[ { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 0, "chunk_text": "# 2022 Environmental Sustainability Report\nEnabling sustainability for our company, our customers, and the world\n## Contents\n## Microsoft sustainability\n## Global sustainability\n## Appendix\n## Overview\n## Customer sustainability\n## Waste\n## Ecosystems\n>600M Since its inception, Microsoft has allocated over $\\$ 600$ million of impact investment capital from our Climate Innovation Fund.\n1.4M We contracted 1,443,981 metric tons of carbon removal in FY22.\n12,159 We diverted 12,159 metric tons of solid waste from landfills and incinerators across our direct operational footprint in FY22.\n12,270 In FY22, we protected 12,270 acres of land in Belize. Another 4,998 acres in the United States is contracted.\n1M\nWe reached just under one million people with clean water and sanitation solutions by the end of the calendar year 2022.\nOverview\n## Reviewing our 2022 progress and learnings\nWe are focused on new ways to harness the power of technology, partnerships, investments, and policy to drive impact at scale and pace to help the world protect ecosystems and biodiversity.\nForeword 4 2022 progress How we work 8 About this report 9\n## Foreword\nMicrosoft’s approach to addressing the climate crisis starts with the sustainability of our own business. In 2020, we made a bold set of commitments: to be a carbon negative, water positive, zero waste company that protects ecosystems—all by 2030. Three years into this journey, we remain steadfast in our commitment. 2022 was a reminder that to mitigate the most severe impacts of climate change, our commitments need to extend beyond our four walls, and we must continue to accelerate investments that will enable progress for decades to come.\n## A closer look at 2022\n## Getting our own house in order", "chunk_word_count": 281, "section_path": "2022 Environmental Sustainability Report > Contents", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 1, "page_start": 1, "page_end": 4 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 1, "chunk_text": "# 2022 Environmental Sustainability Report\n## Enabling sustainability for our company, our customers, and the world\nMicrosoft’s own sustainability is our first sphere of influence, and we remain focused on getting our own house in order and delivering on our 2030 commitments. We made ambitious commitments in 2020 and we knew that progress would not always be linear. These commitments are rooted in science and take the necessary steps to protect our ecosystems and prevent the most severe impacts of climate change. We are firmly focused on achieving our 2030 commitments and making the right long-term investments that support the sustainability of our business for decades to come. In addition to our longterm focus, it’s important to pause and evaluate our progress in 2022.\n2022 marked the sixth warmest year in history. Extreme weather caused devastating droughts, wildfires, famine, floods, and heat waves with alarming frequency. We felt the effects of climate change like never before, and as the planet warms, we’ll continue to see and feel the negative impacts on ecosystems and communities around the world. The most recent report from the Intergovernmental Panel on Climate Change (IPCC) underscores the severity of the climate crisis, and the urgent need for global collective action.\nMeaningful climate action requires an enduring commitment from both government and business, with the private sector playing an increasingly important role in the transition from pledges to progress. As we reflect on the seriousness of the climate crisis, we have expanded our ambition to meet this urgent climate need by investing in a broad range of initiatives, technologies and approaches that support a net zero future.\nIn 2022 we launched Microsoft Cloud for Sustainability, a comprehensive suite of enterprise-grade sustainability management tools. We also helped to advance a set of global sustainability initiatives that aim to benefit every person and organization on the planet. These include accelerating the availability of new climate technologies through our Climate Innovation Fund, strengthening our climate policy agenda, helping to develop a more reliable and interoperable carbon accounting system, advocating for skilling programs to expand the green workforce, and working to enable a just transition for the vulnerable populations of the global south.\nIn 2022, our business grew by 18 percent and our overall emissions declined by 0.5 percent. This in part is a result of a reduction in our direct operational (Scope 1 and 2) emissions by 22.7 percent. At Microsoft, Scope 1 and 2 emissions account for less than four percent of total emissions, while indirect emissions, or Scope $^ { 3 , }$ account for more than 96 percent. Our Scope 3 reported emissions increased slightly in 2022, by 0.5 percent, despite a 25 percent increase in purchased goods and services due to business growth. The more positive outcomes in 2022 are the result of improvements in our operations, real-time device telemetry-based measurement, renewable energy investments, sustainable aviation fuel (SAF) purchases, and procurement of unbundled renewable energy certificates (RECs).\nAs we look toward 2030—and beyond—we remain optimistic about our collective ability to decarbonize the global economy while continuing to grow and prosper as a global community.", "chunk_word_count": 518, "section_path": "2022 Environmental Sustainability Report > Enabling sustainability for our company, our customers, and the world", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 2, "chunk_text": "# 2022 Environmental Sustainability Report\n## Enabling sustainability for our company, our customers, and the world\nWe believe that Microsoft has an important role to play in developing and advancing new climate solutions, but also recognize that the climate crisis can’t be solved by any single company, organization, or government. The global community needs partnerships, new innovations, policies, and global commitment to ensure a healthy future for all.\nBrad Smith, Vice Chair and President\n## Foreword (continued)\nWhile we continue to work to reduce our Scope 1 and 2 emissions to near zero, Scope 3 is the ultimate decarbonization challenge. It necessitates the coevolution of best practices for business, technology, and policy among thousands of global stakeholders. When we made our carbon negative commitment in 2020 it wasn’t just a challenge to support the sustainability of our business, it was also an invitation to the world to participate in this journey, translating ingenuity into action, and action into impact.\nCompanies can only manage what they can measure, and Microsoft is committed to helping our customers measure their environmental impact in a timely and accurate manner. In June 2022, we launched Microsoft Cloud for Sustainability, a comprehensive environmental sustainability management platform that includes Microsoft Sustainability Manager. These new digital tools can interoperate with virtually any business system and unify data intelligence for organizations at any stage of their sustainability journey. Sustainability Manager enables organizations to record, report, and reduce their Scope 1, 2, and 3 emissions.\n## Zero waste\n## Enabling and supporting a more sustainable world\nWe increased our reuse and recycle rates of all cloud hardware to 82 percent and continue to pace toward our 2030 reuse and recycle goal of 90 percent. We also reduced single-use plastics across all Microsoft product packaging to 3.3 percent and are on track to eliminate their use by 2025. In total, we have diverted 12,159 metric tons of solid waste from landfills.\nFinally, our third sphere of influence is to impact global sustainability. Just as the reach of Microsoft technology extends to almost every country in the world, so should the impact of our sustainability programs.\nIn November 2022, the world’s climate leaders convened for COP27. There were important conversations at COP27 focused on the uneven impacts of climate change and how the least developed countries in the world are disproportionately affected. For example, the nations of Africa together account for less than 5 percent of global emissions but have experienced far more than their share of the negative impacts of climate change. At Microsoft, we are focused on climate policies and programs that will have a positive impact on all eight billion inhabitants of planet Earth.", "chunk_word_count": 445, "section_path": "2022 Environmental Sustainability Report > Enabling sustainability for our company, our customers, and the world", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 4, "page_start": 4, "page_end": 5 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 3, "chunk_text": "# 2022 Environmental Sustainability Report\n## Ecosystem protection\nWe continue to maintain our commitment to protect more land than we use. In 2022, 12,000 of the over 17,000 acres of contracted land were officially designated as protected. The amount of land protected in 2022 exceeds the approximately 11,200 acres of land we currently use.\nIn addition to our carbon negative commitment, we’ve also made encouraging progress toward our 2030 commitments in water, waste, and ecosystems:\nMicrosoft Azure customers also benefited from significant upgrades to the Emissions Impact Dashboard (EID), which helps customers to understand the emissions impact that results from their use of the Microsoft Cloud. The EID estimates Microsoft’s direct and indirect emissions related to a customer’s cloud usage, as well as the emissions customers have avoided by running workloads in the cloud rather than on-premises.\n## Water positive\nWe contracted for replenishment projects that are estimated to provide more than 15.6 million $\\mathsf { m } ^ { 3 }$ in volumetric water benefits, increasing our running total of replenishment projects to 35 million $\\mathsf { m } ^ { 3 }$ . Additionally, we provided more than 850,000 people with access to clean water and sanitation solutions, including 163,000 in Brazil, India, Indonesia, and Mexico.\n## Amplifying our impact and helping our customers achieve more\nOur second sphere of influence is customer sustainability. As a technology company, we have a role to play with the thousands of corporate customers who put their trust in Microsoft technology. The majority of our customers have already made a climate pledge and Microsoft is working to help them move from pledges to progress.\n## Policy\nMicrosoft is deeply committed to using our voice to influence sustainability policies around the world. We support public policy initiatives to accelerate carbon reporting, reduction and removal, the transition to clean energy, water access and stress reduction, and the ability to measure, manage, and protect ecosystems. In 2022, we further committed to shaping public policy by releasing policy briefs on carbon and electricity.\nIn 2022, we also released a preview version of the Microsoft Planetary Computer to enable customers to measure, monitor, and subsequently to manage ecosystems that may be affected by their operations, and to make important decisions related to climate risk. The Planetary Computer draws on more than 60 petabytes of open-source geospatial data. This data, when combined with the analytic capabilities of our AI for Good Lab, delivers a new level of planetary insights to corporations and governments around the world.\nWe are firmly focused on achieving our 2030 commitments and making the right long-term investments that support the sustainability of our business for decades to come.\nWhile Microsoft’s emissions footprint is a tiny percentage of global emissions, we also have a role to play in helping reduce or remove the other 99.97 percent of global emissions. It’s important that our approach to sustainability extends beyond our own four walls and supports the sustainability needs of our customers.", "chunk_word_count": 495, "section_path": "2022 Environmental Sustainability Report > Ecosystem protection", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 5, "page_start": 5, "page_end": 5 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 4, "chunk_text": "# 2022 Environmental Sustainability Report\n## Carbon measurement and the Carbon Call\nIn February 2022, Microsoft, ClimateWorks Foundation, and over 20 leading organizations launched an important new initiative called the Carbon Call. The objective of this program is to unify the world around a carbon accounting system that is more reliable and interoperable. ClimateWorks Foundation is building this program to a global scale. The Carbon Call now has over 80 signatories, and released its initial roadmap at COP27.\n## Foreword (continued)\n## Climate Innovation Fund\n## A decade of innovation and decisive action\nWe believe that innovation is a critical component to solving the climate crisis, and that the investment of capital plays an important role in accelerating the availability of new solutions. Microsoft is investing in accelerating climate innovation through our $\\$ 1$ billion Climate Innovation Fund (CIF). We invest in innovative technologies and business models that have the potential for meaningful, measurable climate impact by 2030. Since the founding of the CIF in 2020, Microsoft has allocated more than \\$600 million into a global portfolio of more than 50 investments, including sustainable solutions in energy, industrial, and natural systems.\nAs we look toward 2030—and beyond—we remain optimistic about our collective ability to decarbonize the global economy while continuing to grow and prosper as a global community. We will continue investing in three key areas that will enable the scale of sustainability solutions needed to address the climate crisis:\nAdvancing AI solutions for greater climate impact .\nAccelerating the development of sustainability markets through investment .\n## Africa data lab\nIn November we announced an expansion of our AI for Good Lab into Egypt and Kenya, building a new team of data scientists on the ground in Africa that will work to improve climate resilience. The work of these data labs will be informed by a new Africa AI Innovation Council comprised of representatives from leading African organizations.\nCreating tools that advance emissions measurement and compliance .\nThis will be a decade of innovation and decisive action, from expanding the use of AI to address sustainability to forging new public and private sector partnerships. To move from pledges to progress, we cannot be deterred by near-term challenges, and must remain focused on developing innovative new solutions and in many cases, accelerating our actions. At Microsoft, we’re deeply committed to sustainability as a company, as a technology provider, and as citizens of planet Earth.\nmonitor, and manage ecosystems and make climate risk decisions.\n## Sustainability skills\nDelivering on the ambition of the Paris Agreement will require a global initiative focused on the proliferation of sustainability skills throughout the labor market. In November 2022, Microsoft and BCG released a new report, Closing the Sustainability Skills Gap: Helping Businesses Move from Pledges to Progress. This report reinforces the need for employers and governments to invest in upskilling the current workforce through learning initiatives focused on sustainability knowledge and skills, to prepare the next generation for sustainability jobs of the future. Microsoft is working with partners to develop and share new sustainability learning materials to accelerate the development of the sustainability workforce of the future.\nBrad Smith Vice Chair and President\nMelanie Nakagawa Chief Sustainability Officer\n## 2022 progress\n### Carbon\n### Water\n### Waste", "chunk_word_count": 542, "section_path": "2022 Environmental Sustainability Report > 2022 progress > Carbon", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 5, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2022 progress\n### Ecosystems\n1.4M metric tons\n15.6M m3\n12,270 acres\n12,159 metric tons\n### Microsoft Cloud for Sustainability\nThe Microsoft Cloud for Sustainability data model centralizes emissions data from disparate sources in a shared data language—streamlining data ingestion, integration, and calculations and enabling more accurate and reliable reporting. The Microsoft Cloud for Sustainability data model initially focused on carbon and was expanded in 2022 to include water data.\nWe contracted 1,443,981 metric tons of carbon removal in FY22. We also made first-of-a-kind multi-year forward offtake commitments to carbon removal, which we view as the model for scaling this industry.\nIn FY22, we contracted for replenishment projects that are estimated to provide more than 15.6 million $\\mathsf { m } ^ { 3 }$ in volumetric water benefit over the lifetime of these projects.\nIn FY22, we diverted 12,159 metric tons of solid waste from landfills and incinerators across our direct operational footprint.\nIn FY22, we protected 12,270 acres of land in Belize. We now protect more than the 11,206 acres of land that we use.\n### Advanced policy\n### 13.5 GW\n82%\nBig game migration program\n1M\nTo support our policy work, we published several briefs on carbon and electricity policy to share the priorities and principles that guide Microsoft’s policy advocacy work around the world.\nIn FY22, we signed new PPAs around the globe, bringing our total portfolio of carbon-free energy to over $1 3 . 5 \\mathsf { G W } ,$ including projects in 16 countries and more than 135 clean energy projects.\nBy the end of FY22, we provided more than 550,000 people with access to clean water and sanitation solutions in Brazil, India, Indonesia, and Mexico and reached just under one million people by the end of the calendar year 2022.\nOur reuse and recycle rates of servers and components across all cloud hardware reached 82 percent in FY22.\nThrough the NFWF Western Big Game Migration Program, we invested in projects in the American West that are vital for preserving the migration corridors of endangered and at-risk species, including mountain lions and grizzly bears.\n### $> 5 6 0 0 \\mathsf { M }$ in climate innovation\nSince its inception, Microsoft has allocated over $\\$ 600$ million impact investment capital from our Climate Innovation Fund into a global portfolio of investments, featuring sustainable solutions in energy, industrial, and natural systems.\n### Environmental justice\n29%\nEnvironmental justice is embedded in our water access target, and we are looking for ways to be more intentional about integrating environmental justice into our replenishment investments.\nWe reduced single-use plastics in our Microsoft product packaging by more than 29 percent, a decrease from 4.7 percent to 3.3 percent by weight (on average) of plastic per package in FY22.\nProtecting biodiversity\n### Sustainability skills gap", "chunk_word_count": 471, "section_path": "2022 Environmental Sustainability Report > 2022 progress > Ecosystems", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 7, "page_start": 7, "page_end": 7 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 6, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2022 progress\n### Scope 1 & 2\nTo better understand how to close the sustainability skills gap, Microsoft published the Closing the Sustainability Skills Gap report and LinkedIn published the Green Skills Report to provide insights into the demand and supply of talent with green skills.\nOur Scope 1 and 2 (market-based) emissions remained proportional with business growth in FY22.\nLast year, we contributed to the TNC Belize Maya Forest Project (BMF) to protect an additional 236,000 acres in a global biodiversity hotspot.\n### How we work\n## 1 Set commitments basedon science\n## 3 Establish sustainability as part of culture\n## 5 Ensure governance and accountability\nFor any organization’s environmental sustainability journey, it is critical to set commitments, develop a strategy, and build an operational roadmap—all while measuring progress and ensuring accountability. We’ve learned a lot over the last three years of Microsoft’s sustainability journey, and we hope that sharing our approach can help other organizations as they develop their own roadmap.\nSustainability science has been at the center of our commitments. In 2019, Microsoft took a step back to look at the science behind climate change and saw that our commitment to being carbon neutral was not enough. The world needs to reach net zero by or before 2050, and achieving it relies heavily on private sector partnership and action. This guided us to make our commitments to be a carbon negative, water positive, zero waste company by 2030.\nAt the heart of the Microsoft culture is the belief that for Microsoft to continue to do well, the world around us also needs to do well. As we continue to grow, we are pursuing opportunities that help solve the problems of people and the planet—and we have made sustainability core to our brand and our business. Our senior leadership team has a deep and enduring commitment to sustainability, which sets the tone across all levels of our organization.\nGovernance and accountability are critical to ensure cross-company alignment and prioritization of sustainability commitments. At Microsoft, we hold our business groups accountable for their carbon emissions via an internal carbon fee. Achieving our sustainability commitments is a core priority for every business group; we publish scorecards twice yearly and review progress quarterly. We established a Climate Council of senior leaders across the company to govern our sustainability progress and priorities.\n## 2 Consider all positions of influence\n### M Make it central to business", "chunk_word_count": 410, "section_path": "2022 Environmental Sustainability Report > 2022 progress > Scope 1 & 2", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 7, "page_start": 7, "page_end": 8 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 7, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\nTo move from pledges to progress, Microsoft set commitments and built sustainability into the strategy, operations, and roadmaps of each business group and every subsidiary across the globe. We are also working across our value chain on sustainability commitments and support our customers and partners by delivering capacity-building tools and solutions.\nAs a global technology leader, Microsoft has many opportunities to influence—as a customer, supplier, investor, employer, policy advocate, and innovation partner. We know it will take commitment across our entire value chain to reach our goals. We also focus on the larger impact that we can have with research, investments, innovation, strategic partnerships, policy, and advocacy.\nTransparency needs to be a component of any sustainability initiative. Microsoft is committed to sharing our progress, learnings, innovations, methodology development, and thought leadership through our annual sustainability report, white papers, blogs, and journal publications. We share playbooks from our successes, as well as learnings when we uncover new challenges or setbacks. These learnings also inspire us to champion global issues such as more reliable and interoperable global carbon accounting, a more systematic approach to building a multidisciplinary workforce of sustainability experts, and the development of innovative technology solutions for our customers and partners.\n### About this report\nWe think about Microsoft’s role in sustainability through three spheres of influence: Microsoft sustainability, customer sustainability, and global sustainability.\n### Microsoft sustainability Taking care of our own environmental footprint\n### Customer sustainability Delivering digital technology for net zero\n### Global sustainability Enabling a more sustainable world\n### Transparent and accountable reporting on progress\nA key principle of our work is transparency. This report, published annually, includes our strategy, progress against our goals, and key challenges and trends we see in this work. We also publish our environmental data, which is included in the separate Environmental Data Fact Sheet. Deloitte & Touche LLP performed a review relating to specified information within Section 1 of the Environmental Data Fact Sheet.\nOur sustainability work starts with getting our own house in order. We are taking accountability for our operational footprint and are committed to sharing learnings, accelerating markets, scaling solutions, and being transparent about our progress.\nWe are committed to providing the digital technology needed to help build a more sustainable world. We are delivering technology to help organizations measure and manage their environmental footprints and monitor the health of the planet’s natural ecosystems.\nWe understand that our actions alone will not solve the climate crisis. As a global technology leader, we are also committed to helping build the enabling societal conditions that will support a net zero economy.", "chunk_word_count": 444, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > About this report", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 8, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Taking care of our own environmental footprint\nOur sustainability work starts with taking accountability for our operational footprint. In 2020, Microsoft made industry-leading commitments to be carbon negative, water positive, and zero waste by 2030, and to protect more land than we use by 2025. This means taking accountability for our operational footprint across our campuses, datacenters, devices, software, and value chain. We look at our operations across the entire lifecycle of assets and products, from design to building, usage, and end of life. We are committed to sharing our learnings, accelerating markets, scaling solutions across our value chain, and being transparent about our progress.\n### Carbon\n### Water\nOur approach 11 \nReducing Scope 1 and 2 emissions 15 \nReducing Scope 3 emissions 17 \nTransitioning to carbon-free energy 20 \nRemoving carbon 22 \nKey trends and what’s next 24 \nOur approach 26 \nReducing our water footprint 30 \nReplenishing water 33 \nImproving access to water 34 \nKey trends and what’s next 35 \nOur approach 37 \nReducing our waste footprint 41 \nKey trends and what’s next 44\n### Waste\n### Ecosystems\nOur approach 46 Taking responsibility for our land footprint 48 Key trends and what’s next 50\n### Getting to carbon negative\nemissions from our supply chain, the lifecycle of our hardware and devices, travel, and other indirect sources. We saw a 0.5 percent increase in our Scope 3 emissions this year based on investments in real-time device telemetry-based measurement, improvements in our operations and supply chain, and purchases of renewable energy.\nAs the world transitions to a lower-carbon, clean energy economy, we’re using our purchasing and investing power to help advance innovation and the development of new solutions—helping us meet our own commitments while catalyzing the creation of broader market supply for others. We fund purchases of renewable energy, sustainable aviation fuel, and carbon removal through our internal carbon fee, which we established in 2012. The fee is designed to accelerate carbon reduction and allocate funding to projects that jumpstart and scale decarbonization technologies. In FY22, we redesigned and increased our carbon fee to accelerate Scope 3 emissions reduction, tying the fee to the costs abatement for different sources—electricity, fuel, and other emissions. We will continue to evaluate the carbon fee design to align our business operations and 2030 carbon commitments.", "chunk_word_count": 393, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Taking care of our own environmental footprint", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 10, "page_start": 10, "page_end": 11 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 9, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Our approach\nIn January 2020, Microsoft committed to be carbon negative by 2030. Operationally, we see this commitment as a journey that starts with reducing carbon emissions as much as possible, replacing our electricity consumption with carbon-free energy, and removing the emissions that remain.\nIn 2022, we were able to disaggregate and identify previously unreported electricity for some of our leased datacenters due to improvements in our ability to capture such data. We have revised FY20 and FY21 Scope 2 and Scope 3 Category 3 market and location values to include this additional information. In FY22, we included this activity in our results and procured unbundled renewable energy credits (RECs) to mitigate the increased emissions for FY22. Our year-over-year figures show a 23 percent reduction in Scope 1 and 2 market-based emissions, which is driven in part by our procurement of RECs for FY22. Without this revision, our Scope 1 and 2 market-based emissions would have remained proportional with business growth.\nIn FY22, our business grew by 18 percent and our overall emissions were down 0.5 percent. Our total company emissions were just under 13 million metric tons of carbon dioxide equivalents $( \\mathsf { m t C O } _ { 2 } \\mathsf { e } )$ (marketbased and management-defined criteria for Scope 3 Category 11). Taking into account our renewable energy purchases, our Scope 1 and 2 emissions were approximately $4 2 8 , 0 0 0 \\ \\mathrm { m t C O _ { 2 } e }$ . More than 96 percent of our emissions are in Scope 3, which includes\n### Carbon negative by 2030\n### Our commitment\n### Our progress\nWe are committed to being carbon negative by 2030 and by 2050 remove from the atmosphere an equivalent amount of all the carbon dioxide our company has emitted either directly or by our electricity consumption since we were founded in 1975.\n### Reducing direct emissions\n### Net zero Scope 1 and 2 emissions\nOur Scope 1 and 21 emissions remained proportional with business growth in FY22.2 More than 95 percent of our Scope 2 emissions were reduced by renewable energy from power purchase agreements (PPAs), green tariff programs, and unbundled renewable energy certificates.\nWe will reduce our Scope 1 and 2 emissions to near zero by increasing energy efficiency, decarbonization, and reaching 100 percent renewable energy by 2025.\n### Scope 3 emissions increased by 0.5 percent\n### Reducing value chain emissions\nBy 2030, we will reduce our Scope 3 emissions by more than half from a 2020 baseline.\nOur value chain or Scope 3 emissions increased slightly at 0.5 percent, despite a 25 percent increase in purchased goods and services due to business growth. This result was driven by improvements in our operations, telemetry-based measurement, renewable energy investments, sustainable aviation fuel purchases, and procurement of unbundled renewable energy certificates (RECs).3\n### Replacing with 100/100/0 carbon-free energy", "chunk_word_count": 498, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Our approach", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 10, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### 13.5 GW of carbon-free energy\nBy 2030, 100 percent of our electricity consumption will be matched by zero carbon energy purchases 100 percent of the time.\nIn FY22, we signed new Power Purchase Agreements (PPAs) around the globe, bringing our total portfolio of carbon-free energy to over $1 3 . 5 \\mathsf { G W } ,$ including more than 135 projects in 16 countries.\n### Removing the rest of our emissions\n### Over 1.4M metric tons of carbon removal\nWe contracted 1,443,981 metric tons of carbon removal in FY22. We also made first-of-theirkind multi-year forward offtake commitments to carbon removal, which we view as the model for scaling the industry.\nBy 2030, Microsoft will remove more carbon than it emits. By 2050, we will remove an amount of carbon equivalent to all our historical emissions.\n### Other achievements\n10th year of CDP A List for Climate Change Microsoft was named to the CDP A List for Climate Change for the 10th consecutive year.\nCarbon fee redesign\nWe redesigned our carbon fee, tying it to the costs of abatement of electricity, travel, and other emissions sources.\n[IMAGE CAPTION] Retirements from carbon removal\n[IMAGE CAPTION] Contracted carbon removal\n### Carbon Table 1\n### Carbon Table 2\n### Tracking our yearly progress toward carbon negative by 2030\n### Tracking our emissions across Scopes 1, 2, and 3\nMicrosoft’s overall emissions decreased by 0.5 percent in FY22. This was driven by improvements in our operations, telemetry-based measurement, renewable energy investments, sustainable aviation fuel purchases, and procurement of unbundled renewable energy certificates (RECs).\nIn FY22, we procured 1.44 million metric tons and retired 514,156 metric tons of carbon removal as part of our effort toward achieving our annual carbon commitment to be carbon neutral. Carbon removal contracted each year includes credits retired in the same year and to be retired in future years.\n### Microsoft emissions\nRetirements from avoided emissions\n[IMAGE CAPTION] Projected carbon removal\n### Learn more in the Environmental Data Fact Sheet\na. The chart has been updated to reflect the latest actual values which incorporate the latest methodology, management’s criteria metrics, and structural change adjustments. Scope 2 and 3 values are market-based and management’s criteria metrics. b. Carbon negative by 2030: A company is carbon negative when it removes more carbon than it emits each year.\na. Scope 2 and 3 values are market-based and management’s criteria metrics. \nb. Reported emissions for FY20 and FY21 have been recalculated for improved accuracy in accordance with our internal recalculation policy. We were able to disaggregate and identify previously unreported electricity for some of our leased datacenters due to improvements in our ability to capture such data.\n### Carbon Table 3\n### Tackling Scope 3", "chunk_word_count": 465, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > 13.5 GW of carbon-free energy", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 11, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Breaking down our FY22 Scope 3 emissions by source\nScope 3 represents 96 percent of Microsoft’s annual emissions in FY22. Our Scope 3 emissions result primarily from the operations of our tens of thousands of suppliers (upstream) and the use of our products across millions of our customers (downstream).\nMicrosoft’s Scope 3 emissions account for more than 96 percent of our total emissions, with the vast majority of these emissions coming from two categories upstream, Purchased Goods and Services (Category 1) and Capital Goods (Category 2), and one downstream, Use of Sold Products (Category 11).\nReducing Scope 3 emissions requires unprecedented scaling of corporate clean energy purchases across Microsoft’s value chain, to address both the electricity consumed by our products, like Xbox devices or Surface laptops, and used to manufacture everything from semiconductors to fiber optic cables. Moreover, tackling Scope 3 means decarbonizing hard-toabate industries, including the steel, concrete, and other building materials used in our datacenters, as well as jet fuel for business travel and logistics.\n### Scope 3 Categories\n### Learn more in the Environmental Data Fact Sheet\n### Reducing Scope 1 and 2 emissions\n### Ensuring energy efficiency\n### Innovating with thermal energy in our campuses\n### Designing energy efficiency into our campuses\nEnsuring our buildings are energy efficient is a key first step in reducing emissions.\nAs part of our Redmond Campus Modernization project, we built the Thermal Energy Center. Nine hundred deep wells are the foundation of a large system that heats and cools the new buildings. The wells will compose one of the largest geoexchange fields in the United States to take advantage of the temperature difference between sub-ground soil, which remains constant year-round, and that of ambient air, which changes with the seasons. More than 220 miles of piping will distribute 320,000 gallons of water as a heat-exchange medium across the wells and the new campus in a closed loop system. The Thermal Energy Center houses chillers, cooling towers, backup generators, solar panels, and 65-foot tanks that can store thousands of gallons of water as thermal energy. The system is expected to reduce energy consumption by more than 50 percent of a typical utility plant.\nOur global campus projects adhere to strict sustainability standards which have energy efficiency measures embedded in our design requirements. All major projects must achieve LEED Gold or Platinum certification, ensuring high energy efficiency design. Each of our campuses has a sustainability plan with energy efficiency projects planned each year to drive down our energy usage.", "chunk_word_count": 431, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Breaking down our FY22 Scope 3 emissions by source", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 12, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Building datacenters for optimum power usage effectiveness\nSustainability is a key priority across all phases of our campus and datacenter projects—from integrated design and construction through operations and decommissioning.\nThe power usage effectiveness (PUE) ratio is a metric of how efficiently a datacenter consumes and uses energy. We design and build Microsoft datacenters as close to a PUE of 1 as feasible. Our newest generation of datacenters have a design PUE of 1.12 and, with each new generation, we strive to become even more efficient. In addition, all future built datacenters will be LEED Gold certified. We are also investigating how to encourage transparency and efficiency improvements at leased sites.\n### Promoting grid stability via energy storage solutions\nWind farms generate more than 35 percent of Ireland’s electricity. As the supply of wind and other renewable energy increases, electric power grid operators need to ensure that they have resources available to balance variable power production. Banks of lithiumion batteries at our Dublin datacenter, typically used for backup power, will help grid operators provide uninterrupted service when demand exceeds renewable supply—reducing the need to rely on coal or natural gas to support a stable grid. The uninterruptible power supply for the Dublin datacenter includes new technology that enables real-time provision of services to the grid. We’re also researching and testing alternatives to lithium-ion batteries, to address the challenges of high demand for raw materials and end-of-life disposal.\n### Scopes explained\nScope 1 Direct emissions created by a company’s activities\nScope 2 Indirect emissions from a company’s activities\nScope 3\nIndirect emissions from all other activities up and down the value chain\nLearn more about GHG emissions\n100% which uses 100 percent renewable power.\n### Reducing Scope 1 and 2 emissions (continued)\n### Reducing fossil fuels\nThis year, Microsoft opened our first all-electric kitchen on our Redmond campus. The One Esterra food hall includes 12,200 square feet of all-electric cooking space, which supports more than 1,000 meals a day and uses 100 percent renewable hydro power.\nMicrosoft is committed to being diesel free in our datacenter operations by 2030, moving to all-electric kitchens, and electrifying our campus fleet.\n### Developing hydrogen fuel cells for datacenters\nThe decreasing cost of renewable sources, advancement of green hydrogen production technology, and increasing legislative focus are starting to show potential to reduce the datacenter industry’s reliance on fossil-based diesel fuels. Microsoft is demonstrating the application of green hydrogen at industrial scales— with a first of its kind, zero emission, 3 MW hydrogen polymer electrolyte membrane (PEM) fuel cell backup power generator piloted in July 2022. PEM fuel cell technology combines hydrogen and outside air in a chemical reaction that generates electricity, heat, and water. While hydrogen fuel cell technology has been commercialized at smaller scales, this is the first time it has been demonstrated for multi-megawatt generation needs at datacenters.\n### Implementing all-electric kitchens", "chunk_word_count": 492, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Building datacenters for optimum power usage effectiveness", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 13, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Electrifying our fleet\nThis year, Microsoft opened our first all-electric kitchen on our Redmond campus. The One Esterra food hall includes 12,200 square feet of all-electric cooking space, which supports more than 1,000 meals a day and uses 100 percent renewable hydro power. In collaboration with Jade Range, we created custom commercial grade electric cooking equipment. Moving forward, we intend to construct all new kitchens with all-electric equipment and are developing retrofit plans for existing operations. We released a new Dining All-Electric white paper sharing our lessons learned, technical details, and decision making. One Esterra is a preview of our Redmond Campus Modernization which will have over 77,000 square feet of all-electric dining operations and serve more than 10,000 meals a day.\nWe are committed to fully electrifying our global campus operations vehicle fleet of over 1,800 vehicles by 2030. To date, we have received five all-electric buses in Ireland and sites in China are running allelectric routes through service providers. In Redmond, Microsoft purchased land to build an eight-acre electric vehicle charging and maintenance facility for its internal and external commute fleet of electric buses and shuttles.\n### Reducing Scope 3 emissions\n### Improving Scope 3 measurement and methodologies\n### Advancing lifecycle assessments\nWe are using realworld, anonymized insights from users of Surface and Xbox devices who opt to share information with us to estimate how energy is consumed by those devices.\nMicrosoft is promoting circular design principles for the cloud hardware and devices communities. This year, we contributed to the “Life Cycle Assessment (LCA) Guidelines for Cloud Providers” and provided the guidelines to the Open Compute Project (OCP) to encourage other cloud hardware organizations to better understand and reduce their environmental impact. We are also evolving our approach to LCAs in our devices. The LCAs will feed into an advanced Carbon Data Platform to provide the most representative emissions profile possible for our devices. The platform will be used for reporting and improved decisionmaking with visibility into actionable and granular environmental impacts.\nAccurate measurement is one of the biggest challenges in Scope 3 emissions reduction. Microsoft has prioritized improving the methodologies we use for collecting data and calculating emissions for greater precision and granularity.\nOur Scope 3 commitment is our most powerful opportunity to help accelerate global decarbonization efforts by engaging suppliers and customers in our value chain and partnering to reduce emissions associated with the business we do together.\n### Increasing data quality from our supply chain\nSupply chain and capital goods are our biggest drivers of emissions, and we need better data in these categories to drive the right reduction strategies. In July 2022, we updated our Supplier Code of Conduct (SCoC) sustainability requirements to include independent third-party assurance of emissions data and to deliver a minimum 55 percent greenhouse gas (GHG) reduction by 2030.\nMicrosoft’s Scope 3 emissions account for more than 96 percent of our total emissions, with the vast majority of these emissions coming from three categories: Purchased Goods and Services (Category 1), Capital Goods (Category 2), and Use of Sold Products (Category 11).", "chunk_word_count": 525, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Electrifying our fleet", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 14, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Optimizing devices based on real-world data\nWe are using real-world, anonymized insights from users of Surface and Xbox devices who opt to share information with us to inform our carbon emissions assessments. The data provides an estimate of how energy is consumed by those devices based on factors such as battery drain and CPU utilization. We use this data to calculate high-quality estimates of the daily energy use in different geographies. In the future, we are exploring how to increase accuracy by shifting to hourly energy use tracking paired with more granular, impact-relevant grid emission rate data.\n### Improving accounting methodologies\nOverall, our Scope 3 emissions increased by 0.5 percent in FY22 compared to FY21. This is attributed to a few notable carbon reduction initiatives. First, we’ve extended the useful life of servers and network equipment from four to six years, resulting in a decrease in emissions related to Capital Goods. Second, we introduced a new telemetry-driven methodology to help us account for the energy consumption from our Surface devices and our rapidly growing base of Xbox users. This new data led us to purchase unbundled renewable energy certificates (RECs) to offset a portion of the emissions footprint from these devices. Just as is the case for Scope 2 reduction efforts, we plan to phase out the use of unbundled RECs in future years as programs to reduce emissions take effect, including substantial forward investments into new clean energy facilities yet to commence operation.\nFor capital goods, we are developing new methodologies to use product specific emissions factors for building materials from the Embodied Carbon in Construction Calculator (EC3). This methodology is under development (not yet reflected in Scope 3 reporting metrics) and, in combination with using EC3 in project decisions to track and reduce embodied carbon at each phase of construction, will enable us to reduce embodied carbon emissions on our construction projects as well as demonstrate those product-level reduction decisions in future reporting cycles.\nMicrosoft has prioritized improving the methodologies we use for collecting data and calculating emissions for greater precision and granularity.\n### Reducing Scope 3 emissions (continued)\n### Reducing emissions by consuming less\n### Reducing embodied carbon in buildings and interiors\n### Engineering carbon out of our cloud operations and hardware supply chain", "chunk_word_count": 391, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Optimizing devices based on real-world data", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 17, "page_start": 17, "page_end": 17 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 15, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Boosting efficiency of device usage\nSurface Pro 9 and Surface Laptop 5 are among the most energy efficient Surface computers, and both are ENERGY STAR® Certified, consuming less than half the recommended energy limit from the latest ENERGY STAR computer specifications.4 Surface Pro 9 5G, powered by ARM technology, combines the energy efficiency of modern mobile devices with the computing power of a traditional computer. We also use software to reduce carbon emissions associated with our devices’ use stage, such as with the energy-efficient Shutdown (energy saving) mode for Xbox, which cuts power use by up to 20 times when it is off, compared to Sleep mode.\nWe are focused on engineering carbon out of our value chain via the infrastructure equipment we use in the operation of our datacenters. Using LCAs and environmental product declarations, we partner with our suppliers to assess hotspots of embodied carbon in the equipment we purchase, so we can better understand how we can help reduce emissions in our supply chain.\nTo drive deeper reductions in embodied carbon, we are pursuing the use of transformational low-carbon materials. This year, we piloted a new concrete mix using recycled glass pozzolans, reducing embodied carbon for the slab structure by around half. We completed a lab-scale pilot of structural materials made from biogenic limestone and algae-based concrete, which have the potential to drive down embodied carbon of concrete installations to near zero. Microsoft also completed a study of embodied carbon emissions in furniture, carpeting, and other interior building features to establish the baseline for reduction in our design standards. These standards, using the Embodied Carbon in Construction Calculator (EC3), set thresholds for mineral wool insulation, cold-formed steel framing, carpeting, and gypsum.\nOur top priority for reducing Scope 3 emissions is to design efficiency and circularity into construction and purchasing from the start, so our supply chain uses less energy.\n### Improving efficiency to reduce the number of datacenters\nDatacenter resources are often designed and built for peak power usage, which can lead to underutilization and the need to build new datacenters. Microsoft is focused on improving datacenter efficiency by reducing peak power, safely harvesting unused power, and increasing server density in existing datacenters through intelligent utilization, service level agreement (SLA)-driven power harvesting, and power-aware virtual machine allocation. We use the inherent redundancy in Microsoft-internal software services to tap into datacenter capacity that is traditionally reserved for use only during power grid or infrastructure failures, so we can increase the number of servers in datacenters by up to 33 percent and, in turn, reduce the number of datacenters needed overall.\nIn FY22, our cloud hardware designers worked with material and component suppliers to design components that reduced dependency on virgin plastic, introducing up to 35 percent post-consumer recycled (PCR) plastic in select server components. We also redesigned certain rack components to drive material reduction, resulting in a reduction of plastic in those components by 12 percent.\n90% Our Circular Center", "chunk_word_count": 506, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Boosting efficiency of device usage", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 18, "page_start": 18, "page_end": 18 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 16, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Reimagining circularity of cloud hardware\nMicrosoft has taken an innovative approach by implementing Circular Centers in our datacenter campuses, aligning our end-of-life dispositioning processes with an integrated plan across the entire supply chain. Over the past year, we engaged new suppliers who can remanufacture assets and components, enabling new lifecycles for our assets. We have demonstrated takeback/buyback models with several of our original asset suppliers, closing the loop on assets and enabling suppliers to repurpose or reuse assets and components, resulting in emissions reduction and material recovery. Our Circular Center program will reuse or recycle 90 percent of datacenter decommissioned cloud computing hardware assets, contributing directly to emissions reductions.\n### Reducing Scope 3 emissions (continued)\n### Transforming the market through purchasing\nThrough our Supplier Code of Conduct (SCoC) and purchasing commitments, Microsoft is sending demand signals to our supply chain that we expect lower-carbon inputs and business models.\n### Roadmapping our supply chain\nSince 2020, our SCoC has required that suppliers disclose GHG emissions and plans to reduce those emissions. Last year, we met with our top suppliers to understand their sustainability objectives and establish a shared approach to how we measure emissions, establish baselines, identify difficult to reduce areas, and review commitments to align on the priorities. In the indirect purchasing space, including consultancies and marketing companies, suppliers are starting to consider policies for hybrid work and exploring options for how best to transition to renewable electricity.\n### Reducing emissions in our devices supply chain\n### Advancing sustainable aviation", "chunk_word_count": 264, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Reimagining circularity of cloud hardware", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 17, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Decarbonizing transportation\nIn FY22, we supported the avoidance of $2 8 , 0 0 0 \\mathrm { m t }$ of $\\mathsf { C O } _ { 2 } \\mathsf { e }$ savings in partnership with our suppliers by shifting cargo from carbon intense modes (air and truck) to lower-carbon modes (ocean and rail).\nWe partner with our transportation logistics ecosystem to implement decarbonization solutions across our logistics network. In 2022, our logistics teams explored new ways to mitigate sources of logistics emissions. Based on the Global Logistics Emissions Council (GLEC) Framework and cutting-edge tooling, the new emissions approach will enable strategic investments and optimizations across Microsoft’s logistics operations in support of decarbonized transportation. In FY22, we supported the avoidance of $2 8 , 0 0 0 { \\mathrm { ~ m t C O } } _ { 2 } { \\mathrm { e } }$ in partnership with our suppliers by shifting cargo from carbon intense modes (air and truck) to lower-carbon modes (ocean and rail). We also launched the first alternative energy vehicle (AEV) pilots for trucking.\nMicrosoft is advancing efforts to increase the production of and accounting standards for sustainable aviation fuel (SAF). In 2022, we piloted the Roundtable on Sustainable Biomaterial’s (RSB) “book and claim” process, which will result in a SAF certificate for Microsoft in collaboration with United Airlines and AirBP. In July 2022 Microsoft announced a partnership with Alaska Airlines and Twelve, a Climate Innovation Fund investee, to operate the first demonstration flight using e-Jet, a low-carbon jet fuel produced from recaptured carbon dioxide, water, and renewable energy. Microsoft worked together with the Environmental Defense Fund to publish the High Integrity Sustainable Aviation Fuel Handbook.\nWe continue to work with our device suppliers on carbon reduction interventions, renewable energy alternatives, and manufacturing process improvements. These reductions include 12 suppliers switching to renewable energy, with six converting to 100 percent renewable energy as members of RE100. Learn more about our efforts in our FY22 Responsible Sourcing Report.", "chunk_word_count": 349, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Decarbonizing transportation", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 18, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Transitioning to carbon-free energy\nIn FY22, we signed new power purchase agreements around the globe, bringing our total portfolio of PPAs for carbon-free energy to over 13.5 GW. This includes deals across 16 countries including New Zealand, the Netherlands, Chile, Singapore, Austria, Ireland, and the United Kingdom. Globally, we have more than 135 renewables projects in our PPA portfolio and are positioned to continue to grow our renewable resource procurement to meet our goals.\nExamples of how we’ve worked to integrate equity and justice into our approaches include the following:\nThrough a justice-centered selection process led by the Just Transition PowerForce, we provided environmental justice grants to seven organizations that advance climate readiness, economic opportunity, and health and wellbeing in their communities: Native Renewables, Three Part Harmony Farm, Bridging the Gap in Virginia, West Atlanta Watershed Alliance, Pittsburghers for Public Transit, Harambee House, and Little Village Environmental Justice Organization.\nWe supported the development of two new community solar gardens in Illinois, which are expected to have a capacity of 4.75 MW with a focus on expanding access to renewable power to traditionally under-resourced populations. ENGIE and Microsoft are working with a leading community solar organizer and provider, Solstice, who engage directly with residents and community organizations in cities and counties across the United States to provide access to renewables for customers that cannot afford to install rooftop solar. Solstice pioneered EnergyScore, a unique solution that uses utility payment history and other customer data to provide a more accurate and inclusive prediction of an individual’s ability to pay an energy bill. Once fully subscribed, the two solar gardens could save Illinois subscribers more than $\\$ 100,000$ a year in total electricity costs, while also reducing carbon emissions equivalent to more than $1 { , } 0 0 0$ households’ average electricity usage.\nElectricity use accounts for the vast majority of Microsoft’s operational carbon emissions footprint. In parallel to energy reductions and efficiencies, our work supports the growth and adoption of more carbon-free energy.", "chunk_word_count": 346, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Transitioning to carbon-free energy", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 20, "page_start": 20, "page_end": 20 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 19, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Committing to environmental justice in carbon-free energy procurement\nOur long-term vision is to reach a state where, on all the world’s grids, 100 percent of electrons, 100 percent of the time, are generated from zero-carbon sources. On the path to reaching this vision, our commitment is to cover 100 percent of Microsoft’s load with renewable energy purchases by 2025, and by 2030 to ensure that we meet our 100/100/0 commitment, meaning 100 percent of Microsoft’s electricity consumption, 100 percent of the time, will be matched by zero-carbon energy purchases.\nIn addition to carbon-free energy, Microsoft has made commitments to diversity and inclusion, and to racial equity. An important point of intersection for these is environmental justice. To support environmental justice outcomes in a reimagined energy sector, Microsoft is in its third year of modeling approaches that link our carbon-free energy commitments with community-led clean energy and resiliency projects.\nTo support environmental justice outcomes in a reimagined energy sector, Microsoft is in its third year of modeling approaches that link our carbon-free energy commitments with community-led clean energy and resiliency projects.\nThrough partnerships, we have established new renewable energy procurement models that create new opportunities for frontline communities by equitably distributing the benefits of the clean energy economy. We’ve shared our lessons learned in a position paper with Volt Energy Utility, including an Environmental Justice Measurement & Evaluation Framework that guides our initiatives.\nIn FY22, we continued to work with industry-leading partners such as Shell, Constellation, and ENGIE to procure new carbon-free energy resources to meet our goals. To continue advancing the green energy economy in the United States and in recognition of the opportunity to proactively collaborate on driving a more reliable domestic solar module supply chain, Microsoft is collaborating with Hanwha to increase domestic green energy manufacturing through a first-of-its-kind initiative for major equipment and associated construction services. By partnering with Hanwha, Microsoft seeks to facilitate quicker adoption of domestic green energy equipment supply through its pipeline of domestic power purchase agreements (PPAs).\nWe supported a 6.6-MW solar facility in Panola County, Mississippi, which provides first-time solar access to consumers in a county with majority Black residents and a poverty rate that is double the United States average. By using emissions data to determine where new solar generation can displace the most carbon, Clearloop is collaborating with Microsoft to expand access to clean energy in a state that currently relies on fossil fuels to power nearly 90 percent of its electricity. Clearloop will also collaborate with local community programs to provide workforce development, training, and hiring opportunities.\n12%\nWe also redesigned rack components, resulting in a reduction of plastic by 12 percent for certain components.\n### Transitioning to carbon-free energy (continued)\nWe join national and local governments, businesses, foundations, and international civil society and youth organizations who", "chunk_word_count": 482, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Committing to environmental justice in carbon-free energy procurement", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 20, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Contribution to collective action to decarbonize the electric grid\nWe supported the purchase of “Peace RECs” (P-RECs) in Sub-Saharan Africa. These credits are generated through projects located in countries with high risk of conflict, high vulnerability to climate change, low levels of electrification, and limited access to renewable energy finance. In May 2022, Microsoft made the largest P-REC transaction to date, building on our first P-REC purchase in 2020. This first purchase funded the installation of public streetlights connected to Nuru’s 1.3-MW solar mini-grid in Ndosho neighborhood in Goma, Democratic Republic of the Congo. Our 2022 purchase also supports first-time electricity connections for households, businesses, and social institutions, and deploys additional streetlights that improve nighttime security and allow local businesses and markets to operate during evening hours. The purchase also contributes directly to the financing of Nuru’s new 3.7 MW solar metro-grid, which is anticipated to serve 5,000 customers and enhance more than 25,000 lives. Together, these projects are some of the largest off-grid minigrids operating in Sub-Saharan Africa, eventually benefiting 125,000 people and raising the average electricity rate from three percent to around 20 percent.\nThis year, with Sustainable Energy for All (SE For All), an organization that works in partnership with the United Nations, Microsoft committed to take actions that drive toward decarbonization of the electric grid to combat climate change. Energy Compacts were introduced in 2021 as a key outcome of the Highlevel Dialogue on Energy, which calls for affordable, reliable, sustainable, and modern energy for all by 2030. Microsoft joins national and local governments, businesses, foundations, and international civil society and youth organizations from every region who have submitted Energy Compacts, reflecting actions and finance commitments. Microsoft’s Energy Compact documents its 100/100/0 commitment to carbonfree energy.\n### Other projects\nWith PosiGen Louisiana Solar, we supported the reduction of electricity bills for low-to-moderate income residents through financing solar and energy efficiency projects that can also strengthen resiliency for homes in underserved communities.\nWe supported programs with California Rooftop Solar at Wildmind Science Center, which funds environmental engagement programs for 120,000 at-risk youth.\nWith Sustainable Energy for All, an organization that works in partnership with the United Nations, Microsoft committed to take actions that drive toward decarbonization of the electric grid to combat climate change.\n• Microsoft has purchased solar RECs from school districts that were supported by the California Bright Schools program. The program identifies energy saving opportunities for schools, saving general fund dollars and providing educational opportunities for students and teachers.\n### Removing carbon", "chunk_word_count": 432, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Contribution to collective action to decarbonize the electric grid", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 21, "page_start": 21, "page_end": 21 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 21, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2022 projects and results\nIn FY22, we contracted 1,443,981 metric tons of carbon removal. We also made multi-year commitments to carbon removal. These projects will provide around 300,000 metric tons towards our greater than five million metric ton goal in 2030. Projects include:\nWe are three years into our mission to build the carbon dioxide removal (CDR) capacity that the world will require to prevent the worst effects of climate change.\n### CarbonFuture\nTogether with Pacific Biochar, CarbonFuture is retooling lumber mills’ bioenergy plants to produce more biochar compared to energy—a process which can be scaled across the mill bioenergy fleet.\n### Neustark\nNeustark is removing carbon within the Swiss concrete recycling industry by carbonating demolished concrete with carbon dioxide from biogas production.\n### Acorn\nThis program from Cooperative Rabobank UA assists in the transition to agroforestry systems in the tropics— including in Colombia, Ivory Coast, Nicaragua, and Peru—and is replicating that financing model in additional areas.\nOver the past 18 months, we have developed the process and structures to create long-term carbon removal offtake agreements designed to get new projects built. This is how we can move past many of the quality challenges prevalent in the market today and take CDR to scale.\n### Our focus\n### Offtake agreements\nOur first offtake agreement with Climeworks was announced in July 2022 and we’ve followed up with several additional large investments of increasing scales. We are targeting multiple multi-year purchases of up to 250,000 tons per year to serve as a risk-diversified portfolio of projects meeting our needs in 2030 and beyond.\nOur offtake agreements are built on our experience procuring renewable energy, tailorable to the risks faced by diverse removal approaches, and structured to enable projects to gain outside financing. We are now building a portfolio with the goal of greater than five million metric tons a year in offtakes in order to hit our 2030 goals, balanced across low, medium, and highdurability solutions. We are moving into the next phase of our carbon removal journey.\n### Removing carbon (continued)\n### What’s next on carbon removal\n## 2023 carbon removal key projects\nLooking ahead, we’re focused on several exciting and necessary developments. First, taking high-quality and additional nature-based solutions to greater scale. Second, bringing in more demand for CDR after the landmark announcements of the First Movers Coalition and Frontier Climate. Third, trialing the emerging set of second wave, hybrid carbon removal solutions that are coming to market, such as Heirloom, which combines advantages of carbon mineralization and direct air capture (DAC) to amplify the natural ability of limestone to remove carbon dioxide from the air. Fourth, identifying the best ways to embed carbon removal solutions in an overall circular economy.\n### Climeworks offtake\n### Climate Robotics\n### O.C.O Technology", "chunk_word_count": 466, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > Climeworks offtake", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 22, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2023 carbon removal key projects\n### CommuniTree\nIn September 2022, we signed a deal for 25,000 metric tons of CDR from O.C.O’s mineralization technology, which takes industrial waste (like fly ash) and uses it as the core of manufactured limestone. That’s a neat bit of upcycling and a great way to work carbon removal into a circular-economy solution. Moreover, O.C.O showed pragmatic, long-term thinking by holding back some tonnage until empirical results clarify marginal carbon accounting uncertainty.\nIn July 2022, we signed a 10-year forward agreement with Climeworks to purchase DAC removals from their Orca and Mammoth plants, building on our earlier purchase commitment with Climeworks. This prototypical agreement is our model for taking carbon removal to scale and meeting our ambitious goals.\nEarly in 2022, we signed a small deal with Climate Robotics and we doubleddown in August with a four-year, 75,000 metric ton contract. We believe this is among the largest direct biochar CDR procurements to date. Climate Robotics’ novel approach to biochar production will eliminate the transport of biomass to central plants, instead taking pyrolizers to the fields where crop waste is processed and re-tilled.\nWe renewed our investment in the CommuniTree project in November 2022, signing for 700,000 metric tons in the form of ex ante credits over the next two years, which we project will deliver $> 1 0 0 , 0 0 0$ metric tons of ex post verified carbon in 2030 and subsequent years. CommuniTree engages smallholder farmers in Nicaragua to plant and maintain native trees alongside existing farming practices, restoring ecosystems and improving local livelihoods.\n### Key trends\n### Resources\n### Carbon removal lessons learned\n### $\\textcircled{1}$ Geopolitics are affecting supply chains\n### $\\textcircled{4}$ Corporate investment is needed to scale nascent markets\nMicrosoft’s carbon removal lessons learned from our first two years of corporate purchasing.\nGeopolitical implications of world conflict and the global pandemic have hit supply chains hard, with impact on renewable energy supply and suppliers’ ability to go beyond business as usual to deliver innovative new goods and services, such as decarbonization technologies.\nRead the 2022 paper\nRead the 2021 paper\nStakeholder expectations are increasing for corporate involvement in renewable energy, SAF, and carbon removal markets. While we are further along the trajectory toward higher-impact vehicles for renewable energy, we see creditbased mechanisms for funding SAF, green steel, green concrete, and carbon removal as critical for jumpstarting these nascent markets.\n### Sustainable aviation fuel guidance\nMicrosoft supported the Environmental Defense Fund in developing a handbook which provides expert guidance on using high-integration sustainable aviation fuel.\n### $\\textcircled{2}$ Emissions data quality needs to improve across the value chain\nRead the paper\n### All-electric kitchens\nData quality continues to be an area of need across the sustainability landscape—especially in supply chain, capital goods, and logistics. Our update to our SCoC to require suppliers to have their data assured aims to improve the quality of our supply chain data.\nMicrosoft released a new white paper, Dining All-Electric, where we share our lessons learned, technical details, and decision making for all-electric kitchens.", "chunk_word_count": 514, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > CommuniTree", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 23, "page_start": 23, "page_end": 24 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 23, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2023 carbon removal key projects\n### $\\textcircled{5}$ Lower embodied carbon in materials needs to be a focus\nRead the paper\nLower embodied-carbon solutions for key materials—such as semiconductors—have yet to be developed commercially or at scale. We are looking ahead to cross-sector partnerships to help jumpstart these strategies.\n### Environmental justice in renewable energy procurement\nMicrosoft and Volt energy shared lessons learned on environmental justice in renewable energy procurement.\n### $\\textcircled{3}$ Data methodologies will continue to evolve\nRead the paper\nMethodologies are evolving and will continue to do so for the next several years. Like other companies, we are focused on improving our calculation methodologies to lead the industry and improve the actionability of our data and opportunities.\n### Circular design principles for cloud hardware\nMicrosoft and WSP developed the paper, Life Cycle Assessment (LCA) Guidelines for Cloud Providers, and provided the guidelines to the Open Compute Project (OCP).\nRead the paper\n### What’s next\n### Scope 3 emissions reduction\nImproving measurement: We cannot manage what we cannot measure. We are developing improved Scope 3 data visibility and carbon accounting methodologies to better guide and reflect meaningful actions towards reducing carbon emissions.\nMany of the technology solutions needed to reduce Scope 3 emissions are either nascent or currently unavailable at scale. GHG accounting standards provide limited guidance on how to address Scope 3 emissions. For too long, the lack of a clear starting point has led to persistent inaction on Scope 3. The private sector needs a new approach; one that prioritizes learning by doing and innovation through experience. We are enacting a five-part Scope 3 strategy:\nAdvocating for policy: We will propose and endorse public policies that enrich markets, partnerships, and measurement activities, with a focus on “greening the grid,” by further opening the power sector to corporate clean energy purchases and upgrading electric transmission.\nIncreasing efficiency: We will design our products and infrastructure in ways that reduce energy and carbon intensity, minimizing both downstream and upstream carbon emissions.\nScope 3 is perhaps the ultimate decarbonization challenge, necessitating the co-evolution of commercial, technology, and policy best practices among thousands of global stakeholders. Our carbon negative commitment is an invitation to the world to participate in this journey, translating ingenuity into action, and action into impact.\nBuilding markets: Scaling sustainability initiatives, such as the Microsoft Climate Innovation Fund and carbon fee, position us to invest in and purchase from nascent technology providers, like Heirloom, to build supply chains for decarbonized materials and fuels.\nForging partnerships: Microsoft cannot achieve carbon negative alone. We will scale supply chain decarbonization by aligning financial and government leadership, to signal global market demand and infuse investment into infrastructure and technology solutions worldwide.", "chunk_word_count": 453, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > $\\textcircled{5}$ Lower embodied carbon in materials needs to be a focus", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 24, "page_start": 24, "page_end": 26 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 24, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2023 carbon removal key projects\n### Getting to water positive\nOur internal water fee, modeled after our carbon fee, plays a critical role in enabling our progress against our water commitment. The fee was established in FY20 and is used to fund replenishment and access projects around the globe. It is charged to business groups based on annual water consumption projections at a rate that was determined with historical data and guidance from experts on the cost of replenishment projects. The objectives of the fee are to incentivize businesses across Microsoft to take steps to reduce water use and to raise internal awareness of our water positive commitment.\n### Water\n### Our approach\nIn 2020, we made a commitment to be water positive by 2030 and co-founded the Water Resilience Coalition (WRC), an industry-driven, CEO-led coalition of the UN Global Compact CEO Water Mandate to reduce water stress by 2050. For Microsoft, being net water positive means we will reduce water consumption across our global operations, replenish more water than we use, provide people across the globe with access to water and sanitation services, drive innovation, and engage in water policy.\nWe are strengthening how we manage water within Microsoft, while working to improve the way the world evaluates and manages water today and for future generations.\n### Our commitment\n### Our progress\n### Replenishing more water than we use\n### 15.6 million $\\mathsf { m } ^ { 3 }$ of water replenishment\nBy 2030, we will replenish more water than we consume across our global operations in water-stressed regions where we work.\nIn FY22, we contracted for replenishment projects that are estimated to provide more than 15.6 million $\\mathsf { m } ^ { 3 }$ in volumetric water benefit over the lifetime of these projects. Since the inception of this program, we have contracted for projects that are estimated to provide more than 35 million $\\mathsf { m } ^ { 3 }$ in volumetric water benefit over the lifetime of these projects.\n### Water access for 1 million people\n### Increasing access to water\nWe will provide 1.5 million people with access to clean water and sanitation services by 2030.\nBy the end of FY22, we provided more than 550,000 people with access to clean water and sanitation solutions in Brazil, India, Indonesia, and Mexico and reached just under one million people by the end of the calendar year 2022.\n### Water Table 1\n### Water Table 2", "chunk_word_count": 418, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > Getting to water positive", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 25, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2023 carbon removal key projects\n### Measuring our annual water consumption to help inform our replenishment targets\nReplenishing more water than we consume on our journey to water positive by 2030\nIn FY22, we contracted for replenishment projects that are estimated to provide more than 15.6 million $\\mathsf { m } ^ { 3 }$ in volumetric water benefit over the lifetime of these projects.\nIn FY22, we consumed nearly 6.4 million $\\mathsf { m } ^ { 3 }$ of water from our operations. The increase in consumption was proportional to our business growth year-over-year. This data informs the amount of water we need to replenish to ensure we are making progress against our water positive commitment.\n[IMAGE CAPTION] Total water consumption\n[IMAGE CAPTION] Total contracted water replenishment\n### Learn more in the Environmental Data Fact Sheet\na. Reported replenishment values were updated to represent contracted impact over the lifetime of a project. This update in reporting was driven by our effort to improve our measurement methodologies.\n### Water Table 3\nelivering on our water positive commitment by enabling access to water and sanitation services, and through water replenishment projects\nIn FY22, Microsoft provided 552,058 people with water access across Brazil, India, Indonesia, and Mexico. From the program’s inception through December 2022, we have provided nearly one million people with water access across these regions.\nnce year one, we have contracted 27 replenishment programs in water-stressed basins, which are contracted to deliver more than 35 million $\\mathsf { m } ^ { 3 }$ of replenishment over their lifetime.\n### Reducing our water footprint\n### Designing for efficiency", "chunk_word_count": 275, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > Measuring our annual water consumption to help inform our replenishment targets", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 28, "page_start": 28, "page_end": 29 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 26, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2023 carbon removal key projects\n### Increasing efficiency in existing systems\nAs our datacenter business continues to grow, Microsoft is committed to reducing the intensity with which we withdraw from our resources, both water and energy.\nWater usage effectiveness (WUE) is a key metric relating to the efficient and sustainable operations of our datacenters and is a crucial aspect as we work towards our commitment to be water positive by 2030. WUE is calculated by dividing the liters of water used for humidification and cooling of the datacenter by the total annual amount of power (measured in kWh) needed to operate our datacenter IT equipment. There are variables that can affect WUE, many of which relate to the location of the datacenter. Datacenters in some parts of the world, like Sweden and Finland, operate in naturally cooler environments and require no freshwater for cooling, whereas warmer climates like Phoenix will require water for portions of the year. Our datacenter designs minimize water use through all climates. As our datacenter business continues to grow, Microsoft is committed to reducing the intensity with which we withdraw from our resources, both water and energy, focusing on being as efficient as possible while balancing the needs for power and water in the regions where we develop. All future built datacenters will be LEED Gold certified with an emphasis on water and energy conservation.\nMicrosoft employs a comprehensive lifecycle assessment methodology in our datacenters that goes beyond typical carbon-centric measurements and considers the GHG emissions, energy, water, and other environmental impacts of technology, from servers to full datacenters. Our approach accounts for the entire cycle of production, transport, use, and end of life in order to calculate the environmental burdens of these systems and identify opportunities for reductions. It is empowering our own teams to consider the full environmental impact of their designs—both today and in the future. In 2022 we formally shared our standard operating procedure (SOP) recommendations so that others in the datacenter industry can improve their own lifecycle assessment.\nWe take a holistic approach to water reduction across our campuses and datacenters from design to efficiency in existing systems, recycling and repurposing, and innovating new technologies. We measure and report the global water use of our campuses and datacenters to drive efficiency and reuse.\n## 5 Pillars of water positive\nReducing our water footprint across our direct operations\nIncreasing access to water and sanitation services\nReplenishing more water than we consume across our operations\nScaling water solutions through innovation and digitization\nAdvocating for effective and innovative water policy\n### Reducing our water footprint (continued)\n### Recycling and repurposing\n### Procuring reclaimed water from utilities", "chunk_word_count": 448, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > Increasing efficiency in existing systems", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 30, "page_start": 30, "page_end": 30 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 27, "chunk_text": "# 2022 Environmental Sustainability Report\n## 5 Pillars of water positive\n### Improving the quality of stormwater runoff\n13.9\nWhile availability of reclaimed water is limited, we procure reclaimed water from utilities where it is available to reduce our dependence on freshwater supply. We are procuring reclaimed water at our datacenters in Washington, Texas, California, and Singapore. We also continue to move forward on plans to access municipal recycled water for landscaping and plumbing at LinkedIn’s Mountain View headquarters. We are currently testing municipal recycled water quality to confirm on-site treatment requirements. This project is anticipated to save approximately $3 0 , 5 0 0 \\mathrm { m } ^ { 3 }$ of potable water annually when implemented, which we expect to be completed in 2023.\nOur Redmond Campus Modernization project is focused on improving the quality and quantity of stormwater runoff. We implemented an underground parking garage, removing approximately 13.9 acres of previous surface parking and roadways, and avoided copper and zinc coated metal panels in our campus to eliminate any toxicity to downstream aquatic life. The campus is also Salmon-Safe Certified, reducing the impacts it has on water quality and fish habitat.\nWherever possible, we look at recycling and repurposing water at our datacenters and campuses, including harvesting rainwater, procuring reclaimed water, and reusing water within our facilities.\nWe removed \n13.9 acres of surface parking and roadways at our Redmond \nCampus. Campus.\n### Recycling and reusing water\nWe measure and monitor reused water at datacenters and campuses across the globe and use meters to collect real-time data on usage, including recycling, for owned datacenters. We design our cooling systems to reduce consumption to address stressed areas, geographic locations, and poor water quality. For recycling, in our Arizona and Mexico datacenters we are treating the incoming water to maximize cycles and minimizing water discharge to drain. Our Johannesburg office greywater treatment plant is separately metered to track water reused monthly. At our Silicon Valley campus, which is pursuing net-zero water certification and is on track to be one of first tech campuses to secure this certification, we operate a water treatment plant to process on-site grey and black water for reuse and have established a water budget to quantify the amount of water captured, recycled, and reused on-site.\n### Harvesting rainwater\nWe incorporate rainwater harvesting and reuse at our campuses and datacenters around the globe. We are harvesting rainwater in our Netherlands, Ireland, and Sweden datacenters and have rainwater harvesting in the designs for new datacenters in England, Finland, Italy, South Africa, and Austria. At our Silicon Valley and Beijing campuses, harvested rainwater is used for toilet flushing, landscaping irrigation, road washing, and more. We also have plans for rainwater harvesting at our Redmond, England, Ireland, and Namibia campuses.\nWe incorporate rainwater harvesting and reuse at our campuses and datacenters around the globe.\n### Reducing our water footprint (continued)\n### Keeping datacenters cool with less water\n### Investing in air-to-water generation", "chunk_word_count": 493, "section_path": "2022 Environmental Sustainability Report > 5 Pillars of water positive > Improving the quality of stormwater runoff", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 28, "chunk_text": "# 2022 Environmental Sustainability Report\n## 5 Pillars of water positive\n### Innovating new water technologies\n37,850m3 37,850m3\nWe continue to integrate our standards in water reduction technologies where we use direct outside air most of the year to cool servers. We otherwise cool through direct evaporation that requires a fraction of the water compared to other, conventional waterbased cooling systems such as water-cooled chillers. By powering our datacenter with power from the Sun Streams 2 Solar Project owned by local partner, Longroad Energy, we are displacing the water needed in the traditional electricity generation process.\nAs climate change exacerbates water risks, air-towater generation is an important innovation that we are investing in, both within our own four walls and through our recent investment in SOURCE, a renewable water technology that is powered by solar. We are also investing in air-to-water generation across our operations. Four new air-to-water generators were installed at our Hyderabad campus in 2020 and 2021, each has an installed capacity of 500 liters. We installed an adiabatic cooling system at our Bengaluru campus, which has reduced our energy consumption, in line with our efforts to make our HVAC systems more efficient.\nInnovation is a critical component of our water reduction approach at campuses and datacenters. We are investing in water reduction technologies including thermal energy, cooling technologies, and air-to-water generation.\nThe Redmond Campus Thermal Energy Center is predicted to save over 37,850 m3 of water per year. year.\n### Saving water through thermal energy\nOur Thermal Energy Center in Redmond is predicted to save over $3 7 . 8 5 0 ~ \\mathrm { m } ^ { 3 }$ of water per year through several unconventional approaches to heat rejection. The geoexchange field transfers heat into the ground, which is approximately 50 degrees Fahrenheit. The system’s wells and tanks will store water as heat energy for future use, instead of expelling it through the cooling towers, which is expected to reduce water use by $3 0 , 2 8 0 \\mathrm { m } ^ { 3 }$ a year or roughly the volume of 12 Olympic pools.\n### Pioneering liquid immersion cooling\nIn 2021, Microsoft was the first cloud provider to run two-phased liquid immersion cooling in a production environment. At the component level, we’re testing new biodegradable materials to empower greater circularity of our servers and exploring microfluidics to cool chips more efficiently. As Microsoft and the industry continues to advance immersion cooling technology, we’re also looking at ways to optimize the performance of chips beyond their pre-defined voltage, thermal, and power design limits, a concept called overclocking.\nAs Microsoft and the industry continues to advance immersion cooling technology, we’re also looking at ways to optimize the performance of chips beyond their pre-defined voltage, thermal, and power design limits, a concept called overclocking.\nAdvancing liquid immersion cooling technology helps to reduce water consumption in our operations.", "chunk_word_count": 483, "section_path": "2022 Environmental Sustainability Report > 5 Pillars of water positive > Innovating new water technologies", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 32, "page_start": 32, "page_end": 32 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 29, "chunk_text": "# 2022 Environmental Sustainability Report\n## 5 Pillars of water positive\n### Replenishing water\nIn FY22, we invested in six new projects, which are expected to replenish more than 15 million $\\mathsf { m } ^ { 3 }$ of water in the next decade. To date, we have contracted for 27 replenishment projects, totaling more than 35 million $\\mathsf { m } ^ { 3 }$ of potential volumetric water benefit and have invested $\\$ 7$ million in the program overall.\n### Restoring Sembakkam Lake and wetlands in Chennai, India\n### Improving precision agriculture in Santiago, Chile\nWe supported The Nature Conservancy (TNC) in improving water quality, storage capacity and groundwater recharge of Lake Sembakkam. The project is establishing a nature-based wastewater treatment system at the lake using a constructed wetland system that is estimated to treat $6 , 0 0 0 { - } 7 , 0 0 0 \\mathrm { m } ^ { 3 }$ of wastewater entering the lake per day and benefit approximately 10,000 people. These solutions will improve groundwater recharge, biodiversity habitat, and flood control. They will also create a waterfront to serve as a recreational site for community members.\nIn 2022, we contracted a project to improve agricultural water efficiency and overall water supply reliability in the Maipo Basin in Chile, the key watershed that Santiago depends upon. The project is expected to begin realizing benefits in 2023. Microsoft is partnering with Kilimo and using its IT platform to catalyze change by educating and supporting farmers in optimizing water use. The project aims to increase agricultural efficiency and productivity, reduce water demand, and protect ground and surface water resources. The project will support expanded applications of Internet of Things (IoT)-based satellite moisture and irrigation management systems on 360 hectares of private irrigated family farms to decrease water pumping and diversion.\nMicrosoft is committed to replenishing more water than we consume across our operations. We focus on investing in replenishment projects that protect watersheds, restore wetlands, and improve infrastructure in waterstressed regions where we operate. We use the Volumetric Water Benefit Accounting (VWBA) guidance to quantify the estimated volumetric water benefits that can be claimed from a range of different replenishment project types. We seek to align the project type with the unique needs of each location; for example, in a location with high water quality challenges, we will focus on projects that help to improve water quality in the basin.\nWe are building the infrastructure to ensure that we can scale to 40 priority water-stressed locations across the globe and are looking at a blend of traditional and more innovative replenishment projects. We are also partnering with companies and other key stakeholders to further define how organizations should account for benefits and the types of projects that should be prioritized in key locations.\nIn FY22, we invested in a range of different types of projects from agricultural water efficiency to groundwater restoration to watershed restoration, including the following:", "chunk_word_count": 496, "section_path": "2022 Environmental Sustainability Report > 5 Pillars of water positive > Replenishing water", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 33, "page_start": 33, "page_end": 33 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 30, "chunk_text": "# 2022 Environmental Sustainability Report\n## 5 Pillars of water positive\n### Supporting water infiltration and groundwater recharge in San Antonio\nIn 2021, we partnered with the Edwards Aquifer Authority to acquire a conservation easement and keep lands from being developed in San Antonio, Texas. The easement focuses on lands that are most likely threatened by rapid development or negativemanagement practices and ensure these lands are not developed to allow for water infiltration and groundwater recharge. Targeted acquisition of conservation easements and implementation of land management practices are projected to protect, on average, 0.6 acre-feet of recharge-per protected acre—with the potential to increase average recharge rates over time through the establishment of landmanagement practices.\nWe have contracted for 27 replenishment projects, totaling more than 35 million $\\mathsf { m } ^ { 3 }$ of potential volumetric water benefit and have invested $\\$ 7$ million in the program overall.\n### Improving access to water\nIn FY22, Microsoft’s contribution has provided more than 550,000 people with access to clean water and sanitation services in Brazil, India, Indonesia, and Mexico. This project reached just under one million people by December 2022.\nWe continue to make progress towards our commitment to provide 1.5 million people with access to safe drinking water and sanitation solutions by 2030. One in four people across the globe do not have access to clean water and this is expected to increase as water challenges are exacerbated by climate change. In 2020, we committed to providing Water.org with $\\$ 3$ million over three years to provide micro-loans to cover a range of solutions, such as installation of household taps and toilets, rainwater harvesting, storage and well restoration for communities and schools.\nWe are also helping to develop resources to support organizations in understanding the different types of accessibility projects they can invest in, as well how to quantify the benefits and impacts from these investments across different types of water, sanitation, and health (WASH) solutions.\n### Increasing water access in Mexico\nMexico is facing extreme water challenges as a result of increasing demands on water resources. In peri-urban towns outside of Mexico City, the local government subsidizes water for their residents. This is a common approach to help improve household access to water; however, it is not holistic. Patty, a healthcare worker, was unable to get the amount of water her family needed through the program. She used to wait hours each month to receive her household ration of water, taking time away from work and earning income. To supplement the water she did receive, Patty bought bottled water and saved rainwater in a makeshift bucket to use for cooking, laundry, and bathing. Contigo, a local partner of Water.org, allowed Patty to affordably finance a rain storage solution with a large tank, gutters, and a cistern to cover her household water needs. This represents one of the roughly 150,000 micro-loans that Microsoft’s funding has supported across the globe.\nWe are helping to develop resources that support organizations in understanding the different types of accessibility projects they can invest in across different types of water, sanitation, and health (WASH) solutions.\n### Key trends\n### Resources\n### Water Action Hub 4.0\n### Water requires a collective approach", "chunk_word_count": 536, "section_path": "2022 Environmental Sustainability Report > 5 Pillars of water positive > Supporting water infiltration and groundwater recharge in San Antonio", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 31, "chunk_text": "# 2022 Environmental Sustainability Report\n## 5 Pillars of water positive\n### Innovation is a critical piece of the puzzle\nIdentify organizations to partner with in specific basins and use a wide range of tools and case studies. A new tool allows companies to evaluate their water management maturity and compare progress against peers.\nWorking collectively to solve challenges at the basin scale is critical. Water is a resource that every person and business on this planet needs to survive. We can use as little water in a location as possible and replenish more than we use, yet that basin can still be highly stressed and not provide local communities with what they need.\nWater challenges will become more extreme in the years to come. If we continue with the status quo, we will not protect freshwater resources for future generations. Organizations need to innovate within their own operations, supply chain, and the communities in which they operate by investing in solutions that maximize efficiency and reduce dependence on freshwater resources. There is also an important role for organizations and investors to play in providing the capital to scale water technologies needed to tackle water scarcity, quality, and access.\nUse the tool\n### Volumetric Water Benefit Accounting (VWBA)\nThis guidance document provides corporate water stewardship practitioners with a standardized approach and set of indicators to quantify and communicate the volumetric water benefits and complementary indicators of water stewardship activities.\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\nRead the guidance\n### Water Risk Monetizer\nReplenishment is a nascent market with limited guidance on what it means, how to account for benefits, how to make credible claims, and how to ensure replenishment investments are having a significant impact in high-stressed basins. Furthermore, the supply of replenishment projects in many global markets is limited or non-existent. Cultivation of credible partners to manage and implement replenishment projects, as well as investment in innovative replenishment projects with non-governmental organizations (NGOs) and private sector entities, are critical to scale the market and collective impact.\nThe free tool, built by Microsoft and Ecolab, allows you to assess the true value of water and risk exposure you face.\nUse the tool\n### WRI Aqueduct Tool and WWF’s Water Risk Filter\nUnderstand the local water stress and scarcity concerns where you operate.\nUse the WRI tool\nUse the WWF tool\n[IMAGE CAPTION] increase access, and reduce our water footprint.\n### What’s next\n### Investing in innovative replenishment projects", "chunk_word_count": 418, "section_path": "2022 Environmental Sustainability Report > 5 Pillars of water positive > Innovation is a critical piece of the puzzle", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 32, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Scaling our efforts to reduce water use across operations\nWe anticipate increasing the number of innovative replenishment projects that we invest in between now and 2030. We will look at projects with innovative funding mechanisms, such as revolving or low-interest loans. We also plan to look at projects where we procure volumetric water benefit from private sector entities, including start-ups, that offer a unique solution to the water challenges we face today, for example leak detection projects in distribution networks and transmission mains. As we invest in these projects and track learnings, we remain committed to sharing those with others.\nInvestment in reduction is a critical component of our water positive commitment and one we are focusing on as we get closer to 2030. While we continue to maximize our efficiency for our datacenters and campuses, we will also continue to look for opportunities to invest in innovations that will help us to further reduce our dependence on freshwater sources.\n### Investing in projects that will increase access to water and sanitation solutions\nWe are looking for ways to scale our investments in new and existing locations where people lack access to water and sanitation services. Micro-loans are a unique solution and fill a need in many locations across the globe. There are also many people across the globe who can’t afford a loan and thus are not supported through the types of investments we have made thus far. As we move towards 2030 and beyond, we will be looking for ways to support populations that are not being reached.\n### Integrating environmental justice into replenishment\nEnvironmental justice is embedded in our water access target, and we are looking for ways to be more intentional about integrating environmental justice into our replenishment investments as well. This includes looking at ways we can ensure our replenishment investments support disadvantaged communities, as well as the potential unintended consequences of projects that could cause harm to disadvantaged communities in the locations where we operate.\n### Getting to zero waste\nTo reach our commitment to become a zero waste company by 2030, Microsoft is taking an increasingly circular approach to materials management to reduce waste and carbon emissions. Our strategy goes beyond waste diversion as we work across our value chain, beginning with design and material selection. Wherever possible, we reduce the amount of materials needed. We responsibly source materials for our operations, products, and packaging. We are increasing the use of recycled and recyclable content, reducing hazardous substances, and designing out waste. We aim to keep products and materials in use longer through reuse and repair. We reduce waste generation at end of life with recycling and composting programs.\n### Waste", "chunk_word_count": 470, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Scaling our efforts to reduce water use across operations", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 33, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Our approach\nEvery year, people consume 100 billion tons of materials, and in 2020 only 8.6 percent of those materials were cycled back into the economy after use, according to the 2022 Circularity Gap Report. Linear take-make-waste systems and existing infrastructure are not adequate to maintain, collect, and redistribute materials effectively for a global circular economy.\nWe are taking an increasingly circular approach to materials management to reduce waste and carbon emissions.\nWe recognize the urgent need to reduce carbon emissions associated with the lifecycle of these materials. As a company that manufactures devices, builds campuses and datacenters, and uses manufactured goods in our operations, we have committed to responsibly design and source materials and build a more circular approach into our work and the world.\n### Zero waste by 2030 across our direct waste footprint\n### Our commitment\n### Our progress\n### Driving to zero waste operations\n### 12,159 metric tons of operational waste\nIn FY22, we diverted 12,159 metric tons of solid waste from landfills and incinerators across our owned datacenters and campuses. In FY22, we renewed Zero Waste certifications for our San Antonio, Texas; Quincy, Washington; Boydton, Virginia; and Dublin, Ireland datacenter locations. Our Redmond campus has been Zero Waste certified for six consecutive years.\nWe will achieve 90 percent diversion of operational waste at datacenters and campuses, and 75 percent diversion for all construction and deconstruction projects by 2030.\n### Increasing reuse and recycling of servers and components\n### $82 \\%$ reuse and recycling\nOur reuse and recycle rates of servers and components across all cloud hardware reached 82 percent in FY22. We opened four new Circular Centers in FY22 in Boydton, Virginia; Chicago, Illinois; Dublin, Ireland; and Singapore. We are launching our next Circular Centers in Quincy, Washington in FY23 and in Texas in FY25.\nBy 2025, 90 percent of servers and components for all cloud hardware will be reused and recycled with support from our Circular Centers.5\n### Eliminating single-use plastic\n### More than $29 \\%$ plastic reduction\nBy 2025, we will eliminate single-use plastics in all Microsoft primary product packaging and all IT asset packaging in our datacenters.\nWe reduced single-use plastics in our Microsoft product packaging by more than 29 percent, a decrease from 4.7 percent to 3.3 percent by weight (on average) of plastic per package in FY22.\n### Making fully recyclable products and packaging\n### Devices\nDevice recyclability We are in the process of switching to a new methodology to assess product and packaging recyclability, consistent with the EN 45555 standard, to increase the accuracy of our recyclability reporting.\n### Recycled materials in devices", "chunk_word_count": 456, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Our approach", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 37, "page_start": 37, "page_end": 38 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 34, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Repairability\nWe will design Surface devices, Xbox products and accessories, and all Microsoft product packaging to be 100 percent recyclable in OECD countries by 2030.\nWithout compromising on our design and quality, we constantly evaluate any opportunities for recycled materials. For example, many of our PC accessories contain recycled materials, including the new Microsoft Adaptive Accessories and Audio Dock, both made with at least 30 percent post-consumer recycled plastic resin.\nThe new Surface Laptop 5, Surface Pro 9, and Surface Laptop Go 2 are the most repairable devices in their product lines with more replaceable components and repair options than ever before.\n### Other achievements\n### Improving data on construction and demolition waste\nZero waste campuses\nIn FY22, we piloted a durables-first campaign in Dublin and Puget Sound, focusing on replacing items such as single-use cups and takeaway containers with reusable solutions.\nWe are partnering with our vendors to improve data collection processes and tools to gather high-quality construction and deconstruction waste data. We’ll use this data to inform innovative construction processes to reduce waste throughout our entire lifecycle and supply chain.\n### Waste Table 1\n### Waste Table 2\n### Working towards our target to divert 90 percent of operational solid waste from landfills and incinerators across our owned datacenters and campuses\n### Ensuring 90 percent of servers and components for all cloud hardware will be reused and recycled by 2025\nIn FY22, Microsoft’s diversion rate increased to 84.9 percent and we diverted more than 12,100 metric tons of waste from being landfilled or incinerated.\nIn FY22, Microsoft increased reuse and recycling of servers and components to 82 percent. Additionally, to align with upcoming definitions in circular economy regulations and more accurately describe the steps we are taking operationally to meet our commitment, in 2022 we adjusted our terminology to “reuse and recycling”. The operational scope, strategy, and metric has not changed. Expansion of our Circular Centers program and investments in systems and policy changes will further enable us to achieve our 90 percent reuse and recycling target of servers and components by 2025.\n[IMAGE CAPTION] A Reused B Recycled\nLearn more in the Environmental Data Fact Sheet\na. Starting in FY22 we transitioned to a methodology with improved accuracy in mass accounting and standardized recycling efficiency coefficients.\nDesigning our product packaging for circularity\nIn FY22, we achieved a rate of over 94 percent recyclability and decreased single-use plastics to just over three percent across all Microsoft product packaging.\n[IMAGE CAPTION] Waste Table 3\n### Reducing our waste footprint\n### Developing technology to drive a circular cloud", "chunk_word_count": 450, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Repairability", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 38, "page_start": 38, "page_end": 41 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 35, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Reducing waste in our cloud hardware\nOur Circular Center approach starts with sustainable design and responsible sourcing of an asset. Microsoft designs a growing portion of its own hardware portfolio, and we make sustainability considerations a key part of the entire Microsoft Azure hardware design process—including energy efficiency, repairability, upgradability, and durability.\nA critical piece of achieving our zero waste goal is managing cloud hardware at our growing fleet of datacenters. We have taken an innovative approach towards designing and implementing circularity into our datacenters by launching Circular Centers to optimize reuse.\n### Defining design requirements for cloud hardware\nTo meet our commitment to being zero waste by 2030, we are reducing, reusing, and recovering waste in our campuses and datacenters. We are focused on keeping our products and packaging in use longer.\nIn 2022, Microsoft published ecodesign requirements for cloud hardware. This specification outlines the sustainability guidelines, including energy and material efficiency requirements, that suppliers must follow when designing hardware for the Microsoft Cloud, such as the use of post-consumer recycled (PCR) plastics and use of recycled content requirements in some packaging. In the same timeframe, we began collecting material content and sustainability data for transport packaging materials. Using our current hardware data collection process, we can now digest data such as weights, material type, and recycled content that can be used for regulatory purposes and to enable our suppliers to deliver energy and material efficient hardware contributing to carbon and waste reduction.\nReusing and recycling cloud hardware In FY21, we piloted our new approach to asset reuse by building a Circular Center within our Amsterdam datacenter campus, which represented seven percent of our server capacity globally. We process decommissioned cloud hardware to service strategic routes, secondary markets, and suppliers using intelligent routing software. Our Amsterdam Circular Center model achieved reuse and recycle of 82 percent of all decommissioned assets in FY22. Our Circular Centers also achieved a four percent reduction in carbon per server. Based on the success of the Amsterdam location, we opened four new Circular Centers in FY22 in Boydton, Virginia; Chicago, Illinois; Dublin, Ireland; and Singapore. We are launching our next Circular Centers in Quincy, Washington in FY23 and in Texas in FY25. This model enables suppliers to reuse assets and components, resulting in significant carbon emissions reduction and material recovery.\nTo enact these principles at scale, we developed a patent-pending Intelligent Disposition and Routing System (IDARS) that establishes and executes a zero waste plan for our cloud hardware assets. IDARS is an end-to-end system that identifies the most sustainable disposition path for every part at any point in its lifecycle across the supply chain. Paired with Microsoft Dynamics 365 Supply Chain Management and Microsoft Power Platform, IDARS utilizes the bill of materials of assets, inventory, and demand to optimize the sustainable path, and provides Circular Center technicians with precise instructions on how to steward the asset onto its next phase. This technology, along with our close collaboration with both upstream and downstream partners, offers a model for the technology industry.", "chunk_word_count": 528, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Reducing waste in our cloud hardware", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 36, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Designing and building circular devices\n### Designing for and enabling repair\n29.8%\n### Reducing plastic packaging waste\nRepairability can offer significant carbon emissions and waste reduction benefits. Microsoft continues to invest in this important space and the findings will aid in our product design and plans for expanding device repair options for our customers that are safe, effective, and sustainable. Our latest Surface products feature a host of replaceable components.\nMicrosoft is committed to making fully recyclable packaging for our products by 2030. We are focused on eliminating single-use plastics in our device packaging and for cloud hardware in our datacenters.\nOver the past year, we have continued our work to reduce the environmental impacts of Microsoft devices by increasing circularity and reducing carbon intensity across the entire product lifecycle.\nIn FY22, we reduced single-use plastics in our Microsoft device packaging by 29.8 percent.\n### Reducing single-use plastics in device packaging\n### Designing for lower-carbon and circular devices use\nRepairability goes beyond design. This year, we piloted the sale of spare parts on Microsoft.com and began expanding our network of local Authorized Service Providers who are qualified to repair Microsoft devices. Microsoft has spent the past several years investing in local repair hubs in major geographies that are equipped to repair a customer's Microsoft device instead of replacing it.\nIn FY22, we reduced single-use plastics in our Microsoft device packaging by 29.8 percent, a reduction from 4.7 percent to 3.3 percent by weight (on average) of plastic per package. We made significant progress on our journey to eliminate single-use plastic packaging, introducing several 100 percent plastic-free packages during the year including the Surface Adaptive Kit and Microsoft Ocean Plastic mouse. This packaging is made from 100 percent renewable materials and fully recyclable. In FY22, our product packaging was on average 94.4 percent recyclable in OECD countries. Our most recent wave of Surface Laptop 5 and Pro 9 retail packages use less than one percent plastic (by weight) and are over 99 percent recyclable. All virgin paper/fiber used for these packages is certified as responsibly sourced.\nOur accessory devices have shorter development cycles, making them a great vehicle to test new circular materials. We test new materials in individual products and, if successful, expand their use across a broader product portfolio. Circular design must also account for a future in which products can easily be returned, repaired, refurbished, and resold. Microsoft devices are also built to last, which helps increase circularity by keeping materials in use longer. The Microsoft Authorized Refurbisher Program gives new life to used and returned devices—repurposing over three million devices in FY22.", "chunk_word_count": 457, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Designing and building circular devices", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 37, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Designing for recyclability\nAs we make progress towards our goal of 100 percent recyclability of Surface devices and Xbox consoles and accessories, we are engaged with the electronics recycling industry to learn about and improve how our products are recycled at end of life. Our research showed a gap between the processes used at electronics recycling centers and the tools available for us to calculate the recyclability of our products. To address this, we are in the process of switching to a new recyclability methodology, consistent with the EN 45555 standard, to increase the accuracy of our recyclability reporting.\n### Innovating with suppliers on materials\nWe are partnering with suppliers on more sustainable material innovations. In our hardware supply chain, we are working on using 100 percent recycled tin solder paste and 100 percent recycled gold in our printed circuit boards. We are phasing out single-use plastics in battery packs by reusing packs multiple times. We are also reducing waste in our software supply chain by eliminating physical cards and enabling digital downloads for games, apps, and gift cards.\nWe have spent the past several years investing in local repair hubs in major geographies that are equipped to repair Microsoft devices.\nDesigning for repairability reduces waste by keeping hardware in use longer.\n### Reducing operational waste\nAchieving zero waste datacenters Microsoft has a goal to achieve 90 percent reuse or recycle of our cloud computing hardware assets by 2025. In FY22, we renewed Zero Waste certifications for our San Antonio, Quincy, Boydton, and Dublin, datacenter locations.\n### Reducing construction and deconstruction waste\nAs we pursue our zero waste and circularity goals, we also look for opportunities to provide community co-benefits where we operate.\nGetting to zero waste at our campuses and datacenters requires more ambitious efforts to reduce as much waste as we can, reuse products to extend use life, and recycle or compost wherever possible. We're thinking through everything from durable serviceware to air filters with circularity in mind.\nMicrosoft is approaching the design, construction, and deconstruction of the buildings in our datacenter and campus portfolio with circularity in mind and identifying ways to prevent waste from the offset.\nIn FY22, we invested in enhancing the program's business intelligence using a suite of waste data tools, including Microsoft Power Apps and Power BI, to track the waste performance of our datacenters.\n### Innovating the construction process", "chunk_word_count": 419, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Designing for recyclability", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 42, "page_start": 42, "page_end": 43 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 38, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Transforming to zero waste campuses\nWe are innovating our construction processes to reduce waste throughout our entire lifecycle and supply chain. In FY22, we developed a playbook that standardized our internal processes for diverting construction waste. We implemented a construction and deconstruction waste app to collect data from our general contractors globally to increase transparency and traceability. We also implemented a new database that stores, displays, and analyzes real-time global waste diversion data. Moving forward, priority strategies including construction circularity, upstream design considerations, a steel scrap take-back program, repurposing of excess concrete, and mitigation of hard-to-recycle materials, are all becoming standard elements of our datacenter construction projects.\nOur Puget Sound campus has been Zero Waste certified since 2016. LinkedIn has been collecting annual waste data from most of its high impact sites and plans to continue expanding the collection to other sites in the next two to three years. The goals are to reduce preand post-consumer food waste, avoid waste collection contamination, reduce packaging in kitchen deliveries, transition all parts of the program to 100 percent reusable dishware, and eliminate single-use packaging in micro kitchens.\n### Going beyond our operations\nAs we pursue our zero waste and circularity goals, we also look for opportunities to provide community co-benefits where we operate. Atlanta's Zero Waste Westside initiative, sponsored with Microsoft grant funding, shows the power of justicecentered community-led sustainability enterprises. The collaboration brings food waste collection and recovery, composting services, and education to the Westside Atlanta community. The concept was also informed by the Environmental Justice Measurement and Evaluation Framework, co-created by Microsoft and the Just Transition PowerForce. The enterprise is run by three local organizations led by Black women with longstanding commitments to social and environmental justice. With Microsoft's support, the collective secured farm equipment to improve composting processes and more than double output at their community compost lab. It is poised to scale service offerings to businesses.\n### Improving our diversion rates\nWe have a goal of 75 percent construction and deconstruction waste diversion for all projects, including tenant improvement, and 90 percent diversion for core and shell projects over 75,000 square feet.\n### Zero waste\nSan Antonio, Quincy, Boydton, and Dublin datacenter locations all renewed their zero waste certifications in FY22.\n### Key trends\n### Resources\n### Microsoft Circular Centers\n### •1 Circularity can reduce embodied carbon", "chunk_word_count": 411, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Transforming to zero waste campuses", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 43, "page_start": 43, "page_end": 43 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 39, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Data methodologies must be standardized\nLearn how Microsoft Circular Centers are designing and implementing circularity into our cloud.\nAs industries like design and construction align around embodied carbon measurement tools, significant opportunities open up to reach not just circularity and waste reduction goals but also carbon reduction goals. Implementing responsible materials management and circular practices with technologies allows for optimized reuse and recycling of materials.\nWatch the video\nTo effectively use information from across the value chain, industry standards must be introduced to ensure consistency of measurement and interpretation of data. Circularity will be accelerated through global benchmarking, coordinated efforts to track progress, and cross-industry accountability.\nSustainability benefits of Microsoft device repair\nRead the paper\nRepair your Microsoft Surface\nLearn how\n## 2 Innovation in data acquisition must be prioritized\n### A circular transition should be a just transition\nEnd-of-life programs for devices, batteries, and packaging\nLearn more\nFurther strides are needed to improve waste data. Currently, downstream systems are dependent on estimation of material volume and weight. Systemic investment is needed across the value chain to provide actual and real-time data, which includes data points from collection, processing, and material availability. Improvements in data accuracy will provide critical insight into an organization's footprint, informing immediate next steps and driving long-term innovation.\nEngagement with underrepresented and under-resourced communities is imperative to ensure a holistic approach to circularity. People are at the center of any economic transformation and ensuring accessibility and equity must be prioritized. Alongside any mitigation efforts for environmental impact, community engagement and investment are paramount to any circular economy.\n### Reducing packaging waste\nMicrosoft participated in the development of a cross-industry white paper on stretch wrap alternatives.\nRead the paper\n### Circular economy vision\nFind out more about the circular economy and the vision for an economic system that's better for the people and the environment.\nLearn more\n### Circularity Gap Report 2022\nUnderstand the systemic benefits of a transition toward a circular economy and learn more about the status of circularity globally.\nRead the report\n### Circular Electronics Roadmap\nThe Circular Electronics Partnership has developed a cross-industry strategy to accelerate the circular transition in a collaborative way.\nRead the report\n[IMAGE CAPTION] Designing for circularity accelerates our path to zero waste by 2030.\n### What’s next\n### Accelerating progress towards zero waste by 2030\n### Growing the scope and impact of our environmental justice initiatives\nMicrosoft will use roadmaps across the company to enable key activities that result in zero waste outcomes that center circularity. We will continue to scale our programs, including Circular Centers, design for circularity in buildings and hardware, and the elimination of single-use plastics from packaging for Microsoft products and across our cloud hardware supply chain.\nAs we learn from our existing partnerships, we are building out the framework to integrate environmental justice into our activities. We will continue to build on existing community partnerships, such as our partnership with Zero Waste Westside, and explore new ones in communities we operate in to create opportunities for economic inclusion and community well-being.\n### • Redesigning cloud rack packaging", "chunk_word_count": 536, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Data methodologies must be standardized", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 44, "page_start": 44, "page_end": 45 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 40, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Innovation in data acquisition must be prioritized\n### Expanding our circular strategy across Microsoft\nTo further our progress towards our zero waste objectives, our Cloud Logistics Team has undertaken a deeply collaborative process with stakeholders from across the enterprise to source and design world class reusable solutions for the safe and sustainable transportation of Microsoft's server racks. Today, the transportation of each server rack from integration to our datacenters results in over $1 0 0 \\mathsf { k g }$ of packaging waste. We're aiming to reduce this to zero with our new solutions, enabled by a circular supply chain and logistics network design.\nIn efforts to further accelerate progress towards our zero waste and Scope 3 carbon reduction commitments, we are working across the enterprise and with external partners to prioritize actions that align with our circular strategy. By taking a coordinated approach, we will use the expertise of our team to unlock key barriers and further drive innovation at scale.\n### • 3 Streamlining our collection systems\nWe are engaging with industry collaborators on piloting new electronic collection systems. These new systems will allow for better data such as weights, material type, and recycled content, ensuring regulatory compliance and supporting decision making around driving circular economy initiatives.\n### Protecting more land than we use\n### Our approach\nMicrosoft directly operates on approximately 11,000 acres of land around the world, and we recognize that our own land footprint has an impact on ecosystems. We have made a commitment to permanently protect more land than we use by 2025. We are also committed to being good stewards of the land we use – as well as going beyond our own operations and actively working to protect the environmental health of the communities that host our datacenter operations and where our employees live and work.\nWe have contracted to protect 17,268 acres of land, which is over 50 percent more than the land we use to operate.\n### Ecosystems Chart 1\n### Our commitment\n### Our progress\n### Achieving our target of protecting more land than we use by 2025\n### Taking responsibility for our land footprint\n### Protecting acres of land\nAs of FY22, Microsoft has contracted to protect 17,268 acres of land, which is over 50 percent more than the land we use to operate, and 12,270 acres were designated as permanently protected.\nIn FY22, we protected 12,270 acres of land in Belize. Another 4,998 acres in the United States are contracted for protection in future years. We now have funded more land to be protected than the 11,000 acres of land that we use.\nWe will take responsibility for the ecosystem impacts of our direct operations by protecting more land than we use by 2025.\n\n### Protecting the Belize Maya Forest\n### Investing in the NFWF Western Big Game Migration Program", "chunk_word_count": 480, "section_path": "2022 Environmental Sustainability Report > 2 Innovation in data acquisition must be prioritized > Expanding our circular strategy across Microsoft", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 45, "page_start": 45, "page_end": 47 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 41, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Innovation in data acquisition must be prioritized\n### Local engagement\nThe Trust is working with communities in the area to build a strong local alliance to maintain the integrity of these vital forests and safeguard their biodiversity. They are building trust among community stakeholders by identifying issues of mutual interest such as water quality and availability, and determining critical gaps and needs of communities like education and livelihoods to further invest in.\nLast year, we contributed to the TNC Belize Maya Forest Project (BMF) to protect an additional 236,000 acres in a global biodiversity hotspot. In December 2021, these acres were placed under declaration of trust by the Belizean government, putting nine percent of Belize's land under permanent protection.\nThrough the NFWF Western Big Game Migration Program, we invested in projects in the American West that are vital for preserving the migration corridors of endangered and at-risk species, including mountain lions, grizzly bears, and Canada lynx. We are continuing to monitor the progress of these projects in Montana, Colorado, New Mexico, and Nevada, which are on track to be protected through conservation easements by the end of 2023.\nSince our commitment in 2020, Microsoft has partnered with the National Fish and Wildlife Foundation (NFWF) within the United States and The Nature Conservancy (TNC) globally to permanently protect more land than we use by 2025. We used a data-informed approach to invest in projects that are working to protect more than 17,000 acres of ecosystems most at risk. We are tracking each of these projects through the process of placing the land under a legal designation of protection, as well as ongoing conservation and management.\nThe designation of land protection is just the first important step for the long-term conservation and management of BMF. The Belize Maya Forest Trust was established as a local nonprofit, trustee, and steward to create a globally recognized, locally relevant model of healthy, biodiverse forest protected for and by all Belizeans and to be a global benchmark for effective and lasting conservation. The following programs have been put in place:\n### Ranger program\nTo help legally enforce forest protection, there are currently 10 local rangers patrolling BMF. The Trust has also partnered with the British Army Training Support Unit Belize to resource more than 400 troops to assist with security and help train BMF rangers.\n### Conservation Action Plan\nWith the University of Belize's Environmental Research Institute, the Trust developed a Conservation Action Plan that provides a strategic framework for management over the next five years. The forest and aquatic ecosystems, wild cats, critically endangered Central American river turtle, and Sacred Pools of Cara Blanca have been identified as the main conservation targets. Anti-poaching and fire protection measures will be implemented to address threats in the region.\nWe used a data-informed approach to invest in projects that are working to protect more than 17,000 acres of ecosystems most at risk.\n### Regenerative agriculture\nBMF was acquired to halt the continued expansion of large-scale mechanized agriculture. TNC has committed to working with the Government of Belize to invest in regenerative agriculture in the buffer zones neighboring the BMF.", "chunk_word_count": 528, "section_path": "2022 Environmental Sustainability Report > 2 Innovation in data acquisition must be prioritized > Local engagement", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 48, "page_start": 48, "page_end": 49 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 42, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Innovation in data acquisition must be prioritized\n### Being good stewards of the land we use\n### Going beyond our operations\nMicrosoft is committed to supporting strategic communities that host our datacenter operations and where our employees live and work. Through our Community Environmental Sustainability program, we partner with global and local organizations to identify priority environmental issues, and actively participate in sustainable solutions to protect and restore our communities' natural environments. We support localized nature-based solution projects with a flexible, multi-functional, and adaptable approach to simultaneously improve human well-being, social equity, and environmental health.\nAs we expand our footprint with new datacenters, we are measuring, designing, and piloting solutions that are regenerative. In nature, healthy ecosystems clean the air, filter the water, sequester carbon, and support biodiversity, among other benefits. Using the tools of biomimicry, we are assessing the impact of our datacenters and identifying opportunities to enhance the ecosystems around us.\nThis year, we launched our first pilot in North Holland. After researching how resilient landscapes function in an area, we identified a series of landscape solutions that could be incorporated into the existing datacenter campus. The first phase included the planting of 150 native trees and 2,300 square meters of shrubs, grasses, and groundcovers around the campus. As the landscape matures, the datacenter facility will begin to blend into the surrounding environment. As we roll out additional phases of this project, we will measure the impact on air quality, soil health, and biodiversity both on the direct campus and for the surrounding area.\nOver the past four years, we have launched over 40 community projects across our global portfolio of datacenter locations. This year, we supported several urban forestry projects, including holistic street, park, and school tree projects in locations including Sydney, Des Moines, Phoenix, and Santiago. Working with local communities and councils, these projects will provide much needed shade, habitats, and measurable stormwater benefits to heat-affected urban areas and vulnerable residents. We are also launching a suite of ecological restoration projects to assist in the recovery of ecosystems, contribute to increased biodiversity of native species, and improve green spaces for all.\nAs we look to incorporate these strategies across our footprint, we have assessed the ecosystem performance benchmark for several other datacenter regions and are developing tools to standardize and design to this measurement. Modeled results suggest that ecosystem performance can be restored to as much as 75 percent (where we are able to successfully recreate 75 percent of the function of the untouched ecosystem).\n### Key trends\n### Resources\n### Maya Forest in Belize\n### Taking a science-based approach to land protection\nLearn more about the project to protect the Belize Maya Forest, supported by Microsoft.\nLearn more\nMicrosoft is using the Last Chance Ecosystems framework to prioritize our selection of land protection projects and partner with the UN Biodiversity Lab and the Group on Earth Observations Biodiversity (GEO BON) on developing conservation management tools.\n### NFWF land protection\nLearn more about the Microsoft and NFWF partnership to protect natural habitats and sustain wildlife populations vital to maintaining biodiversity.\nLearn more", "chunk_word_count": 523, "section_path": "2022 Environmental Sustainability Report > 2 Innovation in data acquisition must be prioritized > Being good stewards of the land we use", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 43, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Innovation in data acquisition must be prioritized\n### Identify ecosystems to protect\nFind out more about the tool that Microsoft used to make a science-based decision on the most important places to protect.\nUse the tool\n### See the land where Microsoft directly operates\nView an interactive map by biome.\nView map\n### What's next\n### Protecting more land than we use by 2025\nMicrosoft will continue to monitor the progress of our remaining land protection investments. The NFWF projects we invested in are on track to be protected by the end of 2023. We will also track how much land Microsoft directly operates on, to ensure we are protecting more land than we use.\n## 2 Being good stewards of the land we use\nAs we look to incorporate regenerative strategies across our footprint, we have assessed the ecosystem performance benchmark for several other datacenter regions and are developing tools to standardize and design to this measurement. Modeled results suggest that ecosystem performance can be restored to as much as 75 percent.\n### Centering environmental justice in our ecosystems work\nWe will support localized nature-based solution projects with a flexible, multi-functional, and adaptable approach to simultaneously improve human well-being, social equity, and environmental health for vulnerable communities.\n### Delivering digital technology for net zero\nMicrosoft is committed to providing the digital technology needed to help build a more sustainable world. From managing environmental footprints with Microsoft Cloud for Sustainability to accelerating 'innovation for new climate technologies, we’re working to empower our customers and partners across industries. We are advancing greener software and reducing carbon intensity to improve device sustainability, and helping organizations measure 'and manage the health of the planet’s natural ecosystems by building a Planetary Computer.\nCommitments and progress 53 \nMicrosoft Cloud for Sustainability 54 \nGreen software 56 \nSustainable devices 59 \nPlanetary Computer \nand AI for Good 63\n### Customer sustainability\n### Our commitment\nWe are committed to providing the digital technology needed to help build a more sustainable world. We are delivering technology to help organizations measure and manage their environmental footprints and monitor the health of the planet's natural ecosystems.\n### Empowering customers and partners\n### Building a Planetary Computer\nWe are working to help our customers, partners, and suppliers around the world to reduce their carbon footprints, understand water-related risks, and make environmental decisions through our learnings and with the power of data, AI, and digital technology.\nWe are planning to aggregate environmental data from around the world and put it to work through computing and machine learning in a Planetary Computer.\n### Our progress\n### Expanding Microsoft Cloud for Sustainability", "chunk_word_count": 443, "section_path": "2022 Environmental Sustainability Report > 2 Innovation in data acquisition must be prioritized > Identify ecosystems to protect", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 50, "page_start": 50, "page_end": 53 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 44, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Advancing climate aware software engineering\nIn 2022, we expanded the breadth of Microsoft Cloud for Sustainability capabilities beyond carbon emissions to include methods to centralize water data and added new functionality to Microsoft Sustainability Manager, including new Scope 3 calculation methodologies. We released the Emissions Impact Dashboard for Microsoft 365 and introduced Environmental Credit Service.\nIn 2022, we improved the efficiency of Microsoft Azure, decreased the carbon intensity of Microsoft 365 cloud services, and launched the world's first “carbonaware” updates in a PC operating system in September as part of the Windows 11 launch. We also enabled Xbox games to be played on Samsung 2022 Smart TVs via the Xbox app, reducing the need for standalone hardware.\n### Improving device repairability and energy efficiency\n### Delivering digital technology for climate action\nOur latest products, including Surface Pro 9, Surface Laptop 5, Surface Laptop Go 2, and Surface Studio $^ { 2 + }$ all feature a host of replaceable components serviceable by an expanding Authorized Service Provider and in-region repair network.\nAs of 2022, the Planetary Computer has over 80 data sources containing over 50 petabytes of data.\nIn 2022, we expanded our AI for Good Lab into Egypt and Kenya to improve climate resilience and launched Global Renewables Watch, a first-of-its-kind living atlas aiming to map and measure all utility-scale solar and wind installations on Earth.\nThe Surface Pro 9 and Surface Laptop 5 are among Microsoft's most energy efficient Surface computers. Both devices are ENERGY STAR® Certified, consuming less than half the recommended energy limit set by the latest ENERGY STAR® computer specification.\n### Microsoft Cloud for Sustainability\n### Understanding emissions impact of cloud services and devices\nSharePoint, OneDrive, Teams, Word, Excel, PowerPoint, and Outlook. These applications estimate Microsoft's direct and indirect emissions related to a customer's cloud usage, as well as the emissions customers have avoided by running workloads in the cloud rather than on-premises.\n### Centralizing sustainability data\nThe Microsoft Cloud for Sustainability data model centralizes emissions data from disparate sources in a shared data language—streamlining data ingestion, integration, and calculations and enabling more accurate and reliable reporting. The data model is available for use across organizations and value chains.6 The Microsoft Cloud for Sustainability data model initially focused on carbon and was expanded in 2022 to include water data.\nThe Microsoft Emissions Impact Dashboard applications for Azure and Microsoft 365 provide transparency into the emissions that Microsoft generates based on a customer's use of Microsoft cloud services, empowering organizations to more accurately report this aspect of their Scope 3 emissions.", "chunk_word_count": 441, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Advancing climate aware software engineering", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 45, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Empowering customers to manage their environmental footprints\nThe Surface Emissions Estimator enables commercial customers to gain insight into the carbon footprint of their entire Surface device fleets. The Estimator uses state-of-the-art carbon assessment technologies and lifecycle assessments to enable customers to get more accurate estimations of the carbon impact of the Surface devices they purchase from us.\nMicrosoft's work to meet our own sustainability goals made clear that there is an urgent need for better data and intelligence to enable organizations to track and report progress on sustainability pledges. Our learnings have informed the solutions we're building to help our customers. Microsoft Cloud for Sustainability enables organizations to manage their environmental footprint, embed sustainability through their organization and value chain, and make strategic business investments to help them meet their sustainability commitments.\nThe Emissions Impact Dashboard for Azure has been available since 2020. In 2022, we released the Emissions Impact Dashboard for Microsoft 365 to help Microsoft customers track datacenter emissions related to their use of Microsoft Exchange Online,\n### Enabling sustainability management and reporting\nMicrosoft Sustainability Manager unifies data intelligence and enables environmental sustainability management for organizations at any stage of their sustainability journey. It can be integrated with virtually any business system. It breaks down data silos using the Microsoft Cloud for Sustainability data model and increasingly automates data connections and calculations, reducing reliance on manual processes. Sustainability Manager allows organizations to gain continuous visibility into their emissions activities, report their impact and progress more reliably, and access the intelligence required to help reduce their environmental footprint and transform their business.\nMicrosoft Cloud for Sustainability enables organizations to manage their environmental footprint, embed sustainability through their organization, and make strategic business investments to help them meet their sustainability commitments.\n### Increasing transparency and promoting trust in environmental claims and credits\nSupporting Australia's digital growth In July 2022, Telstra and Microsoft expanded their long-term strategic partnership, which includes the intention to help advance sustainability in Australia and drive growth. Microsoft will support Telstra in achieving its own sustainability goals with Microsoft Cloud for Sustainability which will provide data insights into sustainability performance. The strategic partnership brings together the best strengths of the two organizations. In 2020, Telstra was certified carbon neutral in their operations, and both Microsoft and Telstra have ambitious climate targets and share a commitment to a net zero carbon future.7\n### Customers\n>2,400 TerraPraxis and Microsoft entered a strategic collaboration to repurpose over 2,400 coal-fired power plants around the world to run on carbon-free energy.", "chunk_word_count": 435, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Empowering customers to manage their environmental footprints", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 46, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Transforming the energy industry\nTerraPraxis is a nonprofit focused on actionable solutions for climate and prosperity. In 2022, TerraPraxis and Microsoft entered a strategic collaboration to repurpose over 2,400 coal-fired power plants around the world to run on carbon-free energy. TerraPraxis will combine its deep expertise in energy with Microsoft technology to build and deploy a set of tools to automate the design and regulatory approval process to decarbonize coal facilities with advanced small modular nuclear reactors (SMRs). The partnership will help to accelerate the transition of one of the world's largest sources of carbon to zero emissions. TerraPraxis and Microsoft will develop a software application to analyze the existing coal fleet to determine the best approach for the retrofit, saving coal plant owners time and money while giving the communities around them a new lease on life for decades to come. The partnership started with Microsoft's 2021 Hack for Sustainability when Microsoft employees worked with TerraPraxis to develop the winning project, “Beyond Coal.”7\nIn October 2022, we introduced Environmental Credit Services, delivering common, open-standards infrastructure and a shared process and data standard to help track the origination process for carbon credits and other environmental assets. The service provides transparency into the provenance and quality of environmental claims and credits by digitizing and streamlining the origination workflow for environmental project developers, claim verifiers, credit-issuing registries, and marketplaces. This can yield more credible, scalable credit offerings to support growing global demand.\n### Enabling partner solutions\nMicrosoft provides the technologies and platform to guide digital transformation. Our efforts are supported by our global ecosystem of partners, who provide a broad range of capabilities to unlock data and build industry-specific solutions to improve sustainability outcomes.\nWe have an ecosystem of global advisors and system integrators who are helping organizations plan, design, and implement strategies to enable sustainable growth. Our independent software vendor partners bridge gaps and add value to our technologies with a growing set of off-the-shelf and custom sustainability solutions and services.\n### Green software\n### Developing standards, tools, and best practices\n### Improving Azure efficiency\n### Improving cloud resource utilization\nWe use resource oversubscription and harvesting techniques to optimize the utilization of energyconsuming cloud resources. We address oversubscription by using statistical analysis to predict when additional virtual machines can be deployed on underutilized hardware. Our approach to oversubscription is enabled by a technique called harvesting. It enables us to opportunistically create a new type of virtual machine to apply underutilized resources to oversubscribed situations. We are currently applying oversubscription and harvesting to Microsoft internal virtual machines for CPU resources, and will be expanding this capability into other energy-intensive resources such as memory, networking, and storage. This initiative has the potential to reduce datacenter hardware needs, and the associated embodied carbon, by more than 30 percent.\nAzure efficiency requires a close collaboration between the platform and the workloads running on Azure.\nWe are committed to green software standards, tooling, and best practices, as defined by the Green Software Foundation (GSF). Microsoft is a founding member of GSF and contributes to several climate aware software tools and standards.", "chunk_word_count": 531, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Transforming the energy industry", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 55, "page_start": 55, "page_end": 56 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 47, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Advancing greener software and reducing carbon intensity\n### Helping customers and partners optimize Azure workloads\nGreen software engineering is an emerging discipline at the intersection of climate science, software practices, architecture, electricity markets, hardware, and data-centered design. We are making ongoing investments to help reduce the carbon intensity of our applications in the cloud and on the edge.\nMicrosoft developed new technical guidance in partnership with the GSF to help customers and partners with optimizing Azure workloads with the Well-Architected Framework (WAF). The framework is part of a broader initiative to help customers plan for and meet evolving sustainability requirements and regulations in the development, deployment, and operations of IT.\nThe Software Carbon Intensity (SCI) Specification provides an industry standard for calculating the rate of carbon emissions in a software system to help users and developers make informed choices about which tools, approaches, architectures, and services they use.\nThe Carbon Aware SDK, an open-source tool codeveloped by Microsoft and UBS and released by the GSF, provides recommendations on when and where to run workloads that take advantage of the lowest-carbon sources of energy possible. UBS is deploying the SDK in a time-shifting application to make a computationallyintensive risk modeling platform carbon-aware.\n### Improving cloud energy efficiency\nWe are reducing idle power consumption of servers when they are not actively being used or hosting customer virtual machines. In these cases, server performance requirements are relaxed, enabling reduced power consumption with lower-power states. We expect up to a 25 percent reduction in energy usage for these unallocated servers, with a corresponding reduction in Scope 2 emissions. This capability has been deployed to a subset of general-purpose compute servers and will continue to expand across the Azure fleet.\n### Developing sustainable Artificial Intelligence (AI)\nThe Green Software Principles focus on energy reduction, hardware efficiencies, and carbon aware software. The GSF's Design Patterns catalog provides the latest patterns and best practices for building software that can enable energy efficiency and thereby reduce carbon emissions.\nAzureML and Microsoft Research partnered with researchers from Allen Institute for Artificial Intelligence, Huggingface, Carnegie Mellon, Hebrew University, and the University of Washington to publish a paper in the Association for Computing Machinery (ACM) Conference on Fairness, Accountability, and Transparency (FAccT). The paper uses the principles of carbon aware software and applies them to building carbon measurement baselines and reduction strategies for AI systems.\n25% We are reducing idle power consumption of servers when they are not actively being used and expect up to a 25 percent reduction in energy usage for these unallocated servers.\nWe are committed to advancing greener software to help reduce the carbon intensity of our applications in the cloud and on the edge.\n50%\n### Decreasing the carbon intensity of Microsoft 365\n### Optimizing Azure Compute demand for Teams services", "chunk_word_count": 481, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Advancing greener software and reducing carbon intensity", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 48, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Optimizing performance of Microsoft 365 client-side applications\nTeams services were transitioned to optimized cores with approximately 50 percent lower memory requirements. This led to a reduction\nFor online Teams meetings, the most critical datacenter resources are compute cores and main memory consumption. In 2021, the Teams product group transitioned services to run on optimized cores with approximately 50 percent lower memory requirements. This led to a reduction in total datacenter resources during a period of time in which the volume of Teams active users increased.\nMicrosoft Teams has optimized performance to achieve PC power usage declines of up to 50 percent between June 2020 and December 2021.\nMicrosoft 365 applications are powered by Azure datacenters, so customers benefit from their significant energy and resource efficiencies. As disclosed in this white paper, we use the data powering the Emissions Impact Dashboard for Microsoft $3 6 5 ^ { 8 }$ to estimate that the datacenter carbon intensity per gigabyte of data stored in SharePoint and OneDrive per month decreased by more than 30 percent9 over the course of FY22. We also estimate that the datacenter carbon intensity of a device joining a one-hour Teams call fell by a similar amount, even as Teams delivered new value like AI-based speech enhancements.10\n[IMAGE CAPTION] energy and resource efficiency benefits.\n### Optimizing peak CPU resource usage for Teams\nToday, cloud infrastructure capacity is planned based on our need to satisfy peak customer traffic. A service that has not optimized its peak utilization will increase the number of servers Microsoft has to procure. Net decreases in capacity purchases can directly lead to emissions avoidance. Over the past several years the Teams service improved peak utilization by more than 30 percent, leading to reductions in the volume of hardware needed to support growth in usage.\n### Customer experience prioritization for SharePoint and OneDrive\nOneDrive and SharePoint implemented standardized headers that require first-party applications to tell the service if a given operation must be prioritized or can be deferred. This has allowed the team to run services at higher utilization while prioritizing customeraffecting operations, contributing to reductions in the number of servers required to support file editing and management workloads.\n### Reducing carbon intensity of devices and gaming\n### Empowering game developers to improve power performance\n### Digital design for sustainability in web experiences\nGaming activity represents approximately half of the usage-based carbon footprint of Xbox devices. To support first and third-party publishers who design and build games for our Xbox platform, we launched new developer tooling in 2022 to monitor and reduce the power consumption of their games. Our goal is to support game publishers' sustainability goals as we build solutions to lower carbon intensity on console gaming.\nWe focus on the sustainability of web experiences that Microsoft delivers, including ads, search, maps, news, commerce, and more. We have enabled front-facing solutions to reduce the carbon footprint of our web services, including Sleeping Tabs and Efficiency Mode performance optimizations in Microsoft Edge browser.\nWe are empowering users with options for managing their usage and developers with the tools to improve power performance in games.", "chunk_word_count": 534, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Optimizing performance of Microsoft 365 client-side applications", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 49, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Improving the carbon awareness of devices\nWith the Windows 11 2022 update, Windows Update is now more carbon aware. When devices are plugged in, turned on, and connected to the internet, and regional carbon intensity data is available, Windows Update will schedule installations at times of the day when a higher proportion of electricity is coming from lower-carbon sources on the electric grid. We also made changes to the default power setting for Sleep and Screen Off to help reduce carbon emissions when PCs are idle.\nXbox Series X developer kits now include real-time power performance feedback on front panel displays. Performance Investigator for Xbox (PIX), the go-to developer tool for Xbox game and app performance analysis, now includes power utilization counters. Xbox certification labs have started preliminary feedback to our publishing partners on power analysis in their test reports.\n### Reducing emissions with cloudpowered computing\nIt is estimated that by 2025, Microsoft Azure will run on 100 percent renewable energy. As such, cloud-based approaches to IT infrastructure, like Microsoft Windows 365, can reduce operating emissions by transitioning end-user computing workloads to Microsoft datacenters, increasingly powered by renewable energy.\nGaming activity represents approximately half of the usage-based carbon footprint of Xbox devices. Our solutions empower game developers to improve power performance.\nIn 2022, Microsoft launched our Xbox app on Samsung 2022 Smart TVs, enabling users to play hundreds of cloud-enabled Xbox Game Pass games like Halo Infinite, Forza Horizon 5, and Microsoft Flight Simulator without the need for a console, and soon benefiting from the impressive renewable energy commitments in Azure.\n### Sustainable devices\nHardware is only one piece of the story. Microsoft is in a unique position to promote sustainability improvements across the full devices stack: hardware, software, and games. Last year, we released Shutdown (energy saving) mode for Xbox, which became the default power experience in November 2021 and has been adopted by 39 percent of our consoles. In September 2022, Windows Update became carbon aware, making it easier for our devices to reduce carbon emissions. When devices are plugged in, turned on, and connected to the internet, and regional carbon intensity data is available, Windows Update will schedule installations at specific times of the day when doing so may result in lower carbon emissions because a higher proportion of electricity is coming from lower-carbon sources on the electric grid.\n### Building a data-driven carbon platform", "chunk_word_count": 414, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Improving the carbon awareness of devices", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 58, "page_start": 58, "page_end": 59 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 50, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Testing lower-carbon, circular design\nEach device we sell is a complex amalgamation of new and recycled materials, manufacturing and assembly processes, distribution, lifetime product usage, and eventual disposition. We quantify the lifecycle environmental impacts of each product and publish summarized results from our LCAs in our product EcoProfiles.\nOur accessory devices have shorter development cycles, making them an ideal way to test new circular materials. We trial new materials in individual products, and if successful, we expand their use across our broader portfolio—such as in Windows Dev Kit 2023, an ARMbased developer kit featuring 20 percent recycled ocean plastic11, a material first proven in our Ocean Plastic Mouse. Circular design must also account for a future in which products can easily be returned, repaired, refurbished, and resold.\n### Reducing environmental impact in our devices\nOver the past year, Microsoft has continued our work to reduce environmental impacts of our devices by increasing circularity and reducing carbon intensity across the entire product lifecycle. For example, we have revamped our Surface product development process to define sustainability targets on our product roadmaps for every major future launch.\nWe are building an advanced carbon data platform that combines advancements in LCA, product usage telemetry, and real-time distribution data to get the most representative emissions profile possible for our devices. This data will be used for reporting and to provide visibility into actionable and granular environmental impacts to continue improving decisionmaking at all levels. This year alone, we more than doubled the percentage of the total carbon footprint calculated based on suppliers' primary LCA data.\n### Incorporating recycled materials in devices\nWithout compromising on our design and quality, we routinely evaluate opportunities for the use of recycled material content. For example, many of our PC accessories contain recycled plastic, including our new Adaptive Accessories and Audio Dock, which are both made with at least 30 percent post-consumer recycled plastic resin.\n### Designing for sustainability\nImproving the sustainability of our devices starts with hardware design. Informed by lifecycle assessments (LCAs), we set explicit carbon and repairability targets during product design to ensure year-over-year improvement. Designing with circularity in mind— keeping materials and products in use longer—is key to achieving these goals. And we strive to meet rigorous third-party ecolabels and ecostandards—all of our newest laptops and tablets are registered EPEAT® Gold and are ENERGY STAR® Certified.\nWe continue to work to reduce environmental impacts of our devices by increasing circularity and reducing carbon intensity across the entire product lifecycle.\n### Designing for repairability\n### Manufacturing", "chunk_word_count": 436, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Testing lower-carbon, circular design", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 59, "page_start": 59, "page_end": 59 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 51, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Circular product lifecycle\nMicrosoft devices suppliers' GHG emissions reduction amounted to approximately $9 0 , 0 0 0 \\mathrm { m t C O } _ { 2 } \\Theta$ in FY22, roughly equivalent to 17,000 homes' average annual energy usage. This was achieved through supplier carbon reduction interventions, renewable energy alternatives, and manufacturing process improvements. These reductions resulted from 12 suppliers switching to renewable energy, with six converting to 100 percent renewable energy. You can find more detail and individual supplier case studies in the Microsoft Responsible Sourcing Report.\nRepairability can offer significant carbon emissions and waste reduction benefits. Microsoft continues to invest in this important space and the findings will aid in our product design and plans for expanding device repair options for our customers that are safe, effective, and sustainable. Our latest computer products, including Surface Pro 9, Surface Laptop 5, Surface Laptop Go 2, and Surface Studio $^ { 2 + , }$ all feature a host of replaceable components.\nImproving the sustainability of our devices starts with hardware design. We set explicit carbon and repairability targets during product design to ensure year-over-year improvement. Designing with circularity in mind keeps materials and products in use longer and is key to achieving these targets.\nRepairability goes beyond design. This year we piloted the sale of certain spare parts on Microsoft.com and began expanding our network of local Authorized Service Providers (ASPs) which are qualified to repair Microsoft devices. We are also improving our capability to deliver broader availability of spare parts for independent repairers and consumers, targeting the first half of 2023. We continue to make our Service Guides available at Microsoft.com and repair videos available online. Through the ASP network, we are able not only to reduce waste but also to save on GHG emissions by shortening the distance that a device travels to a repair center.\n### Empowering and financing decarbonization\nMicrosoft realizes that financing is a common barrier to decarbonization and has partnered with the International Finance Corporation (IFC), the private sector arm of the World Bank Group, to stand up a program for the IFC to offer financing solutions to eligible suppliers to support decarbonization efforts. IFC also offers eligible Microsoft suppliers its advisory services to identify technical solutions for reducing GHG emissions in the manufacturing process. Learn more about our sustainability advisory and financing services.\nMicrosoft has also spent the past several years investing in regional repair hubs in major geographies that are equipped to make same-unit repairs. We are onboarding authorized repair partners across Surface markets to expand our authorized repair network and bring repair options closer to our customers. Enabling these localized repair hubs has led to quantifiable reductions in reverse logistics emissions (over 10 percent in some cases).\nMicrosoft continues to invest in repairability. Our latest computer products all feature a host of replaceable components.\n### Ensuring traceability of materials sustainability", "chunk_word_count": 498, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Circular product lifecycle", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 60, "page_start": 60, "page_end": 60 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 52, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Innovating materials with suppliers\nMicrosoft is a supporter and, as of the end of 2022, the only consumer electronics member in the Global Battery Alliance (GBA), a public-private platform organization founded to help establish sustainable battery materials throughout the supply chain. GBA is also leading the development and implementation of a battery passport that conforms to new EU regulations. We are also involved in partnerships such as IMEC with silicon manufacturers.\nWe are partnering with suppliers on more sustainable material innovations. For example, in our hardware supply chain, we are working on using 100 percent recycled tin solder paste and 100 percent recycled gold in our printed circuit boards. We are also working to reducing waste in our software supply chain by eliminating physical cards and enabling digital downloads for games, apps, and gift cards.\n### Advancing packaging, purchasing, and distribution\n### Reducing distribution footprint\n### Increasing packaging sustainability\nIn FY22, our devices supply chain organization engaged in key optimization projects, resulting in over $6 , 3 0 0 \\mathrm { m t C O } _ { 2 } \\mathrm { e }$ avoidance from the global network. Key network adjustments enabled a shift to sea freight, resulting in $3 , 2 0 0 \\mathrm { m t C O } _ { 2 } \\mathrm { e }$ savings. We optimized our inbound containerized freight processes to allow for increased container utilization. Outbound freight consolidations for one US retailer yielded $9 0 0 ~ \\mathrm { m t C O _ { 2 } e }$ and collaborated cross-functionally to reduce over $8 0 0 ~ \\mathrm { m t C O _ { 2 } e }$ within our customer network through order optimization and consolidation.\nWe are using innovation and design rigor to make progress on our journey to eliminate single-use plastic packaging by 2025. We introduced several 100 percent plastic-free packages in FY22, including the Surface Adaptive Kit and Microsoft Ocean Plastic mouse. This packaging is made from 100 percent renewable materials and fully recyclable. Our most recent wave of Surface Laptop 5 and Pro 9 retail packages use less than one percent plastic (by weight) and are over 99 percent recyclable. All virgin paper or fiber used for these packages is certified as FSC responsibly sourced.\nOnce our products have been manufactured, Microsoft embeds sustainability goals into nearly every logistics step to get them to our customers. Our global logistics network is optimized to reduce carbon intensity. And we inform our customers about how they can achieve more sustainable purchase and use decisions when buying or using Microsoft products. Our packaging is also designed to minimize plastic waste.\n100%\nOur key European and American distribution centers now produce over two million kWh of solar energy and are 100 percent powered by renewable energy.", "chunk_word_count": 485, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Innovating materials with suppliers", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 60, "page_start": 60, "page_end": 61 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 53, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Purchasing responsibly\nWith investments in on-site solar generation, our key European and American distribution centers, which handle over half of all Microsoft devices sold, now produce over two million kWh of solar energy and are 100 percent powered by renewable energy. In Europe, our parcel deliveries are via electric or carbon neutral vehicles, where the capability is available. Less-thantruckload networks deliver via electric vehicles on the final mile transport with identified customers.\nWe're also focused on eliminating single-use plastics beyond our 2025 commitment for product packaging. For example, we are implementing reuse for plastic shipping trays in our battery pack supply chain and will proliferate such improvements to other systems. Additionally, we're researching the potential use of lower-carbon footprint plastic alternatives for these trays.\nMicrosoft is committed to helping customers understand how to purchase devices that pose fewer environmental impacts. For example, we engaged with PC makers across the industry to drive sustainability best practices and provided guidance to channel partners and our sales team on how to select more sustainable PCs through our “Featured Devices” program.\nWe provide in-depth detail on Microsoft device sustainability and repairability through our EcoProfiles and Repair Guides. We provide clarity to consumers on how to reduce their shipping emissions through ground shipping. And for commercial customers, we provide full-fleet visibility into the carbon impact of a purchase at point of sale through the Surface Emissions Estimator.\nOur global logistics network is optimized to reduce carbon intensity. And we inform our customers about how they can achieve more sustainable purchase and use decisions when buying or using Microsoft products.\n### Reducing the impact of product usage\n### Improving efficiency through hardware\n### Designing for recyclability", "chunk_word_count": 296, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Purchasing responsibly", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 61, "page_start": 61, "page_end": 61 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 54, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Partnering to remove consumer recycling barriers\nThe Surface Pro 9 and Surface Laptop 5 are among Microsoft's most energy efficient Surface computers. Both devices are ENERGY STAR® Certified, consuming less than half the recommended energy limit set by the latest ENERGY STAR® computer specification. In particular, Surface Pro 9 5G, powered by ARM technology, combines the energy efficiency of modern mobile devices with the computing power of a traditional computer.\nAs we make progress towards our goal of 100 percent recyclability of Surface devices and Xbox consoles and accessories, we have engaged with the electronics recycling industry to learn about and improve how our products are recycled at end of life. Through research, we noticed a gap between the processes used at electronics recycling centers and the tools available for us to calculate the recyclability of our products. To address this, we are in the process of switching to a new methodology, consistent with the EN 45555 standard, to increase the accuracy of reporting the recyclability of our packaging and products.\nIn February 2022, Microsoft partnered with three original equipment manufacturers (OEMs)— Amazon, Dell, and Google—to launch a consumer electronics collection and recycling pilot in Denver, Colorado. The goal of this pilot, incubated through our participation in Corporate Eco-Forum (CEF), was to identify barriers that consumers face during the disposal of their end-of-life electronics—including nostalgia, lack of convenience, uncertainty around data security, and cost. Based on the pilot, the OEMs plan to take a data-driven approach to formulate strategies to overcome these barriers. Microsoft also participates in the Circular Electronics Partnership (CEP) to help drive industrywide improvements in circularity.\nReducing carbon emissions associated with the use stage of our devices presents a massive opportunity for carbon reduction. Microsoft starts by designing and engineering our devices to be more energy efficient and then uses software to further reduce emissions that may result from device usage.\n### Gaining insights from usage data\nThis year, we released a limited run of enhanced Xbox Series X|S consoles with power supply energy monitoring, which provides anonymized insights into console power consumption. This telemetry helps us gather additional insights across a wide range of user setups and usages in the field, such as power consumption from SSD, USB devices, networking, and power regulation efficiency losses. We are partnering with Carbon Trust and other global tech companies to develop a common methodology for tracking the usage emissions associated with connected devices.\n### Repurposing and recycling at end of life\nThis change helps to ensure that future assessments will be representative of the electronics recycling industry, backed by quality data, and repeatable through a stepby-step process, and will address both the qualitative and quantitative aspects of device recyclability. For transparency, we will recalculate the recyclability of products mentioned in previous sustainability reports.\nWherever possible, we look to reuse our hardware with new customers. We start with Microsoft Authorized Refurbisher and Trade-In programs. Where refurbishing and trade-in are not possible, we recycle as much of each device as possible as part of our commitment to achieve 100 percent recyclable devices by 2030.", "chunk_word_count": 529, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Partnering to remove consumer recycling barriers", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 62, "page_start": 62, "page_end": 62 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 55, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Closing the loop with customers\nMicrosoft offers multiple programs that repurpose or recycle used devices. Our Authorized Refurbisher Program gives millions of PCs a second life each year, including over three million devices in 2022. Our Trade-In Program, expanded to 10 countries in 2022 and offers cash incentives for eligible older devices, which are then either reused or recycled responsibly. And the consumer mail back recycling program also allows customers to recycle their devices through Microsoft in 39 countries.\n### Boosting efficiency through software\nIn addition to hardware, software (both our operating systems and the applications and games that run on top of them) and a shift towards more cloud computing have a major role to play in reducing use-phase emissions. See our section on green software.\nTelemetry helps us gather additional insights across a wide range of user setups and usages in the field.\n### Planetary Computer and AI for Good\n### Building a Planetary Computer\n### Partnering on the Planetary Computer\nThe Planetary Computer aggregates and stores spatiotemporal datasets, creating a fully indexed data estate for Earth's natural systems, using the power of data and AI for environmental good.\nMicrosoft has been working with Esri, the global leader in geospatial analytics, to enable users to access up-todate information from public satellite imagery programs for both the Planetary Computer and the Esri Living Atlas. We are also jointly working towards empowering users of Esri's advanced geospatial analytic tools with data powered by the Planetary Computer.\nWe live in a new era of big data which includes an abundance of high-resolution satellite imagery and remote sensing (IoT) data. Millions of sensors provide near real-time updates on the state of Earth's natural ecosystems. One such data type is called spatiotemporal data, which includes the information collected about all the locations on Earth indexed in both space and time.", "chunk_word_count": 323, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Closing the loop with customers", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 62, "page_start": 62, "page_end": 63 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 56, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Delivering digital technology for climate action\nMicrosoft is committed to delivering digital technology that helps organizations around the world – from nonprofits to research institutions, NGOs, governments, and corporations – with environmental decision-making, which relies on a systematic understanding of the Earth's natural systems. Microsoft has deep expertise in aggregating and analyzing the data that can help organizations understand the planet's ever-changing ecosystems, and how to adapt to these changes. Through our Planetary Computer data platform and AI for Good Lab, we are using the power of data and AI for environmental good.\nMicrosoft has also been working with Impact Observatory, which utilizes the Planetary Computer as a primary data source for powering their AI to derive land use and land cover data. Their annual mosaic of land use and land cover data is available on the Planetary Computer for all users to better understand Earth's ever-changing landscape.\nThe Planetary Computer aggregates and stores spatiotemporal datasets, creating a fully indexed data estate for Earth's natural systems. This data enables predictive models to forecast the effects of changing climate. Examples include land use data that can detect changes in urbanization or forest biomass, demographic exposure data that shows where populations are most in need of climate adaptation, and biodiversity data that can help monitor the effectiveness of conservation efforts and support the sustainable use and management of natural resources.\n### What's next for the Planetary Computer\nMicrosoft will continue to scale the Planetary Computer to provide access to all the world's most important spatiotemporal datasets. This will enable the Planetary Computer and the power of Azure to address the increasingly urgent adaptation needs across the globe. The Planetary Computer will provide a collaborative data storage and access system that uses open standards and enables open data. This approach is critical for integrating the growing community of collaborators from industry, governments, and academia as they look for new solutions to adapt to climate change.\nThe Planetary Computer contains over 50 petabytes (PB) of data in multiple cloud-optimized formats and based on open-source standards. With these rich datasets and the power of Azure we have enabled spatiotemporal analytics at scale, unlocking new insights and innovations.\n### Improving climate resilience with the AI for Good Lab", "chunk_word_count": 388, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Delivering digital technology for climate action", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 63, "page_start": 63, "page_end": 63 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 57, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Mapping the world's solar and wind energy\nThe Global Renewables Watch (GRW) is a first-ofits-kind living atlas aiming to map and measure all utility-scale solar and wind installations on Earth using AI and satellite imagery, allowing users to evaluate clean energy transition progress and track trends over time. It is being built as a publicly available renewable energy atlas with country-by-country insights into production progress and development trends. As of November 2022, mapping is complete for Germany, India, Brazil, and Egypt. The GRW aims to show a country's renewable energy capacity, bring new understanding to that capacity, and recognize patterns about the potential impact of the renewable energy in the landscape over time. The first full global inventory is expected to be completed in 2023 and will undergo both scientific and technical validation. The GRW is a joint program between Microsoft, Planet Labs PBC, and The Nature Conservancy.\nThe Microsoft AI for Good Lab uses data from the Planetary Computer and other organizations around the globe with AI, machine learning and statistical modeling to improve climate resilience around the world. By offering the technology and expertise of the AI for Good Lab, we are helping to advance the local development of scalable solutions, including the following.\n### Bridging the climate data divide\nAt COP27, we announced that we have expanded our AI for Good Lab into Egypt and Kenya, building a new team of data scientists on the ground in Africa that will work to improve climate resilience. The work of these data labs will be informed by a new Africa AI Innovation Council comprised of representatives from leading African organizations.\n### Understanding the impact of weather patterns\nThe Global Renewables Watch (GRW) is a first-of-its-kind living atlas aiming to map and measure all utility-scale solar and wind installations on Earth using AI and satellite imagery, allowing users to evaluate clean energy transition progress and track trends over time.\nAlong with an AI for Humanitarian Action grant, Microsoft partnered with the Sustainable Environment and Ecological Development Society (SEEDS) to build an AI model that can forecast the impact of cyclones on the most vulnerable populations in India. The model utilizes high-resolution satellite imagery of areas likely to fall under a cyclone's path and applies advanced data analytics and machine learning to identify the most vulnerable houses. This enables SEEDS and its on-the-ground partners to pinpoint those at the highest risk of the cyclone and focus their outreach to those communities.\nGlobal sustainability\n### Enabling a more sustainable world\n' Microsoft’s actions alone will not solve the climate crisis. As a global technology leader, we are also committed to helping build the enabling societal conditions that will support a net zero economy. 'We’re focused on accelerating the availability of new climate technologies, strengthening our climate policy agenda, helping to develop a more reliable and interoperable carbon accounting system, advocating for skilling programs to expand the green workforce, and working to enable a just energy transition.\n### Global sustainability\n### Our commitment", "chunk_word_count": 516, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Mapping the world's solar and wind energy", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 64, "page_start": 64, "page_end": 65 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 58, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Our progress\nWe understand that our actions alone will not solve the climate crisis. As a global technology leader, we are also committed to helping build the enabling societal conditions that will support a net zero economy.\n### Using our voice on climate-related public policy issues\n### Advanced policy\nTo support our policy work, we published several briefs on carbon and electricity policy to share the priorities and principles that guide Microsoft's policy advocacy work around the world.\nWe will support new public policy initiatives to accelerate carbon reporting, reduction and removal, the transition to clean energy, water access and stress reduction, and the ability to measure, manage, and protect ecosystems.\n### Investing in climate innovation\n### Invested $> 5 6 0 0 \\mathsf { M }$ in climate innovation\nWe have created a \\$1 billion Climate Innovation Fund to accelerate the global development of carbon reduction and removal technologies, as well as related climate solutions to reduce water and waste.\nSince its inception, Microsoft has allocated over \\$600 million impact investment capital from our Climate Innovation Fund into a global portfolio of investments, featuring sustainable solutions in energy, industrial, and natural systems.\n### Driving collective action\n### Drove collective action\nWe will partner with others to drive deeper engagement to help the world reach net zero, focused on rigorous and consistent carbon accounting and innovation, water access and stress reduction, and the circular economy.\nIn 2022, we supported broad global action towards net zero by joining several coalitions including the Carbon Call, the First Movers Coalition, the IMEC Sustainable Semiconductor Technology and Systems, and WASH4Work.\n### Empowering our global workforce\n### Focused on the sustainability skills gap\nWe recognize that our employees are the most important asset and resource in advancing innovation in sustainability and are creating opportunities for them to contribute to our efforts.\nTo better understand how to close the sustainability skills gap, Microsoft published the Closing the Sustainability Skills Gap report and LinkedIn published the Green Skills Report to provide insights into the demand and supply of talent with green skills.\n### Other progress\nCatalyzed solutions through sustainability science and research We launched AI4Science and the Microsoft Climate Research Initiative (MCRI) to advance the computational foundations, partnerships, and tools needed to achieve a carbon negative future globally.\n### Science and research\n### Enabling industry breakthroughs\n### Predicting microclimates", "chunk_word_count": 408, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Our progress", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 66, "page_start": 66, "page_end": 66 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 59, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Modeling carbon flow\nRegions of the world have multiple microclimates, and accurately predicting the behaviors of these microclimates leads to better sustainability outcomes. We are now able to fuse historical weather forecasts with local sensor data to more accurately predict weather parameters in a specific microclimate. We originally developed this technology to help farmers make better operational decisions, such as when to plant or spray, especially in the face of changing weather patterns. This technology is included in FarmVibes.AI, but is broadly applicable to other industries that must adapt to climate change. For example, logistics and supply chains can be affected by hyperlocal weather events, causing ripple effects throughout many industries, such as retail, manufacturing, and transport. Renewable energy production forecasts are also highly dependent on loca weather, affecting renewable energy operators as well as managers of electricity grids.\nCarbon capture and storage (CCS) involves extracting carbon dioxide from sources like industrial emissions, then liquefying and storing it underground or undersea. CCS relies on equation-based models that predict the suitability of a storage site, such as its storage capacity and risk of leakage. Using traditional numerical simulation to maximize storage capacity and minimize leakage is time-consuming and costly. Reducing the cost of these simulations can help realize the full potential of CCS. Using Fourier Neural Operators with a 4D deep learning (AI) model, we built a carbon flow surrogate model that produces good approximations from 1,000 to 10,000 times faster than traditional simulators, enabling solutions to problems that would otherwise be prohibitively costly to solve, such as storage capacity maximization. We have validated our simulator with industry partners, including Northern Lights and Schlumberger, and made it available as open source software for use by other researchers.\nMicrosoft ensures that all our work is grounded in science, and we extend this approach to our work with customers and partners. As sustainability has become a pressing concern across all industries, our Research for Industry (RFI) program uses our advanced data platforms and technologies for cloud and edge processing, Internet of Things (IoT) connectivity, robotics, and AI to contribute to new solutions in multiple industries, including agri-food, energy, retail, and financial services.\n### Catalyzing solutions through science and research\nThe goals of our sustainability science and research programs are to help us achieve our own sustainability commitments, help our partners and customers achieve theirs, and catalyze solutions to key global sustainability problems. In collaboration with global experts in science and policy, we identify critical sustainability problems and mobilize the worldwide scientific community to address them.", "chunk_word_count": 438, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Modeling carbon flow", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 60, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Enabling more sustainable decision making in agriculture\nData-driven and precision agriculture solutions enable more sustainable decision making for farmers. To inspire the research and data science community in this domain, we made FarmVibes.AI available as an open source toolkit. FarmVibes.AI brings the power of AI to heterogeneous data combined from multiple sources, including satellites and ground sensors. This approach enables lower-cost and higher-accuracy predictions of soil carbon dynamics by automatically generating inputs to common prediction models, such as COMET and DNDC, instead of relying on sometimes faulty and costly-to-obtain historical records. The result is a “what if” analysis tool that can help to estimate how different farming practices will affect the amount of carbon sequestered in the soil, potentially creating new opportunities for farmers to participate in carbon markets.\nWe develop advanced computational techniques and tools to accelerate breakthroughs on fundamental scientific bottlenecks that exist within complex, longterm technological and industry transformations required to address climate change. We use approaches from our global AI4Science team, launched in June 2022, to advance the state-of-the-art in scientific discovery by using simulations of natural phenomena to produce training data for large-scale AI models. These advances have greatly sped up the discovery of solutions to critical scientific problems, such as predicting where undersea hydrates will form—a critical factor in safe long-term carbon storage—1,000 times faster than before. These and other computational approaches feed into our programs on sustainability research with industry and academic partners, including Research for Industry and the Microsoft Climate Research Initiative.\nScience and research (continued)\n### Advancing sustainability initiatives with partners\n### Improving carbon accounting\n[IMAGE CAPTION] The Microsoft Climate Research Initiative aims to advance the computational foundations, partnerships, and tools needed to achieve a carbon negative future globally.\nMicrosoft convened a global team of experts to identify and overcome the biggest constraints to reliable carbon accounting. The results were published in Nature. One key issue identified is the difficulty of accurately assessing the effects of decarbonization policies and investments. In many parts of the world, monitoring the effect of carbon reduction policies is hampered by the lack of real-time, localized carbon emissions measurements. Last year, we reported on our university collaboration that used neural networks (AI models) to develop more accurate and significantly faster simulations of the complex, nonlinear relationship from historical carbon emissions to atmospheric carbon concentrations. With funding from MCRI, we have expanded these efforts to make the data and technology improvements needed to develop an AI model to predict localized carbon emissions from abundant data on atmospheric carbon concentrations. This AI-based inverse method reduces computation time from weeks to hours, while still maintaining accuracy.\nPartnerships with external experts are critical to catalyzing Microsoft's work to address key global sustainability problems. We partner with sustainability experts, scientists, and academics around the globe to advance our sustainability work.", "chunk_word_count": 485, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Enabling more sustainable decision making in agriculture", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 67, "page_start": 67, "page_end": 68 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 61, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Pursuing climate solutions through computational foundations\nThe Microsoft Climate Research Initiative (MCRI), launched in June 2022, aims to advance the computational foundations, partnerships, and tools needed to achieve a carbon negative future globally. Together with external sustainability experts, Microsoft scientists identified fundamental bottlenecks to mitigating and adapting to the climate crisis. To pursue solutions, researchers then narrowed their focus to bottlenecks for which computational approaches, such as those pursued by AI4Science, could be transformative. From this analysis, researchers selected three priority focus areas: reliable accounting of carbon emissions, materials engineering for carbon removal and reduction, and climate risk assessment. MCRI now supports projects in these three areas with collaboration between Microsoft researchers and external academics and is establishing a global community of research partners to complement Microsoft's internal computational expertise and infrastructure. A complete list of MCRI projects is available on our website.\n### Engineering materials for carbon removal and reduction\n### Strengthening nature-based solutions for climate", "chunk_word_count": 173, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Pursuing climate solutions through computational foundations", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 68, "page_start": 68, "page_end": 68 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 62, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Assessing climate risk\nWe are collaborating with scientists and research institutions around the world to improve measurement and accounting methods for climate solutions.\nMost climate risk assessments today do not adequately reflect the true exposure of society and businesses to climate-related risk, as explained by Microsoft and global experts in a Nature Communications paper. The development and applications of emerging science and technologies can help drive a step change in climate risk assessments. We have partnered with the UK Met Office to build the world's most powerful supercomputer for weather and climate, and with CSIRO to build a science-based climate intelligence platform for Australia. We are also partnering with climate researchers to use AI to improve the assessment and management of climate risks. We have advanced subseasonal forecasting by incorporating machine learning, which we are also using to better understand the cause-and-effect relationships between physical and societal risks. Researchers at Microsoft, the Universitat de Valencia, and the University of Reading are collaborating to demonstrate the usefulness of causal machine learning methods for climate risk assessment, in the context of food security in Africa. The project plans to blend expert domain knowledge from NGOs working in the Horn of Africa with advances in causal machine learning techniques and tools, such as the CAUSEME web platform and the EconML software package, to better understand the impact of humanitarian interventions on food security in this region.\nDirect capture of carbon from ambient air is a technology with great promise, but scaling it requires efficiency and cost improvements. We're using AI to identify materials that can lead to such improvements. Metal-organic frameworks are a class of materials that can balance the tradeoff between adsorbing significant amounts of carbon dioxide from the atmosphere and the energy required to release the adsorbed molecules for cost-effective storage or reuse. Researchers at Microsoft and the University of California, Berkeley are collaborating to use AI methods to find optimal metal-organic materials that balance this tradeoff and offer other properties required for economic and safe carbon removal.\nRestoring and protecting nature is vital to reaching net zero, while building resilience to climate change is already underway. However, it can be difficult to properly measure and account for the climate benefit of investments in nature. We are collaborating with scientists and research institutions around the world to improve measurement and accounting methods for nature's contribution to climate solutions. For example, through collaborations with researchers at Concordia and Simon Fraser universities, we demonstrated that temporary carbon stored in nature can lead to permanent climate benefits by reducing peak warming, as long as it is pursued as a complement to emissions reductions. This work was published in Nature's Communications Earth and Environment journal.", "chunk_word_count": 466, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Assessing climate risk", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 63, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Climate Innovation Fund\nWe think broadly about the impact of our CIF investments. We invest to help Microsoft achieve our own operational needs, accelerate the development of technologies that will help our customers and partners, and rapidly increase the scale of the global sustainability market. Microsoft has a unique perspective in the market for climate technologies. In addition to investments made through CIF, we are also a buyer in carbon, water, and waste solutions, and a donor of grant capital. We have enabled a portfolio of climate innovations that have a collective potential for climate impact that we believe is far greater than any individual approach can achieve by itself.\n### Investing to scale carbon and renewable energy markets\n### Supporting commercialization with blended capital\nOur commitment to climate innovation extends through our $\\$ 100$ million grant to the Breakthrough Energy Catalyst platform. Catalyst both funds large demonstration projects and invests in first-of-their-kind projects that use key emerging climate technologies, such as clean hydrogen, direct air capture, long duration energy storage, sustainable aviation fuel, and manufacturing to decarbonize cement, steel, and plastics. The focus is on accelerating the scaleup of these technologies which will be required for an economywide net zero transition.7\n### Scaling carbon removal\nWe are investing in the development and growth of carbon markets. Our investment in Heirloom will support the deployment of durable, scalable carbon removal, which combines the advantages of carbon mineralization and direct air capture. We have also selected Heirloom as part of our portfolio of carbon removal purchases. With the combination of investment and purchasing, we're enabling Heirloom to scale its ability to sequester tens of millions of tons of carbon by the end of the decade.7\n### Investing in climate innovation\nMicrosoft is investing to accelerate climate innovation through our $\\$ 1$ billion Climate Innovation Fund (CIF). In 2021, we also made a $\\$ 100$ million grant to Breakthrough Energy's Catalyst platform. With the CIF, we invest in innovative technologies and business models that have the potential for meaningful, measurable climate impact by 2030.", "chunk_word_count": 358, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Climate Innovation Fund", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 70, "page_start": 70, "page_end": 70 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 64, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Investing in water and resilience\nVerifying carbon-free energy consumption We have invested in FlexiDAO to reliably track and verify carbon-free energy consumption. Its tool traces electricity and its carbon footprint every hour of the day, providing the transparency customers need. FlexiDAO will also accelerate Microsoft's ability to reach our 100/100/0 clean energy commitment by enabling us to transparently verify granular carbon-free energy consumption for datacenters. FlexiDAO is currently tracking around 1.5 million tons of carbon dioxide equivalents per year across 14 customers in Europe, North America, and South America.\n[IMAGE CAPTION] Our investments are accelerating climate breakthroughs.\nEvery community deserves an opportunity to prosper in this new world, and many of the negative effects of climate change will be a result of water scarcity. That's why we've invested in SOURCE Global, PBC to help scale its hydropanel water system, which works entirely off the grid and provides clean drinking water in a variety of climates and conditions, including arid, remote locations.\nOur investments are more than a financial transaction. We help to unlock the financial bottlenecks holding back climate entrepreneurs from achieving significant scale at a price point that can compete with more carbon intense alternatives. Our flexible investment approach allows us to fund climate innovators through a variety of investment vehicles, matching the type of capital that is most suitable to a given technology and stage of maturity. We also work across Microsoft to identify operational partnerships, such as procurement contracts, that drive commercial traction and growth.\nFor example, in Navajo Nation, 40 percent of homes have no running water. To date, Navajo Nation leaders have installed SOURCE Hydropanels on more than 540 homes, bringing these families clean, safe drinking water, often for the first time.7\n### Advancing carbon transformation\nThis year, we announced a partnership with Alaska Airlines and Twelve in which our travel procurement team will use Twelve's sustainable aviation fuel (SAF) to reduce carbon emissions from Microsoft business travel. The partnership follows our investment in Twelve last year to develop new carbon transformation pathways for SAF production.7\nMicrosoft has allocated over $\\$ 600$ million into a global portfolio of more than 50 investments, including sustainable solutions in energy, industrial, and natural systems. Our investments are selected based on four principles: the technology's potential for climate impact, the company's inclusion in an otherwise underfunded market, the investment's impact on climate equity, and the investment's alignment with Microsoft's own operational needs.\nClimate Innovation Fund (continued)\n### Our 2022 learnings\n[IMAGE CAPTION] solutions benefit underserved communities and markets.", "chunk_word_count": 435, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Investing in water and resilience", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 70, "page_start": 70, "page_end": 71 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 65, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### What's next\nBlended capital partnerships unlock new markets Microsoft's approach to investing in blended capital instruments, such as the Eversource Capital managed Green Growth Equity Fund in India, has enabled us to effectively deploy capital in emerging markets alongside both public and private sector capital providers.\nAs we continue to invest in the innovative technologies and businesses to scale carbon reduction and removal globally, we are particularly interested in investment opportunities which expand our geographic focus and ensure underserved markets and communities benefit from climate solutions. Our investing themes will continue to evolve to address the rapidly changing challenges of climate change.\nEarly adoption catalyzes a virtuous cycle Combined capital and demand during the early commercialization stages of innovation trigger a positive feedback loop of scale and cost reduction. As both an investor and a buyer of sustainable products, Microsoft is advancing climate solutions along the commercialization curve to make them affordable and scalable for others.\nInnovation spans geographies \nThe collective action of technology developers, capital providers, policymakers, and enterprise customers offers a path to international prosperity in decarbonization.\n### Policy and advocacy\n### Key projects\nIn the European Union, we supported a comprehensive decarbonization plan with ambitious measures to scale uptake of renewable energy, and informed Europe's emergency measures to face the energy crisis. We actively engaged in the development of the regulatory framework for the certification of carbon removals, calling for strict standards for high-quality, accountable, and long-lasting carbon removals. As Europe leads the way on upgraded transparency and disclosure of environmental, social, and governance information across global value chains, we have endorsed the buildout of a level playing field for corporate sustainability reporting. We have also engaged and supported the drive to increase\nthe circularity of devices, boost transparency and efficiency in waste management policies, and empower consumers with better information.\n### Advocating for robust policy in carbon, electricity, water, waste, and ecosystems", "chunk_word_count": 332, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > What's next", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 71, "page_start": 71, "page_end": 72 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 66, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Using our voice to advocate for net zero\nGlobally, Microsoft advocated for public policies to accelerate climate action; invest in mitigation, adaptation, and a just transition; and align international climate reporting and disclosure rules. At COP27, Microsoft called on countries to remain committed to the target of limiting global warming to $1 . 5 ^ { \\circ } \\mathsf { C }$ . In response to the UN Secretary-General's call to action to develop early warning systems for all within the next five years, Microsoft joined global leaders in support of this initiative while highlighting the fundamental role that technology can play in these efforts.\nOver the past year we have deepened our policy engagement on carbon, electricity, waste, and ecosystems.\nWe believe that Microsoft and the broader private sector have an important role to play in advocating for effective and innovative sustainability policies. When we announced our commitment in 2020 to become carbon negative by 2030, we pledged to use our voice on public policy issues to help advance global decarbonization efforts.\nIn the United States, we advocated for climate and energy investments as part of the recent US infrastructure and climate laws, including the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. In addition, we shared our support for a robust and consistent framework for climate disclosure requirements by the US Securities and Exchange Commission and provided comments to the requests for information climate disclosure for US federal procurement. Microsoft continued to encourage tree planting and reforestation efforts through our support of the Trillion Trees $\\mathsf { A c t } ,$ as well as efforts to improve the health of old-growth forests by supporting the Save Our Sequoias Act. At the state level, we supported legislative and regulatory efforts to accelerate the clean energy transition by encouraging the integration of zero-emission generation and improving the resilience of the electric grid.\nWe understand that public policies will play a critical role, both in creating signals to spur the economic and social transition required to address climate change and in building the foundations of markets to develop and deliver innovative goods, services, and skills to achieve that transition. However, there is a growing gap between the pace of desired policy outcomes and economic and scientific indicators that show accelerating climate impacts. To help close this gap and support communities and companies in their efforts to achieve their climate pledges, governments around the world need to accelerate policy action.\nWe continue to use our voice on public policy issues to help advance global decarbonization efforts.\nPolicy and advocacy (continued)\n### Sharing principles that guide our policy work in carbon and electricity", "chunk_word_count": 459, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Using our voice to advocate for net zero", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 72, "page_start": 72, "page_end": 73 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 67, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Making green jobs, skills, and entrepreneurship central to climate action\nUsing its Economic Graph insights, LinkedIn embarked on a major research initiative focused on the rise and proliferation of green skills throughout the labor market. The 2022 Global Green Skills Report brings this research into focus through two key findings: 1) demand for green skills is on track to outpace supply, and 2) not only are green jobs growing, but also green skills are becoming increasingly common across existing jobs that are not traditionally thought of as green. At COP26, LinkedIn announced it would be one of the founding partners on the U.S. State Department's Connecting Climate Entrepreneurs initiative, through which the US government will catalyze resources to support job growth by climate entrepreneurs in the global south.\nTo support our policy work, we published briefs on carbon and electricity policy to share the priorities and principles that guide Microsoft's policy advocacy work around the world. The principles we set forth are grounded in our focus on achieving tangible results, enabling a flexible rather than one-sizefits-all approach, and recognizing the important role that digital technologies will play as we expand market opportunities for all. We developed these two policy briefs together to underscore the integral and complementary role that electricity policy plays in addressing climate change. We also recognize that there are critical energy issues that go beyond climate change such as the availability of electricity for all, affordability, and environmental justice. Similarly, there are carbon issues that go beyond energy. As we tackle these issues in parallel, we are mindful that our policy work will need to expand in the future and consider these policy briefs as foundations for future work on issues like water and waste.\nLinkedIn embarked on a major research initiative focused on the rise and proliferation of green skills throughout the labor market.\n### Strategic partnerships\n### Carbon Call\n### Green Software Foundation", "chunk_word_count": 334, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Making green jobs, skills, and entrepreneurship central to climate action", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 73, "page_start": 73, "page_end": 73 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 68, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Green activation in games\nMicrosoft is a founding member and participating organization of the Carbon Call, a multiple stakeholder initiative focused on advancing more reliable and interoperable global carbon accounting. The initiative accelerates work to improve measurement, reporting, and verification of GHG emissions and removal. It uncovers and addresses gaps in existing carbon accounting systems, focusing on carbon removal and land sector, methane, and indirect emissions.\nMicrosoft is a founding member of the Green Software Foundation, which is focused on building a trusted ecosystem of people, standards, tooling, and best practices for building carbon aware software. The foundation is creating carbon aware software industry standards, driving awareness, growing advocacy, and accelerating innovation to enable developers to reduce the carbon emissions of the software platforms that they build.\nMicrosoft believes that we have the responsibility to inspire generations about sustainability through green activation in our games. Some highlights include partnering with Ubisoft to deliver Project Rebirth, the Riders Republic in-game tree-planting campaign and climate march. Mojang Studios provides free educational Minecraft content for players and schools globally, created with partners including the Nobel Peace Center, UK Environment Agency, and C40 Cities. The team launched a series of Minecraft maps with BBC Earth based on the new documentary series Frozen Planet II to teach players about the impacts of climate change. Minecraft added mangroves and created the “Rooted Together” campaign with documentary videos about mangroves, a free map, and charity livestreams that with the company donation raised $\\$ 227,000$ for The Nature Conservancy.\n### Driving deeper engagement on climate action\nGetting to net zero is going to take more than investments, technology, and commitments. We'll need to use all those together in multiple sectoral and stakeholder organizations that drive full ecosystem change. Microsoft spearheads and participates in many of these efforts.\n### First Movers Coalition", "chunk_word_count": 319, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Green activation in games", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 74, "page_start": 74, "page_end": 74 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 69, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### IMEC Sustainable Semiconductor Technology and Systems (SSTS)\nMicrosoft is supporting development of new markets for high-quality durable carbon dioxide removal through participation in the First Movers Coalition. The coalition is a global initiative harnessing the purchasing power of companies, along with innovative carbon removal technologies, to decarbonize seven “hard to abate” industrial sectors that currently account for 30 percent of global emissions: aluminum, aviation, chemicals, concrete, shipping, steel, and trucking.\nIn 2022, Microsoft joined the SSTS initiative to tackle one of the largest contributors to Microsoft's Scope 3 carbon emissions—the silicon chips that power our Windows PCs, Xbox devices, and datacenter servers. SSTS is an industrywide initiative aimed at creating a detailed emissions profile of the semiconductor fabrication process, which will deliver insights about the electricity, materials, and water required to manufacture each chip that we purchase. This in-depth look at chip manufacturing will allow us to identify the biggest sources of emissions, not only at the fabrication facilities, but deeper in the supply chain, helping us target reductions where it matters most. We will also incorporate this data into our lifecycle assessment frameworks, ensuring that every hardware project at Microsoft can make the right tradeoffs to maximize sustainability.\nMicrosoft is a founding member and participating organization of the Carbon Call, a multiple stakeholder initiative focused on advancing more reliable and interoperable global carbon accounting.\n### Transform to Net Zero (TONZ)\nMicrosoft is a founding member of TONZ, a crosssector initiative to accelerate the transition to an inclusive net zero global economy. The group's 2025 goal is for the world's largest 1,000 companies to have targets backed up by transformation plans to achieve net zero no later than 2050. The initiative develops and delivers research, guidance, and implementable roadmaps to enable all businesses to achieve net zero emissions.\n### Playing for the Planet\nXbox is a founding partner of Playing for the Planet, a UN Environment Programme facilitated initiative focused on reducing the impact of the gaming ecosystem on the environment through better carbon accounting and educating gamers everywhere on sustainable causes.\n### CEO Water Mandate and Water Resilience Coalition\n### WASH4Work\n### Circular Electronics Partnership (CEP)", "chunk_word_count": 373, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > IMEC Sustainable Semiconductor Technology and Systems (SSTS)", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 74, "page_start": 74, "page_end": 74 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 70, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\nRecognizing the importance of quantifying the volumetric water benefits of WASH investments, Microsoft is a member of WASH4Work and an active participant in developing an accounting method to measure WASH activities. This work is organized through WASH4Work, a UN initiative facilitated by the Pacific Institute in collaboration with LimnoTech and Water.org. The new volumetric water benefit accounting (VWBA) for WASH will more effectively account for a variety of different types of water access and sanitation projects (ranging from well restoration to toilet installation).\nCEP unites leaders in technology, consumer goods and waste management, to identify how to improve circularity. CEP aims to reimagine the value of electrical products and materials using a lifecycle approach, reducing waste from the design stage through to product use and recycling. As a member, Microsoft contributed to the development of CEP's Roadmap, which provides clear action pathways in the form of key interventions. Acting as a guide, the Roadmap identifies vital players such as industry leaders, partner organizations, research institutes, and NGOs, and suggests how to overcome challenges and enable scalable circularity.\nLast year the Healthy Country AI Digital Training program was launched in collaboration with North Australian Indigenous Land and Sea Management Alliance (NAILSMA), CSIRO, the Australian government's National Environmental Science Program (NESP) Resilient Landscapes Hub, Women in STEM and Entrepreneurship program, Charles Darwin University, the Telstra Foundation, and Microsoft. With a focus on Indigenous digital inclusion, the Indigenous-led and co-designed program aims to provide on-ground digital skills that will deliver environmental, cultural, and economic benefits for local Indigenous communities and Indigenous land and sea management practitioners in remote regions of northern Australia.\nAcknowledging the importance of collective action and collaboration to solve shared water challenges, Microsoft has endorsed the United Nations Global Compact CEO Water Mandate, an initiative in cosecretariat with the Pacific Institute, since 2018. In 2020, Microsoft and six other companies, together with the UN Global Compact CEO Water Mandate, spearheaded the establishment of the industry-driven Water Resilience Coalition (WRC). Microsoft serves as a coalition leader and has pledged its commitment to collective action, net positive water impact, resilient value chain, and global leadership.\n### Ellen MacArthur Foundation\n### Group on Earth Observations Biodiversity Observation Network (GEO BON)", "chunk_word_count": 374, "section_path": "2022 Environmental Sustainability Report > CSIRO > Ellen MacArthur Foundation", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 75, "page_start": 75, "page_end": 75 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 71, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\n### WRI Aqueduct\nMicrosoft is a Network Partner of the Ellen MacArthur Foundation, which is focused on developing and promoting the idea of a circular economy. We are elevating opportunities for Microsoft employees to learn and engage on topics of the circular economy through community platforms, workshops, events, courses, and collaborative projects.\n[IMAGE CAPTION] Strategic partnerships are critical to accelerating climate action.\nWorld Resources Institute's Aqueduct is preparing new projections on water stress, demand, and supply, expected by early 2023, supported by inaugural Aqueduct Pro Sponsors Microsoft. These will be among the first water projections using the latest CMIP6 climate forcings from the IPCC Climate Change 2022: Impacts, Adaptation and Vulnerability report. Microsoft Azure was used in every step of the project from hydrologic modeling to data processing to indicator visualization. The future projections will equip Aqueduct users with the best available information on climate-related water risks that they can then factor into internal water strategies, sustainable water management plans, ESG ratings, and contextual water targets.\nFostering global connections and collaboration will be critical to address biodiversity change and the action required to protect and restore ecosystems. In the past year, Microsoft broadened our work with GEO BON to connect with a worldwide network of scientists to enable a scalable approach to expand the global network of biodiversity observation networks and the use of essential biodiversity variables to support access to robust biodiversity information and insights.\n### Capital Equipment Coalition North America\nMicrosoft is a founding member of the Capital Equipment Coalition North America. We continue to work with the coalition to support the capital equipment industry's acceleration to a closed loop model that preserves and recovers the value of materials across a product's lifecycle, leading to reduced waste and carbon emissions. As a group, we're working towards circularity standards and methodology that measures the environmental impacts of $^ { \\prime \\prime } \\mathsf { X }$ as a Service” models compared to traditional ownership models.\n9,000 \nThe Sustainability \nConnected \nCommunity now \ntotals more than \n9,000 Microsoft \nemployees worldwide who volunteer their \ntime for sustainability initiatives.\n### Employee engagement and green skilling\nEnabling learning for our employees In 2021, we launched a Microsoft all-employee training effort, the Sustainability in Action badge. As of July 2022, more than 13,500 employees around the world completed this foundational training. This year, we launched role-specific sustainability training that provides more targeted content. For Earth Day 2022, hundreds of SCC members contributed to a crowd-sourced “Employee's Guide to Sustainability,” with recommendations employees can use to make sustainability part of their jobs.\n### Employee engagement\nMicrosoft employees around the world, not just those with jobs focused on environmental sustainability, are core to our sustainability mission and we are committed to helping our global workforce integrate sustainability into their roles. We do this by providing learning opportunities and creating channels for them to actively contribute to our sustainability work.", "chunk_word_count": 489, "section_path": "2022 Environmental Sustainability Report > CSIRO > WRI Aqueduct", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 75, "page_start": 75, "page_end": 76 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 72, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\n### Scaling impact through employees and green skilling\nFostering our employee community Since 2018, Microsoft employees have self-organized into a volunteer-led sustainability community, the Sustainability Connected Community (SCC), and found creative ways to take advantage of their diverse experience, skills, and passion to help the company achieve its sustainability commitments. The SCC's mission is to make sustainability part of everybody's job. The SCC now totals more than 9,000 employees with 37 local chapters and counting.\nThe world is at a tipping point of a global transition to focus on environmental sustainability. Microsoft recognizes that our employees play a critical role in advancing our climate innovation. To support our own work in sustainability and the needs of businesses around the globe, we see the need to dramatically change the landscape of green jobs and skilling across industries.\nEmpowering employees to innovate We tap into the ingenuity of our employees by sponsoring a Hack for Sustainability during our annual Microsoft Global Hackathon. In 2021, 787 hackers worked on 143 different sustainability projects. The winning team worked with the nonprofit organization, TerraPraxis, which has since evolved into a strategic partnership with Microsoft. TerraPraxis launched the Repowering Coal EVALUATE solution at COP27.\n[IMAGE CAPTION] The Microsoft SCC has 37 local chapters and counting.\nThis year, our SCC chapters across the globe hosted dozens of volunteer events to drive upskilling and community involvement. Employees partnered with local stakeholders to improve waste management in offices, ran Hackathons to protect and preserve Indigenous languages, and donated time and money to local nonprofits, all while working to ensure environmental justice was factored into the work we do every day. Our LinkedIn community kicked off the fiscal year with a refresh of the Go Green program and onboarded 30 new leads across the globe.\nIn 2022, we saw a 50 percent increase in participation with 1,185 participants, who worked on 206 projects. These projects include providing tools for web developers to use more environmentally conscious engineering practices and creating a tool to generate heat maps for any location, which is critical for protecting vulnerable populations in extreme heat events. The winning project improves the recyclability of hard disk drives by automating the disassembly process and sorting each component for recycle or reuse.\nMicrosoft employees around the world are core to our sustainability mission.", "chunk_word_count": 391, "section_path": "2022 Environmental Sustainability Report > CSIRO > Scaling impact through employees and green skilling", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 76, "page_start": 76, "page_end": 76 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 73, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\n### Green jobs and skilling\nOur LinkedIn team is already providing critical actionable insights into the demand and supply of talent with green skills via the LinkedIn Economic Graph. LinkedIn Learning also offers a growing catalog of sustainability skills. This year, LinkedIn's Economic Graph team published the Global Green Skills Report, including interactive data and a related LinkedIn Learning course, “Closing the Green Skill Gap to Power a Greener Economy”, featuring key insights from the report for policymakers and corporate leaders. To act on the learnings from the reports, we are engaged in the following programs.\nThe gravity of climate change has led more than 3,900 companies, including Microsoft, to announce climate pledges. As we work internally and with other companies, it's clear that the impact on business will be significant and will require a workforce equipped to work on a broad range of sustainability projects. The International Labour Organization (ILO) estimates 18 million net-new jobs will be created by 2030 as a result of meeting the goals of the Paris Agreement.\nTo better understand how to close the sustainability skills gap, Microsoft and Boston Consulting Group studied the work of 15 companies at the forefront of sustainability innovation and change—including across Microsoft itself. Our teams interviewed and surveyed nearly 250 employees whose jobs have sustainability commitments incorporated into their role. We identified new jobs that have emerged, studied the impact on jobs that already exist, and identified in-demand knowledge and skills.\n### Delivering sustainability training\nLinkedIn Learning delivered 11 new courses for members to build in-demand sustainability skills over the past year: Closing the Green Skills Gap to Power a Greener Economy and Drive Sustainability; 34 Things to Know About Carbon and Climate; Green Jobs for Sustainable Careers; Sustainability as an Innovation Opportunity; Daily Habits to Live Sustainably; Introduction to ESG: Environmental, Social, and Governance; Including Sustainability in Your Cloud Strategy; Corporate Finance: Environmental, Social, and Governance; AWS Well-Architected Framework: Sustainability Pillar; Sustainable and ESG Supply Chains; How Tech Drives Sustainability.\nTo meet these sustainability commitments, a vital effort is needed to equip companies and employees with a broad range of new skills needed for sustainability transformation. We published the Closing the Sustainability Skills Gap report to share what we have learned.\n### Linking green jobseekers to employers\nThe LinkedIn platform links green jobseekers to employers looking for green talent. For Earth Month 2022, LinkedIn featured equitable access to green jobs and a new green jobs collection to make it easy for green jobseekers and employers looking for green talent to connect on the LinkedIn platform.", "chunk_word_count": 434, "section_path": "2022 Environmental Sustainability Report > CSIRO > Green jobs and skilling", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 77, "page_start": 77, "page_end": 77 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 74, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\n### Appendix A\nOur Reports Hub available at microsoft.com/ transparency provides a consolidated, comprehensive view of our ESG reporting and data ranging from our carbon footprint to workforce demographics to political donations. This Environmental Sustainability Report is an important part of that overall set of disclosures. For this and other reports, we inform our disclosure strategies with careful consideration of commonly used global standards. We have reported to CDP Climate Change since 2004, and for the last 10 years have made it into the A-list leadership group by earning the highest score band of A for our responses. Additionally, we have reported to CDP Water Security since 2011, and since 2016 have earned A and A- scores for our responses. On climate-related issues, we are committed to fully aligning with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and in FY22 we published our first TCFD report.\n### ESG materiality\n### Forward-looking statements\nOur ESG reporting describes the topics we consider to be the most important to stakeholders when evaluating environmental, social, and governance issues at Microsoft. Therefore, ESG materiality in our reporting does not directly correspond to the concept of materiality used in securities law. A listing of what we currently identify and categorize as our top ESG issues can be found on our website. In 2020, Microsoft conducted a materiality assessment focused on environmental sustainability, which can be accessed in the 2020 Microsoft Sustainability Report.\nThis report includes estimates, projections, and other “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, section 27A of the Securities Act of 1933, and section 21E of the Securities Exchange Act of 1934. These forward looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in our reports filed with the Securities and Exchange Commission. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.\n### How we report\n### Reporting principles and external standards\nMicrosoft works to conduct business in ways that are principled, transparent, and accountable. We annually publish this Environmental Sustainability report to provide information on our strategy, our performance and progress against our goals, and key challenges and trends we see in this work. We also publish our environmental data, which is included in the separate Environmental Data Fact Sheet. We presented greenhouse gas emissions in accordance with the GHG Protocol and management's criteria and select environmental metrics that both reference the Global Reporting Initiative (GRI) Standards and are reported in accordance with management's criteria as of and for the fiscal year ended June 30, 2022 (FY22). Microsoft's environmental data reporting covers global wholly owned and partially owned subsidiaries over which Microsoft has management and operational control, including Microsoft owned and leased real estate facilities and datacenters.", "chunk_word_count": 536, "section_path": "2022 Environmental Sustainability Report > CSIRO > Appendix A", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 79, "page_start": 79, "page_end": 79 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 75, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\n### Governance\nThe Environmental, Social, and Public Policy Committee of Microsoft's Board of Directors provides oversight and guidance on Microsoft's environmental sustainability strategy and commitments. During at least one meeting each year and on an as-needed basis, our President and Vice Chair and our Chief Environmental Officer present to this committee on our overall sustainability agenda, including our climate-related work, and solicit high-level input on new and emerging initiatives. Additional information on Microsoft's corporate governance is available at microsoft.com/investor.\n### Working together with stakeholders\nWe know that the decisions we make affect our employees, customers, partners, shareholders, suppliers, and communities, and we take their voices into account. Microsoft receives input from millions of people each year—from individual customers to policymakers and global human rights specialists. We bring outside perspectives into the company and inform our business decisions through a variety of feedback channels. We go beyond formal channels, proactively engaging with key stakeholders, advocacy groups, industry experts, corporate social responsibility (CSR) rating agencies, CSR-focused investors, and many others. We also share our learnings and practices thereby generating industry dialogue, informing public debate, and advancing greater progress.\n### Appendix B\n### Endnotes\n1. The market-based method includes consideration of contractual arrangements under which Microsoft procures power from specific suppliers or sources, such as renewable energy.\n9. This carbon intensity estimate was calculated by dividing the monthly datacenter emissions associated with usage of SharePoint and OneDrive (including compute, bandwidth, and storage) for each month in Microsoft's 2022 fiscal year by the volume of data stored in these tools as of the end of each month.\n2. Reported emissions for FY20 and FY21 have been recalculated for improved accuracy in accordance with our internal recalculation policy. We were able to disaggregate and identify previously unreported electricity for some of our leased datacenters due to improvements in our ability to capture such data.\n10. Our internal term for this is a “Teams meeting device hour,” which represents a specific device joining a Teams call for an hour. This means that if a given individual dials into a one-hour Teams meeting via their phone for audio and simultaneously via their laptop for screensharing, their participation adds up to two Teams meeting device hours.\n3. The market-based method includes consideration of contractual arrangements under which Microsoft procures power from specific suppliers or sources, such as renewable energy. Management's criteria represents criteria selected or developed by Microsoft which provide an objective basis for measuring and reporting metrics as specified in section 1.10 of our Environmental Data Fact Sheet.\n11. Recycled ocean plastic is made from plastic waste that is recovered from oceans and waterways, cleaned, and processed into recycled plastic resin pellets.\n## 4. ENERGY STAR® estimated annual energy consumption.\n5. To align with definitions in emerging circular economy regulations and more accurately describe the steps we are taking operationally to meet our commitment, in 2022, we adjusted our terminology to “reuse and recycling”. The operational scope, strategy, and metric has not changed.\n## 6. Microsoft Dataverse is required to use the publicly available Microsoft Cloud for Sustainability data model.", "chunk_word_count": 520, "section_path": "2022 Environmental Sustainability Report > CSIRO > Governance", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 79, "page_start": 79, "page_end": 80 }, { "report": "2022 Microsoft Environmental Sustainability Report.pdf", "chunk_idx": 76, "chunk_text": "# 2022 Environmental Sustainability Report\n## 7. This information has been self-reported by the organization and has not been verified by Microsoft.\n8. The underlying methodologies and emissions findings generated from the Emissions Impact Dashboard (EID) for Microsoft 365 differ from those reflected elsewhere in this corporate disclosure. The figures reported here could change in the future due to better data reporting calculation methodologies or because of enhancements to the Emissions Impact Dashboard. The calculations are limited to Microsoft's datacenter emissions associated with commercial customer usage of Microsoft 365 applications; they do not include usage associated with national cloud deployments such as Microsoft US Government clouds and Office 365 operated by 21Vianet.\n### Stay up to date on our progress\nLearn more about our sustainability journey and sign up for news and updates.", "chunk_word_count": 133, "section_path": "2022 Environmental Sustainability Report > 7. This information has been self-reported by the organization and has not been verified by Microsoft.", "document_id": "2022 Microsoft Environmental Sustainability Report", "page": 80, "page_start": 80, "page_end": 81 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 0, "chunk_text": "# Table of Contents1,2\n2022\nbxp\nEnvironmental, Social, & Governance Report\nLetter To Our Stakeholders 4\nKey Performance Indicators 23\nGovernance 59\nCorporate Overview 6\nEnvironmental Impact 28\nLeadership & Oversight 60\nESG Strategy 7\nGreen Building 29\nSenior Management ESG Goals 63\nReporting Methodology 8\nGreen Finance 31\nEthics & Integrity 64\nClimate Strategy 32\nStakeholder Engagement 9\nCybersecurity 65\nGreen Leasing 10\nEnergy 38\nQuality Of Public Disclosures 66\nMateriality 11\nWater 40\nDisclaimers 67\n## Management Approach 12\nWaste 41\nForward-Looking Statements 68\nRecognition 13\nTransportation 42\nAssurance Statement 69\nESG Leadership 15\nBiodiversity 43\nGRI Content Index 72\nGoals & Progress 17\n## Social Impact 44\nSustainable Development Goals 19\nSocial Good 45\nHealthy Buildings 48\nOur Employees 51\nDiversity, Equity, & Inclusion 53\nCareer Development, Training, 56 & Performance\nHuman Rights 57\nCommunity Involvement 58\n## Letter to Our Stakeholders\nBXP’s environmental, social, and governance (ESG) strategy aligns with our mission to envision, develop, and manage exceptional properties that enhance client success, strengthen communities, and advance opportunity. We believe that responsible real estate ownership, investment, and management contributes to progress on economic, social, and environmental issues. In 2022, we remained focused on measurable social and environmental impacts, which we are pleased to detail in this report.", "chunk_word_count": 211, "section_path": "Table of Contents1,2 > Management Approach 12", "document_id": "2022_BXP_ESG_Report", "page": 1, "page_start": 1, "page_end": 4 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 1, "chunk_text": "# Table of Contents1,2\n## In 2022 we continued to advance our ESG efforts by:\n• remaining on track to achieve carbon-neutral operations for Scopes 1 and 2 emissions by 2025,\nachieving our science-based target reductions across emissions Scopes 1, 2, and 3, and committing to setting a target to achieve net-zero across all Scopes by 2050,\n• continuing to focus on energy and water efficiency as space occupancy increased year-over-year, achieving a $3 9 \\%$ reduction in energy use intensity and a $4 5 \\%$ reduction in water use intensity below a 2008 base year,\nThe real estate industry plays an important role in maintaining the economic vitality of our cities and communities, mitigating the climate crisis, and creating diverse and inclusive workplaces. As a long-term investor in our people, our properties, and our communities, we are proud of our leadership position in sustainability and continued progress towards our ESG goals.\n• increasing property area certified under the U.S. Green Building Council Leadership in Energy and Environmental Design (LEED) rating system to 28.6 million square feet, of which $9 3 \\%$ is certified at the highest Gold and Platinum levels,\n• issuing $\\$ 750.0$ million in principal aggregate amount of unsecured senior notes in our fifth \"green bond\" offering and committing to allocate the net proceeds of $\\$ 743.5$ million to \"eligible green projects\" that support our sustainability goals,\n“We are proud of our position and consistent recognition as an industry leader in sustainability and ESG. We will continue to demonstrate our commitment and capacity to conduct our business in a manner that contributes to positive economic, social, and environmental outcomes for our clients, shareholders, employees, and the communities we serve.”\n• identifying actionable diversity goals and executing initiatives in the focus areas of training $\\&$ education, recruiting $\\&$ onboarding, employee engagement, social responsibility, transparency $\\&$ communication, and governance,\n• launching the Women’s (“BXP Shero”), LGBTQ $^ +$ (“BXP Proud”), and Multicultural/BIPOC (“ELEVATE at BXP”) Employee Resource Groups (\"ERG's\") with an extraordinary year-one participation rate of over 1 in 4 employees,\n• partnering with CareerSpring and Project Destined to provide college-level students access to BXP professional experience via mentoring platforms and providing exposure to program alumni for new career opportunities,\nincreasing Underrepresented Business Enterprise1 usage by $34 \\%$ , and • commencing a new depository relationship with a Black-owned bank and continuing our partnership with a minority- and women-owned bank in our November 2022 “green bond” offering.", "chunk_word_count": 408, "section_path": "Table of Contents1,2 > In 2022 we continued to advance our ESG efforts by:", "document_id": "2022_BXP_ESG_Report", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 2, "chunk_text": "# Table of Contents1,2\n## Our ESG leadership was recognized by numerous industry groups and received the distinction of:\nearning Nareit’s 2022 Office Leader in the Light award, \n• ranking among the top real estate companies in the GRESB assessment, earning a seventh consecutive 5-Star rating, and 11th consecutive GRESB “Green Star” designation, being named an ENERGY STAR Partner of the Year – Sustained Excellence Award Winner, being named to the Dow Jones Sustainability Index (DJSI) North America. BXP was one of eight real estate companies that qualified and the only office REIT in the index, scoring in the $9 5 ^ { \\mathrm { t h } }$ percentile of the real estate companies assessed for inclusion, \n• being named to Newsweek’s America’s Most Responsible Companies 2023 list for the third consecutive year. BXP ranked first in the real estate industry with a ranking increase from $3 1 ^ { \\mathrm { s t } }$ overall out of 499 companies in 2022 to $2 9 ^ { \\mathrm { t h } }$ overall out of 500 companies in 2023, \n• increasing our MSCI ESG Rating from “A” to “AA,” \n• increasing our Carbon Disclosure Project (CDP) Climate Change score from “C” to “B,” being named a Green Lease Leader at the highest Platinum level by the Institute for Market Transformation and the U.S. Department of Energy for our strong commitment to high performance and sustainability in buildings, implementing social priorities and policies, and exhibiting best practices in leasing, \n• being named a Best in Building Health winner by the Center for Active Design, and \n• being recognized for having the Best ESG Program by Commercial Property Executive.\nOur experience demonstrates that through our activities as real estate owners, developers, and managers, we can contribute to environmental solutions as a positive force while improving our financial performance and becoming a stronger, more purposeful organization in the process. We are proud of our position and consistent recognition as an industry leader in sustainability and ESG. We will continue to demonstrate our commitment and capacity to conduct our business in a manner that contributes to positive economic, social, and environmental outcomes for our clients, shareholders, employees, and our communities.\n## Corporate Overview\nBXP (NYSE: BXP) is the largest publicly traded developer, owner, and manager of premier workplaces in the United States, concentrated in six markets - Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC. BXP has delivered places that power progress for our clients and communities for more than 50 years. BXP is a fully integrated real estate company, organized as a real estate investment trust (REIT).", "chunk_word_count": 440, "section_path": "Table of Contents1,2 > Our ESG leadership was recognized by numerous industry groups and received the distinction of:", "document_id": "2022_BXP_ESG_Report", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 3, "chunk_text": "# Table of Contents1,2\n## NYSE: BXP1\n### Portfolio1,2\n▸ Primarily Premier Workplaces \n▸ 54.1M net rentable square feet \n▸ 173 office and life sciences properties (including 10 under construction/ redevelopment) \n▸ 14 retail properties (including two properties under construction/ redevelopment) \n▸ Six residential properties (including one property under construction/ redevelopment) \n▸ One hotel\n▸ $\\$ 3.18$ total revenue \n▸ $\\$ 848.9 M$ net income attributable to Boston Properties, Inc. common shareholders \n▸ $\\$ 26.08$ consolidated market capitalization - $\\$ 11.8 B$ equity, $\\$ 14.23$ consolidated debt\nThe Company is listed on the New York Stock Exchange under the symbol “BXP.” As of December 31, 2022, BXP’s portfolio totaled $5 4 . 1 ^ { 2 }$ million net rentable square feet, with $\\pm 9 4 ^ { 2 }$ properties and a $\\$ 1.9$ billion active development pipeline (our share) including redevelopment and new construction totaling 3.2 million square feet. BXP’s 2022 total revenue was $\\$ 3.1$ billion and the net income attributable to BXP common shareholders was $\\$ 848.9$ million. BXP’s consolidated market capitalization was $\\$ 26.0$ billion, including $\\$ 11.8$ billion in equity value and $\\$ 14.2$ billion of consolidated debt. Additional financial information can be found in the Company’s most recent Form 10-K for fiscal year 2022.\n### ESG Strategy\nWe actively work to promote our growth and operations in a sustainable and responsible manner across our six regions. The BXP ESG strategy is to conduct our business, the development and operation of new and existing buildings, in a manner that contributes to positive economic, social, and environmental outcomes for our clients, shareholders, employees, and the communities in which we serve.\nBXP and its employees also make a social impact through charitable giving, volunteerism, public realm investments, and by promoting diversity, equity, and inclusion at our workplace and in the community.\nWe continue to address the needs of our stakeholders by making efforts to maintain and improve our ESG performance across three pillars: climate action, resilience, and social good. Through these efforts, we demonstrate that operating and developing commercial real estate can be conducted with a conscious regard for the environment and wider society while mutually benefiting our stakeholders.\nOur investment philosophy is shaped by our core strategy of long-term ownership and our commitment to our communities and the centers of commerce and civic life that make them thrive. We are focused on developing and maintaining healthy, high-performance buildings, while simultaneously mitigating operational costs and the potential external impacts of energy, water, waste, greenhouse gas (GHG) emissions, and climate change.\nEnergy & Water Efficiency Green Building Renewable Energy Carbon-Neutrality\n## CLIMATE ACTION\nClimate Risk Awareness Asset-Level Preparedness Scenario Analysis Management & Planning\n## RESILIENCE\nHealthy Buildings Community Involvement Employee Programs Diversity, Equity, and Inclusion", "chunk_word_count": 458, "section_path": "Table of Contents1,2 > NYSE: BXP1", "document_id": "2022_BXP_ESG_Report", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 4, "chunk_text": "# Table of Contents1,2\n## SOCIAL GOOD\n### Reporting Methodology\nThis report intends to present information related to ESG performance indicators in a format that is understandable and accessible to our stakeholders. BXP’s reporting is aligned with the Global Reporting Initiative (GRI), the United Nations Sustainable Development Goals (SDGs), and the Sustainability Accounting Standards (SASB). BXP continues to focus on full alignment with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.\nbuildings where we have operational control of building system performance and investment decisions. By concentrating on similarly situated buildings, we can meaningfully benchmark performance and measure the efficacy of our sustainability measures. Unless otherwise noted, data presented in this report relate to occupied and actively managed office buildings. Over time we will continue to assess available data and determine when to expand this report to address other property types and information.\nThis report is focused on the performance of our occupied and actively managed office building portfolio in our Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC regions. Occupied office buildings are buildings with no more than $5 0 \\%$ vacancy. Actively managed buildings are\nAs of the end of 2022, BXP’s 96 occupied and actively managed office buildings totaling 42.8 million gross square feet (SF) accounted for $7 7 \\%$ of the Company’s total in-service portfolio by area.\n[IMAGE CAPTION] Sustainability data and indicators presented in this report are derived from 2022 calendar year performance at BXP’s actively managed and occupied buildings in Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC.\nSEATTLE 2 Buildings 7 Employees 1.7M SF\nBOSTON \n29 Buildings \n307 Employees1 \n14.0M SF\n## SAN FRANCISCO\nNEW YORK 21 Buildings 209 Employees 11.4M SF\n## 8 Buildings \n72 Employees \n5.9M SF\n## LOS ANGELES\n## WASHINGTON DC\n## 21 Buildings \n173 Employees \n7.8M SF", "chunk_word_count": 305, "section_path": "Table of Contents1,2 > SOCIAL GOOD", "document_id": "2022_BXP_ESG_Report", "page": 8, "page_start": 8, "page_end": 8 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 5, "chunk_text": "# Table of Contents1,2\n## 15 Buildings \n12 Employees \n2.0M SF\nREPORTING BOUNDARY\n### Stakeholder Engagement\nWe develop our understanding of the views and priorities of our stakeholders by engaging our supply chain, clients, employees, communities, investors, and partners throughout the lifecycle of our activities. BXP management identifies and seeks to understand the groups and organizations that may affect or be affected by a decision, activity, or outcome of a project. During stakeholder engagement processes, we work closely with our clients, vendors, and service providers to gather knowledge, plan, and implement design solutions, technologies, and programs that drive key performance indicator improvement. We regularly participate in public forums during the development process to seek community input and apply green building standards to manage our supply chain. In our communities, we actively participate in business improvement districts (BIDs), associations, nonprofits, and other civic engagement activities intended to strengthen public-private partnerships and advance sustainability at the neighborhood scale.\nWe continue to engage investors on ESG issues that matter most to them and our other stakeholders. ESG investor engagement in 2022 reached more than 80 firms and was conducted through BXP’s first virtual ESG Investor Update, the 2022 BXP Investor Conference, and several one-on-one meetings with ESG-focused investors.\n### BXP Vendor Engagement Survey\nOur vendor engagement survey which assesses vendor diversity and sustainability is a requirement for all new vendors. The results highlighted below represent all survey responses since the inception of the survey in 2020.\nWe are directly engaged with several third-party suppliers for the procurement of materials and services required for the construction of new development projects and the ongoing operation of our existing buildings. BXP requires all service providers and contractors to comply with applicable laws relating to payment of wages and benefits, worker health and safety, interactions with labor organizations and other workplace laws, such as non-discrimination, proper classification of employees and maintenance of insurance. Respecting the use of unionized labor, BXP is committed to a position of neutrality, guided by the interests of its partners, investors, and clients.\n### Summarized Survey Results\n27% ARE UBEs\n## 22% HAVE AN ENVIRONMENTAL SUSTAINABILITY PROGRAM\n## 37% HAVE PROGRAMS OR INITIATIVES OF THEIR EMPLOYEE POPULATION\n25% HAVE INITIATIVES TO INCREASE EMPLOYEE EQUITY & INCLUSION", "chunk_word_count": 373, "section_path": "Table of Contents1,2 > 15 Buildings \n12 Employees \n2.0M SF", "document_id": "2022_BXP_ESG_Report", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 6, "chunk_text": "# Table of Contents1,2\n## 22% MONITOR WASTE STREAMS\n### Green Leasing\nThe environmental impact of our in-service portfolio is heavily dependent on the behavior of our clients. Effective engagement with our clients is necessary for the successful execution of our sustainability strategy. We have integrated sustainability into our property management practices, regional annual goals, leasing and construction documents, client improvement guidelines, and our routine meetings with existing and prospective clients. In addition to client meetings, we survey regularly to collect feedback regarding client satisfaction. We believe that by developing green buildings we maximize the likelihood of sustainable performance and that through effective stakeholder engagement, we can align efforts toward positive economic, social, and environmental outcomes.\nWe recognize and have taken steps to address the role of our clients in supporting the execution of our sustainability strategy through our leasing activity. Approximately half of our active leases incorporate green lease language and all of our Master Lease forms for our ongoing leasing include the language. BXP has been named a Green Lease Leader by the Institute for Market Transformation and the U.S. Department of Energy for exhibiting a strong commitment to high performance and sustainability in buildings, implementing social priorities and policies, and exhibiting best practices in leasing. To align our sustainability efforts with our clients, our Master Lease forms include cost recovery for capital expenditures made to reduce operating expenses, cost recovery for certifications (including LEED and ENERGY STAR), sub-metering of high-intensity client equipment, and required client energy disclosure (benchmarking). Our internal legal counsel and leasing team actively negotiate our leases with the intent of preserving green lease clauses without alterations or exceptions.\n[IMAGE CAPTION] DRIVING DECARBONIZATION THROUGH LEASING | BXP has executed a Net-Zero Lease at 140 Kendrick Street, which includes lease clauses for necessary retrofits that intend to enable the building to become qualified for the LEED Zero Carbon certification.", "chunk_word_count": 313, "section_path": "Table of Contents1,2 > 22% MONITOR WASTE STREAMS", "document_id": "2022_BXP_ESG_Report", "page": 10, "page_start": 10, "page_end": 10 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 7, "chunk_text": "# Table of Contents1,2\n## GREEN LEASE LEADER\nIn 2022, BXP was named a Green Lease Leader at the highest Platinum level by the Institute for Market Transformation and the U.S. Department of Energy for our strong commitment to high performance and sustainability in buildings, implementing social priorities and policies, and exhibiting best practices in leasing.\n### Materiality\nBXP first conducted a materiality assessment in 2016 to identify the significant economic, social, and environmental issues that impact our business and that are important to our stakeholders. We refreshed our materiality assessment in 2019 and again in 2022, with more input from stakeholders, including clients, investors, community members, and BXP employees. In defining material aspects, BXP has evaluated the main ESG interests, topics, and indicators raised by stakeholders. The results of the 2022 materiality assessment have been used to establish and confirm ESG-related performance indicators for our organization, prioritize resources, and determine the contents of this report. This report prioritizes the following material aspects: economic performance; resource use; energy; GHG emissions; water; waste; customer satisfaction; public transportation; climate preparedness and resilience; green building; local community impact; diversity, equity, and inclusion; and the health, safety, and wellness of our clients and employees. There has been rising interest in ESG issues from our stakeholders, particularly related to healthy buildings, climate action, and diversity, equity, and inclusion. This report includes more information detailing BXP’s efforts to address these important issues.\n[IMAGE CAPTION] 2022 MATERIALITY ASSESSMENT", "chunk_word_count": 241, "section_path": "Table of Contents1,2 > GREEN LEASE LEADER", "document_id": "2022_BXP_ESG_Report", "page": 10, "page_start": 10, "page_end": 11 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 8, "chunk_text": "# Table of Contents1,2\n## KEY\n1. Economic Performance \n2. Ethical Business Conduct/ Whistleblower Protection \n3. Carbon Emissions \n4. Customer Satisfaction \n5. Indoor Air Quality (IAQ) \n6. Non-Discrimination \n7. Equal Pay \n8. Employee Well-Being \n9. Energy Consumption/Efficiency \n10. Environmental Violations \n11. Building Certifications (LEED, ENERGY STAR, BOMA 360, Fitwel) \n12. Health Benefits/Impacts of our Buildings on Occupants \n13. Anti-Harassment Policy \n14. Employee Satisfaction \n15. Walkability and Access to Nearby and Onsite Amenities \n16. Diversity, Equity, & Inclusion \n17. Employee Occupational Health and Safety \n18. Transparency and Disclosure of ESG Performance \n19. Human Rights \n20. Climate Policy Engagement \n21. Water Consumption/Efficiency \n22. Community Involvement \n23. Environmental Impact/Life Cycle of Materials Used \n24. Cyber Risk and Security \n25. Board of Directors Management of ESG Issues \n26. Waste/Recycling/Composting \n27. Physical Climate-related Risks \n28. Access to Public Transportation \n29. Renewable Energy Generation/ Battery Storage \n30. Electrification\n### Management Approach\nThe purpose of the management approach is to control major risks and opportunities for all material financial and non-financial aspects of our business. Material topics identified in our materiality assessment are governed by BXP’s (i) Board of Directors, including the Sustainability Committee of the Board of Directors, (ii) executive management, (iii) Senior Vice President, Sustainability, (iv) Company-Wide Sustainable Operations Committee, (v) regional management and (vi) Property Management, Human Resources, Risk Management, Development, Construction, and Information Services Departments.\nThis document is complemented by a set of key policies with more detailed information about roles, responsibilities, and commitments for the material topics:\n• Code of Business Conduct and Ethics Corporate Governance Guidelines • BXP Environmental Management System Policy on Political Spending Policy Against Discrimination • Workplace Violence Policy\nTargets and actions on our material aspects are included in the “Goals & Progress” and “Sustainable Development Goals” sections of this report. BXP continues to support the advancement of the industry on ESG issues by sharing knowledge and learning from our peers. BXP actively participates in the following industry groups and organizations:\n• National Association of Real Estate Investment Trusts® (Nareit®); • Real Estate Roundtable (RER) Sustainability Policy Advisory Committee (SPAC); • United States Green Building Council® (USGBC®); Global Real Estate Sustainability Benchmark GRESB; • Building Owners and Manager Association (BOMA); and Urban Land Institute (ULI)\n### Recognition\nFITWEL \nBEST IN BUILDING \nHEALTH \nAWARD WINNER \n2023 \nMember of \nDow Jones \nSustainability Indices \nPowered by the S&P Global CSA\n## SUSTAINALYTICSTOP 4 %GLOBAL UNIVERSE\nDJSI NORTH AMERICA 95th PERCENTILE REAL ESTATE\n## GRESB GREEN STAR, 5-STAR RATING\n## MSCI “AA” RATING\n### 28.6 MILLION SQUARE FEET LEED CERTIFIED\n## 40 ENERGY STARCERTIFIEDPROPERTIES", "chunk_word_count": 422, "section_path": "Table of Contents1,2 > KEY", "document_id": "2022_BXP_ESG_Report", "page": 11, "page_start": 11, "page_end": 13 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 9, "chunk_text": "# Table of Contents1,2\n## 100% ENERGY STAR RATED OFFICE PORTFOLIO\n### Recognition\nBXP was named to Newsweek’s America’s Most Responsible Companies 2023 list for the third consecutive year. BXP ranked first in the real estate industry with a ranking increase from $3 1 ^ { \\mathrm { s t } }$ overall out of 499 companies to ${ 2 9 ^ { \\mathrm { t h } } }$ overall out of 500 companies. BXP was also recognized by Commercial Property Executive for having the Best ESG Program in 2022.\nBXP was named an ENERGY STAR Partner of the Year – Sustained Excellence Award Winner. This is the fifth year BXP has been named a Partner of the Year and the third year with Sustained Excellence distinction.\nBXP was named a 2023 Best in Building Health winner for the highest square footage of certified space under the Fitwel rating system. The award was given for BXP’s ongoing leadership in advancing the healthy building movement through Fitwel.\nIn 2022 BXP was selected by the National Association of Real Estate Investment Trusts (“Nareit”) as a Leader in the Light award winner. Nareit’s annual Leader in the Light Awards honor Nareit member companies that have demonstrated superior and sustained ESG practices.\nMember of\n### Dow Jones Sustainability Indices\nPowered by the S&P Global CSA\nBXP was named to the Dow Jones Sustainability Index (DJSI) North America. BXP was one of eight real estate companies that qualified and the only office REIT in the index, scoring in the $9 5 ^ { \\mathrm { t h } }$ percentile of the real estate companies assessed for inclusion.\nBXP has been named a Green Lease Leader at the highest Platinum level by the Institute for Market Transformation and the U.S. Department of Energy for our strong commitment to high performance and sustainability in buildings implementing social priorities and policies, and exhibiting best practices in leasing.\n### ESG Leadership\nBXP has been recognized as an international leader in sustainability and ESG. We maintain strong ESG ratings and focus on improving our performance where it matters for our business and our stakeholders. BXP continues to provide leadership, in our industry and beyond, demonstrating that a focus on sustainability is an essential component of our operational strategy.\n## GRESB\nBXP ranked among the top real estate companies in the GRESB assessment, earning a seventh consecutive 5-Star rating, the highest rating and recognition. It was the eleventh consecutive year that BXP earned the GRESB “Green Star” designation.\nMSCI \"AA\" ESG Rating\nSustainalytics Top $4 \\%$ G l o b a l Universe Low-Risk Score: 12.5\nS&P Global Ratings\nThis Entity Peer Group Range GRESB Range Peer Group Average GRESB Average\n## 2022 Score change -2", "chunk_word_count": 457, "section_path": "Table of Contents1,2 > 100% ENERGY STAR RATED OFFICE PORTFOLIO", "document_id": "2022_BXP_ESG_Report", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 10, "chunk_text": "# Table of Contents1,2\n## 2022 Rating change\nS&P ESG \n95th Percentile \nReal Estate \nScore: 66 \nGRESB \nGreen Star, \n5-Star Rating \nScore: 91\nKatie Gonzalez Senior Sustainability Analyst\nBen Myers Senior Vice President Sustainability\nNeetu Siddarth Manager Energy & Utilities\n“The ambition of our organization and the perseverance of our team drives the execution of business activities aligned with stakeholder economic, environmental, and social priorities. We’re pleased with our progress to date and recognize the important role of the real estate industry. Together with our stakeholders, we will continue to pursue positive performance outcomes and initiatives aligned with our sustainability strategy centered on climate action, resilience, and social good.”\nBen Myers | Senior Vice President, Sustainability\nOur sustainability goals establish targets for energy, GHG emissions, building certifications, water consumption, and waste. In 2016, we achieved our first round of energy, emissions, and water goals three years early, and we achieved our second emissions reduction target in 2019. By resetting company-wide goals, we seek to increase stakeholder awareness and endeavor to drive continuous year-over-year, like-for-like key performance indicator improvement. We have adopted goals with the following specific time frames, metrics, and targets below the noted baseline years:\n### Goals & Progress1\n### STATUS: Complete\n### 32x25 Energy Use Reduction Goal\nNOTES: In 2020 and 2021, we exceeded our energy reduction target but did not claim completion due to the impacts of the COVID-19 pandemic on physical occupancy. As our buildings repopulated in 2022, we officially achieved our energy use reduction goal with a $3 9 \\%$ decrease in energy use intensity when compared to the 2008 baseline year.\nReduce energy use intensity, targets a $3 2 \\%$ reduction by 2025. Units are kBtu/SF.\nSTATUS: In Progress\n### Net-Zero Science-Based Target\nNOTES: BXP intends to set a Net-Zero Science-based Target by committing to the SBTi’s Net-Zero Standard. Companies who commit to the standard have 24 months to establish a net-zero target, inclusive of Scope 3 emissions, which aims to reach net-zero within a timeframe by 2050 at the latest, consistent with limiting warming to $1 . 5 ^ { \\circ } \\mathrm { C }$ . BXP is in the process of evaluating the details of the net-zero target within SBTi's timeframe.\nReduce Scope 1, Scope 2, and Scope 3 GHG emissions intensity, targets net-zero carbon emissions by 2050. Units are ${ \\mathsf { k g C O } } _ { 2 } { \\mathsf { e } } _ { \\iota }$ /SF.2,3,4\nSTATUS: In Progress", "chunk_word_count": 416, "section_path": "Table of Contents1,2 > 2022 Rating change", "document_id": "2022_BXP_ESG_Report", "page": 15, "page_start": 15, "page_end": 17 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 11, "chunk_text": "# Table of Contents1,2\n## 8 39x24 Science-Based Scope $1 + 2$ Emissions Target\nNOTES: We have aligned emissions reduction targets with the climate science. In 2019 the SBTi Target Validation Team classified BXP’s emissions reduction target ambition and has determined that it is in line with a $1 . 5 ^ { \\circ } \\mathsf { C }$ trajectory, currently the most ambitious designation available. The science-based target for Scopes 1 and 2 has been met but will remain in progress pending SBTi validation. See Page 37 for more detail on emissions scopes and calculation methodology\nReduce Scope 1 and Scope 2 GHG emissions intensity $3 9 \\%$ by 2024. Units are ${ \\mathsf { k g C O } } _ { 2 } { \\mathsf { e } } ,$ /SF.2,5\nSTATUS: In Progress\n### 14x25 Science-Based Scope 3 Emissions Target\nNOTES: BXP’s science-based target for Scope 3 focuses on reducing the emissions intensity of Category 2: Capital Goods. The science-based target for Scope 3 has been met but will remain in progress pending SBTi validation. See Page 37 for our full Scope 3 Emissions Inventory and details on the calculation methodologies used.\nReduce Scope 3 – Capital Goods GHG emissions intensity $1 4 \\%$ by 2025. Units are $\\mathsf { M t C O } _ { 2 } \\mathsf { e } / \\mathsf { M } ^ { 2 }$ .\nSTATUS: In Progress\n## 2025 Carbon-Neutral Operations Goal\nNOTES: We have committed to achieving carbonneutral operations, or net-zero carbon dioxide equivalent emissions, by 2025. The commitment includes direct and indirect Scope 1 and Scope 2 emissions associated with BXP operations at actively managed office buildings. The status of our current goal has been reset since we allocated tenant-related GHG emissions to Scope 3 - Category 13 in 2022. See Pages 36-37 for more details.\nReduce Scope 1 and Scope 2 GHG emissions intensity, targets net-zero carbon emissions from operations by 2025. Units are $\\mathsf { k g C O } _ { 2 } \\mathsf { e } _ { \\iota }$ /SF.1,2\nSTATUS: In Progress\nNOTES: We are on track to increase the certification percentage of our actively managed portfolio to $8 7 \\%$ . BXP has added a sustainability-linked pricing component to our credit facility, aligned with our 87x25 Building Certification Goal. Certifications increased from $7 7 \\%$ to $8 6 \\%$ in 2022.\n### 87x25 Building Certification Goal\nIncrease building certifications, including ENERGY STAR, LEED and Fitwel $1 0 \\%$ by 2025. Units are $\\%$ SF certified.\nSTATUS: Complete\nNOTES: In 2020 and 2021, we exceeded our water reduction target but did not claim completion due to the impacts of the COVID-19 pandemic on physical occupancy. As our buildings repopulated in 2022, we officially achieved our water use reduction goal with a $4 5 \\%$ decrease in water use intensity when compared to the 2008 baseline year.\n### 30x25 Water Use Reduction Goal\nCommitment to reduce water use intensity, targets a $30 \\%$ reduction by 2025. Units are gallons/SF.\nSTATUS: In Progress\nNOTES: In 2021 we established a commitment to achieve a $6 0 \\%$ diversion rate by 2025. See the Waste section on Page 41 for more detail.", "chunk_word_count": 539, "section_path": "Table of Contents1,2 > 2025 Carbon-Neutral Operations Goal > 87x25 Building Certification Goal", "document_id": "2022_BXP_ESG_Report", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 12, "chunk_text": "# Table of Contents1,2\n## 2025 Carbon-Neutral Operations Goal\n### 60x25 Waste Diversion Goal\nIncrease waste diverted from landfill, targets a $6 0 \\%$ diversion rate by 2025. Units are $\\%$ diverted.\n### Sustainable Development Goals\nWe believe that our efforts can contribute to resolving the key issues that the global community faces. Our sustainability policies, practices, and projects are aligned with the direction set by the United Nations Sustainable Development Goals (SDGs). We have aligned our efforts with SDG goals 3, 5, 6, 7, 8, 9, 11, 12, and 13. The status of our alignment is provided on Pages 20-22.\n\n### Our Status\n### Goal\n### Potential Impact\nEnsure indoor environments provide exceptional air quality and thermal comfort. Provide employees with programs and benefits that support health and wellness. Align design and operational practices with leading healthy building rating systems and expert guidance.\nPursue third-party \"healthy building\" certification.\nEnsure healthy lives and promote wellbeing\nCreate a diverse and inclusive workplace by following the principles of Equal Employment Opportunity, including, but not limited to decisions concerning recruiting, hiring, upgrading and downgrading, discharge, training, promotions (in all job titles), compensation, benefits, layoffs, returns from layoffs, and social and recreational programs.\nContinue to monitor gender diversity trends, including total women in the workforce $( \\pmb { \\mathscr { L } } ( \\pmb { \\mathscr { P } } ) )$ ), management and above $a \\mathbf { s } \\mathbf { \\textmu }$ ), and BXP’s Board of Directors $\\boxed { 6 } \\textcircled { \\div } \\textcircled { \\div } \\boxed { 9 }$ ). Establish an ERG for women at BXP.\nAchieve gender equality and empower women\nReduce water use intensity 30% by 2025 below a 2008 baseline (45% reduction to date).\n• Regularly conduct water sampling, checking residual chlorine and pH levels.\nEnsure the sustainable use and management of water resources\nContinue to responsibly execute water quality protection practices, including stormwater runoff control, treatment, and mitigation efforts such as rainwater harvesting.\nPrevent abnormal biological growth by periodically purging water from distribution systems and equipment.", "chunk_word_count": 346, "section_path": "Table of Contents1,2 > 2025 Carbon-Neutral Operations Goal > 60x25 Waste Diversion Goal", "document_id": "2022_BXP_ESG_Report", "page": 18, "page_start": 18, "page_end": 20 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 13, "chunk_text": "# Table of Contents1,2\n## 2025 Carbon-Neutral Operations Goal\n### Potential Impact\nReduce energy use intensity 32% by 2025 below a 2008 baseline $1 6 \\%$ reduction to date).\nUse iterative energy modeling during an integrated design process to maximize the energy use reduction below a code-compliant baseline. Increase electrification of thermal systems.\nEnsure access to affordable, reliable, sustainable, and modern energy\n• Develop and operate energy efficient buildings and procure onsite and offsite renewable energy sources.\nResearch technology that reduces energy use and adopt such technology across the portfolio.\nRequire that all service providers and contractors comply with applicable laws relating to payment of wages and benefits, worker health and safety, labor organizations, and other workplace laws, such as non-discrimination, proper classification of employees, and maintenance of insurance.\nInvestments in both new and existing properties support the long-term prosperity of our company, natural environments, and the vital centers of research, commerce, and civic life where we operate.\nEnsure a safe work environment and assist in the economic development of local communities\n• Assess climate change vulnerabilities by modeling future climate scenarios.\nTrain key personnel in climate-related risks and implement tailored Emergency Response Plans at the property level.\nBuild resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation\nIdentify and anticipate climate-related factors during real estate activities, including business continuity, transitional and physical risks such as flooding, precipitation, extreme heat, wildfires, and water scarcity.\n• Maintain risk property insurance at the portfolio level for natural catastrophes, such as flood, fire, earthquake, and wind events. Work with cities and local governments to develop climate resilience plans.\n### Sustainable Development Goals\n### Goal\nPotential Impact\n### Our Status\nContinue to support the advancement of the industry on sustainability issues by sharing knowledge and learning from our peers, industry groups, and organizations committed to sustainable cities and communities.\nPromote diversity, inclusion, equality, and transparency as part of our culture, business activities, and decision-making practices. Areas of priority include recruiting, retention and professional development, review and assessment of our policies with a focus on business partner diversity and other relationships, and community outreach. 2022 Diversity, Equity, & Inclusion highlights are on Pages 53-55.\nParticipate in public-private partnerships that make our cities inclusive, safe, resilient, and sustainable\nExecute new development and major renovation projects that create great public spaces and places.\nIncrease waste diversion rate to $\\textcircled { \\div } \\textcircled { \\div } \\textcircled { \\div } \\textcircled { \\div }$ \nby 2025. \nRequire all new developments to be LEED certified at the silver level or higher. \nTarget a minimum of $f ( 0 ) \\%$ recycled content for building materials by cost on new \ndevelopment projects.\nTarget a minimum construction and demolition debris diversion rate of 75% for all new construction and major renovation projects.\nEnsure the sustainable use and management of resources\nReduce GHG emissions intensity $4 5 \\%$ by 2025 below a 2008 baseline. Execute 1.5°C science-based target by 2025. • Achieve carbon-neutral operations by 2025.\nReduce GHG emissions from operations and prepare for environmental impacts\nKey Performance Indicators\n### Renewable Energy Consumed\n### Energy Absolute\n8,702 MWh GENERATED ONSITE 139,918 MWh PURCHASED FROM THE GRID 220,629 MWh REC PROCUREMENT\n522,504 MWh\n70.7%\n### Energy Like-for-like", "chunk_word_count": 536, "section_path": "Table of Contents1,2 > 2025 Carbon-Neutral Operations Goal > Potential Impact", "document_id": "2022_BXP_ESG_Report", "page": 21, "page_start": 21, "page_end": 24 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 14, "chunk_text": "# Table of Contents1,2\n## 2021 MWh \n675,111 \n4.1% 2022 MWh \n702,991\n### Historical Energy Use Intensity\n[IMAGE CAPTION] Whole Building Historical Market-Based Emissions Intensity3\n74.8\nAverage ENERGY STAR Score\n### 58.1 (kBtu/SF)\nSite Energy Use Intensity\n### Emissions Absolute1\nSCOPE 1 13,394 MtCO2e SCOPE 2 (MARKET-BASED) 30,883 MtCO2e SCOPE 2 (LOCATION-BASED) 101,267 MtCO2 e SCOPE 3 (MARKET-BASED) 184,341 MtCO2e SCOPE 3 (LOCATION-BASED) 204,234 MtCO2e\nMARKET-BASED2 LOCATION-BASED2 44,277 114,661 MtCO2e MtCO2e\n## 1 See \"Climate Strategy\" section on Pages 32-37 for more detail on emissions scopes and calculation methodologies.\n## 2 Represents Scope 1 and Scope 2 emissions from BXP operations.\n## 3 Represents Scope 1, Scope 2, and Scope 3: Category 13 emissions from whole building energy consumption.\n### Historical Water Intensity\n### Water Absolute\n458,309 kGal\n## 20.0% WATER LIKE-FOR-LIKE\n## 2021 $=$ 367,725 kgal 2022 $=$ 441,163 kgal\nWaste Absolute\n### Historical Waste Diversion Rate\n## 47.3% DIVERSION RATE\n## RECYCLED & DONATED\n## 6,680 TONS\n## COMPOSTED 1,282 TONS\n## OTHER\n## 8,884 TONS\n### ENERGY STAR Buildings\n### LEED Certified Floor Area\n### LEED Certification Levels\n### 28.6 MILLION SQUARE FEET CERTIFIED\n## 42 LEED ACCREDITED PROFESSIONALS\n## 49% OF ELIGIBLE FLOOR AREA\n## 40 PROPERTIES CERTIFIED\n## 67%ELIGIBLEFLOOR AREA\n## 52 GREEN ASSOCIATES\n### 21.0 MILLION SQUARE FEET ENERGY STAR CERTIFIED\n### Employment Metrics\n## 52% ARE WOMEN4\n## 47% O LOYEES ARE WOMEN4\n## 780 TOTAL WORKFORCE\n## 172 NEW HIRES\n[IMAGE CAPTION] Gender Diversity Data3\n45% OF ALL MANAGEMENT POSITIONS ARE HELD BY WOMEN4\n21% OF TOP MANAGEMENT POSITIONS ARE HELD BY WOMEN4\n### 17.7 AVERAGE YEARS OF TENURE OF OFFICERS1,2\n9.4\n50% OF JUNIOR MANAGMENT POSITIONS ARE HELD BY WOMEN4\n43% OF REVENUE-GENERATING MANAGEMENT POSITIONS ARE HELD BY WOMEN4\n## AVERAGE YEARS OF TENURE OF OUR EMPLOYEES1\n## 42% OFS M POSITIONS ARE HELD BY WOMEN4\n## 36% DIRECTORS ARE WOMEN\n[IMAGE CAPTION] Ethnic Diversity Data3,4,5 XP defines Officers as high-level management at the Vice President level or above.\n[IMAGE CAPTION] Age Diversity Data3,4 xcludes intern employees; excludes union employees for which the unions control primary aspects of the hiring process; excludes BXP's non-employee directors.\n3As of December 31, 2022. We determine race and gender based on our employees' and directors' self-identification.\n4Includes intern employees; excludes union employees for which the unions control primary aspects of the hiring process; excludes BXP’s non-employee directors. \n5\"Other\" represents American Indian/Alaskan Native, Native Hawaiian or Other Pacific Islander, two or more races, and those that did not self-identify.\n### Absentee & Lost Day Rates\n## 100% OF EMPLOYEES 28 TRAININGS RECEIVED TRAINING OFFERED\n### Alternative Transportation\n## 3,119 TOTAL BICYCLE STORAGE SPACES\n## 428 TOTAL BIKE SHARE UNITS\n### Social & Economic Contributions\n392\n## 345 TOTAL ELECTRICVEHICLE (EV) CHARGING STATIONS\n## 2,569 COMMUNITYSERVICE HOURS\nTRANSIT OPTIONS WITHIN 1/2 MILE WALKING DISTANCE OF NEW DEVELOPMENTS\n## 758 COMMUNITY SERVICE EVENTS\n## 19 TOTAL BIKE SHARE LOCATIONS\n## 5082 UNITS OF HOUSING PROVIDED\n## 218 EMPLOYEES DONATED TIME \\$72.1M2 IN PUBLIC REALM IMPROVEMENTS\n[IMAGE CAPTION] Environmental Impact", "chunk_word_count": 501, "section_path": "Table of Contents1,2 > 2021 MWh \n675,111 \n4.1% 2022 MWh \n702,991", "document_id": "2022_BXP_ESG_Report", "page": 24, "page_start": 24, "page_end": 28 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 15, "chunk_text": "# Table of Contents1,2\n## 218 EMPLOYEES DONATED TIME \\$72.1M2 IN PUBLIC REALM IMPROVEMENTS\n### Green Building\nBXP is a corporate member of the U.S. Green Building Council® (USGBC) and has a long history of owning, developing, and operating properties that are certified under USGBC’s Leadership in Energy and Environmental Design (LEED®) rating system. The LEED Green Building Rating System is a voluntary, consensus-based national standard of design guidelines for high-performance and sustainable buildings. Since 2008, BXP has certified over 28.6 million square feet of our actively managed office portfolio, of which $9 3 \\%$ is certified at the highest Gold and Platinum levels.\n### LEED For Operations and Maintenance (LEED O+M)\nGreen building certification of our existing properties is an important component of our strategy to achieve operational sustainability. BXP continues to actively pursue LEED $\\hphantom { - } 0 + \\mathsf { M }$ certification across our portfolio and has a Company-Wide Sustainable Operations Committee dedicated to sharing best practices. Using the LEED rating system and the Arc platform, we are using performance scoring to benchmark new LEED $0 + { \\mathsf { M } }$ projects across five performance areas: energy, water, waste, transportation, and human experience. Currently, we have certified 21 of our actively managed properties under the LEED $\\hphantom { - } 0 + \\mathsf { M }$ program totaling 18.7 million square feet.\n### LEED For Building Design And Construction (LEED $B D + C$ )\nBXP has a proud history of delivering the greenest buildings in our markets. We target LEED $\\mathsf { B D + C }$ Gold certification or better on all developments. Between 2008 and 2022, we completed 23 LEED $\\mathsf { B D + C }$ certified new office development or redevelopment projects that we currently own and manage, totaling 11.4 million square feet. As of the end of 2022, we are pursuing LEED $\\mathsf { B D + C }$ certification for more than 3.0 million square feet of new office construction.\n### LEED For Communities and LEED For Neighborhood Development (LEED ND)\nBXP certified Reston Town Center in Reston, VA, under the LEED for Communities scorecard. This 2.3 million square foot mixed-used development area earned Platinum certification. In addition, the next phases of BXP’s Reston Town Center development have also earned LEED ND Gold certification.\n[IMAGE CAPTION] A FORCE TO BE RECKONED WITH | A grand symbol of BXP’s responsible growth and capacity to execute smart, sustainable development. Salesforce Tower is a high performance workspace designed to promote the health and wellbeing of its inhabitants. At 1.4 million square feet, the 61-story tower at the former Transbay Transit Center in the South of Market neighborhood was the first in San Francisco to be pre-certified at the LEED Platinum level.\n### Building Materials", "chunk_word_count": 465, "section_path": "Table of Contents1,2 > 218 EMPLOYEES DONATED TIME \\$72.1M2 IN PUBLIC REALM IMPROVEMENTS > Green Building", "document_id": "2022_BXP_ESG_Report", "page": 29, "page_start": 29, "page_end": 29 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 16, "chunk_text": "# Table of Contents1,2\n## 218 EMPLOYEES DONATED TIME \\$72.1M2 IN PUBLIC REALM IMPROVEMENTS\n### Green Building Education\nAs part of our commitment to developing LEED projects, sustainability criteria inform the building materials selection process. These criteria, aligned with the LEED rating system, support sustainable construction material procurement, green building delivery, conservation of natural resources, waste reduction, and occupant health. Project teams review vendor disclosures and aim to cost-effectively procure building materials that are:\nMaintaining and strengthening BXP’s internal green design, construction, and operations capabilities and knowledge base is a key aspect of the Company’s overall environmental strategy. Ongoing training and education of our employees is essential to sustainable operations and growth. We have made a concerted effort to train and accredit our managers and staff in green design, construction, and operations. One hundred sixty-one employees across our development, construction, and property management departments are LEED Accredited Professionals, Green Associates, or Green Professionals, representing ${ 3 4 \\% }$ of all employees in these departments. Sixty-seven building engineers have received Green Professional (GPRO) Operations & Maintenance building skills training, a program that is endorsed by the USGBC. Our trained property management professionals are equipped to effectively engage clients to promote more sustainable client behavior and discover opportunities.\nLower embodied carbon, global warming potential; \nExtracted, harvested, recovered, and manufactured within 500 miles of the project site; \nComposed of the maximum possible recycled content; \nThird-party validated sustainably harvested wood products; and \nNon-toxic and support healthy, productive indoor environments containing no volatile organic compounds (VOCs), urea-formaldehyde, and/or other chemicals of concern.\n### Impacts by Life-Cycle Stage\n### Green Finance\nBXP is a leading REIT in the issuance of green bonds. BXP has marketed and issued an aggregate principal amount of $\\$ 4.3$ billion of green bonds in five separate bond offerings and subsequently provided impact reporting for the first four offerings. BXP expects to issue its impact report for its most recent green bond offering in Q4 2023. Green bonds restrict the use of proceeds to “Eligible Green Projects,\" which are defined as: (i) investments in acquisitions of buildings; (ii) building developments or redevelopments; (iii) renovations in existing buildings; and (iv) client improvement projects, in each case, that have received, or are expected to receive, in the three years prior to the issuance of the notes or during the term of the notes, a LEED Silver, Gold, or Platinum certification (or environmentally equivalent successor standards). The definition of “Eligible Green Projects” includes the Salesforce Tower development project, which has received LEED Platinum certification, and was the project to which BXP allocated the full use of proceeds from its first green bond offering.\n## GREEN BOND IMPACT METRICS AND EQUIVALENCIES1\nImpact metrics quantify the environmental result associated with the allocation of green bond proceeds. The selected metrics and methodology have been informed by The Green Bond Principles Harmonized Framework for Impact Reporting. The impact metrics below illustrate the environmental performance of eleven properties that received or are expected to receive an allocation of green bond net proceeds from the first four offerings.", "chunk_word_count": 508, "section_path": "Table of Contents1,2 > 218 EMPLOYEES DONATED TIME \\$72.1M2 IN PUBLIC REALM IMPROVEMENTS > Green Building Education", "document_id": "2022_BXP_ESG_Report", "page": 30, "page_start": 30, "page_end": 31 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 17, "chunk_text": "# Table of Contents1,2\n## GREEN BOND IMPACT METRICS AND EQUIVALENCIES1\n### Sustainability-Linked Credit Facility\nOn June 15, 2021, Boston Properties Limited Partnership (BPLP) entered its 2021 Credit Facility, which features a sustainability-linked pricing component such that if the Company meets certain sustainability performance targets, the applicable per annum interest rate will be reduced by one basis point. The sustainability-linked pricing component informed the creation of BXP’s 87x25 Building Certification Goal, which targets an increase in building certifications, including ENERGY STAR, LEED, and Fitwel from $7 7 \\%$ to $8 7 \\%$ by 2025.\n### Equivalency Calculations\nThe annual savings associated with the environmental impact metrics based on the allocation of green bond proceeds to the eight Eligible Green Projects are equivalent to the following:\n### Solar Power Purchase Agreements\n### Carbon Emissions\n### Energy\n### Water\nHeating, cooling, and power for 1,346 U.S. homes2,3\nRemoving 3,838 gasoline-powered vehicles from the road annually2,4\nFilling over 19 Olympic-sized swimming pools2,5\nBXP has financed the installation of solar photovoltaic (PV) onsite renewable energy systems with power purchase agreements (PPAs) since 2010. Under a PPA contract, a counterparty designs, finances, builds, owns, operates, and maintains the renewable energy system. BXP agrees to host the system and purchase power generated by the system from the counterparty over the contract term. Advantages of the PPA delivery model include no significant upfront costs to BXP, energy cost savings over the term, and the ability to capture the indirect economic benefit of monetized federal tax credits. As of December 31, 2022, BXP has executed 12 onsite solar PPAs.\n1 There can be no assurance that the actual environmental performance of the “Eligible Green Projects” will not differ materially from the estimates provided.\n2Estimated savings attributable to “Green Bond” proceeds have been adjusted to align with the respective percentages of estimated total project costs as outlined in the Green Bond Allocation Reports published on the BXP Commitment webpage.\n3U.S. Energy Information Administration, 2018 \n4U.S Environmental Protection Agency, 2022 \n5New World Encyclopedia, 2016\n### Climate Strategy\nAt BXP, we believe we can play a leading role in advancing the transition to a low-carbon economy through our climate action efforts. As a long-term owner and active manager of real estate assets in operation and under development, we take a long-term view of climate change risks and opportunities. We are focused on understanding how climate change may impact the performance of our portfolio and the steps we can take to increase climate resilience. We continue to evaluate the potential risks associated with climate change that could impact our portfolio and are taking proactive steps to plan for and/or mitigate such risks.", "chunk_word_count": 440, "section_path": "Table of Contents1,2 > GREEN BOND IMPACT METRICS AND EQUIVALENCIES1 > Sustainability-Linked Credit Facility", "document_id": "2022_BXP_ESG_Report", "page": 31, "page_start": 31, "page_end": 32 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 18, "chunk_text": "# Table of Contents1,2\n## GREEN BOND IMPACT METRICS AND EQUIVALENCIES1\n### Task Force On Climate-Related Disclosures (TCFD)\nWe have aligned our climate-related disclosures with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). The TCFD framework has informed the development of our strategy for identifying and managing both physical and transition risks associated with climate change. As defined by the TCFD framework, physical risks associated with climate change include acute risks (extreme weather-related events) and chronic risks (such as extreme heat and sea-level rise), and transition risks associated with climate change include policy and legal risks, and other technology, market, and reputation-related risks.\n2016\n2020\n2022\n• Met Energy Use, GHG Emissions, and Water Use targets early\n• Established S1&2 Carbon-Neutral Operations goal (0x25) • Reset Waste diversion target (60x25)\n• Met Energy Use and Water Use targets early • Evaluation of a Net-Zero Science-based target (S1,2,&3)\n2017\n2019\n2021\n2015\n• Established targets with a 2008 base year: › Energy Use 15x20 › GHG Emissions (S1&2) $2 0 \\times 2 0$ › Water Use 20x20 › Waste Diversion 65x20\n• Met second GHG reduction target • Established Science-based targets at the 1.5 degree level with a 2018 base year › GHG Emissions - S1&2 (39x24) › GHG Emissions - S3 (14x25)\n• Established Building Certification target (87x25) • Remained on track to achieve Science-based targets and Carbon-Neutral Operations goal • Disclosed Scope 3 GHG emissions\n• Set new targets with a 2008 base year: › Energy Use 32x25 › GHG Emissions (S1&2) 45x25 › Water Use $3 0 \\times 2 5$ \n• Increased Waste diversion\nOur approach to climate-related issues is informed by robust stakeholder engagement. We are in frequent dialogue with investors, clients, community members, governmental policymakers, consultants, and other non-governmental organizations. We are heavily involved in industry associations and participate in conferences and workshops covering ESG, sustainability, and climate resiliency topics. Through these engagements, we enhance our knowledge of climate-related issues and those issues that are most important to our stakeholders as well as industry best practices.\n### Governance\nManagement’s role in overseeing, assessing, and managing climate-related risks, opportunities, and initiatives is spread across multiple teams throughout our organization, including our Board of Directors, executive leadership and our Sustainability, Risk Management, Development, Construction, and Property Management Departments. BXP has a dedicated team of sustainability professionals focused on ESG issues that coordinate and collaborate across corporate and regional teams to advance environmental sustainability issues and initiatives. As a vertically integrated, full-service real estate company, we are engaged in addressing climate-related issues at all levels of our Company. In 2021, our Board of Directors established a new, Board-level Sustainability Committee to, among other things, increase Board oversight over sustainability issues, including climate-related risks and opportunities. The Sustainability Committee directly reports to the full Board of Directors on matters related to the environment, sustainability, climate change, and resiliency.", "chunk_word_count": 481, "section_path": "Table of Contents1,2 > GREEN BOND IMPACT METRICS AND EQUIVALENCIES1 > Task Force On Climate-Related Disclosures (TCFD)", "document_id": "2022_BXP_ESG_Report", "page": 32, "page_start": 32, "page_end": 33 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 19, "chunk_text": "# Table of Contents1,2\n## GREEN BOND IMPACT METRICS AND EQUIVALENCIES1\n### Strategy\nWe continue to proactively assess the potential risks that may impact the properties in our portfolio, but our assessment and analysis remain preliminary as we gather information and monitor the evolving regulatory landscape related to climate change. Our process for assessing climate-related risks and their implications on our properties and business includes conducting climate change scenario analysis on our portfolio assets. In 2021, we engaged Moody’s ESG Solutions (formerly known as the Four Twenty Seven Application), an independent provider of science-driven insights and analytics on climate risk, for its climate risk scoring to evaluate the forward-looking physical climate risk exposure of our entire portfolio. The scenario analysis and physical risk scoring was based on an RCP 8.5 emissions scenario, which is a worst-case, highemissions scenario, under a time horizon up to 2040. The scenario analysis included all in-service assets owned by BXP and included climate events such as hurricanes, wildfires, heat stress, water stress, flooding, and sea-level rise. We are also using Moody’s ESG Solutions data to identify potential risks during the new acquisition diligence process. The analysis of our portfolio yielded no material findings.\n[IMAGE CAPTION] VARYING CLIMATE RISKS | Assessing the climate risk of our entire portfolio is crucial in identifying risks and impacts that may vary across the country. For example, wildfire and water stress risks are typically higher in our West Coast markets when compared to our East Coast markets where hurricane and flooding risks become the main focus.\nWe consider climate-related risks and opportunities in the context of the following time horizons: short-term (1-2 years), medium-term (3-10 years) and long-term (>10 years). Based on the foregoing process for evaluating climate-related risks, including the scenario analysis, we have identified (1) the following potential physical and transition risks associated with climate change that could impact our portfolio in the future across the stated time horizons and (2) BXP’s climate-related opportunities. We will continue to analyze the results of the Moody’s ESG Solutions analysis and the following risks and opportunities to understand our potential exposure and inform our climate resilience strategy and future investments, which include climate-related risk mitigation and initiatives.", "chunk_word_count": 366, "section_path": "Table of Contents1,2 > GREEN BOND IMPACT METRICS AND EQUIVALENCIES1 > Strategy", "document_id": "2022_BXP_ESG_Report", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 20, "chunk_text": "# Table of Contents1,2\n## GREEN BOND IMPACT METRICS AND EQUIVALENCIES1\n### Risk Management\n• Floodable first floors. Temporary flood barriers. Backup generation, emergency lighting, and fire pumps. Onsite energy resources and distributed generation, storage, and solar PV systems.\nBXP is committed to managing the avoidable and avoiding the unmanageable impacts of climate change. Our risk management program includes physical and transition risks, including both climate mitigation (resource efficiency and emissions reduction) and adaptation (integration of climate resilience into our investment decision-making). We are actively acquiring, developing, and operating a geographically diverse portfolio of high-quality commercial real estate properties. Individual assets have unique risk profiles and insurance requirements. Through the processes of acquisition, development, and operation of our in-service portfolio, our experienced real estate professionals are identifying risks, including business continuity risks, loss exposure related to extreme weather events, and impacts of regulation, including permitting requirements, codes, and energy and carbon performance standards. The climate risk profile of each property is largely dependent on the property’s unique attributes, physical location, and jurisdictional regulatory requirements.\nOur exposure to physical climate risks and the resilience of our markets may depend on the actions taken by cities to adapt transportation, energy, and communication infrastructure for extreme heat, weather events, sea-level rise, and flooding. We will continue to influence the adaptation of our cities and management of physical and transition risks by maintaining a voice in policy decision-making at the local level through direct engagement and/or advocacy through collective membership-based groups.\nWe are managing transition risks by, among other things, benchmarking energy, carbon, water, and waste performance at the asset level and are prioritizing interventions at underperforming assets. We develop, operate, and maintain a large portfolio of buildings that are LEED, ENERGY STAR, and/or Fitwel certified. In 2022, $8 6 \\%$ of our actively managed portfolio was certified under one or more of these frameworks. As a leader in green building, we will continue to make investments in building performance, energy efficiency, and decarbonization.", "chunk_word_count": 330, "section_path": "Table of Contents1,2 > GREEN BOND IMPACT METRICS AND EQUIVALENCIES1 > Risk Management", "document_id": "2022_BXP_ESG_Report", "page": 35, "page_start": 35, "page_end": 35 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 21, "chunk_text": "# Table of Contents1,2\n## GREEN BOND IMPACT METRICS AND EQUIVALENCIES1\n### Asset-Level Risk Management\nWe carry all-risk property insurance on our properties including those under development. Insurance coverage mitigates the impact on BXP from losses associated with natural catastrophes, such as floods, fires, earthquakes, and wind events.\nWe are preparing for long-term climate risk by considering climate change scenarios and will continue to assess climate change vulnerabilities resulting from potential future climate scenarios and sea-level rise. We will continue to evaluate existing plans and procedures and proactively implement practical, cost-effective resiliency measures and infrastructure enhancements, including:\nThrough our climate action efforts, we believe we can play a leading role in advancing the transition to a low-carbon economy and taking action to decarbonize operations. GHG sources include the generated electricity and steam at offsite generation facilities, the onsite combustion of fuels (e.g., natural gas), and emissions associated with other business activities, including business travel and new development. We continue to explore and implement creative and cost-effective measures that reduce GHG emissions from our operations. GHG mitigation efforts include energy efficiency measure implementation at existing in-service assets, high-performance new development, onsite renewable energy (e.g., solar PV systems), procurement of offsite renewable energy, public portfolio and asset-level GHG short and long-term reduction targets, engagement of property engineers using real-time energy consumption data, sustainability education, and client engagement.\n• Business Continuity Plans. Emergency Response and Life Safety Plans. Emergency evacuation planning, procedures, and drills. \n• Client engagement and coordination. \n• Life safety analysis. \n• Elevation of vault, switchgear, and critical equipment during new development. \nWaterproofing of subgrade infrastructure.\n### BXP’s Carbon-Neutral Operations Strategy\n[IMAGE CAPTION] STRATEGIC ACQUISITIONS | BXP acquired an interest in 200 Fifth Avenue in November 2022, which included an existing contract to source $1 0 0 \\%$ renewable electricity for the building. Acquisitions such as these are strategic for BXP to meet our Scope 1 and Scope 2 GHG Emissions Goal, our Carbon-Neutral Operations Goal, and our future Net-Zero Science-based Target.\nBXP became a proud signatory of the We Are Still In pledge after the U.S. withdrawal from the Paris Agreement and has aligned emissions reduction targets with climate science. The SBTi Target Validation Team has classified BXP’s emissions reduction target ambition and has determined that it is in line with a $\\pm . 5 ^ { \\circ } \\mathsf { C }$ trajectory, the most ambitious designation available at the time of submission. We are committed to achieving carbon-neutral operations, or net-zero carbon dioxide equivalent emissions, which includes direct and indirect Scope 1 and Scope 2 emissions, by 2025 from our occupied and actively managed buildings where we have operational control. In addition, as an active ULI Greenprint member, we have publicly committed to the ULI Greenprint Net-Zero Operations (Scope 1 and Scope 2) by 2050 Goal. In 2022, BXP signed on to the U.S. Department of Energy (DOE) Better Climate Challenge committing to a $5 0 \\%$ reduction in GHG emissions intensity and a $1 5 \\%$ reduction in energy use intensity across our actively managed portfolio over 10 years.", "chunk_word_count": 512, "section_path": "Table of Contents1,2 > GREEN BOND IMPACT METRICS AND EQUIVALENCIES1 > Asset-Level Risk Management", "document_id": "2022_BXP_ESG_Report", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 22, "chunk_text": "# Table of Contents1,2\n## GREEN BOND IMPACT METRICS AND EQUIVALENCIES1\n### Mitigation Strategy\nOur strategy to achieve carbon-neutral operations includes the following goals:\n1. Energy Efficient Operations – approximately $1 / 3$ of total carbon reductions by 2025 (below a 2008 base year) from energy conservation and efficient operations.\n2. Renewable Energy – Advancement of onsite development of renewable energy systems and sourcing offsite renewable energy to meet $1 0 0 \\%$ of our electricity needs by 2025.\n3. Electrification – Explore and advance electrification, prioritizing electrification of new developments and replacement of onsite gas-fired systems at existing buildings at the end of their useful lives.\n## 4. Carbon Offsets – To the extent necessary, offset any remaining emissions during the transition to carbon-free energy.\nThe SBTi Target Validation Team has classified BXP's target ambition and has determined that it is in line with a $1 . 5 ^ { \\circ } \\mathsf { C }$ trajectory, currently the most ambitious designation available.\n### Metrics\nkilograms of carbon dioxide equivalent $( \\mathsf { k g C O } _ { 2 } \\mathsf { e } )$ per square foot per year. For our Science-based Scope 3 - Category 2: Capital Goods target, we report GHG emissions intensity in $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ per square meter per year.\nBXP works closely with governments, policymakers, strategic partners, and our clients to decarbonize our operating activities with the long-term objective of achieving carbon neutrality. BXP has three existing GHG emissions goals - a 39x24 Scope 1 & 2 Science-based target, a $\\mathtt { 1 4 } \\times 2 5$ Science-based Scope 3 - Category 2: Capital Goods Science-based target, and a 2025 Carbon-Neutral Operations Goal. We are in the process of setting a Net-Zero Science-based target by intending to commit to the SBTi’s Net-Zero Standard for Scopes 1, 2, and 3.\nBXP's 2025 Carbon-Neutral Operations Goal includes direct and indirect Scope 1 and Scope 2 emissions associated with BXP operations at actively managed office buildings. Scope 1 emissions are associated with the onsite combustion of fossil fuels for heating, hot water, and standby generators. Scope 2 emissions include all emissions associated with the offsite generation of electricity and steam consumed by the base buildings. In 2022, we allocated all tenant-related GHG emissions to Scope 3 - Category 13 per the GHG Protocol.\nThe Company monitors and benchmarks all primary sources of GHG emissions at the asset level in absolute units of metric tons of carbon dioxide equivalent $( { \\mathsf { M t C O } } _ { 2 } { \\mathsf { e } } )$ ). For Scope 1 and Scope 2 GHG emissions intensity, we report in\nAs our business continues to grow, carbon reduction targets and the transparent disclosure of ESG metrics will remain a priority. We closely monitor GHG emissions and have provided a detailed Scopes 1, 2, and 3 emissions inventory in the below table and graph.\n## 1 Represents emissions from BXP operations.\nSCOPE 3 CALCULATION REFERENCES \n2GHG Protocol Quantis Screening Tool \n3GHG Protocol's Average-product method for Capital Goods, using Carbon Leadership Forum's embodied carbon benchmarking data. 42021 eGrid GHG Emissions Factors.", "chunk_word_count": 540, "section_path": "Table of Contents1,2 > GREEN BOND IMPACT METRICS AND EQUIVALENCIES1 > Mitigation Strategy", "document_id": "2022_BXP_ESG_Report", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 23, "chunk_text": "# Table of Contents1,2\n## 1 Represents emissions from BXP operations.\n### Energy\n### Energy Management\nManaging energy consumption and implementing energy conservation measures aligns with our objective to provide the greatest benefit to our stakeholders. We continually measure and manage the usage of electricity, gas, and steam using Energy Intelligence Software (EIS), EPA’s ENERGY STAR Portfolio Manager®, and energy audits. Our Regional Managers and Heads of Property Management have annual performance goals with energy, emissions, water, and waste targets. These goals are formulated at the asset level and roll up to regional and company-wide targets.\n[IMAGE CAPTION] Historical Energy Use Intensity\n### Energy Intelligence Software\nSince 2011, BXP has strategically partnered with EnerNOC and Measurabl (formerly Hatch) to deploy real-time energy monitoring infrastructure, including 259 commodity meters at 98 sites. As active managers, BXP leverages interval data, automated alerts, conservation measure recommendations, and increased energy use awareness to optimize facility operations and control utility costs by adjusting Building Management System (BMS) programming, verifying nighttime shutdowns/setbacks, holiday scheduling, peak load shedding, optimizing equipment runtime, and executing strategic demand response events. Across the portfolio, 171 active Measurabl users log in an average of 14 times per month. Using interval data to optimize energy performance, BXP implemented over 14.4 million kWh in automatically generated energy savings measures from 2017 through 2022, resulting in approximately $\\$ 1.6$ million in cumulative avoided annual energy expenses. In 2022 alone, BXP building teams leveraged over 1,500 weather-adjusted energy consumption reports from the Measurabl platform to help benchmark building performance as occupancy continued to fluctuate post-pandemic. Interval data is also used to execute demand response events. Demand response program enrollments have generated demand response payments of $\\$ 4.9$ million over the same six-year period.\n### Energy Conservation Measures (ECMs)\n### Renewable Energy\nWe are committed to identifying and implementing ECMs and capital improvements that reduce energy use. ECMs are reviewed and the projects that meet certain investment criteria are implemented. Since 2015, energy projects have cut annual use by over 33.7 million kWh, saving approximately $\\$ 4.6$ million per year. ECMs include lighting retrofits, HVAC upgrades, and the addition of building management system (BMS) programming and controls.\nIn 2022, BXP generated 8,702 MWh renewably onsite. At specific sites, distributed generation technologies, like solar PV, can produce energy more cost-effectively than traditional technologies. We are pursuing renewable energy projects where these utility cost discounts are evident. We are actively researching and pursuing the adoption of alternative and renewable energy technology, including energy storage, at our existing buildings and new developments. As of December 31, 2022, BXP has executed 12 solar PPAs and the total renewable energy consumed, both generated onsite and offsite, was 369,249 MWh.", "chunk_word_count": 447, "section_path": "Table of Contents1,2 > 1 Represents emissions from BXP operations. > Energy", "document_id": "2022_BXP_ESG_Report", "page": 38, "page_start": 38, "page_end": 39 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 24, "chunk_text": "# Table of Contents1,2\n## 1 Represents emissions from BXP operations.\n### Lighting Improvements\nImplemented measures include the relamping and replacement of fixtures with high-efficiency LEDs and fluorescent lamps. Lighting system improvements also include the addition of occupancy and daylighting sensors and controls. Lighting improvements conserve resources, improve energy efficiency, and provide improved lighting quality that supports healthy and productive indoor environments for our clients.\n[IMAGE CAPTION] MODERNIZING SYSTEMS & AMENITIES | Strong economically performing assets built in the 1960s, like the GM Building, require updating to maintain Class A sustainability and functionality expectations. BXP has advanced execution of a new chiller plant, amenity area, and building management system fault detection that will better serve clients, improve comfort control, and reduce operational energy costs and carbon emissions.\n### HVAC Upgrades\nImplemented measures include a variety of heating, ventilation, and air conditioning improvements. Upgrades have been made to heating and cooling systems, including boiler retrofits, compressor replacements, air handling unit replacements, the addition of variable frequency drives, installation of heat exchangers, and improved filtration on cooling towers. HVAC equipment upgrades and replacement, central plant improvements, modernization and reconstruction projects are helping drive energy savings, and optimize occupant comfort, health, and wellness.\n### BMS Programming & Controls\nImplemented measures include demand control ventilation, airflow stations and monitoring, occupancy sensors, and the addition of direct digital control points to building automation systems. Adjustment of ventilation rates to meet demand improves energy efficiency and air quality, particularly ${ \\mathsf { C O } } _ { 2 }$ concentration. BMS fault detection pilots have been launched in Boston and New York.\n### Water\nWe recognize the growing importance of water conservation, particularly where water scarcity has been an issue. Over the past nine years, BXP has upgraded plumbing fixtures across more than one-third of our in-service portfolio and has continued to execute LEED-certified new development projects that are designed to use $30 \\%$ to $40 \\%$ less water than code. Since 2008, BXP has reduced water use intensity (gallons/SF) by $45 \\%$ .\n### Historical Water Use Intensity\nWe use ENERGY STAR Portfolio Manager to monitor and benchmark water usage in buildings where we have access to water meter data. We prioritize the oldest, least efficient fixtures for improvement, and focus our efforts on some of our largest properties to ensure that we are maximizing our conservation efforts. Implemented improvements include smart controllers, low-flow sprinkler heads, rain sensors, cooling tower retrofits, and infrastructure improvements.\n[IMAGE CAPTION] HARVESTING RAIN | Atlantic Wharf features a half-acre green roof that captures rainwater and has helped to save over 12.5 million gallons of water annually, equivalent to 19 Olympic-sized swimming pools.", "chunk_word_count": 443, "section_path": "Table of Contents1,2 > 1 Represents emissions from BXP operations. > Lighting Improvements", "document_id": "2022_BXP_ESG_Report", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 25, "chunk_text": "# Table of Contents1,2\n## 1 Represents emissions from BXP operations.\n### Waste\nIn partnership with our vendors and clients, BXP has implemented best waste management practices, including single-stream recycling, composting, and $\\mathsf { e }$ -waste programs for solid waste in all our regions. As a result, $4 7 . 3 \\%$ of office waste by weight is recycled, donated, or composted across our portfolio, which is a $3 1 . 3 \\%$ increase since 2008. We also work closely with our vendors and clients to promote responsible waste management practices, including haul trip optimization and composting at cafés and restaurants. In 2016 we established a bold commitment to achieving a $6 5 \\%$ diversion rate by 2020. Unfortunately, we fell short of that goal by a margin of approximately $1 0 \\%$ . Diversion has become more challenging as the economics of recycling have become less favorable and waste haulers have become more discerning regarding contamination (recycling that contains non-recyclable materials). Going forward, we will perform more auditing of waste streams, engage clients to promote recycling, and will make efforts to introduce composting at more sites. In 2021, we reset our waste diversion target to $6 0 \\%$ by 2025.\n### Single-Stream Recycling\nWe have worked across our portfolio with our clients and waste haulers to transition to single-stream recycling programs. Single-stream simplifies recycling. Commingled materials are collected in one container and sorted offsite at a material recovery facility. The advantages of single-stream recycling include increased client participation and potentially higher waste diversion rates.\n### Composting\nOur integrated composting program diverted nearly 1,282 tons of organic material from landfills in 2022. We work with our clients to ensure that they have signage and receptacles, and that our buildings have designated central compost bins with frequently scheduled pickup. Composting produces valuable nutrient-rich soil, avoids potentially significant methane emissions, and reduces the frequency of waste hauls required.", "chunk_word_count": 317, "section_path": "Table of Contents1,2 > 1 Represents emissions from BXP operations. > Waste", "document_id": "2022_BXP_ESG_Report", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 26, "chunk_text": "# Table of Contents1,2\n## 1 Represents emissions from BXP operations.\n### Transportation\nMore than $7 8 \\%$ of the square footage of our properties is in central business districts with ready access to public transportation. Within 0.25 miles of our buildings, our clients and the communities we operate in have access to thousands of alternatives to non-single occupancy vehicle (SOV) transportation, including bike spaces, bike-sharing stations, bus stops, subway stations, commuter rail stations, car share spaces, hybrid spaces, vanpooling spaces, and EV charging stations.\n[IMAGE CAPTION] TRANSIT-ORIENTED DEVELOPMENT | Completed in 2022, 1950 & 2000 Opportunity Way (Reston Next) is a grand example of transit-oriented development. The buildings were constructed adjacent to the Reston Town Center Silver Line Metro Station, multiple Reston Town Center bus stops, and are located less than $^ 1 / _ { 4 }$ mile from the Washington and Old Dominion bicycle trail. The development also includes 200 secure bicycle storage spaces and 125 EV charging stations.\nBXP promotes the use of mass transit by our clients through on-site events, employee newsletters, and one-on-one meetings with client contacts. Our employees support alternative transportation programs by working with local transportation management authorities and supporting the use of carpooling. We encourage our employees to use alternatives to single-occupancy vehicles by subsidizing the purchase of transit passes and enabling employees to fund many of their additional commuting expenses, such as vanpools and parking at public transportation stations, by using pre-tax dollars through our Commuter Benefits program.\n### Biodiversity\nBXP makes efforts to protect and enhance biodiversity and ecosystems during the development of new buildings and the operation of our existing buildings. Much of our new construction involves the redevelopment of existing sites, which conserves natural areas and habitats. In some cases, the redevelopment of sites involves the remediation of soil and water contamination caused by industrial activities by others. We design buildings to minimize light pollution which increases night sky access and reduces the consequences of development for wildlife and people. When we install site lighting, we typically model light levels and specify fixtures that minimize the trespass of light beyond the site boundary. We are also committed to supporting biodiversity by maintaining tree canopy cover and vegetated areas. BXP has several green roofs and has been a leader in urban beekeeping, with seven on-site apiaries. At our Bay Colony complex in Waltham, MA, BXP has installed bat houses to provide habitats for North American bats while also naturally reducing the number of insects on the waterfront property. We have also commissioned four urban farms in our Boston and Washington, DC regions that provide food for local charities. In 2022, BXP did not have any environmental violations.\n[IMAGE CAPTION] PRODUCTIVE ROOFTOPS | BXP has partnered with Dreaming Out Loud in its mission to increase access to healthy food. At Capital Gallery, we have created a rooftop garden that provides fresh and affordable produce to low-income families in Washington, DC.\n[IMAGE CAPTION] BUSY BEES | BXP has commissioned seven on-site apiaries across our portfolio. Bees are vital in pollinating local food crops and vegetation, which is especially important in urban locations. Honey from our beehives is also used by some of our restaurant clients.", "chunk_word_count": 535, "section_path": "Table of Contents1,2 > 1 Represents emissions from BXP operations. > Transportation", "document_id": "2022_BXP_ESG_Report", "page": 42, "page_start": 42, "page_end": 44 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 27, "chunk_text": "# Table of Contents1,2\n## 1 Represents emissions from BXP operations.\n### Social Good\nOur success depends on human capital and the prosperity of the communities that we serve. We are focused on social performance and externalities, including the social and economic impact of our development pipeline, the delivery and operation of healthy buildings, diversity, equity, and inclusion in our workforce, the well-being of our employees, their training and professional development, and our positive contributions to the communities we operate in.\nPeople are the assets and buildings are the equipment that drive our business.\n[IMAGE CAPTION] PUBLIC ART HIGHLIGHT | Ponle Vuelo A Tus Sueños/Let Your Dreams Take Flight, by Yenny Hernandez, was commissioned by BXP and curated by Boston's Now $^ +$ There public art organization in 2022. The Latinx muralist and graphic designer delighted visitors to the Prudential Center with vibrant colors, tropical foliage, and nostalgic imagery related to the Latinx journey in pursuing dreams.\n• Platform 16 - a premier workplace project located in San Jose, California, that is expected to contain approximately 1.1 million net rentable square feet upon completion. The first phase of the development projects includes the construction of an approximately 390,000 net rentable square foot premier workplace building and a below-grade parking garage. The project is registered for LEED $\\mathsf { B D + C }$ certification.", "chunk_word_count": 224, "section_path": "Table of Contents1,2 > 1 Represents emissions from BXP operations. > Social Good", "document_id": "2022_BXP_ESG_Report", "page": 45, "page_start": 45, "page_end": 46 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 28, "chunk_text": "# Table of Contents1,2\n## 1 Represents emissions from BXP operations.\n### The Social and Economic Impacts of New Development\nDevelopment continues to be an important contributor to growth and value creation for BXP. During 2022, we fully placed in service three developments with an aggregate investment of $\\$ 1.1$ billion (our share):\n• 325 Main Street - a premier workplace project with approximately 414,000 net rentable square feet located in Cambridge, Massachusetts. The project is on track to earn LEED BD $+ \\mathsf { C }$ Platinum certification in 2023.\n• Reston Next Office Phase II - a premier workplace project located in Reston, Virginia. When completed, the building will consist of approximately 90,000 net rentable square feet. The project is registered for LEED $\\mathsf { B D + C }$ certification and contributed to the LEED-ND Gold certification in Reston Town Center.\n• 880 Winter Street - an approximately 244,000 net rentable square foot laboratory/life sciences project located in Waltham, Massachusetts. The project is on track to earn Fitwel certification in 2023.\n• 1950 & 2000 Opportunity Way (Reston Next) - a premier workplace project consisting of two buildings with an aggregate of approximately 1.1 million net rentable square feet, located in Reston, Virginia. The project contributed to a LEED-ND Gold certification in Reston Town Center and is on track to earn LEED $\\mathsf { B D + C }$ Gold certification in 2023. The project also earned Fitwel certification in 2022.\n• Reston Next Residential - located in Reston, Virginia. Reston Next Residential is expected to consist of 508 residential rental units upon completion. The project contributed to the LEED-ND Gold certification in Reston Town Center.\nAs of December 31, 2022, our active development pipeline totaled 3.2 million square feet and $\\$ 1.9$ billion in estimated investment (our share), and is projected to deliver over the next several years. The delivery of our new development pipeline includes significant community engagement, public consultation and community benefits, and mitigation. There are several positive externalities associated with the delivery of our current pipeline.\nAdditionally, we commenced seven new development projects of our active development pipeline, with a total anticipated investment of $\\$ 0.6$ billion (our share):\n• 105 Carnegie Center - located in Princeton, New Jersey. The redevelopment is a repositioning of the property. 105 Carnegie Center consisted of approximately 70,000 net rentable square feet of office space. When completed, the building will consist of approximately 73,000 net rentable square feet of laboratory/life sciences space.\n[IMAGE CAPTION] LIFE SCIENCE EXPANSION | The official opening of 880 Winter Street expanded BXP's Life Sciences footprint in Waltham, MA, and helped to create space and place for scientific discovery for the growing demand of companies in the biotechnology sector.\n• 140 Kendrick Street, Building A - a repositioning of a building consisting of approximately 90,000 net rentable square feet in Needham, Massachusetts into a net-zero, carbon-neutral premier workplace building, as defined by the LEED Zero Carbon Certification. When completed, the building will consist of approximately 104,000 net rentable square feet.\n• 651 Gateway - a premier workplace in South San Francisco that is being converted to approximately 327,000 net rentable square feet of life sciences space. The project is registered for LEED $\\mathsf { B D + C }$ certification.", "chunk_word_count": 547, "section_path": "Table of Contents1,2 > 1 Represents emissions from BXP operations. > The Social and Economic Impacts of New Development", "document_id": "2022_BXP_ESG_Report", "page": 46, "page_start": 46, "page_end": 46 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 29, "chunk_text": "# Table of Contents1,2\n## 1 Represents emissions from BXP operations.\n### The Social and Economic Impacts of New Development\n760 Boylston Street - a retail project at the Prudential Center located in Boston, Massachusetts. The redevelopment is a modernization of the space consisting of approximately 118,000 net rentable square feet.\n[IMAGE CAPTION] PLATFORM FOR SUCCESS | Platform 16 will be a three building campus occupying a full city block along the Guadalupe River Park in San Jose, CA. The articulation of the building façades’ different geometries, materials, and colors creates a dynamic architectural presence. Platform 16 is adjacent to Google’s planned 8 MSF transit village and Diridon Station, the largest multi-modal transportation hub in the Bay Area. The first phase of the development began construction in 2022.\n## PUBLIC BENEFITS1\n## TRANSPORTATION\n## JOBS & HOUSING\n### Healthy Buildings\nAs developers and managers of buildings, and occupiers of many of those buildings, we are keenly aware of the influence of buildings on human health. In 2018, we announced a partnership with Fitwel, a leading healthy building certification system, to support healthy building design and operational practices across our portfolio and became a Fitwel Champion. Since then, we have certified 21.3 million square feet of our portfolio under the Fitwel rating system. The aim has been to ground healthy building claims in science by quantifying the benefits of superior air quality, water purity and access, building material composition, indoor environments, and wellness amenities. We have exceeded our Fitwel Champion commitments and were named a Best in Building Health award winner in 2020, 2022, and 2023. These awards were earned for executing more Fitwel certifications by count and building area than any other company in 2019 (2020 award), certifying more Fitwel Viral Response assets than any other company in 2021 (2022 award), and having the highest square footage of Fitwel certified space in 2022 (2023 award). BXP has three Fitwel Ambassadors among our Sustainability, Development, and Property Management teams.\nWe are advancing the following healthy building strategies to promote the positive impact of buildings on human health.\n### fitwel ?\n### Indoor Air Quality\n### Indoor Air Quality (IAQ) refers to the air quality within and around a building as it relates to the health and comfort of the occupants.\n### Monitoring\n### MERV filtration\nBXP manages thermal comfort and air distribution by continuously monitoring space temperature set points and HVAC equipment performance using advanced building management systems. Rigorous air and water quality testing is conducted biannually at a minimum, with samples taken from throughout the building. Results available upon request.\nAll of our properties are provided with filtration which is certified to at least a MERV-13 rating and to a MERV-14 or MERV-15 rating.\nAt BXP, we are committed to developing and maintaining sustainable properties while simultaneously providing healthy indoor environments for our clients, employees, contractors, and other visitors at our properties. As part of a smart-building strategy, our management and engineering teams use real-time energy consumption data to optimize facility operations, including IAQ, and to control energy consumption,carbon emissions, and utility costs. Increasingly, the energy we are using is from renewable sources.\n### HEPA Filters\nPortable hospital grade HEPA filters are provided in our amenity conference rooms, cafes, and fitness centers.", "chunk_word_count": 542, "section_path": "Table of Contents1,2 > 1 Represents emissions from BXP operations. > The Social and Economic Impacts of New Development", "document_id": "2022_BXP_ESG_Report", "page": 46, "page_start": 46, "page_end": 49 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 30, "chunk_text": "# Table of Contents1,2\n## JOBS & HOUSING\n### Fresh air rate\nBXP has confirmed that all base building systems are capable of exceeding the ventilation standard, ASHRAE 62.1. The median fresh air rate capacity at BXP office properties is 36 CFM per person at 200 square feet per person (54 CFM at 300 square feet per person).\n### Consumption\nOur management and engineering teams use real-time energy consumption data to optimize facility operations and control utility costs.\n### Healthy building certification\nSince 2008\nIn response to the COVID-19 pandemic, BXP achieved Fitwel Viral Response Module enterprise certification and building-level certification at all actively managed office properties. The Viral Response Module was created to operationalize policies and practices to mitigate the spread of infectious disease in buildings.\nWe've reduced operational energy intensity by $3 9 \\%$ and water intensity by $4 5 \\%$ . Today, $8 6 \\%$ of our portfolio is LEED, ENERGY STAR, and/or Fitwel certified. 27 M SF of which is at the highest LEED Gold & Platinum levels.\n### Green Cleaning\n[IMAGE CAPTION] LIVING GREEN WALLS | As part of our healthy building and IAQ strategy, several BXP buildings include living green walls as an amenity in our lobbies. Living green walls offer many benefits, including purifying the air, increasing well-being, reducing ambient noise and temperature, and offering a healing environment.\nAll regions have formalized a Green Cleaning requirement with our cleaning vendors to minimize the impact of cleaning products on the environment. Aspects of this requirement include using Green Seal® certified cleaning products, High-Efficiency Particulate Air (HEPA) vacuums, dry cleaning for carpets, and restroom supply products made from recycled materials. Our Green Cleaning program benefits both the janitorial workers within our buildings and our clients because the cleaning methods and products used do not include toxic chemicals that can cause respiratory and dermatological problems. Indoor air quality has also improved because of the use of HEPA vacuums.", "chunk_word_count": 322, "section_path": "Table of Contents1,2 > JOBS & HOUSING > Fresh air rate", "document_id": "2022_BXP_ESG_Report", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 31, "chunk_text": "# Table of Contents1,2\n## JOBS & HOUSING\n### Our Employees1\nOur company culture supports and nurtures our employees and provides a unique competitive advantage. We believe our employees are a significant distinguishing factor that sets BXP apart. As of December 31, 2022, we had 675 non-union employees (we had 780 employees, inclusive of union employees). Our operational and financial performance depends on their talents, energy, experience, and well-being. Our ability to attract and retain talented people depends on a number of factors, including work environment, career development and professional training, compensation and benefits, and the health, safety, and wellness of our employees. We have an established reputation for excellence and integrity and these core values are inherent in our culture and play a critical role in achieving our goals and overall success.\nThere is no substantial portion of our work that is performed by workers who are legally recognized as self-employed, or by individuals other than employees or supervised workers, including employees and supervised employees of contractors. We are not reporting on the work performed by third-party vendors and contractors in the construction and operation of our buildings.\nWe have had no significant variations in employment numbers. As of the end of 2022, BXP had 769 full-time employees and 11 part-time employees, inclusive of union employees. Not inclusive of union employees, BXP had 664 fulltime employees and 11 part-time employees. Approximately $1 3 \\%$ of our total employees are covered by collective bargaining agreements.\nWe believe that the success of our business is tied to the quality of our workforce, and we strive to maintain a corporate environment without losing the entrepreneurial spirit with which we were founded more than 50 years ago. By providing a quality workplace and comprehensive benefit programs, we recognize the commitment of our employees to bring their talent, energy, and experience to us. Our continued success is attributable to our employees’ expertise and dedication.\n[IMAGE CAPTION] MAKING STRIDES AGAINST BREAST CANCER | BXP New York region employees, family members, and regional members of the BXP Shero ERG participated in the annual Making Strides Against Breast Cancer Walk. This was the first year BXP organized a team and participated in this great event which helps to unite communities in the fight against this deadly disease.", "chunk_word_count": 380, "section_path": "Table of Contents1,2 > JOBS & HOUSING > Our Employees1", "document_id": "2022_BXP_ESG_Report", "page": 51, "page_start": 51, "page_end": 51 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 32, "chunk_text": "# Table of Contents1,2\n## JOBS & HOUSING\n### Our Employees1\nWe periodically conduct employee engagement surveys to monitor our employees’ satisfaction in different aspects of their employment, including company performance, leadership, communication, career development, and benefits offerings. Past employee responsiveness to the engagement surveys has been consistently high and the results help inform us on matters that our employees view as key contributors to a positive work experience. Based on the most recent employee engagement survey conducted in 2022, with $9 6 \\%$ responsiveness, the overall company-wide favorability result was a “favorable” rating. The highest scoring statement on the survey with a $9 4 \\%$ favorability score was “BXP conducts its business in accordance with the highest standards and ethical conduct.” We intend to continue to periodically evaluate employee engagement as needed on a meaningful basis. Another indicator of the success of our efforts in the workplace is the long tenure of our employees, $3 5 \\%$ of whom have worked at BXP for ten or more years. The average tenure of our employees is approximately 9.42 years and that of our officers is 17.65 years. In 2022, our voluntary workforce turnover rate was $1 5 \\%$ .\nThe BXP benefit programs are designed to meet the needs of our diverse workforce. These programs help to protect and enhance the well-being, work and personal life balance, and financial security of our employees and their families. BXP offers a comprehensive total rewards strategy in support of our business objectives and in alignment with our company values, market trends, and our goal of attracting and retaining top talent.\n• Work-Life Balance Employee Assistance Program, services include:\n› Personal relationship information (Marriage/Family Issues) Legal consultations and licensed attorneys Financial planning assistance Stress management › Mental illness › Career development › Alcohol/Drug dependency help › Wellness and Self-Help • Subsidized commuter benefit encourages public and alternative transportation • Annual flu shot campaign Value Added Programs provided by our medical benefits provider include: › Telehealth Healthy Baby – Ovia Fertility/Pregnancy Apps › Fitness Reimbursement Weight Loss Reimbursement › Goal Getter – track exercising activity and/or calories to reach fitness goals • Flexible Work Arrangements (including hybrid/remote work)\n### Some of the Benefits that We Offer Our Employees Include:\n• Health (including telehealth), dental, and vision insurance Employee Wellness Program 401(k) retirement savings plan Health care and dependent care flexible spending accounts Income protection plans - salary continuation, long-term disability, and life and AD&D insurance \n• Paid time off - vacation, holiday, and personal days Scholarship Program \n• Tuition reimbursement Employee stock purchase plan Paid Parental and Family Medical Leave Policies \n• Adoption Assistance Program \n• Volunteer Day Program \n• Online cognitive behavioral therapy for mental wellbeing Family Care Program through backup child, adult, and elder care Pet Insurance\nOur Employee Wellness Program, established to encourage employees to improve their health and well-being, offers wellness activities facilitated through an engaging and personalized approach. Program participants receive a reduction in their health insurance deduction cost.", "chunk_word_count": 499, "section_path": "Table of Contents1,2 > JOBS & HOUSING > Our Employees1", "document_id": "2022_BXP_ESG_Report", "page": 51, "page_start": 51, "page_end": 52 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 33, "chunk_text": "# Table of Contents1,2\n## JOBS & HOUSING\n### Diversity, Equity, & Inclusion\nBXP strives to create a diverse and inclusive workplace. It has been, and will continue to be, our policy to recruit, hire, assign, promote and train in all job titles without regard to race, national origin, religion, age, color, sex, sexual orientation, gender identity, disability, protected veteran status, or any other characteristic protected by local, state, or federal laws, rules, or regulations. By implementing this policy, we aim to ensure that all employees have the opportunity to make their maximum contribution to us and to their own career goals.\n### BXP’s notable achievements for 2022 include:\n## NOTABLE 2022 ACHIEVEMENTS\n## GOAL & INITIATIVES\n### Diversity, Equity, & Inclusion Council\nBXP’s Diversity, Equity & Inclusion Council (the “DEI Council”) is an executivesponsored, voluntary, and employee-led committee unified by a mission to promote diversity, equity, inclusion, and transparency as part of BXP’s culture, decision-making practices, and business activities, while also providing a mechanism for positive impact in the communities in which we operate. Since its formation in 2020, the DEI Council has grown to over 33 Council members across our six regions, and each member contributes to the overall mission through leadership in one or more of the DEI Council’s three committees – the Recruiting & Development Committee, the Company Policies Committee, and the Community Outreach Committee – and/or three ERGs including BXP Proud (LGBTQ $^ +$ ERG), BXP Shero (Women's ERG), and ELEVATE at BXP (Multicultural/ BIPOC ERG). Including ERG members, as of December 31, 2022, BXP’s DEI community consisted of 244 members, or $3 6 \\%$ of BXP’s workforce.1 The DEI Council in collaboration with BXP’s CEO, President, and Human Resources Department annually identifies actionable diversity goals and proposes initiatives to advance its mission. In 2022, the DEI Council created a sustainable structure of current and future tracking and organization by consolidating these initiatives into six focus areas: (1) training and workforce education, (2) recruiting and onboarding, (3) employee engagement, (4) social responsibility, (5) transparency and communication, and (6) governance.\nDiversity, Equity, & Inclusion Highlights\n[IMAGE CAPTION] Gender Diversity Data3\n### 9.4 AVERAGE YEARS OF TENURE OF OUR EMPLOYEES1\n### 17.7 AVERAGE YEARS OF TENURE OF OFFICERS1,2\n[IMAGE CAPTION] Ethnic Diversity Data3,5", "chunk_word_count": 376, "section_path": "Table of Contents1,2 > JOBS & HOUSING > Diversity, Equity, & Inclusion", "document_id": "2022_BXP_ESG_Report", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 34, "chunk_text": "# Table of Contents1,2\n## 36 PERCENT OF BXP’S BOARD OF DIRECTORS ARE WOMEN3\n45\nPERCENT OF ALL MANAGEMENT POSITIONS ARE HELD BY WOMEN3,4\n1 Excludes intern employees; excludes union employees for which the unions control primary aspects of the hiring process; excludes BXP’s non-employee directors.\n2BXP defines Officers as high-level management at the Vice President level or above.\n3As of December 31, 2022. We determine race and gender based on our employees' and directors' self-identification.\n4Includes intern employees; excludes union employees for which the unions control primary aspects of the hiring process; excludes BXP’s non-employee directors.\n5\"Other\" represents American Indian/Alaskan Native, Native Hawaiian or Other Pacific Islander, two or more races, and those that did not self-identify.\n[IMAGE CAPTION] DEI AT BXP | In honor of Global Pride, Salesforce Tower displayed the rainbow flag (left). Members of BXP's Multicultural/BIPOC ERG, ELEVATE, in the San Francisco region kicked off their first ERG outing by supporting a local UBE (top right). The “Spilling the T” event, hosted by BXP Proud, featured Tiq Milan, a Black Trans thought leader whose work on equity and inclusion has impacted the world for over a decade. Hilary Spann, Executive Vice President of BXP’s New York Region served as moderator (bottom right).\n### Career Development, Training, & Performance\nAll eligible employees receive an annual performance review. These evaluations are done in the same time frame as the review of annual incentive compensation. One of the general factors on the performance appraisal form requires the supervisor to address whether the employee has a fundamental understanding of our business and a demonstrated commitment to company policies.\n### Training & Education\nWe invest significant resources in our employees’ personal and professional growth and development and provide a wide range of tools and development opportunities that build and strengthen employees’ leadership and professional skills. These development opportunities include in-person and virtual training sessions, in-house learning opportunities, various management trainings, departmental conferences, executive town halls, and external programs. BXP’s Tuition Reimbursement Program also provides educational assistance to employees who successfully complete work-related courses at accredited colleges or universities.\nWe foster an environment of growth and internal promotion and strive for a best-in-class candidate experience for our internal applicants. Open positions are posted, and employees are highly encouraged to apply for promotion within the organization. For 2022, $1 6 \\%$ of our employees were promoted to elevated roles within our organization. Of the employees promoted, $5 0 \\%$ were women and $2 9 \\%$ were non-White.1\n[IMAGE CAPTION] THOUGHT LEADERSHIP | Engineering leaders from all six BXP regions gathered in 2022 to strengthen regional knowledge sharing and collaboration through in-person team building, outlining operational priorities, and sharing successes, challenges, and opportunities.\n1 All data provided in this section refers to BXP's non-union employee workforce (675 employees) as the unions control primary aspects of the hiring process.", "chunk_word_count": 474, "section_path": "Table of Contents1,2 > 36 PERCENT OF BXP’S BOARD OF DIRECTORS ARE WOMEN3 > Career Development, Training, & Performance", "document_id": "2022_BXP_ESG_Report", "page": 54, "page_start": 54, "page_end": 56 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 35, "chunk_text": "# Table of Contents1,2\n## 36 PERCENT OF BXP’S BOARD OF DIRECTORS ARE WOMEN3\n### Human Rights\nBXP is committed to advancing its responsibility to respect human rights. Because we encourage all persons to be treated with dignity and respect, we have adopted the following Human Rights Policy, which aligns with the United Nations’ Universal Declaration of Human Rights. BXP strives to respect and promote human rights within all aspects of the Company. Its policies and directives are integrated within BXP’s literature, such as employee handbooks and code of conduct and compliance trainings. We operate our business in a legal, ethical manner that adds value to society rather than harm. With this, BXP is opposed to both child and forced labor in any form, and we strictly prohibit involvement in any such activities. This Policy includes the following components:\n[IMAGE CAPTION] SDG AND HUMAN RIGHTS ALIGNMENT | Our sustainability policies, practices, and projects are aligned with the direction set by the United Nations SDGs, which support human rights initiatives. For example, SDG 8 includes a goal to protect labor rights and promote safe and secure working environments for all BXP employees within our buildings and on our job sites.\n• A respect for the rights of all persons impacted, both directly and indirectly, by our business; \n• A respect for employees’ rights of freedom of association and to collectively bargain in compliance with applicable labor and employment laws; \n• Compliance with national laws and regulations regarding the protection of human rights; \n• Promote and prioritize diversity and inclusivity; \n• Provide safe and healthy workplaces, compliant with all applicable health and safety laws, regulation, and internal directives; \n• Sustain and safeguard spaces free of violence, harassment, intimidation, and other unsafe or disruptive conditions; \n• Re-assess the needs of the Human Rights Policy as the Company grows appropriate to its size and circumstances; and \n• Carrying out human rights due diligence of adverse human rights impacts.\n### Community Involvement\nWe are a leading property owner and developer. Our local teams are very engaged in their local communities, not only seeking entitlements but also determining how our projects can enhance neighborhood amenities and quality of life. Our community involvement was strengthened in 2022 by our ongoing commitment to volunteerism and philanthropy. Throughout the year, BXP and 218 of our employees donated over 2,569 service hours to 758 community events and contributed over $\\$ 2.1$ M in donations and event funding.\n### The Salvadori Center\nBXP’s New York region supported the Salvadori Center on multiple occasions in 2022. The Salvadori Center uses the built environment, such as buildings, bridges, parks, and communities that surround students’ lives to help them see the relevance of math, science, and the arts.\n### Holiday Toy Drives\n### Reston Holiday Parade\nIn continuation of our ongoing partnership with the United Way of Massachusetts Bay and Merrimack Valley, BXP hosted a Holiday Toy Drive in 2022. Employees donated over 389 toys and gift cards for families in need.\nThis year marked the 31st annual Reston Holiday Parade. The one-of-a-kind, half-mile parade along Market Street welcomes the arrival of Santa and Mrs. Claus in a horse-drawn carriage. Proceeds from the carriage rides benefit local charities.", "chunk_word_count": 534, "section_path": "Table of Contents1,2 > 36 PERCENT OF BXP’S BOARD OF DIRECTORS ARE WOMEN3 > Human Rights", "document_id": "2022_BXP_ESG_Report", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 36, "chunk_text": "# Table of Contents1,2\n## 36 PERCENT OF BXP’S BOARD OF DIRECTORS ARE WOMEN3\n### United Playaz\n### The Hill & Dale Gala\nBXP’s San Francisco team continued their partnership with United Playaz, a program that provides youth with adult support, academic enrichment, and leadership skills to prevent them from entering and re-entering the justice system. BXP donated to the program and helped in setting up their Paint Party event.\nBXP’s Los Angeles region helped to fund the 2022 Hill & Dale Gala. The organization provides Early Childhood Education that nurtures the development of children, families, and educators through inquiry, collaboration, and play.\n## 31 Nights of Light\nIn addition to supporting charities and community groups across our regions, we are committed to enhancing our local, national, and global communities through education and outreach, and volunteering our time with industry groups, such as: BOMA; local chambers of commerce; local tourism organizations and Nareit; government committees including regional and city sustainability efforts and ‘green’ ribbon task forces; building innovation districts and sustainable neighborhood planning; technical advisory teams and local engineering unions; and in-house to our neighborhoods by providing building tours, offering educational programs about our buildings and operations, and hosting annual sustainability and healthy-living events.\nSince 2009, 31 Nights of light has grown as an iconic event in the Boston-area nonprofit community. Every night of December, the top of Prudential Tower shined a different color in support of that night’s nonprofit partner and their important work. The honored organizations host events in conjunction with their lighting. Over the course of 13 years, 31 Nights of Light has attracted positive public attention to a multitude of important causes.\n### Governance", "chunk_word_count": 278, "section_path": "Table of Contents1,2 > 36 PERCENT OF BXP’S BOARD OF DIRECTORS ARE WOMEN3 > United Playaz", "document_id": "2022_BXP_ESG_Report", "page": 58, "page_start": 58, "page_end": 59 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 37, "chunk_text": "# Table of Contents1,2\n## 31 Nights of Light\n### Leadership & Oversight\nBXP is committed to strong corporate governance policies and practices designed to make the Board of Directors effective in exercising its oversight role. Our Board of Directors oversee management performance on behalf of our shareholders, ensure that the long-term interests of our shareholders are being served, monitor adherence to BXP's standards and policies, and promote the exercise of responsible corporate citizenship. Our Board of Directors is currently comprised of eleven highly accomplished individuals with diverse backgrounds who are dedicated to serving the best interests of our shareholders. Among other things, the Board is responsible for overseeing the strategy, ESG priorities, risk management for the Company, ensuring that the Board, taken as a whole, has the desired mix of skills, experience, continuity, reputation, and diversity relevant to our strategic direction and operating environment, overseeing management's succession plan, approving and implementing governance policies, assessing its performance and the performance of executive management, monitoring our cybersecurity and risks, and providing oversight of financial reporting and legal compliance policies.\nThe Board of Directors and the Sustainability Committee support efforts to implement our sustainability strategy through our corporate sustainability program. Our Board-level Sustainability Committee, chaired by BXP Director Diane Hoskins, assists the Board in fulfilling its oversight responsibilities with respect to matters relating to environmental sustainability and climate, including the issues and risks related to these topics. Throughout the year, the Company organizes meetings, presentations, and regional Sustainability Summits to communicate the objectives and performance of our ESG initiatives to our Board of Directors, executive management, and other stakeholders, including our employees and investors. BXP's ESG reporting and implementation of our sustainability initiatives are led by Ben Myers, our Senior Vice President of Sustainability. The sustainability program initiatives are supported and coordinated by BXP's Board-level Sustainability Committee, a Corporate Sustainability Steering Committee, and a Company-wide Sustainable Operations Committee of regional leaders and key decision-makers.\n[IMAGE CAPTION] 25TH ANNIVERSARY ON THE NYSE | In 2022, BXP celebrated the $2 5 ^ { \\mathrm { { \\scriptscriptstyle T H } } }$ Anniversary of our listing on the New York Stock Exchange (NYSE). Representatives from BXP rang the closing bell at the NYSE in recognition of this milestone occasion. When our founders Mort Zuckerman and Ed Linde rang the bell in 1997, they memorialized what was at the time the largest office REIT IPO ever completed.\nBXP is highly ranked for its governance principles among other real estate companies, including:\n• Delaware domicile; \n• Diverse Board of Directors; \n• Annual election of all directors; Majority voting standard for director elections; Proxy access by-law right for nominating directors; No shareholder rights plan or “poison pill;” Lead Independent Director; Policy on company political spending; Compensation clawback policy; and Policy against future tax “gross-ups.”", "chunk_word_count": 467, "section_path": "Table of Contents1,2 > 31 Nights of Light > Leadership & Oversight", "document_id": "2022_BXP_ESG_Report", "page": 60, "page_start": 60, "page_end": 60 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 38, "chunk_text": "# Table of Contents1,2\n## 31 Nights of Light\n### Leadership & Oversight\n• Reporting to and advising the full Board as appropriate on the Company’s sustainability objectives and its strategy; \n• Periodically reviewing legal, regulatory, and compliance matters that may have a material impact on the implementation of the Company’s sustainability objectives, and making recommendations to the Board and management, as appropriate, with respect to the Company’s response to such matters; \n• Assisting the full Board in fulfilling its oversight responsibility by identifying, evaluating and monitoring the environmental and climate trends, issues, risks, and concerns that affect or could affect the Company’s business activities and performance; \n• Advising the full Board on significant stakeholder concerns related to sustainability; and \n• Performing such other functions as may be requested by the full Board from time to time.\n### Sustainability Committee of the Board of Directors\nIn 2021, BXP's Board of Directors formed a new committee dedicated to overseeing BXP's sustainability activities, including risks and initiatives related to climate action and resilience. The Sustainability Committee assists the Board of Directors in its risk oversight responsibilities and serves as a direct resource to management with a primary purpose of providing oversight and direction related to environmental sustainability matters, including best practices, developing trends, risks, and issues. The duties and responsibilities of the Sustainability Committee of BXP's Board of Directors include:\n• Reviewing and sharing real estate industry sustainability best practices; • Working with the Board and management to establish environmental performance goals (energy, emissions, water, and waste), and initiatives related to climate action and resilience; • Monitoring and evaluating the Company’s progress in achieving its sustainability goals and commitments, progress, and achievements, as well as relevant independent ESG ratings/rankings;\n## BOARD OF DIRECTORS\n### Owen D. Thomas Chairman and Chief Executive Officer\n### Kelly A. Ayotte Lead Independent Director\n### Douglas T. Linde President and Director\nBruce W. Duncan Director\nCarol B. Einiger Director\nJoel I. Klein Director\nWilliam H. Walton, III Director\nDiane J. Hoskins Director\nMary E. Kipp Director\nMatthew J. Lustig Director\nDavid A. Twardock Director\n### Corporate Sustainability Steering Committee\n### Company-Wide Sustainable Operations Committee\nThe Corporate Sustainability Steering Committee is comprised of Sustainability, Communications, Legal, Human Resources, Risk Management, and Investor Relations representatives. This committee is primarily responsible for ESG disclosures, including public reporting.\nThe Company-wide Sustainable Operations Committee meets throughout the year and has the following goals:\nIdentify and execute new strategies for promoting sustainability in new construction, existing buildings, and corporate operations; \n• Enhance the Company’s processes for collecting sustainability performance information; \n• Promote communication across the Company and share “best practices;” Assess the cost-effectiveness of small and large scale projects and programs; and \n• Follow new regulatory requirements and cooperate with the regulators to make new requirements meaningful.\nAdditionally, the Company’s President, Senior Vice President, Sustainability, Senior Sustainability Analyst, and Manager, Energy & Utilities work together to oversee BXP’s Sustainable Operations Committee, which includes over 35 representatives from all of our regions. This Committee helps inform the direction of our sustainability and ESG program.\n[IMAGE CAPTION] BXP SUSTAINABILITY ORGANIZATION", "chunk_word_count": 515, "section_path": "Table of Contents1,2 > 31 Nights of Light > Leadership & Oversight", "document_id": "2022_BXP_ESG_Report", "page": 61, "page_start": 61, "page_end": 62 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 39, "chunk_text": "# Table of Contents1,2\n## BOARD OF DIRECTORS\n### Senior Management ESG Goals\nTo support the achievement of the Company’s overarching sustainability and ESG goals, the performance of each member of our executive team is assessed annually against pre-established corporate, operational, and management goals and factors such as individual contributions to overall Company results are considered in our executive compensation program. Annually, one of these pre-established goals focuses on sustainability and ESG accomplishments across our portfolio.\nIn 2022, these goals were formulated by the President and the Senior Vice President, Sustainability. Sustainability targets and objectives are also communicated to senior management in weekly and monthly meetings, with progress monitored through weekly and monthly reports. With a wide range of department representatives in attendance, sustainability objectives are effectively communicated to the Board, senior management, and throughout the Company on a consistent basis.\n### Ethics & Integrity\nFor more than five decades, BXP and our employees have maintained the highest standards of integrity and ethics. We take pride in our traditions of responsibility and accountability. We also believe that transparent disclosure of our corporate governance policies is fundamentally important to maintaining our well-established reputation and preserving the trust of our investors. We believe this sets a “tone at the top” for good governance and includes the appropriate checks and balances that a formalized system of governance should have.\n### Employee Business Conduct and Ethics Training and Whistleblower Mechanism\nAcross the Company, every employee receives online training regarding their obligations under the Code annually. Employees who deal specifically with the government also receive in-person training regarding the requirements of the Code as it relates to the Federal Government annually. Additionally, all employees must certify in writing at the time they are hired that they will abide by the Code, and each employee must provide a re-certification every time they are trained. BXP requires employees to report any suspected violations of the Code, including using the EthicsPointTM Reporting System. Through EthicsPoint, any employee can anonymously report any suspected or observed violations of the Code 24 hours per day, 365 days per year, either online or via telephone. In addition, BXP includes a provision highlighting the requirements of our Code in vendor contracts, including how to file a complaint on our hotline if they become aware of any inappropriate activity by an employee. We remain committed to adhering to these policies and principles and are confident that our employees will continue to conduct themselves in a manner consistent with these policies and ideals.\n### Code of Business Conduct and Ethics\nBXP has established clear policies, administration, communication, training, and enforcement of a set of strict rules and regulations, found in our Code of Business Conduct and Ethics, which is publicly available on the Company’s website. The Code governs business decisions made and actions taken by our directors, officers, and employees and is an expression of the Company’s fundamental and core values, which include: (i) integrity and honesty in the Company’s and its employees’ dealings with clients, suppliers, co-venturers, competitors, shareholders, and the community; (ii) respect for individuality and personal experience and background; and (iii) support of the communities where the Company operates and its employees work.", "chunk_word_count": 531, "section_path": "Table of Contents1,2 > BOARD OF DIRECTORS > Senior Management ESG Goals", "document_id": "2022_BXP_ESG_Report", "page": 63, "page_start": 63, "page_end": 64 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 40, "chunk_text": "# Table of Contents1,2\n## BOARD OF DIRECTORS\n### Political Spending\nThe Company has established a Policy on Company Political Spending, publicly posted on our website, which requires the prior approval of our Chief Legal Officer, in consultation with our Chief Executive Officer and President, of any political contributions made by the Company. The policy is available under the \"Governance\" section of our website. In the interest of transparent reporting of political contributions of the Company, BXP annually publishes on its website approved Company political spending amounts in accordance with its policy.\n### Bribery and Corruption\nBXP has a strong commitment to minimizing our exposure to bribery, corruption, and conflicts of interest. The Company requires strict adherence to the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act of 2010, where applicable, and any similar anti-corruption and anti-bribery laws of the United States and other nations. Among other things, employees are prohibited from, directly or indirectly through a third party (i) offering, authorizing, promising, directing, or providing anything of value to any government official for the purpose of influencing that person to assist the Company in obtaining or retaining business or securing an improper business advantage, or (ii) otherwise offering or giving anything to any person in connection with Company business that could be perceived as a bribe.", "chunk_word_count": 218, "section_path": "Table of Contents1,2 > BOARD OF DIRECTORS > Political Spending", "document_id": "2022_BXP_ESG_Report", "page": 64, "page_start": 64, "page_end": 64 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 41, "chunk_text": "# Table of Contents1,2\n## BOARD OF DIRECTORS\n### Cybersecurity\nBXP continually invests in maintaining the security and integrity of our IT networks, systems and applications to mitigate the risk of a security compromise or breach on our corporate operations and/or our buildings. Like all organizations, we face the risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization, and other significant disruptions of our IT networks and related systems. The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. BXP’s IT networks and related systems are essential to the operation of our business, ability to perform day-to-day operations and management of our building systems. To this end, BXP maintains a robust set of security protections, expertise, and programs centered on mitigating risk across our entire enterprise ranging from awareness training to advanced firewalls to layered monitoring programs.\n[IMAGE CAPTION] ALL SYSTEMS GO | In 2022, eighteen members of the BXP IS Team executed the actual and successful \"failover\" of $^ { 8 0 + }$ systems and services, among several other successful simulations and tests. Here, members of the BXP IS Team stepped away from their computers to enjoy our Corporate Services Event at Fenway Park in Boston, MA.\nThe Audit Committee of BXP’s Board of Directors oversees our risk management processes related to cybersecurity. It meets no less frequently than annually with our IT personnel and senior management to discuss recent trends in cyber risks and our strategy to defend our IT networks, business systems, and information against cyber attacks and intrusions. Under the oversight of the Audit Committee, we established our overall cybersecurity program and its standards by reference to the National Institute of Standards and Technology (“NIST”) Cyber Security Framework.\n### Quality of Public Disclosures\nBXP is committed to providing its shareholders with complete and accurate information, in all material respects, about the Company’s financial condition and results of operations in accordance with the securities laws. We strive to ensure that the reports and documents we file with or submit to the Securities and Exchange Commission, and other public communications made by Company, include full, fair, accurate, timely, and understandable disclosure. The Company’s Disclosure Committee is primarily responsible for monitoring such public disclosure and meets at least quarterly to review and discuss reports and documents prior to filing.\n[IMAGE CAPTION] BPU RETURNS | In 2022, BXP hosted its 17TH Boston Properties University (BPU) event at Big Night Live at The Hub on Causeway in Boston, MA, after a two-year hiatus due to the COVID-19 pandemic. At BPU, BXP clients and associates gather to share their knowledge in our quest to create great space and place. Bryan Koop, Executive Vice President for the Boston Region, kicked off this year’s event with a commercial real estate “State of the Industry” address and was followed by three dynamic speakers.\n### Disclaimers\n### General", "chunk_word_count": 523, "section_path": "Table of Contents1,2 > BOARD OF DIRECTORS > Cybersecurity", "document_id": "2022_BXP_ESG_Report", "page": 65, "page_start": 65, "page_end": 66 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 42, "chunk_text": "# Table of Contents1,2\n## BOARD OF DIRECTORS\n### No Assurance\nThe information and opinions contained in this report are provided as of the date of this report is issued (April 20, 2023) and are subject to change without notice. BXP does not undertake to update or revise any such statements. This report represents BXP’s current policy and intent and is not intended to create legal rights or obligations. This report may contain or incorporate by reference public information not separately reviewed, approved, or endorsed by BXP, and no representation, warranty, or undertaking is made by BXP as to the accuracy, reasonableness, or completeness of such information.\nThe goals, targets, and commitments presented in this report are aspirational and not guarantees or promises that such goals, targets, or commitments will be achieved. Further, historical, current, and forward-looking information included in this report may be based on standards and practices for measuring progress that are still developing, internal controls, and processes that continue to evolve, and assumptions that are subject to change, therefore, no assurance can be given that any plan, initiative, projection, goal, commitment, expectation, or prospect set forth in this report can or will be achieved. Accordingly, such historical, current, and forward-looking information or underlying assumptions may be subject to modifications in future reports due to such developing standards, practices, controls, and processes.\n### Materiality\nThe inclusion of information or references in this report, including the use of “materiality” or similar terms, should not be construed as a characterization regarding the materiality of such information to our business or financial results or that such information is necessarily material to investors or other stakeholders for purposes of U.S. federal securities laws. Inclusion of information in this report is not an indication that the subject or information is material to BXP’s business or operating results.\n### Unaudited and Non-GAAP Data\nThe data contained in the report is unaudited. In addition, certain numerical data contained in this report, including the data related to key performance indicators, and therefore are not, calculated in accordance with accounting principles generally accepted in the United States of America (GAAP).", "chunk_word_count": 353, "section_path": "Table of Contents1,2 > BOARD OF DIRECTORS > No Assurance", "document_id": "2022_BXP_ESG_Report", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 43, "chunk_text": "# Table of Contents1,2\n## BOARD OF DIRECTORS\n### Forward-Looking Statements\nThis report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements related to BXP’s sustainability strategies, initiatives, commitments, and targets. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with those safe harbor provisions, in each case, to the extent applicable.\nAll statements other than statements of historical or current facts, including statements regarding our plans, initiatives, projections, targets, goals, commitments, expectations, or prospects, are forward-looking. You can identify these statements by our use of the words “believe,” “commit,” “ensure,” “expect,” “goal,” “intend,” “may,” “project,” “target,” “will” and similar expressions that do not relate to historical matters. These forward-looking statements reflect management’s current expectations and are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, achievement, outcomes, or occurrences, which may be affected by known and unknown risks, trends, uncertainties, and factors that are, in some cases, beyond BXP’s control. Should one or more of these known or unknown risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied by the forward-looking statements. Factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, with respect to BXP’s ability to successfully meet its goals, targets, and commitments (including within the expected time frame): changes in laws, regulations, prevailing standards or public policy, the alignment of the scientific community on measurement and reporting approaches, the complexity of commodity supply chains and the evolution of and adoption of new technology, including traceability practices, tools and processes, evolving sustainability strategies, changes in carbon and renewable energy markets, and other changes in circumstances. Additional discussions of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements appear in the Company’s filings with the Securities and Exchange Commission, including BXP’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 under the heading “Risk Factors” and under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Forward-Looking Statements” and in subsequent quarterly reports on Form 10-Q. BXP does not undertake a duty to update forward-looking statements.", "chunk_word_count": 425, "section_path": "Table of Contents1,2 > BOARD OF DIRECTORS > Forward-Looking Statements", "document_id": "2022_BXP_ESG_Report", "page": 68, "page_start": 68, "page_end": 68 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 44, "chunk_text": "# Table of Contents1,2\n## DNV\n### Independent Assurance Statement\nBoston Properties, Inc $( ^ { \\prime \\prime } \\mathsf { B X P ^ { \\prime \\prime } } )$ commissioned DNV Business Assurance USA, Inc. (“DNV”, “we”, or “us”) to undertake independent assurance of the Boston Properties 2022 Environmental, Social, and Governance Report (the “Report”) and to carry out an independent verification for selected performance indicators for the year ended December 31, 2022.\nOur Opinion: On the basis of the work undertaken, nothing came to our attention to suggest that the Report does not properly describe Boston Properties adherence to the Principles described below. In terms of reliability of the performance data, nothing came to our attention to suggest that these data have not been properly collated from information reported at operational level, nor that the assumptions used were inappropriate. In our opinion, the Report provides sufficient information for readers to understand the company’s management approach to its most material issues and impacts.\n### Without affecting our assurance opinion, we also provide the following observations:\nconsidered in future health security goals. BXP’s reporting has remained current by aligning its strategy to global frameworks such as the Global Reporting Initiative (GRI), and the Task Force on Climaterelated Financial Disclosures (TCFD). Furthermore, BXP is in the process of setting a Net-Zero Science-Based target by committing to the SBTi’s Net-Zero Standard to continue improving around its sustainability efforts and reporting. Given BXP’s sector and operational impacts, we consider the disclosures within the Report to be suitable for its sustainability context.\n### Stakeholder inclusiveness\n### The participation of stakeholders in developing and achieving an accountable and strategic response to sustainability.\nBXP has demonstrated a clear commitment to engaging internal and external stakeholders including employees, investors, tenants, and suppliers. In 2022, BXP continued to utilize employee engagement surveys to monitor employees’ satisfaction and understand key contributors to positive work experience. The company continues to leverage its vendor engagement survey to assess new vendors’ sustainability efforts and diversity and inclusion.\n### Completeness\n### How much of all the information that has been identified as material to the organization and its stakeholders is reported.\nIn our review, we saw evidence that priorities and views of stakeholders have informed the decision-making throughout the business and have been reflected in the report.\nThe Report provides a good overview of BXP’s ESG performance across the business. Assessments on embodied carbon for both new constructions and major renovations demonstrate strengthened reporting and management of Scope 3 emissions. BXP also addresses issues material to its stakeholders, including the impact of indoor air quality on human health and the ongoing integration of diversity, equity, inclusion and transparency into BXP’s culture and business operations. Based on the work performed, we do not believe that BXP has failed to report on any of its material issues.\n### Materiality", "chunk_word_count": 475, "section_path": "Table of Contents1,2 > DNV > Independent Assurance Statement", "document_id": "2022_BXP_ESG_Report", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 45, "chunk_text": "# Table of Contents1,2\n## DNV\n### The process for determining the issues that are most relevant to an organiation and its stakeholders.\nIn 2022, BXP conducted a formal materiality assessment, which incorporated feedback from stakeholders, including clients, investors, community members, and employees. New topics, such as renewable energy generation and electrification, have been added to the materiality metric, while some issues, such as indoor air quality and equal pay have increased in importance for the business since the previous update. Economic performance, customer satisfaction, carbon emissions, as well as ethical business conduct continue to remain amongst the most material issues. In 2022, BXP sustainability operations began reporting up to the President and CEO which further enhanced the visibility of sustainability into daily decision-making.\n### Reliability and quality\n### The accuracy and comparability of information presented in the Report, as well as the quality of underlying data management systems.\nOverall, we have confidence in the processes in place to ensure reasonable accuracy for the information presented in the Report and data management systems. The reporting of performance including the disclosure of data is comprehensive and the indicators are disclosed in a balanced manner. Goals and performance data are presented objectively, with clear and balanced representation of 2022 performance. Our review of GHG emissions, energy, waste, and water data presented in the report resulted in minimal technical errors being identified based on our sampling. These errors have been corrected for the final report. The systems for production and collation of these data appear to be reliable and capable of producing complete and consistent data.\nThe Board of Directors, in particular, the Sustainability Committee of the Board of Directors continues to be a strong partner in defining BXP’s sustainability ambition, as exemplified by its approach on establishing BXP’s pathway to Net Zero.\nSustainability context\n### The presentation of the organization’s performance in the wider context of sustainability.\nThe Report discloses performance on issues relevant to the real estate sector and Post-Covid-19 impacts, specifically how these are", "chunk_word_count": 334, "section_path": "Table of Contents1,2 > DNV > The process for determining the issues that are most relevant to an organiation and its stakeholders.", "document_id": "2022_BXP_ESG_Report", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 46, "chunk_text": "# Table of Contents1,2\n## DNV\n### Scope and approach\nResponsibilities of Boston Properties Inc and of the Assurance Providers\nWe performed our work using DNV’s assurance methodology VeriSustainTM, which is based on our professional experience, international assurance best practice including the International Standard on Assurance Engagements 3000 (“ISAE $3 0 0 0 ^ { \\prime \\prime }$ ), and the Global Reporting Initiative $( \\mathbf { \\chi } ^ { \\prime \\prime } \\mathsf { G R l } ^ { \\prime \\prime } )$ Sustainability Reporting Guidelines.\nBXP has sole responsibility for the preparation of the Report. In performing our assurance work, our responsibility is to the management of BXP; however, our statement represents our independent opinion and is intended to inform all stakeholders. DNV was not involved in the preparation of any statements or data included in the Report except for this Assurance Statement. We have no other contract with BXP. This is our fourth year providing assurance for BXP’s Report.\nWe evaluated the Report for adherence to the VeriSustainTM Principles (the “Principles”) of stakeholder inclusiveness, materiality, sustainability context, completeness, and reliability. We evaluated the performance data using the reliability principle together with ${ \\tt B X P ^ { \\prime } S }$ data protocols for how the data are measured, recorded and reported. The reporting criteria against which the GHG verification was conducted is the World Business Council for Sustainable Development (WBSCD)/World Resources Institute (WRI) Greenhouse Gas – Corporate Accounting Standard.\nThe boundary of our work is restricted to occupied (defined as no more than 50 percent vacancy) and actively managed buildings in BXP’s portfolio where the company has operational control. The boundary includes all eligible buildings that meet these criteria that have remained within the company ownership for full calendar 2022. This includes 96 buildings which account for 77 percent of the total inservice portfolio by area.\nDNV’s assurance engagements are based on the assumption that the data and information provided by the client to us as part of our review have been provided in good faith. DNV expressly disclaims any liability or coresponsibility for any decision a person or an entity may make based on this Independent Assurance Statement.\nWe understand that the reported financial data and information are based on data from $\\mathsf { B X P } ^ { \\prime } \\mathsf { S } \\mathsf { 1 } 0 \\mathrm { - } \\mathsf { K } ,$ , which is subject to a separate independent audit process. The review of financial data taken from the 10-K is not within the scope of our work. In addition, claims and assertions related to the company’s Green Bond and use of proceeds are outside the scope this assurance.\n### Data Verified\nThe 2022 performance data in scope are listed below:\n### Greenhouse Gas Emissions", "chunk_word_count": 472, "section_path": "Table of Contents1,2 > DNV > Scope and approach", "document_id": "2022_BXP_ESG_Report", "page": 70, "page_start": 70, "page_end": 70 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 47, "chunk_text": "# Table of Contents1,2\n## DNV\n### Level of Assurance\nScope 1 Emissions 13,394 $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ Scope 2 Emissions (Location-Based) 101,267 $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ Scope 2 Emissions (Market-Based) 30,883 $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ Scope 3 Emissions o Category 1: Purchased Goods and Services 2,193 $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ o Category 2: Capital Goods 35,390 $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ o Category 3 (Location-Based) : Fuel- and Energy-Related) Activities (Not Included in Scope 1 or Scope 2) 23,602 MtCO2e o Category 3 (Market-Based) : Fuel- and Energy-Related) Activities (Not Included in Scope 1 or Scope 2) 9,525 MtCO2e o Category 5: Waste Generated In Operations 8,650 MtCO2e o Category 6: Business Travel 1,160 MtCO2e o Category 7: Employee Commuting 1,020 $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ o Category 13 (Location-Based) : Downstream Leased Assets 132,219 $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ o Category 13 (Market-Based) : Downstream Leased Assets 126,403 $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ Scope 1 and 2 GHG Emissions Intensity (Market-Based) $1 . 0 \\mathrm { \\ k g } \\mathsf C 0 _ { 2 } \\mathsf e / \\mathsf { S } \\mathsf e$\nWe planned and performed our work to obtain the evidence we considered necessary to provide a basis for our assurance opinion. We are providing a ‘limited level’ of assurance. A ‘reasonable level’ of assurance would have required additional work at headquarters and site levels to gain further evidence to support the basis of our assurance opinion.\n### Independence\nEnergy\nDNV’s established policies and procedures are designed to ensure that DNV, its personnel and, where applicable, others are subject to independence requirements (including personnel of other entities of DNV) and maintain independence where required by relevant ethical requirements. This engagement work was carried out by an independent team of sustainability assurance professionals.\n727,745 MWh \n58.1 kBtu/SF\n Total Energy Consumption Energy Use Intensity\nWater\n458,309 kgal \n10.7 gallons/SF\n Total Water Consumption 1 Water Intensity\nWaste\n Total Waste Generated o Disposed waste o Recycled o Composted\n16,846 tons \n8,884 tons \n6,623 tons \n1,282 tons\n### DNV Business Assurance\nGRI Indicators in scope include:\n302-1: Energy Consumption; 302-3: Energy Intensity 303-5: Water Consumption \n305-1: Direct GHG Emissions; 305-2: Indirect GHG Emissions; 305-4: GHG Emissions Intensity \n1 306-2: Waste\nDNV Business Assurance is a global provider of certification, verification, assessment and training services, helping customers to build sustainable business performance.", "chunk_word_count": 480, "section_path": "Table of Contents1,2 > DNV > Level of Assurance", "document_id": "2022_BXP_ESG_Report", "page": 70, "page_start": 70, "page_end": 71 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 48, "chunk_text": "# Table of Contents1,2\n## DNV\n### Basis of our opinion\nhttps://www.dnv.com/assurance/\nA multi-disciplinary team of sustainability and assurance specialists performed work. We undertook the following activities:\nReview of the current sustainability issues that could affect BXP and are of interest to stakeholders; \nReview of BXP’s approach to stakeholder engagement and recent outputs; \nReview of information provided to us by BXP on its reporting and management processes relating to the Principles; Conducted interviews with the President; Senior Vice President, Finance and Planning; Senior Vice President, Chief Human Resources Officer; Vice President, Corporate Counsel and Senior Vice President, Sustainability. They are responsible for areas of management and stakeholder relationships covered by the Report. The objective of these discussions was to understand top level commitment and strategy related to corporate responsibility and BXP’s governance arrangements, stakeholder engagement activity, management priorities, and systems. We were free to choose interviewees and functions covered; Assessed documentation and evidence that supported and substantiated claims made in the Report; \nReviewed the specified data collated at the corporate level, including that gathered by other parties, and statements made in the Report. We interviewed managers responsible for internal data validation, reviewed their work processes, and undertook sample-based audits of the processes for generating, gathering, and managing the quantitative and qualitative sustainability data; \nExamined data and information to support the reported energy use, GHG emissions, waste generated, and water use assertions; \nEvaluated whether the evidence and data are sufficient to support our opinion and BXP’s assertions. \nProvided feedback on a draft of the report based on our assurance scope.\nIn addition, the following methods were applied during the verification of BXP’s environmental footprint inventories and management processes:\nReview of documentation, data records and sources relating to the corporate environmental data claims and GHG emission assertions;\n Review of the processes and tools used to collect, aggregate and report on all environmental data and metrics;  Assessment of environmental information systems and controls, including:\n$\\circ$ Selection and management of all relevant environmental data and information; \n$\\circ$ Processes for collecting, processing, consolidating, and reporting the relevant environmental data and information; \n$\\circ$ Design and maintenance of the environmental information system; \n$\\circ$ Systems and processes that support the environmental information system. Performed sample-based audits of the processes for generating, gathering and managing the quantitative and qualitative environmental data; \nExamination of all relevant environmental data and information to develop evidence for the assessment of the environmental claims and assertions made; \nConfirmation of whether the organization conforms to the verification criteria\nThis Statement is for the sole use and benefit of the party contracting with DNV Business Assurance USA, Inc. to produce this Statement (the “Client”). Any use of or reliance on this document by any party other than the Client shall be at the sole risk of such party. In no event will DNV or any of its parent or affiliate companies, or their respective directors, officers, shareholders, employees or subcontractors, be liable to any other party regarding any statements, findings, conclusions or other content in this Statement, or for any use of, reliance on, accuracy, or adequacy of this Statement.\nFor and on behalf of DNV Business Assurance USA, Inc.\nAssurance Team\nKaty, TX April 18, 2023\n### Global Reporting Initiative (GRI) Content Index", "chunk_word_count": 540, "section_path": "Table of Contents1,2 > DNV > Basis of our opinion", "document_id": "2022_BXP_ESG_Report", "page": 71, "page_start": 71, "page_end": 71 }, { "report": "2022_BXP_ESG_Report.pdf", "chunk_idx": 49, "chunk_text": "# Table of Contents1,2\n## GRI 1: FOUNDATION 2021\n### Global Reporting Initiative (GRI) Content Index\n## GENERAL DISCLOSURES 2022\n### Global Reporting Initiative (GRI) Content Index\n\n\n\n\n\n\n\n## 800 BOYLSTON STREET SUITE 1900 BOSTON, MA 02199\nbxp.com bxp.com/commitment\nConnect with us", "chunk_word_count": 41, "section_path": "Table of Contents1,2 > GRI 1: FOUNDATION 2021", "document_id": "2022_BXP_ESG_Report", "page": 72, "page_start": 72, "page_end": 81 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 0, "chunk_text": "# Building asustainable and inclusive future\nLloyds Banking Group Sustainability Report 2023\nAs the UK’s largest financial services provider with more than 27 million customers, we have an important role to play in creating a more sustainable and inclusive future for people and businesses, by shaping finance as a force for good.\n## Our purpose is Helping Britain Prosper\n## Overview 01—05\n## How we deliver 13—29\n## Sustainable future 84—175\n## Our 2023 reporting suite\nOur 2023 report provides an update on our progress towards our sustainability ambitions, along with the activities we are undertaking to understand our related risk and the opportunities to grow our business and generate sustainable shareholder returns. Throughout this report, we detail the activities we are undertaking to help our customers and stakeholders.\nGroup roles, responsibilities and remuneration 14-16\nConducting our business responsibly 17-24\nSupporting our customers to ensure good outcomes 25-26\nOur frameworks 27-28\nUpcoming regulation 29\n## Our Group strategy 06—12\nAlongside progress on broader environmental, social and governance matters, this report includes the second iteration of our Bank climate transition plan, and a progress update on the climate action plan previously released by Scottish Widows.\n## Inclusive future 30—83\nThis report covers the Group’s sustainability progress from a broader environmental, social and governance perspective. Details on the Group’s progress against the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and recommended disclosures and the Group’s reporting requirements under Mandatory climate-related financial disclosures for Companies (Strategic Report)(Climate-related Financial Disclosure) Regulations 2022 are included within pages 33 to 38 of the annual report and accounts 2023 .\nOur business model 07\nOur strategic sustainability priorities and values 08\n## 2023 in review 31-32\nOur approach to materiality 09\nPromoting financial inclusion and resilience 33-43\nOur material ESG topics 10\nHow we support our stakeholders 11-12\nAccess to quality housing 44-50\n### Assurance\nDeloitte LLP has provided limited assurance over selected environmental and social key performance indicators. Deloitte’s 2023 assurance statement and the 2023 sustainability metrics basis of reporting are available on our download centre .\nSupporting regional development and communities 51-57\nDiversity, equity and inclusion 58-79\nHuman rights and modern slavery 80-83\nIndicator is subject to limited ISAE 3000 (revised) assurance by Deloitte LLP for the 2023 reporting.\n### Within this report, reference to the Group covers our three divisions: Retail; Insurance, Pensions and Investments; and Commercial Banking. Bank is limited to our Retail and Commercial Banking operations. Scottish Widows relates to our Insurance, Pensions and Investment activities.\n### Our structure\nWe have three core divisions and, in line with our new strategy launched in 2022, we have structured our business to optimise synergies and efficiencies to best serve our customers’ needs.\n### Consumer lending\nConsumer relationships Current accounts Savings accounts Mass affluent proposition\nMortgages Credit cards Personal loans Motor finance\n### Insurance, pensions and investments\nHome, motor and protection insurance \nPensions \nInvestments\nThe data and examples in this report reflect activities undertaken during the 2023 financial year (1 January to 31 December 2023) and, where relevant to performance, refer to activities and events before and after this period. The report includes information about Lloyds Banking Group and its subsidiaries’ performance.\n### Small and medium businesses", "chunk_word_count": 533, "section_path": "Building asustainable and inclusive future > 2023 in review 31-32 > Assurance", "document_id": "2023 Lloyds sustainability report", "page": 1, "page_start": 1, "page_end": 4 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 1, "chunk_text": "# Building asustainable and inclusive future\n## 2023 in review 31-32\n### Corporate and institutionalbankin\nBusiness loans Transactional banking Working capital\nLending \nRisk management \nLiquidity \nDebt capital markets\nPlease see the disclaimer on page 176 for further information about the basis on which this document, and the information contained within it (including forward-looking statements), has been prepared.\nFurther information about our sustainability related policies, sector positions, performance ratings and benchmarks can be found online at our download centre .\n### Our reporting network\nOur reporting network is designed to facilitate better communication to a range of stakeholders.\nWe support practically every sector of the UK economy, and we serve millions of people and businesses every day. Our lending, investments, products and services are powerful drivers of creating a sustainable and inclusive future for all, as well as enabling the Group to grow profitably with our customers.\n£29bn of sustainable finance provided since 2022 to support the transition to a low carbon economy\n### Group Chief Executive’s statement\n£21.7bn of discretionary investment in climate-aware strategies since 2020 >£17bn of new funding to the UK’s social housing sector since 2018\nBy focusing on Helping Britain Prosper, we aim to deliver sustainable growth and returns. Guided by our Group strategy, we are focusing on areas where we can have a bigger impact. In a year that’s meant continued hardship and uncertainty for many, we have focused on promoting financial inclusion and resilience, increasing access to quality housing, working to unlock business investment to enable greater regional development and grow productivity across the UK. We’ve also made significant progress in capitalising on sustainable opportunities through new acquisitions and partnerships and investing in climate-aware strategies. We know there is much more to be done to support customers as they transition to net zero, but our commitment and focus remain strong.\nI’m pleased to share our sustainability report 2023 detailing how we’re delivering onour purpose of Helping Britain Prosper by enabling sustainable and inclusive growth for people and businesses across the UK.\n12% by 2025\nLaunched our goal to double the representation of senior colleagues with a disability\n### Group Chief Executive’s statement continued\n### Promoting financial inclusion and resilience\nLooking at our financed emissions, we have set new targets for Passenger Road Transport, Commercial and Residential Real Estate, and Agriculture. We are continuing to challenge ourselves on our sustainability goals and we have launched new operational emissions pledges to be zero waste and water neutral by 2030. We have also launched our first nature pledge to halt and reverse nature loss across our green spaces. Overall, our sustainability strategy represents a significant strategic and commercial opportunity consistent with our purpose.\n### Supporting regional development and communities", "chunk_word_count": 451, "section_path": "Building asustainable and inclusive future > 2023 in review 31-32 > Corporate and institutionalbankin", "document_id": "2023 Lloyds sustainability report", "page": 4, "page_start": 4, "page_end": 6 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 2, "chunk_text": "# Building asustainable and inclusive future\n## 2023 in review 31-32\n### Industry partnerships and commitments\nOver the past 12 months, I’ve met with customers up and down the UK and the cost of living continues to be a challenge and concern for many. In the last year, we have helped customers adapt their finances, manage debt and supported them as they navigate continued economic uncertainty. By using data and insights to gain a deeper understanding of customer needs, we proactively contacted 7.5 million customers since April 2022, to offer support through challenging times. We reached out to 675,000 of our mortgage customers to encourage a review of their available options and we contacted 15 million deposit customers to ensure they are aware of their savings options.\nBy participating in global and regional commitments and partnerships, we collaborate with peers on industry initiatives to create positive change. Key memberships which supported our approach to sustainability:\nWe have taken important steps forward in our regional development in 2023. We launched our Liverpool City Region Housing Initiative and Leeds Retrofit Partnership.\nOur work in Liverpool aims to address the need for more social and affordable housing. Our Leeds retrofit project is testing whether a local, place-based approach to financing homes retrofit can accelerate decarbonising the UK’s housing stock. Both projects show how we’re working with industry and local authorities to develop solutions that really work for local communities that can be scaled elsewhere.\nIt is clear though, that parts of our economy are not transitioning at the speed and scale required. Reaching net zero relies on government, industry and society acting together with certainty, pace and focus. We remain committed to delivering on our net zero ambitions, but we are realistic that insufficient progress in key areas like policy commitments, technology and behaviour change will ultimately limit our ability to achieve them.\n### Capitalising on sustainable opportunities\n### Increasing access to quality housing\nAt COP28 in December, I joined global businesses and policymakers to discuss accelerating the environmental transition. Finance is central to a successful low carbon transition and businesses like ours must help drive progress.\nAccess to quality housing is a fundamental human need and a home is key to giving people a stable foundation. We are one of the largest funders of UK house building and since 2018 we have supported over £17 billion of new funding to the social housing sector. I’ve spent time with several housing association clients this year and seen first-hand how they are building the next generation of UK homes with social and green spaces at their centre. A clear example of building a more sustainable and inclusive society in action, with safe, affordable and sustainable homes that help communities thrive. Expanding on our work on quality housing, we launched a strategic partnership with Crisis and are calling for 1 million new social homes to be built in the next 10 years. It’s been wonderful to see colleagues get behind the partnership and exceed our target of fundraising £1 million in its first year.", "chunk_word_count": 509, "section_path": "Building asustainable and inclusive future > 2023 in review 31-32 > Industry partnerships and commitments", "document_id": "2023 Lloyds sustainability report", "page": 6, "page_start": 6, "page_end": 6 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 3, "chunk_text": "# Building asustainable and inclusive future\n## 2023 in review 31-32\n### Continuing to deliver in 2024\nWe’ve made important headway on our sustainability agenda, whilst growing our business this year. To support the transition to a low carbon economy we have funded £29 billion of sustainable financing since 2022. We have grown our low carbon transport business through our acquisition of Tusker and we now finance one in eight ULEVs on UK roads. In support of our focus on greening the built environment, we launched a new solar panel proposition with Effective Home. We have exceeded our target for £15 billion of sustainable financing for our Corporate and Institutional Banking franchise, originally set for the end of 2024. We are continuing to challenge ourselves and have set a new Commercial Banking target of £30 billion of sustainable financing for 2024 to 2026, which will take the cumulative total for the division to £45 billion by 2026. Through Scottish Widows, we have made £21.7 billion of discretionary investment in climate-aware strategies since 2020 and will continue to work across our pensions and investment activities to support decarbonisation and climate solutions.\nI am proud of the role we play in supporting the UK economy and the important progress we’ve made this year. As we look forward, I feel energised by our ambitious growth strategy that will Help Britain Prosper by creating a sustainable and inclusive society for people and businesses, shaping finance as a force for good.\nCharlie Nunn, Group Chief Executive\nOur business model 07 \nOur strategic sustainability priorities and values 08 \nOur approach to materiality 09 \nOur material ESG topics 10 \nHow we support our stakeholders 11\n### Our Group strategy\nIn February 2022, as part of our new strategy, we committed to an ambition to become a truly purposedriven organisation and we are taking steps to embed purpose at the core of our business, decision-making, operations and culture.\ninvestors. In doing this we aim to meet the needs of our broader stakeholders through sustainable growth, supporting the prosperity of the UK for generations to come.", "chunk_word_count": 347, "section_path": "Building asustainable and inclusive future > 2023 in review 31-32 > Continuing to deliver in 2024", "document_id": "2023 Lloyds sustainability report", "page": 6, "page_start": 6, "page_end": 8 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 4, "chunk_text": "# Building asustainable and inclusive future\n## 2023 in review 31-32\n### Our business model\nOur multi-year strategy will be a transformation requiring us to build towards our ambition progressively, through commitments, objectives and ambitions, and to embed our purpose into our decision-making, culture and capabilities. The Board of Lloyds Banking Group is responsible for the long-term success of the Group, setting and overseeing purpose, culture, values and strategy for the Group. Together with the Group Executive Committee, the Board actively drives our efforts and engages in shaping our strategic plans, ensuring these are aligned to our purpose, while overseeing their delivery.\nOur strategy is directly aligned to our purpose of Helping Britain Prosper, building on the scale and position of the Group, that will deliver long-term and profitable growth while making a meaningful and positive difference for all stakeholders. Core to our purpose and strategy is our focus on building a more inclusive and sustainable society, while creating new opportunities for our future growth. It is only by doing right by our customers, colleagues and communities that we can achieve higher, more sustainable profits for\nGiven our unique position at the heart of the UK economy, we embrace our responsibility to help address some of the biggest economic, social and environmental challenges that the UK faces.\n### Sustainable and inclusive growth\n### Sustainable profit and returns\n### Our social and environmental impact\n### Supporting our Customers\n### Supporting our Colleagues\n### Supporting our Communities\n### Returns for Shareholders\nWe provide financial services to over half of the UK adult population and around 900,000 businesses of all sizes, responding to the needs and challenges they are facing.\nWe are committed to building an inclusive and sustainable organisation that is truly representative of modern-day Britain. We know that colleagues who can show up to work as themselves are central to our success.\nOur success is intrinsically linked with the success of the Uk's regions and nations.\nThe Group’s robust financial performance has delivered a return on tangible equity that has exceeded our guidance and generated strong levels of capital, enabling higher returns forour shareholders.\nWe are committed to helping communities through our support of regional development to build a sustainable and inclusive UK.\nBy supporting our customers through sustainable finance, investments, products and services, it enables us to unlock growth and transform the Group.\nWe are focused on embedding sustainability in all that we do to enable our colleagues to deliver on our purpose.\nWhen local people, local businesses, and their communities all prosper, so can we.\n>£12bn of funding to first-time buyers in 2023\n>85% of colleagues are shareholder of the Group\n£24.7m donated to our independent Foundations in 2023\nSustainably managing the value we create for all our stakeholders \nensures that we can reshape financial \nservices and Help Britain Prosper for generations to come.\n2.2m shareholders, including more than 85% of our employees £3.8bn\n2.76p\nreturned to shareholders for 2023\nordinary dividend per share £15.8bn of sustainable finance provided for corporate and institutional customers since 2022\n40.1% of our senior manager roles were held by women in 2023 £2.7bn of funding supported to the social housing sector in 2023\n### Our strategic sustainability priorities and values", "chunk_word_count": 537, "section_path": "Building asustainable and inclusive future > 2023 in review 31-32 > Our business model", "document_id": "2023 Lloyds sustainability report", "page": 8, "page_start": 8, "page_end": 8 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 5, "chunk_text": "# Building asustainable and inclusive future\n## 2023 in review 31-32\n### Our strategic sustainability priorities\n### Our values\nOur Group strategy focuses on three priorities ‘Grow’, ‘Focus’ and ‘Change’ to help us achieve this. Our sustainability objectives support the delivery of the Group strategy.\nOur values guide how we work together and how we make decisions, so that we’re always Helping Britain Prosper by meeting the needs of customers, colleagues and communities – today, and for generations to come. We are aiming to embed these values into key every decision-making moments across the business, from big strategic decisions to smaller everyday choices.\n### Change\nGroup strategic priorities\n### Focus\n### Grow\nDrive revenue growth and diversification\nStrengthen cost and capital efficiency\nMaximise the \npotential of \npeople, technology \nand data\nReducing emissions and monitoring our sustainabilityrelated risks to manage costs and mitigate against future losses Strengthening our balance sheet by supporting customers, clients and communities through challenging times\nOur sustainability objectives\nCapitalising on inclusive and \nsustainable financing and \ninvestment opportunities \nImproving access to \nquality housing \nIncreasing access to banking \nby promoting financial inclusion \nand resilience \nSupporting regional development \nand productivity\nEmbedding sustainability in all that we do \nSupporting and \nengaging our colleagues Building an inclusive and diverse organisation People-first \nWe listen and care for people as individuals.\n### Bold\nWe innovate and do things differently to better serve our customers and grow with purpose.\n### How our sustainability objectives deliver value for our stakeholders\n### Transitioning our business to net zero\nSupporting \nregional \ndevelopment and \ncommunities (pages 51 to 57)\nManaging the environmental performance of our own operations (pages 95 to 100)\nPromoting diversity, equity and inclusion (pages 58 to 79)\nBanking Group \nambitions, \ntargets and Our focus on \nprogress Scottish Widows (pages 105 to 159) (pages 160 to 175)\nPromoting financial inclusion and resilience (pages 33 to 43)\nImproving access to quality housing (pages 44 to 50)\nManaging our impact on human rights (pages 80 to 83)\nManaging our supply chain emissions (pages 101 to 104)\n### Inclusive\nWe learn about and embrace our differences, and seek out diverse perspectives.\nOur sustainability objectives aim to create positive outcomes for our colleagues,customers and communities while building a more resilient and profitable business to deliver higher, more sustainable returns for our shareholders.\nSupporting our customers\nSustainable\nWe take responsibility for the impact of our actions on nature and Britain’s transition to net zero.\nSupporting our colleagues\nTrust\nSupporting our communities\nWe give each other the space and support to take things on and see them through.\n### Our approach to materiality\n### Mapping to the UN Sustainable Development Goals\nAs we become a more purpose-driven organisation, we have an opportunity to play our part in helping the UK to meet the targets set by the UN Sustainable Development Goals (SDGs).\n### Talking and listening to our stakeholders is intrinsic to our business acting responsibly. This engagement allows us to determine the important topics from an environmental and social perspective. We then analyse material topics that have both an impact on our stakeholders but are also of a strategic importance to us as a Group.", "chunk_word_count": 523, "section_path": "Building asustainable and inclusive future > 2023 in review 31-32 > Our strategic sustainability priorities", "document_id": "2023 Lloyds sustainability report", "page": 9, "page_start": 9, "page_end": 10 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 6, "chunk_text": "# Building asustainable and inclusive future\n## 2023 in review 31-32\n### Our priorities on material topics\nWe prioritise our material topics based on:\nThe SDGs provide a common framework for us to identify how we can play a more active role in the sustainable development of UK society and help us frame how we use our operating model, scale, resources and skillsets to respond to some of the biggest societal challenges faced by the UK today.\n2023 has been a challenging year for many of our customers, with the socioeconomic impact of the cost of living crisis from rising inflation and interest rates, and ongoing political instability both in the UK and globally. As a Group, we will continue to respond to support our customers and our communities during this challenging period.\nThe strategic importance of the issue to the Group\nWhen conducting our materiality review and impact assessment of our operations, products and services in line with the requirements of the UNEP FI Principles for Responsible Banking, we have considered, among other inputs, the SDGs with the highest materiality to our business and sector, to assist us in identifying our most material areas of societal impact.\nAnnually, we review ESG-related topics raised through our own analysis of both our external and internal environments, which includes our geography, markets in which we operate, sector, products, services and activities, as well as through horizon scanning and stakeholder engagement. Our internal environment includes colleagues, processes and policies, culture and management.\n## 02 The importance of the issue to our stakeholders\n03\nThe social, economic and environmental impact of each topic in relation to the core activities, products and services provided by the Group\nIn determining our areas of societal impact, we have reviewed our commercial exposures, considering both the potential for positive and negative impact as well as risk mitigation, and considered the level of influence that the Group may feasibly have to make an impact, as well as those of highest impact to our key stakeholders.\nFurther information on our external environment is available on page 14 of our annual report and accounts 2023 . In 2023 we have noted an emerging theme from a social perspective in relation to the consideration of the use of Artificial Intelligence and personal data, which are increasingly important topics to our stakeholders.", "chunk_word_count": 389, "section_path": "Building asustainable and inclusive future > 2023 in review 31-32 > Our priorities on material topics", "document_id": "2023 Lloyds sustainability report", "page": 10, "page_start": 10, "page_end": 10 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 7, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Double materiality\nThroughout this report we have chosen to demonstrate how our activities support the achievement of specific SDG sub-targets through selected examples and case studies. Our non-financial performance indicators in the Group balanced scorecard further drive progress against our ambitions, focus areas and the SDGs.\nWe acknowledge the growing focus of double materiality in ESG reporting and regulations across the globe. We continue to review industry developments related to the identification of material ESG-related topics from a double materiality perspective to ensure that we will report on both how ESG issues impact the Group and how we impact sustainable development in society, whilst meeting the information needs of our shareholders and broader stakeholders by reporting on financially material sustainability matters.\nSee page 108 of the annual report and accounts 20237\nOur approach towards assessing ESG matters through a double materiality lens continue to evolve. We will look to update our ESG double materiality assessment once this work concludes, building on initial work for climate-related topics.\n### Our material ESG topics\n### How we support our stakeholders\n### Our purpose is Helping Britain Prosper.\n### We have supported our customers through a number of sustainability initiatives over the year.", "chunk_word_count": 216, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Double materiality", "document_id": "2023 Lloyds sustainability report", "page": 10, "page_start": 10, "page_end": 12 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 8, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Sitting at the heart of communities across the UK, we play an active role in helping them in a number of different ways.\nFrom an environmental perspective we support our customers through our sustainable finance and investment propositions, including £29 billion of sustainable finance since 2022.\nTo help our Foundations to support charities and organisations we donated £24.7 million in 2023 and supported over 2,400 charities through a mix of grant-making and colleague-matched giving for their local fundraising and volunteering.\nIt’s what drives us, what makes us different and defines how we profitably grow for...\nWe have enhanced the sustainability of our credit card offering through producing sustainable plastic credit cards (c.85 per cent recyclable for Lloyds Bank Credit cards).\nIn 2023, Lloyds Banking Group and Crisis, a UK national charity for people experiencing homelessness, joined forces through a new two-year partnership to help tackle the shortage of good-quality, affordable homes in Great Britain. Through colleague and customer fundraising, over £1.3 million has been raised to support Crisis (and Simon Community in Northern Ireland) with over 300 colleagues also volunteering their time to support Crisis activities across the UK.\nIn addition we have supported an additional 5 million customers go paper-free through digital communications, keeping them safe from fraud and giving them access and storage to their key documents via their phone or device 24/7. This takes our total number of paper-free customers to 20.5 million for products where we offer this capability, with a further 6.5 million receiving some form of digital communications from us.\nAs one of the UK’s largest employers, we know the success of our business is dependent on our colleagues and we aim to look for ways to help them feel more supported, in control and confident about their future.\nSince January 2020, the Group has been working in partnership with the Woodland Trust to plant 10 million trees in the UK by the end of the decade as part of our commitment to finance a greener future and support the transition to a low carbon economy.\nWe have provided tablets and in-person training to 513 local individuals in Liverpool, to support financial capability through our pilot and we will build on this initiative to provide 4,750 tablets, training, and mobile internet access to digitally excluded individuals during 2024.Through our partnership with Citizens Advice, 4,000 customers have received dedicated support and advice, helping them access £2.5 million of potential additional income.\nIn 2023, we launched Inclusive Everyday, our ongoing internal campaign to help colleagues understand how they can be more inclusive in their everyday behaviours, language and leadership and support making our business a place we all love to work.\nWe launched our Flexibility Works colleague proposition to support enhanced, fair flexibility for all colleagues, which is crucial in achieving our purpose of Helping Britain Prosper.\nIn 2023, we supported £2.7 billion of new funding of which £1.4 billion is sustainable or sustainabilitylinked to the social housing sector, which also reduces tenants’ energy bills and helps to tackle fuel poverty.", "chunk_word_count": 522, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Sitting at the heart of communities across the UK, we play an active role in helping them in a number of different ways.", "document_id": "2023 Lloyds sustainability report", "page": 12, "page_start": 12, "page_end": 12 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 9, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Sitting at the heart of communities across the UK, we play an active role in helping them in a number of different ways.\nWe have agreed a two-year pay deal to give colleagues greater certainty and paid an additional cash award to support our colleagues during these extraordinary times and over the longer term.\nIn addition, during 2023 we have been providing targeted support for our business customers to help them navigate challenging times, and supported c.600,000 customers with customer resilience resources via our support teams, outreach by client relationship managers and digital financial wellbeing communications.\nWe support our colleagues to make sustainable choices including through our colleague salary sacrifice scheme. The Group has supported loans for 2,500 electric cars.\n### How we support our stakeholders continued\nThe Group has a proactive investor stakeholder engagement programme. We actively engage with shareholders and other investor stakeholders (e.g.proxy advisers and NGOs) onarange of ESG topics, including our climate commitments and diversity and inclusion plans. Our focus on inclusivity and sustainability supports the delivery of our purpose and strategy, and higher, more sustainable returns to our shareholders.\nOver the past year, the Group has undertaken a number of sustainability-focused investor meetings and presentations, and participated in anumberof EsG investorconferences.The Chair and other Board members have also engaged with the Group’s shareholders on a range of governance topics. We continue to disclose on ESG topics, including progress against our sustainability commitments and how our sustainability initiatives support the Group on delivering its purpose and strategy. We do this primarily through this report as well as our 2023 annual report and accounts.", "chunk_word_count": 284, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Sitting at the heart of communities across the UK, we play an active role in helping them in a number of different ways.", "document_id": "2023 Lloyds sustainability report", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 10, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### The Group recognises the importance of using our voice to engage with government and regulators on sustainability matters.\nWe have actively engaged with government to help encourage the right enabling policy environment and business behaviours and activities. For example, we have engaged with the UK government directly to shape the UK Transition Plan Taskforce’s (TPT) framework for nature and Just Transition, and supporting development of sector-specific transition plans. We have also engaged with the WWF on the inclusion of nature within TPT requirements.\nWe recognise the environmental and social impacts of the Group’s demand for goods and services and the importance of working collaboratively with our suppliers in a way that is aligned with our purpose. To drive more targeted and deeper engagement with our suppliers on these important topics, we have introduced various initiatives.\nIn relation to greening the built environment, we are engaging on our policy asks including hosting roundtable events and one-to-one meetings with MPs, peers and policy advisers to discuss and garner advocacy and support for our policy ideas. See page 122 for further details.\nDuring 2023 we launched our flagship Liverpool City Region Housing Initiative. The Initiative is being driven by the Group, Liverpool City Region Combined Authority, and key city housing partners. It aims to deliver practical action to address housing challenges.\nIn 2022 we launched the Lloyds Banking Group Emerald Standard which, aligned to the Group’s own ambition, sets clear environmental and social expectations of our suppliers that we ask them to work towards. Through 2023 we continued to engage with our key suppliers to drive adoption of our standard.\nRecognising that cyber security is a material issue impacting our entire sector, the Group collaborates externally, working in conjunction with our sector peers and government on initiatives such as the Financial Services Cyber Collaboration Centre, working with the UK Government’s National Cyber Security Centre, and the Cross-Market Operational Resilience Group.\nIn addition, we have worked with Unseen, a UK anti-slavery charity, to deepen our understanding of modern slavery risk within our supply chain and enhance our colleague training.\nWe have also progressed our supplier diversity activity geared towards ensuring our supply chain aligns with our goal to further represent the society we serve. The intent is to provide insights into the diversity of our existing supplier base and proactively ensure equal opportunity is provided to diverse suppliers.\nHow we deliver through oversight, ownership and responsible conduct builds a foundation that allows us to deliver on our purpose of Helping Britain Prosper.\n### In this section\nGroup roles, responsibilities and remuneration 14 Conducting our business responsibly 17 Supporting our customers to ensure \ngood outcomes 2527 Our frameworks \nUpcoming regulation 29\n### How we deliver\n### Group roles, responsibilities and remuneration\nOur Board-level Responsible Business Committee oversees the Group’s performance as a responsible business, sharing responsibility with the Audit Committee and Board Risk Committee on sustainability-related matters.\n### Board level\n[IMAGE CAPTION] Our Group-level sustainability governance structure", "chunk_word_count": 509, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > The Group recognises the importance of using our voice to engage with government and regulators on sustainability matters.", "document_id": "2023 Lloyds sustainability report", "page": 13, "page_start": 13, "page_end": 15 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 11, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Executive level\n△\nGroup Risk Committee (GRC) 3\nGroup \nExecutive \nCommittee \n(GEC)1\nGroup Net Zero Committee (GNZC) 2,3\nGiven the strategic importance of our sustainable business ambitions and commitment in managing the impacts arising from climate change and broader social issues, our governance structure provides clear oversight and ownership of the Group’s sustainability strategy and management of risk.\n### Division and function/platform level\nThe Chair of the Scottish Widows Board sits on the Group Board. The Scottish Widows CEO sits on GEC and will update GEC on relevant Insurance matters which can include papers for GEC approval. 2 The Chair of the RBC, Amanda Mackenzie, is a non-executive director on the Board, and is a member of the Remuneration Committee and the Nomination and Governance Committee, as of 1 January 2024, the Audit Committee, and ensures that sustainability is discussed and considered by the Board. Amanda has extensive experience in ESG matters, including helping launch the United Nations Sustainable Development Goals. 3 GNZC and GRC provide oversight from an environmental perspective only.\nFull details on how sustainability is incorporated into our Group governance structure along with key decision made in the year can be found within the annual report and accounts 2023 on page 84.\n### Group roles, responsibilities and remuneration continued\n### Training delivered\n### Entity governance\nBeyond the Group level, governance structures are in place to support consideration of sustainability and climate risks and opportunities at Board level across the Group’s key legal entities.\nThe Group’s governance structure focuses on ensuring independent decision making by the Ring-Fenced Bank Boards, the structure and responsibilities for the Ring-Fenced Banks are outlined on page 87 in the annual report and accounts 2023 .\n### Skills and training\n### Other updates delivered:\nDuring the period other key updates delivered include:\nIn 2023 we provided training for the Group Board, Group Executive Committee (GEC), the Scottish Widows Board and Insurance, Pensions and Investments Executive Committee on the theme of nature and biodiversity. We launched new environmental sustainability training for all colleagues covering the transition to a low carbon economy, nature loss and greenwashing. We have also continued specialist training of our frontline Commercial banking, credit risk, and sourcing and supplier manager colleagues, with this training continuing in 2024.\n• RBC recommended to the Board approval of our environmental strategy update, and three additional sector targets AC update on limited assurance activities and evolving regulatory landscape including International Sustainability Standards Board Climate data requirements were discussed at a joint Audit and Risk Committee forum\nIn Lloyds Bank Corporate Markets (LBCM), regular updates on climate risks are provided to its Board and Board Risk Committee. Details of the governance structure within Scottish Widows can be found on page163.\nFurther details on respective governance for the Group’s other entities can be found in their respective disclosures.\nThe Group Board in addition to the above training received training related to the following sustainability topics:", "chunk_word_count": 504, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Executive level", "document_id": "2023 Lloyds sustainability report", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 12, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Divisional governance\nGroup-level governance of sustainability and climate risk is supported by existing governance structures across our divisions that are used to oversee decisions related to sustainability and climate risk that impact the divisions, ensuring sustainability and climate risk are managed as part of regular activity. Divisional governance structures include the Consumer Lending Executive Committee, Commercial banking Committee and Insurance Pensions and Investments Responsible Business Executive Committee within Scottish Widows. Our Group Sustainable Business team is supported by divisional sustainability teams, ensuring a coordinated approach to oversight, delivery and reporting of the Group’s sustainability strategy.\n• Culture, conduct and the statutory duty of responsibility for non-executive directors \nMarket abuse Consumer duty \n• Data ethicsThe Group’s tax strategy\nGovernance structures are in place to support consideration of sustainability and climate risk across the Group’s key legal entities.\nTraining provided at a Board and executive committee level on the theme of nature and biodiversity.\n### Group roles, responsibilities and remuneration continued\n### Group roles and responsibilities and remuneration\n### Remuneration and balanced scorecard\n### Three lines of defence'\nOur annual balanced scorecard provides transparency on how our performance aligns with 2023 GPS and LTIP awards. In 2023 the weighting related to ESG performance measures in the Group balanced scorecard was 17.5 per cent, continuing our focus on climate change ambitions and our ongoing commitment to improving diversity at the Group. The ESG measures included within our annual scorecard are as follows:\nThe Group’s structure provides clear oversight and ownership of our sustainability strategy and management of climate risk across the three lines of defence, with dedicated teams in place focused on these areas.\n### Teams\nThe Group Sustainable Business team is responsible for overseeing the Group’s strategic approach to responding to global and local issues on environmental and social sustainability.\n### 1st line\nAt a divisional and/or sector level there are sustainability teams supporting the delivery of our strategy. They are responsible for developing the Group’s strategic response to climate risk, including setting the business strategy, ambitions and development of sustainable productlevel offerings to support the Group’s sustainability strategy.\n• Increasing our gender and ethnic representation in senior roles (7.5 per cent) • Reducing our operational carbon emissions (5 per cent) • Sustainable financing and investment (5 per cent)\nThis includes calculating and forecasting emissions, as well as sector-level target setting and transition plans to support the Group’s environmental commitments and targets.", "chunk_word_count": 417, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Divisional governance", "document_id": "2023 Lloyds sustainability report", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 13, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Progress against our targets is set out on pages 32 and 35 to 36 of the annual report and accounts 2023 .\nGroup Finance is responsible for incorporating climate into the Group’s planning and external reporting.\nFor 2024, we are returning to a performance based Longterm Incentive Plan (LTIP) which will deliver stronger alignment with our strategic objectives by supporting a more demanding performance culture and providing the opportunity to directly link long-term variable reward outcomes to the delivery of our strategy and the realisation of its benefits for shareholders. The new LTIP will weight 15 per cent to environmental measures, reflecting that the transition to a low carbon economy is at the core of our strategy and aligns with our purpose to Helping Britain Prosper. Sustainable financing and investment will form part of the LTIP in 2024 and therefore has been removed from our 2024 balanced scorecard. Full details on the LTIP can be found on page 124 of the annual report and accounts 2023 .\nRisk is responsible for overseeing the risks relating to ESG topics. This includes formal responsibilities in relation to oversight of the risks arising from climate change to support meeting regulatory expectations.\n### 2nd line\nTeams across Risk are responsible for oversight of the Group’s strategy for environmental and social sustainability, as well as incorporating consideration of ESG-related topics into the appropriate risk management processes. Activity in relation to climate risk is most advanced, including development of methodologies to quantify climate risk, oversight of net zero strategies and setting the Group’s climate risk appetite.\nGroup Audit has an established team focussing on ESG risks. This team, supported by other subject matter experts, provides independent assurance to the Audit Committee and the Board. Group Audit also attends key sustainability and climate risk governance committees and forums.\n### 3rd line\n### Conducting our business responsibly\n### Product development\n### Our Group customer and product policies set out how important it is to ensure that we are delivering good customer outcomes.\nTaking this approach enables the Group to grow with purpose by continuously improving outcomes for our customers. We conduct regular monitoring to assess whether or not we meet our high customer service standards and colleagues’ remuneration is linked to outcomes.\n• Everyone in the Group must focus on the outcomes we want to deliver for customers and to ensure that evidence and monitoring is in place to assess whether we have provided good outcomes, avoided foreseeable harms and supported customers in pursuing their financial objectives. We must act in good faith towards customers which is characterised by honesty, fair and open dealing, and acting consistently with the reasonable expectations of customers. \nWe must ensure that our products offer fair value to customers.", "chunk_word_count": 473, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Progress against our targets is set out on pages 32 and 35 to 36 of the annual report and accounts 2023 .", "document_id": "2023 Lloyds sustainability report", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 14, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Upholding competition law\nWe believe that consumers benefit from healthy competition between providers of financial services and we compete vigorously and fairly, striving to offer excellent service and competitive products which meet our customers’ needs and provide good outcomes.\nThe Group tolerates no anti-competitive practices that could lead to: interventions by competition authorities; or breaches of competition law, which may harm customers or have a significant financial or reputational impact on the Group. The Group does not become involved in agreements or practices that are unlawful, such as colluding with our competitors to restrict competition or unlawfully fixing prices. We recognise that we must deal in good faith with all our trading partners, including our suppliers and competitors. We recognise that competition law is not intended to stifle legitimate business.\nWe believe that conducting our business responsibly means: operating ethically, sustainably and inclusively; meeting our legal requirements; and always considering our impact on our customers, colleagues, society and the environment.\n### Conducting our business responsibly continued\n### Suppliers\n### We conduct regular monitoring to assess whether or not we meet our high customer service standards.\n### Avoiding market abuse\nWe expect suppliers to meet or exceed the provisions of our Code of Supplier Responsibility (the Code), which we share through the supplier contract in our business sourcing process.\nWe implement and monitor adherence with market abuse and personal account dealing procedures that are aligned with the UK’s market abuse legislation. Market abuse, such as trading based on inside information, is a criminal offence in the UK, the US and many other countries. Colleagues are personally responsible for ensuring that they comply with this policy and do not abuse the market. We have monitoring systems in place to detect instances of market abuse and procedures to ensure that any detected instances are dealt with swiftly and effectively. This includes procedures to identify and report suspicious transactions where relevant.\nThe Code is reviewed at least annually and updated to ensure its ongoing appropriateness, relevance and applicability for our suppliers.\n### Code of Supplier Responsibility\n### Responsible and sustainable sourcing\nTo meet our objective to be more purpose-driven, it is crucial that we act in a sustainable and inclusive manner, and this includes the way in which we source goods and services from our suppliers. Our Code of Supplier Responsibility sets out the key sustainable and inclusive business practices and behaviour that we want our suppliers to abide by. These are grouped into five key areas:\nWe are committed to working collaboratively with our suppliers on developing our approach to responsible and sustainable sourcing; this is integral to the way we do business. Colleagues engaged in sourcing follow a defined business sourcing process as required by our internal sourcing and supply chain management policy and related procedures. The business sourcing process is a seven-step process that facilitates the identification, assessment and mitigation of applicable risks as we select and contract with suppliers.", "chunk_word_count": 506, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Upholding competition law", "document_id": "2023 Lloyds sustainability report", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 15, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Product governance\nA comprehensive Group product policy, procedures and framework is in place to define the guardrails for the business to meet the regulatory requirements and how we want to operate as a Group. The policy outlines core concepts which are considered throughout the product lifecycle including identifying the need the product is required to meet for customers in the target market, and having controls in place to prevent the product from being offered to customers for whom the product is not appropriate. Colleagues are also supported to use their judgement to apply the policy requirements in a way which is proportionate and appropriate to the product and customer needs and the foreseeable harms. Through robust risk management, regular product reviews and monitoring, we adopt a continuous process to ensure that our products provide good customer outcomes.\n• Human rights • Diversity, equity and inclusion • Accessibility and usability Conducting your business responsibly • Environmental sustainability\nWe are committed to working collaboratively with our suppliers on developing our approach to responsible and sustainable sourcing.\nDevelopment and continued oversight of the implementation of the customer vulnerability strategy remains through operating at a senior level to prioritise change, drive implementation and ensure consistency across the Group. More on approach to supporting customers is available on pages 34 to 38.\n### Conducting our business responsibly continued\n### Economic crime\nThere is also a defined supply chain management framework including associated tools and learning for accountable persons and supplier managers, which enables the ongoing risk-based management of the supplier relationship in line with the Group’s risk appetite. Where third-party relationships exist that fall outside the scope of our sourcing and supplier management policy, business units accountable for these relationships are required to ensure adherence to the Group’s policy framework, including the Code of Supplier Responsibility, where applicable.\n### ESG risk assessment\nWe are using EcoVadis’ predictive sustainability analysis to help further understand our ESG risk across our core supplier base. This covers the key themes of environment, labour and human rights, ethics and sustainable procurement. In 2023, this analysis has helped to identify a sub-set of suppliers for a deeper dive risk assessment specific to modern slavery, and we have engaged Unseen (a UK anti-slavery charity) in this activity.", "chunk_word_count": 392, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Product governance", "document_id": "2023 Lloyds sustainability report", "page": 19, "page_start": 19, "page_end": 20 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 16, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Economic crime devastates lives, causing deep distress and harm to victims and communities. The economic climate and changing spending habits provide a complex mix of uncertainty for customers and attractive opportunities for criminals to exploit as the ‘hook’ for their scams.\nPrevention and detection are a key defence against economic crime. At Lloyds Banking Group, we have processes, technologies and systems that help us understand who our customers, suppliers and third parties are. We undertake checks to understand sources of funds to reduce the risk that illicit proceeds can enter the financial system. We monitor payments and transactions, so we protect customers, society and the Group. And when needed, we stop payments, close accounts and end relationships to meet our legal and regulatory requirements.\nWe will continue to assess our risk-based approach to supplier engagement, colleague training and more generally raise awareness of ESG risk in our supply chain.\n### Supplier due diligence\nIn assessing and managing risk, it is important that we have the right framework to operate responsibly and safely. Before selecting any supplier, we follow a due diligence process which evaluates them against key criteria across all the key risk domains.\nAs a Group, we are committed to complying with our legal and regulatory responsibilities in relation to economic crime prevention and have no appetite for non-compliance. In line with legislative and regulatory requirements, the Group adopts a risk-based approach to managing economic crime risk. This flexibility allows the Group and its businesses to focus our control framework on those customers, products, channels and jurisdictions that carry a higher risk of economic crime.\n### Managed suppliers and FSQS", "chunk_word_count": 288, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Economic crime devastates lives, causing deep distress and harm to victims and communities. The economic climate and changing spending habits provide a complex mix of uncertainty for customers and attractive opportunities for criminals to exploit as the ‘hook’ for their scams.", "document_id": "2023 Lloyds sustainability report", "page": 20, "page_start": 20, "page_end": 20 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 17, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Policy framework\nLloyds Banking Group subscribes to the FSQS (Financial Services Qualification System), a third-party managed supplier qualification system for the financial sector that is currently used by c.60 financial institutions. This ensures we adopt a standardised approach to risk, compliance and assurance, which forms an integral part of our sourcing and supply chain management activity for new and existing suppliers.\nThe Group has a dedicated economic crime prevention (ECP) function, which is part of the Risk Division. The ECP function facilitates risk-based, effective and efficient economic crime risk management by providing expert support and oversight across our businesses.\nWe have adopted a holistic approach to economic crime prevention and have a single ECP policy and associated procedures which are reflective of prevailing legal and regulatory requirements, industry guidance, and the Group’s risk appetite. The ECP policy sets out the minimum requirements to which all Group businesses must comply across five key risk areas: anti-bribery and corruption (ABC); anti-money laundering and counterterrorist financing (AML); fraud; sanctions; and tax evasion. This holistic approach provides a consistent, proportionate and effective approach to managing economic crime risk.\nWe take a risk-based approach and contractually require our managed suppliers to self-attest their compliance to the Group’s policy expectations on an annual basis. When completing FSQS we require our suppliers to confirm they have read, understood and complied with the Code of Supplier Responsibility and provide us with evidence to demonstrate their approach in the design, deployment and control of their policies and procedures.\n### Supplier assurance\nThe Group continues to invest in and enhance our economic crime prevention policies, processes and systems to help combat this continuously evolving threat.\nThe Group sourcing supplier assurance team conducts an annual programme of supplier assurance reviews. These reviews target suppliers which represent the highest risk exposure to the Group primarily driven by the resilience, cyber, data privacy and conduct risks they represent based on the services they provide. Suppliers that trigger agreed risk criteria are selected for a supplier assurance review conducted by subject matter experts through a combination of onsite and remote assessment to test adherence to relevant Group policies. Where appropriate, testing is completed on our Code of Supplier Responsibility.\n### Conducting our business responsibly continued\n### Anti-bribery and corruption (ABC)\nWe are a member of Transparency International (TI) UK’s Business Integrity Forum – a network of major international companies committed to high anti-corruption and ethical standards in business practices. TI has a Corporate Anti-Corruption Benchmark, which measures and compares the performance of corporate ABC programmes in the UK using TI’s extensive anti-corruption expertise and the input of experienced specialist practitioners. In September 2023, the Group received an ‘A’ rating for its ABC control framework from TI.\nIn addition, there are two advanced level courses (sanctions and anti-bribery) which meet the needs of colleagues whose roles require further specialist training. Colleagues undertake the training, dependent upon the nature of the business, type of role, jurisdiction in which they operate and the propensity for which their products can be used to facilitate economic crime.", "chunk_word_count": 525, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Policy framework", "document_id": "2023 Lloyds sustainability report", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 18, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Economic crime training:\n• Creation of a new CoLP online learning platform, offering new advanced fraud and cyber education courses to give mainstream police greater opportunity for fraud investigation training, and to keep abreast of new and emerging fraud techniques. Development of Fraud and Cyber courses which have been rolled out to over 7,000 participants across the police and counter fraud community, helping to enhance knowledge and develop relevant skills to enable police officers to better detect and respond to Economic Crime.\nLloyds Banking Group is subject to the provisions of the UK Bribery Act 2010 and the US Foreign Corrupt Practices Act 1977, which have extra-territorial effect globally, as well as applicable local anti-bribery and corruption laws.\nThe ECP policy requires that all colleagues act with integrity and fairness, and to conduct appropriate due diligence when pursuing business opportunities and when awarding business. Our policy prohibits the offering, giving, promising or receiving of monetary or other inducements, or any other inappropriate practice which might be perceived to improperly influence a person’s conduct in their professional or public duty.\nIn 2023, 99 per cent of colleagues across the Bank completed their annual refresher economic crime prevention training, compared to 98 per cent in 2022. Completion rates for new starters and returners within eight weeks of joining is above 97 per cent. Controls are in place to manage those colleagues who do not complete their training on time.\n### Training and awareness\n### Knowledge enhancement and sharing:\nThe Group has a comprehensive economic crime prevention training programme which includes mandatory general awareness training delivered via Workday, the Group’s learning management system. All colleagues are required to undertake core level economic crime prevention training:\n• Supporting CoLP to build new relationships with other private sectors and as a result CoLP are now an integral part of a joint programme with Cifas, the UK’s fraud prevention community, in training Fraud Protect Officers and the Fraud Foundation, recently winning a Tackling Economic Crime Award (TECA) for their achievements. Joint CoLP and Lloyds Banking Group workshops have been successful, sharing best practice, cross-sector knowledge and enhanced capabilities across both organisations. This has led to targeted dissemination of intelligence packages resulting in successful law enforcement detection and outcomes.", "chunk_word_count": 389, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Economic crime training:", "document_id": "2023 Lloyds sustainability report", "page": 21, "page_start": 21, "page_end": 21 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 19, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Working with partners and law enforcement\nThe Group’s Code of Ethics and Responsibility is a reference point for every colleague and underpins our purpose, bringing together all the different elements that define how we work and ensuring that we do business responsibly.\nWe recognise that we cannot tackle and reduce economic crime in isolation. We work collectively with industry bodies, law enforcement, regulators and governments. These partnerships are crucial to our ambition to reduce financial crime and to help Britain prosper. The Group is an active participant in public and private sector initiatives to tackle economic crime.\nAn induction level module designed for new colleagues and those returning from long-term absence. The learning is split into four sections followed by a series of mandatory assessment questions which the colleague must answer correctly before they can progress to the next section An annual core refresher module for all existing colleagues, designed to test a colleague’s knowledge and understanding of the key risk areas. The learning comprises four video scenarios followed by a compulsory assessment. Colleagues must answer all questions correctly to pass the module\nThe Code explains how we can work responsibly, living up to our values and doing the right thing when we have to make decisions, and it applies to all Lloyds Banking Group colleagues, contractors and agency employees, whether or not they are working with customers directly.\n### City of London Police\nIn 2018, the Group formed a partnership with the City of London Police (CoLP) to fight economic crime across the UK, committing £1.5 million to support the delivery of several joint initiatives, over a three-year period.\n### The Group is committed to fighting economic crime, maintaining its focus on protecting the bank and minimising customer impact, Helping Britain Prosper, whilst reducing theharmto communities caused by criminals and terrorists.\nDue to its success, the Group extended the partnership for a fourth year and in September 2022, a new memorandum of understanding was signed for joint commitment to an ongoing collaborative partnership. Our funding has enabled the expansion of the CoLP’s intelligence development capability, which is helping support tangible coordination across national, regional and local policing to address high harm fraud.\nIn 2024 the core annual refresher will be updated, moving from a single 60-minute course to four courses, spread across the year. The update is needed to reflect several regulatory developments which need to be reflected. Notably: the requirement to undertake proliferation financing risk assessments and the introduction of a strict liability sanctions regime. Using real-life customer and colleague scenarios, the learning solutions retain both the theoretical and practical application of economic crime concepts. Training provides colleagues with the knowledge they need to protect our customers, the Group and the economy from the harm caused by criminals and terrorists.\nThe partnership continues to support key initiatives: Economic Crime Training, Knowledge Enhancement and Sharing and Community Engagement/Social Responsibility.\nConducting our business responsibly continued", "chunk_word_count": 502, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Working with partners and law enforcement", "document_id": "2023 Lloyds sustainability report", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 20, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Community engagement and social responsibility\nSDG 16.4: By 2030 significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organised crime.\nMule recruitment continues to be a challenge as criminals seek to convince account holders there will be no consequences for taking part in this type of activity and coach them on how to respond if challenged by a bank.", "chunk_word_count": 87, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Community engagement and social responsibility", "document_id": "2023 Lloyds sustainability report", "page": 22, "page_start": 22, "page_end": 22 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 21, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Crooks on campus\nAdditional funding, secured from Project Olaf (see below), will enable the rollout of Crooks on Campus to universities across the UK.\nThe Group and CoLP,in collaboration with Lancaster University, have partnered with We Fight Fraud to roll out Crooks on Campus a fraud education programme to university students. Crooks on Campus is designed to help educate and prevent them becoming a money mule. After a trial at Lancaster University, a pilot across sixuniversities in London began in October 2022 comprising of webinars, face to face seminars and training programmes.\nStudents can protect themselves by:\nNot responding to job adverts, or social media posts that promise large amounts of money for very little work. \nResearching a potential employer, particularly one based overseas, before handing over personal \nor financial details to them. \nNot allowing an employer, or \nsomeone they do not know and trust, to use their bank account to transfer money. \nReporting any suspicions of \nmoney muling to CrimeStoppers on 0800 555 111, or the police. SDG 17.7: Encourage and promote \neffective public, \npublic-private and \ncivil society \npartnerships, \nbuilding on the \nexperience and \nresourcing strategies of partnerships.\nCrooks on Campus is a powerful criminal drama that brings to life the reality of organised financial crime and the consequences for students if they become a money mule. The film accurately depicts the role a money mule plays in helping criminals ‘clean’ money they have obtained through fraudulent activity. The film isbased on real-lifestories of victims and criminals gathered from We Fight Fraud’s intelligencegathering activities.\nA growing number of students are being targeted by criminal gangs to launder money through their student bank accounts. Research conducted by Dr Nicola Harding at Lancaster University in 2022 shows that 3 in 5 students have been approached in person or online to become a money mule. Even more worrying is that 52 per cent did not know what a money mule was and 47 per cent thought it was acceptable to let someone use their bank account to transfer money.\nThe Group believes it is really important young people understand more about the consequences of being caught moving fraudulent funds. Tempting offers that sound too good to be true probably are, so it is important to think about the consequences.\nOriginally piloted with the National Crime Agency, the film produced significant awareness and behavioural change, with 90 per cent of students from the pilot population rejecting subsequent money mule recruitment messages.\nIn 2022, money mule behaviour accounted for 68 per cent of misuse of bank accounts according to the Cifas, Fraudscape 2023 report. The key age range for mule activity continues to be 21-25 years, with social media remaining a key enabler in the recruitment of mules.\nIt is hoped this project, which also incorporates training for university staff and student representatives, will help stop students from allowing criminals to use their bank accounts -making it increasingly harder for criminals to place their illicit funds in the financial system.\nConducting our business responsibly continued\n### Cyber Detectives\n### Project Olaf\n### North East Business Resilience Centre", "chunk_word_count": 530, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Crooks on campus", "document_id": "2023 Lloyds sustainability report", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 22, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Illegal wildlife trade\nRecognising the increasing threat of economic crime to our young \nchildren the Group and CoLP \nco-designed and delivered the \n‘Cyber Detectives’. An education \nprogramme targeting primary school children which now forms part of the PSHE (Personal Social Health and \nEconomics) element of the national curriculum in England. Latest figures show more than 3,500 schools, circa 150,000 young children in England are now using the learning. \n‘Cyber Detectives’ will help equip \npupils with the skills they need to stay safe online, protect their personal \ninformation, report concerns and \naccess help. The lessons will help \npupils: \nExplain what online fraud is and \nidentify and analyse examples \nof scams \nDescribe the importance of \nprotecting personal information \nand data online \nExplain why age restrictions for \nonline gaming can help to keep \nus safe and prevent fraud \nRecognise ways to stay safe online \nand report concerns about \nonline fraud\nThe illegal wildlife trade (IWT) is the prohibited collection, transportation and sale of flora or fauna (living or dead). IWT is valued between £40-120 billion per year and is one of the five most lucrative global crimes, which benefit organised criminal gangs. Since 2019 Lloyds Banking Group has been a member of the United for Wildlife Financial (UFW) Task Force, part of the Royal Foundation led by the Prince and Princess of Wales to tackle the illegal wildlife trade (IWT) and protect endangered species. So far, UFW collective efforts have led to 250 arrests, 450 law enforcement cases and trained over 100,000 employees across member institutions to raise awareness about the illegal wildlife trade. The Group’s internal UFW Working Group has actively engaged in several projects, which include enhancing public-private IWT intelligence sharing; promoting education and awareness of IWT across the Group; using transactional analysis of known IWT cases to build typologies and identify red flags; and supporting Project Seeker, which uses Artificial Intelligence scanning technology, to increase detection of IWT products trafficked through international airports.\nThrough building a strong working relationship with CoLP, together we launched the first banking industry’s pilot scheme called ‘Project Olaf,’ using proceeds of crime to fund fraud-fighting and victim support programmes. The ‘frozen’ money captured from fraudsters by a Group’s specialist mule-hunting team has been invested in projects to tackle fraud, as well as increasing education andawarenessinorganisations such as Age UK.\nThe Group is a member of the North East Business Resilience Centre (NEBRC),a not-for-profit organisation bringing together experts across the cyber and fraud communities to improve cyber safety and reduce cybercrime by promoting awareness and delivering training tosmgllbusinesses gnd the local community. The Group has also promoted online and in-person events to educate our customers and promote the services of NEBRC.", "chunk_word_count": 462, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Illegal wildlife trade", "document_id": "2023 Lloyds sustainability report", "page": 23, "page_start": 23, "page_end": 23 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 23, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Stop Scams UK\nThe Group is an active supporter of Stop Scams UK. Working in partnership with otherbanks, telecoms and technology companies, the telephone hotline number – 159 – has been rolled outacrosstheUKwithexcellent results. This number connects customers directly and securely with their bank if they fear they are a victim of a scam or to check the authenticity of a caller.\nThe resource pack also contains teacher guidance to help ensure effective lesson delivery, as well as information and guidance for parents, so they can stay informed how online fraud could affect their child.\n### Conducting our business responsibly continued\n### Cyber security and data privacy\n### Our approach to tax\n### Incident management and intel-led security testing frameworks\nThe Group maintains strong and practised incident management frameworks, demonstrated during the COVID-19 pandemic. We have continued exercising our incident management frameworks and teams right up to Board level, focusing on cyber security scenarios and threats, and participating in the Bank of England sector SIMEX exercise. The Group carries out active security testing of internal and external systems, utilising the expertise of in-house advanced security testing capability and external CREST accredited security experts.\n### Tax is one of the ways in which businesses contribute to the societies in which they operate, and we are proud to be among the UK’s highest payers of corporate taxes for several years.\n### Cyber security and resilience\n### Cyber benchmarking\nThe Group undertake an annual cyber benchmarking exercise, in conjunction with an independent consultancy, to understand the relative maturity of our cyber capabilities, as aligned to the NIST framework. This allows us to measure ongoing improvements in our capability maturity and align ourselves with peer organisations in the financial services industry.\nCustomers trust us to keep their money and data safe, and the Group deploys sophisticated technology to protect both. The Group works continuously to bolster defences against cyber-attacks through adopting a threat-led approach and enhancing our preventative, detective and responsive controls. We also recognise the importance of secure behaviours and continue to educate our customers and colleagues on cyber threats.", "chunk_word_count": 364, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Stop Scams UK", "document_id": "2023 Lloyds sustainability report", "page": 23, "page_start": 23, "page_end": 24 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 24, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Collaboration\nRecognising that cyber security is a material issue impacting our entire sector, the Group collaborates externally, working in conjunction with our sector peers and government on initiatives such as the Financial Services Cyber Collaboration Centre, working with the UK Government’s National Cyber Security Centre and the Cross-Market Operational Resilience Group. We work closely with other banks, recognising the importance of collaboration when it comes to security, including being part of the Cyber Defence Alliance.\nIn 2023, we paid £2.6 billion of cash taxes. This was primarily on business profits, VAT on goods and services needed to run our business, bank levy and employer social security on staff wages and salaries. In addition, we collected £1.8 billion of cash taxes primarily from payroll taxes and customer product taxes.\nThe result of the 2023 review were favourable with the Group’s cyber capabilities praised as mature and wellestablished. Our highly-skilled cyber security colleagues and their drive to innovate were highlighted as a particular strength for the organisation, along with highly mature capabilities in areas such as colleague education and incident detection/response functions. The key areas for improvement highlighted in the report align with our Group security strategy focus areas, confirming that it is addressing the correct areas of development and investment.\n### Governance\nCyber security maintains a high level of focus right up to Board level, with regular updates to the Board and Group Risk Committees, along with a dedicated quarterly Board sub-risk forum focused on cyber security, IT resilience and operational resilience. Cyber and data security forms a part of the Group’s wider operational resilience framework, which continues to enhance the Group’s resilience to ‘maintain the expected through the unexpected’. An ongoing focus area of the Group is to continue to embed a culture of resilience and security across the Group and its key third parties.\nAppropriate, prudent and transparent tax behaviour is a key component of being a responsible business. We comply with the HMRC code of practice on taxation for banks. We do not interpret tax laws in a way that we believe is contrary to the intention of Parliament, and we do not promote tax avoidance products to our customers.\n### Data privacy\nThe Group values the trust our customers and colleagues place in us, therefore we process their personal data in a lawful, fair and transparent manner to enable the delivery of good outcomes and to protect our customers and colleagues from foreseeable harm. The Group demonstrates accountability to data subjects and regulatory expectations through policy, process, risks and controls, this includes ensuring.", "chunk_word_count": 443, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Collaboration", "document_id": "2023 Lloyds sustainability report", "page": 24, "page_start": 24, "page_end": 24 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 25, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Colleague training and awareness\nFurther information on the Group’s approach to tax can be found in our tax strategy and approach to tax report 2023 .\nAll Group colleagues and contractors must complete an annual mandatory four-part security training programme, which highlights the key threats and risks that colleagues face and how to reduce and avoid them. We also publish regular articles and news on our SharePoint and Viva Exchange channels and a monthly newsletter, alongside regular webinars, presentations and events. The education and awareness team also create bespoke learning campaigns which correlate with ongoing real-world events – the FIFA World Cup, for example, as well as international holidays and events like Valentine’s Day, Easter, Christmas etc. – to obtain further colleague engagement in security education. Our phishing simulation programme allows colleagues to spot phishing emails and receive training as necessary, while certain colleagues in the Group, due to their role or risk profile, must complete further mandated training.\n### Compliance and controls\nThe Group utilises a range of identified best practice guidance as inputs to our Security Policy Frameworks including the NIST cyber security framework, ISO 27000 and PCI DSS. In addition, we undertake legal, regulatory and best practice horizon scanning to proactively identify updates to the framework or opportunities to respond to regulation, alongside our annual policy refresh cycle.\n• Personal data is limited to what is necessary, processed lawfully, fairly and in a transparent manner Personal data is collected for an explicit, legitimate, adequate, and necessary purpose and not further processed in a non-compatible manner The risk posed to our data subjects is assessed, monitored and escalated when necessary Data subjects’ rights are upheld and respected Personal data is processed with appropriate protection against unauthorised or unlawful processing, and against accidental loss, destruction or damage, using appropriate measures\nIn 2023, external validation of the Group’s security controls in the form of a SOC2 report was achieved for the period 1 January 2022 to 30 June 2022 covering our client-facing businesses in Commercial, Lex Autolease, Lloyds Bank Capital Markets, Insurance and Pensions. This was the second SOC2 report to be obtained by the Group and provides an independent assessment of the design and operational effectiveness of the Group’s security controls.\n### Whistleblowing and colleague conduct\nyear showed that 95 per cent of colleagues believed their concern would be taken seriously and treated sensitively through Speak Up.\nIn 2023 we delivered a comprehensive communication plan to promote colleague awareness and confidence in Speak Up. We have also worked closely with our Speak Up Champions and Speak Up Officer network to deliver tailored communications to business areas, colleague networks and line managers. We have worked with colleagues to build advocacy and promote awareness, trust and confidence and paid particular attention to any groups of colleagues, who may be less inclined to Speak Up.", "chunk_word_count": 490, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Colleague training and awareness", "document_id": "2023 Lloyds sustainability report", "page": 24, "page_start": 24, "page_end": 25 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 26, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Whistleblowing – helping colleagues to Speak Up\nThe Speak Up arrangements provide a safe and confidential environment for reporters to raise concerns of wrongdoing or inappropriate behaviour, but there are also several other complementary routes to report concerns including:\ndisciplinary action. Our Speak Up procedures also includes pro-actively contacting reporters, throughout and following an investigation, and acting on any concerns of retaliation.\nLloyds Banking Group promotes a culture where people feel safe, supported, included and empowered. Our values lie at the very heart of that culture, and we rely on our colleagues to be bold and challenge anything that doesn’t feel right by speaking up when they see or become aware of misconduct.\n### Speak Up Champions and Speak Up Officers\nRaising concerns with a line manager or people representative, where it may be possible to resolve concerns quickly and effectively Using ‘Let’s Talk’, a programme that provides colleagues with support on personal employment issues and helps resolve most personal employment issues informally\nThree non-executive directors (NEDs) support the Group as Whistleblowing Champions for our legal entities: Group; Insurance, Pensions and Investments; Lloyds Bank Corporate Markets. They are individually responsible for oversight of Speak Up arrangements in their respective legal entities and ensure that the confidential reporting system remains a reliable and independent channel for colleagues to report suspected wrongdoing. The whistleblowing champions are also responsible for ensuring that colleagues are protected from any form of victimisation, should they report a concern. The Group whistleblowing champion presents an annual whistleblowing report to the Group Board on the effectiveness of our Speak up arrangements. Each business area also has its own Speak Up Officer, who supports Speak Up activity in their area and shares themes and insights arising from recent cases.\nOur case triage process prioritises reports by differentiating between the more serious allegations of wrongdoing, and any other important matters. Where investigation is necessary, it is carried out by highly-trained and empathetic investigators and a report produced for business leaders, disciplinary hearings or the Group’s Conduct Investigations Committee (GCIC) for non-disciplinary cases. Our highest priority investigations are reviewed by a hearing manager or the Chair and members of GCIC, comprising experienced senior executives.\nSpeak Up is the Group’s whistleblowing programme. It is available to all colleagues across the Group, including suppliers, contractors and third parties. Speak Up helps colleagues who feel unable or are unwilling to report their concerns to a manager directly. Concerns are raised via an independent third party, 24 hours a day, 7 days a week, either confidentially or anonymously and in a variety of ways. Reporters are protected from any form of retaliation after raising a concern.", "chunk_word_count": 458, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Whistleblowing – helping colleagues to Speak Up", "document_id": "2023 Lloyds sustainability report", "page": 25, "page_start": 25, "page_end": 25 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 27, "chunk_text": "# Building asustainable and inclusive future\n## 02 The importance of the issue to our stakeholders\n### Speak Up Policy\nThe Group’s Speak Up Policy was refreshed this year to include the recent changes reflected in the EU Whistleblower Directive (2019/1937).\nOur Speak Up Policy is clear that the Group will not tolerate any form of retaliation against reporters, and our procedures designed to protect colleagues after raising a concern. Anyone who does so may be subject to\nWe also recognise the importance of sharing lessons from investigations, to help prevent their reoccurrence. Themes and lessons from recent investigations have been shared with a broad range of senior leaders across the Group, and a forum has been established to facilitate further organisational learning.\nOur whistleblowing arrangements were independently benchmarked by Protect in 2023 and received a score of 99%.\n### Group Audit Committees\nAll the Group’s Audit Committees receive regular updates on the effectiveness of these arrangements, in line with their terms of reference. Updates include commentary on the continued independence, integrity and effectiveness of Speak Up policy and procedures. The committees are also briefed on the volume and types of cases received, outcomes of investigations and any emerging trends and process improvements.\n## 2023 Performance\nIn 2023, 511 concerns were reported via Speak Up and 61 led to the need for a formal conduct investigation. The remainder were managed via other established processes, including 21 per cent passed to line management and 13 per cent referred to one of our people processes.\n55 per cent of the investigations closed in 2023 were substantiated and resulted in remedial action. This included 14 colleagues dismissed from the Group in 2023 following disciplinary as the outcome of a whistleblowing report.\nImproving our processes\nLloyds Banking Group is delighted to be a constituent of Protect, the UK’s Whistleblowing Charity, and is committed to continuously improving and maintaining its speak up culture.\nAll colleagues, contractors and third parties receive annual training on the Speak Up programme and have access to a dedicated website with details of our services. An optional survey conducted following Group-wide annual training this\n### Supporting our customers to ensure good outcomes", "chunk_word_count": 361, "section_path": "Building asustainable and inclusive future > 02 The importance of the issue to our stakeholders > Speak Up Policy", "document_id": "2023 Lloyds sustainability report", "page": 25, "page_start": 25, "page_end": 25 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 28, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Consumer duty\nThe FCA’s new Consumer Duty Regulations, which came into force in July 2023, sets higher and clearer standards of consumer protection across financial services, requiring firms to put their customers’ needs first.\nAs an organisation, we are already focused on the delivery of good outcomes for our customers – the Consumer Duty is the next step in the evolution of how we do this and will drive broader cultural change. There will be greater focus on the outcomes customers receive – whether products and services meet customer needs and offer fair value, if customers understand the information with which they are being provided and if customers are given the support required to meet their financial objectives.\nThe Responsible Business Committee (RBC), under delegated authority from the Board, provides oversight of the implementation and ongoing consideration of Consumer Duty, with the Board Risk Committee overseeing related risks. The Board (via RBC) have been engaged on the Group’s implementation of Consumer Duty, including agreeing with the steps the Group has taken to meet the requirements of the Duty in line with the July 2023 deadline, a similar approach will be taken to the July 2024 requirements. In addition, the Group are working closely with the Financial Conduct Authority to ensure they are fully apprised of our progress in embedding the Consumer Duty.\nLloyds Banking Group is committed to delivering good outcomes for our customers and, as we continue to move towards becoming a truly purpose-driven business, this remains at the heart of our strategy.\nThe Group has appointed two Consumer Duty Champions who will help ensure Consumer Duty is considered in senior leadership strategic discussions. Amanda Mackenzie, as Chair of the Responsible Business Committee, is the Group Consumer Duty Champion, with John Reizenstein, who is a non-executive director on the Scottish Widows Board (and Chair of its Risk Oversight Committee), fulfilling a similar role within the Insurance, Pensions and Investments business.\n### Supporting our customers to ensure good outcomes continued\n### Customer complaints\n### The ethical use of Artificial Intelligence\n### The business continues to focus on initiatives that will improve servicing accuracy and speed alongside customer journey digitisation across the servicing and complaint handling journeys.\nThese have increased by 71 per cent from 2022 (4.3 per cent of all complaints compared to 3.3 per cent at the start of 2023). Multiple increases in interest rates are driving higher demand for mortgage product transfers and pushing an increasing number of customers into financial difficulty, in addition to existing customers in arrears worsening their position. Group complaints per thousand saving and PCA accounts has improved year-on-year due to associated journey improvement actions informed by strong root cause analysis.\nIn March 2023,the Group took a further step towards ethical practices in data and Artificial Intelligence (AI) by introducing its inaugural Data and AI Ethics (DAIE) Council. The formation of this council marked a significant milestone for the Group. The primary purpose of the council is to always ensure we use data in ways our customers would expect, regardless of whether it is legal and compliant to do so. As a secondary objective, it helps protect the bank from reputational risks.", "chunk_word_count": 538, "section_path": "Building asustainable and inclusive future > 2023 Performance > Consumer duty", "document_id": "2023 Lloyds sustainability report", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 29, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Preventing complaints\nThe Group have a well-established robust framework to continually address the root cause of complaints, taking action to mitigate the drivers, improving our customers experience. In 2023, 147 new improvement initiatives specifically targeting complaint drivers mitigated around 17,000 customers having cause to complain. Additionally, improvements to our service stability have reduced ‘wait time’ complaints by 41 per cent year-on-year.\nThe business continues to focus on initiatives that will improve servicing accuracy and speed alongside customer journey digitisation.\n### Responding to complaints\nThe council comprises a diverse range of senior executives drawn from across the Group. While conventional risk assessment often categorises cases into ‘low’, ‘medium’ or ‘high’ risk, categories, the DAIE council introduced an innovative risk indicator, also known as ‘edge case’. These are specific instances where the use of data or AI systems, despite meeting all legal and regulatory compliance requirements, might still pose a potential risk to the bank or to its customers. The overarching ethos of the council is encapsulated in a pivotal question: “We know we can deploy a model or use data in the way described in the edge case, but the question is, should we?”\nAs a minimum standard we aim to meet the FCA’s Dispute Resolution: Complaints Sourcebook rules and respond to non-payment complaints in eight weeks and payment complaints in 15 days; however, we continue to focus on improvements to the journey to make it easier for colleagues to respond faster.\nThese improvements have allowed us to manage an increase in business growth and increasing demand driven by the external economic environment. Cost of living impacts are being seen more commonly in root cause analysis, in particular, complaints from customers with ‘money worries’.\nOur focus in 2023 has included improving our customer communications, by launching a new letter writing application for our bespoke complaints letters. This helps our colleagues create consistent and quality communications, whilst improving efficiency. We’re also testing new customer communication solutions and challenging our thinking about how and when we communicate with a view to provide more digital correspondence. This not only responds to what customers tell us they want but also reduces reliance on paper and post, which is a small part of our commitment to achieving sustainability targets in our operations.\nTo further strengthen our capability, we have created a dedicated data and AI ethics team led by a head of data and AI ethics. The team’s purpose is to ensure ethical guardrails are developed and implemented across the Bank. This team is augmented by technology experts, who specialise in creating ethical tooling and technology components which are made available across the bank.\nWe are adopting Generative AI by paying close attention to the impact it may have on our sustainability targets – Generative AI is very compute-intensive (i.e. it consumes considerable power to operate), therefore our adoption is being carefully calibrated to ensure it aligns to the Bank’s sustainability targets. To help with this, we are partnering with the open-source community to use less carbonintensive Generative AI systems, which are optimal in both performance and energy consumption.", "chunk_word_count": 523, "section_path": "Building asustainable and inclusive future > 2023 Performance > Preventing complaints", "document_id": "2023 Lloyds sustainability report", "page": 27, "page_start": 27, "page_end": 27 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 30, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Responding to complaints\nSimultaneously, as the financial sector’s interest in a new class of AI technologies, so-called ‘Generative AI’, has surged during 2023, our commitment to safe, responsible and ethical deployment of these technologies has increased. To harness this growing innovation, the Group has initiated a Bank-wide Generative AI assurance programme, which draws upon expertise from many teams across the bank including legal, internal audit, conduct compliance and operational risk, chief technology office and the chief data and analytics office teams. This programme not only reinforces established risk controls that oversee data and machine learning algorithms but additionally mitigates new emerging risks specific to Generative AI. The programme aims to scale the use of AI to support and augment our colleagues’ roles, and create better outcomes for our customers, whilst doing so under carefully implemented ethical guardrails.\n### Our frameworks\n### Bank frameworks\nEligible types of finance to which this framework applies include lending and/or third-party bond issuances arranged by the Group which fall into one of the following categories:\n• Use of proceeds products (finance and/or refinance provided exclusively for Eligible Green Activities and/or Eligible Social Activities) Sustainability-linked products (finance that incentivises improved sustainability) Sustainable business financing products (finance and/or refinance provided to a business which has 90 per cent or more of its revenue generated from eligible green activities, eligible social activities or a mixture of the two)\n### Sustainable Financing Framework\nThe Bank has developed a Sustainable Financing Framework which sets out our methodology for classifying whether certain financial products and services offered by Lloyds Banking Group may be described as sustainable for the purpose of tracking and disclosing the Group’s progress against its sustainable financing targets.\nThe framework covers the Group’s Retail lending, Business and Commercial Banking and Corporate and Institutional Banking eligible products and operates alongside the Group’s Sustainable Bond Framework and the Group’s Housebuilding Sustainability Finance Framework.\nFrameworks in place across the Bank and Scottish Widows provide details on how we consider sustainability in our banking products and services, investments and stewardship activities.\nThe framework will be used when developing sustainable finance products and to track the Group’s progress against its sustainable financing targets. It will also act as a way to promote new environmental and social financing opportunities. Providing a structured and consistent framework enhances the Group’s risk management and reporting, which can encourage innovation in financing and the development of new financial products and services that align with the Group’s sustainability objectives and ambitions.\n### Sustainable Bond Framework\nThe Group’s Sustainable Bond Framework facilitates the issuance of Use of Proceeds Green and Social Bonds of any seniority within the capital structure by Lloyds Banking Group or any of its subsidiaries. It covers five categories of lending: Green Buildings, Renewable Energy, Energy Efficiency, Clean Transportation and Affordable Housing; setting out the methodology for classifying whether products may be described as sustainable, supporting the funding of eligible assets and the Group’s sustainability strategy. The updated framework will be published in 2024.", "chunk_word_count": 507, "section_path": "Building asustainable and inclusive future > 2023 Performance > Responding to complaints", "document_id": "2023 Lloyds sustainability report", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 31, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Sustainable Housebuilding Framework\nIn 2022, the Group published Housebuilding Sustainability Finance Framework which sets out the underlying eligible qualifying purposes, themes and activities to classify the Group’s loan propositions as sustainable finance in the housebuilding sector. The Group’s intention is to make sustainable finance accessible and available to as many housebuilding sector operators as possible – from some of the smallest developers to the largest housebuilders – and to ensure that the resources available to each sized operator are considered when designing the relevant loan proposition. The framework covers two types of financial products: Use of Proceeds (Green Loans) and Sustainability-Linked Loans and establishes a consistent and comprehensive methodology for the classification. We will closely monitor emerging market and policy standards, such as the Future Homes Standard consultation, and update the framework as appropriate.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Our frameworks continued\n### Responsible Investment Framework\n### Responsible Investment and Stewardship Framework\n01\n02", "chunk_word_count": 176, "section_path": "Building asustainable and inclusive future > 2023 Performance > Sustainable Housebuilding Framework", "document_id": "2023 Lloyds sustainability report", "page": 28, "page_start": 28, "page_end": 29 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 32, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### The Scottish Widows Responsible Investment and Stewardship Framework articulates our ambition, which includes six principles of Responsible Investment and our Stewardship Commitments.\nOur stewardship and responsible investment strategy, including ensuring alignment with the FRC’s Stewardship Code, is set by the Board of Scottish Widows. Board-level scrutiny ensures responsible investment is embedded into our activities throughout the entirety of the business.\nWe will be a \nresponsible investor. \nWe will strive to protect ourinvestments \nfrom mgterial ESG \nrelated risks and \nseek to capitalise \non ESG-related \nopportunities.\nTo help us manage downside risk, we will take a position on the companies we will not support and will implement exclusions throughout funds managed or mandated by us.\nOur Stewardship Policy applies to all Scottish Widows investments other than a very small proportion, which is comprised of direct loans in our shareholder funds, where Lloyds Banking Group external sector statements are applied.\nOur decisions on asset allocation, manager selection, fund research and engagement activity are guided by this framework and these principles are integrated into our overall investment policy.\nWe believe Stewardship is integral to our business and investment philosophy. As a large UK asset owner, we want to ensure we play our part, not only in the responsible oversight of our own assets, but in driving industry-wide transition for better long-term outcomes for our customers and clients, benefiting the UK and global economy as a whole.\nResponsible investment allows us to manage risks and returns in a more effective way in the funds we offer, to safeguard our customers’ long-term savings.\n03\n04\nWe will aim to offer an industry-leading fund range to our customers to help support causes thatare closeto their hearts while growing their savings for the future.\nWe will aim to reduce the carbon intensity of our whole portfolio by 50 per cent by 2030 and achieve net zero by 2050.\nWe target our Stewardship initiatives across three core pillars:\n• Monitoring and oversight of our appointed investment managers Direct and collective engagement with material investee companies Contributing to industry-wide initiatives like those related to policy advocacy\n05\n06\nWe aim to underpin this activity through dialogue and engagement with our customers and members.\nWe will work with policymakers and industry participants to promote direct investment opportunities required to successfully transition to a lower carbon economy.\nWe will seek to extend our responsible investment principles into all asset classes over time.\nFor further information and updated reporting – please visit Scottish Widows Responsible Investment .\n### Upcoming regulation\n### International Sustainability Standards Board (ISSB)\n### Corporate Sustainability Due Diligence Directive (CSDDD)\nWe have reviewed the ISSB standards IFRS S1 ‘General Requirements for Disclosure of Sustainability-related Financial Information’ and IFRS S2 ‘Climate-related disclosures’ and are supportive of the ISSB objective to develop a comprehensive global baseline of sustainability disclosures.\nThe Group continues to monitor the development of the Corporate Sustainability Due Diligence Directive and its anticipated implementation including how the requirements will impact the Group and our EU subsidiary teams.", "chunk_word_count": 508, "section_path": "Building asustainable and inclusive future > 2023 Performance > The Scottish Widows Responsible Investment and Stewardship Framework articulates our ambition, which includes six principles of Responsible Investment and our Stewardship Commitments.", "document_id": "2023 Lloyds sustainability report", "page": 29, "page_start": 29, "page_end": 30 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 33, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Taskforce on Nature-related Financial Disclosures (TNFD)\nWe note that the disclosures will look to focus on disclosures that:\nThe TNFD is a set of voluntary disclosure recommendations, launched in September 2023. The Group continues to monitor TNFD developments within the UK and Europe. We expect the structure of reporting against the TNFD will be very similar to how the Group has and is continuing to embed sustainability into the business according to the four pillars of TCFD, including: Strategy, Governance, Risk Management and Metrics & Targets.\n• Are understandable, relevant, reliable and comparable for investors \nAre technically feasible to prepare Can be prepared on a timely basis and at the same time as general purpose financial reports Are expected to generate benefits that are proportionate to the costs that are likely to be incurred\nThe Group continues to monitor the evolving sustainability reporting landscape. This section details activities undertaken to date to prepare for upcoming regulatory reporting changes.\n### Sustainability disclosure requirements and investment labels\nWe have undertaken a gap analysis based on current Group capabilities and will be looking to close material gaps identified during 2024 in readiness for preparation of disclosures in line with the UK government endorsement.\nIn November 2023, the FCA confirmed a substantial package of measures to improve the trust and transparency of sustainable investment products and minimise greenwashing. The FCA will introduce:\n### Corporate Sustainability Reporting Directive (CSRD)\n• An anti-greenwashing rule for all FCA-authorised firms to make sure sustainability-related claims are fair, clear and not misleading Product labels, based on clear sustainability goals and criteria to promote consumer confidence when choosing sustainable products to invest in Naming and marketing requirements to ensure product names accurately reflect sustainability characteristics of qualifying funds\nOur EU operations are in scope for CSRD reporting from 2024, with the Group providing guidance on ESG material topics to support a double materiality perspective. We continue to explore the use of tools available to complete the double materiality assessment, the Group is looking to complete a gap analysis against the CSRD requirements in 2024. In scope EU subsidiary teams are looking at implementation of CSRD reporting from 2024, with the remainder of the Group falling into scope for CSRD reporting from 2028.\nThe anti-greenwashing rule applies to the whole Group, with the provisions on labelling and marketing applying to Scottish Widows. The Group continues to review these proposals to ensure capabilities are embedded into business-as-usual to manage and monitor compliance.\nAs one of the UK’s largest financial services provider with more than 27 million customers in the UK, we have an important role to play in creating a more sustainable and inclusive future for people and businesses, shaping finance as a force for good.\n2023 in review 31 \nPromoting financial inclusion and resilience 33 \nAccess to quality housing 44 \nSupporting regional development and communities 51 \nDiversity, equity and inclusion 58 \nHuman rights and modern slavery 80\n### Inclusive future\n### In 2023 we have remained committed to building an inclusive future focusing our efforts on where we are best-placed to act.", "chunk_word_count": 521, "section_path": "Building asustainable and inclusive future > 2023 Performance > Taskforce on Nature-related Financial Disclosures (TNFD)", "document_id": "2023 Lloyds sustainability report", "page": 30, "page_start": 30, "page_end": 32 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 34, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Drive revenue growth and diversification\nThe progress and performance that we have delivered on these priorities in 2023 will enable us to drive further progress in 2024, ensuring that our Purpose is at the heart of everything we do.\nPromoting financial inclusion and resilience\n£2.5m of potential additional income for customers through our partnership with Citizens Advice\nC.3.9m savings accounts opened in 2023\n4,750 tablets, training and mobile internet access to be provided to participants in Liverpool\nLaunched additional support for customers who do not speak English as a first language\nIncreasing the access to quality housing £2.7bn of new funding support to social housing sector >£12bn of funding provided to first-time buyers\nEstablished a \ntwo-year partnership \nwith Crisis\nLaunched Citra Pathways to expand shared home ownership support\nSupporting regional development and productivity\n3,898 apprentices, graduates and engineers trained through MTC Training Centre\nLaunched our Start up Scale up programme for small businesses\nLaunched our Liverpool City Region Housing Initiative\n### Maximise the potential of people, technology and data\n### Strengthen cost and capital efficiency\n### Change\n### Focus\nSupporting and engaging our colleagues\nSupporting our customers, clients and communities through challenging times\nc.600,000 businesses supported with customer resilience resources\n>6,300 colleagues trained to be change catalysts to support our Grow with Purpose initiative\n>7.5m customers contacted to offer support since April 2022\nLaunched our Flexibility Works colleague proposition\nLaunched our Inclusive Everyday campaign for colleagues\n£24.7m donated to our Foundations and supported over 2,400 charities\n8.8m customers have registered for Your Credit Score service since 2021\nDiversity, equity and inclusion\n12.4% representation of colleagues with disabilities in senior manager roles\n40.1% of our senior roles were held by women in 2023\nLaunched Black in Business initiative in partnership with Channel 4\n### Promoting financial inclusion and resilience\nc.3.9m savings accounts opened in 2023\n£2.5m of potential additional income for customers through our partnership with Citizens Advice\n513\ntablets, training and mobile internet access provided in Liverpool by digital pilot project\nThe Group continues to progress our commitment to increasing financial resilience and promoting inclusivity in the UK’s financial sector.\nWe are leveraging our position as a large financial service provider in the UK and collaborating with partners, having the potential to make a significant impact on individuals and businesses.\nProactively supporting retail, insurance and commercial customers is crucial in ensuring their success and stability. We offer accessible and inclusive products, processes and services that are inclusive by design. This not only helps people and businesses navigate financial difficulties but also empowers them to make informed decisions and pursue their goals.\nIn recent years, the high cost of living in the UK has forced many to make considerable changes and difficult choices. Our customers and clients are at the heart of what we do, so we continue to support them through financial challenges.", "chunk_word_count": 483, "section_path": "Building asustainable and inclusive future > 2023 Performance > Drive revenue growth and diversification", "document_id": "2023 Lloyds sustainability report", "page": 32, "page_start": 32, "page_end": 35 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 35, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Support through a range of tools\nThe Group continues to develop ways to support our customers in their daily lives and developed a range of customer support services in our mobile banking apps and tools. Giving customers access to information that will help them to make good decisions is important. We’ve lots of brand-new tools available on our Money Worries and Money Management pages such as the Support Tool and Budget Calculator to support with this.\n### Supporting customers\nThe Group continue to identify those of our customers who are most likely to need help now and in the future, and assist them with the right level of support. By doing so, we are enabling individuals and businesses to use financial services to their fullest potential, ultimately improving their overall wellbeing.\nLloyds Bank, Halifax and Bank of Scotland are offering customers the ability to manage and cancel subscriptions (e.g. video streaming, recipe boxes) within our mobile banking app without having to contact their provider. This can help with household budgeting. Since its launch in June 2021, more than 6 million unwanted subscriptions have been managed.", "chunk_word_count": 195, "section_path": "Building asustainable and inclusive future > 2023 Performance > Support through a range of tools", "document_id": "2023 Lloyds sustainability report", "page": 35, "page_start": 35, "page_end": 35 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 36, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Supporting our customers to save\nIn 2023, we have increased our instant access rates and expanded our savings offering for customers, with c.3.9 million savings accounts being opened in 2023.\nBy providing the right tools and resources, we are actively working to prevent financial difficulties from arising in the first place. This proactive stance can make a meaningful difference in people’s lives.\nWe continue to support our customers and have contacted more than 15 million deposit customers to ensure they are aware of their savings options, including limited withdrawal products offering higher rates than instant access, whilst retaining flexibility in how savings are accessed. Each year, we contact over 200,000 customers on variable rate mortgages to tell them how much they could save by transferring to a lower fixed rate.\nThrough the app, customers can also freeze and unfreeze different types of transaction on debit or credit cards and can set their own contactless limit on their debit card. Customers can select controls for gambling, spending abroad, online and remote payments, as well as in-person payments including digital wallets and contactless transactions.\nSpending alerts in addition allow customers to see when money is paid in or out of their accounts and they can receive reminders, spending insights for regular payments, and alerts when a debit card is used, as well as a weekly spending summary. Every month more than half a million customers are using spending insights on our mobile banking apps. A clear view helps them to identify where they might want to cut back or invest more.\nThe size of our fixed interest rate savings book has more than doubled in 2023 as we have launched new products and helped customers benefit from higher rates.\nWe are committed as a Group, to the Government’s Mortgage Charter, a series of measures which are very much in line with our well-established approach to supporting customers who are concerned about their finances.\nOur goal is to strive towards a more inclusive and financially resilient future for our customers, clients and communities.\nYour Credit Score, a free service we provide in partnership with TransUnion, gives customers access to their credit information including credit score, information about factors which may impact their score and hints and tips to improve it over time. 8.8 million customers have registered for Your Credit Score since 2021, of which 5.2 million customers opted in for push notifications. This allows us to notify customers when their credit score has been refreshed.\nOver 500,000 customers have improved their score band using the tool. We have also started capturing customers’ reasons for registering for Your Credit Score and in 2023, 3.3 million customers have shared their reasons for registering. These insights will be used to personalise future engagement with customers.\n### Supporting customers continued\n### Supporting our customers when they need it most", "chunk_word_count": 483, "section_path": "Building asustainable and inclusive future > 2023 Performance > Supporting our customers to save", "document_id": "2023 Lloyds sustainability report", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 37, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Customers can access support through multiple channels to seek help with their financial wellbeing or navigate the cost of living.\nWe also offered customers in financial difficulty support through:\n• Allowing time to seek support: Credit card, loans and overdraft customers who needed time to seek support and guidance were offered a temporary pause on all interest and fees, with no contact regarding payment during that period.\nOur partnership with Citizens Advice is a significant step in revolutionising our support offering for customers in vulnerable financial positions. Through our partnership with Citizens Advice, 4,000 customers have received dedicated support and advice, helping them access £2.5 million of potential additional income.\nThe Group aims to talk to anyone who feels like they might be facing difficulty so that we can help find a solution that suits their individual circumstances. The earlier we talk to someone who might be struggling, the more tools we have to help. Customers can engage with us directly either online, over the phone with one of our specially-trained colleagues, or in branch.\nRepayment plans: Mortgage, motor, credit card, overdraft and loan customers were able to discuss a range of support options, including allowing more time for repayment, making reduced payments for a period of time, or changing the product term of their mortgage to help support them.\nThrough our Lloyds Bank, Halifax and Bank of Scotland branches, customers can book an appointment with a specially trained colleague who can support them with any money worries. We also had more than 4,000 colleagues helping to provide financial assistance to customers in financial difficulty through tailored treatments and products.\nConsolidating debts: Credit card, loans and overdraft customers have been able to consolidate their outstanding debt into a lower interest loan.\nThroughout 2023, we proactively helped customers to manage the challenging economic environment and financial uncertainty, recognising the impact on their overall wellbeing, health, relationships and general sense of security.\nMortgage customers were particularly affected by high interest rates so we offered a range of support and products to help those coming to the end of a deal including:\nSince April 2022, we have contacted more than 7.5 million customers most in need in need of support with the cost of living through a mix of emails, direct mail, outbound calling and internet banking prompts. By using data and insights to gain a deeper understanding of customer needs, we are able to refine and expand our support.\nMaking sure that our customers have easy access to information to make informed decisions is important.\n• The option to secure a new mortgage rate up to six months in advance, which provides more flexibility and choice. If these rates fall during those six months, customers can then switch again to the lower rate. Lloyds Bank, Halifax and Bank of Scotland customers on a variable rate, whether they’re up to date with payments or not, can switch to a new fixed rate. This option is currently saving some customers up to £185 a month. We also remained committed to the Mortgage Charter measures and continually enhanced customer journeys to enable them to get support.", "chunk_word_count": 531, "section_path": "Building asustainable and inclusive future > 2023 Performance > Customers can access support through multiple channels to seek help with their financial wellbeing or navigate the cost of living.", "document_id": "2023 Lloyds sustainability report", "page": 36, "page_start": 36, "page_end": 36 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 38, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Customers can access support through multiple channels to seek help with their financial wellbeing or navigate the cost of living.\n>7.5m customers have been proactively contacted through a mix of emails, direct mail, outbound calling and internet banking prompts since April 2022\nOur Money Worries and Money Management website pages across our Lloyds, Halifax, Bank of Scotland and MBNA brands are also an invaluable resource for the over 1.5 million annual visitors. Money Worries pages provide guidance for customers likely to be in financial difficulty or concerned about keeping up with payments, while Money Management pages contain resources, tools and tips to help customers stay on track and manage their finances.\nWe also signpost customers to organisations such as StepChange which provide independent help, debt advice as well as support with income maximisation.\n### Supporting customers continued\n### Making it easier for customers to tell us what they need\n### Upskilling and training our colleagues to support our customers\n### Support through challenging times and Home Insurance\nThe Group training provided to all customer-facing colleagues to support them in understanding vulnerability and addressing it with empathy, is a crucial step in ensuring that customers in vulnerable circumstances receive the support they need.\nSDG 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.\nPaying bills upfront can be financially challenging for many of our customers, however, opting to pay monthly can incur an additional charge to their insurance premium. We want our customers to choose payment structures that work best for them.\n### The Group is placing a strong emphasis on understanding and meeting the specific needs of its customers.\nAcross Halifax, Lloyds Bank and Bank of Scotland we have 3.1 million specific customer support needs registered across our channels, enabling us to better meet our customers needs.\nTailoring our inclusion training to specific business areas and upskilling colleagues according to their needs is a key part of our inclusion strategy. Our vulnerability and capability training modules were completed over 209,000 times in 2023.\nCreating an environment where customers feel comfortable discussing their support requirements is crucial, so we have focused on making it easier for them to tell us about the support they need.\nThe emphasis on recording customers’ support needs and sharing them with relevant teams is a practical way to ensure that customers don’t have to repeat difficult conversations. This not only streamlines the process but also shows empathy and consideration for the customer experience.\nSince January 2023,there has been no cost of borrowing (APR) on any of our home insurance policies. This gives confidence to more than 1 million Lloyds Bank, BankofScotland,Halifaxand MBNA customers that they are not negatively impacted by paying in instalments over the year.", "chunk_word_count": 472, "section_path": "Building asustainable and inclusive future > 2023 Performance > Customers can access support through multiple channels to seek help with their financial wellbeing or navigate the cost of living.", "document_id": "2023 Lloyds sustainability report", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 39, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Our customer vulnerability support tool\nWe are committed to supporting both colleagues and customers in vulnerable situations. Through the expansion of our Colleague Vulnerability Support Tool incorporating additional vulnerabilities such as speech impediments, addiction and modern slavery, we have taken a proactive approach to guide colleagues in conversations with customers, ensuring a comprehensive understanding of their financial practical and emotional needs. Where we are unable to help, we signpost or refer to external organisations and partners, assisting customers to additional support.\nThe introduction of features on our online and mobile banking platforms that allow customers to record their support needs, such as special formats for letters and statements, or indicating speech difficulties, use of British Sign Language, or mobility support, demonstrates our thoughtful approach to accessibility.\nOur Help and Support hubs across customer websites are a rich resource for individuals seeking advice and guidance on various financial situations. The inclusion of information regarding key life events, health issues and money worries, along with signposting to independent organisations and charities, is a valuable service for all customers.\nHowever, we recognise that sometimes it can still be tough for our customers to meet their monthly payments. As part of our purpose of Helping Britain Prosper, all our home insurance customers are eligible for payment deferral should they require this additional support during challenging times. As part of this response, we have permanently embedded a specialist team to work with these customers, enabling them to protect what is important to them. In 2023, we were able to support 539 customers with this.\nAdditionally, providing options for customers with more complex needs to communicate their requirements over the phone or in person further demonstrates our commitment to financial inclusion.\nThe tool aids in identifying appropriate solutions based on the impacts and needs identified, empowering colleagues to have meaningful conversations with customers about their circumstances.\n3.1m specific customer support needs registered\n### Supporting customers continued\n### Our specialist support initiatives\n### Our specialist support teams are trained to handle specific circumstances requiring extra care and bespoke support which demonstrates our dedication to addressing individual needs.", "chunk_word_count": 360, "section_path": "Building asustainable and inclusive future > 2023 Performance > Our customer vulnerability support tool", "document_id": "2023 Lloyds sustainability report", "page": 37, "page_start": 37, "page_end": 37 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 40, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Supporting customers impacted by gambling\nWe are committed to providing support for customers with gambling support needs, developing strategies to help customers control their spending and manage their finances effectively.\nThe provision of dedicated phone numbers for these specialist teams, publicly accessible on our customer websites, ensures ease of access for those who require specialist assistance.\nWe offer support tools that enable customers to regulate their card spending in a practical and impactful way. This empowers individuals to set limits on their spending and take charge of their financial wellbeing.\nFurthermore, the ability for colleagues to make referrals into these specialist support teams underscores a collaborative approach to providing the best possible support for customers. This ensures that customers in need are identified and connected with the appropriate resources and expertise.\nCustomers are able to sign up directly from our customer websites with Gamban. This initiative provides an accessible resource for individuals seeking additional help in managing their gambling habits.\nAdditionally, our customers can access GamCare , for confidential online support and access to forums, providing an alternative avenue for those who may not be comfortable speaking directly with someone.\nIn 2023 our specialist support teams provided dedicated support to all customers affected by:\nOur specialist support initiatives demonstrate our dedication to understanding individual customer needs.\n• Serious illness and ill health, offering support to customers affected by ill health through the provision of fee suppressions, waiver of fees and charges, payment holidays and more Bereaved customers, assisting them to navigate the practical and money-related matters they need to deal with following the death of a loved one \nDomestic and financial abuse\n### Supporting customers continued\n### Macmillan cancer support\n### Trusted persons", "chunk_word_count": 293, "section_path": "Building asustainable and inclusive future > 2023 Performance > Supporting customers impacted by gambling", "document_id": "2023 Lloyds sustainability report", "page": 38, "page_start": 38, "page_end": 38 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 41, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Recognising the link between mental health and debt\nThe Trusted Person Card, introduced in 2020, was a significant step towards providing additional support for customers who may need assistance in managing their finances. This card offers a practical solution for friends, family and carers to help with everyday purchases and accessing cash on behalf of those who need it such as the ability to have a different card number and PIN, allowing the customer then to monitor how the card is being used and provides the ability to cancel it at any time, offering peace of mind.\nLloyds Bank, Halifax and Bank of Scotland were the first organisation to receive the ‘Mental Health Accessible’ accreditation (Advanced Level) from the Money and Mental Health Policy Institute in 2023.\nSDG 8.10: Strengthen the capacity of \ndomestic financial \ninstitutions \nto encourage and \nexpand access to \nbanking, insurance and financial \nservices for all. \nSDG 10.2: By 2030, \nempowerand \npromote the social, economic \nand political \ninclusion of all, \nirrespective \nof age, sex, disability, race, ethnicity, origin, religion or economic or other status.\nThey praised our strategy of equipping colleagues with the skills to identify vulnerable circumstances and how these are applied so that we have great conversations to understand the financial, practical and emotional impact of a customer’s situation.\nSince the launch of the Scottish Widows and Macmillan Partnership, Scottish Widows have referred nearly 600 customers to Macmillan for cancersupport.Ourpartnership allows for a two-way referral system: Macmillan will refer an individual to our claims team if they identify a Scottish Widows policy. At the same time,ScottishWidowsoffersreferrals to Macmillan’s Financial Guide team for our customers with cancer. Customers, who were signposted to this service, are now collectively better off by over £242,000. Due to the benefit to our customers,Scottish Widows announced an extension to its partnership with Macmillan Cancer Support in October 2023.\nScottish Widows isMacmillan's first insurance partner to offer both referrals, and an improved critical illnessclaims process for the customer. Our partnership enables some Scottish Widows customers to verify their cancer diagnosis through their Macmillan Cancer Nurse Specialists, which can speed up the claim.Moreover,toensureour colleagues are confident in holding empathetic conversations with their colleagues, we have worked with Macmillan to develop training that builds the necessary resilience and capability to do so.We also encourage all of our line managers to complete training, of a similar nature, on how to best talk to their colleagues affected by cancer.\nThe introduction of Trusted Person Alerts in 2023 is another step in providing further support mechanisms for customers and their trusted individuals. This service allows customers to select someone they trust to receive text messages about their current account activity. Importantly, this trusted person does not have access to the accounts for making payments or viewing balances, ensuring privacy and security for customers. By giving customers the ability to pre-agree on the content of these text messages, we’re providing a customisable and flexible way to keep trusted individuals informed about account activity, while respecting privacy and confidentiality.", "chunk_word_count": 510, "section_path": "Building asustainable and inclusive future > 2023 Performance > Recognising the link between mental health and debt", "document_id": "2023 Lloyds sustainability report", "page": 39, "page_start": 39, "page_end": 39 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 42, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Domestic and financial abuse\nOur Domestic and Financial Abuse team, set up in 2019, has now supported over 8,500 victim-survivors to rebuild their finances. Specially trained by domestic abuse charities Surviving Economic Abuse and Tender, our colleagues support customers in the way that best suits their needs, including separating finances and setting up new accounts.\nIn 2023, Scottish Widows continued to provide in-the-moment support for colleagues impacted by cancer and support three key Macmillan initiatives – World Cancer Day, Mighty Hikes and the Coffee Morning. We also built an allyship with Access, the Lloyds Banking Group’s Disability colleague network, to promote Macmillan activity on our internal Volunteering hub. Consequently, between January and August 2023, there were 471 referrals between Macmillan and Lloyds Banking Group brands.\nThe team also signposts to domestic abuse charities for emotional and practical support where needed and taking direct referrals from domestic abuse charities.\nIn some instances, the Domestic and Financial Abuse team will refer customers to our Exceptional Circumstances Panel, who are there to help resolve the most complex financial abuse cases.\nWe work closely with Surviving Economic Abuse, learning from their experts, including survivors of financial abuse, to inform our strategy, embedded a colleague from Surviving Economic Abuse into the Group to help us to evolve our support for colleagues and customers. Throughout 2023, we have supported 3,784 victims of domestic and financial abuse.\n### Supporting businesses\n### Supporting businesses through challenging times", "chunk_word_count": 249, "section_path": "Building asustainable and inclusive future > 2023 Performance > Domestic and financial abuse", "document_id": "2023 Lloyds sustainability report", "page": 39, "page_start": 39, "page_end": 39 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 43, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### In 2023, we have supported c.600,000 businesses with guidance on the cost of living and how to build financial resilience.\nWe conducted a colleage-led outreach programme focusing on the clients, within the Business and Commercial banking business, ,who are more likely to be impacted by high inflation and higher interest rates and we have directly supported nearly 8,500 business customers.\nWe continue to provide support via 1,100 business specialists in communities nationwide to help business customers develop appropriate recovery and growth plans. For customers with Bounce Back Loans we have provided additional support through Pay as You Grow, including extensions and payment holidays.\nWe also provide regular economic and market insights to help businesses make more informed decisions. This includes our Business Barometer, which measures business and economic confidence each month, UK Sector Tracker, and our series of Business Insights.\nDuring 2023, we targeted support for our business customers to help them navigate challenging times. We have leveraged our data to understand customer resilience in a way that allows targeted outreach to those who would benefit most.\nWe are working with key partners to be there for customers, including via Mental Health UK and the Soil Association Exchange for the Agriculture sector, see page 109 for further information on our work with the Soil Association Exchange.\nThrough our partnership with Mental Health UK, we have launched a hub to support small business leaders and owners. In addition, through this partnership, we have supported businesses to build their resilience through coaching sessions as well as providing financial support across financial initiatives, including fee waivers and increased telephony resourcing to support inbound and outbound activity.\nc.600,000 business customers received support in 2023\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Supporting businesses continued\n### Supporting the productivity and resilience of businesses\nLloyds Bank and MTC Training Centre apprenticeships have also teamed up to create a partnership to deliver fully funded high-value engineering apprenticeships to SMEs in Coventry, Warwickshire and the surrounding areas. In 2019, the Group agreed a further £9 million of support over three years to help SMEs to invest in apprenticeships through our levy transfer initiative.\n### Start up Scale up\nIn 2023 we successfully piloted and rolled out our Start Up Scale Up programme by Lloyds Bank Academy. Since the programme launched in May, we have supported over 150 businesses in our Regional Development cities of Birmingham, Liverpool and Leeds. Helping the business owners to build a roadmap to growth, this eight-week programme is designed with a mix of 1-2-1 coaching, online learning and in-person sessions, which provide businesses with the opportunity to network with other local business leaders.\nManufacturing plays a critical role in the journey towards sustainability and net zero decarbonisation, but identifying the challenges and solutions can be a daunting task for businesses. The MTC has a range of sustainability services to help manufacturers identify sustainability improvements in their business.", "chunk_word_count": 503, "section_path": "Building asustainable and inclusive future > 2023 Performance > In 2023, we have supported c.600,000 businesses with guidance on the cost of living and how to build financial resilience.", "document_id": "2023 Lloyds sustainability report", "page": 40, "page_start": 40, "page_end": 41 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 44, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Skillsoft\nBusinesses continue to face new challenges, and are operating in rapidly evolving environments with a shortage of critical skills. To help businesses adapt and acquire new skills, with the support of Skillsoft, we have created access to an online training platform through the Lloyds Bank Academy, offering training in leadership and personal effectiveness to improve productivity as well as creating attractive propositions to acquire new talent. We have made 20,000 licences available to small and medium-sized businesses and not-for-profits to support skill development.\nThe MTC offers manufacturers nationwide a complimentary Sustainability Line Walk for Lloyds Bank Customers to explore how their business could make sustainability improvements, as well as identifying energy and cost-saving opportunities.\n### Be the Business\nIn 2023, we extended our strategic partnership with Be the Business to help hundreds of UK SME business leaders achieve sustained productivity growth and success. We have sponsored 125 businesses to receive support from a Be the Business Mentor or ‘The Productivity Programme’, benefitting from the advice and guidance of executives from some of the UK’s leading companies. We have also committed to providing Be the Business with 24 colleague volunteers, further supporting small businesses. Since we first partnered in 2019, our contribution has helped to generate an estimated £37 million boost to UK SME productivity.\nThe review identifies energy and cost saving opportunities and highlights opportunities for sustainability improvements in key areas such as waste, lifecycle impact, resource and reporting.\n### Supporting the skills required for the future at the MTC Training Centre\n### Levy transfer\nThe UK job market has continued to remain turbulent and during this period we have continued to equip SMEs through our levy transfer initiative to invest in skills within their business and create new opportunities for young people and adults faced with reskilling in an evolving market. The Group is amongst the largest private sector donors and through the initiative, we’re helping to resolve critical skills gaps and provide opportunities for future UK economic success. By the end of 2023, we committed financial support to more than 1,300 apprentices employed by over 900 businesses in areas of critical skills shortfall, to a cumulative value of £13.3 million.\nLloyds Bank continues to promote the importance of bringing new skills into the manufacturing industry through the apprentice support service in conjunction with the MTC Training Centre for companies across England. Established in 2015, the Lloyds Bank MTC Training Centre is a state of-the-art centre designed to create a new generation of engineers and technicians to help the UK realise its potential in advanced manufacturing. The Lloyds Bank MTC Training Centre connects apprentices with high-calibre manufacturing and engineering employers who are looking to employ the best talent in the industry.", "chunk_word_count": 463, "section_path": "Building asustainable and inclusive future > 2023 Performance > Skillsoft", "document_id": "2023 Lloyds sustainability report", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 45, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### The Manufacturing Technology Centre\nThe Manufacturing Technology Centre’s (MTC) programmes aim to help businesses be more productive, innovative and reduce costs. They can help address practical, technical and strategic engineering challenges including: productivity, supply chain robustness, digitalisation and new product, and process development.\n3,898 apprentices, graduates and engineers in the manufacturing sector trained and upskilled through our annual investment into the MTC Training Centre to date\nManufacturing businesses nationwide can take up the opportunity to have a free consultative line walk at their facility to discuss current challenges and identify potential solutions. 594 Lloyds Bank manufacturing clients have taken up this opportunity to date. There is no obligation for future collaboration but over 100 of our clients have utilised further support programmes to embed innovation and new ways of working into their operations. This has delivered c.£7 million in additional benefits from increased revenues, reduced costs and driven profit growth.\nThe Group has extended its long-term investment to £15 million over 15 years, which is on track to support the training and upskilling of over 6,000 apprentices, graduates and engineers in the manufacturing sector by 2030. Through our annual investment in the MTC Training Centre, we have trained and upskilled 3,898 apprentices, graduates and engineers in the manufacturing sector to date.\n### Increasing access to banking\n### People experiencing homelessness, financial abuse, survivors of modern slavery, refugees, asylum seekers and prisoners are all demographics that may face greater difficulties in accessing banking services.", "chunk_word_count": 253, "section_path": "Building asustainable and inclusive future > 2023 Performance > The Manufacturing Technology Centre", "document_id": "2023 Lloyds sustainability report", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 46, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### When English is not a first language\nSDG 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.\nWe know that language barriers may result in customers managing their products without the confidence we would like them to have. Our customer-facing colleagues are encouraged to use their own bilingual skills, where they match the needs of the customer. However, we understand that we can’t always connect the customer’s language requirement to a colleague with the existing skillset.\nBy acknowledging these challenges and showing an understanding of the barriers that exist for some individuals we have simplified our processes to make it easier for colleagues to support these vulnerable groups in a practical and effective way.\nSDG 10.3: Ensure \nequal opportunity and reduce \ninequalities of \noutcome, including by eliminating \ndiscriminatory laws, policies and \npracticesand \npromoting \nappropriate \nlegislation, policies and action in this \nregard.\nBy offering support for customers with non-standard identification documents, we are directly addressing a common hurdle that people may face when trying to establish a financial foothold.\nTo make our interactions more efficient and better cater to our customers, Scottish Widows is piloting the use of a third-party translation service. Two of our customer-facing business areas are using the service, which allows a three-way call with an interpreter in real time, providing tailored support for our customers in over 150 languages.\nOur commitment to financial inclusion is reflected in the Group being the largest provider of Basic Bank Accounts in the UK, with c.114,000 accounts opened across our brands in 2023, we are taking a significant step in promoting accessibility to essential financial services.\nWe are testing additional support for customers who do not speak English as their first language, introducing a telephone translation service along with an in-branch app translator that supports auto-translation between colleague and customer. The Lloyds Bank, Halifax and Bank of Scotland websites now have dedicated pages that explain how we can support people who have recently arrived in the country gain access to a bank account. In response to the crisis in Ukraine, these pages have been made available to download in Ukrainian and Russian, with translations into more languages to follow soon.\nTo support customers who are deaf or have hearing loss we launched basic British Sign Language (BSL) training for all colleagues. In addition to this we have partnered with Signly to translate our customer websites and where a web page has not yet been translated, customers are able to request the page is translated and we’ll provide a BSL version in less than a week.\n### Increasing access to banking continued\n### Supporting financial and digital capability", "chunk_word_count": 458, "section_path": "Building asustainable and inclusive future > 2023 Performance > When English is not a first language", "document_id": "2023 Lloyds sustainability report", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 47, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Our commitment to becoming a digitally accessible financial service provider, ensuring that our digital channels are usable by everyone regardless of their abilities, is a significant step towards financial inclusivity.\nWith our partners, we have developed tailored training for communities to get online as a strategic and impactful approach. The pilot programme that took place in Liverpool during 2023, provided tablets and in-person training to 513 local individuals who are unemployed or economically inactive, showcasing a tangible effort to bridge the digital divide.\nThe development of training for individuals, businesses and charities not only supports customers who may not have prior experience with the internet but also empowers businesses and charities to harness technology for their benefit.\nTogether, we continue to expand this initiative, and will be providing 4,750 tablets, training and mobile internet access to digitally excluded individuals across the city region, demonstrating our commitment to improving digital literacy and accessibility across the UK. We have a collaborative approach, involving partners from the community and voluntary sector, local authorities and members of the Digital Inclusion Network.\n### Donna’s story\nFurthermore, extending this support to businesses and charities demonstrates our commitment to building inclusive communities.\nDonna, a participant in the digital skills training in Liverpool, has been a recipientof Jobseeker's Allowance for several years with no previous work history. She has a hearing impairment which can create an additional barrier to employment.\nOur involvement reflects a comprehensive approach to addressing digital access and inclusion. Our efforts to provide practical support, resources and training to individuals facing financial challenges and digital exclusion are making a tangible difference in communities.\n### Resources for our customers\n### It might sound a little bit cheesy but that really is life-changing.\nOur digital initiatives and tools demonstrate our dedication to providing practical support and resources to individuals facing various financial challenges and life events. We are helping businesses and communities scale and grow through building their digital skills.\nSDG 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.\n“I am made up to be getting closer toemployment,but the tablet and internet has not just helped me with that. It has also allowed me to stay connected with friends easier, I can do things like FaceTime friends, and we can sign to each other.”\nSDG 10.3: Ensure \nequal opportunity and reduce \ninequalitiesof \noutcome, including by eliminating \ndiscriminatory laws, policies and \npractices and \npromoting \nappropriate \nlegislation, policies and action in this \nregard.\n513\ntablets, training and mobile internet provided in Liverpool in 2023\n### Increasing access to banking continued\n### The Digital Helpline\n### Making money meaningful with financial education", "chunk_word_count": 455, "section_path": "Building asustainable and inclusive future > 2023 Performance > Our commitment to becoming a digitally accessible financial service provider, ensuring that our digital channels are usable by everyone regardless of their abilities, is a significant step towards financial inclusivity.", "document_id": "2023 Lloyds sustainability report", "page": 43, "page_start": 43, "page_end": 43 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 48, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Consumer Digital Index\nAs part of our dedicated effort to understand and address the digital and financial capability landscape in the UK, we make use of and review unique datasets, along with our analytical capabilities and research partnerships. By sharing our findings with partners, we aim to actively contribute to raising awareness about the profound impact confidence and proficiency in digital and financial capability can have on people’s lives.\nWe continue to offer help to children and young adults across the UK to better understand the value of money and manage their finances day-to-day as they transition to financial independence. Our activity is primarily delivered face-to-face by colleague volunteers in schools and further education establishments.\nSDG 8.10: Strengthen the capacity of \ndomestic financial institutions \nto encourage and \nexpand access to \nbanking,insurance and financial \nservices for all. \nSDG 10.2: By 2030, \nempower and \npromote the social economic \nand political \ninclusion of all, \nirrespective \nof age, sex, disability, race, ethnicity, origin, religion or economic or other status.\nPartnering with We Are Group to provide a digital helpline for Lloyds Bank, Halifax and Bank of Scotland customers, as well as people across the UK, has allowed the Group to take a collaborative approach to addressing digital inclusion.\ntowards bridging the digital divide. Coupled with training from the Digital Helpline, this ensures that individuals notonly receive the necessarytools but also the knowledge to use them effectively.\nWe also have a range of free, newly Quality Mark accredited resources that are available for download via the Lloyds Bank Academy site. Employers can also use the content to build it into their apprenticeship and graduate enrichment programmes, and our materials are available for colleagues to support their own families/friends, networks and communities.\nThe annual publication of the Consumer Digital Index report, now in its eighth year, highlights our commitment to tracking and analysing people’s behaviours and attitudes towards technology, online services and financial wellbeing. This report serves as a significant resource for understanding the evolving digital landscape in the UK, utilised by the Department for Education and other organisations.\nThe personalised approach of trainers spending up to two hours at a time with individuals acknowledges that each person may have different learning needs and speeds.\nIn 2023 we were able to provide assistance through this initiative, covering a wide range of essential digital skills, from basic tasks like switching on a device and connecting to the internet, to more advanced functions like setting up online banking and booking appointments.\nIn 2023, over 350 colleagues used their skills and the resources to deliver face-to-face financial education lessons to over 2,500 students in 22 different educational environments across the UK. We continue to work with Young Enterprise to ensure that the learning outcomes of our resources are in line with recommendations from the Money and Pensions Service, and work collaboratively with our peer organisations through our engagement with UK Finance. We also continue to actively promote Talk Money Week.\nThe integration of the Essential Digital Skills Benchmark into the Consumer Digital Index Report provides a comprehensive view of the digital skills necessary for independent internet access and for navigating everyday life and work. This benchmark is a crucial tool for assessing, informing and improving digital literacy.", "chunk_word_count": 548, "section_path": "Building asustainable and inclusive future > 2023 Performance > Consumer Digital Index", "document_id": "2023 Lloyds sustainability report", "page": 44, "page_start": 44, "page_end": 44 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 49, "chunk_text": "# Building asustainable and inclusive future\n## 2023 Performance\n### Consumer Digital Index\nBy providing telephony support and comprehensive training through The Digital Helpline we are empowering individuals to navigate the digital world.\nSupporting the Department of Education through our proactive approach in measuring the Essential Digital Skills Framework, we aim to reinforce our broader commitment to Helping Britain Prosper through supporting societal wellbeing and education.\nThe free initiative to provide tablet devices, along with a SIM card with a data allowance, for those who do not have access to a device or cannot afford one, is a significant step\n## 2023 highlights\n340\n### Access to quality housing\nThe Group supports over 340 housing associations across the UK\n£2.7bn of new funding supported to the social housing sector >£12bn of funding provided to firsttime buyers\nAccess to housing is increasingly being recognised as a core condition in the creation of a sustainable and inclusive UK society – providing household and financial security, and supporting healthy lives, strong communities and economic productivity.\nThe Group operates across the full UK housing ecosystem, supporting housing development and access, through to improvements and protection. This means that the Group has the capability, scale and external relationships to drive positive change in this sector.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Access to quality housing continued\n### Supporting the UK housing market\n### The Good Economy\nDuring 2023, Scottish Widows commissioned specialist impact advisers The Good Economy (TGE) to develop a framework which can be used to measure and report on the social impact of the housing and real estate portion of its loan book. Ultimately, the aim of this was to provide insight into the realworld impact for people and places delivered throughScottish Widows lending activities in these sectors.\nSDG 8.10: Achieve \nhigher levels of \neconomic \nproductivity through diversification, \ntechnological \nupgrading and \ninnovation, including through a focus on high-value added \nand labour-intensive sectors.\nSocial housing is an integral part of the UK’s housing landscape with millions of people benefitting from stable and genuinely affordable homes. We support over 340 housing associations across the UK, from small local associations of several hundred homes to larger regional associations with tens of thousands of homes. Since 2018, we have supported over £17 billion of new funding to the sector. In 2023 we have supported £2.7 billion of new funding to the social housing sector, of which £1.4 billion is sustainable (green or social use of proceeds) or sustainability-linked (including key ESG performance indicators).", "chunk_word_count": 427, "section_path": "Building asustainable and inclusive future > 2023 Performance > Consumer Digital Index", "document_id": "2023 Lloyds sustainability report", "page": 44, "page_start": 44, "page_end": 46 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 50, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Supporting small to medium-sized housebuilders\nUnderpinning the Group’s social purpose is a desire to be part of building an inclusive and sustainable society. Access to quality housing is a fundamental human need with affordable and stable homes giving people a foundation on which they can thrive. The Group is one of the largest funders of the UK housing sector and we are committed to expanding the availability and affordability of safe, quality and sustainable housing. The Group is an integral part of the UK’s housing landscape with millions of people benefitting from stable and genuinely affordable homes.\nHousing Growth Partnership (HGP) is an equity investor and part of the Group. HGP invest patient capital with the purpose of delivering social impact through partnership with selected residential developers and housebuilders to increase the number of homes being delivered and help our partners grow. Find out more about the impact we have already made on page 52 and at $\\mathcal { A }$ Social Impact Investor.\nSDG 11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums.\nThrough a mix of qualitative and quantitative data – including staff and client interviews, client survey and analysis of lending data – TGE developed a social impact framework and undertook an assessment of Scottish Widows existing real estateand social housing loan book, which was published in January 2024.\n### Supporting the rental market\nThe Group is working to improve quality in the private rented sector. In 2022 we published research in collaboration with Social Finance exploring how lenders can improve the private rented sector. The report concluded that a National Landlord Register in England will have a significant impact on housing quality and conditions for tenants, and emphasises there is a golden opportunity to design the register in such a way so that mortgage providers can use it to inform lending decisions, influence landlord behaviour and help reduce the burden of the enforcement. We have continued to engage the industry and political stakeholders on the opportunity for mortgage providers to use a Property Portal in England.\nOur funding is used by our housing association customers to continue to invest and improve the quality of their homes, through to building new homes as well as supporting energy efficiency and retrofit improvements, helping to reduce energy bills to tackle fuel poverty.\nAccess to secure and quality housing is becoming increasingly challenging. We’re uniquely placed to enact change and want to explore the opportunities to increase access to the benefits of home ownership, including through shared ownership, supporting a quality rental and social housing sector, taking the building of housing that supports inclusive communities further and increasing the availability of specialist housing.\nDuring 2023, we reviewed our social housing lending policy so that, where applicable, associations can accelerate spending on tenant safety, damp and mould, retrofit and increasing the supply of new homes. Reflecting this, we have migrated a range of clients who are benefitting from a combined year 1 increase in financial capacity of over £500 million, a cumulative increase of c.£3 billion over a five year period.\nKey findings from the report include:", "chunk_word_count": 536, "section_path": "Building asustainable and inclusive future > 2023 highlights > Supporting small to medium-sized housebuilders", "document_id": "2023 Lloyds sustainability report", "page": 46, "page_start": 46, "page_end": 46 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 51, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Supply and accessibility of social housing\n69 per cent of homes financed located in the 40 per cent most deprived local authorities in terms of housing deprivation c.57, 000 full-time equivalent jobs supported across Scottish Widows’ commercial portfolio 45 per cent of the estimated jobs fall within local authority areas where the need for ‘good jobs’ is higher\nResearch tells us that social housing adds value to society by reducing unemployment, improving health outcomes and improving educational performance. This is why we continue to champion social housing in the UK – we know the importance of a home and we are here to Help Britain Prosper.\nOur BM Solutions business have teamed up with the Energy Savings Trust to help clients make changes to their properties to become more friendly for the environment, as well as guidance for landlords to make energy efficiency improvements to their properties, how to manage current and proposed $\\mathsf { E P C }$ changes and guidance for our clients on the government grants and schemes available to fund energy efficient property improvements. Our BM Business Development Managers frequently educate brokers on private rented sector regulation and proposed standards relevant to landlords in the different nations of the UK.\nWe want to use our scale and reach to help shape a housing market that works for all. During the year we created a national housing convening group, and as part of this process we are engaging with key stakeholders to understand what more we can do to support the challenging aspects of financing retrofitting of properties to improve tenant wellbeing and to increase the amount of affordable housing developments.\nWe have been by the side of the social housing sector for decades and our vision is to enable accessible, quality and sustainable housing that meets the UK’s long-term needs, and our strategy is focused on the three core pillars of Supply, Accessibility and Sustainability.\n>£17bn of new funding supported to the social housing sector since 2018\nHear more on discussions, insights and challenges in social housing in our ‘Making Sense of Social Housing’ podcasts\nFull analysis and methodology can be found in the Scottish Widows housing and real estate investment impact report .", "chunk_word_count": 378, "section_path": "Building asustainable and inclusive future > 2023 highlights > Supply and accessibility of social housing", "document_id": "2023 Lloyds sustainability report", "page": 46, "page_start": 46, "page_end": 46 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 52, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Our partnership with Crisis\n“Our partnership with Lloyds Banking Group will ensure we can take the bold action that is desperately needed to begin tackling the biggest issue facing the people we support – the chronic shortage of good-quality, affordable housing. Our new lettings agency will mean we can help people experiencing homelessness directly into a safe, settled homes, the essential foundation they need to rebuild their lives.\nSDG 11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums.\nIn 2023 Lloyds Banking Group and Crisis, a UK national charity for people experiencing homelessness, joined forces through a new two-year partnership to help tackle the shortage of good-quality, affordable homes in Great Britain (working with Simon Community in Northern Ireland),which is leaving hundreds of thousands of people trapped in homelessness.\nIncreasing the provision of social homes can help some people on the journey to home ownership. Those in social housing pay lower rents than if renting privately, which for some people gives more of an opportunity to save for a deposit on a first home. We recognise the urgent need for more genuinely affordable and secure homes to be made available to those on low incomes.\nTogether, Lloyds Banking Group and Crisis are calling for one million new genuinely affordable homes to be built and made available to those on the lowest incomes by 2033, with a focus on supporting people at risk of and experiencing homelessness.\nSDG 11.3: By 2030, \nenhance inclusive \nand sustainable \nurbanisation and \ncapacity for \nparticipatory, \nintegrated and \nsustainable human settlement planning and management in all countries.\nWe are delighted to have the support of Lloyds Banking Group and its staff in our mission to end homelessness. The money raised and expertise shared through the partnership will also enable us to continue our vital support for people experiencing homelessness, helping more and more people to leave homelessness behind for good.\nLloyds Banking Group will also support Crisis to partner with Homes for Good to develop and launch a new lettings agency, Good Place Lettings, in response to the chronic affordable housing shortage. This innovative new agency will match and support both tenants and landlords and avoid poor and exclusionary practices in the private rented sector. It will be fair for tenants and for landlords.\nAccess to decent quality homes is a fundamental part of solving homelessness. Good-quality social housing in the UK is becoming increasingly scarce, with not enough homes being built to meet demand and too many homes in disrepair and in poor condition. With a severe shortage of good, genuinely affordable homes, millions of people across the UK are trapped in poor-quality housing.\nDriven by our purpose of Helping Britain Prosper, we want to help Crisis achieve its aim to end homelessness for good. Making sure that everyone has a safe and affordable home is not only the right thing to do, it creates a stronger and more productive society and benefits us all.\nMatt Downie Chief Executive at Crisis\nSDG 17.7: Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.", "chunk_word_count": 536, "section_path": "Building asustainable and inclusive future > 2023 highlights > Our partnership with Crisis", "document_id": "2023 Lloyds sustainability report", "page": 47, "page_start": 47, "page_end": 48 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 53, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Access to quality housing continued\nSDG 7.3: By 2030, \ndouble the global \nrate of improvement in energy efficiency. SDG 9.4: By 2030, \nupgrade \ninfrastructure and \nretrofit industries \nto make them \nsustainable, with \nincreased resourceuse efficiency and \ngreater adoption of clean and \nenvironmental \nsound technologies and industrial \nprocesses, with \nall countries taking action in accordance with their respective capabilities.\n### Citra Living\nSince launch, we have provided over 3,000 customers with cashback for approved energy improvement initiatives through our Halifax Green Living Reward and Lloyds Bank Eco Home Reward. As part of our recent Making Homes Greener initiative, we are calling on the UK government to deliver a clear, five-point plan to help make the UK’s homes more energy efficient. Yet despite the progress we’ve already made in supporting our customers to boost the energy efficiency of their homes, we know that now is not the time for complacency.\nTo help boost the supply of high-quality homes in this market, the Group launched Citra Living in 2021, which aims to increase new housing supply and the availability of sustainable, quality homes while supporting our regional regeneration ambitions.\nCitra Living is working with leading housebuilders and developers through strategic partnerships to accelerate the delivery of housing, with Citra Living providing homes for private rent.\nReducing carbon emissions and helping our customers make their homes warmer and cheaper will require collective action and collaboration from policymakers, energy companies, house builders, landlords and banks to tackle the challenges ahead.\nIn 2023 Citra launched ‘Pathways’, which provides renters the ability to buy their home through Shared Ownership, and will be looking to expand this offer through 2024. Citra has also undertaken its first retrofit scheme as well as an initial ‘zero bills’ pilot with Octopus Energy.", "chunk_word_count": 301, "section_path": "Building asustainable and inclusive future > 2023 highlights > Access to quality housing continued", "document_id": "2023 Lloyds sustainability report", "page": 48, "page_start": 48, "page_end": 48 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 54, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Supporting Pobl Group\nRetrofitting plays a key role in achieving the UK government’s net zero targets while also helping tenants improve their quality of life, as well as reducing their bills. This is especially important when considering the needs of vulnerable customers with low financial resilience – many of whom are social housing tenants.\nAs well as ensuring continued support for the housebuilding sector, Citra aims to respond to the increase in demand for rental properties, provide renters with a route to home ownership, while also taking steps to decarbonise existing homes. The properties will provide modern, good-quality living to meet the demands of a growing market, and they will be within easy reach of local transport, amenities and leisure facilities.\nSDG 11.1: By 2030 ensureaccessforall to adequate, safe and affordable housing and basic services and upgrade slums.\nThe largest housing association in Wales, Pobl Group (‘Pobl’ is Welsh for ‘people’), is developing 10,000 new sustainable homes across South Wales over the next 10 years. In 2023, Lloyds Bank supported Pobl Group with a sustainability-linked loan of £100 million. Pobl’s goal is to increase the energy efficiency of 95 per cent of the new homes developed over the next four years with a target to have an Energy Performance Certificate (EPC) rating B or above, while delivering close to 1,000 homes which meet EPC A standards.\nAs parts of its efforts, Pobl is undertaking the UK’s largest solar energy retrofit scheme – equipping hundreds of homes with solar panels, battery storage and zero carbon energy from renewable sources.\nSince 2021 we have supported around £4.8 billion to accelerate sustainability ambition, including investment in making the UK’s social housing stock more energy efficient. However, more still needs to be done to both increase the supply of new social homes while urgently retrofitting existing stock to increase its thermal efficiency. This would not only help to reduce the UK’s carbon footprint, but could also bring about a better standard of living and improved health outcomes for social housing tenants.", "chunk_word_count": 347, "section_path": "Building asustainable and inclusive future > 2023 highlights > Supporting Pobl Group", "document_id": "2023 Lloyds sustainability report", "page": 48, "page_start": 48, "page_end": 48 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 55, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Sustainability in housing\nThe UK has a commitment to achieve net zero by 2050. The decarbonisation of buildings, which currently contribute 17 per cent of the UK’s total carbon emissions, will be key to achieving this1 .\nAcross the UK, residential housing accounts for 16 per cent of carbon emissions,which is why the leadership of Housing Associations such as Pobl is so critical to the Group’s net zero targets. They are creating strong, sustainable communities which will work for and with residents long into the future.\nWith the help of WPI Economic and Censuswide, we produced a report: Decarbonising the UK’s Homes: A Housing Stocktake, dealing specifically with UK housing stock to provide a thorough look at the current state of decarbonisation across UK homes and residential properties. The research identified the main barriers to decarbonisation and, importantly, contained knowledge gleaned from homeowners and landlords who have gone through the process already.\nOur role is to work closely with our clients to support them in striking the right balance between building new homes and improving existing stock, to bring about the best outcomes for social housing tenants, and to Help Britain Prosper.\nTo help support a move towards sustainable buildings, our customers have free-of-charge access to our Green Buildings Tool – a digital insights calculator that helps to identify, evaluate and understand the estimated outcomes of potential investments to make properties greener. Since 2019, 2 billion square feet of real estate has been assessed using our Green Buildings Tool .\nThe sustainability-linked loan from Lloyds Bank incentivises Pobl Group to meet its targets on energy ratings for new homes, invest in retrofitting its existing properties, and help to achieve Pobl’s ambitions for 10,000 new green homes across South Wales in a decade.\n### Access to quality housing continued\n### Supporting Stonewater", "chunk_word_count": 311, "section_path": "Building asustainable and inclusive future > 2023 highlights > Sustainability in housing", "document_id": "2023 Lloyds sustainability report", "page": 48, "page_start": 48, "page_end": 48 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 56, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Sustainability reporting standards for social housing\nThe updated version places even greater emphasis on the sector priorities, and particularly resident issues, with specific questions aimed at improving transparency around how adopters are dealing with the issues of damp and mould in the sector, along with questions around net zero targets and a greater focus on equality, diversity and inclusion.\nIn 2021 Lloyds Bank and Scottish Widows adopted the Sustainability Reporting Standards for Social Housing ‘SRS’, with board representation on Sustainability for Housing Ltd which governs and oversees the SRS and its continued evolution. It is a voluntary reporting standard that has seen increasing adoption by clients. It seeks to increase transparency and reporting consistency to create common reporting standards, with the ultimate aim of driving increased investment and capital into the sector.\nSDG 7.3: By 2030, Double the global rate of improvement in energy efficiency.\nSDG 9.4: By 2030, \nupgrade \ninfrastructure and \nretrofit industries \ntomakethem \nsustainable, with \nincreasedresource use efficiency and \ngreateradoption \nof clean and \nenvironmentally \nsound technologies and industrial \nprocesses,with all \ncountries taking \naction in accordance with their respective capabilities.\nStonewater secured £200 million funding from the Group to support its continued development and improvement programme. Stonewater owns and manages around 36,000 homes for more than 78,000 customers, predominantly across central and the south of England. The social housing provider also took the opportunity to transitio to a sustainability-linked loan where it will be measured against three key performance indicators to benefit from savings on its funding.\naffordable homes that surpass minimum planning regulations in relation to energy efficiency measures, with a high percentage reaching SAP 86 and above.\n### Sustainability across real estate and housing\nIn 2022 we supported the creation of national sustainability standards for new build homes, as part of our role on the NextGeneration Executive Committee alongside Homes England and the UK Green Building Council. We contributed to the development of two new sustainability standards – NextGeneration Project and NextGeneration Core – both being created to support small and mediumsized housebuilders to assess their own sustainability performance. These new standards help them begin or accelerate their sustainability journeys by reducing complexity and focusing on the areas that will make the most difference.\nSince the launch of the SRS in 2021, over 100 housing associations have adopted the framework with nearly 70 additional funders, investors and endorsers; this includes housing providers overseeing over 2.2 million homes across the UK and funders with more than £1 trillion of assets under management. A second version of the standard was launched at the end of 2023 placing a greater focus on sector priorities as well as helping the sector keep pace with relevant international frameworks, making it easier for adopters to demonstrate their ESG credentials.\n“This is an important agreement forStonewateras itcontinues the progress we are making towards more affordable, lower-carbon homes for our customers. It is also a cleardemonstrationofthe financial strength of our organisation, which allows us to focus on existing customers, while delivering muchneeded affordable homes forothers in society.”\nIt has committed to investing in retrofitting existing homes to exceed the current minimum regulations. As part of the new agreement, Stonewater has also pledged to deliver new", "chunk_word_count": 540, "section_path": "Building asustainable and inclusive future > 2023 highlights > Sustainability reporting standards for social housing", "document_id": "2023 Lloyds sustainability report", "page": 49, "page_start": 49, "page_end": 49 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 57, "chunk_text": "# Building asustainable and inclusive future\n## 1 The Sustainable Reporting Standard for Social Housing has grown from a great ESG partnership between the finance and social housing sectors to influencing communication, ambition and strategy across social housing. Lloyds have been key players on this journey.\nTo complement these new sustainability standards for UK housebuilders, we have launched our own Housebuilding Sustainability Finance Framework. This framework sets out how we will help housebuilders access green and sustainable finance to build more sustainable homes. We believe that our framework was one of the first sector-based financing frameworks issued by a financial institution in the UK and illustrates the real focus we have on this important sector. Our ambition is that we work with housebuilders to help build modern homes to a high standard that are cheaper to live in and less damaging to the environment.\n### Anne Costain\nStonewater’s Chief Financial Officer\nDuring 2023 we supported the delivery of £2.4 billion of sustainable or sustainability-linked finance to the housebuilder sector. We also sponsored of the inaugural Future Homes Conference held in November, which announced the alignment between the Futures Homes Hub and the NextGeneration Initiative to support the housebuilding sector to deliver and comply with the Future Homes Standard which is being established by the government.\nThey have provided critical sponsorship, but more importantly they have provided leadership, counsel (from across the whole organisation not just Housing) and support. They have walked the talk and believe that integrating the net zero journey is part of maximising commercial success.\nBrendan Sarsfield Chair of Sustainability for Housing Ltd\n### Access to quality housing continued\n### Industry partnerships and supporting skills development\n### Regeneration Brainery\nSDG 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.\nIn 2021, we announced a threeyear headline partnership with Regeneration Brainery, an awardwinning, non-profit academy for school leavers from underrepresented backgrounds. Regeneration Brainery is aimed at tackling the skills shortage by boosting diversity in the property, construction and regeneration industries and combatting the lack of hands-on experience for young people in the sector. The free Regeneration Brainery academy offers interactive week-long workshops, bootcamps in schools and colleges, as well as practical real-world work experience.\nTo date, Regeneration Brainery has inspired over 6,000 young people and grown their ambassador network to over 300, alongside over 500 industry mentors. In 2023, with our support, RegenerationBraineryreached363 brainees via 14 braineries and bootcamps across key regional cities, with furtherbraineriesplanned across the UK in 2024.\nshow you that it doesn’t matter what your background is or where you’re from, there’s a place for everyone in the industry. My advice would be to grasp every opportunity associatedwith Regeneration Brainery with both hands and the results will speak for themselves.”\n363", "chunk_word_count": 478, "section_path": "Building asustainable and inclusive future > 1 The Sustainable Reporting Standard for Social Housing has grown from a great ESG partnership between the finance and social housing sectors to influencing communication, ambition and strategy across social housing. Lloyds have been key players on this journey. > Anne Costain", "document_id": "2023 Lloyds sustainability report", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 58, "chunk_text": "# Building asustainable and inclusive future\n## 1 The Sustainable Reporting Standard for Social Housing has grown from a great ESG partnership between the finance and social housing sectors to influencing communication, ambition and strategy across social housing. Lloyds have been key players on this journey.\n### Real Estate Balance\nIn 2023, we announced a partnership with Real Estate Balance, a campaigning organisation working to improve diversity and inclusion in the real estate industry with a target of 50 per cent representation of women on boards. Real Estate Balance works closely with industry leaders to support them in making cultural changes and identifying best practice, contribution to the enhanced performance of the industry.\nSDG 10.2: By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.\nyoung people from under-represented backgrounds reached through Regeneration Brainery in 2023\nRegeneration Brainery secured work experience for Lewis across the country. He attended UKREiiF with Regeneration Brainery and used his networking skills to secure more work experience with a project manager. He is now planning to complete the second year of his Diploma and work with Regeneration Brainery to secure a degree apprenticeship in construction project management.\nMichele Steel, Chief Executive Regeneration Brainery, said: “Our partnership with Lloyds Bank has enabled us to expand our reach farbeyond our initial expectations. The commitment and support from all the team at Lloyds has helped shaped future career paths for hundreds of young people, providing opportunities that they would not normally have and changing lives, literally.”", "chunk_word_count": 265, "section_path": "Building asustainable and inclusive future > 1 The Sustainable Reporting Standard for Social Housing has grown from a great ESG partnership between the finance and social housing sectors to influencing communication, ambition and strategy across social housing. Lloyds have been key players on this journey. > Real Estate Balance", "document_id": "2023 Lloyds sustainability report", "page": 50, "page_start": 50, "page_end": 50 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 59, "chunk_text": "# Building asustainable and inclusive future\n## 1 The Sustainable Reporting Standard for Social Housing has grown from a great ESG partnership between the finance and social housing sectors to influencing communication, ambition and strategy across social housing. Lloyds have been key players on this journey.\n### Importance of just transition using Onward Homes\nWe recognise the importance of increasing digital access within our communities and supporting all of our customers to access services online, so that they can benefit from the opportunities that digital brings, as well as tackling social isolation.\nThrough our active contribution, Regeneration Brainery have gone from strength to strength, winning the Social Impact Award at the 2022 ESG Estate Gazette Awards as well as ‘Social Impact Initiative of the Year‘ at the RESI Awards 2023 and Property Week Awards 2023, and have been shortlisted for Social Mobility Initiative of the Year at the British Diversity Awards 2024.\nIn 2023 we partnered with Onward, one of the largest registered providers of social housing based in the north-west of England, with 35,000 homes, to deliver free in-person digital skills classes for residents living in their sheltered schemes in Merseyside. The pilot programme has been rolled out to three of the housing associations over-65s schemes to help close the digital gap often encountered by older residents.\nSee page 93 for details on the Group’s approach to a Just Transition\nLewis, now a graduate of the Regeneration Brainery Academy, had really struggled with what to do with his studies and future career. Following studying at a specialised engineering academy and starting a Construction and Built Environment Diploma course at college, Lewis was recommended to the Regeneration Brainery Bootcamp inStoke,where he learnt about a whole raft of roles in property and regeneration.\nDuring the sessions, the Lloyds Bank Academy provided expert-led training on internet basics, how to use tablet devices, as well as digital apps and features such as social media and video calling. Other practical tips included online banking safety, sending emails, keeping in touch with friends and family through video calls and social media, and being cyber-secure. More than 30 residents signed up for the course, each receiving a free tablet and, through Lloyds Bank Academy’s partnership with Vodafone, free data for six months.\nWewill continue to work with them to provide young people from different backgrounds with an introduction to the property world, helping to inspire the next generation of talent whilst bridging the future skills and diversity challenges in the sector.\nLewis said: ‘‘Regeneration Brainery is honestly life-changing if you capitalise on the opportunities they offer. They offer opportunities in areas that need it the most and help to\n### Access to quality housing continued\n### Home ownership", "chunk_word_count": 452, "section_path": "Building asustainable and inclusive future > 1 The Sustainable Reporting Standard for Social Housing has grown from a great ESG partnership between the finance and social housing sectors to influencing communication, ambition and strategy across social housing. Lloyds have been key players on this journey. > Importance of just transition using Onward Homes", "document_id": "2023 Lloyds sustainability report", "page": 50, "page_start": 50, "page_end": 50 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 60, "chunk_text": "# Building asustainable and inclusive future\n## 1 The Sustainable Reporting Standard for Social Housing has grown from a great ESG partnership between the finance and social housing sectors to influencing communication, ambition and strategy across social housing. Lloyds have been key players on this journey.\n### Shared ownership\nShared ownership offers a potential pathway into home ownership for those initially unable to access full ownership. In our mortgage offer, we are enhancing eligibility for our shared ownership proposition through a review of affordability and eligibility parameters.\nWe are committed to helping more renters and first-time buyers own their own home and have been convening conversations across the housing industry to explore how shared ownership, including expansion to older homes and private schemes, can be made more accessible to potential first-time buyers.\n>£12bn of funding provided to first-time buyers in 2023\n### Supporting our mortgage customers\nAs the UK’s largest mortgage lender, we are supporting more and more of our customers to buy their first home. We currently support one in five first-time buyers to get on the housing ladder and in 2023, we have provided over £12 billion of funding to first-time buyers.\nWe have expanded our shared ownership support in 2023 through the launch of a partnership with Citra Pathways, providing customers with an opportunity to rent, with an option to move to shared ownership through a mortgage with Halifax or Lloyds.\nThrough our family of brands, we offer savings tools and provide a range of deposit-saving options. We provide a range of mortgages for first-time buyer and home mover mortgages. For those aspiring to own their own home but struggling to find a deposit, intergenerational options such as our ‘Lend a Hand’ mortgage from Lloyds Bank allows a family member to put down 10 per cent of the purchase price of a home into a three-year, fixed term savings account.\nWe also support a range of government-sponsored affordable housing initiatives, including Right to Buy, and the First Homes initiative, which aims to help young people and key workers get on the housing ladder by being able to purchase a home with at least a 30 per cent discount to market value.\nWe have been supporting the Mortgage Guarantee Scheme, since its launch in April 2021, which helps customers with less than a 10 per cent deposit looking to borrow up to £570,000.\n### Supporting regional development and communities\nOur success is intrinsically linked with the success of the UK’s regions and nations.\n### We have a significant regional presence, supporting communities across the country every day.\n## 2023 highlights\nLaunched our Liverpool City Region Housing Initiative\nThe Group has made a number of public commitments to support our local communities, engaging them and ensuring that they positively benefit from our societal ambitions. We encourage colleagues to volunteer their time and expertise to support our programmes, many of which involve local charities and community organisations as well as social enterprises.\n>£46m in community investment in 2023\n£120m donated to our Foundations since 2018\n### Supporting regional development\n### Our regional impact", "chunk_word_count": 513, "section_path": "Building asustainable and inclusive future > 1 The Sustainable Reporting Standard for Social Housing has grown from a great ESG partnership between the finance and social housing sectors to influencing communication, ambition and strategy across social housing. Lloyds have been key players on this journey. > Shared ownership", "document_id": "2023 Lloyds sustainability report", "page": 51, "page_start": 51, "page_end": 52 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 61, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### We are committed to supporting the UK’s regions and nations and we want to play our part to address the considerable disparity which exists between different parts of the UK.\nSome examples of how we have supported the regions of the UK in 2023 to be more sustainable and inclusive include:\n• The HGP (Housing Growth Partnership) announced the launch of a £390 million joint venture with Thriving Investments, with the aim of delivering 1,200 sustainable homes across regional city communities. Its first investment is the initial phase of a highly sustainable 400-home development Dundashill in Glasgow. The HGP is backed by the Group and Homes England, supporting housebuilders and developers to address the UK housing shortage.\nThe Group already has a significant regional presence across the nations of the UK, whether this be lending to local businesses, funding critical infrastructure projects, supporting the education sector or helping to build more homes, alongside our personal customer relationships across all communities. However, we are directing incremental resources to support the priorities of lower income regions, stretching us to go even further in these places. Our aim is to stimulate increased investment, working closely with business leaders and local and regional government to help create thriving communities.\nThe Group’s objective is to become a leading partner in the regeneration of low-income regions and communities, helping to address regional inequality as part of our purpose of Helping Britain Prosper.\n• Power Roll Ltd has created and patented a lower cost alternative to solar panels. The company is based in County Durham and its innovative solar photovoltaic film uses proprietary micro-groove technology which is lighter and more flexible than traditional panels and can be deployed on almost any surface. As a small business, there was a limited capacity to employ financial experts, so we have supported them with treasury services and deposit accounts.\nWe have identified three particular areas where the Group is best placed to make a contribution:\n• Creating economic opportunity • Regenerating housing and communities • Capturing the benefits of net zero transition\n[IMAGE CAPTION] Artist impression of Dundashill development, Glasgow\nHigh-growth clusters are key to boosting regional productivity. Enabling similar sectors, such as the life sciences, technology and advanced manufacturing, to work together in close proximity can have many benefits including sharing knowledge and innovating but also attracting investment, which further boosts productivity. Clusters often emerge around universities and science parks and we are developing a detailed understanding of where the UK’s clusters exist and in which sectors. This will enable us to best direct our resources to invest in and support these clusters so that they can maximise their potential, delivering on our Group purpose of Helping Britain Prosper.\n### Supporting regional development and communities continued", "chunk_word_count": 467, "section_path": "Building asustainable and inclusive future > 2023 highlights > We are committed to supporting the UK’s regions and nations and we want to play our part to address the considerable disparity which exists between different parts of the UK.", "document_id": "2023 Lloyds sustainability report", "page": 53, "page_start": 53, "page_end": 53 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 62, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Spotlight on Liverpool\n• We are supporting Brockwell Energy with the construction of North Kyle Wind, an onshore windfarm in East Ayrshire. Our £60 million funding commitment will see 49 wind turbines built on land previously used for coal mining in southwest Scotland, supporting our carbon reduction target for the power sector.\n• Waxman Energy Ltd has grown its distribution capacity for its range of solar and battery storage products due to increasing demand. Our funding enabled the acquisition of three additional warehouses in West Yorkshire to store and supply more energy efficient products.", "chunk_word_count": 104, "section_path": "Building asustainable and inclusive future > 2023 highlights > Spotlight on Liverpool", "document_id": "2023 Lloyds sustainability report", "page": 54, "page_start": 54, "page_end": 54 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 63, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### We have developed a close relationship with stakeholders in the Liverpool City Region as we deepen our engagement in one place, enabling us to understand the challenges faced and how we can support the region to fulfill its potential.\nFollowing a research phase, we are working together to unlock opportunities which include assessing regeneration sites with the potential for new homes and determining options for more enduring housing partnerships. We are already seeing national interest in our innovative approach to tackling the housing challenges in Liverpool, with the intention that our proposals could be replicated in other cities across the UK’s regions and nations.\n• We continue to support social housing providers across the UK, helping them to both build new sustainable homes as well as making their existing housing stock more environmentally friendly. One example is Adra Housing Association in North Wales which received a £40 million sustainability-linked loan, with loan pricing linked to meeting sustainability targets.\nThe city of Liverpool has a powerful global brand in sport and music, and its world-class research facilities, especially in health, life sciences and technology, have led to the creation of a high-growth cluster in the city.\nLiverpool’s Knowledge Quarter $( \\mathsf { K Q } )$ has become one of the UK’s leading innovation districts, with the state-of-the-art Spine building at its centre. Working closely with $K Q ,$ we are helping Liverpool’s entrepreneurs and small businesses to navigate the early stages of their journey. We support KQ’s Start-up initiative as well as offering drop-in sessions at the Spine building, providing guidance on banking and finance, net zero transition, and skills and mentoring programmes, including our Start Up Scale Up initiative. This initiative was launched during 2023 and was attended by 37 businesses, all looking for their springboard to growth via a tailored 8-week programme, held in the Spine building. You can read more about our productivity and skills programmes, including Start Up Scale Up, on page 40.\n• Viscose Closures is a leading UK manufacturer of tamper evident packaging that provides visible security to demonstrate that products have not been tampered with. The firm employs 45 people in Swansea and is the world’s only producer of a tamper evident band that is biodegradable, compostable and completely plasticfree. Our funding has supported the purchase of 250 solar panels and has also enabled the purchase of new machinery to improve productivity and reduce waste.\nDuring 2023 we launched our flagship Liverpool City Region Housing Initiative. The Initiative is being driven by the Group, Liverpool City Region Combined Authority, and key city housing partners. It aims to deliver practical action to address housing challenges.\n• We’ve enabled Russell Homes to support the delivery of 103 new, affordable family homes in Wincham, Cheshire. There is a shortage of affordable homes in the area and the development has received a silver rating from Next Generation, backed by Lloyds, Homes England and the UK Green Building Council where housing developments exceed minimum sustainability standards.", "chunk_word_count": 508, "section_path": "Building asustainable and inclusive future > 2023 highlights > We have developed a close relationship with stakeholders in the Liverpool City Region as we deepen our engagement in one place, enabling us to understand the challenges faced and how we can support the region to fulfill its potential.", "document_id": "2023 Lloyds sustainability report", "page": 54, "page_start": 54, "page_end": 54 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 64, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### We have developed a close relationship with stakeholders in the Liverpool City Region as we deepen our engagement in one place, enabling us to understand the challenges faced and how we can support the region to fulfill its potential.\nWe have provided £75 million of liquidity funding to support Newcastle University with its capital investment programme. The university is renowned for its research quality, academic excellence and global impact and it enjoys a strong reputation in subject areas such as computer science and engineering, enabling students to acquire skills of growing importance for the future workplace.\n### We have developed a close relationship with stakeholders in the Liverpool City Region.\nWe are working together to unlock opportunities which include assessing regeneration sites with the potential for new homes.\nSupporting regional development and communities continued\n### Supporting the net zero transition in the UK’s regions\n### Accelerating the transition to net zero is an important part of our Regional Development ambition as we work alongside the UK’s regions to capture the benefits of transition, including harnessing jobs and economic opportunities that come from a low carbon economy.\nWe built on this in 2023 with a series of regional roundtable events, sharing the outcomes and lessons from this work with other local authorities, central government and key industry players as we help to identify and share replicable solutions to these key energy challenges.\nAs a direct result of this activity, we are partnering with Octopus, and working with Leeds City Council with the aim of testing whether a local, place-based vehicle to provide retrofit services and access to finance can unlock increased pace of delivery in retrofitting the UK’s housing stock.\n### Purpose in action\nDuring 2022 we launched the Local Low Carbon Accelerator where we worked alongside Octopus, National Grid, Shell and the UK Infrastructure Bank. This identified opportunities to accelerate regional net zero infrastructure which focused on the retrofitting of homes in Leeds, zero emission bus franchising in Liverpool and electric vehicle charging infrastructure in the West Midlands, working with the local authorities in these places.\n### Enabling better digital connectivity\nSDG 9.1: Develop \nquality, reliable, \nsustainable and \nresilient \ninfrastructure, \nincluding regional and transborder \ninfrastructure, to \nsupport economic development and human well-being, with a focus on \naffordable and \nequitable access for all.", "chunk_word_count": 392, "section_path": "Building asustainable and inclusive future > 2023 highlights > We have developed a close relationship with stakeholders in the Liverpool City Region as we deepen our engagement in one place, enabling us to understand the challenges faced and how we can support the region to fulfill its potential.", "document_id": "2023 Lloyds sustainability report", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 65, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Gigaclear provides ultrafast broadband to underserved communities\nGigaclear designs, builds and operates ultrafast, pure fibre, broadband networks to underserved ruralcommunitiesandharder to reach locations across the UK, providing high speed internet access to both retail and business customers.Established in 2010, Gigaclear is now the UK’s largest rural fibre-to-the-premises provider, laying more than 12,000km of fibre cabling.\nHigh-speed, reliable broadband drives growth and productivity in the UK’s regions, widening job opportunities and encouraging people to stay in their local area.\nDigital connectivity is of growing importance in our increasingly digital world. It has the potential to allow high-productivity technology clusters to emerge, such as fintech and e-commerce. In addition, it supports a net zero transition, by enabling workers to work from home if they choose, thus reducing travel-related emissions.\nBuilding on our existing funding to Gigaclear, during 2023 we supported the UK Infrastructure Bank in providing a debt guarantee covering £240 million of bank commitments to help Gigaclear achieve its aim of doubling its network size to cover nearly one million rural homes across the UK by 2025.\n### Supporting our communities\n### Group colleagues add further value to our Foundations’ grants through volunteering and skills sharing.\n### Our Foundations\n### SDG 16.2: End\nabuse, exploitation, trafficking and all forms of violence against and torture of children.\nOur partnership goes much further than traditional funding; we share skills, time and expertise with the Foundations, with hundreds of colleagues getting involved. This deepens our colleagues’ sense of connection with their communities, enables them to develop a greater understanding of the needs, aspirations and strengths of people facing complex issues, and develops skills that they can bring back into their roles at the Bank.", "chunk_word_count": 290, "section_path": "Building asustainable and inclusive future > 2023 highlights > Gigaclear provides ultrafast broadband to underserved communities", "document_id": "2023 Lloyds sustainability report", "page": 55, "page_start": 55, "page_end": 56 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 66, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Tackling social disadvantage in the communities that need it most\nSDG 17.7: Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.\nOur four independent charitable Foundations have been providing vital support to small charities across the UK and Channel Islands for the last 38 years, helping tackle social disadvantage in the communities that need it most, partnering with us in our purpose of Helping Britain Prosper.\nSitting at the heart of communities across the UK and Channel Islands, we play an active role in helping them in a number of different ways including: colleague volunteering; support for community groups and organisations; donations to our independent Foundations; and fundraising for local charities.\nCaroline Moorhouse, Product Manager, Homes Demand Generation became a Treasurer/Trustee for Leeds-based charity, Basis Yorkshire, in summer 2023. They are one of the many charities supported by the Lloyds Bank Foundation for England and Wales. The charity aims to end stigma, create safety and promote empowerment for women and young people. It provides information and support for women working in the sex industry and offers intensive one-on-one support to young people involved in oratmediumtohighrisk ofchildsexual exploitation. The Foundation has supported the charity since 2015 with grants totalling £216,864 and a package of organisational support.\nThe Foundations provide an invaluable contribution to the third sector by working with hundreds of small and local charities in their area, providing core funding and other forms of support to help people overcome complex social issues. The Foundations also share their insights, expertise and best practice with the Group to help inform our customer and colleague products and propositions.\nLast year, over 2,400 charities were supported through a mix of grant-making and colleague matched giving for their local fundraising and volunteering. In 2023, we donated £24.7 million to our Foundations. In the last five years, we have donated over £120 million.\nOur investment into communities takes on many forms, including direct cash donations, colleague time and fundraising. Aligned to B4SI standards, we invested more than £46 million into the community last year.\n>£46m in community investment in 2023\n>2,400 charities supported through a mix of grant-making and colleague matched giving for their local fundraising and volunteering in 2023\n“Upon hearing that Basis Yorkshire were looking for a Treasurer/Trustee, I jumped at the chance. It’s been a fantastic experience getting to know the team, learning about their impactful work and being able to add value to the charity through my network and knowledge. The time I give the charity not only helps them but I have benefitted significantly in my own journey from this experience too.\nSupporting our communities continued", "chunk_word_count": 455, "section_path": "Building asustainable and inclusive future > 2023 highlights > Tackling social disadvantage in the communities that need it most", "document_id": "2023 Lloyds sustainability report", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 67, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Purpose in action\nWhen the Halifax Foundation for Northern Ireland wanted to update their own website, Experience Design colleagues Steve Heron, Ed Mitchell and Steve Gladwin stepped up with the perfect skills and expertise from their day jobs, and the desire to give something back.\n“CEOs and leaders in charities do amazing jobs and that’s probably why I thought that I couldn’t do anything to help. But through monthly conversations I realised I can give a different perspective, a view to consider, an ear to listen. I can help. I have learned that I shouldn’t undervalue the experience and opportunities that we have access to in the Group. Through my network I can open up a huge range of support and access for a charity and I can learn a lot in return.”\n### Skills-based volunteering\n### Realising the skills we can offer\nBy sharing existing skills and knowledge colleagues build greater confidence in their own expertise, learning something new and giving back at the same time.\nAngus Gray, Strategic Workforce Planning, in our People and Places team, reflects on his experience as a mentor for a charity supported by the Bank of Scotland Foundation.\nBANK OFSCOTLAND Foundation", "chunk_word_count": 208, "section_path": "Building asustainable and inclusive future > 2023 highlights > Purpose in action", "document_id": "2023 Lloyds sustainability report", "page": 57, "page_start": 57, "page_end": 57 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 68, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Mentoring and trusteeships\nCharlotte Atkins, Senior Business Support Manager in Customer Channels, began as a mentor at Advocacy Services North East Wales and is now a Trustee\nLLOYDSBANKFOUNDATIONEgne&\nColleagues sometimes gain a real affinity for a charity they have worked with and we encourage them to consider supporting on a longer-term basis.\n“I have been surprised how my day job at Lloyds Banking Group has provided so much support to a small charity, I love spending time with the team at ASNEW and knowing I am giving something back to my local community makes the difference.”\nTheresa Carruthers, Strategic Relationship Manager, Intermediary Sales, Insurance, Pensions & Investments, supported Wonderfully Made Woman, a Manchesterbased charity that seeks to help women of all ages and backgrounds that have faced significant adversity build confidence and thrive:\nA charity response forum is a 2,5 hour virtual collaboration between a group of colleagues and the senior leader from a charity that our Foundations support, helping the charity to explore solutions to current issues, shape ideas and direction for the charity.\n“We had a great group of colleagues, each with a different perspective, so we were able to add value in different ways. I was able to draw on current and past experience and bring forward ideas and suggestions. We all bounced off one another and built on ideas, coming up with some great actions for the charity to take forward. It felt so good to be able to help.”\nOur Foundations fund matched-giving Colleagues can claim up to £1,000 matchedgivingagainst fundraisingor volunteer time.\nNatasha Kowalewska, Lloyds Bank Capital Markets, Islands,braved an abseil and fundraised more than£500 for the Jersey Cheshire Home, which is the only residential facility on the Island caring solely for adults with disabilities. She claimed the matched £500 through Lloyds Bank Foundation for the Channel Islands.\nSuzy Webb, Lloyds Bank Capital Markets, Islands volunteers for Caring Cooks, a Jersey-based charity providing a weekly Community Meal Service for Islanders who are experiencing hardship. Suzy says, “As well as volunteering my time, the Group’s Matched Giving Programme means Caring Cooks have the added benefit of £10 per hour for my time, which will really help towards the cost of the food they are providing.”", "chunk_word_count": 380, "section_path": "Building asustainable and inclusive future > 2023 highlights > Mentoring and trusteeships", "document_id": "2023 Lloyds sustainability report", "page": 57, "page_start": 57, "page_end": 57 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 69, "chunk_text": "# Building asustainable and inclusive future\n## LLOYDSBANKFOUNDATION\n### Supporting our communities continued\n### Colleague volunteering\n### Charity partnerships\n90,000 hours of volunteering gifted by colleagues in 2023\n### As we continue to see growing interest from colleagues eager to service local communities, we have taken the opportunity to closely align our primary volunteering themes to our Group’s purpose and strategic partnerships to support our impact as a Group on our key focus areas to Help Britain Prosper.\n### Woodland Trust\nOur partnership is supporting the agriculture sector to decarbonise by offering preferential funding for more than 0.5ha of new woodland which brings down the cost of trees and hedges to farmers, and also supports communities to plant trees locally with the Woodland Trust’s Free Trees programme, planting 100,000 trees during 2023.\nSince January 2020, the Group has been working in partnership with the Woodland Trust to plant 10 million trees in the UK by the end of the decade as part of our commitment to finance a greener future and support the transition to a low carbon economy. These trees are estimated to have the potential to absorb around 2.5 million tonnes of carbon dioxide in their lifetime.\n### Crisis and Simon Community\nIt is estimated that over 227,000 families and individuals across the UK are facing homelessness. Through our partnership we are working with Crisis (and Simon Community in Northern Ireland) to help them to provide the support that will help people to leave homelessness behind for good.\nThis partnership has planted 4 million native trees across the UK since 2020 – in our new ‘woods within woods’, in partnership with the agriculture sector and communities. Around 1,100 colleagues have planted over 22,000 trees at 65 tree planting events during 2023.\nIn 2023, we have rebranded our volunteering programme as ‘Time to Make a Difference’ – highlighting both that the Group supports a minimum of eight hours a year within work time to volunteer and that in the current economic climate there really is no time better to get involved.\nThrough our partnership, Crisis will launch Good Place Lettings Agency, breaking down the barriers that people face in accessing affordable housing. Our partnership will also help people to rebuild their lives and become financially secure through a Changing Lives grant programme.\nThroughout 2023, 6,273 colleagues gifted more than 90,000 hours of volunteering, including using a wide variety of their skills across our Purpose aligned themes of sustainability, charitable foundations, financial education and housing/ homelessness.\n4m\nThese grants will help people to make their house a home and support financial stability through support to access further education, employment or for people to start their own business.\nnative trees planted in partnership with Woodlands Trust since 2020\n>£1.3m\nFinally, through our work together we aim to support Crisis to ‘Activate the Nation’ aiming to equip the UK with the solutions to end and prevent homelessness.\nfundraising raised by colleagues and customers to support Crisis\nThrough colleague and customer fundraising, over £1.3 million has been raised to support Crisis (and Simon Community in Northern Ireland) with over 300 colleagues also volunteering their time to support Crisis activities across the UK.\n22,000 \ntrees planted by colleagues in 2023", "chunk_word_count": 536, "section_path": "Building asustainable and inclusive future > LLOYDSBANKFOUNDATION", "document_id": "2023 Lloyds sustainability report", "page": 58, "page_start": 58, "page_end": 59 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 70, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Diversity, equity and inclusion\n40.1% senior roles held by women in 2023\n1.7% of senior roles held by Black heritage colleagues\n12% by 2025 Our new goal to double the representation of colleagues with disabilities in senior manager roles\nAs a Group, we strive to create a fully inclusive environment for all our colleagues, customers and communities.\nGetting this right is at the heart of our purpose to Help Britain Prosper and we have made inclusion a group value to be considered in all our activities.\nIn 2023, we have continued to take our work forward, expanding our focus and have seen significant recognitions for the work we are doing. As we now seek to transform our business and reshape our ways of working, systems and processes, we have an opportunity to ensure we do so with diversity, equity and inclusion always in mind. We remain committed to driving this vital work forward and ensure we are a business that reflects the society it serves.\n### Building an inclusive organisation", "chunk_word_count": 180, "section_path": "Building asustainable and inclusive future > 2023 highlights > Diversity, equity and inclusion", "document_id": "2023 Lloyds sustainability report", "page": 59, "page_start": 59, "page_end": 59 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 71, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Inclusive Everyday\nSupporting this, we were pleased to be the first FTSE 100 company to set goals to increase both gender and ethnic diversity at senior levels and we continue to commit ourselves to stretching targets, having also set a goal in 2023 to double the representation of senior colleagues with disabilities, the first public commitment of its kind to be launched by a UK bank.\nIn our most recent colleague survey, 76 per cent agreed that the Group is an inclusive place to work where diverse perspectives are valued. But we also know from this survey and through listening sessions that we have more work to do.\nIntegrating diversity, equity and inclusion into the way we run our business has been core to our success to date. Beyond our Group-wide goals we also have individual business unit level targets and delivery against these forms a core part of the Group Executive Committee member’s individual scorecards and performance conversations.\nColleagues have told us that non-inclusive language and behaviour continue to exist in the Group, and that colleagues don’t always feel comfortable challenging this, particularly from senior leaders and customers.\nInclusion is a core part of our Group values – we learn about and embrace our differences, and seek out diverse perspectives.\nOur data led approach, which is grounded in key metrics and insight gathered through colleague feedback, helps us to identify opportunities to accelerate progress, by developing bespoke initiatives which help to address business unit or industry specific challenges.\nThat’s why in September 2023, we launched Inclusive Everyday, our ongoing internal campaign to help colleagues understand how they can be more inclusive in their everyday behaviours, language and leadership and support making our business a place we all love to work.\nWe have launched new colleague advisory panels for Disability, Gender, $\\scriptstyle \\lfloor \\mathsf { G B T Q ^ { + } }$ and Life Stages alongside our existing Race and Ethnicity panels. They have been involved in a variety of activities including reviewing campaigns, giving feedback on the latest TV advertising, and supporting system design and new propositions, putting inclusion at the heart of everything we do.\nThe campaign brings to life our Group values and demonstrates how inclusion is central to creating the conditions for success and increased productivity, where our people can grow with purpose. This is vital as we enter the next phase of our journey to deliver the largest transformation ever in financial services.\nWe believe a more diverse company is a stronger and more successful company.\n### Building an inclusive organisation continued\n### Our 2023 diversity, equity and inclusion performance", "chunk_word_count": 447, "section_path": "Building asustainable and inclusive future > 2023 highlights > Inclusive Everyday", "document_id": "2023 Lloyds sustainability report", "page": 60, "page_start": 60, "page_end": 60 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 72, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Methodology and definitions:\nData is sourced from the HR system (Workday) containing all permanent colleague details \nAll data is representative as at 31 December 2023 and diversity \ncalculations are based on headcount, not full-time employee value All diversity information for ethnicity, disability, sexual orientation and gender identity is based on voluntary self-declaration by colleagues through our HR system. Our systems do not record diversity data \n(excluding gender data) of colleagues who have not declared this information and is for UK payroll only \nEthnicity data excludes non-UK colleagues \nGender data includes international, those on parental/maternity leave, absent without leave and long-term sick and excludes contractors, Group non-executive directors, temporary and agency staff \nLGBT+ includes ‘Asexual/Ace Spectrum, Bisexual/Bi, Gay Man, Lesbian/Gay Woman, Pansexual, Other Sexual Orientation and includes Transgender’ The Group Executive Committee (GEC) assists the Group Chief Executive in strategic, cross-business or Group-wide matters and inputs to Board. GEC includes the Group Chief Executive and excludes colleagues who report to a member or attendee of the GEC, including administrative or executive support roles (personal assistant, executive assistant). GEC and GEC direct reports includes the Group Chief Executive and colleagues who report to a member or attendee of the GEC, including administrative or executive support roles (personal assistant, executive assistant) \nSenior managers: Grades F, G and Executive (F being the lowest) \nA colleague is an individual who is paid via the Group’s payroll \nand employed on a permanent or fixed-term contract (employed \nfor a limited period). Includes parental leavers and internationals \n(UK includes Guernsey, Isle of Man, Jersey and Gibraltar). Excludes leavers, Group non-executive directors, contractors, temps and agency staff\nWe will continue to create a fully-inclusive organisation that is representative of modern-day Britain, where differences are embraced and everyone can reach their potential, and we will use our experience to help communities to become more inclusive.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Building an inclusive organisation continued\n### Gender diversity\n### We are committed to becoming a leader in gender diversity and we’re working hard to have a leadership team that reflects the society we serve.\n### Ensuring a gender-diverse recruitment strategy\nWe have continued to drive progress around developing our talented women and are committed to their progression and recruitment through our existing activities and networks. We use artificial intelligence to improve the tone and language of job adverts to create gender neutrality and, for senior appointments, gender diversity is monitored.\nAs we continue to work towards our aspiration to have 50 per cent women in senior roles by 2025, our progress has been recognised externally. At the end of 2023, 40.1 per cent of our senior roles were held by women, showing continued year-on-year progress to improving our representation.", "chunk_word_count": 471, "section_path": "Building asustainable and inclusive future > 2023 highlights > Methodology and definitions:", "document_id": "2023 Lloyds sustainability report", "page": 61, "page_start": 61, "page_end": 62 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 73, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Lloyds Banking Group Returners\nOur Returners programme, now in its eighth year, targets professionals who have been on a career break for 18 months or more. It enables Returners to resume their career in a role that matches their skills and experience.\nDuring 2023, we were named in the Bloomberg Gender-Equality Index for the fifth year in a row, the Times Top 50 Employers for Gender Equality for the 12th consecutive year and won the Insead Balance in Business Award for Most Impact.\nIn 2023, we moved from recruiting in cohorts to a businessas-usual model, which has allowed an uncapped number of Returners to join when it suits them. To support hiring managers, we launched a Group-wide learning suite and reviewed and improved our processes to make everything as easy as possible for Returners.\n### Gender diversity in leadership\nWe have continued to meet our commitment to publish our Gender Pay Gap report.\nWe continue to be proud co-sponsors of the FTSE Women Leaders Review. In 2023, we achieved all of the FTSE Women Leaders’ recommendations two years ahead of the 2025 target date achieving at least 40 per cent women on the Board, at least 40 per cent women in executive leadership roles and at least one woman in one of the four key roles on the Board. We are aligned to the FCA listing rule 9.8.6 R(9). More information on the gender diversity of our Board is available on page 32 of our annual report and accounts 2023 .\n90 per cent of Returners hired by the Group to date are women and 60 per cent are Black Asian or Minority Ethnic, supporting our goals to ensure our teams reflect the society we serve.\n### Supporting our colleagues\nContinued progress has been made in closing the gender pay gap with the gap reducing by 2.6 per cent to 26.7 per cent (April 2022 to April 2023), the largest improvement since we started reporting. The full pay gap report is available on our download centre\nIn 2023, our women’s network, Breakthrough, has continued to support the development of our colleagues and to help them achieve their career aspirations.\nOur Returners programme has been recognised externally, winning the Most Successful Returners Strategy at the Women in Banking and Finance Awards 2023 and being named the Best DE&I initiative for Returners at the Business Culture Awards 2023.\nThe network has run a series of virtual and face-to-face events, including Girl Power Half Hour, a 12-week programme to help with personal and career development, sessions around working in tech, and joint events with our other colleague networks, including senior role model events. They have also provided sessions around health, menopause and financial wellbeing.\nGender Advisory Panel\nAlong with our other colleague advisory panels, our Gender Advisory Panel launched in 2023 has provided us with support in shaping plans, initiatives, reports and advertising during the year, ensuring we are applying a genderinclusive lens across all activities.\nBreakthrough now has a GEC Executive Ally who champions the network and its goals.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Building an inclusive organisation continued", "chunk_word_count": 539, "section_path": "Building asustainable and inclusive future > 2023 highlights > Lloyds Banking Group Returners", "document_id": "2023 Lloyds sustainability report", "page": 62, "page_start": 62, "page_end": 63 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 74, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Race and ethnicity mental health advocates\n### Ethnic diversity\nSDG3.4: By 2030, \nreduce by one-third premature mortality from non \ncommunicable \ndiseases through \nprevention and \ntreatment and \npromote mental \nhealth and well \nbeing.\nNicola Bailey (she/her) Head of Operations & Assurance I am mixed race of Caribbean heritage and growing up I faced into a lot of adversity and issues, while trying to navigate where Ifitted best. also watched as my mum and many around me suffered withdepression – many people from a Black, Asian and Minority Ethnic background live with poor mental health for many reasons, including racism.\n### In today’s multicultural society, we can only truly become the best bank for our customers if our workforce reflects the ethnic diversity of the customers we support.\nWe’re working towards our goals to increase representation of Black, Asian and Minority Ethnic colleagues to 13 per cent at senior management levels and to increase Black representation in senior roles to at least 3 per cent by 2025.\nOur Race Action Plan, launched in 2020 to drive recruitment, progression and cultural change across the Group continues to build focus across the Bank. As part of this plan, we also work beyond our own internal boundaries by actively supporting Black heritage communities through our partnerships with Foundervine and the Black Business Network.\nSDG 10.2: By 2030, \nempower and \npromote the social, economic \nand political \ninclusion of all, \nirrespective \nof age, sex, disability, race, ethnicity, origin, religion or economic or other status.\nOur aim is to increase the ethnic diversity of our workforce and unlock the potential of our Black, Asian and Minority Ethnic colleagues. We’re building a truly inclusive organisation where all colleagues can speak up, challenge and act to take an active stance against racism and discrimination of any kind.\nDuring 2023, we have continued to see an increase in Black, Asian and Minority Ethnic and Black Heritage representation in senior roles. At the end of 2023, 11.3 per cent of senior manager roles were held by Black, Asian or Minority Ethnic colleagues, and 1.7 per cent held by Black Heritage colleagues.\nWhen I joined the Group, I became a Mental Health Advocate (MHA) straight away. I liked that they are working hard to remove the stigma surrounding mental health issues and I wanted to help. After additional training, I am proud to also be a Race and Ethnicity MHA. I have been mentoring younger colleagues on our Graduate and Apprentice schemes supporting with everything from voicing issues to recognising the signs of burnout. Supporting these colleagues is essential for us to strengthen our cultural environment.\n### Jing Chang (she/her)\nSenior Financial Risk Manager Having been a MHA at Lloyds Banking Group for a few years, becoming a Race and Ethnicity MHA was an obvious next step for me. As well as supporting individuals, I run group sessions to promote awareness and allow safe space discussion and have also supported our Race, Ethnicity And Cultural Heritage (REACH) colleague network in a Group-wide session too.\n11.3% of our senior manager roles were held by Black, Asian or Minority Ethnic colleagues in 2023", "chunk_word_count": 528, "section_path": "Building asustainable and inclusive future > 2023 highlights > Race and ethnicity mental health advocates", "document_id": "2023 Lloyds sustainability report", "page": 63, "page_start": 63, "page_end": 63 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 75, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Board ethnicity\nWe continue to exceed the Parker Review recommendation of having at least one Black, Asian or Minority Ethnic Board member. More information on our Board ethnicity can be found on our annual report and accounts 2023 on page 32.\n15.3% of our colleagues were from a Black, Asian and Minority Ethnic background in 2023\nHaving experienced burnout myself, being able to support others is so important to me. The existence of Race and Ethnicity MHAs has encouraged many colleagues to ask for help, who may otherwise have remained silent.Since it's launch, more colleagues from a Black, Asian or Minority Ethnic background have asked for support around a variety of topics, such as increasing stress, unconsciousbiasand lack of empathy and understanding. This is an invaluable programme I look forward to continuing to support.\n### Colleague engagement\nWe have continued to have valuable listening sessions and engagement with our Black, Asian and Minority Ethnic colleagues and with our Race Advisory Panel, who support us to shape our initiatives, programmes and propositions, helping to ensure we deliver sustainable and impactful solu tions.\nOur thriving Race, Ethnicity, Cultural and Faith colleague networks, REACH and BOLD are also key in supporting us and both networks now have GEC Executive Allies to sup\n### Building an inclusive organisation continued\n### Our 2023 progress against our Race Action Plan\n### Race and ethnicity mental health advocates\n### Community\n• In 2023 we trained over 40 Race and Ethnicity Mental Health Advocates to better support Black, Asian and Minority Ethnic colleagues at moments that matter. Our advocates have been sharing their experiences to raise awareness and have supported our 2023 Mental Health Awareness events.\n• Our Lloyds Bank Foundation for England and Wales dedicates at least 25 per cent of their core grants to charities led by and for communities experiencing race inequity. ‘Coaches for Interns’ is a new initiative in partnership with LinkedIn and 10,000 Black Interns. We have trained over 100 colleagues to support Black Interns who have not been able to secure a paid internship. They benefit from coaching on enhancing their professional image on LinkedIn and gain other additional support to secure future employment.\n### Race education programme\n• We launched our ‘Embracing and Valuing Each Other’ culture, faith and religion mandatory training programme, replacing our previous cultural awareness training. We continued to run our successful Line Manager Race Education sessions, giving line managers the confidence to tackle inappropriate behaviour and manage more inclusively. To broaden understanding and raise colleague awareness of culture, faith and religion, we launched our Faith and Religion fact sheets, a cultural events and awareness days calendar and the Colleague Faith Works round table series.\n### Race Advisory Panel\n• Our Race Advisory Panel continues to support us with shaping of initiatives, programmes and propositions, helping ensure we deliver sustainable and impactful solutions.\n### Supporting colleagues and allies", "chunk_word_count": 490, "section_path": "Building asustainable and inclusive future > 2023 highlights > Board ethnicity", "document_id": "2023 Lloyds sustainability report", "page": 63, "page_start": 63, "page_end": 64 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 76, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Partnerships and awards\n• Our Race, Ethnicity, Cultural and Faith Networks play an essential role in supporting colleagues in their career ambitions, running events year-round, including a full and varied programme for Black History Month, and continue to run an annual Role Model list. Our Race, Ethnicity and Cultural Heritage (REACH) Network has expanded to include a number of race/ethnicity groups which include groups for Muslim, Sikh, Hindu, Jewish and Christian colleagues, and new for 2023, a Network supporting East and South East Asian colleagues. We spotlighted South Asian Heritage Month and East and South East Asian Heritage Month in 2023, celebrating with colleagues, customers and communities and working with external partners to bring together communities to network and celebrate.\nWe are a signatory to the Black Talent Charter and in 2023 hosted a Careers & Development Event together and hosted their Black History Month Review.\n### Career progression\n• We continue to invest in our Black heritage talent through our bespoke Senior Leadership and Career Acceleration programmes, with over 40 per cent promoted or having made a lateral move to progress their career.\n### Recruitment\nIn 2023, we welcomed another cohort of summer interns who joined us from the 10,000 Black Interns programme, 10,000 Able Interns programme and Sutton Trust. We increased our intake of Black Interns from 19 in 2022 to over 97 students in 2023. Continuing our support for young talent, we also welcomed 70 T Level students on a nine-week paid work placement, providing valuable work experience for them and giving us access to continue to develop a diverse talent pipeline, with 60 per cent of students from a Black, Asian or Minority Ethnic heritage background. Those who enjoyed a successful placement will have the opportunity to join us as a permanent apprentice when they complete their studies. We continue to work with ethnicity-focused recruitment partners to help better reach Black, Asian and Minority Ethnic talent. Our 2023 graduate programme delivered an increase in the diversity of graduates, with 43 per cent being Black, Asian or Minority Ethnic of which 7 per cent were specifically from a Black heritage background.\n### Ethnicity pay gap report\nWe have continued to meet our commitment to publish our ethnicity pay gap report. The full pay gap report is available on our download centre • We are a signatory to the Business in the Community Race at Work Charter, working together on our joint objective of equitable Black representation and identifying ways to support, retain and progress Black talent. Our colleagues continue to be recognised: Abdur Rahman was included in the 2023 Empower role models list and Mahari Hay was recognised with the Financial Services, Insurance and Banking Award at the 2023 Black Talent Awards. At the 2023 Ethnicity Awards we were once again listed as one of their Top 10 Employers. We have achieved this every year since the launch of the awards in 2018, and have been recognised as their overall Outstanding Employer three times.\n### Building an inclusive organisation continued\n### Sexual orientation and gender identity", "chunk_word_count": 519, "section_path": "Building asustainable and inclusive future > 2023 highlights > Partnerships and awards", "document_id": "2023 Lloyds sustainability report", "page": 64, "page_start": 64, "page_end": 65 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 77, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### We strive to continually improve our employment experience for our LGBTQ+ colleagues. Pride continues to be an all-year celebration of all sexual orientations and gender identities.\n### LGBTQ+ Advisory Panel\nOur LGBTQ $^ +$ Advisory Panel was launched in 2023 to ensure we are understanding and tackling the specific challenges faced by $\\scriptstyle \\lfloor \\mathsf { G B T Q ^ { + } }$ colleagues and customers. The panel is made up of colleagues from a mix of grades and with a range of divisional experiences. The panel has met collectively with our other advisory panels to drive intersectional thinking with a focus on creating a more inclusive place to work and a more inclusive society for all.\nWe run visibility and awareness events throughout the year, such as the International Day Against Homophobia, Transphobia and Biphobia, $\\scriptstyle \\lfloor \\mathsf { G B T Q ^ { + } }$ History Month, Trans Visibility Day, Bi Visibility Day and Lesbian Visibility Day.\n### Partnerships\nTo support our LGBTQ+ colleagues and encourage allyship among colleagues and communities we have continued to partner with PinkNews. We were proud to be the headline sponsor of the 2023 PinkNews Awards, which aims to highlight the work of campaigners, businesses, organisations and individuals across the globe in advancing $\\scriptstyle \\lfloor \\mathsf { G B T Q ^ { + } }$ equality. We also supported a series of webinars run by PinkNews covering $\\scriptstyle \\lfloor \\mathsf { G B T Q ^ { + } }$ as well as neurodiversity, bisexuality and race.\n### Support for colleagues and allies\nWe continue to encourage colleagues to share their sexual orientation and gender identity with us, and we have seen an increase in 2023 of colleagues choosing to do so.\nOur ${ \\mathsf { L G B T Q } } +$ colleague network, Rainbow, plays a pivotal role in supporting our $\\scriptstyle \\lfloor \\mathsf { G B T Q ^ { + } }$ colleagues. In 2023, Rainbow launched its fifth $\\scriptstyle \\lfloor \\mathsf { G B T Q ^ { + } }$ Ally Role Model list, which shines a light on colleagues within the Group who’ve been nominated for their positive impact on LGBTQ $^ { + }$ inclusion.\nFollowing the successful launch of the ${ \\mathsf { L G B T Q } } +$ Mental Health Advocate programme in 2022, Rainbow has now trained 150 Mental Health Advocates who offer tailored support for LGBTQ+ members and allies.", "chunk_word_count": 426, "section_path": "Building asustainable and inclusive future > 2023 highlights > We strive to continually improve our employment experience for our LGBTQ+ colleagues. Pride continues to be an all-year celebration of all sexual orientations and gender identities.", "document_id": "2023 Lloyds sustainability report", "page": 65, "page_start": 65, "page_end": 65 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 78, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Understanding our LGBTQ+ colleagues will help us to improve support\nTo better understand the workforce diversity of the Group, we continue to encourage colleagues to share their sexual orientation and gender identity data with us, and we have seen an increase in 2023 of colleagues choosing to do so.\nTo support further, in 2023, Rainbow launched a new tool to help more colleagues make connections with advocates that best work for them, whether that be by location or by a specific experience or subject matter.\nWe’ve also run a series of listening sessions with some of our Asexual, Bisexual and Pansexual colleagues, with our CEO Charlie Nunn.\nRainbow runs numerous activities in support of key awareness days, they hosted a Trans Men’s Health talk and ran the Group’s first Linkedin Live session. Rainbow now has a GEC Executive Ally to advocate and support the network and their goals.\nIn 2023, following colleague feedback and consultation, we launched a working group to understand more about the Queer, Intersex and Asexual communities and the support we could offer going forward.\nThis is helping to ensure we create inclusive experiences for our people.\nPride continues to be a focus with thousands of colleagues taking part in face-to-face and virtual events nationwide. One of the highlights was the CEO Event Series, which saw a series of special guests being interviewed by executives from across the business.\n### Building an inclusive organisation continued", "chunk_word_count": 248, "section_path": "Building asustainable and inclusive future > 2023 highlights > Understanding our LGBTQ+ colleagues will help us to improve support", "document_id": "2023 Lloyds sustainability report", "page": 65, "page_start": 65, "page_end": 66 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 79, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Supporting disability and neurodiversity\nOur aim is to create an inclusive and accessible working environment in which all colleagues have access to a psychologically safe environment, equal opportunities, and where everyone is supported to reach their full potential.\nWe have received external recognition for the progress we have made so far, as the Group continues to hold the Business Disability Forum Gold Standard accreditation and Disability Confident status from the Department for Work and Pensions in 2023. The City Mental Health Alliance has accredited us with \\`Going Beyond the Standards’ against their Thriving at Work Assessment. We are also a founding member of Neurodiversity in Business, and a member of Valuable 500.\nA key part of our bold ambition to be a leading UK business for diversity, equity and inclusion is dialling up our focus on disability, mental health, and neurodiversity. This is championed by the GEC and through our new GEC Executive Ally for our disability colleague network, Access.\nUnderstanding more about our colleagues In April 2023, we committed to doubling the number of colleagues with disabilities in senior management roles by 2025. It’s the first public goal of its kind to be set by a UK bank, and an important step in becoming more inclusive.\nSince launching our goal, we have seen a significant uplift in colleagues sharing their disability data with us. We believe the announcement of our goal has played a key role in this, raising awareness and encouraging colleagues to share their disability data with us.\nAt the time of setting our goal, 6 per cent of our senior management colleagues had shared that they had a disability, making our ambition to double representation feel like the right first step. At the end of 2023, 12.4 per cent of our senior management colleagues had shared their disability, meaning that we have achieved our representation of senior colleagues with disabilities goal earlier than anticipated.\nWe will continue to encourage our colleagues with disabilities and neurodiverse conditions to share their data with us across the course of 2024, helping us to build a true picture of the diversity of colleagues within our organisation, whilst continuing to strive for greater representation.\n### Our Disability Colleague Advisory Panel\nTo support the creation of an inclusive culture, we have worked closely with our new Disability Colleague Advisory Panel to influence and inform our ongoing diversity strategy and ensure we are making the right progress.\n### Building an inclusive organisation continued\n### Building an inclusive culture and working environment\nWe also have an established Neurodiversity Working Group, with colleague-led squads working with business sponsors to understand the barriers neurodivergent colleagues face, and develop potential solutions.\nWe have begun to look at the socioeconomic diversity of our colleague base.\nWe take pride in being a leader in flexibility and offer a wide array of flexible working options for different circumstances, including from a health, wellbeing and disability perspective. We also continue to make improvements to our colleague wellbeing services, including: Workplace Adjustments, Occupational Health, and the Employee Assistance Programme.", "chunk_word_count": 517, "section_path": "Building asustainable and inclusive future > 2023 highlights > Supporting disability and neurodiversity", "document_id": "2023 Lloyds sustainability report", "page": 66, "page_start": 66, "page_end": 67 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 80, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Making our recruitment more accessible and inclusive\nWe know that to be fully representative, our end-to-end colleague experience needs to be fully inclusive and supportive to people with disabilities, regardless of where an individual is in their career.\nTo support the inclusivity of our working environment we have implemented a new set of baseline design standards to support inclusivity of our offices for our colleagues with disabilities and have opened two more Changing Places facilities in our Bristol and Andover offices.\nWe embed inclusivity and accessibility into our recruitment process, such as offering the Disability Confident Scheme – this guarantees an interview for those who share their disability with us and meet the minimum requirements for the role.\n### Colleague training\nThe training of our colleagues remains vital in building our inclusive culture. In addition to refreshing our Equality Act training this year, we have also launched suicide prevention $\\ominus \\cdot$ -learning for all colleagues with the ambition to equip colleagues to take action if they’re concerned about someone’s mental health. The importance of this is brought to life through the testimonials of five colleagues who share their lived experiences.\nAdditionally, this year we have refreshed our mandatory training for recruiters and hiring managers, alongside providing new inclusive hiring resources and guidance in recruiting candidates with disabilities, long-term health issues or neurodiverse conditions.\n### Social mobility\nIn 2023, we welcomed our pilot internship cohort of the 10,000 Able Interns programme, providing eight weeks paid work experience to 10 students/recent graduates with disabilities. The Group had the largest Able Intern cohort of any organisation partnered with the 10,000 Interns Foundation.\nAs part of our support for the #WorkingWithCancer pledge, we have worked with subject matter experts to upskill our leaders, line managers and our people, so that they can better support others living with cancer and their caregivers in the moments that matter.\n### In addition to the more traditional diversity characteristics, we have begun to look at the socioeconomic diversity of our colleague base and what we need to do to ensure that opportunities for progression to senior roles are accessible to individuals from all backgrounds.\n### Supporting colleagues’ progress", "chunk_word_count": 370, "section_path": "Building asustainable and inclusive future > 2023 highlights > Making our recruitment more accessible and inclusive", "document_id": "2023 Lloyds sustainability report", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 81, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Access\nIn addition, we launched our new Career Pathway programme pilot for colleagues with disabilities, in partnership with APS Intelligence Leadership Consultancy. This nine-month bespoke career development programme has been designed to provide colleagues with the tools, resources and support to help grow and drive their careers forward and achieve their aspirations. This is in addition to our continued commitment to Generation Valuable, as part of Valuable 500’s future leaders programme.\nAccess is our network for colleagues with disabilities, long-term health conditions or neurodiverse conditions. It’s open to all colleagues and looks to raise awareness, upskill and support key populations, and reduce stigma.\nWe are still in the early stages of our work on improving social mobility, but our approach to apprenticeships and broader attraction specifically targets those from nonprofessional backgrounds. We are aware, and supportive of the greater focus of our regulators on social mobility, and we are actively involved with the financial services Progress Together group, which is focused on improving diversity at senior levels in the sector.\nMembers of Access receive regular communications, can get involved in awareness campaigns, and are given the opportunity to attend a range of events: including listening sessions, lunch and learns, and the annual National Event.\nInclusion is core to our purpose and values and gives an important lens through which we view outcomes for customers, communities and colleagues.\nIn 2023 Access launched its second Role Model list, which shone a light on 100 colleagues across the Group for their outstanding contribution in championing disability inclusion with our colleagues, our customers, our clients, and our communities.\nIn 2023, we asked colleagues via our colleague survey to disclose their socioeconomic background for the second time, and saw a disclosure rate of 60 per cent. We know that overall, we have a fairly diverse workforce compared to the broader financial services sector but, in line with other firms, diversity does decline with seniority.\n### Supporting diverse businesses, supply chain customers and suppliers\n### Inclusive business", "chunk_word_count": 341, "section_path": "Building asustainable and inclusive future > 2023 highlights > Access", "document_id": "2023 Lloyds sustainability report", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 82, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Black entrepreneurs\nOur actions remain centred around the recommendations and calls to action from our research reports – ‘Black. British. In Business & Proud’ .\nWe continue to build on the successes of our Black entrepreneurs programme we started in 2021, focusing on long-standing grass-roots partnerships, extensive research and deep Black business community engagement.\nSome of the highlights include:\nWe have partnered with Channel 4 to launch the ‘Black in Business’ initiative where five businesses are the beneficiaries of £100k worth of TV advertising each, their own TV commercial and senior sponsorship from the Group and Channel 4 in order to support their intention to scale. The TV adverts will go live in Q1 2024. In addition, grant funding, promotional opportunities and bespoke consultancy have been offered to a cohort of five ‘Rising Stars’ and a mass outreach programme to $\\mathsf { C . 6 0 0 + }$ applicants that opted in for further support to grow has been initiated, whilst providing a series of masterclasses to the $1 , 0 0 0 +$ businesses that applied.\nIn 2023, we engaged more than $5 , 0 0 0$ Black entrepreneurs with c.23,000 hours of support through the events and initiatives we played our part in, exceeding our 2022 performance. We also had over 12,000 visits to our Black business hub , which acts as a central resource that we signpost businesses to.\n• In partnership with Foundervine, we launched year two of the Immerse programme, including: two accelerators for early-stage and growth businesses with grant funding distributed to the winners of the end of programme demo day; community gatherings; access to finance spotlight events; a podcast series; and retail sector roundtables discussing the challenges and opportunities to access retail sector supply chains.\nSince 2021 we have been developing strategies to support minority or disadvantaged business owners as part of our focus on building an inclusive future.\nWe have expanded support across the regions, particularly in Birmingham, by engaging local changemakers and ambassadors, and by supporting grassroots organisations and events such as Birmingham Black Business Show and BOB Expo in Manchester.\n• We sponsored or self-organised 19 events in the Black business calendar, aligning to the diverse needs of Black entrepreneurs in different stages of their lifecycle.\n### Supporting diverse businesses, supply chain customers and suppliers continued\n### Understanding and highlighting the issues\n### iUVO Skincare", "chunk_word_count": 406, "section_path": "Building asustainable and inclusive future > 2023 highlights > Black entrepreneurs", "document_id": "2023 Lloyds sustainability report", "page": 68, "page_start": 68, "page_end": 68 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 83, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Women entrepreneurs\nFurther information can be found in these reports: Black, British, In Business & Proud / Women Entrepreneurs: The Northern Perspective 7 Disability & Entrepreneurship\nBuilding on our Investing in Women Code commitments, we are investing in initiatives that support growth and scaling businesses, regional ecosystem connections, societally important sectors, such as manufacturing, and enabling better access to finance, networks and resources.\nIn 2023, Scottish Widows compiled two research reports related to thematic research around retirement planning.\nShani Gabbidon, founder of iUVO Skincare, has participated in a number of events and programmes this year for Black entrepreneurs, including one of the Foundervine Immerse accelerators, which supports founders to gain the skills and knowledge needed to scale their business. Launched following her mother’s battle with cancer, where they found natural products provided her with important benefits, iUVO is on a mission to provide handmade high-quality vegan skincare to their customers.\nSDG 8.3: Promote \ndevelopment \noriented policies that support productive \nactivities,decent \njob creation, \nentrepreneurship, \ncreativity and \ninnovation, and \nencourage the \nformalisation and \ngrowth of micro-, \nsmall- and \nmedium-sized \nenterprises, including through access to \nfinancial services. \nSDG 10.2: By 2030, \nempower and \npromote the social, \neconomic \nand political \ninclusion of all, \nirrespective \nof age, sex, disability, \nrace, ethnicity, origin, \nreligion or economic \nor other status\n### Scottish Widows Retirement Report\nOur 2023 Retirement Report has highlighted the importance of auto-enrolment, holistic retirement, housing and state pension awareness as policy recommendations to ensure expectations of people’s need and living standards during retirement are met. In particular, the report highlighted, that as a result of the cost-of-living crisis, the number cutting back on essentials and long-term savings had risen. 75 per cent of people surveyed remain concerned about making ends meet due to the pressures of the cost of living. As such, addressing the cost-of-living crisis and reducing inflation is an immediate priority to safeguarding people’s wellbeing the health of their financial future.\nIn September we announced a new partnership with Female Founders Rise, a fast, a fast-growing community of over 2,500 female and non-binary founders based in the UK. They are an impact-led company focused on closing the gender gap by supporting women to build profitable and financially sustainable businesses. They focus on supporting growth businesses with funding support, meet-ups, community, resources, business fundamentals and raising awareness of women who are running amazing businesses. We will further build out this partnership into 2024.", "chunk_word_count": 410, "section_path": "Building asustainable and inclusive future > 2023 highlights > Women entrepreneurs", "document_id": "2023 Lloyds sustainability report", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 84, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Disabled entrepreneurs\nFollowing the public announcement of our disability representation goal, in April we launched the ‘Disability & Entrepreneurship’ report in partnership with Small Business Britain. The report highlights that 72 per cent of disabled founders lacked role models to guide them, and 56 per cent did not get any support when starting their business; financially or non-financially.\nFor more information, please see our Retirement Report 2023 .\nTo support women in manufacturing, we held two roundtables with influential women across the industry, discussing the barriers and opportunities to support our core objectives of: encouraging more women and girls into the sector; helping scale women-led manufacturing businesses; providing more role models; and networking opportunities. We also joined forces with the Women in Manufacturing Initiative, a network of industrial and academic professionals with a shared interest in encouraging diversity and inclusion in the sector to support the ‘Changing Perceptions: Women in Manufacturing Initiative’ conference in October and the Advanced Engineering conference.\n“If I could think of a word to sum up my experience having had the support from Lloyds Bank this year it wouldn’t exist in the Oxford dictionary. Having access to support and mentoring through Be the Business support and being part of a cohort of like-minded businesses within the Level Up Accelerator has been exceptional. This year’s support has been incredible for our business and well appreciated, we look forward to continuing to build our relationship with our bank.”\nAs a follow-up to the report, we hosted a roundtable in partnership with Small Business Britain at the House of Lords in September that brought together leaders from across business, policy and society, to spark debate and action on disability and entrepreneurship.\nScottish Widows Women and Retirement Report This year’s report delved deeper into some drivers of the gender pensions gap such as income and employment, childcare and divorce.\nThe report highlighted a need for policies that address these underlying causes, that drive wider inequalities, which result in the gender gap. Overall, the Women and Retirement Report 2023 highlights the importance of financial literacy, as well as specific reforms needed to directly address the gender gap and provided recommendations for both the government and employers.\n### Supporting supplier diversity\nWe have progressed our supplier diversity activity geared towards ensuring that our supply chain matches our goal to further represent the society we serve. The intent is to provide insights into the diversity of our existing supplier base and proactively ensure equal opportunity is provided to diverse suppliers.\nFor more information, please see our 2023 report here Women and Retirement Report 2023 .\n### We have announced a new partnership with Female Founders Rise.\nOur efforts to achieve this to date involve the establishment of partnerships with key supplier diversity advocacy organisations, proactive identification of diverse-owned businesses with a view of introducing them into our supply chain, hosting a Supplier Diversity Academy, and the creation of a database which will allow us to better monitor and track our spend with diverse-owned businesses.\n### Supporting diverse businesses, supply chain customers and suppliers continued\n### Supporting our customers with disabilities", "chunk_word_count": 527, "section_path": "Building asustainable and inclusive future > 2023 highlights > Disabled entrepreneurs", "document_id": "2023 Lloyds sustainability report", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 85, "chunk_text": "# Building asustainable and inclusive future\n## U=U\nInclusive Insurance Cover\nSDG 3.8: Achieve \nuniversal health \ncoverage, including financial risk \nprotection, access \nto quality essential health-care services and access to safe, effective, quality and affordable essential medicines and \nvaccines for all. \nSDG 10.2: By 2030, \nempower and \npromote the social, economic \nand political \ninclusion of all, \nirrespective \nof age, sex, disability, race, ethnicity, origin, religion or economic or other status.\n### We want all of our customers to have an excellent service experience and to be able to access our services in a way that is right for them, wherever they are.\nWe have received a number of accreditations and awards this year to recognise our support for customers with disabilities. This year the Money and Mental Health Policy Institute charity has awarded Lloyds Bank, Halifax and Bank of Scotland an ‘Advanced’ rating through its ‘Mental Health Accessible’ programme for banks and essential services. We’re the first businesses in the UK to achieve this rating. We have received the National Autistic Society’s prestigious Autism Friendly Award, marking our commitment to become the UK’s first autism-friendly bank.\nWe are changing our core insurance cover offering to include ‘HIV Undetectable’ customers and colleagues. As such, ‘U=U’ colleagues and customers who are HIV Undetectable (c.105,000 people in the UK) will be able to have access to Travel and Life Insurance cover through Lloyds Banking Group.\nIn addition to supporting impacted individuals, this change sends a strong signal around our commitment to breaking the stigma and myths surrounding HIV by signalling people can access protection when it is needed.\nIn respect of our digital offering, this year we have launched the Recite Me tool on our Halifax website, giving customers a range of tools to help access the website, supporting our neurodiverse customers and those with visual impairments. We were also the first bank to offer Signly, a pioneering British Sign Language (BSL) translation application on our Lloyds Bank, Halifax and Bank of Scotland customer websites, to support our Deaf customers.\nThis health and wellbeing consideration for colleagues and customers living with HIV was launched in October 2023 at the Pink News Awards and was linked to our campaigns in support of World AIDS Day on the 1st of December 2023.\nOur Digital Helpline is accessible and provides BSL translation and speech to text services for customers who are deaf or have hearing loss. For more information please see page 43.", "chunk_word_count": 407, "section_path": "Building asustainable and inclusive future > U=U > We want all of our customers to have an excellent service experience and to be able to access our services in a way that is right for them, wherever they are.", "document_id": "2023 Lloyds sustainability report", "page": 70, "page_start": 70, "page_end": 70 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 86, "chunk_text": "# Building asustainable and inclusive future\n## U=U\n### Our branches are designed to be as inclusive as possible for all our customers.\nEnsuring colleagues build the skills they need to make all our services accessible to everyone is crucial. In 2023, we launched our the Inclusive Design and Delivery toolkits, a series of practical resources to help our teams adopt inclusive approaches through the planning and delivery process. We ensure our teams have the tools to build and test their content and systems and baking accessibility standards into the methods we use to deliver change. We also work with not-for-profit organisation Digital Accessibility Centre (DAC) to check that our websites and apps are accessible for all customers, in particular those with physical disabilities.\nOur branches are not only designed to be as inclusive as possible for all our customers, but we were the first Bank to launch the Hidden Disabilities Sunflower Scheme across all our Halifax and Bank of Scotland and branches. As some disabilities are not immediately visible, the lanyards are used to discreetly indicate that the wearer may need a little more support and prompt a conversation.\n### Supporting our colleagues\nOur people make all the difference. We are committed to creating a work environment that encourages and values the unique differences our people bring with them to work every day, and where everyone can reach their full potential.\n### Launched our new ‘Flexibility Works’ colleague proposition.\n2,500 trained colleagues as mental health advocates\nWe want to make sure that every colleague is motivated, feels supported and is excited by the role they can play in Helping Britain Prosper.\nWe know the success of our business is dependent on our colleagues and we aim to look for ways to help them feel more supported, in control and confident about their future.\nLaunched a new safety, health and wellbeing colleague hub.\n### Grow with purpose", "chunk_word_count": 317, "section_path": "Building asustainable and inclusive future > U=U > Our branches are designed to be as inclusive as possible for all our customers.", "document_id": "2023 Lloyds sustainability report", "page": 70, "page_start": 70, "page_end": 71 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 87, "chunk_text": "# Building asustainable and inclusive future\n## U=U\n### Our colleagues are key in delivering the Group’s ambitious transformation and growth strategy, which also sets out a plan to be a purpose-driven business, and we recognise our culture is a fundamental enabler of that.\nOur leaders play a crucial role in the cultural change. In 2023, we completed a senior leadership development programme centred around the organisational shifts we need to make in order to prow with purpose. All 340 senior leaders were brought together in smaller groups allowing a different and more intimate format, and over three days were immersed in our purpose, strategy and behaviours we needed to role-model, setting clear expectations of our senior leadership population. This was reiterated at a senior leadership offsite later in the year where all leaders came together to explore the progress we are making, new ways of working and technologies we are introducing across the business, and the change we need to drive as a Group.\nThe Group’s purpose of Helping Britain Prosper is as important as ever, and in order for us to grow our business in a way that delivers good outcomes for customers, communities and colleagues, we need to put our purpose at the front and centre of every decision we make.\nLloyds Banking Group is committed to Helping Britain Prosper by identifying profitable solutions to building a more inclusive and sustainable future for people and businesses in the UK.\nIn driving the change, leaders are supported by a movement of over 6,300 colleagues as ‘Catalysts’ across the business. Representing more than 10 per cent of our colleague population, these changemakers role model our values and purpose, share stories and drive improvements by challenging the status quo and unblocking issues that get in the way of how we work. Our Catalysts inspire everyone across the Group to help us become a truly purpose-driven organisation.\nThroughout the year, we have been further embedding our purpose and values across the organisation and helping colleagues understand how our values guide not only the way we work together, but also how we make decisions.\nWe believe that focusing on our purpose and doing right by our customers, colleagues and communities will help us identify new areas of growth, build a more resilient and profitable business, and deliver higher, more sustainable returns for shareholders.\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Best overall Business Culture Award 2023\nThe Group was the overall winner at the Business Culture Awards in 2023\n### Supporting our colleagues continued\n### Our approach to flexible working\n### Colleague engagement", "chunk_word_count": 444, "section_path": "Building asustainable and inclusive future > U=U > Our colleagues are key in delivering the Group’s ambitious transformation and growth strategy, which also sets out a plan to be a purpose-driven business, and we recognise our culture is a fundamental enabler of that.", "document_id": "2023 Lloyds sustainability report", "page": 72, "page_start": 72, "page_end": 72 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 88, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### We want people to love working here. With more than 66,0001 colleagues working across the Group, we welcome their views and opinions on a range of topics to help them grow, and us to grow as a business.\n‘Flexibility Works’ is an important part of our transformation as we strive to create a place where people love to work and feel supported in the moments that matter, while ensuring we are set up in the right way to meet the needs of our customers.\nFlexibility Works offers a broad range of options which balance the needs of colleagues and the business transformation underway.\nIt brings together different aspects of flexibility and supportive working arrangements, helping our colleagues and managers balance personal and team needs, providing even more flexibility when they need it the most.\nWe ran surveys in eight months last year, which enabled us to track our employee net promoter score (eNPS) more regularly than ever before. Our regular pulse surveys enabled us to delve into relevant and timely topics, including processes and bureaucracy, and change. Our annual autumn survey was completed by 81 per cent of colleagues in the Group and gave us a complete view on our progress with our purpose, strategy and culture. Despite engagement declining by 12 points compared to 2022 due to changes to our flexible working arrangements, our in-year advocacy measure (employee net promoter score) is moving in a positive direction. Our line managers continue to be well-regarded, with levels of trust and respect remaining high.\nIn 2023, we broadened how we listen to our colleagues to provide a more regular and complete picture of sentiment. This included further embedding regular pulse surveys, providing us with more regular, timely feedback, as well as conducting two additional one-off surveys, one which allowed our leaders to share their views on how we are progressing as they lead the Group through a significant period of change and one that gained colleagues’ views on our new flexible working arrangements. We also introduced new ways of listening to our colleagues by including internal social media comments.\nFlexibility for everyone – All colleagues have access to a range of different flexibility offerings, dependant on their role. Including everyday flexibility, flexible bank holidays and access to compressed working for moments that matter. 14,600 colleagues work reduced hours and over 40,000 have access to hybrid working.\nFlexibility for families – Families come in all shapes and sizes and Flexibility Works provides support whatever your situation. 70 hours paid leave for foster carers, six weeks flexible paid paternity leave, improved maternity and adoption leave, access to shared parental leave, as well as providing additional support for parents whose baby arrived early or are undergoing fertility treatment.\nDuring the year the Group communicated directly with colleagues detailing Group performance, changes in the economic and regulatory environment, and updates on key strategic initiatives. Meetings were held throughout the year between the Group and our recognised unions. Stakeholder engagement takes place at all levels within the Group and is an important part of how we are delivering on our purpose of Helping Britain Prosper.", "chunk_word_count": 545, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > We want people to love working here. With more than 66,0001 colleagues working across the Group, we welcome their views and opinions on a range of topics to help them grow, and us to grow as a business.", "document_id": "2023 Lloyds sustainability report", "page": 73, "page_start": 73, "page_end": 73 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 89, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### We want people to love working here. With more than 66,0001 colleagues working across the Group, we welcome their views and opinions on a range of topics to help them grow, and us to grow as a business.\nOver 3,000 colleagues made use of family leave in 2023. Since September, over 10 per cent of parents returning from family leave have started using our compressed working for new parents, available until their child’s second birthday or two years after placement.\nFlexibility for heath and carers – For our colleagues who need ongoing support either for themselves or as a carer to a family member we provide additional flexibility.\nThe Board continues to engage both directly and indirectly with its stakeholders. This engagement helps to provide a better understanding of our colleagues points of view, and the impact the Group has on their day-to-day lives. Please see our annual report and accounts 2023 on page 82, for further examples of how the Board engages with the Group’s workforce and why the Board considers those arrangements to be effective.\nFlexibility for growth – People need different flexibility at different stages of their life, so we are increasing the options available for colleagues in the later stages of their career and colleagues can also take unpaid sabbaticals and career breaks.\n### Supporting our colleagues continued\n### Freedom of association and collective bargaining\nWe support our colleagues’ rights to exercise freedom of association and have extensive consultation and collective bargaining processes in place.\ninto its investment strategy for colleagues in the defined contribution schemes to opt into.\nWe have a recognition agreement with two trade unions who collectively consult and negotiate on behalf of our UK workforce, who represent around 98 per cent of colleagues worldwide, and have engagement with the CEO and Group executives.\n### Pension schemes\n### The Group has 98 per cent of our employees participating in the in-house pension schemes.\n98% of our employees participating in the inhouse pension schemes\nLloyds Banking Group Pensions Trustees Limited, which is responsible for managing the largest Group pension schemes, also shares the commitment to reduce carbon emissions by at least 50 per cent of its c.£39 billion investments by 2030, and net zero by 2050.\nAs part of this, and in response to member feedback, Lloyds Banking Group Pensions Trustees Limited integrated sustainability considerations into its investment strategy, allowing our colleagues in the defined contribution schemes to opt to participate in an ESG-aligned pension investment.\n\n### Colleague remuneration\n### Performance management ‘Your Best’\n### We believe our people want to do their best for our customers and each other, every day. Under ‘Your Best’ our colleagues own their performance and our managers coach and support them to achieve it.\nto this and create focused performance goals and development goals and ensure they have the relevant skills, both now and for the future.", "chunk_word_count": 505, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > We want people to love working here. With more than 66,0001 colleagues working across the Group, we welcome their views and opinions on a range of topics to help them grow, and us to grow as a business.", "document_id": "2023 Lloyds sustainability report", "page": 73, "page_start": 73, "page_end": 75 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 90, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### The Group was one of the first large UK companies to make a £1,000 payment (pro-rated by worked hours) to all colleagues in August 2022 to help with living costs.\nOn a day-to-day basis, colleagues are supported to be their best by in-the-moment feedback and coaching from their managers. This is a two-way dialogue as we encourage managers to ask regularly for feedback on how they are leading their teams.\nYour Best is a framework that builds on our Group’s strategy, purpose, and values. It helps us achieve our key aims of making the Group a place that people love to work, do amazing things for our customers and communities, and shape finance as a force for good.\nSince our original payment in August 2022, we have continued to support our more junior colleagues with a further £1,000 pro-rated across two payments (£500 prorated in each of December 2022 and 2023).\nOur human-centred approach means we no longer rely on admin-heavy processes involving ratings or annualised reviews and it helps our colleagues and managers to build trust and psychological safety, which we see in our continued high levels of our managers’ net promoter scores.\nIn addition, we worked closely with our recognised unions Accord and Unite to rapidly agree the 2023 pay deal effective from April 2023. The deal brought certainty and support to those that needed it most and helped put pay in our people’s pockets faster.\nThe process starts with goal setting, where leaders and managers help colleagues connect with the Group’s strategy. Colleagues understand how their work aligns\nThe 2023 deal provided pay increases of between 8 per cent and 13 per cent for around 43,000 colleagues, although the overall increase to the pay bill was materially lower at 6.3 per cent, as spend was directed to our lowest paid colleagues.\nLooking forward, the group successfully reached a further agreement with our recognised unions with a sector leading two-year pay deal (effective from April 2024 through April 2025) creating certainty for our more junior colleagues who will receive a minimum pay award of £1,500 pro-rata each year and a new minimum starting salary of £25,000 in 2025 – some 25 per cent higher than our minimum pay at the start of 2023.\nOur 2023 pay deal brought certainty and support to those that needed it most and helped put pay in our people’s pockets faster.\nTo encourage ownership, colleagues are eligible to participate in HMRC-approved share plans.\nWe also continued to promote our Healthy Finances Hub and Employee Assistance Programme to enable colleagues to support themselves at key personal moments.\nFurther information is provided in our annual report and accounts 2023 .\n### Supporting our colleagues continued\n### Health and wellbeing", "chunk_word_count": 480, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > The Group was one of the first large UK companies to make a £1,000 payment (pro-rated by worked hours) to all colleagues in August 2022 to help with living costs.", "document_id": "2023 Lloyds sustainability report", "page": 75, "page_start": 75, "page_end": 76 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 91, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Menopause support\nApproximately 30 per cent of our workforce is made up of women aged over 40, which means many of our colleagues could be experiencing symptoms of perimenopause or menopause. We want to ensure all our people are healthy at work and reach their full potential. Since launching our proposition, we have experienced a major cultural shift as we continue to challenge the stigma around menopause and support all our colleagues to be menopause aware and informed. We became independently menopausefriendly accredited in 2022 and are proud of this achievement. We are committed to providing menopause support to anyone who needs it.\nThe health and wellbeing of our colleagues remains a key priority for the Group. We use a data-led approach to understand the health needs of our people and emerging issues and trends in the external environment. The data we gain is used to build a wellbeing strategy that meets the needs our of colleagues, as well as the business.\nOur proposition continues to focus on the following areas:\nWe offer a range of support for colleagues. Our approach continues to deliver support in our four pillars, and in 2022 we refreshed our Healthy Finances Hub to support our colleagues with the increased costs of living.\n• Raising awareness of the menopause and empowering colleagues to support themselves and those around them through provision of colleague learning resources, line manager training, ongoing digital and face-to-face live events, and a thriving peer-to-peer support community. Improving day-to-day experiences at work by embedding the guidance found in our ‘Menopause Promise’, provision of appropriate workplace kit and guidance around working arrangements, and reviewing existing provisions such as our uniform offering. Providing medical support through our Bupa private medical benefit and trialling provision of wider menopause wellbeing support through a menopause wellbeing app.\n### Four pillars of our wellbeing programmes:\n### Healthy bodies", "chunk_word_count": 336, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > Menopause support", "document_id": "2023 Lloyds sustainability report", "page": 76, "page_start": 76, "page_end": 76 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 92, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Healthy finances\nIn 2023 we launched a brand-new Safety, Health and Wellbeing Hub, which will make it easier for colleagues to access the right support during their time of need. At present there are around 85,000 visits made on average each month by our colleagues.\nBupa private medical cover Office equipment support Menopause proposition Workplace adjustment services Occupational health services Affected by Cancer support\nMoney Chats service, healthy \nfinances hub and Helping \nHands appointments \nTools and resources to improve \nfinancial education \nEAP- debt and financial \nwellbeing support \nOngoing review and provision \nof support through financial \nwellbeing/resilience colleague \ncampaigns\nWellbeing remains a key theme in our internal communications, helping colleagues to feel supported through the wide range of focused wellbeing support on offer, which has assisted colleagues to feel empowered to make healthy choices.\nThe proposition is not just aimed at those going through menopause, but also those who play a role in supporting someone through it at work and/or in their personal lives. We know there is still more to do, and we aim to continue to push the boundaries and encourage colleagues to improve their understanding and engage in meaningful conversations both at work and with their friends and family.\n### Healthy minds\nMental health advocates \nHeadspace \nEmployee Assistance Programme \n(EAP) \nOccupational health services \nInternal mental health awareness \nactivities\n85,000 visits made to our Safety, Health and Wellbeing Hub monthly\n### Healthy relationships\nDomestic and economic abuse \nsupport \nEmployee Assistance \nProgramme – your coaching \nand support \nSupport for Carers\n### Supporting our colleagues continued\n### Providing support to colleagues\nWe have a suite of advanced guidance taking colleagues on a journey to remove any judgement, reflect on the nature of healthy relationships, and consider their reaction to disclosure of abuse. Professional support to specialist charities and support organisations is signposted, including the Bright Sky app.\n### Domestic and economic abuse support\n### Financial wellbeing support", "chunk_word_count": 342, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > Healthy finances", "document_id": "2023 Lloyds sustainability report", "page": 76, "page_start": 76, "page_end": 77 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 93, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Bupa\nAll colleagues are offered private medical cover provided by Bupa as a core employee benefit, which gives access to good-quality medical care, including accommodation, nursing care and specialist advice. Cover is also available for family members by purchasing additional benefits through our benefits programme, Flex.\nWe believe employers have a very real role to play in supporting individuals who have experienced, and survived, domestic and economic abuse. By raising awareness, acknowledging and responding to the issue, work can be a safe space.\nAs an organisation, we have been conscious of the impact that the increased cost of living has continued to have on our colleagues. In 2022, we launched a Money Chats service to allow colleagues to have a free and confidential conversation with an internal financial wellbeing expert offering support to colleagues to maximise their full reward package. This support helps our people to understand their pensions, access information and guidance on budgeting and money management, and provides proactive signposting to support services where more intensive help is needed.\nWe have specific guidance for line managers on how to support colleagues experiencing domestic and economic abuse. This guidance aims to increase awareness and understanding of the nature and impact of abuse, and to help them support colleagues in the workplace and to signpost them to access additional help from appropriate third parties.\nWe recognise we are not experts on this issue, so we work with specialist charities including Surviving Economic Abuse and Tender, as well as Employers’ Initiative on Domestic Abuse (EIDA) to help us develop our strategy, support tools and resources for colleagues. In 2023, our Foundations supported 82 domestic abuse charities, giving them over £5.4 million over the lifetime of their grants. The insight and support from these charities helps us fully understand the challenges that individuals face, to ensure we can continually improve our support offering for colleagues.", "chunk_word_count": 339, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > Bupa", "document_id": "2023 Lloyds sustainability report", "page": 77, "page_start": 77, "page_end": 77 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 94, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Support for parents and carers\nWe recognise the importance of family life and provide a range of additional support to colleagues with parental and caring responsibilities to manage the impact that this can have on their work and personal life.\nWe also share regular communications to raise awareness, as well as hosting webinars with specialist charities to provide the opportunity for colleagues to ask questions on this topic and find out more about the support available. In 2023, supported by Employers’ Initiative on Domestic Abuse (EIDA), Tender, Galop and Crisis we hosted a series of Group-wide webinars focusing on topics such as young people and domestic abuse, domestic abuse through a LGBTQ $^ +$ lens and the intersection between domestic abuse and homelessness. We also supported the 16 Days of Action Against Domestic Abuse campaign.\nIn 2023 we tested new ways to support our colleagues with rich, transaction-based, financial wellbeing support through Helping Hands appointments.\nIn addition, to provide further support for our colleagues, the Group’s dedicated health and wellbeing hub has significantly improved its financial wellbeing support, consolidating all available financial wellbeing support internally and recommended external support provisions. This content emphasises removing the stigma around talking about money and provides opportunities to understand exactly how the Group can support our people.\nProviding care might mean that colleagues require time away from work to do this or some flexibility so that they can combine providing care with their work responsibilities.\n### Support for new parents\nIn 2021, we launched a ‘Maternity Colleague Journey’ on our HR system which brings together all the required information for colleagues in one place. We also created Maternity and Adoption Pay Calculators allowing colleagues to view their projected income whilst on leave. We are now in the process of introducing a Shared Parental Pay Calculator.\n### Group emergency assistance\nOur established Emergency Assistance Programme for colleagues (and their children) covers the cost of one-toone support and emergency accommodation for 14 nights. During an emergency stay, the colleague can receive additional support to help them with their next steps. We also offer to change their work mobile number to help prevent the perpetrator contacting them.\n### Shared Parental Leave & Pay – UK Colleagues\nShared Parental leave enables colleagues to share leave with their partner in the first year of the child’s birth or placement for adoption. Partners also have the ability to access up to a total of 26 weeks of paid leave and premature birth paid leave is available to both parents for preterm babies born (weeks 24-37) in addition to their full maternity/paternity paid leave.\nFor more information about how we support our customers who are experiencing domestic and economic abuse please see page 38.\nFoster care leave\nColleagues who provide foster care for children can access up to 70 hours paid leave each year to help with ongoing training, appointments and settling in.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$", "chunk_word_count": 524, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > Support for parents and carers", "document_id": "2023 Lloyds sustainability report", "page": 77, "page_start": 77, "page_end": 78 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 95, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Supporting our colleagues continued\nMental Health Alliance (CCLA) accredited the Group as ‘Excelling’ against their Thriving at Work Assessment. In 2022, to better represent the diverse needs of our colleagues, we created two sub-networks to level up our support for $\\scriptstyle \\lfloor \\mathsf { G B T Q ^ { + } }$ and Black, Asian and Minority Ethnic colleagues.\n### Colleague mental health\nIt has been a challenging year for our colleagues, and we continue to focus on mental health as a key component of our health and wellbeing strategy.\n### LGBTQ+ Mental Health Advocates\nFollowing the successful launch of the LGBTQ $^ +$ aligned Mental Health Advocate programme, in 2022 Rainbow launched their Mental Health Hub offering tailored support for $\\scriptstyle \\lfloor \\mathsf { G B T Q ^ { + } }$ members and allies. They have worked closely with MindOut who have delivered seven mental health training sessions so far and currently have 93 trained Rainbow Mental Health Advocates available to support colleagues.\nWe continue to build a culture where mental health stigma is consistently challenged and reduced. We listen to colleagues, test and learn, and remain agile to further hone our approach, ensuring all colleagues feel supported to be their best at work.\n### Mental Health Advocates\nOur mental health advocates programme continued for its fourth year, and we now have around 2,500 trained colleagues. These advocates proactively raise awareness of mental health. The mental health advocates network was highly commended in the category of ‘Best Mental Health Network’ at the This Can Happen Awards in 2022. Our commitment to the mental health of our colleagues has also been recognised by a several external bodies. The City\nWhile our fundraising partnership with Mental Health UK came to an end in December 2022, we continue to work closely with Mental Health UK to ensure that our policies and practices continue to support colleague mental wellbeing.\n### Race and Ethnicity Mental Health Advocates\nWe collaborated with the City Mental Health Alliance on the mental health and race at work report, which seeks to build the business community’s understanding of the challenges faced by Black, Asian and Minority Ethnic employees at work, and how this impacts their mental health. The Group has had tremendous success through its training and offering of colleague mental health advocates. By leveraging the mental health and race at work report, we have recruited and trained 42 race and ethnicity mental health advocates to support our Black, Asian and Minority Ethnic colleagues to discuss mental health-related issues and get support directly from colleagues that have lived similar experiences.\n### Colleague health and safety\nEnsuring a safe working environment is key to the operation of the Group as we are an organisation dependent on our people. Our Health and Safety Policy issued by our CEO demonstrates the commitment of the Group to providing a safe working environment.", "chunk_word_count": 508, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > Supporting our colleagues continued", "document_id": "2023 Lloyds sustainability report", "page": 78, "page_start": 78, "page_end": 78 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 96, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Crisis\nIn 2023 we delivered a joint campaign for World Mental Health and World Homeless day to raise awareness of the mental health impact of being homeless. The campaign was linked to our charity partnership with Crisis and also to this year’s World Mental Health Day theme: Mental Health is a Universal human right. We delivered educational and fundraising-linked activities internally and externally shared a message calling for policy makers to act, via our social media channels.\nIn 2023 our focus was on embedding our 11 health and safety standards, whilst developing the assurance regime that supports the health and safety framework.\nWe are continually working to create an environment where employees, customers and contractors are not exposed to harm and in 2023, we have seen a 20 per cent decrease in injuries to our employees and an 46 per cent decrease in injuries to members of the public.\n### Headspace\nThe Group offers all colleagues a free subscription to the market-leading meditation app Headspace, providing access to mindfulness modules covering a range of topics from stress to self-esteem. Approximately, 23,500 colleagues have registered, along with 1,200 of their loved ones. These initiatives continue to help us to change our culture around mental health, empowering our colleagues to openly talk about, and take ownership for, their own wellbeing and take action to support it.\n### Our Employee Assistance Programme (EAP)\nThe EAP provides colleagues and their families (dependants and children aged 16-23) with free confidential support and advice on a range of issues. It covers topics ranging from emotional support to very practical legal and financial wellbeing. The service is available 24 hours a day, 365 days a year, ensuring that support is always available to our colleagues. On average each month, 1,700 calls are made, and 760 structured counselling sessions take place.\n### Working with partners\nMental Health UK\nOur partnership with Mental Health UK has made a huge difference in communities right across the UK. Our colleagues and customers have demonstrated enormous commitment to mental health by raising over £16 million during the six-year tenure of the partnership.\n24,300 colleagues have accessed our free Headspace subscription\nWorking with Cancer Pledge\nAt the beginning of 2023 we became a founding signatory of the ‘Working with Cancer Pledge’, sponsored by our Chief Financial Officer. The additional support we launched for colleagues affected by cancer, including peer support and manager training, won ‘Best Wellbeing Initiative for Business Culture award’.\n### Supporting our colleagues continued", "chunk_word_count": 439, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > Crisis", "document_id": "2023 Lloyds sustainability report", "page": 78, "page_start": 78, "page_end": 78 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 97, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Colleague learning and development\nWe recognise that the world of work is changing, technology is advancing and skills needed today will be obsolete in the future. As the UK faces challenges with skills shortages, we are investing in our colleagues to be the key to our future success.\nTechnology and Change roles a single place to go to develop their skills and access specific content, and pathways are available for colleagues interested in a role in these areas, supporting those new to role, those looking to develop core skills, through to people wanting become an expert. In 2023 the Data & Tech Academy had 40,000 unique colleague views and over 62,000 courses were completed.\n### Skills-based organisation", "chunk_word_count": 143, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > Colleague learning and development", "document_id": "2023 Lloyds sustainability report", "page": 79, "page_start": 79, "page_end": 79 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 98, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Colleague insight\nThe world, along with the needs and expectations of our customers and communities, developing technology and our reliance on data, is changing at pace and we know that 40 per cent of core skills will change in the next five years.\nA Group wide review was undertaken mid-2023 to understand how we can improve our learner experience and make it clear for colleagues how they build the skills they need for today and tomorrow.\nWe have established a common understanding around skills (our skills library). which provides a consistent way for us to describe the skills we need, aligned to future strategy, with detailed definitions and relevant proficiency descriptors.\nWe have spent time listening to colleagues through surveys and co-creation sessions across a mix of grades, tenure, roles, archetype and active/non-active learners.\nWe have also recognised the need to uplift the general technical literacy of all colleagues in the Group. We have introduced a learning solution (Technology Quotient) which is available to all colleagues in the Group to gain a base understand of 12 topics (including cloud, data and sustainability). In 2023 over 78,000 assessments were passed by 11,400 individuals, reinforcing our aim to support colleagues who are looking to reskill into new roles.\nInvesting and supporting skills for the future We have continued to move towards putting skills at the centre of everything we do, mobilising a programme of activity to map skills to all roles.\nColleagues stated that they are positive about the quality of solutions, which tells us when colleagues consume the learning they find it designed to a high quality, pitched at the right level and delivered in a way to suit different learning styles.\nSkills and expected proficiency levels are mapped to each role. This ensures there is visibility for both the organisation and our colleagues of what our skillset is today and needs to be for the future. Skills will become the ‘currency’ that we operate by so that we can grow and move skills around our organisation when and where we need them most.\nOur Data & Tech Academy has been implemented, giving over 10,000 colleagues in Data, Security, Engineering,\nFurther work is now underway via Ideation sessions to understand what enhancements we need to make to improve our learning culture, ensuring that colleagues have quality conversations, are clear on their learning objectives and have the drive and focus to take ownership for their own development.\n### Reskilling\nOur dedicated reskilling team is helping to bridge the skills gap by investing in colleagues, helping them realise their potential and progress into a new role. The team offers colleague training and support to develop new skills that are unrelated to their current role so that they can successfully change their career to one aligned to future skills needs.", "chunk_word_count": 492, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > Colleague insight", "document_id": "2023 Lloyds sustainability report", "page": 79, "page_start": 79, "page_end": 79 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 99, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Leveraging technology to improve our colleague experience\nThis year we entered into a strategic collaboration with Microsoft to co-create their Viva learning and skills products, which will provide colleagues with hyper-personalised learning pathways and integrate learning into the flow of their work.\nEarlier in 2023, we also launched a career mobility policy which encourages movement and growth of skills across our business. This has enabled colleagues to move more freely around the organisation based on skills.\n62,000 courses completed in 2023 through the Data & Tech Academy\nIn addition, we have also now defined and created a suite of new learning environments, designed to deliver a more immersive and engaging virtual facilitated experience for both trainers and learners. Our new Virtual Delivery Studio is a dual-purpose self-serve film and live delivery studio with industry-standard technology that will transform and revolutionise both our film and broadcasting strategy.\nWhilst the roles have completely different skills, some are similar, e.g. critical thinking, problem solving, so by adding in the technical skills required these colleagues were able to receive an industry-recognised qualification and a new role.\nWe continue to leverage new technologies to improve the colleague learner experiences including the use of Virtual Reality to deliver new immersive experiences, which enable colleagues to practice in a safe and controlled environment to build confidence and competence.\nReskilling uses a different selection process that focuses on potential: what could you do in the future rather than what you can do now. We have reskilled over 290 colleagues this year into roles that have future-focused skillsets.\n### Supporting our colleagues continued\n### T Level Talent Pipeline\nThis was a miracle to me! Couldn’t believe that they had this opportunity to let people like myself get into a role that is a career path for me rather than a job. I couldn’t imagine getting into a role like this without this reskill option.", "chunk_word_count": 341, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > Leveraging technology to improve our colleague experience", "document_id": "2023 Lloyds sustainability report", "page": 79, "page_start": 79, "page_end": 80 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 100, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Apprenticeships\nThrough our award-winning programmes we have continued to extend and enhance our apprenticeship delivery, currently offering apprenticeships in 30 occupational roles from Level 2 (GCSE equivalent) to Level 7 (Master’s Degree equivalent). We typically have 1,300 colleagues on an apprenticeship at any time and we welcomed 635 new apprentices this year. The programme recruitment also contributes to our focus on diversity with 22 per cent of external hires coming from a Black, Asian or Minority Ethnic heritage and 48.7 per cent being women.\nSDG 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.\nLiz Smite, joined the Group for her Software Engineering T Level placement in 2022, excelling in her nine-weekplacement and as a result was offered a software engineering apprenticeship.\nI felt really lucky that I was able to secure a T Level work placement at Lloyds Banking Group. I was able toexperience the workplace for the first time and was really positively surprised what a dynamic environment it was in technology.\n### T Levels\nFollowing a test and learn pilot we provided 70 placements for 16-17 year olds completing a T Level. T Levels are a post-16 qualification aligned to different occupations, the key component being a meaningful and structured industry placement for 45 days. We are proud to be providing paid placements in data, software engineering and finance and providing relevant experience to help young people succeed in their chosen careers. T Levels are a pipeline to apprenticeships and from our test and learn in 2022, we have two-thirds of the students having started an apprenticeship with the Group.\n“It all started with me having an interest in technology which led me to choose Computer Science as a subject in high school. At this point after studying for my GCSE’s, I was pretty clear that I wanted to become a software engineer and a digital T Level became the next natural step.\nIt opened my eyes on what an apprenticeship could be like and what work I would take on, which made me even more keen to apply. University was always a ‘just-in-case’ option as I prefer hands-on learning and after seeing how interesting the placement was and reaping the benefits, I decided an apprenticeship was definitely the way to go. I knew I would enjoy the balance of learning and then putting is into practice ‘on the job’.\nUna Currie, reskilled colleague", "chunk_word_count": 446, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > Apprenticeships", "document_id": "2023 Lloyds sustainability report", "page": 80, "page_start": 80, "page_end": 80 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 101, "chunk_text": "# Building asustainable and inclusive future\n## 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business\n### Work experience programmes\nThe Group coordinates various work experience programmes for school children to engaged with the Group. In the course of 2023, the programme achieved the following:\nAfter completing my work placement and working through the selection process, I received an offer for Software Engineer Apprenticeship.\nSkillsbuilder – essential skills sessions to 8,521 students aged between 6 and 19 \nWork experience – virtual, hybrid and on campus for students aged 14 years or older totalling 1,490 places Careers fairs, talks and outreach to total audience to date of 19,217 students \nSkillsbuilder Accelerator – 12,000 students\nOverall, I’m so glad I decided to choose a T Level course and go on to be one of the first students to do a work placement with Lloyds Banking Group. It has opened up the route into an apprenticeship and hopefully an exciting career ahead in software engineering, something I never even thought I could achieve.”\n## 2023 highlights\n### Human rights and modern slavery\nA company’s salient human rights issues are those human rights that stand out because they are at risk of the most severe negative impact through the company’s activities or business relationships.\nWe conducted a Groupwide review of our inherent salient human rights risks.\nScottish Widows analysed their portfolio and engaged companies representing £5.8 billion of assets under management on human rights issues.\nThe UN Guiding Principles Reporting Framework asks companies to focus their human rights reporting on their salient human rights issues.\n### Human rights and modern slavery continued\n### Salient human rights risks\n### Training our colleagues\n### Our approach tohuman rights\n### The Group’s approach to human rights is governed by the Responsible Business Committee.\n### During 2023, we worked with an external party to identify and prioritise the inherent salient human rights risks that can be connected to the Group’s operations and value chain.\nThe scope of this work covered all of the Group’s subsidiaries, and aimed to identify where the Group could cause, contribute or be connected to human rights issues across our value chain.", "chunk_word_count": 367, "section_path": "Building asustainable and inclusive future > 340 top leaders brought together to lead our organisational shift >6,300 colleagues trained as ‘Catalysts’ across the business > Work experience programmes", "document_id": "2023 Lloyds sustainability report", "page": 80, "page_start": 80, "page_end": 82 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 102, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Modern slavery and human trafficking is included in our bespoke Fighting Economic Crime Prevention training which is mandatory for all UK colleagues to complete on an annual basis.\nTo date, we have already embedded a number of policies and processes to identify the risks associated with human rights. The effective management of human rights and modern slavery issues relies on the integration of the human rights principles into Group guidelines and policies that set the parameters of operations for topics where there may be a human rights impact.\nAffected parties considered included:\n• Colleagues and contractors \nCustomers and clients Workers and communities affected by financing that the Group has provided through our commercial banking, insurance clients and investee companies. Workers and communities affected by the Group’s supply chain and sourcing activities.\nThe aim of the activity was to have an external and independent review of potential human rights risk for the Group without taking into consideration any of our current programmes, policies or initiatives, primarily for the Group to ensure that we aren’t missing any key aspects of human rights risk related to our activities.\nGroup-wide training is further supported by targeted training for colleagues in specific roles that are more likely to encounter modern slavery, including Sourcing and Supplier Management colleagues.\nThe Group’s day-to-day management of modern slavery and human rights is coordinated and driven by the Group Human Rights Manager who sits in Group Sustainable Business, and is guided by a cross-divisional working group, the Modern Slavery and Human Rights Working Group. This working group has input from functions across the Group including our Group people and places teams, Group sourcing, Group Economic Crime Prevention, Retail and Commercial Banking teams, as well as external human rights experts.", "chunk_word_count": 299, "section_path": "Building asustainable and inclusive future > 2023 highlights > Modern slavery and human trafficking is included in our bespoke Fighting Economic Crime Prevention training which is mandatory for all UK colleagues to complete on an annual basis.", "document_id": "2023 Lloyds sustainability report", "page": 82, "page_start": 82, "page_end": 82 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 103, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Our identified potential salient human right risks across our value chain\nModern slavery was identified as a material potential human rights risk across the Group’s activities due to some of the sectors and activities which the Group funds or is involved with.\nIn addition to the salient human rights risks which have been identified, activity within the Group in relation to the protection of human rights is focused on:\n• Inclusion and diversity Mental health and colleague wellbeing in the workplace Supporting vulnerable customers Tackling modern slavery through our supply chain Protecting customer privacy Data security to keep our customers’ money and data safe.\nHaving identified the inherent salient human rights risks, the next step will be for the Group to review our current business processes, some of which already consider human rights risks, identify any gaps and implement measures to prevent or mitigate these potential risks thereby embedding respect for human rights into the Group’s core business where it is relevant.\nThis approach is supported by several Group policies relating to the management of issues that impact human rights through our operations such as, but not limited to:\n• Group colleague policies Health, safety and fire policy \n• Group data policy Security policy Harassment and grievance resolution policy \nGroup compliance policy Group accountability standards Speak Up (whistleblowing) \nAnti-bribery policy Group sector statements Code of supplier responsibility Customer policy \n• Product governance policy\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Human rights and modern slavery continued\n### Human rights issues and how we are addressing them\n### Customers who are more vulnerable including due to critical illnesses, the elderly Customers who are more vulnerable including due to critical illnesses, the elderly and customers with disabilities\n### Mental health of colleagues\nOur focus on mental health as a key component of our colleague health and wellbeing strategy, see pages 75 to 77.\nWe are committed to supporting both colleagues and customers through vulnerable situations, see pages 37 and 69.\n### Freedom of association/collective bargaining\nDomestic and economic abuse victims Our specialist support teams exemplify our commitment to providing tailored assistance for customers in specific circumstances, see page 38.\nWe support colleagues’ rights to exercise freedom of association and have extensive consultation and collective bargaining processes in place, both in the UK and overseas. See page 73 of this report.\n### Economic crime including anti-money laundering and counterterrorist financing\n### Fair remuneration\n### Mental health of customers\nLloyds Banking Group became a UK Living Wage Employer in 2015 and we review our pay rates annually to ensure minimum rates are above the statutory minimum and living wage requirements that are applicable in the countries we operate in. We have worked, and continue to work, with third-party contractors to ensure that they operate in line with our commitments and expect them to ensure that the wages they pay meet legally mandated minimum requirements without unauthorised deductions.", "chunk_word_count": 503, "section_path": "Building asustainable and inclusive future > 2023 highlights > Our identified potential salient human right risks across our value chain", "document_id": "2023 Lloyds sustainability report", "page": 82, "page_start": 82, "page_end": 83 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 104, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Health and safety of colleagues, contractors and visitors\nLloyds Bank, Halifax and Bank of Scotland were the first organisation to receive the ‘Mental Health Accessible’ accreditation (Advanced Level) from the Money and Mental Health Policy Institute (MMHPI) in 2023, see pages 38 and 39.\nThe Group maintains its focus on protecting and minimising the impact on our customers and the Group whilst reducing the harm to communities caused by criminals and terrorists. See page 19.\nEnsuring a safe working environment is key to the operation of the Group as we are an organisation dependent on our people. See page 77.\n### Identified environmental, social, labour and human rights high-risk sectors and excluded activities related to lending and investment activities\n### Data privacy and security\n### Accessibility for persons with disabilities\nThe Group has a Chief Data and Analytics Office which oversees the Group’s policies in relation to data privacy and ethical use of data. See page 23 and our annual report and accounts 2023 on page 179.\nThe Group has an extensive diversity, equity, and inclusion programme. See page 65 of this report.\n### Non-discrimination, inclusivity and equality/harsh or degrading treatment/harassment\nThe Group is cognisant of environmental and social risks as a result of our lending and investment activities. See page 156 and page 171.\nMaternity and paternity protection The Group has an extensive Diversity, Equity, and Inclusion programme. See page 76 of this report.\n### Modern slavery, forced labour and human rights abuses\nThe Group has an extensive diversity, equity and inclusion programme and is committed to meeting its statutory responsibilities as an employer. We do not tolerate discrimination on the basis of protected attributes including race, religion, national or ethnic origin, citizenship status, political opinion, age, marital or relationship status, carer responsibilities, sex, sexual orientation, gender identity, intersex status, pregnancy, parental status, breastfeeding, disability, veteran status, trade union activity or other legally protected status. We expect the same from all our business partners, clients and suppliers. Read more on page 59.\nFor further information on our approach to modern slavery and human trafficking, see page 82 on our modern slavery statement which can be found on our download centre .\n### Grievance mechanisms and whistleblowing\nSpeak Up is the Group’s whistleblowing programme. It is available to all colleagues across the Group, including suppliers, contractors and third parties. See page 24.\nThe Group runs an independent whistleblowing programme, see page 24.\n### Compliance with UK Modern Slavery Act and mitigation of the risk of human rights or modern slavery risks, including forced labour and child labour, in the countries and communities where they operate\n### Access to housing in communities\nThrough our partnership we are working with Crisis (and Simon Community in Northern Ireland) to help them to provide the support that will help people to leave homelessness behind for good. See page 46.\n### Responsible investment and human rights", "chunk_word_count": 491, "section_path": "Building asustainable and inclusive future > 2023 highlights > Health and safety of colleagues, contractors and visitors", "document_id": "2023 Lloyds sustainability report", "page": 83, "page_start": 83, "page_end": 84 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 105, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Domestic and financial abuse\nSDG 8.7: Take \nimmediate and \neffective measures to eradicate forced \nlabour, end modern slavery and human trafficking and \nsecure the \nprohibition and \nelimination of the \nworst forms of child labour, including \nrecruitmentanduse of child soldiers, and by 2025 end child \nlabour in all its forms.\nOur Domestic and Financial Abuse team, set up in 2019, supports survivors to rebuild their finances, see page 38.\nWe expect suppliers to meet or exceed the provisions in our code of supplier responsibility .\n### Drug trafficking and financial exploitation of young people including county lines\nAcknowledging the importance of social factors to our investment portfolio and following on from the introduction in 2022 of human rights as a priority stewardship theme, we began embedding human rights material issues into our engagement approach with our appointed investment managers, joining investor collaborations and conducting a qualitative and quantitative analysis on the materiality of human rights risk across our portfolio.\nThe letters highlighted the in-depth qualitativeresearchoneach company identified. Freedom of association, supply chains and working conditions were common themes across a number of the companies identified.\nSee the code here and more on our approach to responsible and sustainable sourcing on page 18.\n### Fair remuneration and ethical recruitment practices\nWe work collectively with industry bodies, law enforcement, regulators and governments. These partnerships are crucial to our ambition to reduce crime across society and to Help Britain Prosper, see pages 20 to 22.\nWe have worked, and continue to work, with third-party contractors to ensure that they operate in line with our commitments and expect them to ensure that the wages they pay meet legally mandated minimum requirements without unauthorised deductions.\nFifteen companies have replied so far and of those that responded a number have expressed their interest in engagement and we hosted our first engagements during the last two quarters of the 2023, and we will be continuing with this work in 2024.\nModern slavery and human trafficking For further information on our approach to modern slavery and human trafficking and our communitybased initiatives, access our modern slavery statement which can be found on our download centre .\nSDG 8.8: Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants and those in precarious employment.", "chunk_word_count": 394, "section_path": "Building asustainable and inclusive future > 2023 highlights > Domestic and financial abuse", "document_id": "2023 Lloyds sustainability report", "page": 84, "page_start": 84, "page_end": 84 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 106, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Access to effective remedy for individual victims of human rights violations/grievance and whistleblowing mechanisms\nIn 2023, following the analysis of our investee companies in order to prioritise them for engagement, we wrote tailored letters to twenty five companies, representing £5.8 billion of assets under management, as of the end of 2022, with ten companies sitting in Scottish Widow’s top 100 list (companies which represent our largest investment holdings).\nWe believe that engagement ensures that the companies we are invested in understand the standards we expect and that through collaboration we will protect the long-term interests of our clients and investment beneficiaries.\nSpeak Up is the Group’s whistleblowing programme. It is available to all colleagues across the Group, including suppliers, contractors and third parties. See page 24.\nWe continue to work with Unseen, a UK anti-slavery charity, to deepen our understanding of modern slavery risk within our supply chain and enhance our colleague training.\n## D个→Ω\nOur purpose is Helping Britain Prosper. We Help Britain Prosper by creating a more sustainable and inclusive future for people and businesses, shaping finance as a force for good.\n2023 in review 85 \nOur environmental strategy 87 \nOwn operations 95 \nSupply chain 101 \nData, financial planning and controls 105 \nBanking activities 106 \nTransition plan by system 112 \nRisk management and scenario analysis 150 \nScottish Widows 160\n### Sustainable future\nWithin this section we provide more details on the specific environmental sustainability strategy objectives and some of our key related activities.\n### Drive revenue growth and diversification\n### Grow\nCapitalising on inclusive and sustainable financing and investment opportunities\n£29bn Bank sustainable finance lending from 2022 to 2023 £21.7bn progress towards Scottish Widows ‘Climate-Aware’ investment target of £20-£25bn invested by 2025\n### Net zero origination\nHelping us to identify our greatest transition opportunities\nGreening the built environment and improving access to quality housing\n20% of new Citra projects signed up to Next Generation Project\nGreen Buildings Tool\nContinued our partnership with Octopus Energy for energy efficiency home improvements\nLaunched our Effective Home partnership for residential solar\nAn insights calculator to support clients to assess their energy efficiency\n### Maximise the potential of people, technology and data\n### Strengthen cost and capital efficiency\n### Change\n### Focus 1\nManaging our environmental risks and impacts\nEmbedding sustainability in all that we do\n1,000 large clients supported by our partnership with the Soil Association Exchange\n3\nDeveloped \nprototype \nresidential real estate model to enhance \nmeasurement of physical and \ntransition risks\nExited direct lending to UK thermal coal power by end of 2023\nEstablished an internal Nature Task Force and expanded nature training across the Group\nDeveloped credible transition plan (CTP) assessment methodology with 36 assessments undertaken to date\nnew NZBA targets launched in 2024 for C&RRE, road passenger transport and agriculture\nGreenwashing training launched for all colleagues\nUpdated Group carbon offsetting principles\nEnhanced control framework established for external sector statements\nSupporting and engaging our colleagues\nNet zero operations and supply chain\nIncreased \noperational \nScope 1 and 2 \nemissions \nreduction target \nfrom 75% to at least \n90% by 2030", "chunk_word_count": 518, "section_path": "Building asustainable and inclusive future > 2023 highlights > Access to effective remedy for individual victims of human rights violations/grievance and whistleblowing mechanisms", "document_id": "2023 Lloyds sustainability report", "page": 84, "page_start": 84, "page_end": 87 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 107, "chunk_text": "# Building asustainable and inclusive future\n## 152 suppliers assessed against the Emerald Standard representing c.76% of supply chain emissions\n2,500 electric cars through our colleague salary sacrifice scheme since launch\nLaunched a pledge to bring nature closer to our people and places\nRecycle for g ood making it easier for colleagues to recycle personal devices\n95% of supplier and sourcing managers completed training on our Emerald Standard\n### Systems approach\n### Sustainable farming and food\n### Greening the built environment\n• Forestry and land use change • Regenerative agriculture\nSustainable building materials Climate-resilient design Nature-based infrastructure Residential and commercial retrofit\nWe have taken a systems-led approach to consider climate and environmental issues across and between each system in a UK and Group context.\nSee further details on page 139\nSee further details on page 118\nWe must be bold in the role we take in thetransition,toensurewede-riskour business and capitalise on opportunities. Through the work we have undertaken to date on developing Net Zero Banking Alliance (NZBA)-aligned sector targets, our first transition plan and considering the opportunities available to support ourcustomers,the need to move from a sector focus to a system-led approach hasbecomeclear.\nelements of each system and between systems, seeking to understand the changes and solutions that are needed to unlock impactful progress in support of the transition to address environmental trends.\n√\nThis means being proactive in shifting focus from climate and carbon, to also include topics such as nature, Just Transition,circular economy, and resilience and adaptation to ensure we capture a wide range of issues that affect all systems.\n→\nBy taking a system-led approach, our strategy seeks to bring focus through greater cross-Group collaboration, and in turn aims to unlock change and progress. The Group has four priority systems where we believe we can leverage our scale, reach in the market and the different financial services we offer to considerclimate and environmental issues across and between eachsystem.\n### Energy transition", "chunk_word_count": 324, "section_path": "Building asustainable and inclusive future > 152 suppliers assessed against the Emerald Standard representing c.76% of supply chain emissions > Systems approach", "document_id": "2023 Lloyds sustainability report", "page": 87, "page_start": 87, "page_end": 88 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 108, "chunk_text": "# Building asustainable and inclusive future\n## 152 suppliers assessed against the Emerald Standard representing c.76% of supply chain emissions\n### Low carbon transport\nSystems are interconnected, with progress in one also supporting progress in the other, particularly in the energy transition.As such,different areas of the Group will need to collaborate to support different elements across each system. This approach will support focusing on the most material areas that the Group can play a role in to generate new lending or investment opportunities, or to manage our risks.\n• Battery manufacturing and recycling \n·Sustainable aviation fuels \nElectric vehicles\nRenewable energy technologies Alternative fuels and chemicals Decarbonisation of the grid\nSee further details on page 144\nThese systems are focused on where we live through greening the built environment,how we move through low carbon transport, how we farm with a more sustainable farming and food system, and through the energy we use with an energy transition fundamental to broader decarbonisation. Further to this,we will need to ensure we transitionthebrogder business gnd manage our own impacts.\nSee further details on page 128\nThere is further work to do to develop the cross-Group action plans foreach system, which we will update in future iterations of our sustainability report and transition plan. This is a universal endeavour and will depend on government, industry and wider society acting together, alongside significant technological advancements. There are many unknowns as part of the transition but it cannot be a barrier to action.\n### Foundations\nWe will ensure we ‘have our own house in order’ so that we can have legitimacy when helping others transition:\nOwn operations\nWider sector targets and commitments\nA systems approach requires consideration of value chains for\n### Our environmental strategy continued\nWorking with our suppliers to reduce the emissions generated as a result of our demand for goods and services, on the path to net zero by 2050 or sooner4.\n### Our emission reduction ambitions and targets\nBank financed emissions\nWork with customers, government and the market to help reduce the carbon emissions we finance by more than 50 per cent by 2030 on the path to net zero by 20501 or sooner.\nSupply chain\nFor more information on supply chain emissions see page 101\nReduce the carbon emissions we finance by more than 50% by 2030", "chunk_word_count": 384, "section_path": "Building asustainable and inclusive future > 152 suppliers assessed against the Emerald Standard representing c.76% of supply chain emissions > Low carbon transport", "document_id": "2023 Lloyds sustainability report", "page": 88, "page_start": 88, "page_end": 89 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 109, "chunk_text": "# Building asustainable and inclusive future\n## 4 From a 2021/22 baseline.\nFor more information on bank financed emissions see page 106\n### Reduce our supply chain emissions by 50% by 2030\nWe have set several ambitions across our own operations, supply chain and lending and investments to support the decarbonisation of our business in line with limiting global warming to $1 . 5 \\circ _ { \\mathbf { C } }$ .\n### Breakdown of Group’s emissions (MtCO e)\nFrom a 2018 baseline, covering Scope 1 and 2 emissions.\nWhat this looks like for the Group The scale of our current emissions varies across different areas of the business.\nTarget halving the carbon footprint2 of our investments by 2030 on the path to net zero by 20503.\nIn our own operations we will achieve net zero carbon operations by 2030 and reduce our direct carbon emissions by at least 90 per cent, while also reducing energy consumption across our operations by 50 per cent and limiting travel-related carbon emissions by 50 per cent5. We have also renewed our ambitious targets for water, waste and nature.\nWhile we are making good progress on all ambitions to date, there are significant challenges and external dependencies in many of our sectors and systems that will need to be addressed for us to achieve our targets and our overall ambition to reduce the emissions we finance by more than 50 per cent by 2030 (see pages 106 to 149).\nScottish Widows financed emissions\nOwn operations\nFor more information on SW financed emissions see page 160\n2 Carbonfootprintisameasureofcarbon intensity calculated as absolute value of emissions applicable to an investment divided by the value of investment. \n3 From a 2019 baseline. \nHalve the \ncarbon \nfootprint of our \ninvestments \nby 2030\nAchieve \nnet zero \noperations \nby 2030 and reduce our \ndirect carbon emissions by at least 90%\nGlobally, we are not moving quickly enough to tackle the climate crisis at the speed we know is required and we will need to do more and collaborate with a wide range of stakeholders to unlock the barriers that stand in our way or we will not achieve our ambitions.\nFor more information on own operations emissions see page 95\nBased on 2022 data available for Bank and Scottish Widows financed emissions Scope 1 and 2 emissions only. 2022/23 period end data for supply chain emissions and own operations includes Scope 1, 2 and 3 categories and is reported on a market basis.\n## 5 All from a 2018/19 baseline.\nFor details on our methodology please see sustainability metrics basis of reporting .\n### Our environmental strategy continued\n### Our Group sustainable finance and investment\n### Commercial Banking\n### Motor\n### Scottish Widows\n### Existing target", "chunk_word_count": 457, "section_path": "Building asustainable and inclusive future > 5 All from a 2018/19 baseline. > Our environmental strategy continued", "document_id": "2023 Lloyds sustainability report", "page": 89, "page_start": 89, "page_end": 89 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 110, "chunk_text": "# Building asustainable and inclusive future\n## 5 All from a 2018/19 baseline.\n### Existing target\n£15 billion sustainable finance1 for corporate and institutional customers by 2024\n£8 billion financing for EV and plug-in hybrid electric vehicles by 20243\n£20–25 billion discretionary investment in climate-aware5 \nstrategies and climate solutions5 by 2025\n£15.8bn achieved in sustainable finance for corporate and institutional customers by the end of 2023\n£5.7bn\n£21.7bn progress in discretionary investment in climate-aware5 strategies by the end of 2023\nachieved in financing for EV and plug-in hybrid electric vehicles by the end of 2023\nIn 2022 we set sustainable financing targets through to 2024 totalling £33 billion across the Bank and for up to £25 billion of investments in climate-aware strategies for our Scottish Widows business from 2020 through to 2025. As shown to the right, we have made great progress against these targets and have already reached our Commercial Banking target one year earlier than planned.\n### EPC A/B mortgage lending\nExisting target \n£10 billion of mortgage lending for EPC A and \nB-rated properties by 20244\nIn parallel, as noted on page 27, we have developed our sustainable financing framework to provide greater clarity on what Lloyds Banking Group considers to be eligible types of sustainable finance covering the Group’s retail lending, business and Commercial Banking and corporate and institutional banking businesses. Further, we are including our sustainable finance and investment targets as part of our new 2024 to 2026 LTIP assessment as set out on page 26 of our annual report and accounts 2023 .\n£7.5bn\nNew target £30bn of lending from 1 January 2024 to end of 2026\nachieved in EPC A/B mortgage lending by end of September 20234\nAsdefined within the sustainable financing framework7 New Commercial Banking target relates to both corporate and institutional customersand small and mediumbusinesses. \n3 Includes new lending advances for Black Horse and operating leases for Lex Autolease (gross) and operating leases for Tusker (gross, post acquisition by the Group in February 2023 only); includes cars and vans. £3.6bn achieved in 2023. \n4 New mortgage lending on UK (excluding Channel Islands) residential property that meets an Energy Performance Certificate (EPC) rating of B or higher. The target includes re-mortgages but excludes further advances. £7.5bn covers the period from January 2022 to September 2023.With£2.8bnachieved from1January2023to 30 September2023. \n5 We are working with our strategic fund management partners BlackRock and Schroders to develop and refine a range of funds that have a bias towards investing in companies that are adapting their businesses to be less carbon-intensive and/or developing climate solutions.\nWe have launched a new target for sustainable finance for our Commercial Banking customers2.\n### Our environmental strategy continued\n### Summary of our activity\n### 2025+2\n2050\n2021\n2022\n2023\n2024\n2030", "chunk_word_count": 459, "section_path": "Building asustainable and inclusive future > 5 All from a 2018/19 baseline. > Existing target", "document_id": "2023 Lloyds sustainability report", "page": 90, "page_start": 90, "page_end": 91 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 111, "chunk_text": "# Building asustainable and inclusive future\n## 5 All from a 2018/19 baseline.\n### Summary of our activity\nLaunched sustainable finance lending targets Launched our Build Back Better Scheme to support our home insurance customers’ resilience to climate change Launched partnerships with Octopus Energy for home energy efficiency improvementsand Soil Association Exchange for agriculture customers\nExpanded funding available for businesses underdiscounted green finance initiatives Launched our green mortgage and green living reward offers and green salary sacrifice schemes\nLaunched our Effective Home partnership for residential solar Mobilised net zero origination work to identify transition technology financing opportunities (page 117) Achieved Commercial Banking sustainable financing target\n• £10bn of mortgage lending for A and B rated properties by 2024 £8bn electric vehicle financing by 2024 Launched new 2026 sustainable financing target for Commercial Banking\n£20-25bn Scottish climate-aware strategies £30bn Commercial Banking sustainable\nContinue to develop new products, services and financing targets to drive the transition", "chunk_word_count": 154, "section_path": "Building asustainable and inclusive future > 5 All from a 2018/19 baseline. > Summary of our activity", "document_id": "2023 Lloyds sustainability report", "page": 91, "page_start": 91, "page_end": 91 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 112, "chunk_text": "# Building asustainable and inclusive future\n## 5 All from a 2018/19 baseline.\n### Net zero by 2050 or\nWe recognise that ambition alone won’t support the transition or deliver on our purpose of Helping Britain Prosper. We need a plan to deliver on our strategy.\nOur 2023 Group climate transition plan sets out the steps we’ll take to reduce emissions to net zero for our operations, supply chain and how we are addressing nature, Just Transition, engagement and data at the Group level. We outline specific activities happening in the Bank in the transition plan section. Our climate transition plan has been informed by guidance from the Glasgow Financial Alliance for Net Zero (GFANZ) and UK TPT, as well as guidance from the Task Force on Climate-related Financial Disclosures (TCFD), all of which continue to evolve.\nNo new direct financing of new greenfield oil and gas developments approved post-202l Maintained travel emissions below 50% of pre-pandemic levels Announced updated operational climate pledges\nFirst round of Net Zero Banking Alliance sector targets published coveringsevensectors Supply chain net zero ambition published Supply chain Emerald Standard launched\n• Publish agriculture, \ncommercial and \nresidential real estate (C&RRE) and road \npassenger transport \ntargets \nPublish CTP assessment \napproach \n50% Citra homes started \nin 2024 developed to \nNextGen reporting \nstandards \n10% of new Citra \ndevelopments started in \n2024 to achieve 10% \nbiodiversity net gain \nDetermine Citra \nemissions baseline and \nreporting approach \nPublish sustainable \nfinancing and \nsustainable bond \nframeworks \nPublish updated Group \ncarbon offsetting \nprinciples \nDevelop an ESG data \nsolution \nContinue to enhance \ntraining\n75% of new Citra projects delivered in accordance with NextGen reporting criteria \n25% of new Citra \ndevelopments started in 2025 to achieve at least 10% biodiversity net gain All new Citra homes with parking to have EV \ncharge point \nEstablish targets for Citra operational and supply chain emissions based on baselines developed Reduce operational \nwaste by 80% \n50% reduction in bank \nfinanced emissions \nScottish Widows half all investments \nFull exit from all entities \noperating thermal coal \nfacilities \nNet Zero Banking Alliance \n2030 sector targets \n50% reduction in supply chain emissions \nNet zero own operations \n50% reduction \nin operational energy use \nZero waste by 2030 \nWater neutral by 2030\nDeveloped a credible transition plan (CTP) assessment methodology and assessed existing oil and gas clients’ planned activity (page 116)\nExited direct lending to UK thermal coal power by end of 2023 \nAnnounced two updated operational pledges and new nature pledge \n(page 98)\nWe don't yet have all the answers and we continue to work with our stakeholders to evolve our approach. We expect to update our plan regularly in the coming years as a result and as guidance converges around more defined recommendations that will inform future versions.\nEnhanced Citra sustainability strategy (page 126)\n• 10% biodiversity net gain for Citra schemes and supply chain baseline1\nOur transition plan is governed under the same structure and financial planning process as our wider environmental sustainability strategy.", "chunk_word_count": 490, "section_path": "Building asustainable and inclusive future > 5 All from a 2018/19 baseline. > Net zero by 2050 or", "document_id": "2023 Lloyds sustainability report", "page": 91, "page_start": 91, "page_end": 91 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 113, "chunk_text": "# Building asustainable and inclusive future\n## 5 All from a 2018/19 baseline.\n### Net zero by 2050 or\nWe have set several net zero ambitions across our Group to support the decarbonisation of our business in line with limiting global warming to 1.5°C. Our climate transition plan provides the plan and pathway to how we will achieve our Group ambitions and targets discussed in our strategy section, noting how environmental sustainability milestones align with the grow, focus and change strategy pillars.\nDeveloped first \nGroup-wide colleague e-learning course on \nsustainability \nDelivered training to the Board on climate \nchange and climate \nrelated risks \nDeveloped specialist \ntraining to relationship managers in \npartnership with \nCambridge Institute for Sustainability \nLeadership.\nPublished first carbon offsetting approach Delivered training to the Responsible Business Committee and Group Executive Committee on nature and biodiversity 60,000 colleagues completed Group-wide e-learning course\nEstablished a nature task force and expanded training delivered across the Group on nature, including with the Group Board (page 92) Developed Emerald Standard training for supplier and sourcing managers (page 101) Launched new colleague training covering low carbon transition, nature loss and greenwashing (page 15)\nContinue to enhance training, develop Group approaches and refine data as needed\nsooner\nSee pages 84 to 149\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Our environmental strategy continued\nOwn operations ambition: We will use carbon credits to offset residual emissions from our operations for 2030 and beyond.\n### Our approach to carbon offsetting\nSupply chain: We do not currently plan to use carbon credits to offset our supply chain emissions, recognising that we are still in the early stages of our supplier engagement activity. We will continue to evolve and adapt our approach as we learn through our supplier engagement.\nBeyond value chain: We may seek to use carbon credits for mitigation beyond our value chain for propositions, customer benefit or for relevant projects that support wider action.\nAs the voluntary carbon markets (VCM) scale up over the coming years, it is likely that parts of the Group may interact with the market. This will include engaging with our clients and suppliers to encourage them to develop their own net zero plans, which may involve them using carbon credits for offsetting residual emissions for some of their activity, where applicable and in line with science.\n### Carbon credits, if used responsibly, can be an important tool in combating climate change and can support the financing of climate resilient development.\nIt is important that credits are deployed as part of sciencealigned decarbonisation strategies and are not used as an alternative for abatement. Credits can be used to mitigate remaining residual emissions and can also support mitigation activities beyond a business’ value chain. These activities can help support the transition at the pace and scale required, including associated environmental and social benefits.", "chunk_word_count": 479, "section_path": "Building asustainable and inclusive future > 5 All from a 2018/19 baseline. > Net zero by 2050 or", "document_id": "2023 Lloyds sustainability report", "page": 91, "page_start": 91, "page_end": 92 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 114, "chunk_text": "# Building asustainable and inclusive future\n## 2023 carbon credit use\n### Areas of evolution\nThe Group announced its acquisition of Tusker in February 2023, noting the acquisition will support its ambitions to achieve net zero emissions by 2050 or sooner through the promotion of the use of electric vehicles (EV) and ultra-low emission vehicles (ULEV). Since 2013, Tusker has taken measures to offset the tailpipe emissions of all salary sacrifice cars on their schemes. This initiative also includes offsetting the charging requirements from the grid for electric vehicles.\nOur strategy remains focused on reducing emissions before considering the use of carbon credits. To provide clarity and transparency on our approach to carbon offsetting, we have set out a series of nine principles that the Group will seek to follow. These principles have been cross-referenced against external stakeholder expectations and guidance as set out in our principles document.\n### Science Based Targets initiative", "chunk_word_count": 153, "section_path": "Building asustainable and inclusive future > 2023 carbon credit use > Areas of evolution", "document_id": "2023 Lloyds sustainability report", "page": 92, "page_start": 92, "page_end": 92 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 115, "chunk_text": "# Building asustainable and inclusive future\n## 2023 carbon credit use\n### Insurance emissions methodology\nWe continue to explore the requirements to be met to obtain external verification of the science-aligned approach to our sector targets. We have actively reviewed and provided feedback on the public consultation documents released by the Science Based Targets initiative (SBTi) in 2023 related to new and updated approaches for financial institutions.\nIn relation to the home insurance products we offer there is a role for us to improve the resilience of customer homes in relation to climate change-induced extreme weather. We intend to support customer journeys and industry-wide actions towards greater resilience and adaptation in UK domestic properties. Whilst as a Group we are committed to reducing emissions across all business areas, there is currently no established methodology in the industry to calculate financed emissions on our Insurance liabilities. We will continue to monitor developments in this area.\nAs we continue to integrate the business into the Group, we will continue to report on carbon credit use and drive alignment of Tusker activity to our Group offsetting principles. See our download centre .\nOur GmbH business also offsets calculated operationa emissions for its German . and Dutch operations .\nWe recognise that this is a fast-evolving market, so will revisit them regularly to ensure alignment with the latest developments and guidance and update them if we deem that there is a material change needed; we have also obtained a second-party opinion for our principles from ERM CVS. You can read more about our Group offsetting principles and second-party opinion in our download centre .\nHowever, significant challenges still remain with the proposed updates, one of which is the inability to use regional 1.5 aligned scenarios from credible national bodies such as UK Climate Change Committee’s Balanced Net Zero Pathway (BNZP), which sets out feasible 1.5 aligned pathways for UK sectors, taking into account economic, fiscal and social circumstances and energy policy in the UK.\nAny Tusker and GmbH offsetting activity is excluded from our Group reported emissions and considered beyond value chain mitigation (BVCM). In 2023 Tusker retired carbon credits representing 20,106t of $\\mathsf { C O } _ { 2 } \\mathsf { e }$ in support of their offsetting activity using projects that include wind energy, improved cooking and forestry projects. In 2023 GmbH retired carbon credits representing 332t of $\\mathsf { C O } _ { 2 } \\mathsf { e }$ using projects that include safe water and forestry projects. Further details of the carbon credits are located in the sustainability metrics data sheet .\nFacilitated emissions\nThe Group notes the release of the Global GHG Accounting and Reporting Standard for Capital Markets (Part B) in December 2023. This update will enable the Group to move towards calculating and disclosing its facilitated emissions, the assessment of which will be a focus area for 2024. The standard covers the primary issuance of capital markets instruments, including new issuance of various types of bond issues for general purposes and syndicated loans.\nWe expect to have further clarity from SBTi in the first quarter of 2024 on their planned approach.", "chunk_word_count": 527, "section_path": "Building asustainable and inclusive future > 2023 carbon credit use > Insurance emissions methodology", "document_id": "2023 Lloyds sustainability report", "page": 92, "page_start": 92, "page_end": 92 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 116, "chunk_text": "# Building asustainable and inclusive future\n## 2023 carbon credit use\n### Group use of carbon credits:\nFinanced emissions ambition: We do not currently plan to use carbon credits to offset our financed emissions, but we will monitor and seek to contribute to emerging industry standards in this area as they develop.\n### Our environmental strategy continued\n### Nature\n### Woodland Trust\nInfluencer: Actively engage with government to help encourage the right enabling policy environment and business behaviours and activities, for example, we have engaged with the UK government directly to shape the UK Transition Plan Taskforce’s (TPT) framework, as well as with WWF on the inclusion of nature within TPT requirements\nIn January 2020 the Woodland Trust and Lloyds Banking Group embarked on a transformational 10-year partnership. Together we have committed to plant 10 million native trees by 2030, making a real difference in our response to the nature and climate emergency. Our partnership is off to a flying start with four million trees planted in the first four years.\nSDG 13: Improve \neducation, \nawareness-raising \nand human and \ninstitutional capacity on climate change mitigation, \nadaptation, impact reduction and early warning. SDG 15: Protect, \nrestore and promote sustainable use of \nterrestrial \necosystems, \nsustainably manage forests, combat \ndesertification,and halt and reverse land degradation and \nhalt biodiversity loss.\n### Nature context\nIn recognition of the declining state of nature and its relationship with climate change, we have been taking key initial steps in 2023 in line with TNFD recommendations to get started with the identification, assessment, management and disclosure of our material nature-related issues5:\nProtecting and restoring nature goes hand-in-hand with supporting the transition to a low carbon economy, and ultimately Helping Britain Prosper.\nlaunched framework from the TNFD. TNFD recognises that nature is no longer a corporate social responsibility issue, but a core and strategic risk management issue alongside climate change. To this end, the TNFD have produced recommendations and guidance that are fully aligned with the GBF. We welcome the publication of the TNFD’s voluntary disclosure framework as a key development in supporting consistency and transparency in reporting on naturerelated impacts, dependencies, risks and opportunities.\nNature provides us with everything we need to survive and flourish – it provides us with food, energy, medicines and genetic resources, and protects us from floods, storms and overheating. However, the state of nature is rapidly declining, with the rate of global change in nature over the past 50 years unprecedented in human history. Between 1970 and 2018 the average change in relative abundance of monitored species was a decline of 69 per cent globally1 , driven primarily by human activities, including land use change, overexploitation, pollution, anthropogenic climate change and the spread of invasive species.", "chunk_word_count": 452, "section_path": "Building asustainable and inclusive future > 2023 carbon credit use > Group use of carbon credits:", "document_id": "2023 Lloyds sustainability report", "page": 92, "page_start": 92, "page_end": 93 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 117, "chunk_text": "# Building asustainable and inclusive future\n## 1. Building internal capability\nAs a nature conservation specialist, the Woodland Trust holds a wealth of knowledge for us to tap into, supporting us on our climate and nature journey. Through our partnership we provide volunteering and education opportunities for our colleagues, and support the Woodland Trust’s Free Tree Schemeforcommunities,whilst simultaneously encouraging farmerstoplanttreesontheir land and create new hedgerows or restore old ones.\nAs with many organisations, understanding nature and its relevance to the economy and finance is relatively new. We have made an important step on this journey in 2023 by building a nature team to help grow our internal capabilities in this space. The Group welcomed its first head of nature in May, responsible for working to embed nature in decisionmaking right across the Group.\n### Our activity\nWe have delivered initial training on nature to the Group Board, Insurance Board and Executive Committees. We have also developed and started to roll out training to build awareness and understanding of nature across the Group, with a specific training session organised for our internal nature taskforce (comprised of business and central function colleagues who are currently working on or overseeing nature-related activities). More broadly, the purpose of this internal, cross-Group nature taskforce, which formed in 2023, is to help prioritise key activities, ensure alignment and efficiencies across the Group, agree an approach for nature-related activities, including external engagements, and to share learnings from nature-related activities.", "chunk_word_count": 242, "section_path": "Building asustainable and inclusive future > 1. Building internal capability > Our activity", "document_id": "2023 Lloyds sustainability report", "page": 93, "page_start": 93, "page_end": 93 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 118, "chunk_text": "# Building asustainable and inclusive future\n## 1. Building internal capability\n### The role of Lloyds Banking Group\nNature loss and climate change share direct and indirect drivers and mutually reinforce each other, yet for far too long nature has been a peripheral part of the climate conversation. Climate change is estimated to be responsible for 14 per cent of biodiversity2 loss, which is projected to increase over time3. Similarly, the loss of nature reduces the ability of ecosystems to store carbon, and instead releases carbon emissions, amplifying the effects of climate change.\nWe recognise that we, like every individual and organisation, have both an impact and a dependency on our natural world. We believe there are several ways that the Group can play a critical role in halting and reversing nature loss and helping the economy transition:\nEducator: Educating and supporting customers, clients, suppliers and colleagues to raise awareness on the actions they can take to reduce their impact and recognise their dependencies on nature, for example, through our partnerships with the Woodland Trust and Soil Association Exchange Capital provider and facilitator: Helping to redirect financial flows away from activities that harm nature, and towards activities that have a positive impact on nature, for example, we have led the co-ordination of and structured some sustainability-linked loans with nature-related KPIs \nConvener: Actively take part in partnerships, industry bodies and initiatives to steer and shape appropriate responses and drive change, for example, our involvement with the Sustainable Markets Initiative and the nature workstream under the Financial Services Task Force (for further details see page 108)\nIn recognition of the need to address the declining state of nature, at COP15 in December 2022 the Global Biodiversity Framework (GBF) was adopted4 which is hailed as the nature equivalent to the Paris climate agreement. The framework is comprised of 23 targets for action over the decade to 2030, with the aim of ‘living in harmony with nature’. Companies and financial institutions will be key contributors to the implementation of the GBF, particularly through Target 15 on the assessment and disclosure of biodiversity dependencies, impacts and risks.\nSee pages 98 to 100 for further details on our bank approach to nature\nA key framework for companies and financial institutions to align to in assessing and disclosing nature-related impacts, dependencies, risks and opportunities is the recently\n### Our environmental strategy continued\n### Just transition\n## 2. Understanding our potential exposure", "chunk_word_count": 404, "section_path": "Building asustainable and inclusive future > 1. Building internal capability > The role of Lloyds Banking Group", "document_id": "2023 Lloyds sustainability report", "page": 93, "page_start": 93, "page_end": 94 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 119, "chunk_text": "# Building asustainable and inclusive future\n## 2024 year ahead\nThis year, we carried out a nature materiality assessment which included our retail portfolio, suppliers, and our Commercial Banking portfolio1 . We used the ENCORE2 tool to develop a more detailed understanding of our potential material impacts and dependencies on nature across all sectors.\nWe know there is more to do to execute our environmental sustainability strategy. A key focus for 2024 is continuing work on nature.\n### Our priority activities\nA just transition means ‘greening the economy in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind3’. For Lloyds Banking Group, the just transition is at the heart of our purpose of Helping Britain Prosper and we will strive to ensure no one is left behind as we commit to driving positive change for our colleagues, customers, clients and communities, including through meaningful dialogue.\nOur initial findings suggest that agriculture and the built environment are two of the most material areas across our business with the highest potential dependencies and impacts on nature. We will be using these results to inform our approach to nature, and have already incorporated these findings into our refreshed environmental strategy. We will be working to learn from these findings and where possible integrate into activities. Our next steps for the assessment itself are to assess impacts and dependencies on a more granular level, for example on a location and supply chain basis, aligned to the TNFD LEAP framework.\nWe have developed a Nature Approach for the Group in collaboration with our internal cross-Group Nature Taskforce, which includes a high-level vision and objectives connected to our Group strategy to guide us over the next three years. These three objectives are:\n### Capitalising on nature-related opportunities\nWe will explore how we can support nature recovery in the UK and green growth; support the transition to sustainable farming and food systems that protect and restore nature;and support the transition to green building stocks in the UK that protect and restore nature.\n## 3. Exploring nature-related opportunities\nWe are a Founding Partner of the Projects for Nature initiative, which is an online platform connecting business donors to nature recovery projects. We are excited by the opportunity to shape the future direction of this initiative in collaboration with the UK government, NGOs and other private sector organisations. We look forward to realising our commitment to making positive changes to restore nature by mobilising public and private finance.\n### Our activity\nA just transition is at the heart of our purpose of Helping Britain Prosper as we seek to create a more sustainable and inclusive future.\n### System-level collaboration\nWe continue to collaborate to drive system-level transformation in relation to a just transition through our engagement within a number of external working groups, committees, roundtables and workshops, with the aim of collectively informing and developing guidance on the just transition and the role of financial institutions in supporting an inclusive transition. Notable contributions include:", "chunk_word_count": 508, "section_path": "Building asustainable and inclusive future > 3. Exploring nature-related opportunities > Our activity", "document_id": "2023 Lloyds sustainability report", "page": 94, "page_start": 94, "page_end": 94 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 120, "chunk_text": "# Building asustainable and inclusive future\n## 3. Exploring nature-related opportunities\n### Managing our nature-related risks\nWe will assess and manage nature-related risks, opportunities, impacts and dependencies aligned with the voluntary TNFD disclosure recommendations, and integrate nature as part of both our risk management framework and net zero strategy.\nInvolvement in the Transition Plan Taskforce (TPT) Just Transition working group, which contributed to the release of the TPT disclosure framework and sector guidance. Membership within the LSE Grantham Research Institute’s Financing a Just Transition Alliance, where we participated in workshops focused on housing and agriculture, which has led to the release of a policy publication on how finance can support a just transition in UK agriculture. Participation in CISL’s Banking Environment Initiative’s (BEI) just transition project, which culminated in the release of the bank action guide: towards a just transition for small and medium sized enterprises (SMEs) which details the actionable steps banks can take to consider SMEs in the net zero transition.\n### Embedding consideration of nature in all that we do\nWe will continue enhancing our internal capability on nature and explore opportunities to engage our colleagues and customers to take action to address nature loss. To encourage the right enabling environment we will continue to actively engage with industry initiatives and government.\nRead more on our just transition approach within the transition plan pages 118 to 149\n### Our environmental strategy continued\n### Portsmouth Water\nEngagement as a member of the Just Transition Consultive Committee, convened by UNEP FI and ILO, which launched Just Transition Finance: Pathways for Banking and Insurance at COP28. This report aims to provide guidance to financial institutions on how to become enablers of a just and inclusive transition.\n### Customer consideration\nEffectively supporting the transition to net zero will require consideration of many different groups, including vulnerable and low-income households. Our range of products and propositions strive to be inclusive of various customer segments, along with aiming to increase customer awareness and education on the actions that can support their transition. We have detailed examples of the actions we have taken so far across our sectorspecific sections of this report and acknowledge there is more to do to continue to support our customers.\nFor further examples of our collaboration on a system-level in relation to transition planning and Scottish Widows, please see pages 116 and 164.\nIn May, we announced our support for the construction of the Havant Thicket Winter Storage Reservoir (HTWSR) by Portsmouth Water. This is the first large-scale water storage reservoir to be builtinthe UKsince the1980s.\nThe reservoir is expected to take nine years to plan, build and fill with water and once complete will also provide environmental and social benefits to the local community.", "chunk_word_count": 456, "section_path": "Building asustainable and inclusive future > 3. Exploring nature-related opportunities > Managing our nature-related risks", "document_id": "2023 Lloyds sustainability report", "page": 94, "page_start": 94, "page_end": 95 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 121, "chunk_text": "# Building asustainable and inclusive future\n## 3. Exploring nature-related opportunities\n### Strategic focus\nSDG 9: Develop \nquality, reliable, \nsustainable and \nresilient \ninfrastructure, \nincluding regional and transborder infrastructure, to \nsupport economic development and human wellbeing, with a focus on \naffordable and \nequitable access for all.\nThe principles of a just transition strongly align with our Group values, which are there to underpin the way we work and make decisions. To ensure it is prominent in our approach, just transition has been identified as a key cross-cutting theme that sits within our environmental sustainability strategy. To support this, we have developed specific guidance to use within decision-making processes and areas of focus, and we are already considering and prioritising the principles of a just transition in a number of areas, including within our target-setting approach and associated transition plan, whereby just transition considerations are prioritised and used when identifying the levers we can use to influence the transition. See our NZBA target-setting approach on page 114 for more detail.\n### Sector-specific transformation\nWe acknowledge the need to consider the just transition from a sector-specific lens, given the disproportionate impact the transition to net zero will have on high carbon sectors. To date, we have taken some steps to support a just and inclusive transition as demonstrated on page 143, but there is more to do and we aim to continue to identify the steps we can take to support a just and inclusive transition.\nThis is likely to be the first in a series of major infrastructure projects across the UK looking to address forecast water shortages in the coming decades.\n### Financing and investment\nWe understand our decisions around financing and investment have a role to play in embedding a just transition. We have already started to consider just transition principles within our investment decisions, which is further supported with our sustainable financing framework which aligns with just transition principles. See page 113 for further information.\nSDG 12.2: By 2030, achieve the sustainable management and efficientuse of natural resources.\nWithin Scottish Widows, just transition is specifically included in the stewardship policy and outlined in our voting guidelines as part of the low carbon transition.\n### Client engagement\nWe recognise the importance of client engagement to support a just transition to net zero. Details on how we have been engaging clients on the just transition can be found on page 116 and our approach to supporting them in considering just transition principles as part of their transition plans can be found on page 109.", "chunk_word_count": 423, "section_path": "Building asustainable and inclusive future > 3. Exploring nature-related opportunities > Strategic focus", "document_id": "2023 Lloyds sustainability report", "page": 95, "page_start": 95, "page_end": 96 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 122, "chunk_text": "# Building asustainable and inclusive future\n## 3. Exploring nature-related opportunities\n### Own operations\nReducing the carbon footprint of our own operations is a key part of our sustainability strategy. This year, we have reviewed and redefined our operational net zero target for 2030.\nThis adjustment reduces our reliance on offsetting residual emissions.\nWhile we continue to make strong progress against our targets, we recognise that achieving these goals will not be easy, and we will need to keep investing in our buildings, as well as supporting colleagues in the transition towards a greener future.\nWe have increased our commitment to reduce operational Scope 1 and 2 carbon emissions from 75 per cent to at least 90 per cent by 2030, based on our 2018/19 baseline.\nWe recognise that there is more that we can do to minimise the environmental impact of our direct operations.\nIn 2024, we will continue to deploy energy-efficient technology including LED lighting and improved building controls. We will remain focused on removing all use of natural gas from our estate, replacing gas boilers with low-carbon heating technologies and creating more sustainable branches in communities across the UK. We will also keep investing in sustainable and active travel facilities across our buildings, while we mobilise our new waste, water and nature commitments, defining a clear roadmap towardsour2030ambitions.\nOur actions\nWe have renewed our commitment to reduce our water consumption, expanded the scope of our operational and waste target to include technology waste, as well as introduced a new pledge for nature across our operations.\n### Own operations continued\nWe also remain a committed member of the World Green Building Council Net Zero Carbon Building initiative, and the Climate Group’s campaigns on renewable electricity (RE100), energy productivity (EP100) and electric vehicles (EV100).\n### Operational climate ambition and targets1\nDirect carbon emissions2 \nNet zero carbon operations by 2030\n### Energy consumption3\n### Travel emissions4\n## CLIMATEGROUP\nReduce our total energy consumption by 50 per cent by 2030\nMaintain travel carbon emissions below 50 per cent of 2018/19 baseline\n[IMAGE CAPTION] 2018/19 baseline\n36.2%\n## CLIMATEGROUP EP100\n## CLIMATEGROUPEV100\n### reduction\nProgress (% reduction)\nFurther details of our SECR reporting can be found in our 2023 annual report and accounts and our 2023 sustainability metrics datasheet .\nOperational waste (legacy target)5 \nReduce our operational waste by 80 per cent by 2025\n### Water consumption (legacy target)6\nReduce water consumption by 40 per cent by 2030\nThe methodology to derive reported Scope 1, 2 and 3 emissions is provided in the sustainability metrics basis of reporting . Emissions reduction is shown for the period 1 October 2022 to 30 September 2023. 2 Includes Scope 1 and 2 emissions, market-based approach for electricity Scope 2. 2 Includes electricity, gas and fuel usage across our full operational estate. 4 Includes business travel (covering flights, car journeys, hotel stays, taxis, buses and underground/overground rail trips), and employee commuting, company cars and mobile branches with WTT. Includes restated flights and rail emissions performance to reflect improving data coverage. 5 Includes general waste, plastics, mixed recycling, food waste and confidential paper, as well as lower-volume waste such as glass and wood. 6 Includes water consumption across our full operational estate.\n74.7%", "chunk_word_count": 536, "section_path": "Building asustainable and inclusive future > 3. Exploring nature-related opportunities > Own operations", "document_id": "2023 Lloyds sustainability report", "page": 96, "page_start": 96, "page_end": 97 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 123, "chunk_text": "# Building asustainable and inclusive future\n## CLIMATEGROUPEV100\n### reduction\n2025 target We are here\n[IMAGE CAPTION] Progress (% reduction) 2014/15 baseline\n### Own operations continued\n### Implementation strategy\n### Target\n### Reduce total energy consumption by 50 per cent by 2030\n### Maintain travel carbon emissions below 50 per cent of 2018/19 baseline\n### Reduce operational waste by 80 per cent by 2025 (legacy target)\n### Reduce water consumption by 40 per cent by 2030 (legacy target)\n### $\\mathbf { c } \\oplus _ { 2 }$ Net zero carbon operations by 2030\nIn 2023, our operational carbon emissions (Scope 1 and 2, measured using the market-based method) fell by 18.2 per cent compared to 2021/22, resulting in an overall reduction of 47.8 per cent from the 2018/19 baseline.\nIn 2023, our building energy consumption reduced by 13.5 per cent compared to 2021/22, resulting in an overall reduction of 36.2 per cent compared to our 2018/19 baseline. This was achieved through continued reduction of energy use in our properties and working with our supply chain to implement energy saving solutions.\nIn 2023, our travel emissions remained 51.3 per cent below our 2018/19 baseline. Despite an increase in commuting and business travel related carbon emissions from the previous year, we maintained emissions below the 50 per cent target level.", "chunk_word_count": 219, "section_path": "Building asustainable and inclusive future > CLIMATEGROUPEV100 > reduction", "document_id": "2023 Lloyds sustainability report", "page": 97, "page_start": 97, "page_end": 98 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 124, "chunk_text": "# Building asustainable and inclusive future\n## CLIMATEGROUPEV100\n### Achieved in 2023\nIn 2023, we produced 74.7 per cent less operational waste compared to 2014/15. Our recycling rate is 72 per cent and we diverted 97.3 per cent of our waste from landfill.\nIn 2023, we have achieved our water reduction target for the third year in a row. Our water consumption was 53.8 per cent lower than the 2009 baseline, while in 2022 it was 54.3 per cent lower than the baseline.\nSomeof ourkey activities include\n• Completed a trial of low flow shower at our Bristol Harbourside office, reducing water usage by 5l/minute and with a potential to save c.300,000 litres per annum Undertaken successful trials of water saving devices for urinals. When rolled out across 39 sites, this technology has the potential to deliver water savings of c.40 million litres per annum Continued the installation of percussion taps, instant hot water taps and low flush volume WC systems across our offices and branches, including upgrading 50 per cent of toilets to Propelair system at our Andover Keens House office\nOur key activities in the last year include:\n• Developed site level MI dashboard across all offices, to support waste bin rightsizing Started to deploy battery waste collection to reduce waste contamination in over 60 offices In our Bristol Harbourside office, we have removed all non-reusable cups, takeaway containers and crockery, avoiding over 50,000 single used items a year Introduced ‘Recycle for Good’ across our offices. This a scheme for colleagues to bring their own technology device in the office to be recycled \nReduce our year-on-year paper waste by 11.6 per cent, and removed 4,200 printers across our operations\nExamples of our key activities include:\n• Ongoing energy reduction measures and investment across our estate. Further details are outlined in the ‘Reduce our total energy consumption by 50 per cent by 2030’ pledge update Reassessment of our decarbonisation path towards 2030, and increasing our existing commitment from 75 per cent to at least a 90 per cent reduction in Scope 1 and 2 versus a 2018/19 baseline Signing a new Power Purchase Agreement for the supply of 50GWh of renewable electricity per year to our buildings, generated by a new UK-based solar photovoltaic development that will be built in 2024 Investment of £110k in five innovation projects selected from over 200 candidates entering our second ‘Call for Innovation'event\nSome of our key activities include:\nContinuing to build our sustainable travel infrastructure across our sites, with 22 of our offices now accredited by Cycling UK’s Cycle Friendly Employer scheme, plus we also have 264 electric vehicle charging points at 40 of our sites, with 79 per cent of our offices now having EV charging points installed Launch of liftshare platform to all UK based colleagues. Over 2,000 journeys already authenticated Development and launch of a travel carbon calculator, allowing colleagues to compare the carbon impact of different types of journey methods", "chunk_word_count": 492, "section_path": "Building asustainable and inclusive future > CLIMATEGROUPEV100 > Achieved in 2023", "document_id": "2023 Lloyds sustainability report", "page": 98, "page_start": 98, "page_end": 98 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 125, "chunk_text": "# Building asustainable and inclusive future\n## CLIMATEGROUPEV100\n### Achieved in 2023\n• Continuing our energy optimisation programme, resulting in 62GWh cumulative savings in 2023 \nBuilding on the previous years’ programme, we have continued our LED lighting installs across our offices and branches, resulting in expected savings of 6,406MWh, the equivalent to powering 1,800 UK homes. We have also upgraded our building management systems (BMS) at 225 branches, ensuring minimal energy wastage and resulting in savings of 1,215 MWh \nFull integration of our Sustainability Framework 360 in the design process of all our office refurbishment programme\nIn 2024, we remain fully committed in delivering our net zero operational carbon ambitions, and we will focus on:\nReducing energy consumption remains at the core of our operational climate pledges and net zero journey. In 2024, we will:\nAs colleagues continue to use office spaces more often, our commuting and business travel emissions will increase. This is why our travel carbon reduction pledge remains a key priority, and in 2024 we aim to:\nIn 2024, as we mobilise activities on our new ‘Zero Waste by 2030’ target details on page 98, we will also continue our journey to achieve 80 per cent reduction in operational waste by 2025 across our branches and offices by:\nIn 2024, we will focus on mobilising our ‘Water Neutral by 2030’ target details on page 98, while also:\n### (Aim for 2024) Short term\n• Continuing the rollout of heat pumps and energyefficient electric heating and cooling solutions across our branches and offices \n• Improving our buildings’ fabric and roof insulation across branches and offices \n• Reducing the Global Warming Potential (GWP) of refrigerant gases wherever possible\n• Continuing with the rollout of water-efficient toilets, taps and low water usage urinals across our branches and offices, aligning the buildings with our engineering standards Using the Sustainability 360 Framework, our building design tool, to embed water efficiency for new and refurbished offices across our operations\n• Continue to invest in energy efficiency (e.g. installing LED lighting and improving building controls) and build awareness with our colleagues and suppliers via energy management behavioural campaigns \n• Test new ideas and innovative technologies to deliver transformational clean energy solutions across our estate \nDeliver additional roof-top onsite solar photovoltaic installations at our main offices\n• Continue supporting our colleagues in adopting sustainable commuting habits, focusing on the implementation of our liftshare platform across key hubs Continue to improve cycling facilities for colleagues, seeking Cycle Friendly Employer accreditation from Cycling UK at each of our main offices Assess the opportunity to introduce an internal travel carbon levy, with the intention to create a levelled playing field between cost of trains and flights\nContinuing to build colleague awareness with communication and engagement activities to help reduce our operational waste, as colleagues have a significant role to play in achieving our ambition • Continuing to right-size our printer estate in offices and branches • Continuing removal of single-use plastic items from our catering and cleaning operations", "chunk_word_count": 500, "section_path": "Building asustainable and inclusive future > CLIMATEGROUPEV100 > Achieved in 2023", "document_id": "2023 Lloyds sustainability report", "page": 98, "page_start": 98, "page_end": 98 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 126, "chunk_text": "# Building asustainable and inclusive future\n## 2025 onwards\nFrom 2025, we will start reporting our performance agains our new ‘Zero Waste by 2030’ target, alongside our legacy waste reduction target. As more colleagues continue working in our offices, we face a significant challenge in maintaining the low levels of waste measured alongside increasing our recycling rate and decreasing waste contamination. This is why we will:\n### From 2025,we will:\n### From 2025, we will:\nFrom 2025, we will update our reporting to replace our existing water reduction target with our new ‘Water Neutral by 2030’ measure.\n• Eliminate the use of natural gas in our buildings by 2030 Continue to purchase 100 per cent renewable electricity and work towards our ambition to increase our electricity sourced directly from renewable projects or onsite generation, to at least 60 per cent by 2025 By 2030, reach at least 90 per cent reduction in Scope 1 and 2 emissions versus the 2018/19 baseline, improving from the previous 75 per cent target Start sourcing high-quality carbon offsets for our residual Scope 1 and 2 emissions by 2030\n• Continue our energy optimisation programme \n• Integrate the Sustainability 360 Framework, our building design tool, as part of the delivery for new and refurbished offices and branches \n• Continue to invest in rooftop onsite solar photovoltaic installations\n• Embed sustainable travel as the main way of commuting and business travel across the Group Establish sustainable commuting as the go-to solution for colleagues Continue our commitment to The Climate Group’s EV100 campaign, installing charging points across all our colleague car parks by 2030\nReducing water consumption across our operations remains a key priority for us. In the next phase of our water reduction journey, we will broaden our ambition to embed water efficiency as part of our buildings’ design process, ensuring that water conservation principles are included across our operations, major office and branch refurbishments.\n• Continue focusing on reducing our operational and technology waste to support our zero waste by 2030 ambitions Embed long-term circular economy principles across our operations, to support and expand our ambitious waste reduction target Prioritise strategies to prevent waste, prepare it for reuse, recycle, recover other value (e.g. energy) and finally, dispose only if no other alternatives are available\nWe will also look at how we can develop and source credible water offsets project in our journey towards 2030.\nOwn operations continued", "chunk_word_count": 402, "section_path": "Building asustainable and inclusive future > 2025 onwards > From 2025,we will:", "document_id": "2023 Lloyds sustainability report", "page": 98, "page_start": 98, "page_end": 99 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 127, "chunk_text": "# Building asustainable and inclusive future\n## 2025 onwards\n### New operational pledges\nOur operational climate pledges reflect our commitment to minimise the environmental impact of our direct operations. This is why we have now increased our ambitions for waste, water and nature with a new set of operational targets that replace our legacy pledges.\nBy 2025, we will achieve our existing 80 per cent waste reduction target, and by 2030 we will align with the Zero Waste International Alliance’s definition of a zero-waste business, diverting over 90 per cent of our operational and technology waste from landfill and incineration, focusing our effort on preventing, reducing, reusing and recycling waste. As part of our pledge, we will:\nWe recognise the preciousness of water resources, and we want to play our part in minimising the impact of our direct operations. This is why we are committed to reach waterneutrality across our buildings by 2030, reducing our water consumption as much as possible, and offsetting the residual volume. This pledge signifies our dedication to responsible water management, and we will:\nWe understand the importance of nature and biodiversity and ecosystems in a sustainable future, both to support wildlife and to deliver all the vital wellbeing benefits that nature can provide for people. This is why we’re taking action to bring nature closer to our people and places across our offices, branches and data centres. As part of this pledge, we will:\nInvest in our places, prioritising reduction of water \nconsumption across our operations, investing in data \nand technologies we have tested and making them \na standard \nCreate partnerships to finance, invest and support water \nreduction projects in the local community, including \nwater conservation projects \nTake action to help deliver nature-positive operations \nby working to halt and reverse nature loss across our \nkey operational green spaces. This includes adopting \na recognised science-based measurement and \nmonitoring approach, exploring external \ncollaborations and partnerships, and developing \nan operational pollinator strategy \nSupport nature in our urban spaces by delivering \nsmaller nature-positive habitats on rooftops, \nbalconies and patios using UK native and pollinator \nfriendly plants to create stepping-stone habitats \nfor urban wildlife \nBring nature closer to our people by developing \nengaging activities and inspiring learning experiences \nfor our colleagues\nMeasure and disclose our full operational and \ntechnology waste impact \nBy 2030, divert over 90 per cent of our operational and \ntechnology waste from landfill and incineration, with \nthe ambition to include construction waste when \nbetter data is available \nAchieve the TRUE waste certification across our larger \noperating sites\nOwn operations continued\n### Short and longer term goals\nWater neutrality by 2030", "chunk_word_count": 433, "section_path": "Building asustainable and inclusive future > 2025 onwards > New operational pledges", "document_id": "2023 Lloyds sustainability report", "page": 99, "page_start": 99, "page_end": 100 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 128, "chunk_text": "# Building asustainable and inclusive future\n## 2025 onwards\n### Bring nature closer to our people and places\nFocus on achieving our legacy commitment on operational waste (80 per cent reduction by 2025, versus a 2014/15 baseline). \nFocus on data quality, increasing granularity and accuracy of operational waste data, working with suppliers to maximise our technology waste capture capabilities. \nDevelop a new recycling and single use items \nstrategy across our operations and introduce \ncircularity principle and zero waste policy for our larger sites. \nExpand external waste disclosure to include all \noperational and technology waste. \nComplete our first TRUE zero waste certification pilot in one of our major offices.\nRoll out smart meters into our top water consuming sites. Develop reporting and insight on excessive water usage and define a leak repairing strategy. Develop our own water efficiency building standard and embed it into the Sustainability 360 Framework design tool. Develop water offset guidelines, with the potential to partner with external parties and independent bodies. Commence water efficiency technology retrofit across our offices, branches and data centres.\nDevelop a 10-year biodiversity enhancement plan for our larger operational green spaces and continue to protect and restore nature at key sites. Focus on data monitoring and insight across our estate to measure our progress and ensure we remain on track to reach our nature-positive goals. Deliver a showcase nature project at one of our large greenspaces. Develop nature-positive volunteering opportunities, engaging activities and inspiring learning experiences for colleagues across our business. Deliver more nature-led urban spaces as part of our office and branch retrofit programmes.\nShort term (2024–2025)\nRemove single-use items from our own operations. Embed innovation across our operations and \ntechnology waste, with focus on recycling, data, \nwaste audit and gamification. \nAchieve TRUE certification as part of our governance for our larger occupied sites and embed updates into our annual external disclosure. \nWork with suppliers to embed a materials circularity principle across our goods sourcing.\nExtend our pollinator strategy to support colleagues and customers, encouraging them to take ‘microactions’ at home and make life better for all \npollinators. \nAdopt a recognised measurement and disclosure framework across our estate, supporting annual reporting and facilitating further external \ncollaborations and knowledge-sharing. \nSet a goal to achieve The Wildlife Trusts’ ‘Biodiversity Benchmark’ accreditation at key sites. \nDevelop and implement indoor live planting \nstandards across our offices, branches and \ndata centres.\nDefine offsetting planning and phasing, and identify and secure offsetting mechanisms and partners. Explore opportunities to support colleagues and customers on their water reduction journey. Publish case studies and thought leadership and water efficiency and offsetting to inspire and influence others.\nLonger term (2026–2030)\n### We are transforming our operational green spaces across the UK to give nature more space to thrive. Since 2020, we’ve protected and restored over 19,000m2 at 19 offices and two branches.", "chunk_word_count": 470, "section_path": "Building asustainable and inclusive future > 2025 onwards > Bring nature closer to our people and places", "document_id": "2023 Lloyds sustainability report", "page": 100, "page_start": 100, "page_end": 100 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 129, "chunk_text": "# Building asustainable and inclusive future\n## 2025 onwards\n### Adopting a science-based approach\nSDG 13.3: Improve \neducation, \nawareness-raising \nand human and \ninstitutional capacity on climate change mitigation, \nadaptation, impact reduction and early warning. \nSDG 15: Protect, \nrestore and promote sustainable use of \nterrestrial \necosystems, \nsustainably manage forests, combat \ndesertification,and haltand reverse land degradation and \nhalt biodiversity loss.\nWe’re taking a science-based approach to baseline and monitor the biodiversity value of our key operational green spaces. We’re working with ecologists and other trusted experts to adopt Natural England’s Biodiversity Metric 4.0 measurement framework to measure and monitor our progress.", "chunk_word_count": 99, "section_path": "Building asustainable and inclusive future > 2025 onwards > Adopting a science-based approach", "document_id": "2023 Lloyds sustainability report", "page": 101, "page_start": 101, "page_end": 101 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 130, "chunk_text": "# Building asustainable and inclusive future\n## 2025 onwards\n### Closer to nature\nIn 2023, we worked closely with Middlemarch Environmental Ltd., one of the UK’s leading ecological consultancies dedicated to helping businesses protect the natural environment.We'venow completed measurement activities at eight of our operational sites with green spaces, and have calculated each site’s baseline biodiversity value. This included understanding its ecological connectivity, its importance to local and national habitat restoration programmes, and the abundance and condition of wildlife,ecosystems and ecosystem services that are present on site. We then developed 10-year biodiversity enhancement management plans for each site. Implementing the recommendations will enable us to continue to make progress and deliver measurable benefits for nature by restoring and enhancing our vital ecosystems and increasing connectivity between our operational sites and the surrounding landscapes.\nWe are committed to bringing nature closer to our people and places, and to taking action to deliver naturepositive operations by halting and reversing nature loss at our key operational green spaces. Our focus is on increasing the area, connectivity and integrity of habitats at our sites, working to protect native species, including pollinators, and supporting ecosystem services across our estate. Examples of our work this year include:\nnative plant species. These will bloom at various points throughout the year to provide vital foraging opportunities for urban wildlife and to extend the feeding season for bees, butterflies and other important pollinators. We’ve also included various longflowering and berry-producing plants and hedges, such as forsythia, lavender, honeysuckle and hawthorn to provide natural ‘feeding stations’ supporting insects, pollinators, invertebrates and birds,as well as other wildlife that feed on these species, such as bats.\nKeens House, Andover: We have invested innature-positive enhancements and a new biodiversity-led outdoor colleague collaboration space as part of a refurbishment project to improve the sustainability of Keens House, ourmain office in Andover.Thenew garden space aims to support urban wildlife and provide a welcoming and accessible outdoor area for colleagues to meet, collaborate and take a few moments to enjoy the benefits of nature.\nWe’ve planted mature birch trees in the courtyard garden to provide additional nesting opportunities for birds, and have added features such as boulders and rock beds to provide a safe space for invertebrates to find food and shelter, to hibernate or to bask in the sun. The garden pathways were created using self-binding compressed gravel to provide a safe, accessible way for people to access the space. The small gaps in the path surface will allow rainwater to naturally seep through into the soil beneath, helping to prevent flooding.\nFrom 2024, we’ll continue to measure and monitor the maintenance and improvements of natural processes, ecosystem health and species abundance over time, and develop further action plans to ensure persistent, long-term benefits for both people and nature.\nWe have designed the garden as a vital stepping-stone habitat to supportnature'srecoveryand created 200m2 of new planting beds within Andover'surban centre. We’ve planted the beds with a diverse selection of over 30 different UK\nThe new nature-positive courtyard garden at Keens House aims to provide an engaging, biodiversityfriendly outdoor space for all colleagues to enjoy, and a vital stepping-stone habitat for urban wildlife.", "chunk_word_count": 527, "section_path": "Building asustainable and inclusive future > 2025 onwards > Closer to nature", "document_id": "2023 Lloyds sustainability report", "page": 101, "page_start": 101, "page_end": 102 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 131, "chunk_text": "# Building asustainable and inclusive future\n## 2025 onwards\n### Supply chain\n152\nkey suppliers assessed against our Emerald Standard representing c.80% of supply chain emissions and spend\nOur supply chain emissions result from the purchase of goods and services across a diverse range of categories from IT software and hardware through to consultancy services. We are proactively engaging withour suppliers to reduce these emissions aligned to a 1.5-degree pathway.\n2023 is the second year of our supply chain sustainability programme in which we have calculated and disclosed our Scope 3 supply chain emissions with the aim of driving a reduction in our supplier carbon emissions and improve their wider ESG performance. During the year, we continued to focus our direct engagement with suppliers who make the biggest contribution to our supply chain emissions to understand their alignment to our Emerald Standard requirements and future plans to meet it where they fall short.\nFollowing a third-party review of our methodology and approach for calculating our supply chain emissions, we have re-calculated our baseline emissions for the period October 2021 to September 2022. A key refinement was the exclusion of VAT from our spend data used to calculate supplier emissions. This has enabled us to calculate our October 2022 to September 2023 emissions using a consistent methodology and make our first year-on-year comparison. We have also received limited independent assurance of these emissions disclosures.\nAs a result, we are reporting an increase in supply chain emissions driven by business growth and investment to transform our business, resulting in increased demand for supplier goods and services. This highlights the challenge of reducing supply chain emissions on an absolute basis whilst growing our business, the need to de-couple emissions from spend by driving greater transparency of our suppliers’ Scope 1, 2 and relevant Scope 3 emissions and the importance of credible transition plans. Given the diverse nature of goods and services we purchase, we also recognise that suppliers operate in different sectors and the pace at which new technologies become available to support their transition will vary. Similarly, delivering on our ambition will also depend on the action of governments including developments in public policy. We will continue to drive adoption of our Emerald Standard and will evolve our approach in line with emerging standards and best practice.\nThrough this engagement we continue to see varying levels of supplier maturity and ambition in relation to calculating, disclosing and reducing their own emissions. Encouragingly, we have seen positive supplier progress towards meeting our Emerald Standard but recognise the significant challenges ahead in meeting our ambition. Whilst we do not have direct control over our suppliers’ transition plans and associated emissions, we remain committed to managing our demand for supplier services effectively and working with suppliers collaboratively on our shared journey to net zero.\n### Supply chain continued", "chunk_word_count": 473, "section_path": "Building asustainable and inclusive future > 2025 onwards > Supply chain", "document_id": "2023 Lloyds sustainability report", "page": 102, "page_start": 102, "page_end": 102 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 132, "chunk_text": "# Building asustainable and inclusive future\n## 2025 onwards\n### Our supply chain emissions\nWe continue to align our supply chain emissions to the GHG Protocol Scope 3 Categories 1, 2 and 4, namely: purchased goods and services, capital goods and upstream transportation and distribution. Other Scope 3 categories are excluded from our supply chain reporting as they are reported elsewhere or not relevant to supplier activities (for example, downstream Scope 3 categories). The only exception is Category 8 upstream leased assets which contributed less than 1 per cent of in-scope supplier spend in our baseline year. The emissions associated with upstream leased assets have been calculated and are reported in Category 1.\nThe use of CEDA factors is considered the least accurate approach, however, to ensure emissions calculations are complete (in line with GHG Protocol requirements) their use is considered appropriate. CDP Supply Chain allocated data is considered the most accurate approach at this time. The proportion of the spend data and corresponding emissions calculated according to each approach is summarised in the table. Given the timing of CDP releasing their annual supply chain data, we have used 2022 CDP supply chain data in both our restated baseline year and our current year. Going forward, we will use our reporting year minus one CDP data (e.g. for our reporting period October 2023 to September 2024 we will use CDP 2023 data).\nWhen making a year-on-year comparison, we have seen a 4 per cent increase in emissions calculated using CEDA factors which is consistent with a 4 per cent increase in spend with suppliers not disclosing Scope 1, 2 and relevant Scope 3 emissions through CDP. However, it is worth noting that whilst emissions calculated using CEDA factors account for 78 per cent of emissions, they only represent 55 per cent of spend. This highlights the importance of driving a shift to more accurate emissions data that results from supplier’s calculating and disclosing their emissions inventory, coupled with credible transition plans to reduce absolute emissions.\nWe are one year on since announcing our ambition to reduce supply chain emissions by 50 per cent by 2030 on our path to net zero by 2050, or sooner. Against our baseline year, we have seen an increase in our disclosed supply chain emissions of 16 per cent resulting from a 21 per cent increase in spend with our suppliers.\nWe have seen a 4.3 per cent reduction in the carbon intensity of our supplier spend from 169 $\\mathsf { t C O } _ { 2 } \\mathsf { e } / \\mathsf { E m }$ to 161 $\\mathsf { t C O } _ { 2 } \\mathsf { e } / \\dot { \\varepsilon } \\mathsf { m }$ . Analysis of our data shows this reduction is primarily due to inflationary adjustments to the carbon emissions factors used in our calculation.\nThe spend-based methodology involves applying one of four possible approaches to spend data.", "chunk_word_count": 495, "section_path": "Building asustainable and inclusive future > 2025 onwards > Our supply chain emissions", "document_id": "2023 Lloyds sustainability report", "page": 103, "page_start": 103, "page_end": 103 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 133, "chunk_text": "# Building asustainable and inclusive future\n## 2025 onwards\n### Our supply chain emissions\nThis highlights the limitations of a spend-based methodology which relies on average carbon emission factors per £1 of spend and supports our objective of moving towards supplier specific carbon emissions data. This will allow us to more readily assess our suppliers progress against our ambition by decoupling spend from emissions, reflecting the action taken by suppliers to decarbonise their business activities. Currently 3 per cent of our disclosed emissions are calculated using supplier specific allocated emissions and a further 19 per cent by apportioning supplier emissions disclosed via CDP.\n### • CDP supply chain allocated\nWhere a supplier is part of our CDP supply chain membership and has allocated emissions in their CDP Climate Change disclosure to the products and services it provides to the Group, we use this supplier specific emissions data.\n### • CDP supply chain apportioned\nWhere a supplier is part of our CDP supply chain membership but has not been able to allocate their emissions directly to the Group, we apportion their total disclosed emissions based on the level of spend with that supplier.\nOur latest disclosed supply chain emissions are calculated from supplier spend totalling £4.9 billion (net of VAT). In the same period, we estimate there is a further c.£4.7 billion (including VAT)1 of spend with other third parties which requires investigation. We have a programme of work to assess third-party spend which is currently not captured or disclosed in our supply chain reporting. In particular, we will consider the upstream supply chains of our vehicle and property leasing businesses.\n### • CDP apportioned\nWhere a supplier is not part of our CDP supply chain membership but discloses their emissions publicly via CDP we apportion their total disclosed emissions based on the level of spend with that supplier.\n• Comprehensive Environmental Data Archive (CEDA) Where CDP data is not available, CEDA industry factors are applied to calculate emissions for each spend category. CEDA is an Environmentally Extended Input-Output database which provides carbon equivalent emission factors per unit of spend on goods/services.\n### Supply chain continued\n### Our Emerald Standard requirements\nur Emerald Standard is the Group’s supplier sustainability standard. We ask our key suppliers t\n[IMAGE CAPTION] Progress across our key suppliers\nScience-aligned targets Set science-aligned targets, reducing emissions in line with limiting global warming to 1.5°C Have targets which cover Scope 1, 2 and 3 emissions\n### CDP climate change\nSubmit an annual public response to CDP’s climate \nchange questionnaire \nAchieve at least a B score from CDP for their response \nDisclose Scope 1, 2 and applicable Scope 3 carbon \nemissions\n### ESG scorecard\nHave a valid EcoVadis ESG scorecard (or similar) and achieve at least a ‘silver’ level rating\nNet zero commitment\nHave their own public ambition to achieve net zero by 2050 with interim targets to reduce carbon emissions by 2030, or sooner. A net zero target that covers Scope 1, 2 and 3 emissions\n### Annual assessment of key suppliers: 36 out of 152 suppliers met the requirements of our Emerald Standard in 2023\n152", "chunk_word_count": 519, "section_path": "Building asustainable and inclusive future > 2025 onwards > Our supply chain emissions", "document_id": "2023 Lloyds sustainability report", "page": 103, "page_start": 103, "page_end": 105 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 134, "chunk_text": "# Building asustainable and inclusive future\n## 2025 onwards\n### Engagement strategy\nIn 2023, we expanded the rollout of our Emerald Standard engaging with 152 suppliers, an increase of 24 per cent from 2022. These suppliers represent circa 80 per cent of our supply chain spend and emissions in the scope of our disclosure made in February 2023.\nSuppliers assessed against our Emerald Standard representing $\\pmb { \\mathrm { c . 8 0 \\% } }$ of supply chain spend and emissions\nWe took the opportunity at the beginning of 2023 to review our Emerald Standard which led to amending the requirement for suppliers to have a CDP score of at least A- to a score of B. We took this decision as we recognise achieving an A- score was more difficult for smaller organisations and balances the need for attaining a level of quality in responses with being inclusive. A score of B represents a challenge for the broader supply market to achieve and we will keep this under review.\n95% of supplier and sourcing managers completed training on our Emerald Standard\nWe started the year by engaging with the CEOs, CSOs and executives accountable for ESG of these key suppliers, reinforcing the importance of engaging and collaborating with us on our collective journey to net zero. In June we held our second supply chain sustainability summit hosted by our Chief Procurement Officer, providing a platform to share information on our own supplier activities, our supplier programme and climate transition plans. This included 191 external delegates representing 105 different third-party organisations who joined the online virtual event.", "chunk_word_count": 268, "section_path": "Building asustainable and inclusive future > 2025 onwards > Engagement strategy", "document_id": "2023 Lloyds sustainability report", "page": 105, "page_start": 105, "page_end": 105 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 135, "chunk_text": "# Building asustainable and inclusive future\n## 143 of our key suppliers sustainability plans.\nAdditionally, to drive greater adoption of our Emerald Standard, we have enhanced the sustainability questions in our supplier request for proposal templates to ensure sustainability is given consideration in the sourcing process, recognising the importance of including sustainability in our supplier selection decisions. We also developed a sustainability schedule which embeds our Emerald Standard principles and requirements into supplier contracts. The objective is to include this into master services agreements with our 152 suppliers, who complete Emerald Standard Assessments, at the point of renewal. We continue to capture learnings from this activity to inform our approach going forward and future options to incentivise adoption of our Emerald Standard with our suppliers.\nTo further our understanding of our suppliers’ own climate change ambitions and strategies, we had structured conversations with 143 of these key suppliers during the course of 2023. We outlined our ambition and expectations encapsulated by our Emerald Standard. This included an evaluation of their progress towards meeting our requirements and future plans where they fell short.\nWhilst recognising there is more to do to drive environmental sustainability in our supply chain we were delighted to have been shortlisted for the Chartered Institute of Procurement and Supply (CIPS) Excellence Procurement 2023 Awards and the World Sustainability Awards 2023.\nWe saw an increase in engagement across our key 152 suppliers. In our second year as a CDP Supply Chain Member 90 per cent of our 152 suppliers disclosed via CDP and 79 per cent were rated through the EcoVadis platform.\nWe recognise there is more to do to improve our disclosures and reduce the emissions that our supplier activities generate. In 2024 we will be focusing on understanding emissions associated with suppliers which are currently outside the scope of our disclosure and any resulting impact on our ambition to reduce our supply chain emissions.\nIn November we carried out a final validation of our key suppliers’ progress towards meeting our Emerald Standard based on their 2023 CDP Climate Change disclosure and latest EcoVadis scorecards. At that time, CDP had not published their 2023 disclosure ratings however using their 2022 CDP scores 36 suppliers have been assessed as meeting our Emerald Standard requirements.\nThe Emerald Standard concepts are pivotal to meeting our ambition to reduce supply chain emissions and we recognise the importance of building the capacity and capabilities of colleagues who engage more widely with prospective and existing suppliers through their day-to-day roles. In 2023 we rolled out a suite of E-learning modules to relevant supplier and sourcing managers to build their confidence and understanding of the requirements. By the end of November, 95 per cent of these colleagues had completed the training.\nWe will also continue our engagement with our key suppliers, driving Emerald Standard adoption.\n### Financial planning and controls\n### Data considerations", "chunk_word_count": 479, "section_path": "Building asustainable and inclusive future > 143 of our key suppliers sustainability plans. > Financial planning and controls", "document_id": "2023 Lloyds sustainability report", "page": 105, "page_start": 105, "page_end": 105 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 136, "chunk_text": "# Building asustainable and inclusive future\n## 143 of our key suppliers sustainability plans.\n### How climate is factored into our internal reporting and planning process\nFinancial statement preparation includes consideration of the impact of climate change on the Group’s financial position. While the effects of climate change represent a source of uncertainty, the Group does not consider there to be a material short-term impact on its estimates for climate-related risks.\nClimate considerations form part of our planning and forecasting activities. We consider climate effects in our base case economic scenario and forecast financed emissions alongside climate risks and opportunities within the Group’s four-year financial plan, primarily conducted across three key areas.\nAn assessment was performed of the Group’s internallygenerated economic scenarios used in the measurement of expected credit losses against external scenarios published by the NGFS.\nOur financial planning process acknowledges the dependencies on both external factors such as policies, technology developments and customer behaviour. We continue to monitor the impact of these external factors on our Group ambitions and targets alongside working in partnership with our customers and other stakeholders to achieve our common goal of achieving net zero by 2050.\nFor further details of how scenario analysis was used to support our impairment assessments in 2023 see annual report and accounts 2023 page 156.\nAccess to good quality climate and environment data is key to addressing the challenges and opportunities associated with the transition to net zero. With 26 million customers across all sectors of the UK economy, the Group faces a number of challenges to ensure we have the right data to support our activities. These challenges can include accessing data for specific high carbon sectors (e.g. agriculture, see page 142 for related data challenges), data for specific initiatives such as in support of our credible transition plan assessments, as well as ingestion of a significant number of differing data sources to obtain a view of our portfolio.\nTo address some of these data challenges we are building a strategic, cloud-based ESG data solution. This will help create a single source of truth for ESG data in the Group in an automated way, enhancing controls and consistency. Data utilised on this platform will extend beyond the use of climate data used for regulatory reporting, allowing us to better support our customers and their net zero ambitions. Examples of data identified for inclusion includes energy performance certificates $( \\mathsf { E P C } )$ for buildings and CDP submissions. Additionally, we are exploring the use of AI to create insights from unstructured data.\nThere is no material impact assessed on the Group’s financial position or performance as at 31 December 2023.", "chunk_word_count": 445, "section_path": "Building asustainable and inclusive future > 143 of our key suppliers sustainability plans. > How climate is factored into our internal reporting and planning process", "document_id": "2023 Lloyds sustainability report", "page": 106, "page_start": 106, "page_end": 106 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 137, "chunk_text": "# Building asustainable and inclusive future\n## 143 of our key suppliers sustainability plans.\n### How finance is supporting the Bank’s reporting of climate-related matters\nWe are continuing to increase the scope of our emissions forecasting to cover more of our balance sheet, leveraging our forecasting process and capabilities to track progress against our published sector targets.\n1. Forecasting our Bank financed emissions to 2030 for our high-carbon-intensive sectors, along with our supply chain and own operations. \n2. Building the capability to report our financed emissions and sustainable lending and investments progress on a quarterly basis, to support balance scorecard tracking. With this process aligned to Board risk appetite metrics. \n3. Implementing a number of climate-related controls in relation to the calculation and reporting of financed emissions and related regulatory disclosures. \n4. Continuing to develop the Group’s investment planning capabilities to progress our climate ambitions and targets: reducing the emissions we finance, reducing the emissions from our suppliers and supporting our net zero own operations footprint.\nWe regularly track sustainability-related investment across key climate, nature and social initiatives through direct engagement with business unit teams ensuring alignment and prioritisation with our strategic objectives. As part of this, the Group has dedicated investment of c.£40 million to support our customers’ transition in 2024, in addition to the day-to-day activities integrated into business-as-usual. Regular monitoring of our sustainability-related investment across the Group aligns our financial goals with our purpose, supporting the ability to measure progress and delivery.\nAdditionally when utilising data we are regularly working to improve data quality, timeliness and fragmentation, as well as ensuring calculation methods are robust and up to date. Due to the breadth of our business activities, we must also contend with a constantly evolving landscape of frameworks and standardisation. We carefully select and utilise the most relevant ones to our business, for example, the Partnership for Carbon Accounting Financials (PCAF), so that we can accurately gauge and communicate the quality of our emissions calculations.\n## 2023 highlights\n### Banking activities\n97%\nproportion of Bank assets in-scope of PCAF which have emissions calculated\nAs part of our overall ambition to reach net zero by 2050 or sooner, we set ourselves the ambition to work with customers, government and the market to help reduce the carbon emissions we finance by more than 50 per cent by 2030.\nOur bank lending activity is responsible for the largest share of our Group financed emissions and is a key area of focus for us in supporting the transition to a low carbon economy.\n### Our priority is to be a constructive partner in the transition that supports our clients throughout their own transition journeys.\nUnless otherwise stated, disclosures in this section from pages 106 to 159 are not applicable to our Scottish Widows assets and liabilities. See page 160 for Scottish Widows disclosures.\n### Banking activities continued\n### Our UK exposure", "chunk_word_count": 480, "section_path": "Building asustainable and inclusive future > 143 of our key suppliers sustainability plans. > How finance is supporting the Bank’s reporting of climate-related matters", "document_id": "2023 Lloyds sustainability report", "page": 106, "page_start": 106, "page_end": 108 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 138, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### More than 70 per cent of our banking portfolio’s financed emissions are covered by the systems in focus in our environmental sustainability strategy. However, the emissions profile of our portfolio does not mirror the profile of the wider UK economy. Our proportion of emissions is higher for systems such as agriculture and the built environment, systems that are challenging to decarbonise and transition.\nIn this context we must consider the role we can play and the factors which impact how we can work to reach our climate ambition, while continuing to support the UK as it decarbonises.\nWe recognise that as much as we can achieve through our own lending decisions, we cannot achieve our ambitions alone. Transitioning to net zero is a universal endeavour and will depend on government, industry and wider society acting together, alongside significant technology advancements in high-emitting sectors.\nAs part of our overall ambition to reach net zero by 2050 or sooner, we set ourselves the ambition to work with customers, government and the market to help reduce the carbon emissions we finance by more than 50 per cent by 2030.\nFurther, industry standards such as the Partnership for Carbon Accounting Financials (PCAF) and Net-Zero Banking Alliance (NZBA) continue to evolve. This makes it difficult to fully understand our true baseline emissions and the progress towards our target, and it will likely result in restatement of our emissions position in the future. To address this, the Group has continued to provide our insights and contribute to methodology development of PCAF and NZBA guidelines and standards through consultations and working groups.\nOur aim is to be a constructive partner in the transition that supports our clients throughout their own transition journeys. Where we don’t see the level of commitment or progress we believe is necessary to keep key climate ambitions within reach, we reserve the right to change or exit those relationships.\n### Banking activities continued\n### Engagement strategy\n### Partnerships and initiatives\n### United Nations Principles for Responsible Banking (UNPRB)\n### Sustainable Markets Initiative (SMI)\nWe will continue to play our role in supporting the transition to net zero by partnering with businesses, industry groups and other organisations as they increase their own capabilities and skills. Here are some of our current initiatives and partnerships; for those sectors where we have set targets, specific activity is covered in the relevant section of this transition plan and in the wider report.\nThe Sustainable Markets Initiative (SMI), launched by His Majesty The King when he was Prince of Wales in 2020, has the mission to coordinate the private sector in accelerating the achievement of global climate, biodiversity and UN Sustainable Development Goal targets. We are an active member of the Financial Services Task Force, including the Nature Workstream and the Agribusiness Task Force, having joined the latter in 2023.\nThe Group became a member of the UNPRB in 2019 in order to support the banking industry accelerate its contribution to achieving society’s goals as expressed in the UN Sustainable Development Goals and the Paris Agreement.\n### Glasgow Financial Alliance for Net Zero (GFANZ)", "chunk_word_count": 526, "section_path": "Building asustainable and inclusive future > 2023 highlights > More than 70 per cent of our banking portfolio’s financed emissions are covered by the systems in focus in our environmental sustainability strategy. However, the emissions profile of our portfolio does not mirror the profile of the wider UK economy. Our proportion of emissions is higher for systems such as agriculture and the built environment, systems that are challenging to decarbonise and transition.", "document_id": "2023 Lloyds sustainability report", "page": 108, "page_start": 108, "page_end": 109 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 139, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Aldersgate Group\nWe became members of GFANZ in 2021 through our participation in the NZBA. We have used GFANZ guidance on transition plans in developing our first Group climate transition plan and will continue to monitor and contribute to GFANZ activity in this area. We have contributed to GFANZ’s consultation on Defining Transition Finance and Considerations for Decarbonisation Contribution Methodologies.\nAldersgate Group is a multi-stakeholder alliance championing a competitive and environmentallysustainable economy that advocates the business case for decarbonising the UK economy, improving resource efficiency and investing in the natural environment through targeted political engagement and policy development. The Group joined in 2020.\n### Net-Zero Banking Alliance (NZBA)\nThe Bank became a founding member of the NZBA in April 2021 and continues to implement the guidance, supported by new resource and expertise recruited into the business. In 2023, we participated in focus groups working with other NZBA members to review and update the NZBA Guidelines for Target Setting for Banks, as well as contributing to sector papers on emerging best practices, in automotive, power and commercial real estate. We are reviewing how best to contribute to the individual NZBA workstreams going forward, as we further develop approaches to sectorspecific issues.\n### World Business Council for Sustainable Development (WBCSD)\nThe WBCSD is an organisation of over 200 businesses around the world, which works to achieve the UN Sustainable Development Goals through the transformation of economic systems. The Group joined the Council in summer 2023 in order to support its sustainability ambitions, becoming a full member and committing to meet the high standards the Council has for its members.\n### Green Finance Institute (GFI)\nPartnership for Carbon Accounting Financials (PCAF) PCAF is a global partnership of financial institutions that work together to develop and implement a harmonised approach to assess and disclose the greenhouse gas $( \\mathsf { G H G } )$ emissions associated with their loans and investments. Lloyds Banking Group joined PCAF in September 2020 and is also a member of the regional group PCAF UK.\nWe continue to contribute to the GFI’s Coalition for the Energy Efficiency of Buildings (CEEB) aimed at developing the market for financing a net zero carbon and climate resilient built environment in the UK initially by catalysing the widespread retrofitting of residential buildings. We also continue to contribute to the GFI’s Coalition for the Decarbonisation of Road Transport (CDRT), which is focused on charging infrastructure, consumer finance and leasing and battery technology and recycling. We became a member of the Group of Financial Institutions for Nature (G-FIN) in July 2023 in order to identify barriers to UK government ambitions on increasing private investment in nature based solutions.", "chunk_word_count": 454, "section_path": "Building asustainable and inclusive future > 2023 highlights > Aldersgate Group", "document_id": "2023 Lloyds sustainability report", "page": 109, "page_start": 109, "page_end": 109 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 140, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Banking for Impact on Climate in Agriculture (B4ICA)\nThe Bank joined B4ICA, which was formed in 2021, to collaborate with other agriculture industry stakeholders to help develop solutions to better measure agricultural carbon emissions at a farm/producer level, which will further aid development of solutions to manage those emissions.\nEquator Principles\nLloyds Banking Group is a signatory to the Equator Principles, which is a risk management framework for determining, assessing and managing environmental and social risk in project finance transactions, such as large-scale energy, industrial or infrastructure projects.\n### Banking activities continued\n### Nature and just transition\n### Soil Association Exchange\nWe have partnered with the Soil Association Exchange to offer a free in person consultancy service on farm for 1,000 of our larger agricultural clients.\nThe consultants support across six different sustainability areas,of which three are focused on nature: soil health,water and biodiversity. They also measure baseline across each of these areas, and share recommendations and create an action plan and roadmap alongside our clients in these areas.\n### Nature\nFor example, we have joined a bank-specific working group aimed at addressing risks and opportunities in the agricultural sector. The working group is convened by the World Economic Forum’s Tropical Forest Alliance (TFA) finance sector engagement team.\nAs part of the Bank nature materiality assessment (see page 93) we recognise that deforestation is a critical issue linked to both climate change and nature loss, as well as impacting indigenous people and local communities. This year we carried out an initial high-level assessment using Global Canopy’s High Risk Deforestation sectors1 to better understand the exposure to high-risk deforestation sub-sectors within our Commercial Banking portfolio. We are planning more detailed analysis in 2024 and are engaged in industry initiatives aiming to make progress towards halting and reversing deforestation and land conversion.\nAlongside this, we have launched a free digital interface of this service via a website and app providing farmers with support across these six areas.\nAn initial assessment was carried out to understand risks and opportunities within the Commercial Bank’s Agriculture portfolio. Initial results suggest that climate change is a priority impact, and examples of priority dependencies include disease and pest control, healthy soils and flood/ drought mitigation.\nAn initial deep-dive assessment was carried out to help us identify a set of key metrics enabling the measurement of nature-related impacts, dependencies, and begin to assess risks and opportunities for a portion of the Agriculture portfolio.\nSDG 13.3: Improve \neducation, \nawareness-raising \nand human and \ninstitutional capacity on climate change mitigation, \nadaptation, impact reduction and early warning.", "chunk_word_count": 435, "section_path": "Building asustainable and inclusive future > 2023 highlights > Banking for Impact on Climate in Agriculture (B4ICA)", "document_id": "2023 Lloyds sustainability report", "page": 109, "page_start": 109, "page_end": 110 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 141, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Just transition\nEnsuring we are transitioning to a more sustainable economy in a fair and just way possible is key to our purpose in Helping Britain Prosper. We are embedding ‘just transition’ considerations in various parts of the Group already, such as within our target setting and Credible Transition Plan (CTP) approaches (see page 116 for more information) and supporting our clients to embed the principles within their own corporate strategies. Just transition is one of our key cross-cutting themes within our strategy, so throughout 2024 we will continue to identify, implement and embed just transition considerations across the Group, using the external guidance and frameworks we have contributed to, as a guide in doing so.\nSDG 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests,combat desertification,and halt and reverse land degradation and halt biodiversity loss.\nSDG 17.7: Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\nBanking activities continued\n### Bank lending to customers in sectors with increased climate risk\nOur lending portfolio means our biggest exposure to sectors at increased climate risk is in relation to our residential mortgages and our real estate sector.\n### Banking activities continued\nAnalysis by IFRS 9 expected credit loss stage and maturity for lending made to sectors classified as being at increased climate risk.\n### Transition plan by system\n83% \nof our in-scope of PCAF bank lending are covered by NZBA targets \n3 \nnew NzBA targets launched \nin 2024\n£2.9bn of drawn lending was assessed under our credible transition plan framework\nWe recognise that ambition alone will not support the transition or deliver on our purpose of Helping Britain Prosper. We need a plan to deliver on our strategy.\n### Transition plan by system continued\n### Target-setting approach\n### Scenario and reference pathway", "chunk_word_count": 331, "section_path": "Building asustainable and inclusive future > 2023 highlights > Just transition", "document_id": "2023 Lloyds sustainability report", "page": 110, "page_start": 110, "page_end": 113 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 142, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Just transition\nWe have used three climate scenarios and related scenario pathways as a foundation to create reference pathways. The reference pathway is calculated by rescaling the scenario pathway to our banking portfolio for the sector, such that it is equal to our NZBA target baseline emissions in the base year.\nJust Transition is one of the key cross-cutting themes that informed our environmental sustainability strategy and the principles of which have informed our sector targets and CTPs.\nWe seek to understand and target our emissions from our banking activity using a systems-based approach with targets to 2030 for many of our most carbon-intensive sectors. This approach informs and builds on our commitment to reach net zero by 2050 or sooner.\nTo date we have developed 10 sector targets, including our new targets for agriculture, commercial and residential real estate (C&RRE), and road passenger transport. In setting our targets we have determined the key actions we will take to work towards achieving them based on the levers available today and expected future changes in the market, as determined in our system-aligned transition plans. Each of the sector targets has some degree of challenge to ensure we remain ambitious. Initial views from the sectors for which we have now set targets indicate that there are significant challenges and external dependencies in many of them that will need to be addressed for us to achieve our targets and suggest we may need to go further in some areas to achieve our overarching 50 per cent emission reduction ambition. We expect our view to evolve as we set additional targets and where a gap remains we will assess whether we will take mitigating steps.\n1) The International Energy Agency Net Zero Emissions 2050 (IEA NZE 2050) for sectors where our portfolio clients or their main activities have a global or regional focus beyond the UK. IEA NZE 2050 is adjusted using Transition Pathway Initiative methodology for the creation of an OECD scenario for the power generation sector.\nSpecifically, when setting our NZBA sector-based targets and identifying and assessing the strategic levers and actions we are going to take to achieve them, Just Transition considerations are prioritised and used to determine if a lever should be included or excluded.\nIn addition to Just Transition being central to our purpose, values and strategy, we have also developed specific guidance being used within a number of processes and decision-making areas across the organisation, such as within place-based investment decisions to support clients and their transitions to net zero. The development of our sustainable financing framework launched in 2024, also aligns with Just Transition principles, as it includes social eligibility criteria to support and promote our financing of activities and opportunities that seek to achieve positive social outcomes for target populations. Target populations include but are not limited to those living below the poverty line, people with disabilities and unemployed people.\n2) The UK Climate Change Committee’s Balanced Net Zero Pathway (CCC BNZP) from the Sixth Carbon Budget for sectors where clients or customers were primarily UK-focused.", "chunk_word_count": 520, "section_path": "Building asustainable and inclusive future > 2023 highlights > Just transition", "document_id": "2023 Lloyds sustainability report", "page": 114, "page_start": 114, "page_end": 114 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 143, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Just transition\n3) The IEA Energy Technology Perspectives 2020 (IEA ETP 2020) for the aviation transportation subsector. The IEA NZE 2050 and CCC BNZP scenarios seek to limit global warming to $1 . 5 ^ { \\circ } \\mathrm { C }$ by the end of the century and encompass little to no overshoot, with low reliance on negative emissions technologies. The IEA ETP 2020 scenario seeks to limit global warming to well below ${ } ^ { 2 ^ { \\circ } \\mathsf { C } }$ by the end of the century and is only being used for aviation where the near-term challenges in decarbonising the sector indicate achieving an aviation portfolio $1 . 5 ^ { \\circ } \\mathrm { C }$ target by 2030 is unlikely.\nIt should also be noted that the baseline, pathways and targets may be subject to change as data availability and granularity improve, scenario pathways are updated, and the broader regulatory and industry environment evolves. We continue to enhance our climate data capabilities to address these challenges by expanding our sources of data and developing partnerships to increase the amount of client-level data that is available. This year we have recalculated our baseline emissions due to the availability of new and restated data to provide the most up-to-date view of our current (and historical) financed emissions. This has resulted in an update to our existing targets released in 2021 and 2022 except for UK homes and thermal coal. Details of these updates are explained in our sector progress for each system covered in this transition plan section of our report.\nCentral to enabling a Just Transition to a low carbon economy is that workers in high carbon sectors are supported to reskill to work in new low carbon industries. Building on our work as part of the transition plan taskforce (TPT) Just Transition working group, we plan to integrate the TPT guidance on Just Transition (as well as nature and adaptation) into our approach for assessing our clients’ credible transition plans over time.\n### Methodology and data selection\nWe have continued to apply the emerging industry standard developed by the Partnership for Carbon Accounting Financials (PCAF) for measuring and disclosing financed emissions. We have used the same PCAF approach when developing baseline emissions estimates for our targets and have also used client-related targets and commitments where relevant to inform our targetsetting activity. Please refer to our sustainability metrics basis of reporting for further details. Our transition plan progress highlights the reference and relevant scenario pathway performance alongside our targets.\nSector selection\n£375.8bn of our lending has an associated NZBA target\nWe have prioritised setting our targets on fossil fuel sectors and other carbon-intensive sectors covering the majority of the Bank’s portfolio emissions in accordance with the NZBA guidelines. Our targets are summarised on page 114.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$", "chunk_word_count": 500, "section_path": "Building asustainable and inclusive future > 2023 highlights > Just transition", "document_id": "2023 Lloyds sustainability report", "page": 114, "page_start": 114, "page_end": 115 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 144, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Our target summary\nBased on 2022 total Group assets of £877.8 billion, approximately £544.7 billion of assets (excluding pension and investment balances) are in scope of Partnership for Carbon Accounting Financials (PCAF) methodology. We have calculated emissions for 97 per cent of our Bank assets in-scope of PCAF, including cash.\nCash is represented in our coverage as zero emissions, noting the PCAF standard does not have a methodology for cash. The table below shows the proportion of lending that is covered by NZBA Financed Emissions sector targets:\n1 Relates to financial lines that are not in scope of PCAF. \n2 Mainly relates to exclusion of pensions and investment balances which \nare covered through our Scottish Widows financed emissions ambition. \n3 Relates to zero-emission balances, mainly cash. \n4 Relates to lending portfolios where emissions are yet to be calculated.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Transition plan by system continued\n### Our Bank financed emissions\nOur Scope 3 financed emissions are calculated from the Scope 1 and 2 emissions generated from our investments or lending. Scope 3 (value chain) emissions are also calculated and reported separately for certain sectors, aligning to the PCAF standard phased approach. We continue to refine our estimates of financed emissions as we enhance our understanding, calculation methodologies and data. Further details on our calculation methodology can be found within the", "chunk_word_count": 245, "section_path": "Building asustainable and inclusive future > 2023 highlights > Our target summary", "document_id": "2023 Lloyds sustainability report", "page": 115, "page_start": 115, "page_end": 116 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 145, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### sustainability metrics basis of reporting .\nWe recognise our role in the UK economy, and the opportunities it creates to support the transition of our most carbon-intensive sectors in order to meet our net zero ambitions. In supporting the transition through direct financing our financed emissions may increase on a temporary basis. In the long-term we expect that supporting the transition of our high carbon sector clients will reduce our financed emissions. For details of our client transition plan assessment approach see page 116.\nOur 2018 baseline year has been restated from 28.6 MtCO e to 29.6 $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ (3.5 per cent increase) due to methodology changes and improved data for motor and commercial banking portfolios, details are included within the transition plans for each sector. \n2 The Bank’s scope 3 emissions are made up of the Scope 1, 2 and 3 emissions of the customers we lend to. PCAF allows for a phasing in of disclosure for customers’ Scope 3 emissions. Within Commercial Banking without NZBA targets our Scope 3 disclosures cover sectors across transportation, construction, buildings, material and industrial activities in line with PCAF guidance. An estimated range has been provided due to both the limited availability and variability of published Scope 3 data. \n3 √ Indicator is subject to limited ISAE 3000 (revised) assurance by Deloitte LLP. Deloitte’s 2023 assurance statement and the sustainability metrics basis of reporting 2023 are available online at our download centre . \n4 Data availability has resulted in calculation of 2022 C&RRE absolute emissions using 2021 emissions data. This follows PCAF guidance to use most recent available when presented with a lag in available emissions-related data. We will look to enhance methodology in 2024. \n5 2018 Consumer lending without NZBA targets relates to UK mortgages balances, prior to setting a NZBA target.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Transition plan by system continued\n### Assessment criteria\nWe assess our clients against five sub-elements in line with the transition plan taskforce’s three core principles of ambition, action and accountability:\n### Credible transition plan assessments and other enabling activity\n### TPT core principles\n### Sub-elements\nEmissions targets: assesses the nature of clients’ targets (including their alignment to science-based 1.5 degree pathways), timelines for achieving these and considers planned use of any purchased offsets in regards to credibility and quality.", "chunk_word_count": 419, "section_path": "Building asustainable and inclusive future > 2023 highlights > sustainability metrics basis of reporting .", "document_id": "2023 Lloyds sustainability report", "page": 116, "page_start": 116, "page_end": 117 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 146, "chunk_text": "# Building asustainable and inclusive future\n## 2023 highlights\n### Ambition\n2. Business model: assesses client consideration of climate change impact and their plans for transitioning their business model integrating climate-related risks and opportunities into company strategy.\nIs sector-neutral but also includes \nsector-specific considerations \n(e.g. the IIGCC’s net zero standard \nfor oil and gas1 ) as we roll out our \napproach into other high carbon \nsectors \nSets a higher bar initially for larger corporates, recognising that \nsmaller companies will need more \ntime to develop their plans, and \naligned with the transition plan taskforce’s principle that the size and scale of companies will be a crucial consideration for transition planning \nPrioritises CTP engagements for \nmaterial companies in scope of our published targets, and we continue to review and re-prioritise \nengagements where needed to \nensure we are targeting actions where we will have the most real \neconomy impact \nIs being embedded into our \nbusiness processes and decision \nmaking during 2023 and 2024\n### Credible transition plans\n3. Investments: considers alignment of capital allocation to targets and milestones for business model transition and emissions reduction and progress against this.\nTo demonstrate our focus in driving real economy transition, we have prioritised transition plan assessments on clients that are most material in reducing emissions through our consideration of:\nDuring 2023 we have enhanced our methodology for assessing the credibility of our clients’ net zero transition plans. Our approach to credible transition plans will support us in delivering up to our sector decarbonisation targets, to drive real economy impact.\n### Action\n## 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets.\n5. Governance: considers Board responsibilities, executive remuneration, engagement in organisations or coalitions dedicated specifically to climate issues, and the client’s progress in building out a comprehensive transition plan.", "chunk_word_count": 304, "section_path": "Building asustainable and inclusive future > 2023 highlights > Ambition", "document_id": "2023 Lloyds sustainability report", "page": 117, "page_start": 117, "page_end": 117 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 147, "chunk_text": "# Building asustainable and inclusive future\n## 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets.\n### Accountability\nThe CA100+, which focuses on the 166 companies that account for 80 per cent of global corporate GHG emissions and are therefore central to driving the transition to net zero. \n2. The Transition Pathway Initiative, which covers over \n500 companies operating in the most carbonintensive sectors. \n3. Whether the client is on the UK’s Emission Trading Scheme list of high emitters.\nMany of our clients are starting to engage in the Voluntary Carbon Market (to purchase carbon credits) and we recognise that how they do so plays an important role in the credibility of their transition plans. It is important that clients follow a mitigation hierarchy that prioritises targeting abatement of their own value chain emissions first, before mitigating residual emissions through carbon credits, alongside ensuring that all carbon credits purchased/supplied are\nregistered on an internationally-recognised registry. Client conversations regarding the use and reporting of carbon credits will be integrated into broader discussions on the credibility of their transition plans, acknowledging the interconnected nature of these two areas. See page 91 for more information on our Group approach to carbon offsetting.\nOur approach:\nIs aligned with the work of the transition plan taskforce’s sector-neutral disclosure framework published in October 2023. Our approach will evolve to include sector-specific guidance as it is finalised through consultation Draws on existing public frameworks (including Climate Action $1 0 0 +$ and the Transition Pathway Initiative) which assess where clients are on their transition journey Establishes baseline requirements for our clients which increase in expectations in 2025 and 2027. Baseline requirements will be subject to an annual ratcheting mechanism and review to include latest developing standards and guidance\n### We further refine our approach to focus on companies where we have the greatest opportunity to engage, influence and support by considering:\n### Our approach to assessing clients’ transition plans\nWe are refining our expectations for CTP and plan to communicate these enhancements to our clients in 2024. We also continuously track and monitor the evolution of emerging sector-specific transition guidelines and intend to integrate them into our assessments as they develop.\n4. If a client was in scope for a sector decarbonisation target for the Bank, where we have identified material focus areas. 5. Those clients to which we have the largest lending exposure of our corporate and institutional banking (CIB) business.\nWe have supported the transition plan taskforce (TPT) in building out a sector-neutral framework and are engaging with TPT to support their work in developing sector-specific transition plans.\nAn initial desktop assessment is undertaken against each of the five areas, utilising publicly available data, including the CA100+ assessment, SBTi target setting information, the Transition Pathway Initiative tool, CDP and company publications. Where appropriate, engagement meetings with clients are held, focused on understanding further details of a client’s transition plan and discussion of any gaps identified as part of the assessment.", "chunk_word_count": 505, "section_path": "Building asustainable and inclusive future > 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets. > Accountability", "document_id": "2023 Lloyds sustainability report", "page": 117, "page_start": 117, "page_end": 117 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 148, "chunk_text": "# Building asustainable and inclusive future\n## 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets.\n### Assessment and evaluation\nCTP assessments will be refreshed on at least an annual basis, with those not meeting minimum expectations having more regular engagements. Other events such as ESG/ sustainability disclosures or material strategy updates may also trigger a reassessment of transition plan credibility.\n### Monitoring\nWe will seek to support our clients in developing credible transition plans, but will consider other measures where companies do not demonstrate progress in developing a credible transition plans. Ongoing areas of concern will trigger escalation via existing governance routes and could result in a range of measures including more frequent engagements, managing down or removing support for clients.\n### Escalation\n### Transition plan by system continued\n### Evolving expectations\n### Just transition\nTo further support clients in ensuring a Just Transition, we are a part of the transition plan taskforce (TPT) Just Transition working group, contributing to the development of sector-specific (and sector-neutral) guidance on how Just Transition considerations should be addressed within transition plans. As a key next step, we are planning to integrate the TPT guidance on Just Transition (as well as nature and adaptation) into our approach for CTP assessment over time.\nWe expect clients to increase ambition, action and accountability through this decade toward our defined client leadership expectations which include:\n• Emissions targets – 1.5 degree aligned Scope 1, 2 and 3 targets1 Investments – capital allocation plan in line with 1.5 degree scenarios \nActual emissions – Progress in line with targets set\nAdditionally, we are supporting our SME and corporate clients with Just Transition too. In 2023, we partnered with British Chambers of Commerce to produce a report entitled ‘Climate Call to Action’, centred around understanding the support required by SMEs in the north and midlands to transition to net zero. It also highlighted the need for clarity and certainty from the government for SMEs, as well as recognising the key role we have to play in continuing to offer guidance, support and finance for businesses.", "chunk_word_count": 356, "section_path": "Building asustainable and inclusive future > 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets. > Assessment and evaluation", "document_id": "2023 Lloyds sustainability report", "page": 117, "page_start": 117, "page_end": 118 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 149, "chunk_text": "# Building asustainable and inclusive future\n## 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets.\n### Progress and future plans\nIn 2023, we have undertaken 36 initial CTP assessments, representing £2.9 billion of drawn lending, including our full portfolio of large-scale oil and gas producing clients. We have held a number of constructive conversations with our clients using this framework. These conversations help clients identify how they can strengthen their existing plans, advance their ambitions, and solidify our role as a constructive partner through their transition to a low carbon economy. In 2024, we will continue to increase the number of clients assessed, including expanding to other high carbon sectors. In future disclosures, we intend to provide greater detail on the measurable impact of our continued engagement with clients on credible transition plans.\nOur dedicated Sustainability and ESG Finance team actively seeks out opportunities to support corporate and institutional clients financing their net zero transition to maximise the benefits for companies, communities and the wider economy. We hosted an event in June this year for c.100 clients, followed by a series of client roundtables discussing and providing thought leadership on what Just Transition means in the UK, the role of finance in Just Transition and how Lloyds Bank and others embed it into corporate strategies. A further Just Transition conference was also held in Scotland inviting another c.100 clients, covering the same topics as those in London, as well as an action-focused event with two roundtables involving the Chief Investment Officer from Scottish National Investment Bank, the Scottish Government, and the First Minister’s Investor Panel to accelerate investments in net zero technologies through a Just Transition lens.\n### Financing transition technologies\nBy financing and enabling growth in transition technology utilisation across the UK, we will help support our clients’ transition plans, which in turn will be key to contributing to our sector carbon reduction targets and a real economy transition.\nWe also delivered an eight-week course from the University of Exeter Business School, with a focus on sustainabilityrelated risks and opportunities. Two cohorts, totalling 178 participants, completed a specialised advanced sustainability training programme to provide insights into high-carbon sectors relevant to the Group.\nDuring 2023, we mobilised a programme of work (net zero origination) to advance finance for upscaling the most commercially viable solutions. We identified and assessed 85 technologies spanning every sector of the UK economy and prioritised these in line with UK CCC scenarios, UK Government Net Zero & Green Finance Strategy as well as market projections and supporting data analytics. We continue to enhance our internal capabilities to better consider emerging technologies, levering the International Energy Agency’s Clean Energy Technology Guide2 and Technologies Readiness Scale. We are focusing on eight emerging commercially viable technologies, with examples including CCUS, batteries, low carbon heating and EV charging & infrastructure.", "chunk_word_count": 481, "section_path": "Building asustainable and inclusive future > 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets. > Progress and future plans", "document_id": "2023 Lloyds sustainability report", "page": 118, "page_start": 118, "page_end": 118 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 150, "chunk_text": "# Building asustainable and inclusive future\n## 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets.\n### Commercial banking colleague training\nIn 2023, we collaborated with the University of Edinburgh to develop a 22-week bespoke programme to drive our focus on transition technologies. Completed by 170 colleagues, the course covers the eight emerging technologies in focus through our net zero origination programme (as noted earlier), along with emerging business models, market dynamics and policy. The training seeks to empower colleagues to take a proactive approach in maximising value and impact for clients, as well as driving increased internal collaboration and sector-specific knowledge sharing. The programme of work will continue to deepen understanding during 2024.\nBy the close of 2023, over 2,600 colleagues, including relationship managers, successfully participated in the Sustainability Essentials Course accredited by the Cambridge Institute for Sustainability Leadership (CISL).\nClient carbon insights\nThe carbon insights report provides small and medium enterprise (SME) clients with an estimate of their carbon emissions based on current account and credit card transactions. The report provides unique insights into clients estimated emissions and guidance for the next stage of their journey including comparisons to similar businesses. By identifying spending information, classifying the type of business that clients have bought from and applying data and expertise from our partners at the University of Leeds we estimate emissions for each transaction. These insights are presented in a report with a detailed breakdown highlighting the top three emissions sources within their operations.\n### Greening the built environment\n### System challenges\nThe Government’s Heat and Buildings Strategy (2021) acknowledges decarbonisation will involve large-scale transformation and wide-ranging change to energy systems and markets as well as a combination of leadingedge technologies and innovative consumer options. The CCC’s 2023 Progress Report highlights that reducing emissions from this sector is therefore critical for the UK to achieve its net zero ambitions and relies on two main outcomes:\nBuildings remain the UK’s second highest-emitting sector, accounting for 17 per cent of total emissions1 . Reducing emissions will require decarbonisation of the electricity grid, along with increased uptake of low carbon heat technologies and energy-efficiency measures and supply chain upskilling and expansion. Many policies to aid reductions have significant risks in delivering reductions required.\n• Reducing energy demand in buildings, through increased energy efficiency and other demand-side measures such as using smart meters and efficient household appliances Increasing supply of low carbon heat to buildings, through uptake of heat pumps, low carbon heat networks and other heat measures, together with increased grid decarbonisation\nPart of our systems approach:\nEstimated 2022 direct emissions as reported in the CCC June 2023 Progress Report.\nGreening the built environment Low carbon transport Sustainable farming and food Energytransition\n### System boundary\nOur greening the built environment system includes residential homes and non-residential buildings in our residential mortgages portfolio and our commercial and residential real estate portfolio, which includes social housing and both secured and unsecured lending.\nReducing emissions from the built environment is critical for the UK to achieve its net zero ambitions.\n### Greening the built environment continued", "chunk_word_count": 522, "section_path": "Building asustainable and inclusive future > 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets. > Commercial banking colleague training", "document_id": "2023 Lloyds sustainability report", "page": 118, "page_start": 118, "page_end": 120 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 151, "chunk_text": "# Building asustainable and inclusive future\n## 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets.\n### Our actions\nWe have developed products, tools and propositions that help to increase customer awareness and encourage and incentivise them to purchase energy efficient properties or retrofit existing ones. We have also formed partnerships with industry experts to support customers to install heat pumps and solar panels, and continue to engage on key policy and enabling activity with multiple stakeholders.\n### CCC assessment – Buildings\nThe CCC’s assessment concludes that policy progress in the buildings sector is not on track, with 77 per cent of the required emission reductions judged to be at either significant risk or with insufficient plans. The table below summarises the CCC June 2023 overall assessment for policy areas that are the most relevant to delivering our emission reduction targets.\nCCC’s overall assessment of progress: Some risks\nSignificant risks\nInsufficient plans\nThe CCC concluded recent announced policy changes will make it more difficult to meet the government’s pathway for this sector.\n### Key recent policy developments relevant to achieving our buildings decarbonisation targets\nHowever, recent announcements indicate a slowing of policy progress, including:\nThe government has introduced several policies that can aid decarbonisation, including:\nExtension of the Boiler Upgrade Scheme • New Great British Insulation Scheme to help insulate people’s homes in council tax bands A–D New approach to gas and electricity price rebalancing • Delayed ban on installing oil and LPG boilers (and new coal heating) in off-the-gas-grid homes Exemption to the ban on new gas boilers for households less able to afford alternatives Decision not to implement minimum energy-efficiency standards for rented homes\nIn October 2023, the CCC concluded the recent announced changes will make it more difficult to meet the government’s pathway for this sector and most importantly will create widespread uncertainty for consumers and supply chains.\n### Greening the built environment continued\n### Homes\n41%\n### Target\nUK residential mortgages emissions intensity reduction (kgCO e/m2 ) between 2020 and 2030", "chunk_word_count": 345, "section_path": "Building asustainable and inclusive future > 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets. > Our actions", "document_id": "2023 Lloyds sustainability report", "page": 120, "page_start": 120, "page_end": 121 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 152, "chunk_text": "# Building asustainable and inclusive future\n## 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets.\n### The UK has a commitment to achieve net zero by 2050. The decarbonisation of buildings, which currently contribute 17 per cent of the UK’s total carbon emissions, will be key to achieving this1 .\nIn 2022 we published a CCC BNZP-aligned target, requiring a 41 per cent reduction in financed emissions intensity by 2030 (against a 2020 baseline – Scope 1 and 2 emissions). This equates to 28kgCO /m2 by 2030, down from $4 7 \\mathrm { k g } \\mathrm { C O } _ { 2 } / \\mathrm { m } ^ { 2 } \\mathrm { i n } 2 0 2 0$ .\nFaced with the worst insulated housing stock in Europe, plus energy and fuel prices still higher than pre-pandemic levels, there is a pressing need to focus attention on decarbonising the nation’s properties.\n[IMAGE CAPTION] (gCO2 e/m )UK mortgages emission intensity reduction 2020 UK Mortto 2030\nDecarbonising our housing stock at scale is no easy feat; it requires collective, immediate action from us all. As the UK’s largest mortgage provider, we recognise the important role we can play in educating our customers on energy efficiency and supporting them with reducing their household emissions. However, we cannot achieve net zero alone and collective action from the government, other financial institutions, industry leaders and our customers is required.\n### Greening the built environment continued\n### Effective Home", "chunk_word_count": 259, "section_path": "Building asustainable and inclusive future > 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets. > The UK has a commitment to achieve net zero by 2050. The decarbonisation of buildings, which currently contribute 17 per cent of the UK’s total carbon emissions, will be key to achieving this1 .", "document_id": "2023 Lloyds sustainability report", "page": 121, "page_start": 121, "page_end": 121 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 153, "chunk_text": "# Building asustainable and inclusive future\n## 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets.\n### Implementation strategy\nWe understand that the journey to net zero will not be a simple one and that transition challenges exist across the residential sector. However, the Group is committed to support our customers. Our strategy focuses on increasing customer awareness and engagement, as well as developing products and propositions that encourage our customers to act. We want to ensure that we are making the transition as accessible as we can, which is why we recognise the importance of forming partnerships with other industry experts to collectively support customers on their retrofit journey.\nFrom launch in 2020 to now, we have continued to develop iterations of our Halifax Green Living Reward and Lloyds Bank Eco Home Reward, enabling eligible customers to claim up to £1,000 when making energy-efficient home improvements. Engagement and uptake of the offer has maintained momentum and, to date, we have provided over 3,000 customers with a cashback reward\nIn July 2023 we launched a new solar panel consultation and installation offer. By joining forces with accredited and expert solar panel installers, Effective Home, we hope to take away the hard work of searching the market for solar panel suppliers.\nOur online Home Energy Saving Tool developed in collaboration with Energy Saving Trust remains a key engagement technique, providing customers with an interactive experience to generate a personalised plan for their home, identifying where energy efficiency improvements can be made. Over 35,000 action plans have been generated since launch. We have been working to enhance our tool by embedding links to our partners. We have created a simplified customer journey, helping to turn recommendations into action. Additionally, expansion of the tool into our Birmingham Midshires brand is a crucial step in supporting landlords with understanding the energy efficiency of their property.\nSDG 7.2: By 2030, \nincrease \nsubstantially the \nshare of renewable energy in the global energy mix.\nWith over £4.7 billion of lending to EPC A and B rated properties in 2022, and a further £2.8 billion in the first three quarters of 2023, we are progressing well to achieve our £10 billion three-year target out to 2024; but our action does not stop here.\nThrough our Halifax green living hub, people can access Effective Home’s virtual consultation, where a home canbe remotelyviewed to understand solar panel suitability – with no need for an in-person visit. A free, personalised solar plan is provided, outlining installation costs and estimated energy bill savings. Those who want to go ahead will then receive an in-person, technical survey and Effective Home will arrange the installation, supporting customers with registering the panels with the Microgeneration Certification Scheme1 , for a free, insurancebacked guarantee.\nSDG 7.3: By 2030, double the global rate of improvement in energy efficiency.", "chunk_word_count": 481, "section_path": "Building asustainable and inclusive future > 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets. > Implementation strategy", "document_id": "2023 Lloyds sustainability report", "page": 122, "page_start": 122, "page_end": 122 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 154, "chunk_text": "# Building asustainable and inclusive future\n## 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets.\n### Implementation strategy\nAs well as offering additional incentives for purchasing energy-efficient properties, we understand that the majority of the homes lived in today will still be inhabited in 2050, highlighting the importance of making energyefficient home improvements to the existing housing stock. Customer understanding of tangible actions they can take, to support net zero ambitions and potentially reduce energy bills, can be a difficult process and so our strategy focuses on breaking down these barriers. We remain committed to enhancing and nurturing our propositions to explore how we support a wide range of customers.\nSDG 13.3: Improve \neducation, \nawareness-raising \nand human and \ninstitutional capacity on climate change \nmitigation, \nadaptation, impact reduction and early warning.\nEveryone who installs solar panels through Halifax and Effective Home’s scheme will get a free Energy Performance Certificate (EPC) assessment for their home,and eligible Halifax mortgage customers will also be able to access cashback towards the cost through Halifax’s existing Green Living Rewardoffer.\nProviding education materials to our customers is an important step in helping them to understand energy efficiency and supporting them with making more informed energy efficient choices. We have a wealth of material available on our Halifax and Lloyds hubs and our green home events programme together with Energy Saving Trust has continued throughout 2023, branching out into specific topics such as transition to solar energy.\nWith the help of WPI Economic and Censuswide, we produced a report: Decarbonising the UK’s homes: a housing stocktake, dealing specifically with UK housing stock to provide a thorough look at the current state of decarbonisation across UK homes and residential properties. The research identified the main barriers to decarbonisation and, importantly, contained knowledge gleaned from homeowners and landlords who have gone through the process already.\nExamples of our activities include:\nOur partnership with Effective Home supports people with solar panel installation from start to finish, so even more people can take advantage of the benefits to having a ‘greener’ home and cheaper bills.\nEnergy bill savings from installing solar panels typically can range as high as £500 to £7002 annually, depending on the size of the panels and the pitch of the roof, amongst other factors. Any excess energy generated by the panels can be stored in a battery for later use or sold back to the National Grid. Additionally, solar panels can improve the EPC rating of a home3 and properties with the highest energy ratings may be worth up to £40,000 more on average compared to less sustainable properties with buyers willing to pay a ‘green premium’ for a more energy efficient place4.\n• Joining forces with industry experts, highlighting the power of partnerships and supporting our strategy to help move the UK towards net zero. Our strategic partnership with Octopus Energy continues, offering lower cost air-source heat pumps to UK households, supporting the decarbonisation of domestic heating. We have also teamed up with expert solar panel installers, Effective Home, taking away the hard work for our customers of searching the market for accredited solar panel suppliers. More on this can be found in our case study section.", "chunk_word_count": 541, "section_path": "Building asustainable and inclusive future > 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets. > Implementation strategy", "document_id": "2023 Lloyds sustainability report", "page": 122, "page_start": 122, "page_end": 122 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 155, "chunk_text": "# Building asustainable and inclusive future\n## 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets.\n### Greening the built environment continued\nGreening the built environment – Homes continued\n### Risks and dependencies\n### Engagement strategy\n### Dependencies\n### Decarbonisation of the electricity grid\n### A strong retrofit supply chain supported by government and market incentives\nWe are engaging on our policy asks through multiple channels including hosting roundtable events and one-toone meetings with MPs, peers and policy advisers to discuss and garner advocacy and support for our proposals. We continue to ensure MP constituency factsheets are updated with our core policy asks to help ensure our key messages are clear, understood and considered.\nIntensification of geopolitical unrest may disrupt oil and gas exports, exposing the UK to price shocks and potentially impeding ongoing investments into decarbonisation.\nOur 2030 41 per cent financed emissions intensity reduction target highlights our ambition to reduce the emissions of properties on our mortgage book, but reaching net zero for UK homes will require collective action from a broader group of stakeholders to tackle many significant challenges in this area.\nWhilst good developments in available government grants have been made, further incentives are required to encourage all customers to act, particularly given the current economic climate where customers are faced with competing priorities and challenges to fund retrofit measures. Installation rates of energy-efficiency measures continue to be below necessary levels and fell further in 2022 – with the number of households installing measures via UK government schemes falling to 94,000 in 2022, compared to 634,000 in 2014 to 268,00 in 20162.3.\n### Greater public awareness\nThere remains a high proportion of properties in the UK that do not have a valid Energy Performance Certificate (EPC) and our new research shows that, for those that do have one, nearly half (46 per cent) do not know their rating1 . This coupled with the fact that EPCs do not always portray an accurate view of actual energy usage or completed retrofit improvements, make it difficult to engage customers and enhance their understanding on the importance of energy efficiency. Moreover, these EPC limitations hinder our ability to meticulously report on the emissions of homes in our portfolio.\nTo progress at the pace required to remain on track against our target pathway we are dependent on multiple key areas including:\nSupport from the government is required to build further momentum and awareness:\nWith minimal incentives for landlords to act on improving the energy efficiency of their properties, many existing homes are likely to remain in lower EPC bands.\n## 1. Decarbonisation of the electricity grid, the largest expected contributor to UK housing emission reduction by 2030.\n### Energy-efficient new build properties\n2. Greater public awareness, to encourage behavioural changes which are crucial to drive the level of adoption required to decarbonise the UK housing stock1 .", "chunk_word_count": 487, "section_path": "Building asustainable and inclusive future > 4. Actual emissions: assesses the measurement, verification and reporting of emissions as well as performance in line with targets. > Greening the built environment continued", "document_id": "2023 Lloyds sustainability report", "page": 123, "page_start": 123, "page_end": 123 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 156, "chunk_text": "# Building asustainable and inclusive future\n## 01 Provide long-term policy certainty around green home improvements with package of incentives and regulations\n• A lack of clarity on policy and regulation is causing uncertainty for businesses and consumers, leading to many delaying plans to support energy-efficiency improvements. Six in ten landlords (57 per cent) knew about the government’s recent scrapping of plans requiring all rental properties to meet a minimum EPC rating of C by 2028. Of these, 42 per cent said that they had since cancelled plans to invest in energy efficiency measures and 53 per cent said that it made them less likely to invest in energy efficiency in the future1 .\nIn response to a challenged demand there is likely to be a contraction in new build properties, with forecasts highlighting a slowing build trend in 2023 and 2024, which may result in limited access to high-quality sustainable housing.\n3. A strong retrofit supply chain, supported by government and market incentives which encourage both residential and buy-to-let customers to retrofit their properties.\n## 02 Use Stamp Duty to incentivise green home improvements\nOverall, the aggregation of multiple risks, including those called out above, is making it challenging for our customers to act. It is clear that implementation of energy-efficient measures is slow and therefore we need to continue to innovate to drive the mass population adaptation that is required.\n## 4. Continued support for the supply and quality of energy-efficient new build properties to ensure availability of high standard homes.\n## 03 Improve EPCs so they provide accurate and up-to-date information\nWhilst we have made progress on our emission intensity reduction from our 2020 baseline, the CCC progress assessment (see page 119) highlighted that a substantial amount of future abatement either lacks policies or depends on policies which carry significant risks.\n## 04 Use employer tax incentives to encourage employees to make green improvements\nThere are many risks to continued progress on substantive reductions in emissions; action needs to be encouraged across the key areas we are dependent on, as outlined above, and data quality and availability must be improved.", "chunk_word_count": 353, "section_path": "Building asustainable and inclusive future > 01 Provide long-term policy certainty around green home improvements with package of incentives and regulations", "document_id": "2023 Lloyds sustainability report", "page": 123, "page_start": 123, "page_end": 123 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 157, "chunk_text": "# Building asustainable and inclusive future\n## 05 Support new, green jobs across the whole country with the Apprenticeship Levy\n### Greening the built environment continued\nGreening the built environment – Homes continued\n### Total lending value of known EPCs\nThe EPC distribution by lending value for the mortgage book is included within Note 52 of the financial statements. The split between residential and buy-to-let mortgages is shown below for properties with known EPCs:\n### Just transition\nEffectively supporting the transition to net zero will require the consideration of many different groups, including vulnerable and low income households. Our current products and propositions are inclusive of a vast number of customer segments, and we strive to ensure that our education and awareness materials highlight action that can be taken across varying levels of investment. Where appropriate we signpost specific government grant schemes that will support our customers with the cost of some retrofit measures.\nAdditionally, to try to make energy-efficient home improvements accessible for all, we have implemented offers for all our colleagues, whereby they can access offers on heat pumps and solar panels installed with our accredited partners. We acknowledge that there is more to do to ensure a successful transition that is fair for everyone and we therefore welcome all funding on research and development into green technologies to ensure retrofit is attainable for the mass market.\n[IMAGE CAPTION] Residential mortgages\n[IMAGE CAPTION] Rounded down from 1.6 per cent for reporting in the table.\n### EPC splits\nThe charts above provide a view of the EPC profile of our UK residential mortgages portfolio based on our known population. The exposure to properties with no EPC data has reduced from $2 6 \\%$ of residential properties in 2022 to $2 1 \\%$ in 2023, and from $2 0 \\%$ to 14% respectively for buy-to-let. Our 2023 progress versus our 2022 position, highlights that positively improving the mix of $\\mathsf { E P C S }$ on our mortgage book, including shrinking the proportion of unknowns, remains a key factor in advancing towards our sustainability ambitions.\n### Greening the built environment continued\n## C&RRE\n### Target", "chunk_word_count": 356, "section_path": "Building asustainable and inclusive future > C&RRE > Target", "document_id": "2023 Lloyds sustainability report", "page": 124, "page_start": 124, "page_end": 124 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 158, "chunk_text": "# Building asustainable and inclusive future\n## C&RRE\n### Implementation strategy\nCommercial & residential real estate sector Decarbonising existing buildings will be achieved primarily through retrofitting buildings to improve energy efficiency and replacing fossil-fuel heating systems with low carbon equivalents.\nThis year we have developed a 2030 target for our Commercial Banking C&RRE portfolio based on the 1.5 degree aligned balanced net zero pathway of the Climate Change Committee1 . Based on our baseline portfolio composition, it requires an average reduction in emissions intensity of 48 per cent between 2021 and 2030, reducing our 2021 absolute emissions from $4 5 \\mathsf { k g } \\mathsf { C O } _ { 2 } \\mathsf { e } / \\mathsf { m } ^ { 2 }$ to $2 4 \\mathsf { k g } \\mathsf { C O } _ { 2 } \\mathsf { e } / \\mathsf { m } ^ { 2 }$ .\nGiven its materiality both to the UK and the Group, commercial and residential real estate is a crucial sector to decarbonise to meet net-zero ambitions. Our key strategic lever is to accelerate our clients’ adoption of low carbon heating (LCH). Developing products and propositions which incentivise and support our clients to adopt LCH and improve energy efficiency will be critical to achieving this. We are dedicated to helping the sector to understand emissions and have continued to develop our green buildings tool, a free digital insights calculator which helps clients assess and improve the energy efficiency of their buildings.\nIn 2022 our drawn lending to this sector was £22.4 billion, making decarbonisation of the commercial and residential real estate sector a priority for us.\nOur target includes operational emissions from regulated and unregulated energy use, covering the following sub-sectors: commercial real estate, lending to social housing landlords and privately rented real estate2. Fugitive emissions are excluded due to poor data availability. We are working to address data quality and availability to potentially include other sectors in our target in future: housebuilders, real estate development and companies primarily engaged in construction.\nSee page 118 for details of this system\nThrough our credible transition plan activity, we will continue to engage with our most material clients by the end of 2025 on their transition to net zero, including an expectation that clients’ carbon reduction goals will be aligned with scenarios limiting global warming to no more than $1 . 5 ^ { \\circ } \\mathrm { C }$ .\n48%\nC&RRE emissions intensity reduction (kgCO e/m2 ) between 2021 and 2030\nIn 2024 we will be expanding the use of our ESG tool (see page 158) to rollout a sector specific assessment to our clients. This will include a series of questions to understand our clients’ transition journey, including actions taken so far and challenges faced, and we will use the outputs to understand how we can best support our clients going forward.The assessmentwill focus on climate and broader environmental themes and will be rolled out to all clients with the most material exposures.\n[IMAGE CAPTION] C&RREC&RRE emission intensity reduction 2021 to 2030\nIn 2024 we are expanding the use of our ESG tool for sector specific client assessments.", "chunk_word_count": 535, "section_path": "Building asustainable and inclusive future > C&RRE > Implementation strategy", "document_id": "2023 Lloyds sustainability report", "page": 125, "page_start": 125, "page_end": 125 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 159, "chunk_text": "# Building asustainable and inclusive future\n## C&RRE\n### Implementation strategy\nWe continue to work in partnership with industry bodies to support the transition including the UK Green Building Council (UKGBC). We are Gold Leaf Members of the UKGBC, and Programme Partners of the Advancing Net Zero Programme. Furthermore, we will advocate through our participation in industry bodies and lobbying activities on the following policy asks (described below).\n### Greening the built environment continued\n### Bruntwood SciTech\n### Risks and dependencies\n### Engagement strategy", "chunk_word_count": 84, "section_path": "Building asustainable and inclusive future > C&RRE > Implementation strategy", "document_id": "2023 Lloyds sustainability report", "page": 125, "page_start": 125, "page_end": 125 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 160, "chunk_text": "# Building asustainable and inclusive future\n## C&RRE\n### Just transition\nIn 2023, Lloyds Bank acted as sole ESG co-ordinator on £380 million of sustainability-linked financing to Bruntwood SciTech, a leading UK property provider dedicated to the growth of the science and technology sector.\nThe transition of this sector has a critical dependency on accelerated policy action and there is a high level of uncertainty on how policies will develop. As outlined by the CCC (see page 119), ‘policy progress in the buildings sector is not on track’ and a significant acceleration in public policy is needed to achieve our target pathway1 , such as LCH installation, training of installers, affordability and an improvement in the minimum EPC required to lease a property. We continue to engage in policy advocacy both independently and through our affiliation with industry. In particular, we continue to seek certainty on future policy direction, including the accelerated rollout of LCH and minimum energy-efficiency standards.\nSupport from the government is required to build further momentum and awareness. We are developing our engagement strategy to help address a number of areas, including:\nImproving the energy efficiency and rollout of low carbon heating of commercial and residential buildings brings benefits beyond the environment as a result of more comfortable conditions and manageable energy bills. Research by the IEA shows how energy efficiency has the potential to support economic growth, enhance social development and help build wealth. Therefore, to support a Just Transition, it is essential that energy efficiency rollout reaches across society, including small businesses and lower income households, which is central to our strategy.\nThe financing included £100 million of new facilities provided by a group of lenders to support regional growth.\nPolicy and regulatory clarity for a clear trajectory for direct \nregulatory levers and critical indirect dependencies \n(including energy market reform, and decisions on the future \nheating mix, e.g. hydrogen, heat networks) \nEmissions measurement: through improved EPCs and real \ntime energy use \nSkills and labour supply, to boost skills availability in the \nsupply chain \nAccess to expertise to improve provision of advice for \nbuilding users and facilitate their transition \nAvailability of feasible financial mechanisms to implement \nfinancial incentives for improving energy efficiency and/or \ninstalling low-carbon heating systems\nSDG 7.3: By 2030, \ndouble the global \nrate of improvement in energy efficiency SDG 9.4: By 2030, \nupgrade \ninfrastructure and \nretrofit industries \nto make them \nsustainable, with \nincreased resourceuse efficiency and \ngreateradoption of clean and \nenvironmentally \nsound technologies and industrial \nprocesses, with all \ncountries taking \naction in accordance with their respective capabilities.\n£330 million of sustainability-linked lending is aligned to Bruntwood SciTech’s sustainability targets. These include improving the EPC ratings of buildings, a year-on-year reduction in carbon intensity, a reduction inembodiedcarbon across new build developments, and an increase in whole building renewable energy procurement. A £50 million green loan for the development of No.3 Circle Square, in the Manchester Oxford Road Corridor innovation district, was provided to help realise the company’s ambitions for No.3 Circle Square to achieve BREEAM Excellent Status, a NABERS 5 Star rating and an EPC A rating. The development will feature an innovative all-electric heating and cooling system, advanced air source heat pumps and new landscaped space to increase biodiversity.", "chunk_word_count": 535, "section_path": "Building asustainable and inclusive future > C&RRE > Just transition", "document_id": "2023 Lloyds sustainability report", "page": 126, "page_start": 126, "page_end": 126 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 161, "chunk_text": "# Building asustainable and inclusive future\n## C&RRE\n### Just transition\nInternally, there are several data challenges including quality and completeness. To address challenges regarding client data we will investigate ways to utilise internal sources more effectively, including from the green buildings tool. Since 2019 360m ft2 has been analysed by the free tool, bringing the total floor area analysed, including the Bank’s own portfolio, to 2 billion ft2 since 2019. As discussed earlier, it is acknowledged that EPCs, which are the most commonly available data source, do not always portray an accurate view of actual energy consumption in a building. They are also limited to estimating regulated energy use only (from space and water heating, lighting and ventilation), and therefore we need to estimate unregulated energy use (based on information from the Government’s Building Energy Efficiency Survey). The need for widespread improvements in emission measurements for buildings is well-recognised, with metered energy use being a future opportunity to improve accuracy, subject to data being made available.\nSee pages 93 to 94 for an overview of just transition\nWe regularly engage with clients and the wider industry on how to accelerate decarbonisation of the built environment. For example, as a key part of our target setting activity this year, we held two client round tables, to ensure we have an up-to-date understanding of the challenges and opportunities faced by our clients, including corporate and SME clients, in commercial and residential real estate.\n### bruntwood SciTech\nFinally, decarbonisation of this sector is heavily dependent on clients adopting low carbon heating. the future role of electrification for hydrogen and heating buildings is uncertain, which has also dampened appetite. A priority in our ‘greening the built environment’ system is to develop products and propositions that incentivise and support our clients to install low carbon heating.\nRichard Butterfield, Relationship Director, real estate and housing at Lloyds Bank,said: \"Bruntwood SciTech remains one of the UK’s true success stories – a business with sustainability and the industries of tomorrow running through its core.”\n### Greening the built environment continued\n### Citra Living\nWe will continue to encourage our partners to sign up to the Next Generation benchmark as a marker for good quality, sustainable housing and through this framework, look to increase the level of biodiversity net gain achieved in new developments.\nDuring 2023 we refined our sustainability strategy, which now focuses on three key areas:", "chunk_word_count": 400, "section_path": "Building asustainable and inclusive future > C&RRE > Just transition", "document_id": "2023 Lloyds sustainability report", "page": 126, "page_start": 126, "page_end": 127 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 162, "chunk_text": "# Building asustainable and inclusive future\n## C&RRE\n### Operating since 2021, Citra Living exists to provide high-quality homes to the UK rental market.\n• People: demonstrate the difference we are making by developing our approach to social value • Place: reduce reliance on fossil fuels Partner: 100 per cent partner alignment with our sustainable procurement policy by 2030\nAs a new area of the business, we set out in our 2022 reporting a number of key focus areas as part of the process of scoping and shaping a Citra sustainability strategy aligned to our Group sustainability ambitions.\nDuring the year, we started retrofitting pilots for existing homes in the private rental sector (PRS), along with a Zero Bills pilot on one of our new developments. In addition, where requested by customers we have undertaken retrofitting to allow for electric vehicle charging.\nOur initial ambition set out areas of focus across building standards, biodiversity, travel and data. Our activities in 2023 have focused on outlining Citra’s ambitions, and we continue to build the capabilities to calculate our baseline for our operational and supply chain carbon emissions.\nNext year, we will continue to focus on how our efforts can also benefit the people who live in the properties we own, for example, through lower energy consumption, supporting lower carbon transport options and greener more biodiverse places to live. To this end, we are undertaking an energy pilot where we will be monitoring the use of gas, electric, water and air quality in homes and using this insight to understand more about how our homes perform and sharing this information with our customers, to help them live more sustainably. We also hope to contract on our first Future Home Standard development and we will continue to develop our data strategy, to define and measure baselines, understanding our impacts and the opportunity to drive improvements as we continue to grow.\nWe outlined last year that we had an ambition to have 10 per cent of new projects signed up to the NextGeneration benchmark. Across our existing strategic partnerships, Barratts are a member of Next Generation, and have just been announced as the number 2 most sustainable developer at the Next Generation awards 2023. In the same awards Keepmoat were listed in the top 10 developers and they have signed up to the Next Generation Project level, with the first results due early 2024. In addition, Galliford Try have signed up to NextGen Project Level on our first build-to-rent tower.", "chunk_word_count": 416, "section_path": "Building asustainable and inclusive future > C&RRE > Operating since 2021, Citra Living exists to provide high-quality homes to the UK rental market.", "document_id": "2023 Lloyds sustainability report", "page": 127, "page_start": 127, "page_end": 127 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 163, "chunk_text": "# Building asustainable and inclusive future\n## C&RRE\n### Operating since 2021, Citra Living exists to provide high-quality homes to the UK rental market.\nFor 2023, we also targeted 10 per cent biodiversity net gain on each new development, and we had ambitions to deliver 50 per cent of new schemes in 2024 to Future Homes Standards. However, we have not been able to achieve these ambitions thus far. This is largely owing to delays in introducing the Biodiversity Net Gain requirement under the 2021 Environment Act and the delays in government issuing the Future Home Standard guidance (consultation issued end of 2023 with responses due March 2024). In addition, at the point that we entered into contract for the majority of our schemes, work had already started on site under previous building regulations. The requirement to deliver Biodiversity Net Gain will start to apply in 2024, with Future Homes Standards due to come in from 2025 and we remain committed to these as minimum standards.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Greening the built environment continued\n### Home insurance\nTo help customers protect themselves and their homes from the physical impacts of weather events, we are able to reach out, via email, with pre-season advice and guidance. In 2023, we issued pre-summer communications to our customers providing guidance on behaviours they can adopt to reduce risks of fires as well as protecting their homes and belongings when travelling during the summer holiday period. Throughout the winter we will issue advice on how to protect homes against the impacts of cold weather, such as burst pipes. Alongside preventative communications, we also reach out to our customers ahead of severe weather events. In October 2023, we sent almost 12,000 emails to customers in Scotland, in locations with a red weather warning due to Storm Babet, explaining to our customers how they could reach out, if they needed to make a claim.\n### Financing sustainable energy products\nOur Consumer Lending team embarked on a pilot with Octopus Energy to build a bespoke MBNA journey for customers wishing to finance their heat pump purchase. This enabled customers with an appetite for sustainable-energy products to easily pay and spread the cost using a loan from within the heat pump purchase journey.", "chunk_word_count": 388, "section_path": "Building asustainable and inclusive future > C&RRE > Operating since 2021, Citra Living exists to provide high-quality homes to the UK rental market.", "document_id": "2023 Lloyds sustainability report", "page": 127, "page_start": 127, "page_end": 128 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 164, "chunk_text": "# Building asustainable and inclusive future\n## C&RRE\n### Lloyds Banking Group (and its associated brands)1 offers buildings and content insurance to residents in the UK. We aim to support customers in improving the resilience of their homes against extreme weather caused by climate change. As a business, we also strive to advocate for change with policymakers and other firms in the industry.\nSoaring energy prices have meant that UK households are considering more affordable and sustainable heating solutions to brace for the winter months, ensuring their homes remain adequately heated. In response to this,the Group collaborated with trusted supplier Octopus Energy, piloting this proposition to help customers finance their heat pump purchase via an MBNA loan, in turn enabling a move to sustainable heating solution. Heat pumps use less energy than even the most efficient gas boilers to generate the same amount of heat.\nSDG 7.3: By 2030, \ndouble the global \nrate of improvement in energy efficiency SDG 9.4: By 2030, \nupgrade \ninfrastructure and \nretrofit industries to make them \nsustainable, with \nincreased resourceuse efficiency and \ngreater adoption of clean and \nenvironmentally \nsound technologies and industrial \nprocesses, with all \ncountries taking \naction in accordance with their respective capabilities.\nWhilst flooding presents a known challenge, the UK is also expected to experience hotter, drier summers, which is predicted to increase the risk of properties exposed to subsidence. Ground movement in areas of chalky soil may increase and subsidence could start to affect properties that have previously been at lower risk of subsidence.\n### Our strategy focuses on two areas:\nSee page 118 for details on this system\n## 1. Propositions to improve flood resilience\n## 2. Decarbonisation\nClimate change is projected to alter the frequency, severity and location of weather events that impact our UK general insurance portfolio. The UK will experience increases in extreme rainfall leading to increased flooding. Whilst river and coastal flooding can be modelled with catchmentscale hydrological models, allowing for advance planning in mitigation measures, the nature of surface water flooding (localised and difficult to predict) makes equivalent mitigation planning more challenging.\nWhilst there is currently no prescribed methodology for measuring emissions on insured properties to support net zero progress and reporting, we will continue to monitor and engage with developments in this area.\nOur aim is to support customers in improving the resilience of their homes against extreme weather caused by climate change.", "chunk_word_count": 397, "section_path": "Building asustainable and inclusive future > C&RRE > Lloyds Banking Group (and its associated brands)1 offers buildings and content insurance to residents in the UK. We aim to support customers in improving the resilience of their homes against extreme weather caused by climate change. As a business, we also strive to advocate for change with policymakers and other firms in the industry.", "document_id": "2023 Lloyds sustainability report", "page": 128, "page_start": 128, "page_end": 128 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 165, "chunk_text": "# Building asustainable and inclusive future\n## 3. Advocating change\nIn order to facilitate systemic change, we believe that acting as a convener and creating a platform for open dialogue and a diverse representation of expertise outside of just financial services will help us to solve for the challenges we now face. To these ends we are building relationships with environmental groups, experts and thought leaders who are supporting us in delivering training and embedding sustainability into our leadership roles. We have also identified the need to advocate for change within policymaking, leveraging our relationships with government and industry to influence policy in both flood resilience and broader weather-related resilience and adaptation efforts.\nOur MBNA loans application process with pre-approval functionality was integrated within the Octopus Energy customer journey, so consumers who want to install a heat pump can easily access finance.\nGiven the increasing frequency and devastating household impacts of flooding, flood resilience is a priority for us in supporting our customers. We recognise the opportunity and imperative to improve the flood resistance and resilience of those homes that are most at risk of flooding.\nThis journey is purely digital which is more sustainable than applications via branch or telephony.\nOur Build Back Better initiative (backed by Flood Re) is a commitment to spend up to £10,000 on specialist flood surveys and fitting property flood resistance and/or resilience measures following eligible flood claims. To identify the most appropriate measures for eligible customers – including floodgates and self-closing air bricks – we have onboarded specialist flood surveyors to provide expert advice to our customers. The Build Back Better scheme went live on 1 July 2022 and the first eligible claim was registered the following month.\nAdditionally, educating our colleagues remains key in delivering change across our business; we have been working alongside our learning team to identify and build capability and capacity for decision-making aligned to the broader sustainability agenda.\n### Low carbon transport\n### Road transport\nThe road transport sector in the UK plays a pivotal role in the country’s infrastructure, connecting communities, facilitating trade and driving economic growth. With a significant network of roads spanning cities, towns and rural areas, this sector serves the nation’s transportation system. Renewable energy technology is also changing how our cars, vans and buses are powered.\nThe CCC’s 2023 Progress Report highlights that reducing emissions from this sector relies on four main outcomes:\n### Part of our systems approach:\n• Rapid uptake of zero-emission vehicles • Improved conventional vehicle efficiency Shift to low carbon modes of transport, including active travel and public transport More efficient use of vehicles, including car sharing\nGreening the built environment Low carbon transport Sustainable farming and food Energy transition\n### Key recent policy developments relevant to achieving our road transport decarbonisation targets", "chunk_word_count": 464, "section_path": "Building asustainable and inclusive future > 3. Advocating change > Low carbon transport", "document_id": "2023 Lloyds sustainability report", "page": 128, "page_start": 128, "page_end": 129 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 166, "chunk_text": "# Building asustainable and inclusive future\n## 3. Advocating change\n### System boundary\nThe government has introduced several policies that can aid decarbonisation, including:\nOur low carbon transport system addresses transport by road and by air. It includes our retail vehicle leasing and financing activity, as well as support for transport operators, the companies that manufacture vehicles to produce cleaner more efficient vehicles, and those that develop greener alternative fuels. Emissions for our rail and shipping activities within the transportation sector are not currently included, due to their low materiality and exposure.\nNew Local Electric Vehicle Infrastructure (LEVI) fund designed to support the installation of electric vehicle chargers for homes without off-street parking New regulations that will ensure prices across charge points are transparent and easy to compare and that many new public charge points will have contactless payment options Charge point providers will also be required to open up their data so that charge points that meet customers’ needs are easy to locate\n### System challenges\nSurface transport is the highest emitting sector in the UK, accounting for 23 per cent of total emissions 1 . Decarbonisation will require fundamental changes including the shift from fossil fuels to electrical or other low-carbon alternative power sources, changes to how people and goods are moved around, with greater use of public transport, cycling and walking, and a continued rollout of charging infrastructure and sustainable aviation fuels. Many policies to aid reductions have significant risks in delivering reductions required.\nHowever, some policy actions may slow progress slightly, such as:\n• Delayed ban on the sale of internal combustion engine vehicles from 2030 to 2035\nThe CCC concluded that delaying the fossil car phase-out date to 2035 is expected to have only a small direct impact on future emissions, due to the now-confirmed Zero Emission Vehicle (ZEV) Mandate that sets targets for 80 per cent of new cars and 70 per cent of new vans sold by 2030 to be zero-emission, with financial penalties for manufacturers which do not meet targets.\nEstimated 2022 direct emissions as reported in the CCC June 2023 Progress Report. This figure includes cars, vans , buses and HGVs (heavy goods vehicles).\n### Low carbon transport continued\n### Aviation\n### Our actions", "chunk_word_count": 373, "section_path": "Building asustainable and inclusive future > 3. Advocating change > System boundary", "document_id": "2023 Lloyds sustainability report", "page": 129, "page_start": 129, "page_end": 129 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 167, "chunk_text": "# Building asustainable and inclusive future\n## 3. Advocating change\n### CCC assessment – Road and aviation\nAviation is recognised to be a hard-to-abate sector. Aviation emissions were impacted by the COVID-19 pandemic and the rising cost of living, but the long-term historical trend in aviation shows a gradual increase in emissions due to rising demand for long-haul flights only partly being compensated for by improved efficiencies.\nThe CCC’s assessment concludes that policy progress in thesurfacetransportsectorhasbeenslowerthan expected with credible policies in place to meet only 38 per cent of the required emission reductions and delays to key polices are increasing delivery risks. It also indicated that policy progress has been partial in the aviation sector with ‘significant risks’ in delivering the necessary emission reductions.\nCCC’s overall assessment of progress: \nCredible plans present \nSome risks \nSignificant risks \nInsufficient plans\nWe are considering the wider changes needed across the transport system and how our retail and commercial banks can play different, yet complementary, roles in supporting our customers to transition. We have developed products and propositions to help customers understand the best way to transition to greener vehicles and to ensure switching to electric fuel types is as hassle-free and costeffective as possible, including via partnerships. We are also engaging our corporate clients to set science-based targets and with government and other external stakeholders to ensure there is a supportive external environment to facilitate transition.\nThe CCC’s 2023 Progress Report highlights that reducing emissions and achieving net zero in this sector relies on three main outcomes:\n• Reducing emission intensity of aviation, including through innovation (sustainable aviation fuel, zeroemission aircraft) and efficiency improvements Managing demand including making low carbon alternative travel options available and affordable Developing high-quality offsets and removals to achieve net zero by 2050\n### Key recent policy developments relevant to achieving our aviation decarbonisation targets\nThe government has announced current and future actions that can aid decarbonisation, including:\nCommitting to introducing a revenue certainty mechanism (subsidy) to support sustainable aviation fuel (SAF) production \nPublishing a Delivery Plan to support subsidy scheme design, including at least 10 per cent mandatory proportion of total jet fuel to be SAF by 2025 and five SAF plants in construction by 2025\nThese developments recognise that much of the technology available to decarbonise the aviation sector is nascent, with large amounts of funding still required to scale production and integration of alternative fuels like SAF. The International Energy Agency does not expect this sector to decarbonise by 2050, with a reliance on carbon offsets for this sector to achieve net zero (International Energy Agency, Net Zero by 2050, published 2021).\nThe tables above summarise the CCC June 2023 overall assessment for policy areas that are the most relevant to delivering our emission reduction targets.\n### Low carbon transport continued\n### Retail motor\n>50%\n### Targets1\ncar and van emissions intensity reduction (gCO e/km) between 2018 and 2030\n### As a UK-focused bank we play a significant role in the whole ecosystem required to successfully transition towards a sustainable transport model.\nIn 2022, we published our retail motor targets to reduce the emission intensity of cars and vans:\n[IMAGE CAPTION] Cars emission intensity reduction 2018 to 2030'", "chunk_word_count": 532, "section_path": "Building asustainable and inclusive future > 3. Advocating change > CCC assessment – Road and aviation", "document_id": "2023 Lloyds sustainability report", "page": 130, "page_start": 130, "page_end": 131 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 168, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\nReduce the emission intensity (Scope 1 and 2) of the cars and vans we lease or finance by more than 50 per cent by 2030 (from a 2018 baseline) of $1 5 0 g \\mathrm { C O } _ { 2 } \\dot { \\mathrm { e } } / \\ k m$ (cars) and $1 9 8 9 0 0 _ { 2 } \\mathrm { e } / \\mathrm { k m }$ (vans), reaching $7 5 9 0 0 _ { 2 } \\mathrm { e } / \\mathrm { k m }$ (cars) and $9 9 9 \\mathsf { C O } _ { 2 } \\mathsf { e } / \\mathsf { k m }$ (vans) or lower.\nOur retail motor business leases vehicles through Lex Autolease and finances vehicles through our Black Horse and our core-bank brands. In February 2023, we announced the acquisition of Tusker, a dedicated salary sacrifice business. Over 1.1 million vehicles on the road today are funded through our business, including over 194,000 low emission vehicles.\nDuring 2023, we revised our methodology for calculating vehicle emissions, resulting in our restatement of the emission intensity target values for 2030. Our overall ambition in terms of percentage reduction is unchanged.\nThis ambition is ahead of the CCC’s 1.5 degrees balanced net zero pathway (BNZP), when accounting for the required reductions in tailpipe emissions (Scope 1) from vehicles with fossil fuel internal combustion engines (using data from the CCC’s 2023 Progress Report) and the CCC’s 1.5 aligned BNZP for decarbonisation of emissions from grid electricity (Scope 2) to power electric vehicles.\n[IMAGE CAPTION] VansVans emission intensity reduction 2018 to 20301\n### Methodology change\nWe have adopted a more accurate methodology for calculating vehicle emissions.\nFollowing the emissions scandal, vehicle emission measurement moved from New European Driving Cycle (NEDC) to the Worldwide Harmonized Light Vehicle Test Procedure (WLTP) standard. The changeover for cars and vans was staggered with all private cars registered post 1 September 2018 using the WLTP classification. Before our 2023 methodology update, our model to calculate emission intensity of our portfolio used a combination of modern WLTP vehicle emissions where available for newer vehicles and NEDC vehicles for older vehicles.\nThe updated methodology adopts WLTP emission factors and applies an uplift to NEDC where these data are not available. The new methodology uplifts all NEDC emission intensities by c.16 per cent which is significant, providing a more accurate reflection of the emissions intensity baseline and warranting a restatement of targets.\n### Low carbon transport continued\n### Implementation strategy", "chunk_word_count": 449, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Methodology change", "document_id": "2023 Lloyds sustainability report", "page": 131, "page_start": 131, "page_end": 131 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 169, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Risks and dependencies\nOur focus over the last five $^ { + }$ years has been primarily on cars: providing company car policy guidance, salary sacrifice – including the investment in Tusker to speed up capabilities to help the rate of adoption. We have rolled out initiatives in used cars such as subsidised EV finance and used car leasing.\nWe have extended the age and mileage parameters for vehicles we finance to allow longer contracts with lower monthly payments – this allows us to finance more EVs longer into their lives. Through Lex Autolease we are piloting an initiative to re-lease electric vehicles for shorter durations (one to three years) in the market, working through corporate and broker channels, where we are already receiving positive feedback.\nThe recent decision by the UK government to delay the ban on the sale of new petrol and diesel vehicles to 2035 runs the risk of undermining the progress that has been made to date, for example, consumers may not feel the urgency to purchase/ lease an electric vehicle and some inward investment relating to EV manufacturing could be jeopardised. In general, we do not anticipate the delay to affect manufacturers’ EV production behaviour as manufacturing is planned five to seven years in advance.\nAs a Group we are well prepared for the transition from internal combustion engine (ICE) cars to electric vehicles (EVs). We have committed to providing £8 billion of green lending for new battery electric and plug-in hybrid electric vehicles by 2024. In 2022 we provided over £2 billion of this funding and in 2023, added an additional £3.6 billion. Our strategy covers four key areas:\nWe have also launched a leasing proposition for used electric vehicles, enabling us to test the market and identify issues and quickly develop solutions.\nThe government’s zero emission vehicle (ZEV) mandate has now been finalised, setting out expectation for 80 per cent of new cars and 70 per cent of new vans sold in Great Britain to be zero emission by 2030, increasing to 100 per cent by 2035. For cars, the ZEV mandate is more realistic. For vans, the target of 70 per cent by 2030 may be overly optimistic. For electric vans, there are a number of challenges that are hindering growth, including mileage range and the limited product range, together with a limited used market for electric vans. Availability of charging infrastructure is also a key issue. The finalised ZEV mandate for vans has reduced the government’s targets for 2024 and reduced fines for manufacturers achieving their goals, which could impede uptake of electric vans. Based on our current forecasts, we calculate a significant gap between the projected emission intensity of our electric van portfolio and our target in 2030.", "chunk_word_count": 480, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Risks and dependencies", "document_id": "2023 Lloyds sustainability report", "page": 132, "page_start": 132, "page_end": 132 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 170, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Risks and dependencies\nOne of the key areas where investment is needed is to increase the accessibility and affordability of charging infrastructure for residents. This is especially crucial for the c.20 per cent1 of residents who reside in housing blocks and who are most likely to rely on public charging infrastructure, which is much more expensive than using home energy, exacerbated by a difference in VAT rates. This could create much greater demand in communities that would otherwise find it difficult to transition to EVs. Encouragingly, there have been a number of significant positive policy developments to increase EV charging infrastructure, including:\nAs part of our wider Group plan to help provide customers with energy-efficient solutions, we have teamed up with Octopus Energy to pilot EV charging services to our Lex Salary Sacrifice and corporate drivers, to help make their EV journey easier. We will refer drivers and our corporate clients to Octopus Energy who will offer them a range of Home Chargers to choose from, a smart electricity tariff aimed at making home charging cheaper, along with access to public charging with just one single card.\n• Increase awareness and support customers to understand whether a transition to a greener vehicle is suitable for their circumstances Develop propositions that make switching to electric fuel types as hassle-free and cost-effective as possible in both the new and used markets Form enduring strategic partnerships that support and facilitate our transition to net zero Develop targeted external engagement and lobbying activity to support building an external environment that will facilitate the achievement of our emissions reduction targets\nWe are also proactively engaging with external organisations to make access to charging easier and more cost-efficient for those who do not have access to home charging. For vans, we are also exploring how we can use our data to aid corporate customers to transition (e.g. using telematics) and we are working with industry bodies such as BVRLA in advocating for policies to increase the pace of charging infrastructure rollout.\nWidening eligibility of EV charge point grants to include cross-pavement solutions to make EV ownership a more practical option for those without off-street parking (Ref Plan for Drivers, Department for Transport, October 2023) New regulations to ensure that prices across chargepoints are transparent and easy to compare and that a large proportion of new public charge points have contactless payment options (announced October 2023) Funding to support local authorities increase charging infrastructure\nMore widely, there is a continuing need to increase skills to maintain and service EVs, to match customer demand. In addition, for the used EV market to develop and reach a broader customer base, there is a need for dealers to buy and sell more used EVs.\nAlongside financing, the government and the energy and motor industries will need to work together to ensure the confidence of the public, which is vital to enable the move to sustainable forms of transport.\n£3.6bn in green lending for new battery electric and plug-in hybrid electric vehicles in 2023", "chunk_word_count": 525, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Risks and dependencies", "document_id": "2023 Lloyds sustainability report", "page": 132, "page_start": 132, "page_end": 132 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 171, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Risks and dependencies\nSupply chain and chip shortages within the sector had previously been seen as the biggest risk to the electric transition although this does appear to be easing. The generally higher vehicle purchase cost and concerns about charging infrastructure remain significant barriers to adoption, particularly when it can be difficult to understand any whole life cost savings that could be made. The used market for EVs is starting to mature and an ongoing supply and demand in this area is vital for a healthy transition in the future. To mitigate these risks, there are several dependencies that must be considered, including traditional automotive original equipment manufacturers (OEMs) shifting their product mix from ICE to EVs; growth of consumer demand, for both new and used EVs, and the significant scaling-up of charging infrastructure and investments in the electricity grid to support this.\n### Low carbon transport continued\nLow carbon transport – Retail motor continued\n### Engagement strategy", "chunk_word_count": 180, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Risks and dependencies", "document_id": "2023 Lloyds sustainability report", "page": 132, "page_start": 132, "page_end": 133 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 172, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Just transition\nAn important part of our strategy is to engage with policymakers to ensure there is an attractive marketplace for new and used EVs as well expanding the UK’s charge point infrastructure. As a leading UK provider of greener fleets for businesses, and an enabler to access more environmentally-friendly vehicles for our customers, we are confident that we can help meet the challenge of keeping the nation moving in a more sustainable way up to and beyond 2030.\nUsed EV leasing – In April we launched a used EV leasing proof of concept proposition for corporate customers that offers flexibility. The proposition supports customers to quickly access cost-effective, green vehicles. In the current environment, this can help to counter the long lead times in acquiring an EV, but also importantly to make EV ownership more widely accessible and affordable at a time when the cost of living is high.\nWe are also working with industry initiatives and partnerships to help accelerate change, these including:\nThe Climate Group – UK Electric Fleets Coalition: We joined the steering group of The Climate Group’s UK Electric Fleets Coalition in 2021 as part of a small group of business leaders using their market experience to advocate for UK policy measures to accelerate the transition to electric cars and vans, such as stimulating EV supply and investing in EV charging\nWe have validated that there is demand for used EVs, but used leasing has added complexity. Having a multi-disciplined product feature team and dedicated model office working together has enabled us to identify issues early and quickly implement solutions.\nThis year, our five key policy asks for government to focus attention to drive the transition to EVs:\nElectric Vehicle Fleet Accelerator (EVFA): We joined in 2021 to help address challenges by providing a platform for members to collaborate, identify potential solutions and leverage aggregate corporate demand to support a joint commitment to buy 100,000 British manufactured EV vans by the end of the decade, or sooner if availability allows\n1. Prioritise the rapid and fair rollout of charging infrastructure. \n2. Provide certainty around the zero emission vehicle mandate. \n3. Provide clarity on benefit in kind rates beyond 2028. \n4. Consider the future of EV maintenance and consumer information. \n5. Introduce a national battery strategy which aims to support the development of the battery manufacturing industry in the UK.\nThese policy asks guided our one-to-one conversations with multiple MPs and our participation in thought leadership events, from panel sessions at conferences to conversations during the summer’s EV rally.", "chunk_word_count": 445, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Just transition", "document_id": "2023 Lloyds sustainability report", "page": 133, "page_start": 133, "page_end": 133 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 173, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Tusker joins the Group\nIn 2023, more than 1.1 million cars and vans on UK roads were leased or financed throughLex Autolease,Black Horse and Tusker; transport business now finances one in eight ULEVs on UK roads.We have continued to make progress on our commitment to reduce our financed emissions by 50 per cent or more by 2030. As part of our strategy to achieve this we acquired Tusker in February 2023 who are experts in salary sacrifice cars. This acquisition was derived from our 2022 strategy ambitions to grow our participation in motor finance and leasing in a sustainable way. Their commitment to salary sacrifice and low-emission vehicles has seen Tusker grow their customer base tenfold in the last ten years. Tusker’s market-leading proposition provides a superior service having integrated technology and relationships with Enterprise Benefit Providers who offer the salary sacrifice scheme to businesses. Tusker is accelerating our progress to increase the breadth and diversification of our transport business.\nWe operate Tusker on a standalone basis as a third strategic brand in the market alongside the Lex Autolease and Black Horse businesses, to balance disruption with the benefits andcapabilities to be leveraged from being part of Lloyds Banking Group. Over 1,800 companies are now supported by Tusker’s fleet of c.40,000 vehicles, of which 75 per cent are EVs, with current orders set to increase it to 82 per cent. Based in Watford with colleagues across the country,Tusker now has over300 employees focusing on customer excellence and following a clear vision to help the UK drive a better car.Theywereearlymembers of the EV100, a group of companies that have committed to a zero-emission future and that their fleet will be fully electricby2030.\nTusker has been committed to offsetting carbon emissions, initially with its own operations in 2010, before expanding to include allits vehicles in 2013. The offsetting was originally focused on the tailpipe emissions of cars, but in 2020, due to the number of EVs the company was delivering, Tusker went one step further and now incorporates the emissions created from charging EVs.\nSDG 9.4: By 2030, \nupgrade \ninfrastructure and \nretrofit industries to make them \nsustainable, with \nincreasedresourceuse efficiency and qreateradoption of clean and \nenvironmentally \nsound technologies and industrial \nprocesses, with all countries taking \naction in accordance with their respective capabilities.\nTusker’s offsetting is conducted by the Carbon Footprint organisation who use verified offsetting standards toensurethatthebenefitsof offsetting are felt across the world, as well as with UK tree-planting projects.\nTusker has purchased more than 49,300t of carbon credits associated with the emissions or potential charging emissions from the more than 16,000 vehicles which have been delivered since Tusker’s acquisition by Lloyds Banking Group in February 2023. More than 85 per cent of Tusker’s deliveries are now pure EVs.\nSince Tusker’s acquisition by Lloyds Banking Group in February 2023, c.500 customers have joined the Tusker salary sacrifice scheme, which provides more than 315,000 additional employees with the opportunity to drive a brand-new, zero-emission vehicle, bringing the total to over 1.7 million organisations. In the same period, Tusker delivered more than 20,000 cars to drivers, almost doubling its fleet in less than a year.\nThe offsetting for each car Tusker puts on the roads, continues for the entire length of the agreement the driver has with Tusker.", "chunk_word_count": 566, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Tusker joins the Group", "document_id": "2023 Lloyds sustainability report", "page": 134, "page_start": 134, "page_end": 134 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 174, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Low carbon transport continued\n### Road passenger transport\n49% road passenger transport emissions intensity reduction (gCO e/pkm) between 2019 and 2030\n### Implementation strategy\n### Target\nThis year we have developed a 2030 target for our Commercial Banking portfolio of corporate road passenger transport operators. We have used the 1.5 degree aligned balanced net zero pathway of the Climate Change Committee as our reference. Our target requires an emissions intensity reduction of 49 per cent from our 2019 baseline of $1 6 5 9 0 0 _ { 2 } \\mathrm { e } / \\mathsf { p k m }$ to $8 5 9 0 \\mathsf { C O } _ { 2 } \\mathsf { e } / \\mathsf { p k m }$ in 2030. We selected 2019 as the baseline year given the impacts of the COVID-19 lock downs on passenger behaviour in the years 2020 and 2021, and 2022 data not yet being available.\nCentral to our implementation strategy for this target is engaging our clients to set their own credible targets by the end of 2025, aligned with 1.5 degrees. Our continuing finance to clients beyond 2025 will be dependent on credible targets and plans being in place.\nOur clients whose primary business is transportation of passengers, which includes buses, coaches, taxis and rentals. Decarbonisation of this sector is driven by the move from internal combustion engines to electrification.\nAdditionally, we are targeting additional corporate lending, asset finance and project finance to bus owners and operators to finance the rollout of low carbon (electric and hydrogen) buses by 2030.\nEngage with clients to set their own credible targets (1.5 degrees aligned) by end of 2025.\nThe availability of granular client emissions data is a challenge for setting a target in this sector. Due to challenges accessing data for SME clients, our target covers larger clients in our corporate and institutional business. Even for larger clients, there are methodological challenges in translating available Scope 1 emissions data into an intensity metric due to the lack of client-level passenger km data, meaning that significant assumptions are required.\n[IMAGE CAPTION] (gCO2 e/m2 )Road passenger emission intensity reduction Road2019 to 2030\n\n### Octopus Electric Vehicles\nMiray Muminoglu, Managing Director, Head of Securitised Products Group and FIG DCM at Lloyds Bank, said:\n### Risks and dependencies", "chunk_word_count": 409, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Low carbon transport continued", "document_id": "2023 Lloyds sustainability report", "page": 135, "page_start": 135, "page_end": 136 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 175, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Just transition\n“Given the alignment across the two institutions in supporting the transition to net zero, and our leading auto franchise within SPG, this facility demonstrates not only our strategic ambitions to broaden and deepen our client relationships but also our commitment to Help Britain Prosper.”\nWe recognise there are real challenges in decarbonising the road passenger sector. The move to low carbon technologies is dependent on a supportive policy environment, supporting innovation, infrastructure and supply of alternative low carbon fuels where necessary while encouraging the modal shift towards public transport.\nLast year, Lloyds Bank completed a £550 million debt securitisation facility with Octopus Electric Vehicles (Octopus EV). The financing will be used to expand the company’s EV salary sacrifice programme, which began in 2021. The programme enables drivers to save up to 40 per cent on their monthly leasing costs, while the company provides everything they need to take the road – the car, a charger and discounted energy tariff. Octopus EV, a subsidiary of Octopus Energy Group, has emerged as a significant catalyst in propelling the shift towards ecofriendly, electric transportation.\nA thriving public transport sector is an essential component of the transport system, enabling people to travel in the most cost-effective and environmentally sound way, for work and leisure. As the transport system faces transformative change, a key component of our strategy is to support the passenger transport sector to transition to net zero while continuing to serve their communities.\nSDG 9.4: By 2030, \nupgrade \ninfrastructure and \nretrofit industries to make them \nsustainable, with \nincreased resourceuse efficiency and \ngreateradoption of clean and \nenvironmentally \nsound technologies and industrial \nprocesses,withall \ncountries taking \naction in accordance with their respective capabilities.\nFor bus, coach and taxi operators, there is a fundamental reliance on passenger demand for bus/coach travel, to create the business incentive to move to low carbon vehicles. For rentals, the transition to EVs is very much dependent on customer demand to select a rental EV over a conventional internal combustion engine, which in turn is influenced by cost and easy access to reliable charging infrastructure. How consumer demand will evolve, in response to the wider economic trends, will strongly influence our ability to deliver our target.\nSee pages 93 to 94 for an overview of just transition\nLow carbon transport continued\n### Automotive original equipment manufacturers (OEMs)\n47% automotive (OEMs) emissions intensity reduction (gCO e/vkm) between 2020 and 2030\n### Implementation strategy", "chunk_word_count": 425, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Just transition", "document_id": "2023 Lloyds sustainability report", "page": 136, "page_start": 136, "page_end": 137 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 176, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Target\nReduce the emission intensity (including Scope 1, 2 and 3 emissions) of our automotive (OEMs) portfolio by 47 per cent from a 2020 baseline of $2 3 \\mathsf { l g C O } _ { 2 } \\mathsf { e } / \\mathsf { v k m } ,$ , reaching $1 2 4 9 0 0 _ { 2 } \\mathrm { e } / \\mathrm { v } \\mathrm { k m }$ in 2030.\nLast year we signalled our intention to grow sustainable lending and to onboard new EV-only manufacturers. This year we are pleased to have onboarded a new EV-only manufacturer whilst also supporting the transition of traditional manufacturers who remain critical to sectorwide decarbonisation efforts.\nWe expect our clients to set targets which are either aligned with IEA NZE 2030 or validated by SBTi.\nWe originally set a target to reduce emissions intensity from a 2020 baseline of $2 1 7 \\mathrm { g C O } _ { 2 } \\mathrm { e } / \\mathrm { v k m }$ by 47 per cent to $1 1 5 9 0 0 _ { 2 } \\mathrm { e } / \\mathrm { v } \\mathrm { k m }$ by 2030. Previously the emissions baselines of several key clients were based on estimated data.\nIn the coming years, we will expect our clients to set targets which are either in line with IEA NZE 2050 and/or validated by the Science Based Targets initiative (SBTi).\nIn our refreshed version we have improved our methodology to use reported client disclosures where possible, resulting in a more accurate 2020 baseline of $2 3 \\mathrm { l g C O } _ { 2 } \\mathrm { e } I$ vkm. As a result, alignment to the same 1.5 degree scenario pathway requires a 47 per cent reduction to $1 2 4 9 0 0 _ { 2 } \\mathrm { e } / \\mathrm { v } \\mathrm { k m }$ over the same period. We have also calculated the portfolio’s 2022 emissions intensity to be $2 3 2 9 \\mathsf { C O } _ { 2 } \\mathsf { e } / \\mathsf { v k m }$ .\nBy the middle of the decade, we will be working with our clients to ensure they are performing against their decarbonisation targets; by the end of the decade we expect all our clients to be meeting these indicators.\nThe production of vehicles is highly concentrated amongst the world’s largest automotive manufacturers. This sector’s transition relies on the shift away from manufacturing the ICE to battery EVs and other low emission alternatives.\nFor our most material automotive clients we will be assessing their credible transition plans by 2024. We continue to embed considerations of client targets, commitments, progress and transition plans into our decisionmaking processes by the end of 2025 as appropriate.\n[IMAGE CAPTION] (gCO2 e/vkm)Automotive (OEMs) emission intensity reduction Automotive O2020 to 2030\n### Low carbon transport continued", "chunk_word_count": 528, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Target", "document_id": "2023 Lloyds sustainability report", "page": 137, "page_start": 137, "page_end": 137 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 177, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Aviation\nLow carbon transport – Automotive (OEMs) continued\n31%\n### Risks and dependencies\n### Target\naviation emissions intensity reduction (gCO e/rtk) between 2019 and 2030\nAviation (passenger and freight transport) is a hard-to-abate sector, with the required scale-up of sustainable aviation fuels and maturing of low carbon propulsion technologies still many years away.\nThe net zero transition of the automotive manufacturers is key to delivering not only of this target but also to our targets in retail motor (cars and vans) and road passenger (buses, coaches, taxis and rentals). A key driver for automotive OEMs is consumer appetite for EVs, which in turn is dependent on the widespread availability of cost-effective charging infrastructure. The policy landscape underpinning these is relatively advanced in the UK compared to some other jurisdictions for our client base, such as the US and Germany.\nReduce the emission intensity per revenue tonne kilometre of our aviation portfolio by 31 per cent from a 2019 baseline of $\\mathsf { l } , 0 2 8 \\mathsf { g C O } _ { 2 } \\mathsf { e } / \\mathsf { r t k } ,$ reaching 709 $\\mathsf { g C O } _ { 2 } \\mathsf { e } / \\mathsf { r t k }$ by 2030 (based on the IEA ETP 2020 scenario, aligned with well below 2 degrees).\nIn our aviation portfolio we originally set a target to reduce emissions intensity by 31 per cent by 2030 to $6 3 3 \\mathrm { ~ g C O } _ { 2 } \\Theta /$ rtk from a baseline of 918 $\\mathsf { g C O } _ { 2 } \\mathsf { e }$ /rtk in 2019. The 2019 portfolio baseline has increased by c.12 per cent to $1 , 0 2 8 9 \\mathsf { C O } _ { 2 } \\mathsf { e } / \\mathsf { r t k } ,$ driven mainly by client restatements. As a result, alignment to the same WB2D degree scenario pathway requires a 31 per cent reduction to $7 0 9 \\ : \\mathrm { g C O } _ { 2 } \\in / \\mathrm { r t k }$ in the same period.\nA key driver for automotive OEMs is consumer appetite for EVs, which in turn is dependent on the widespread availability of costeffective charging infrastructure.\n### Progress update\nAt year-end 2022, we had reduced the emissions intensity of our aviation portfolio by 2 per cent per revenue tonne kilometre from the 2019 baseline of $\\mathsf { l } , 0 2 8 \\mathsf { g C O } _ { 2 } \\mathsf { e } / \\mathsf { r t k } ,$ reaching $1 , 0 0 3 \\mathrm { g C O } _ { 2 } \\Theta /$ rtk. This is expected considering COVID-19 recovery for the sector, where emissions intensity was expected to return to pre-COVID levels.\n[IMAGE CAPTION] (gCO2 e/rtk)Aviation emission intensity reduction Aviation 2019 to 2030", "chunk_word_count": 529, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Aviation", "document_id": "2023 Lloyds sustainability report", "page": 138, "page_start": 138, "page_end": 138 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 178, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Low carbon transport continued\n### Implementation strategy\n### Risks and dependencies\nOur key strategic lever for this sector is to work with our clients to set targets and develop plans which are aligned with a 1.5 degree pathway. While many of our clients have already set targets or committed to set targets aligned with well below ${ 2 ^ { \\circ } C }$ or $1 . 5 ^ { \\circ } \\mathrm { C }$ scenarios, our modelling indicates that due to uncertainties around COVID-19 recovery and technology scale-up, as well as the time lag between our base year and target adoption by clients, this action alone is unlikely to deliver the 2030 emissions intensity reduction for our aggregate aviation portfolio which is required. It will, however, ensure that in advance of 2030, our portfolio will be made up of companies converging to net zero by 2050.\nKey dependencies for this sector include continued support from governments globally for sustainable aviation fuel (SAF) production, scaling of SAF capacity and alternative propulsion technologies (e.g. battery and hydrogen), expansion of airport infrastructure to run blended fuel lines and continued evolution of aircraft fleet efficiency. There is a heavy dependence on SAF, where production is limited at present.\nIn the UK, as part of the Jet Zero strategy published in 2022 to deliver net zero aviation by 2050, the SAF mandate will require at least 10 per cent of jet fuel to be made from sustainable sources by 2030. This year the government announced it will launch a consultation on the design and delivery of a revenue certainty mechanism to support SAF production in the UK and boost its uptake, giving producers greater assurance about the earning from the SAF they produce1 . The government has an ambition to have at least five commercial SAF plants under construction in the UK by 2025.\nIn 2023, the market recovered from COVID-19 quicker than initially anticipated. Over the past months the market has communicated intentions for investments in enhancing fleet efficiency. In this sector, we support clients through our continued deployment of capital and risk management capabilities, whilst also helping further align finance and environmental performance in the industry through several sustainability-linked financing facilities in which we have played roles as both lender and coordinator.\nWe continue to engage with clients on the need to set ambitious targets to achieve net zero greenhouse gas emissions aligned with the goal of limiting global warming to $1 . 5 ^ { \\circ } \\mathrm { C }$ . As part of this we encourage clients to share their decarbonisation strategies, including planned capital expenditures with associated quantified emissions intensity reductions. For our most material aviation clients we will be assessing their credible transition plans by 2024.\nWe also aim to play a key role in the transition of the aviation sector through supporting and influencing the wider aviation value chain to decarbonise, including the supply chain and aircraft manufacturing.\n### Sustainable farming and food", "chunk_word_count": 520, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Low carbon transport continued", "document_id": "2023 Lloyds sustainability report", "page": 139, "page_start": 139, "page_end": 140 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 179, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Agricultural emissions are mainly from biological processes in crop and livestock production and have declined by 16 per cent since 1990, mainly due to successive reform of the Common Agricultural Policy (CAP) and EU environmental legislation (e.g. Nitrates Directives). There has been little change in emissions since 2008. As acknowledged by the UK government in its Net Zero Strategy – Build Back Greener (2021, page 171), ‘emissions mitigation in agriculture is complex and diverse, with no silver bullets’.\nLand-based activities that do not lead to food production are summarised as ‘Land Use, Land Use Change and Forestry (LULUCF)’, including afforestation and forestry management, agroforestry and hedges, peatlands and bio-energy.\nPart of our systems approach:\nGreening the built environment Low carbon transport Sustainable farming and food Energy transition\nThe agriculture sector has significant potential to benefit from, and create wider societal benefits for nature and climate through implementing nature-based solutions on farms (e.g. hedgerow planting and peatland restoration). It is therefore a critical sector for the UK to achieve its net zero ambitions.\n### System challenges\n### System boundary\nThe CCC’s 2023 Progress Report highlights that reducing emissions and sequestering carbon from agriculture relies on three main outcomes:\nOur sustainable farming and food system addresses primary agriculture and the food value chain and plays an important role in ensuring food security in the UK.\nThe agriculture sector is responsible for 11 per cent of UK emissions 1 . Unlike other systems, emissions are mainly derived from natural processes which are challenging to abate. Decarbonisation is dependent on uptake of low carbon farming methods, improvement in agricultural productivity and changes in consumer behaviour. Many policies to aid reductions have significant risks in delivering reductions required.\n• Take-up of low carbon farming methods \n• Improved agricultural productivity Consumer behaviour change that shifts diets from meat and dairy to plant-based proteins and reduces food waste, releasing agricultural land for uses that sequester carbon, such as tree planting\n### Sustainable farming and food continued\n### Our actions", "chunk_word_count": 354, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Agricultural emissions are mainly from biological processes in crop and livestock production and have declined by 16 per cent since 1990, mainly due to successive reform of the Common Agricultural Policy (CAP) and EU environmental legislation (e.g. Nitrates Directives). There has been little change in emissions since 2008. As acknowledged by the UK government in its Net Zero Strategy – Build Back Greener (2021, page 171), ‘emissions mitigation in agriculture is complex and diverse, with no silver bullets’.", "document_id": "2023 Lloyds sustainability report", "page": 140, "page_start": 140, "page_end": 141 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 180, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Key recent policy developments relevant to achieving our agriculture decarbonisation target\nThrough our partnership with the Soil Association Exchange, we have developed tools and services to provide our larger clients with consultancy support that identifies valuable insights into the financial and environmental impact of sustainability measures and we have developed a free-to-use platform which anyone can use to get recommendations to improve farm practices and seek financial support where possible. We are also using our voice through policy engagement with government and industry to help drive the transition.\nSeveral recent government actions can aid decarbonisation, including:\n• The Nature Markets Framework appointed the British Standards Institution to expedite a pipeline of investment standards for nature markets Defra expanded the Sustainable Farming Incentive to allow farmers to be paid for additional activities, including precision farming and agroforestry\nHowever, policy development to influence behaviour change has yet to gain traction in some areas, such as:\n• In September, the government announced it will not deter individuals from consuming meat\nThe CCC concluded that the government announcement ruling out demand-side measures, including diet choices, reduces the available options to reduce emissions, increasing overall delivery risks. It also removes some important flexibility in the way that future targets can be met. The CCC continues to advise that supporting the public to make more sustainable choices in what they eat is an important part of the pathway to net zero and this could be achieved via public engagement and by making these choices easier, more affordable and more attractive.\n### CCC assessment – Agriculture\nThe CCC’s June 2023 assessment concluded that, despite some recent progress, policies to reduce emissions from agriculture have ‘significant risks’ or ‘insufficient plans’.\nCCC’s overall assessment of progress: Some risks\nSignificant risks Insufficient plans\nPolicy area\nCCC overall assessment\nImprovements in agricultural productivity\nUptake of low carbon farming\nBehaviour change – demand and food waste\n### Sustainable farming and food continued\n### Agriculture", "chunk_word_count": 344, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Key recent policy developments relevant to achieving our agriculture decarbonisation target", "document_id": "2023 Lloyds sustainability report", "page": 141, "page_start": 141, "page_end": 141 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 181, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Fonthill Estate\n25%\nFonthill Estate is a large 8,500 acre estate in southwest Wiltshire,witha farmat itsheart.James Griffin,who manages the farm on behalf of Velcourt under a contract farm agreement, and the team have been working to help modernise the farm in line with new farming techniques. As a result of their early efforts, the farm now rarely depends on deep tillage, instead opting for a direct drilling system and uses organic sources of fertilisers, which has reduced fertiliser use by more than a third over the last five years. With the farm’s transition underway, the team was introduced to the Soil Association Exchange (SAX) assessment through Lloyds Bank to help build on their work. The SAX team visited Fonthill and spent several days learning about the farm and collecting data. Spanning six different areas, the SAX assessment provides a complete assessment of farms and allows clients to see a full picture of their impact instead of data being siloed in different places. Once the assessment had been completed, James received a report and was able to sit down with an adviser from the SAX team to discuss recommendations. As a result of the review, Fonthill is paying greater attention to hedge management schedules to improve water quality, soils and the farm’s overall biodiversity.\n### Target\nagriculture absolute emissions reduction (MtCO e) between 2021 and 2030", "chunk_word_count": 247, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Fonthill Estate", "document_id": "2023 Lloyds sustainability report", "page": 142, "page_start": 142, "page_end": 142 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 182, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### The agriculture sector plays an important role in ensuring food security in the UK, however, it also contributes 11 per cent of total GHG emissions in the UK1 .\nIn 2023, we have developed a 2030 target for our Commercial Banking agriculture portfolio using the Climate Change Committee’s 1.5 degree aligned balanced net zero pathway as our reference. Our target is to reduce absolute emissions by 25 per cent between 2021 and 2030 (from 6.3 $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ to $4 . 7 \\ : \\mathsf { M t C O } _ { 2 } \\mathsf { e }$ ).\nEducating and supporting our farmers to transition, through our report ‘Shaping agriculture’s transition to net zero future’.\nIn 2022 the sector accounted for $2 7 . 3 \\%$ of the Bank’s Scope 3 emissions, based on 2022 drawn lending of £7.2 billion making supporting the decarbonisation of this sector a priority for the Group.\nOur target covers emissions from primary agriculture, and does not include LULUCF measures (e.g. afforestation, peatland restoration and bio-energy crops which sequester carbon) as accounting for how these measures affect carbon emissions and sequestration is complex and currently very uncertain. However, we know that natural processes play a critical role in sequestering carbon. Therefore, we will keep this under review as we recognise that accounting for LULUCF will become a necessity when we develop an agriculture net zero target beyond 2030.\n[IMAGE CAPTION] (MtCO2e)Agriculture absolute emission reduction Agriculture2021 to 2030\nThe SAX assessment allows us to actually see the impact of those changes in the data. From progress on our soil organic carbon, to the impact on biodiversity that our buffer strips are having. It changes the conversation from a theoretical one to one that is grounded in evidence.\nSDG 12.2: By 2030, achieve the sustainable management and efficient use of natural resources.\nSDG 15: Protect, \nrestore and promote sustainable use of \nterrestrial \necosystems, \nsustainably manage forests, combat \ndesertification, and halt and reverse land degradationand halt biodiversity loss.\nFonthill Estate: James Griffin Farm Manager\n### Sustainable farming and food continued\nSustainable farming and food – Agriculture continued\n### Implementation strategy", "chunk_word_count": 388, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > The agriculture sector plays an important role in ensuring food security in the UK, however, it also contributes 11 per cent of total GHG emissions in the UK1 .", "document_id": "2023 Lloyds sustainability report", "page": 142, "page_start": 142, "page_end": 143 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 183, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Risks and dependencies\nWe are focused on supporting all parts of the sector to transition to net zero. We do not intend to withdraw financing from any sub-sector, recognising the potential economic and societal impacts this may create (e.g. on UK food security and rural employment).\nWe are committed to educating and supporting our farmers to transition through the relaunch of our ‘Shaping agriculture’s transition to net zero future report’ and our market-leading partnership with the Soil Association Exchange (SAX). Through this pilot, we are aiming to provide the service to 1,000 of our larger agriculture clients with free on-farm consultancies, which will provide valuable insight into the financial and environmental impact of sustainability measures, enabling us to develop comprehensive guidance and support that can be widely applied throughout the agriculture industry. We have also partnered with them to build a free-to-use online platform available to all farmers to provide them with recommendations to improve farm practices and where possible seek financial support to make changes. The SAX includes a module on ‘social’ which currently looks at public access across the farm, but we plan to extend it to include separate questionnaires to farmers and their employees to cover Just Transition considerations, employee impacts, community involvement and any participation choices in wider agricultural communities.\nThere is a high degree of uncertainty on how the agriculture sector will transition. We acknowledge the uncertainties associated with setting and delivering an emissions target in this sector, namely the poor data landscape and our dependency on factors outside our control, such as government policy, which will drive the sector’s transition.\nThe willingness and capability of our farm clients to decarbonise their operations is key. Our strategy has a critical dependency on government action to incentivise and enable clients to identify, act and report progress through its funding, guidance and regulatory activities. There are more details on our engagement strategy with the government on page 140. The CCC Progress Report in 2023 (see page 140) indicates examples of policy in development although none of the measures are on track. The CCC estimates £1.5 billion investment is required per year by 2035 to implement necessary abatement measures.\nIncreasing client awareness and education is therefore a foundational activity for decarbonising this hard-to-abate sector.\nWe have continued to play an active role in industry activities including: sponsoring Farmers Weekly Question Time events; panels at Conservative and Labour party conferences; Crop Production Magazine Sustainable Farmer of the Year award; British Farming Awards; and Sustainable Farmer of the Year.\nThe effectiveness of mitigation options, such as adoption of appropriate regenerative farming practices, is dependent on farm-level characteristics requiring a bespoke approach, meaning scalability is a challenge. New technologies to improve precision and productivity are still in development and will require investment.\nWe aim to play a key role in the transition of the agriculture sector by engaging across the food and drink supply chain on environmental and social matters, including emissions reduction and food waste. We engage with our most material Corporate and Institutional Banking (CIB) clients that operate within the food and drink sector to support them on their transition to net zero.", "chunk_word_count": 546, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Risks and dependencies", "document_id": "2023 Lloyds sustainability report", "page": 143, "page_start": 143, "page_end": 143 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 184, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Risks and dependencies\nThe poor data landscape in this sector also means we cannot currently track emission reductions as a consequence of our actions. At present, we express our target in terms of absolute emission reductions. In order to set a future intensity target we require improvements to internal and external data capture sources to be delivered. We are investing in our own data capabilities to do this but this will take time. Additionally, there are challenges in tracking the effectiveness of mitigation options as it is dependent on improved availability of client data availability, e.g. revenue, yield and farm boundaries.\n### Sustainable farming and food continued\nSustainable farming and food – Agriculture continued\n### Just transition\n### Engagement strategy\nThe CCC’s Progress Report (2023) concludes that current policies are not driving the necessary pace of change (see page 140 for further information). Policy advocacy is therefore our most important lever for this sector. We are using our voice through policy engagement with government and industry bodies to prioritise policy advancement in key areas including:", "chunk_word_count": 197, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Risks and dependencies", "document_id": "2023 Lloyds sustainability report", "page": 143, "page_start": 143, "page_end": 144 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 185, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### SMI agribusiness task force\nIn line with our purpose to Help Britain Prosper, we are committed to enabling a just transition that benefits our agriculture clients as well as communities, workers, suppliers and consumers. In particular, farmers are facing multiple challenges mostly driven by inflation and increased energy costs in 2022 and 2023.\nIn addition, input costs (fertiliser and animal feed) fluctuate and markets are volatile, which creates uncertainty. The sector consists of smaller businesses, with less capacity to respond to external factors, and they are struggling with rising costs and continued competition from cheaper imports. It is imperative that the move to more sustainable agriculture does not diminish food production and jobs in UK agriculture, causing instead an increase in imports of food produced using less sustainable farming practices.\nWe became a member of the Sustainable Markets Initiative (SMI) Agribusiness Task Force in 2023, directly contributing to the work to look at new financing mechanisms to support farmers. This work involved exploring de-risking mechanisms and financial models across the value chain, to identify how participants could better collaborate and innovate to support farmers at scale in their transition to regenerative farming practices. The outcome of this work has fed into the SMI Agribusiness Task Force’s report $\\mathcal { A }$ ‘Scaling Regenerative Farming: Levers for Implementation’, published at COP28. This report provides a blueprint for implementation, covering four key levers and what they could provide in practice to farmers, including the lever of funding, de-risking and new sourcing models.\nThe development and delivery of a decarbonisation \nstrategy to encourage low carbon and regenerative \nfarming practices and help drive action \nThe standardisation of the methodology to calculate \ncarbon emissions to ensure consistency across the sector \nand enable farmers to confidently develop transition \nstrategies \nThe improvement in incentives for farmers to improve the \nenvironmental performance of their land with the \nlong-term interest in mind, such as the Environmental \nLand Management Scheme (ELMS) where farmers are \npaid for land-based environment and climate goods and \nservices \nUnlocking barriers to green financing for new \ntechnologies \nThe provision of clear guidelines for farmers and a \nstandard code of conduct for voluntary carbon markets\nA key lever needed for implementation is a set of priority common metrics for environmental outcomes, to underpin the scaling of the transition to regenerative practices. Our work with the Soil Association Exchange means that we are already working with a number of our own farming clients to baseline their farms against a set of metrics. Recognising the essential nature of such data to the transition, we made the Soil Association tool and capability to undertake these assessments freely available online to any farmers – not just our own clients.", "chunk_word_count": 470, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > SMI agribusiness task force", "document_id": "2023 Lloyds sustainability report", "page": 144, "page_start": 144, "page_end": 144 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 186, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### SMI agribusiness task force\nFor 2024, through our work with the SMI Agribusiness Task Force, it is our intent to build greater collaborations with members of the agriculture value chain to undertake specific pilot activity and explore different mechanisms and models that can directly support UK farmers in moving to more sustainable practices. We are keen to explore how data can be used across the supply chain to help provide a full picture of measures farmers are undertaking to transition to regenerative practices, what they need to transition, and to recognise their progress towards their goals.\nIn 2024, we will be expanding the use of the ESG tool (see page 158) to support our SME agriculture clients. The bespoke assessment will focus on climate and broader environmental themes, helping us to understand the actions taken and challenges faced by clients in their transition. The outputs from this assessment will enable us to develop our approach in supporting clients’ transition.\n### CCC assessment – Energy\nThe CCC concludes that on electricity supply, policy progress has been mixed with credible policies in place to meet around 30 per cent of required emission reductions by 2030, and on fuel supply, there are some risks in most areas, with credible policies in place to meet only 17 per cent of required emission reductions by 2030.\nCCC’s overall assessment of progress:\n### Energy transition\nSome risks\nSignificant risks\nThe table below summarises the CCC June 2023 overall assessment for policy areas that are the most relevant to delivering our emission reduction target for the energy system.\n### Part of our systems approach:\nGreening the built environment Low carbon transport Sustainable farming and food Energy transition\n### System boundary\nOur energy transition system addresses the supply of energy through oil and gas, as well as electricity generation in the power sector and activities related to thermal coal.\n### System challenges\nThe supply of energy is central to our society and plays a critical role in providing energy security to the UK and aiding other sectors to decarbonise. Decarbonisation of energy is dependent on facilitating a transition that includes having sufficient renewable energy and network capacity, adequate generation flexibility and storage and reductions in fossil fuel extraction over time. Policies to aid reduction are further along than in most sectors, but still have several delivery risks.\n### Energy transition continued\n### Our actions\n### Electricity generation", "chunk_word_count": 421, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > SMI agribusiness task force", "document_id": "2023 Lloyds sustainability report", "page": 144, "page_start": 144, "page_end": 145 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 187, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Key recent policy developments relevant to our ability to decarbonise our energy portfolio\nEmissions from the sector have fallen rapidly over the last decade, but decarbonisation needs to continue at pace as the sector needs to be fully decarbonised by 2035 for the UK to be aligned with the CCC’s 1.5 degree aligned balanced net zero pathway. Continued delays with nuclear deployment could potentially put this at risk.\nSeveral recent government actions can aid decarbonisation, including:\nAs part of our commitment to support the energy transition, we are working to support existing clients to develop credible transition plans and continue to evolve our policies with respect to activities that we will not support going forward. We aim to play a leading role in financing the decarbonisation of the power sector this decade by financing solar, wind and other lowcarbon technologies and to transition away from thermal coal to renewable energy sources.\nLaunch of the ‘Powering Up Britain’ blueprint for the future of energy in the UK, which sets out how UK energy \nproduction will be diversified and decarbonised by \ninvesting in renewables and nuclear, together with \nsupporting technologies like carbon capture, usage and storage, floating offshore wind manufacturing, and hydrogen \nLaunch of Great British Nuclear, which aims to deliver the government’s long-term nuclear programme. However, this is unlikely to have significant near term impacts on grid decarbonisation. \nThe North Sea Transition Deal published in 2021, which includes a commitment to reducing emissions from upstream oil and gas activities by 50 per cent in 2030\nThe CCC’s 2023 Progress Report highlights that reducing emissions from this sector relies on four main outcomes:\n• Rapid deployment of low carbon capacity \nDevelop flexible low carbon options, such as storage to match supply to demand Phase-out use of unabated fossil fuel Utilise flexible demand through EVs, heat pumps and hydrogen\n### Fuel supply and consumption\nFuel-related emissions come from both supply and consumption and both need to be addressed to transition to a low carbon economy.\nHowever, other policy developments may reduce the speed of transition, including:\n• Commitments to increase North Sea oil and gas production to bolster energy security as outlined in the Energy Security Strategy\nThe CCC’s 2023 Progress Report highlights that reducing emissions from this sector relies on five main outcomes:\n• Lowering consumption of fossil fuels \nDecline in North Sea output \n• Reducing emission intensity of production through platform electrification and reducing flaring and venting Reducing emissions from refineries through deployment of carbon capture and storage Reducing emissions from gas networks through reducing methane leakage and use of biomethane\nWe aim to play a leading role in financing the decarbonisation of the power sector this decade.\n### Energy transition continued\n### Oil and gas\n50% oil and gas absolute emissions reduction (MtCO e) between 2019 and 2030", "chunk_word_count": 490, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Key recent policy developments relevant to our ability to decarbonise our energy portfolio", "document_id": "2023 Lloyds sustainability report", "page": 146, "page_start": 146, "page_end": 147 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 188, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Target\nThe oil and gas sector plays an important role in providing energy security to the UK and its decarbonisation is critical to limiting global warming to $1 . 5 \\circ _ { \\circ }$ .\nReduce absolute drawn financed emissions (Scope 1, 2 and 3) by 50 per cent by 2030 from a baseline of $8 . 7 ~ \\mathsf { M t C O } _ { 2 } \\mathsf { e }$ in 2019 to $4 . 4 \\mathsf { M t C O } _ { 2 } \\mathsf { e }$ in 2030, based on the IEA NZE scenario.\n### Progress update\nAt year-end 2022, we had reduced financed emissions by c.62 per cent from the 2019 baseline of ${ 8 . 7 \\mathrm { ~ M t C O } _ { 2 } } { \\ominus } ,$ reaching $3 . 3 \\mathrm { \\ : M t C O } _ { 2 } \\Theta _ { \\prime }$ , driven by both a reduction in drawn balances and a significant reduction reported in Scope 1 and 2 emissions of clients.\nIn our oil and gas portfolio we originally set a target to reduce absolute emissions by 50 per cent by 2030 to 3.9 ${ \\sf M t C O } _ { 2 } \\Theta$ from a baseline of $7 . 8 ~ \\mathsf { M t C O } _ { 2 } \\mathsf { e }$ in 2019. The 2019 portfolio baseline has increased by c.12 per cent to 8.7 ${ \\sf M t C O } _ { 2 } \\Theta _ { \\ L }$ , driven mainly by client emissions restatements and inclusion of additional upstream Scope 3 emissions from some clients. As a result, alignment to the same 1.5 degree scenario pathway requires a 50 per cent reduction to 4.3 $\\mathsf { M t C O } _ { 2 } \\mathsf { e }$ in the same period.\nWe continue to strategically refinance our portfolio away from direct financing of oil and gas projects towards transition technologies including renewable energy generation.\nSee page 144 for details of this system\n[IMAGE CAPTION] (MtCO2e)Oil and gas absolute emission reduction Oil and gas\n### Energy transition continued\n### Risks and dependencies\n### Implementation strategy", "chunk_word_count": 409, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Target", "document_id": "2023 Lloyds sustainability report", "page": 147, "page_start": 147, "page_end": 147 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 189, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Engagement strategy\nAs part of our commitment to supporting the transition to a more sustainable, low carbon economy, we are engaging with existing clients to support them to establish credible and impactful transition plans. $\\mathsf { I n } 2 0 2 3$ , we have undertaken initial CTP assessments across our full portfolio of large-scale oil and gas-producing clients and will monitor progress on an ongoing basis. Details of the credible transition plan assessment approach is described on page 116.\nThe IEA report ‘Net Zero by 2050 – A Roadmap for the Global Energy Sector’ is clear that no new oil and natural gas fields approved after 2021 are needed in order to maintain a Paris-aligned decarbonisation pathway to net zero.\nKey dependencies for this sector include the requirement for energy security to be maintained despite geopolitical risk and increased public and private investment in renewable energy and associated technologies. In that context, our focus is on supporting our clients to accelerate the adoption of non-hydrocarbon-based power generation and reduce the carbon intensity of their operations.\n### As such we:\nWe will not provide direct financing (either via project finance, or reserve-based lending) of new greenfield oil and gas developments (fields which did not receive Oil & Gas Authority approval before the end of 2021) We will not provide financing to new clients in the oil and gas sector unless it is for viable projects into renewable energies and transition technologies and clients have credible transition plans at the point of onboarding\n### Energy transition continued\n### Power\n81% power generation emissions intensity reduction (gCO e/kWh) between 2020 and 2030\n### Implementation strategy", "chunk_word_count": 296, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Engagement strategy", "document_id": "2023 Lloyds sustainability report", "page": 148, "page_start": 148, "page_end": 149 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 190, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Target\nCompanies in the power sector generate electricity from fossil fuels, nuclear or renewable sources. Scale-up of low carbon electricity generation is critical to enable other sectors to transition, e.g. supporting electrification of heating and transport. In Q1 of 2023, 48 per cent of UK power came from renewables, up from 7 per cent in 2010. Solar and wind are currently the cheapest forms of power and the UK is home to the world’s five largest operational offshore wind farm projects.\nReduce the emission intensity (Scope 1 and 2 for corporate utilities and Scope 1 for project finance) of our portfolio by 81 per cent by 2030 to $5 3 \\mathsf { g C O } _ { 2 } \\mathsf { e }$ /kWh from a baseline of $2 7 6 { \\sf g C O } _ { 2 } { \\sf e } _ { i }$ /kWh in 2020, based on the IEA NZE scenario.\nWe aim to play a leading role in financing the decarbonisation of the power sector this decade, including financing solar, onshore and offshore wind and other low carbon technologies.\nIn our power portfolio we originally set a target to reduce emissions intensity by 81 per cent by 2030 to $3 7 \\mathsf { g C O } _ { 2 } \\mathsf { e } / \\mathsf { k W h }$ from a baseline of $1 9 2 \\mathrm { g C O } _ { 2 } \\mathrm { e }$ /kWh in 2020. The portfolio intensity for the 2020 baseline year has risen from $1 9 2 \\mathrm { g C O } _ { 2 } \\mathrm { e }$ /kWh to 276g/kWh, while the 2030 target intensity has risen from 37g/kWh to 53g/kWh. The main drivers of the updated baseline and target values are the addition of biogenic emissions and updates to the calculation of power generated by some clients.\n### Risks and dependencies\nGovernment policies in UK and Europe remain a key dependency, as they drive the forward strategies of our clients. In March 2023, the government published ‘Powering Up Britain’ which outlines how energy production will be diversified and decarbonised. Positive policy developments include funding towards projects for nuclear, carbon capture, floating offshore and hydrogen. Energy is central to the European Union’s transition towards climate neutrality by 2050, in line with the European Green Deal. We expect policies to support the growth and investment in renewables and other technologies to facilitate the decarbonisation of energy production. At the same time, energy security remains a high priority.", "chunk_word_count": 454, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Target", "document_id": "2023 Lloyds sustainability report", "page": 149, "page_start": 149, "page_end": 149 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 191, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Progress update\nAt year-end 2022, we had reduced the emissions intensity of our power portfolio by 56 per cent from the 2020 baseline of $2 7 6 { \\sf g C O _ { 2 } e }$ , reaching $1 2 \\mathrm { l g } \\mathrm { C O } _ { 2 } \\mathrm { e }$ . The reduction in intensity between 2020 and 2022 is driven by reduction in exposure to higher intensity projects or clients coupled with a change in attribution due to project value.\nDelivery risks should not be underestimated. These include competition for transactions, supply chain risks, availability and affordability of critical components/metals and availability of skilled resources. Alongside this, retrofitting of grid improvements to enable flexibility and interconnections will also be crucial.\n[IMAGE CAPTION] Power Power emission intensity reduction 2020 to 2030\nSee page 144 for details of this system\n### Energy transition continued\n### Thermal coal\n### Energy transition – Power continued\n### Full exit\n### Engagement strategy\n### Target\nby 2030 from all diversified energy entities that generate energy from thermal coal and diversified mining entities that operate thermal coal facilities\nWe have engaged with clients on their transition to net zero, including an expectation that clients’ carbon reduction goals will be aligned with scenarios limiting global warming to no more than $1 . 5 ^ { \\circ } \\mathrm { C }$ and will not over-rely on offsetting to achieve their target (i.e. beyond ‘hard-to-abate’ residual emissions). In 2023, we have undertaken initial CTP assessments for our clients in the power and utilities sector.\n### We recognise the urgent need for the global transition away from thermal coal to renewable energy sources. It is clear that keeping the Paris Agreement alive means that use of unabated coal power must be phased out.\n• Full exit of thermal coal power in the UK by 2023 Full exit from all diversified energy entities that generate energy from thermal coal globally by the end of 2030 Full exit from all diversified mining entities that operate thermal coal facilities globally by 2030\nThe UK government’s definition of ‘unabated coal’ power generation refers to when technologies, such as carbon capture and storage, which can mitigate emissions from coal, are not in use. In November 2021, we joined the Powering Past Coal Alliance (PPCA), a coalition of national and sub-national governments, businesses and organisations working to advance the transition from unabated coal power generation to clean energy.", "chunk_word_count": 435, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Progress update", "document_id": "2023 Lloyds sustainability report", "page": 149, "page_start": 149, "page_end": 150 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 192, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Implementation strategy\nWe will require existing clients in the power sector to demonstrate they are transitioning to net zero and we will provide no new lending/renewal of limits to clients unable to evidence this by the end of 2025. As part of our Powering Past Coal Alliance (PPCA) commitments this means that we will aim to exit any entities with a revenue greater than 20 per cent from thermal coal generation by end 2023 and exit any remaining client which operates thermal coal facilities outside the UK by 2030.\nIn 2023, we successfully met our target of a full exit of thermal coal power in the UK by the end of the year and no longer provide direct lending to clients that operate UK coal-fired power stations. This demonstrates good progress towards our target of exiting all diversified energy entities that generate energy from thermal coal by the end of 2030.\nSee page 144 for details of this system\nTo aid achievement of our remaining targets, we will no longer finance entities that do not have a commitment to phase-out all remaining thermal coal mining and thermal coal generation by 2030.\nWe may provide finance to entities towards reducing their thermal coal portfolio (including decommissioning facilities or retrofitting of existing facilities to help them transition away from thermal coal), in line with our 2030 phase-out timelines noted above. However, we will not directly finance retrofit activities that prolong the life of existing thermal coal facilities.\nWe will continue to prioritise renewable energy alternatives over traditional, carbon intensive methods.\nAdditional restrictions on thermal coal financing are outlined in our external sector statements, which are available on our download centre .\n### Risk management and scenario analysis\nThe main focus for our risk management activity continues to be embedding consideration of climate-related risks. This aims to develop our understanding across the Group, as well as drive policies, insights and analysis to help suitably manage the key climate-related risks we face.", "chunk_word_count": 350, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Implementation strategy", "document_id": "2023 Lloyds sustainability report", "page": 150, "page_start": 150, "page_end": 151 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 193, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Embedding climate risk\nClimate risk is considered as a principal risk within our Enterprise Risk Management Framework. However, the impacts of climate risk are wider than this and can be considered as cross-cutting across other principal risks. Therefore,we continue to integrate consideration of climate risk across our business activities.\nThe following sections focus on how consideration of climate risk, alongside certain ESG risks, is integrated into our framework. Our approach is informed by quantitative scenario analysis to identify the potential impacts on the Group, before incorporating appropriate climate and ESG factors into our risk management processes.\nWhile we consider some wider ESG risks in our current practices, this will continue to evolve. We will develop our approach for incorporating other ESG risks beyond climate into our risk management framework further in 2024.\nFurther information regarding the identification, measurement and management of climate risk, together with examples of cross-cutting impacts, can be found within the risk management section of our annual report and accounts 2023 7.\nWe continue to develop our capability for managing risks related to climate change, as well as broadening consideration to wider ESG risks. This is supported by scenario analysis to assess the potential impact of these risks and inform our risk management approach.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Risk management and scenario analysis continued\n### Climate scenario analysis\nWe have chosen to use scenarios covering the orderly transition, divergent and hothouse scenarios, where modelling is most advanced:\nOrderly: The socioeconomic context is of global cooperation and high technological growth (SSP1 or NGFS net zero 2050). This is combined with actions that reduce carbon emissions to limit the increase in surface temperature to below $2 . 0 ^ { \\circ } \\mathrm { C }$ at 2100 compared to pre-industrial levels. We consider this scenario because we believe that it provides the socioeconomic context that is most conducive to achieving an orderly transition\n### Scenario analysis is a process for identifying and assessing the potential implications of a range of plausible future states under conditions of uncertainty. This provides a way for organisations to consider how the future might look if certain trends continue or certain conditions are met.\n### Scottish Widows’ modelling approach", "chunk_word_count": 401, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Embedding climate risk", "document_id": "2023 Lloyds sustainability report", "page": 151, "page_start": 151, "page_end": 152 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 194, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Scenario choices (derived from source: NGFS scenario portal)\nAs an example, our approach to assessing the impact on our assets in Scottish Widows comprises four steps:\nTo rationalise what scenario choices are used it’s helpful to think about four high-level scenarios that capture different settings along two important dimensions: the strength of the gas mitigating policy response; and how smoothly and foreseeably those actions are taken.\n1. To choose our combinations of SSP and global warming scenario. \n2. To partition our investment portfolio into cells by sector and region. \n3. To project the behaviour of each cell under the degree of transition risk designed to achieve our chosen degree of global warming: the greater the transition, the less the global warming. \n4. To overlay the impact of physical risk arising from global warming on our sector-region partition.\nDivergent: This is a disorderly scenario with more divergent global actions. Social, economic and technological trends do not shift markedly from historical patterns, so development and income growth proceed unevenly (SSP2 or NGFS divergent net zero) following a ‘middle of the road’ pathway. This is combined with actions that reduce carbon emissions to limit the increase in surface temperature to below $2 . 0 ^ { \\circ } \\mathrm { C }$ at 2100 compared to pre-industrial levels. Although this scenario is not the most conducive to achieving a transition, we believe we should consider the transition in this context because it has been constructed from observed historical patterns\nThe future is uncertain, climate scenario analysis is important to the Group as it provides us with a view of potential outcomes that could result from this uncertainty, driving alternative views and insights to inform how we manage the main risks.\nWhile climate science itself is very well developed, any analysis of the economic and financial impacts of climate risk involves a measure of subjectivity and simplification, so there is a relatively wide margin of uncertainty in these impacts. This type of modelling is therefore only one of several components of our climate risk management process and is not acted upon in isolation.\n### Scenario pathways\nClimate scenarios provide a starting point to explore economic impacts and financial risks arising from climate change. Scenarios are characterised by their overall levels of physical and transition risks. Each scenario explores a different set of assumptions about how climate policy, technology, emissions and temperatures evolve.\n• Hothouse: The socioeconomic context is of regional rivalries and low technological development (SSP3 or NGFS Current Policies). This is combined with increasing carbon emissions and an increase in surface temperature of $4 . 3 \\%$ at 2100 compared to pre-industrial levels. We consider this scenario because it gives us insight into a world where we take little or no action to limit climate change\nWe consider a range of forward-looking climate projections and methodologies, including:", "chunk_word_count": 496, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Scenario choices (derived from source: NGFS scenario portal)", "document_id": "2023 Lloyds sustainability report", "page": 152, "page_start": 152, "page_end": 152 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 195, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Summary\nShared Socioeconomic Pathways (SSPs) – projected socioeconomic global changes up to 2100, as defined in the IPCC Sixth Assessment Report on climate change in 2021. They are used to derive greenhouse gas emissions scenarios with different climate policies Representative Concentration Pathways (RCPs) – four pathways of greenhouse gas (GHG) emissions and atmospheric concentrations, air pollutant emissions and land use covering a stringent mitigation scenario, two intermediate scenarios and one scenario with very high emissions\nA wide range of scenario analyses is used to provide insights to aid our understanding of climate risk and support our decisions, as outlined in the following pages.\nThe key conclusions from the scenarios we have modelled are:\n• It is in society’s long-term interests to have an orderly transition to a low-carbon economy • Our business strategy remains resilient\n### Risk management and scenario analysis continued\n[IMAGE CAPTION] 2030 and 2050 viewpoints of interquartile and median NPV Impacts by sector for the NGFS phase 3 net zero 2050 and divergent net zero scenarios\n### Commercial Banking climate scenario analysis\nWe also continue to develop internal models to explore the potential counterparty-level transition risk effects for our Commercial Banking clients in a climate scenario, with initial focus also on NGFS scenarios.\nDue to the inherent uncertainty in climate modelling, we continue with a ‘build and subscribe’ strategy. Comparing the outputs from our internally-developed models with those from third-party vendors helps better understand the limitations of various approaches and interpret the results.\nWe are comparing multiple sets of modelled outputs to better understand the limitations of various approaches and interpret the results. This spans the Planetrics solution and internally developed transition risk models, plus wider activities such as the Scottish Widows approach described on the previous page and our submissions to the Bank of England’s Climate Biennial Exploratory Scenario (CBES) in 2021.\nWe continue to subscribe to the McKinsey Planetrics solution and have analysed the results further in 2023. This has helped us assess and understand the resilience of our Commercial Banking lending portfolio, and helped inform how we will embed climate scenario analysis within our credit risk management framework.", "chunk_word_count": 376, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Summary", "document_id": "2023 Lloyds sustainability report", "page": 152, "page_start": 152, "page_end": 153 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 196, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Next steps\n• Implement internally-developed model in strategic infrastructure and feed into dashboard Continue collating and assessing client CTPs, and applying them to our in-house modelling Physical risk modelling investigation\nThe Planetrics solution provides counterparty modelling covering transition and physical risks in the NGFS scenarios, which we use in two main ways: firm-level insight for our clients within the Planetrics modelled universe, and sector-level analysis to provide external benchmarks against which we can compare the relative risks of our own portfolio.\nWe have created a dashboard of the Planetrics results to support with climate risk analysis in our credit risk management processes and other risk quantification processes. Our Bank ESG credit risk team have begun reviewing these results in a risk identification and analysis exercise, to help inform whether any mitigating actions may be needed at a portfolio/sector level or at an individual name level. This analysis will continue in 2024 as we review appropriate ways to embed quantified climate risk analysis within our credit policy and appetite framework.\nThis analysis represents our own selection of applicable scenarios and modelled data. The Group is solely responsible for, and this analysis represents, such scenario selection, all assumptions underlying such selection, and all resulting findings, and conclusions and decisions. McKinsey & Company is not an investment adviser and has not provided any investment advice. The baseline uses the NGFS current policies scenario and current climate (today’s temperature and physical risks). Baseline company financials are scaled based on a company-specific growth rate.\nInterquartile range for divergent net zero scenario\nInterquartile range for net zero 2050 scenario\nThe chart opposite demonstrates some of the insights we can glean from the Planetrics solution, based on firms modelled by Planetrics in North America or Europe. The estimated financial impacts from physical and transition risk are modelled for each entity. The relative difference between this climate estimate and a baseline provides an indicative foresight view of discounted cash flow, and hence net present value (NPV) of the firm from present day to 2050. Firm-level climate transition plan (CTP) effects have not been included. These firm-level NPV differences are aggregated to provide an external benchmark view of each sector rather than being specific to the Group’s portfolio.\nMedian NPV impacts\nThese two timepoints and phase 3 NGFS (Network For Greening The Financial System) scenarios were chosen todemonstratehowtransitionriskscanevolveat different rates (e.g. transport) and for most sectors the variability in results widens as the scenario unfolds. The power sector shows the greatest variability in all cases since other sectors will increase their energy demands as they transition away from fossil fuels and therefore there are large opportunities for suppliers who have already invested in renewable sources.\nIt should be noted that NGFS phase 4 scenarios were released in November 2023, which no longer include the divergent net zero scenario due to the reduced likelihood of a successful uncoordinated transition. We will be looking to explore the new ‘Fragmented World’ instead, which is the ‘too little, too late’ outcome we are striving to avoid but need to understand the potential consequences of it.", "chunk_word_count": 534, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Next steps", "document_id": "2023 Lloyds sustainability report", "page": 153, "page_start": 153, "page_end": 153 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 197, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Risk management and scenario analysis continued\nWithout such flood defence data, we risk overstating the true risk of flood frequency and/or severity and therefore potentially making adverse decisions based on these modelled outputs. There is a need for greater availability and clarity of plans from local authorities for existing and planned flood defences.\n### Difference in combined flood score (defended vs undefended) RCP4.5 2035", "chunk_word_count": 86, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Risk management and scenario analysis continued", "document_id": "2023 Lloyds sustainability report", "page": 154, "page_start": 154, "page_end": 154 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 198, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Retail scenario analysis\nThe physical risk data we receive from Twinn (a company of Royal Haskoning DHV) and Rightmove is at property level, under a range of emissions scenarios and with or without the presence of flood defence or shoreline management plans. We continue to receive and review this data for our existing portfolio. The inbound impact of climate risk is observed primarily through the devaluation of properties due to either physical or transition risk. The integration of climate risk into credit decisioning allows the Group to determine the adequacy of mitigation/required abatement.\nThe main focus for scenario analysis for our consumer lending has been understanding the flood risks associated with our UK homes portfolio.\nFor the table (lower left), we have liaised with both Rightmove and Twinn to refine and benchmark our metrics for exposure to coastal erosion. In this example, we have held our September 2023 portfolio static and selected an end of century view in a hothouse scenario (RCP8.5) as a worst-case stress. The Group population involved is now limited to properties within 1km of the coast rather than the whole portfolio, and we now also have a total UK (excluding Northern Ireland) benchmark for comparison.\nWe continue to work closely between our UK homes and general insurance portfolios to determine a suitable approach for measuring physical risks in both areas. We have actively trialled different vendor solutions and hazards in order to compare these for directional alignment and sharing insights. There is also strong collaboration between the specialist weather modelling team in Scottish Widows and our central climate risk function to review and understand hazard model impacts.\nOne of the data items available from Twinn is the Climate Combined Flood Risk Score, where the risk is ranked from 0 to 100, with 0 being the lowest and 100 being the highest risk. The score is influenced by both the estimated frequency and severity of flood events, and any property with a score of 1 or higher is at risk from the various types of flooding but with increasing likelihood of suffering damages. This score is projected at five-year intervals until the end of the century, across a range of emission scenarios and with or without the presence of currently known flood defences.\nThe table demonstrates the importance of shoreline management plans, as they reduce the risk in this worst case example by an order of magnitude. The benchmarking also demonstrates we currently have a slightly lower than average exposure, which we can continue to monitor for both portfolio and new applications.\nFor our UK homes portfolio we have invested in further understanding the modelling methodologies and limitations involved for three hazards: flood (tidal, riverine and surface water – available separately and combined), coastal erosion and subsidence. We have also developed our own prototype modelling framework for quantifying the potential affordability and property valuation impacts to our residential real estate (RRE) portfolio due to both physical and transition risks across a range of climate scenarios.", "chunk_word_count": 520, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Retail scenario analysis", "document_id": "2023 Lloyds sustainability report", "page": 154, "page_start": 154, "page_end": 154 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 199, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Retail scenario analysis\nWe have upgraded the subsidence data to include climate projections for multiple emissions scenarios and substantially greater granularity for present day risk. We continue to liaise with Twinn and the British Geological Society on the appropriate interpretation and usage of it.\nThe map assumes our September 2023 mortgage portfolio is held static until 2035 in a delayed transition emissions scenario (RCP4.5). It shows the difference between defended and undefended combined flood scores for properties in England and Wales, with greater differences being a darker shade. This shows the regions where current flood defences (where known) are providing the greatest protection.\nVolume weighted proportions of UK residential property stock\\* and Group’s mortgage portfolio\\* within 1km of coast with erosion risk rating > 0 by 2095 in RCP8.5, with and without shoreline management plan effects 1\nClimate change information is now ingested as part of the mortgage application journey, covering future risks from flooding, coastal erosion and subsidence. Credit risk are working closely with the central climate risk function to understand how to consume and use the data to support decision-making given the potential impact on future affordability and property valuation. It is essential to understand how to interpret the scores and how to communicate this in a meaningful way to enable customers to make informed choices. Alongside the data, we recognise the importance of ongoing flood defence maintenance, initiatives such as Flood Re and proper enforcement of flood resilience measures embedded in the planning framework that will go a long way to maintain certainty of climate outcomes.", "chunk_word_count": 281, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Retail scenario analysis", "document_id": "2023 Lloyds sustainability report", "page": 154, "page_start": 154, "page_end": 154 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 200, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Next steps\nWe are currently implementing and calibrating an internally developed Residential Real Estate Climate Impact Model, ahead of planned usage in 2024. This is a portfolio stresstesting model, which quantifies the impact of physical and transition risks for our UK mortgages portfolio via the following mechanisms:\nIt should be noted that:\n• The 2035 timepoint was selected since existing flood defences are largely still providing protection. A later (e.g. end of century) view would show negligible differences between defended and undefended flood scores, since almost all existing flood defences would be breached by then (assuming no further enhancements or modifications) Given the short projection window, the RCP selection is not influential on the overall result and so the example uses a central, delayed transition scenario Northern Ireland flood scores exist, we are liaising with Twinn and Rightmove to source them The Scottish Environment Protection Agency (SEPA) flood maps cannot be used for commercial purposes, and therefore we only have undefended flood risk views There are also certain regions in England where little or no flood defence data is available from local authorities\n• Customer affordability impacts due to paying for retrofitting actions, potential increased energy costs, or risk-based changes to insurance premia Property valuation impacts due to increased risk of flooding, coastal erosion and or subsidence or ability to undertake retrofit actions Insurance availability impacts due to systemic changes in how the insurance market assess risk\nExcluding Northern Ireland properties across both populations, as shown by asterisks, since erosion scores are not available for this region\nThis methodology requires various high-level assumptions. As such, it won’t be suitable for direct usage in customer application decisions, though we will seek to understand which elements can be considered.\n### Risk management and scenario analysis continued\n### General insurance scenario analysis", "chunk_word_count": 321, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Next steps", "document_id": "2023 Lloyds sustainability report", "page": 154, "page_start": 154, "page_end": 155 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 201, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Weather risk assessment\nClimate change may alter the frequency, severity and location of weather risks that our UK general insurance portfolio is exposed to.\nThe red/amber/green status indicates the severity of change for the weather risks in each scenario where red indicates the largest change in risk. Note the change in freeze is a reduction, with increasing temperatures.\nThe change in weather risks could affect the cost of damage resulting from weather events which could have a subsequent impact on:\n• Underwriting risk appetite, i.e. the type and location of properties that are insured Product design. Product design may need to be considered, for example, differentiating customer excess by weather risk type, or certain risks may not be covered for a policy in a particular area. Developments in residential housing, for example more modern methods of construction or use of heat pumps, may also require updates or innovation to the insurance products offered Insurance premiums. Increasing cost of damage may need to be passed on to customers through higher premiums Reinsurance. The cost of reinsurance could increase, reflecting the increased cost of damage. The availability of reinsurance could also be affected by increased frequency and severity of worldwide weather risks\nEven in the orderly and divergent scenarios, where increases in the surface temperatures have stabilised by 2100, sea levels could continue to rise increasing the risk from coastal flood.\nWe have used three illustrative scenarios (orderly, divergent and hothouse as described in page 151) to better understand the potential physical risks that could affect residential home insurance cost of damage under different climate scenarios and across different weather risk types.\nThe potential cost of damage for the most material weather risks has been estimated for future years up to 2100. The weather risks included in the scenario analysis are windstorm, inland flood, coastal flood, freeze and subsidence. Lower materiality and emerging risks are regularly assessed but are not discussed further in this report.\nThe analysis presented is based on risk levels as at 31 December 2021 and assumes no changes in the extent of flood defences over time.\nThe table indicates the change in magnitude of the average annual cost of damage (AAD) for a range of scenarios as at 2100.\n### Risk management and scenario analysis continued", "chunk_word_count": 400, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Weather risk assessment", "document_id": "2023 Lloyds sustainability report", "page": 155, "page_start": 155, "page_end": 155 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 202, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Flood risk\nThe most significant changes are seen in respect of inland flood. The maps show the potential projected change for inland flood in both the orderly and hothouse scenarios as at 2100. The maps show, at a high level, the regional variability in changes in flood risk. Data in the maps represents the Lloyds Banking Group GI portfolio.\nThe largest increase in physical risk is seen in the hothouse scenario, as the cost of damage is expected to increase with warmer global mean temperatures.\n[IMAGE CAPTION] 2100 AAD % Change\nLarge increases in the cost of damage are seen for flood, \nboth inland flood and coastal flood risk. The main driver of this increase is that warmer air can hold more moisture, increasing the level of precipitation. Combined with rising sea levels, the level of flood risk increases \nconsiderably. Even in the orderly and divergent scenarios, \nwhere increases in the surface temperatures have stabilised by 2100, sea levels could continue to rise \nincreasing the risk from coastal flood. There is significant \nregional variability in flooding impacts and it should be \nnoted that the majority of properties are not materially \nimpacted by flood risk \nSubsidence risk is expected to increase, in particular in \nthe south-east of the UK due to hotter, drier summers \nleading to more ground movement in the heavy, chalky \nsoils \nThe cost of damage from windstorm risk is not projected \nto materially change, however, the modelling of future \nwindstorm risk contains a high degree of uncertainty, in \nparticular windstorm activity in the North Atlantic which \ninfluences UK weather \nThe projected increase in temperatures is expected to result in warmer winters on average, reducing the potential cost of damage from freeze risk. The prevalence \nof the weather events that drive UK freeze risk is also \nprojected to decrease. However, the increase in \ntemperature does not remove the risk of significant \nfreeze events affecting the UK in future, even in the hothouse scenario in 2100\nThe analysis can be used to inform future changes to underwriting risk appetite and indicate how the price of risks may change in future.\nThe outputs from the flood modelling are used to create a relative view of risk across the geographic domain of the home insurance book. We assign properties risk bands to reflect the level of potential flood risk, with higher bands representing a higher risk of flooding. We can use this banding to inform customer premiums and manage our exposure in high-risk areas. Increasing the proportion of our portfolio in higher-risk bands could lead to significant increases in cost of damage in the event of increasing severe flood events. In the shorter term, the increase in flood risk would likely result in greater use of the Flood Re scheme1 . Increased flood risk would also require us to prepare for more intensive claims handling, regardless of whether risk is ceded to Flood Re.", "chunk_word_count": 504, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Flood risk", "document_id": "2023 Lloyds sustainability report", "page": 156, "page_start": 156, "page_end": 156 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 203, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Flood risk\nThe increased risk of flooding is likely to be concentrated in a relatively small proportion of UK residential properties. The impact of flood risk can be partially mitigated by home improvements to make properties more resilient to flood, for example by raising electrics, installing hard flooring or flood doors.\nInternationally, government actions that restrict or reduce future emissions are likely to reduce the physical risk that residential properties are exposed to, which would consequently moderate the cost of damage to properties.\nThe extent of future changes in weather risks is highly uncertain and is dependent on several factors including environmental conditions and the actions of policy makers.\nInvestment in flood defences along rivers and coastal defences, along with improved urban drainage systems could help to mitigate some of the increased risk from flooding.\nContinuing the Flood Re scheme beyond the current end date of 2039 would allow properties at high risk of flooding to continue to gain access to affordable insurance, particularly under scenarios where the increase in risk of flooding is high.\nImproving building standards could also increase the resilience of residential properties to heightened physical risk.\nIn summary, flood risk is likely to lead to the most material changes in risk to residential properties within the UK in the scenarios considered.\n[EQUATION] $$\n\\bigcirc \\mathrm { ~ \\left. ~ \\right.} \\mathrm { ~ \\bigcirc ~ }\n$$\n### Risk management and scenario analysis continued\n### ESG credit risk management\n### ESG Credit Risk Integration\nThese priority areas will further strengthen our ESG risk management at both portfolio level and for individually managed exposures.\nThe following areas remain a key priority for our environmental, social and governance credit integration strategy:\nESG credit risk framework and policies 2. Portfolio management 3. Case management 4. Scenario analysis\n### ESG credit risk integration\n### ESG credit risk taxonomy\nWe continue to enhance our capabilities to identify, evaluate, and effectively manage ESG-related risks. Our approach is centred around the concept of ‘double materiality’, allowing us to assess both the inbound risks affecting our balance sheet and the outbound risks of our balance sheet on society and the planet see page 9 for further details.\nDuring 2023, we have developed a new ESG credit risk taxonomy which outlines the most material ESG risks for the Bank, based on our balance sheet and business strategy. Some of these risks are: nature and ecological impacts, community relations, customer privacy and data security.\nInsights from the new ESG credit risk taxonomy will be used to enhance our ESG credit risk management process and assessments throughout 2024. This will include the enhancement of our environmental assessments and processes to incorporate additional nature-related considerations.\nThroughout 2023 we have further integrated environmental, social and governance (ESG) considerations into our credit process, taking account of new challenges and opportunities. We have further embedded climate changerelated considerations across our appetite and policy frameworks for our consumer and commercial businesses, including quantifying potential impacts through scenario analysis.", "chunk_word_count": 518, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Flood risk", "document_id": "2023 Lloyds sustainability report", "page": 156, "page_start": 156, "page_end": 157 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 204, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### ESG colleague training and development\nWe remain focused on uplifting our colleagues knowledge of ESG risks and opportunities to ensure they are fully embedded across our people and our organisation.\nOur risk appetite for managing climate risk is outlined in our external sector statements which are publicly available on our download centre .\nDuring 2023 the risk function has created a programme and developed a number of specific ESG training modules for both credit colleagues and relationship managers to drive the embedding of ESG risk assessment and management within the credit process. This programme has supported colleagues in understanding the commitments the Group has made in transitioning to net zero, our external sector statements and the ESG risk considerations and requirements as a component of the credit assessment process.\nThe external sector statements outline what types of activities we will and will not support and are reflected in our credit risk management framework where we have internal policies and controls in place.\nESG has been integrated into the bank’s credit authority delegation framework in order to ensure these risks are appropriately assessed. This includes understanding materiality and the impact of decisions on portfolios.\n### Scenario analysis\nDuring 2024 we will continue to produce training modules to support and develop our colleagues, ensuring they are kept up-to-date on evolving ESG risks.\nFocus areas\nThroughout 2023 we have continued to make progress in embedding ESG risk management into our credit processes. Highlights of the enhancements we have made can be found on the following page.\n• Integration of climate insights into credit decision-making process\n### Risk management and scenario analysis continued\n### ESG credit risk framework and policies\n2023 has seen positive enhancements of our ESG credit risk policy framework.We have reviewed our framework and policy landscape and consolidated the reputational, environmental and climate requirements of our policies ensuring they deliver a robust set of requirements to allow the Group to appropriately assess and manage the ESG risk within our portfolios.\nThis has resulted in the rollout of three business unit-specific policies covering our inbound and outbound risk assessment requirements. 2024 will see these evolve in line with our new credit risk taxonomy and provide clear requirements to further enhance our control framework and embedding of ESG risk assessment practices within the credit process.\n### Commercial", "chunk_word_count": 406, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > ESG colleague training and development", "document_id": "2023 Lloyds sustainability report", "page": 157, "page_start": 157, "page_end": 158 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 205, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Portfolio management\nWe have integrated climate risk considerations into various aspects of our commercial credit risk portfolio activity. Transition risk and physical risk impacts are considered as part our industry sector risk monitoring. This sector risk monitoring is used to assess the performance and outlook across industry sectors and can drive actions in response to emerging risks (e.g. credit appetite changes).\nCommercial credit risk policy requires a company’s sustainability-related risks to be assessed. This includes the potential physical and transition risks that the business and its supply chain may be exposed to, and the risk of assets becoming stranded.\nWe ensure that ESG-related risks are considered for all commercial lending customers that bank with us, with specific commentary in new and renewal credit applications where total aggregated hard limits exceed £500,000 (excluding automated decisioning processes for smaller counterparties). This commentary including any supporting factors and mitigants is documented within the credit application to support the credit officer in making their decision, ensuring the relevant ESG factors are considered.\nWhere elevated climate risks are observed for a particular industry sector (e.g. a forthcoming regulatory change), this would increase the risk driver and could lead to an increase in the overall sector risk, and trigger mitigating actions.\nSector ratings are updated and reviewed on a monthly basis, and are reported within our commercial credit risk governance forum for visibility to senior decision-makers.\n### Risk management and scenario analysis continued\n### Case management\n### Expansion of assessments to Mid Corporate\nDuring 2023, we expanded the scope of our inbound and outbound assessments using the ESG tool to include further requirements for Mid Corporate.\nOur ESG risk management process continues to evolve and add value to the existing credit assessment process through our ESG tool which is a qualitative assessment of both Inbound (climate) and Outbound (reputational and environmental) risks for high risk exposures within our Commercial Banking portfolio.\n### Expansion of assessments to SME\nSupporting our SME clients is core to our purpose of Helping Britain Prosper. Throughout 2023 we have been developing a bespoke climate risk assessment for our SME clients within our commercial and residential real estate and agricultural sectors. The launch of these assessments further supports our relationship managers to have better quality conversations with their clients and to better understand their transition journey and how we can support them further. These assessments are scheduled to be launched in March 2024 to support our NZBA targets for these sectors.\nWhere areas of concern are identified, we will engage with the client or take mitigating actions to ensure the lending remains within risk appetite and in line with our external commitments.\nRequirements for case management processes to be followed are regularly reviewed and are set based on business unit, sector and overall materiality.\nThe chart below outlines the number of cases assessed across 2023 through our case management processes.", "chunk_word_count": 500, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Portfolio management", "document_id": "2023 Lloyds sustainability report", "page": 158, "page_start": 158, "page_end": 159 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 206, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Inbound case management\nWe have a specialist team in the credit risk function who are responsible for evaluating the climate risks associated with Commercial Banking clients, and project finance transactions.\n### ESG risk assessments\nAcross 2023 we have completed counterparty-level ESG risk assessments using the ESG tool for:\nThese reviews are conducted for clients/projects in higher-risk industry sectors when we are evaluating new transactions and the annual renewal of existing credit facilities. This analysis considers: the transition risk associated with the client or transaction; a detailed evaluation of the client’s transition strategy; adherence with internal de-carbonisation targets and net zero strategy; and an assessment of the potential physical risk associated with the client/transaction. The recommendations and outcomes of these reviews form an important part of the credit assessment and will be used by the credit officer to support decision-making In 2023 the Group has developed an advanced framework for assessing the credibility of client transition plans. Referencing external standards such as the Transition Plan Taskforce (TPT) and utilising different climate-related data (e.g. emissions trends) we have developed a robust assessment framework. We have prioritised our higher-emitting and material exposure clients within the commercial bank for engagement with 36 reviews completed by the end of 2023. We will expand this activity through 2024 to cover our top 100 emitting clients, and we will embed the outcomes of the CTP assessments into our risk-decisioning processes\nrequires the relationship managers to consider and attest that our clients are in adherence with our external sector statements, with second line oversight provided by credit officers and our specialist ESG teams where appropriate Environmental risk must be assessed at origination and monitored on an ongoing basis throughout the customer lifecycle, including at specific trigger points. Our assessments are risk based and focus on higher-risk sectors and transactions. All cases that are identified as a higher risk are subject to further review, and where specific or material environmental risks or concerns are identified, these may be referred to environmental risk consultants for an opinion on the adequacy of the mitigants in place or recommendations on managing the environmental risk. The key findings from such due diligence are factored into credit applications and will be considered as part of the credit decisioning process We continue to be a signatory to the Equator Principles, which is a risk management framework for managing environmental and social risks in project finance transactions, such as large-scale energy, industrial or infrastructure projects. It aims to ensure that such deals, where the Group provides finance or advice, meet minimum standards for due diligence and monitoring in keeping with responsible finance principles", "chunk_word_count": 459, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Inbound case management", "document_id": "2023 Lloyds sustainability report", "page": 159, "page_start": 159, "page_end": 159 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 207, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Outbound case management\nOutbound risks are assessed at a counterparty and transactional level where appropriate and follow two formal processes which are to consider reputational and environmental Risks. These processes are covered in more detail below. In 2024, we plan to enhance the outbound risk assessments to incorporate nature-related considerations.\n• The reputational risk process defines a formal approach for identifying and monitoring outbound and reputational risks and is completed at initial lending request and at the client’s annual review, including trigger-initiated reviews. The review considers both current and historic concerns such as potential ESG risks and incidents including adverse media. The outcome of the review will drive the level of approval required and any associated conditions As ESG risks continue to evolve, we update our assessments and question banks and have included greenwashing risk as an additional consideration throughout 2023 As we continually seek to enhance our control framework and processes in relation to our external sector statements, we have formally incorporated this as a factor within our reputational risk assessment process. This\nWe have also completed asset level environmental risk assessments using our environmental risk screening Tool. This process is limited to higher-risk sectors and transactions.\n### Risk management and scenario analysis continued\n### General insurance\n### Retail\n### Catastrophe modelling\nThe catastrophe weather model is a key component of the Scottish Widows Solvency II capital model. The results of the model by Weather Peril are used to inform the base rates for risk pricing. Accordingly, weather pricing models are used to inform how insurance premiums should vary across the book. The outputs are used to create a relative view of risk across the geographic domain of the book – i.e. how risk varies from location to location. The weather modelling team conducts a regular review of available research and models on climate change.\n### Insurance underwriting risk\n### Homes\nAs the UK’s largest mortgage lender we continue to develop our scenario analysis capability to understand the potential impacts of climate risk on our customers’ affordability and increased need for lending to inform our credit risk strategy.\nGiven the short-term nature of home insurance policies we are able to review our view of risks regularly, and change our approach as risks develop to mitigate long-term exposure of climate risks. Our overall strategy is to continually review our acceptance criteria and pricing strategy for each risk based on both a short-term and long-term view. In-house expertise on physical risk is retained in the form of a dedicated weather modelling team. The team is comprised of specialists in hydrology, meteorology and probabilistic modelling who develop a baseline view of physical risk for the UK and conduct forward-looking climate stress testing on this.\nClimate risk is primarily managed through the integration of third-party climate risk data at the point of acquisition. EPC controls are in place for buy-to-let properties, with exposure to physical risks (such as flooding) managed within the mortgage origination criteria/property valuation process. Where a property is uninsurable we will not lend.", "chunk_word_count": 525, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Outbound case management", "document_id": "2023 Lloyds sustainability report", "page": 159, "page_start": 159, "page_end": 160 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 208, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Key metrics\nMany of our customers have been impacted by weather events in the last few years, specifically from events which have led to claims from inland flooding, coastal flooding and windstorm damage. Climate scientists predict that the frequency and severity of flooding could increase in coming years.\n[IMAGE CAPTION] Severe weather lossesSevere weather losses\nOur considered approach to risk management reflects ongoing challenges in climate policy, data and models, and an ongoing need to work closely with government and agencies such as Flood Re to mitigate the risks around flood resilience.\nThis team has been in place since 2016 and has monitored and applied climate change science onto the view of risk used for capital, pricing, reinsurance and planning.\nFor example, sea level in the UK could rise by up to one metre by the end of the century. This size of increase would likely affect the frequency and severity of our claims experience. Being able to identify and monitor trends in the increased physical risks, through a variety of metrics, is therefore very important.\n### Financial management", "chunk_word_count": 201, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Key metrics", "document_id": "2023 Lloyds sustainability report", "page": 160, "page_start": 160, "page_end": 160 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 209, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Retail motor\nAn assessment of climate-related risks for general insurance liabilities is integrated into our internal model governance process. Climate change is identified as a key topic for model review and approval within this process, and specifically, the appropriateness of the view of risk for the weather perils in the context of climate change science. This view of risk is integrated into assessments of capital requirements, reserving, reinsurance and pricing. It also feeds into the quarterly exposure management where insurance portfolio exposure arising from weather-related perils is monitored and controlled.\nWe have a measured approach to the adoption of EVs, reflecting the rapid and continued development of EV technology and changing consumer demand. This ensures the pace and quality of growth is understood and regularly reviewed, keeping inbound risks (transition risk impacts on residual value risk) within appetite, considering mitigation where appropriate, while continuing to offer support to the transition from internal combustion engines to electric vehicles.\nWeather pricing models are used to inform how insurance premiums should vary across the book. The outputs are used to create a relative view of risk across the geographic domain of the home insurance book. We assign properties risk bands to reflect the level of potential flood risk, with higher bands representing a higher risk of flooding. We can use this banding to manage our exposure in high-risk areas. Increasing the proportion of our portfolio in higher-risk bands could lead to significant increases in losses in the event of increasing severe events.\nIn addition, we monitor actual weather-related losses against expected weather losses. The graph above shows actual versus expected average annual loss on a net of reinsurance basis and covers inland flood, wind, coastal flood and freeze. Actual weather losses performed better than expected from 2019 to 2021 and in 2023 due to relatively benign activity. However, due to the extreme cold weather in December 2022, in addition to small windstorm losses, actual weather losses for 2022 exceeded expected losses. The total cost of the December freeze event has increased from the estimate disclosed in the prior year. This is not unusual with large weather events due to the inherent uncertainty underlying the cost, especially for estimates made soon after the event, as it takes time for the estimate of cost to stabilise.\nFor any new partnerships, retail motor leverage the commercial counterparty-level ESG risk assessment tool undertaking both inbound (climate) and outbound (reputational) risk assessments for large corporate businesses. This ensures a consistent approach to our large corporate counterparties across Commercial Banking and Retail.\nA third-party vendor model is used for the perils of inland flood, coastal flood and wind. The vendor model results are adjusted internally to better reflect our own exposure and experience.\nThe expected weather losses is a long-term view, so there can be significant volatility depending on weather events.\n### Scottish Widows", "chunk_word_count": 497, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Retail motor", "document_id": "2023 Lloyds sustainability report", "page": 160, "page_start": 160, "page_end": 161 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 210, "chunk_text": "# Building asustainable and inclusive future\n## 1 in 8 ultra low emission vehicles on UK roads financed by the Group\n### Our ambition\nOur ambition is to align all our investments with the goals of the Paris Agreement by targeting net zero emissions, by 2050 or sooner (from a 2019 baseline). To support this, we have set ourselves the following targets and milestones.\nThis section details our approach to managing climate risk for our Scottish Widows branded products and offerings, as well as the shareholder investments held to back our insurance liabilities.\n2025\nEntity and product-level disclosures required under the FCA's ESG Sourcebook will be published by June 2024.\nInvest between £20–25 billion in climate-aware investment strategies1 , with at least £1 billion invested into climate solutions investments1\nScottish Widows Group also underwrites the home insurance propositions for Lloyds Banking Group. Details of this can be found on page 127 of this report.\n2030\nHalve the carbon footprint2 of our investment portfolios\nEmissions referred to in this section refer to Scottish Widows’ Scope 3 ‘financed emissions’ which are calculated from the Scope 1 and 2 emissions generated from our investments or lending.\n2050\nNet zero across the entirety of Scottish Widows investments\n## PENSIONS AND INVESTMENTS\n### Embark Group\nThe Embark Group, one of the UK’s fastest-growing diversified financial services businesses, became part of Scottish Widows Group Limited in January 2022. With c.£35 billion1 of assets under administration on its platform (of which the Embark Investments Authorised Corporate Director has responsibility for c.£575 million), representing the interests of over 380,000 individual clients, Embark is committed to developing its ESG policies to align, over time and where appropriate, with those of Scottish Widows in support of investors looking to make better-informed and responsible investment decisions.\n£21.7bn\n### Carbon emission reduction targets\nBy targeting a gradual reduction in overall emissions contained in our investment portfolios to net zero, we are engaging with companies we invest in directly, and via our investment management partners, to encourage them to embark on decarbonisation pathways of a scale and pace needed to meet the global warming objectives of the Paris Agreement.\nachieved in discretionary investment in climate-aware strategies by the end of 2023\nThe Embark leadership team recognises that the TCFD recommendations provide an important framework for stronger engagement on climate-related risks and opportunities with the management teams of companies represented in its investment solutions. There are additional ongoing efforts to providing financial advisers and customers who access the Embark platform with tools and information to foster greater awareness of where and how they can allocate capital to support investment in ways which represent their views on ESG matters.\nThe extent to which we can meet our 2030 and 2050 portfolio decarbonisation targets is influenced by the pace towards net zero of the wider economy. However, our investment decisions on asset allocation, company exclusions and shareholder engagement are consistent with the transition to net zero in the real economy.\n£1.7bn\nachieved in discretionary investment in climate solutions by the end of 2023\nWork is ongoing with Embark’s leadership team on finding the right approach to integrate Embark investments into Scottish Widows overall portfolio plans and commitments.", "chunk_word_count": 531, "section_path": "Building asustainable and inclusive future > 1 in 8 ultra low emission vehicles on UK roads financed by the Group > Our ambition", "document_id": "2023 Lloyds sustainability report", "page": 161, "page_start": 161, "page_end": 162 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 211, "chunk_text": "# Building asustainable and inclusive future\n## 2025 target We are here\nProgress\n[IMAGE CAPTION] Carbon footprint $( \\mathbf { t C O } _ { 2 } / \\pm \\mathbf { m } )$\nAs the carbon footprint is sensitive to market fluctuations in addition to the absolute value of emissions and our own investment activity, we expect to see short-term variation of the footprint and will be studying the medium-term trend from future reporting.\n## RISKS AND OPPORTUNITIES\nThe speed with which the wider economy transitions and the extent to which we align with this will affect the level of exposure we have to these risks. The time horizons during which these risks may manifest is uncertain. We have translated these risks into six overarching risks impacting our business, and more details are on page 171. We use continuous risk management and qualitative assessments to help consider the materiality of these risks to our business which helps to inform the controls that we have in place to monitor and manage the risks.\n### Climate-related risks and opportunities over the short, medium and long term.\n### Key commercial considerations of climate change in the context of demographic risk:\n### Transition risk may impact our business through:\nRisk of loss of value of shareholder or customer assets due to poor, late or costly transition by the companies we invest in; there will be winners and losers during the transition with more significant impact on those companies deemed to be less valuable in the new economy.\n### Market risk\nPotential for people to die sooner than expected due to climate-related factors (e.g. temperature shocks and volatility or air pollution) resulting in increased life insurance claims.\nAs part of Lloyds Banking Group, Scottish Widows Group approaches climate risk management in a consistent way to the overall Group. Details of the Lloyds Banking Group approach, including definitions, and examples of risks and opportunities that arise in relation to climate change can be found in pages 154 to 157 of the Group’s annual report and accounts 2023 .\n### Mortality risk\nPotential for people to become sick more often than expected or for longer than expected due to changes to climate (e.g. spread of vector borne disease, impact on resources or deteriorating air quality) resulting in increased critical illness and/ or disability claims.\n### Morbidity risk\nCorporate customers who are in sectors specifically exposed to the transition will see potential disruption to business models, impacts from upward pressure on carbon-related costs and likely increased expenses as they try to adapt. This will lead to changes in their balance sheets that may ultimately increase the credit risk of lending to them.\nMore detail on how Scottish Widows Group recognises climate risk is set out on pages 171 to 173 of this report.\n### Identified opportunities\n### Credit risk\nWe believe that implementing our net-zero strategy and the other initiatives highlighted on pages 164 to 165 provides an opportunity for us to play our part in contributing towards change in the real economy.", "chunk_word_count": 507, "section_path": "Building asustainable and inclusive future > RISKS AND OPPORTUNITIES > Climate-related risks and opportunities over the short, medium and long term.", "document_id": "2023 Lloyds sustainability report", "page": 162, "page_start": 162, "page_end": 163 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 212, "chunk_text": "# Building asustainable and inclusive future\n## RISKS AND OPPORTUNITIES\n### Identified risks\nAs identified in pages 154 to 157 of the annual report and accounts 2023 . and accounts climate risk manifests in two main categories: Physical Risk and Transition Risk, with the Group considering risks from the perspective of inbound risks, where the external environment affects the Group and outbound risks, the risks that the Group places on society.\nPotential for reduced excess winter mortality due to warmer conditions, but conversely, increased heat-related deaths, resulting in some variation in the duration of annuity payments.\n### Longevity risk\nRisk from not delivering on public targets and commitments or clearly disclosing current position on climate or from poor management of customer/client exposures.\n### Litigation or reputational risk\nIn the context of Scottish Widows the main climate-related risks impacting insurance and annuities include:\n### Physical risk may impact our business through:\nRisk from not meeting existing and upcoming climate-risk-driven regulatory requirements. New climate-related regulation may be costly to implement and lead to additional processes, data and resources; diverging regulation across jurisdictions may add risk.\n### Regulatory risk\nThe value of assets held by Scottish Widows will be affected by balance sheet performance of the underlying companies while government bonds values will be affected by economic performance. Damage and revenue disruption from extreme weather events could erode value on a short or long-term basis depending on the hazard type and the impact on the affected assets.\n### Market and credit risk\n### Insurance board key decisions\n[IMAGE CAPTION] Our governance structure (as at 31 December 2023)\nThe Board is engaged (either directly or via its committees) on a regular basis on our sustainability agenda, receiving regular briefings to build understanding and capability and attending relevant external briefings. Briefing sessions provided share information on critical sustainability trends, stakeholder responses (e.g. government, regulators and investors) and strategic responses from a business perspective.\n## CLIMATE GOVERNANCE IN SCOTTISH WIDOWS\n### Strategy\nKnowledge sessions included a briefing on nature, including priority actions for nature-related objectives and plans Investment rationale for lower carbon strategies Carbon emissions associated with the Group’s Places strategy Role of Scottish Widows as enabler of financial wellness for UK customers within the Social pillar of ESG\nGovernance for climate-related risks has been embedded into our existing governance structure, which is complementary to governance of the wider Lloyds Banking Group’s sustainability strategy, with key boards and committees meeting regularly in a calendar year.", "chunk_word_count": 409, "section_path": "Building asustainable and inclusive future > RISKS AND OPPORTUNITIES > Identified risks", "document_id": "2023 Lloyds sustainability report", "page": 163, "page_start": 163, "page_end": 164 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 213, "chunk_text": "# Building asustainable and inclusive future\n## CLIMATE GOVERNANCE IN SCOTTISH WIDOWS\n### Key decisions\nApproved Scottish Widows Responsible Investment and Stewardship Report 2022 Approved various thought leadership reports for publication: Retirement Report; Women and Retirement Report; and Green Pensions Report\ngenerating value for Lloyds Banking Group as ultimate shareholder, and to contribute to the wider society and engage actively in the affairs of the IP&I business. This includes a requirement to keep abreast of material changes in its business and the external environment, which includes climate-related issues, as well as acting in a timely manner to protect the long-term interests of the IP&I business. These responsibilities and certain matters reserved for the approval of the Insurance Board are set out in the ‘Schedule of Matters Reserved’, which is reviewed annually, and inform matters for consideration and discussion at Insurance Board meetings. The Insurance Board meets no less than eight times a year.\nAs the stewards for long-term performance and resilience, the Insurance Board determines the most effective way to integrate climate considerations into its structure and committees. During 2023, the Board’s consideration of environmental matters and its management of climate risks was taken out of a bespoke Insurance Sustainability Committee and integrated within business as usual, following the establishment of the Board Investment Committee.\n### Oversight\nRegular climate risk reporting \nTarget operating model, including responsibilities, structure, \nresourcing, and development of plans to build capability \nHow risks should be reflected in our risk management \nframework \nKnowledge sessions on legal and regulatory risks, including \ngreenwashing risk\nThe Insurance Board is the ultimate authorisation body for matters which concern the operation of Scottish Widows' business. In 2023, the Insurance Board’s Sustainability Committee’s remit for sustainability and responsible investment was transitioned and embedded within the responsibilities of the Board and its other committees, including a newly established Insurance Board Investment Committee, following which the Insurance Sustainability Committee was decommissioned.\nTo support the Board, management assesses the materiality of climate-related risks and opportunities for the IP&I business on an ongoing basis and take actions that are proportionate to the materiality of climate to the IP&I business. Material climaterelated risks, opportunities and strategic decisions are disclosed to all stakeholders – particularly to investors and, where required, regulators. Such disclosures are made, for instance, within filings, such as annual reports and accounts, and are subject to the same disclosure governance as financial reporting.\n• Approved refresh to risk management system\nThe Insurance Board also undertakes an annual review of each of its committees’ purpose and responsibilities (Terms of Reference) and is kept informed at each Board meeting of key matters, discussed via individual committee Chair Reports. The Insurance Board also ensures that its composition is sufficiently diverse in knowledge, skills, experience and background to effectively debate and take decisions informed by an awareness and understanding of climate-related threats and opportunities. The Insurance Board maintains regular exchanges and dialogues with peers, policymakers, investors and other stakeholders to encourage the sharing of methodologies and to stay informed about the latest climate-relevant risks and regulatory requirements.", "chunk_word_count": 507, "section_path": "Building asustainable and inclusive future > CLIMATE GOVERNANCE IN SCOTTISH WIDOWS > Key decisions", "document_id": "2023 Lloyds sustainability report", "page": 164, "page_start": 164, "page_end": 164 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 214, "chunk_text": "# Building asustainable and inclusive future\n## CLIMATE GOVERNANCE IN SCOTTISH WIDOWS\n### Metrics and Targets\nDuring 2024, we will continue to ensure sustainability is at the heart of governance and ESG is fully embedded across the committee structure and into all business-as-usual considerations. The Insurance Responsible Business Executive Committee remains in place.\nMarket insights of climate disclosures in the industry Evolution of climate-related metrics for 2022/2023 reporting Development of our approach to climate-related scenario analysis\n### Responsible Business Executive Committee\nKey decisions\nThe Insurance Responsible Business Executive Committee is responsible for the development and delivery of the ESG strategy for the Insurance Group (including stewardship activities across Scottish Widows’ investment book and other sustainability goals such as decarbonisation). The Responsible Business Executive Committee met nine times in 2023.\nApproved metrics and targets published in the Scottish Widows Group TCFD Report 2022, including input into Lloyds Banking Group Environmental Sustainability Report 2022\n### Insurance Board\nThe Insurance Board has an overall responsibility to promote and assess the long-term sustainable success, safety, and soundness of the Insurance, Pensions and Investments (IP&I) business,\n## CLIMATE ENGAGEMENT, PARTNERSHIP AND INITIATIVES\n## PARTNERSHIPS, INITIATIVES AND COLLABORATIONS\nWe are represented in the Scope 3 emissions project group, starting in Q4, 2023 and continuing through 2024. The Scope 3 project group has been established to lead on the development of implementation guidance to support investors in addressing the Scope 3 emissions of their investments in the context of achieving net zero portfolio emissions. Specific aims are to identify challenges for investors and potential practical solutions to address them.\n### Institutional Investors Group on Climate Change (IIGCC)", "chunk_word_count": 270, "section_path": "Building asustainable and inclusive future > CLIMATE GOVERNANCE IN SCOTTISH WIDOWS > Metrics and Targets", "document_id": "2023 Lloyds sustainability report", "page": 164, "page_start": 164, "page_end": 165 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 215, "chunk_text": "# Building asustainable and inclusive future\n## PARTNERSHIPS, INITIATIVES AND COLLABORATIONS\n### Net Zero Engagement Initiative (NZEI)\nThis Initiative was set up to scale and accelerate climate-related corporate engagement, to support investors in aligning more of their investment portfolio with the Paris Agreement and accelerate real-world impact. Whilst the Climate Action $^ { 1 0 0 + }$ (CA100+) initiative focuses solely on the biggest high-emitting companies, the NZEI has expanded the universe of companies beyond the ${ \\mathsf { C A 1 0 0 + } }$ focus list, to help investors more broadly align their portfolios with net zero initiatives. In 2022, the IIGCC launched a new Net Zero Engagement Platform, creating a central hub for corporate collaborative engagement workstreams, to accelerate progress against goals. Along with a group of five other investors, we participated in an Engagement Sub-Group, to provide close support for accelerating engagement and escalation with specific ${ \\mathsf { C A 1 0 0 + } }$ target companies and in supporting a plan to engage with an additional number of real economy companies. The aim is to make progress across both the supply and demand side of high- ${ \\mathsf { C } } 0 _ { 2 }$ -emitting sectors. We were signatories to letters to all these 107 companies and are directly engaging with one of those, alongside another investor.\nThe IIGCC is the European membership body for investor collaboration on climate issues, representing investors with more than €50 trillion of assets. Our IIGCC membership has been one of the most important elements of our Responsible Investment initiatives. In the past we have contributed to the development of the Net Zero Investment Framework among other initiatives, as outlined in our previous Scottish Widows Responsible Investment and Stewardship reports. Over the course of 2023, we have participated in two further key initiatives:\nOur active participation in partnerships and collaborations fits into our goal to support and encourage greening across the real economy, and not solely achieving a green investment portfolio.\n### Climate Solutions Working Group\nDuring 2022, and continuing into 2023, one of our key contributions has been to co-lead the Climate Solutions Working Group. This group has produced guidance documents for asset owners and managers to measure, monitor and disclose their relevant investments across different asset classes. This is particularly important as many more asset owners and asset managers have made, or are looking to make, specific commitments to invest in climate solutions as part of being a signatory of the Paris Aligned Investment Initiative. We have contributed, reviewed and communicated the guidance, as well as overseeing its creation through encouraging collaboration with other IIGCC members.\nScottish Widows recognises that we can be most effective through collaboration, and we continue to work with other external bodies, organisations and initiatives pursuing responsible investment and climaterelated policy or advocacy initiatives.", "chunk_word_count": 477, "section_path": "Building asustainable and inclusive future > PARTNERSHIPS, INITIATIVES AND COLLABORATIONS > Net Zero Engagement Initiative (NZEI)", "document_id": "2023 Lloyds sustainability report", "page": 165, "page_start": 165, "page_end": 165 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 216, "chunk_text": "# Building asustainable and inclusive future\n## PARTNERSHIPS, INITIATIVES AND COLLABORATIONS\n### Other\nWe have provided our input to the IIGCC’s Net Zero Voting report, alongside its Asset Owner Stewardship Working Group. The aim of this paper is to help the industry exercise its rights and responsibilities better to help support companies set the right transition plans and make progress on these. Our feedback has been in the areas specific to asset owners and the various voting approaches they can take to direct or influence their investment managers to align voting behaviours with their own beliefs and expected outcomes.\n### Scottish Widows continued\n### Association of British Insurers (ABI)\n2. Scottish Widows is a signatory to the first global investor statement, coordinated by FAIRR, urging G20 Finance Ministers to reallocate their agricultural subsidies in alignment with climate and nature objectives. This statement followed the Global Biodiversity Framework agreed in Montreal. According to the UN, governments provide nearly $\\$ 500$ billion per year of agricultural support that is pricedistorting and environmentally and socially harmful1 . Action on subsidy reform by G20 Finance Ministers is essential for climate mitigation and long-term environmental resilience which is critical for global financial stability, since climate change and nature loss are sources of systemic risk to investments. The IPCC estimates that up to 34 per cent of existing areas for crops and livestock production could be unsuitable by the end of the century, materially impacting agricultural supply chains and companies. Building on a previous investor statement focusing on the EU’s agricultural subsidies, this alliance of investors drew attention to four recommendations to ensure that reforms to agricultural subsidies also include climate and nature protection, as well as the importance of supporting a Just Transition for affected stakeholders to protect sustainable investments and maximise opportunities.\n### Climate Action 100 and Transition Pathway Initiative\n### UK Sustainable Investment Forum (UKSIF)\nWe are also a member of the ABI Board and the Board’s Climate Change Sub-Group, as well as its Climate Change Working Group. In 2023, our contributions to the Climate Change Working Group supported development of an industry Guide to Action on Nature, which, in recognition of the need for nature to support net zero ambitions, complements the previously published Climate Change Roadmap by setting out a detailed framework for how insurance and long-term savings providers can develop strategies for nature.\nAs a member of the UKSIF, Scottish Widows continues to contribute towards industry best practice and to advance the regulatory and policy agenda towards creating well-functioning markets which embrace and embed long-termism. We are currently participating in its working group to support the development of the UK Taxonomy and sustainability-related regulation.\nScottish Widows continues to support these initiatives, using these towards our assessment of company transition plans, engagement activities and voting actions.", "chunk_word_count": 465, "section_path": "Building asustainable and inclusive future > PARTNERSHIPS, INITIATIVES AND COLLABORATIONS > Other", "document_id": "2023 Lloyds sustainability report", "page": 165, "page_start": 165, "page_end": 166 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 217, "chunk_text": "# Building asustainable and inclusive future\n## PARTNERSHIPS, INITIATIVES AND COLLABORATIONS\n### Transition Plan Taskforce\nWe are a part of the sector-specific (asset owner) working group, an industry collaboration to co-develop additional guidance and a disclosure framework relevant for asset owners where the ‘sector-neutral’ guidance and framework was lacking. Transition plan disclosure guidance extends beyond the asset owner’s own corporate transition to include relevant investment activities such as stewardship and investee engagement.\nAlongside our participation in industry collaborations, we are also active in advocating for the policy environment conducive to the climate transition. Some examples of our activities in 2023 are:\n### Farm Animal Investment Risk and Return (FAIRR)\n1. Scottish Widows, alongside several other financial Institutions and UKSIF, signed a letter to the Prime Minister expressing concern at the government’s recent public statements and policy signals regarding net zero. There is a risk that the recent announcements could undermine confidence in the UK’s commitment to meeting its medium and long-term net-zero goals. We have urged the government to provide long-term policy certainty on issues like predictable carbon pricing mechanisms, the transition to EVs, and improved energy efficiency standards for housing, to boost confidence in its long-term net-zero agenda. This is essential so that the finance industry can help drive capital towards innovative companies and infrastructure, and deliver prosperity across the UK, improving productivity, pay and creating approximately 1.7 million ‘green collar’ jobs, also aligned to ambitions of the Chancellor’s Mansion House speech. We believe that to protect the UK’s competitive advantage as the world’s largest net exporter of financial services, purposeful and predictable sustainable finance policy is fundamental, and can help position the UK’s financial services sector as a global leader in green investment.\nWe became members of the FAIRR Initiative in 2022. The initiative provides detailed ESG insight into animal agriculture and global food companies. The initiative is a great resource for our climate, biodiversity and human rights stewardship themes in the food sector, providing in-depth company research and company engagement opportunities. Over 2023, we have been involved in multiple initiatives with FAIRR, ranging from stewardship workstreams on Waste and Pollution, Protein Diversification, Working Conditions, to policy advocacy relating to the food sector and contributing to its thinking around investor action on regenerative agriculture.\n### United Nations Principles for Responsible Investment (PRI) Collaborative Stewardship Initiative on Nature\nScottish Widows has been involved in the Strategic Advisory Council of PRI’s Stewardship initiative on Nature, titled as Spring. The objective of the Council is to support the design and development of the initiative and to provide input, advice and insights to the PRI Executive on the strategy and activities of the initiative. Its initial focus will be on forest loss and land degradation, as a key driver of biodiversity loss, and will likely expand to other drivers of biodiversity loss as the initiative develops further.", "chunk_word_count": 475, "section_path": "Building asustainable and inclusive future > PARTNERSHIPS, INITIATIVES AND COLLABORATIONS > Transition Plan Taskforce", "document_id": "2023 Lloyds sustainability report", "page": 166, "page_start": 166, "page_end": 166 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 218, "chunk_text": "# Building asustainable and inclusive future\n## PARTNERSHIPS, INITIATIVES AND COLLABORATIONS\n### World Benchmarking Alliance (WBA)\nThe WBA is a not-for-profit organisation established to assess and rank companies based on their contribution to the Sustainable Development Goals (SDGs). In 2021, we became members of the WBA to strengthen our direct and collective engagement efforts, and heighten knowledge of emerging ESG themes (e.g. biodiversity, human rights, Just Transition). In 2023, we joined their collective engagement initiative on Just Transition, focusing on three companies in the Oil and Gas sector. We are also participants in the Collective Impact Coalition (CIC) on Human Rights Investor Strategy and Actions sub-group.\nThe initiative will focus on enabling policy alignment and implementation across geographies to help generate positive outcomes for nature and investor portfolios. Focusing investor efforts on policy will make it more likely that systemic risks are addressed across economic sectors and at an appropriate pace.\nScottish Widows is already a participant of PRI’s stewardship initiative on human rights, Advance, and is engaging with several investors.\n## CLIMATE ACTION PLAN: PROGRESS UPDATE\n## 02 Integrate climate considerations into asset allocation optimisation", "chunk_word_count": 186, "section_path": "Building asustainable and inclusive future > PARTNERSHIPS, INITIATIVES AND COLLABORATIONS > World Benchmarking Alliance (WBA)", "document_id": "2023 Lloyds sustainability report", "page": 166, "page_start": 166, "page_end": 166 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 219, "chunk_text": "# Building asustainable and inclusive future\n## 04 Focus our stewardship activity on companies failing to address climate risks\nOur Responsible Investment & Stewardship Framework and policies influence fund selection and asset allocation decisions across our portfolio to ensure that material ESG considerations are embedded. Schroders, our strategic appointed asset manager for active fund management, integrates ESG risks and opportunities into their security analysis and portfolio management decisions to achieve long-term sustainable investment returns. As our appointed passive fund asset manager, we work with BlackRock to deliver tailored strategies that integrate ESG considerations. For example, the launch of the Global Corporate ESG Insights Bond Fund, which applies ESG-related tilts to achieve its aims.\nTo support decarbonisation in line with our targets, a strong engagement programme is needed with investee companies. Our primary role is to monitor the stewardship activities of our appointed investment managers and we engage with them to discuss the quality and coverage of these. In addition, we directly engage with some material high-emitting holdings in a measured manner and over 2023 have directed voting in some of these on key climate and environment issues. Examples of directed voting actions include voting against certain climate transition plans and relevant director reappointments or reports and accounts at companies where enough progress on climate transition hasn’t been made, climate risks have not been articulated in financial statements or there has been backtracking on previous climate targets, despite a longstanding history of engagement by investors. We have also supported multiple shareholder resolutions which have requested disclosures around activities like climate lobbying, physical and transition risks, Scope 3 GHG emissions (including related medium- to long-term targets for reduction), methane measurement and on energy transition social impact, i.e. Just Transition.\nAnnounced in 2022, our five-year Climate Action Plan outlines our current plans for action on climate change with regard to our overall portfolio. It sets out four key actions to aid us in achieving our net zero targets and limit global warming to $1 . 5 ^ { \\circ } \\complement$ . As best practice evolves, so too will this Climate Action Plan and our actions to implement it. In July 2023, we published a report outlining progress made towards our Climate Action Plan .", "chunk_word_count": 372, "section_path": "Building asustainable and inclusive future > 04 Focus our stewardship activity on companies failing to address climate risks", "document_id": "2023 Lloyds sustainability report", "page": 167, "page_start": 167, "page_end": 167 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 220, "chunk_text": "# Building asustainable and inclusive future\n## 01 Develop climate-aware investment strategies and climate solutions investments\nOver the course of 2023, we have continued to work closely with our core appointed strategic investment managers to develop and refine a range of funds that have a bias towards investing in companies that are adapting their businesses in a way that is less carbon intensive and/or developing climate solutions. At the start of last year, we launched the Scottish Widows Global Environmental Solutions Fund1 , which provides targeted thematic exposure to global companies actively involved in providing solutions to the climate crisis or other areas of environmental challenges. The fund, which is actively managed, provides access to a wide range of environmental investment themes such as alternative energy, clean mobility, transport and infrastructure sustainability, forestry, sustainable agriculture, biodiversity and pollution prevention.\nWhen setting the strategic asset allocation (SAA) for our multi-asset funds, we use a variety of optimisation tools, including modelling that incorporates climate considerations into the economic forecasts. Specifically, we use long-term (from 10 to 40 years) asset class forecasts from a variety of sources, including Moody’s Analytics who provide year-on-year forecasts over the next 40 years and 10/30-year forecasts from Schroders, with the longer-term forecasts incorporating Schroders’ projected impact of climate change upon a variety of asset classes.\nThe following summarises activity contributing towards our Climate Action Plan over the course of 2023:\nAs at 2023 year-end, our climate-aware strategies assets increased by £4.2 billion compared with the previous year. This brings us to a cumulative £21.7 billion, well on the way to meeting our £20–25 billion goal by the end of 2025. Having already exceeded our goal in 2022 to achieve £1 billion investment in climate solutions by 2025, 2023 year-end saw this figure reach £1.7 billion1 .\nWe report annually on our progress on these areas through our Responsible Investment and Stewardship reporting, typically published in July each year. The 2023 report, to be published in July 2024, will include greater detail on our climate and environment-related stewardship activities, including those mentioned above.", "chunk_word_count": 345, "section_path": "Building asustainable and inclusive future > 01 Develop climate-aware investment strategies and climate solutions investments", "document_id": "2023 Lloyds sustainability report", "page": 167, "page_start": 167, "page_end": 167 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 221, "chunk_text": "# Building asustainable and inclusive future\n## 03 Exclude high-carbon investments that we believe present a high risk of becoming stranded assets\nOur most recent report, relating to 2022, is published here: Our Responsible Investment Research | Scottish Widows .\nOur exclusion policy, which has been in effect since 2020, is reviewed annually. This policy helps to ensure that our investment approach is aligned with the long-term interests of our customers. As two of the most ${ \\mathsf { C } } 0 _ { 2 }$ -intensive fossil fuels, the carbon, climate change and social impact of companies involved in thermal coal and tar sands is not aligned with our long-term investment strategy. Adherence to this policy has directly resulted in our divesting nearly £3 billion in total from companies we have deemed as ‘at risk of becoming stranded assets’2 .\nWe continue to seek out opportunities to invest in climate-aware solutions through our loan investment activity too. Our existing book contains a range of green infrastructure projects, including green energy solutions across wind and solar power generation, as well as smart metering. In 2023 we completed a £30.8 million investment to support the acquisition of land and lease income of an onshore UK wind farm.\n## SCENARIO ANALYSIS – INVESTMENTS\nA wide range of scenario analyses is used to provide insights to aid our understanding of climate risk and support our decisions. Our approach, along with the scenarios discussed follows that outlined on pages 151 to 155.\nClimate is one of many factors that influence an asset’s performance.\n### Global outcomes\n### Carbon emissions\nThis graph shows projected global outcomes in the illustrative scenarios. They show the aggregate effects of socioeconomic pathways and of climate risk given those pathways. These aggregate effects are influenced more by the choice of socioeconomic pathway than by the impact of climate risk.\nIn the chart below, we project the pathways of ${ \\mathsf { C O } } _ { 2 }$ equivalent emissions in each of our chosen scenarios. We see that the divergent and orderly scenarios have similar profiles, but that they are not identical, as they arise in different SSPs, where different assumptions are being made about the development and coordinated deployment of technology.\nIn the illustrative scenarios:\nGlobal economic performance is best in an orderly transition to a low-carbon economy Coal, oil, gas and petroleum sectors are the most sensitive to the transition to a low carbon economy\nAs Gross Domestic Product (GDP) measures the size of a country’s economy, a higher GDP is expected to lead to higher earnings, growing asset prices and better investment performance. The orderly transition to a low-carbon economy has the best overall performance. This is because it is assumed to have more coordinated actions and a higher rate of technological development.\n[IMAGE CAPTION] Global GDP\nAs a result of these emissions pathways, by 2100 in the orderly and divergent scenarios, the increases in surface temperature have stabilised and the global economy is growing, whilst in hothouse the temperature is increasing, and globally economies are experiencing increasing damage from physical risks.\n[IMAGE CAPTION] Emissions ${ \\bf { \\cal C } } { \\bf 0 } _ { 2 }$ equivalent", "chunk_word_count": 537, "section_path": "Building asustainable and inclusive future > SCENARIO ANALYSIS – INVESTMENTS > Global outcomes", "document_id": "2023 Lloyds sustainability report", "page": 167, "page_start": 167, "page_end": 168 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 222, "chunk_text": "# Building asustainable and inclusive future\n## SCENARIO ANALYSIS – INVESTMENTS\n### Scottish Widows continued\nFor these reasons, this type of modelling is only one of several components of our climate risk management process and is not acted upon in isolation.\n### Conclusions\n### Sectoral sensitivity to climate risks\nThe chart is based on projected equity values at 2050, with currency movements hedged, compared to counterfactual projections.\nThe socioeconomic pathways have a greater effect on modelled outcomes than climate risk in isolation, though we do see some marked differentiation by climate risk among sectors when we project a significant transition to a low carbon economy.\nSince we hold a diversified portfolio of assets, projected aggregate equity returns largely reflect global GDP performance. We consider the impact of physical risk on asset returns to be quite speculative, so we consider the impact of transition risk alone, relative to counterfactual projections that do not recognise climate risk at all.\n### Business strategy\nThe sectors that are more sensitive to the transition to a low-carbon economy are ‘Coal Mining and Gas’ (including Gas Utilities) and ‘Oil and manufacture of Petroleum Products’. Our modelling suggests that in these scenarios, the impacts on these sectors can be similar in the short to medium term, but that in the very long term the impact is stronger in the divergent scenario. The ordering of the sectors in the chart would also change if we changed the term of the outlook.\nWe regularly review our strategy using scenario analysis to assess its resilience.\n### Challenges with the analysis\nThis analysis requires us to model the global economic impacts over several decades of climate risks. Inevitably, such a task involves simplifications and speculative judgements. For example:", "chunk_word_count": 287, "section_path": "Building asustainable and inclusive future > SCENARIO ANALYSIS – INVESTMENTS > Scottish Widows continued", "document_id": "2023 Lloyds sustainability report", "page": 169, "page_start": 169, "page_end": 169 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 223, "chunk_text": "# Building asustainable and inclusive future\n## SCENARIO ANALYSIS – INVESTMENTS\n### Short to medium term\nWe assess risks to the achievement of our strategic objectives over the short to medium term. This year, amongst other stress tests, we considered a bespoke climate scenario and compared this to the base planning scenario. In the analysis, we projected our balance sheet and profit and loss account. The key components of the stress scenario were weather events that previously occurred every 10 years occurring every year, stresse to asset values and projected deterioration of the business environment with reduced sales and more people stopping policies, possibly as a consequence of reputational risk.\nThere are significant differences among the underlying sectors in both the orderly and divergent scenarios. This sectoral differentiation can be helpful in developing our investment strategy, especially when coupled with our view of the relative likelihoods of the scenarios and of the sectoral emissions profiles.\n• We model government policy to effect a transition by means of a single, simple tax on emissions of GHGs, whereas actual policy would also involve regulations and incentives Since there is no historical precedent to guide us, we must speculate on the impact of physical risk on economic output. It is arguable that for various reasons the economic impact of physical risk is understated, for example, we make no explicit allowance for disruptions to supply chains or to political stability Climate scenario analysis covers carbon emissions but other aspects of sustainability, e.g. biodiversity and its interaction with climate change, are not currently addressed\nMore granular analysis suggests that within sectors, there is a wide range of returns by region, and that this range can depend significantly on the underlying SSP.\nIn this chart, we focus on the impact of climate risk on broadly defined sectors. We consider the quantitative impact of transition risk alone in the high transition scenarios, and limit our outlook to 2050.\nBy design, in our hothouse scenario, we would not see the impact of transition risks, but we would expect to see the impact of physical risk in the long term. As discussed above, we would expect an adverse overall economic outcome, but we consider quantification of these impacts to be speculative at this stage.\nThis analysis showed us the variation in projected profitability caused by an adverse climate scenario. If this scenario were to occur the financial stability of Scottish Widows would remain secure.\nClimate scenario analysis requires data for the assets, which is not available for the entire portfolio. While we have been able to model the majority of our assets, for those with inadequate data we do not explicitly model the returns. Implicitly, the projected return on such assets is the same as that on the assets we have modelled. Where precise matching of the sector of an asset to a modelled sector has not been possible, we have adopted an appropriate proxy.", "chunk_word_count": 486, "section_path": "Building asustainable and inclusive future > SCENARIO ANALYSIS – INVESTMENTS > Short to medium term", "document_id": "2023 Lloyds sustainability report", "page": 169, "page_start": 169, "page_end": 169 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 224, "chunk_text": "# Building asustainable and inclusive future\n## SCENARIO ANALYSIS – INVESTMENTS\n### Long term\nOur business strategy is kept under continual review to ensure that it remains current and resilient in the face of emerging risks.\n[IMAGE CAPTION] Impact of transition risk on equities\nLong-term climate scenario analysis alerts us to potential changes in the economic and physical environment, to which we adapt by reviewing, for example, our pricing and underwriting standards and our investment strategy.\nWhile we consider the approaches we take to be reasonable, we must recognise that our model outputs are indicative rather than definitive and treat them with appropriate caution. While climate science itself is very well developed, determining the economic impacts of climate change is problematic, and there is no single agreed method used across the industry. The margin of uncertainty in any translation of climate risk into economic impacts is wide.\n### Next steps\nAnalysis of the impact of climate risk on the economic and financial system is in its infancy and we will continue to develop our analysis and the availability, coverage and quality of climate-related data.\n## METRICS AND TARGETS\n### Overview of financed emissions\nOur 2022 carbon footprint was 77.4 $\\mathrm { t C O } _ { 2 }$ /£m, down from our 2019 baseline of $1 1 6 . 1 \\mathrm { t C } 0 _ { 2 }$ /£m. We saw a decrease in the footprint from 2019 to 2020 relating to the fall in investee company emissions during 2020, in part due to reduced production and energy usage during the COVID pandemic. Some company emissions increased during 2021 post-pandemic, but on average global company values increased relative to emissions causing the footprint to fall.\nThe 2022 results reflect the value of investee companies during 2022 but the emissions still largely relate to 2021. Market values and emissions have not moved consistently during 2022 across different regions and sectors, for example, the US and emerging market indices fell, but the UK was relatively flat. In terms of higher-emitting sectors such as oil and gas, the emissions increased but the company market values increased by more, meaning the oil & gas footprint has reduced relatively. As the carbon footprint is sensitive to market fluctuations in addition to the absolute value of emissions and our own investment activity, we expect to see short-term variation of the footprint and will be studying the medium-term trend from future reporting.\nNote the Assets Under Management (AUM) of £166.4 billion at year-end 2022 represents the total assets in scope of our headline net zero target.", "chunk_word_count": 432, "section_path": "Building asustainable and inclusive future > SCENARIO ANALYSIS – INVESTMENTS > Long term", "document_id": "2023 Lloyds sustainability report", "page": 169, "page_start": 169, "page_end": 170 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 225, "chunk_text": "# Building asustainable and inclusive future\n## METRICS AND TARGETS\n### Further detail of financed emissions\nOur carbon footprint is a key indicator in helping us assess our progress against our net zero commitment. Although we have presented weighted average carbon intensity for the first time, in line with developing industry practice and regulatory expectations, carbon footprint is still our preferred measurement of progress against our net zero target. The metrics and targets we monitor help to inform our investment strategy as demonstrated in our Climate Action Plan, namely the launch of our climate-aware investment strategies. For further information on these strategies, see the Climate Action Plan Update section on page 166.\nRefer to the our sustainability metrics basis of reporting, available on our download centre , for details on how our financed emissions metrics are calculated.\n### Scottish Widows continued\nWhen it comes to Scope 3 emissions of the companies we invest in, at this time we do not feel the data is robust enough or has wide enough coverage for us to be able to set targets using it. We will continue to watch the developments in data quality and will consider extending our portfolio targets to cover Scope 3 of our underlying holdings when there is market consensus on the appropriateness of available data.\n### Sectoral analysis of emissions\n### Scope 3 emissions\nThe following bar chart shows a sector breakdown of the total financed emissions. This view is intended for illustrative purposes at this time and sector headings and the allocation of individual companies to sectors may be subject to revision as best practices emerge. Data is at 31 December 2022.\nScope 3 emissions include all other indirect GHG emissions (not included in Scope 2) that occur in the value chain of the reporting company. Scope 3 can be broken down into upstream emissions that occur in the supply chain (for example, from production or extraction of purchased materials) and downstream emissions that occur as a consequence of using the organisation’s products or services.\nFurther details on our approach to Scope 3 emissions reporting can be found within the our sustainability metrics basis of reporting, available on our download centre .", "chunk_word_count": 365, "section_path": "Building asustainable and inclusive future > METRICS AND TARGETS > Further detail of financed emissions", "document_id": "2023 Lloyds sustainability report", "page": 170, "page_start": 170, "page_end": 171 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 226, "chunk_text": "# Building asustainable and inclusive future\n## RISK MANAGEMENT\n### Overview\nWithin Scottish Widows Group, we recognise climate risk as a principal risk within our Enterprise Risk Management Framework (ERMF) and have integrated climate as a ‘crosscutting’ risk across other relevant risks in our ERMF such as credit risk, insurance underwriting risk, market risk, conduct risk, and legal and regulatory risk.\nWithin our risk management system (Risk and Control Self Assessment (RCSA)), as well as mapping existing or new controls to our key regulatory obligations to identify, measure, manage and report the impacts of climate change, we have grouped our key risks into six broad themes, which align to the Lloyds Banking Group’s definitions of ‘inbound and outbound’ risk impacts (for definitions of inbound and outbound risk please see page 155 of the Group's annual report and accounts 2023 ).\nThe materiality of these risks is assessed via continuous risk management using the same impact likelihood matrix that is used for all of our risks, and will vary over time.\nOur key risks, current residual risk ratings, and examples of relevant controls are as follows:\nThis is a sample of the key risks faced by Scottish Widows Group and is not exhaustive. It is intended to illustrate how we have further embedded climate-related risks into our framework. It continues to be reviewed and will evolve over time.\n### Assessment of risks\nOur risk management framework aims to help us identify, measure, monitor, manage and report the financial risks related to climate change with regular reporting to the Board to enable timely decisions to be taken. Short-term risks and risks that have already crystallised are logged then monitored and assessed. This includes consideration of all risk drivers, including those relating to climate change, to ensure both inherent and residual risk ratings effectively reflect the exposure. As part of Lloyds Banking Group, Scottish Widows Group approaches climate risk management in a consistent way to our overall parent Group. We comply with the Lloyds Banking Group Climate Risk Policy which is set around eight ‘Principles’, and we have developed our own Insurance Climate Risk Procedures to reflect Insurance-specific practices and processes.\n### ESG tool\nWe continue to apply our own internal ESG tool at loan origination and as part of the annual review process. The tool, which focuses on both the inbound and outbound risks, assesses exposure and management of climate and ESG risk issues. These are overlaid with a transition risk assessment of the sector which has been analytically derived using emissions data, to produce scores reflective of the client’s climate impacts and exposure to ESG risks. We also include specific ESG assessment and commentary in all our credit risk assessments.\nThe ESG tool is owned within Group. Further details can be found in the Risk management and scenario analysis section of this report on pages 156 to 158.\n### Insurance: Investment Stewardship Policy\n### Lloyds Banking Group: Insurance Underwriting Risk Policy\n### Embedding climate risk within our risk management framework", "chunk_word_count": 499, "section_path": "Building asustainable and inclusive future > RISK MANAGEMENT > Overview", "document_id": "2023 Lloyds sustainability report", "page": 172, "page_start": 172, "page_end": 173 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 227, "chunk_text": "# Building asustainable and inclusive future\n## RISK MANAGEMENT\n### Risk appetite\nAlso introduced in 2020, this defines the stewardship and engagement activity which we undertake in support of our Responsible Investment Framework and our commitments to:\nThis policy requires that climate change is embedded in underwriting risk management processes including:\nThe Risk Appetite Framework has been extended to include specific Climate Risk Appetite Strategy, preferences and metrics. The Board approved a Climate Risk Strategy Statement and statements expressing our preference to avoid risks arising from climate risk:\nIncorporating the effects of climate change in the demographic risk register \n• Internal model development and improvement to incorporate the impact of climate change on both a short and long-term time horizon \nMonitoring of reinsurer stability with respect to climate change events\n### Existing policy framework\nBe responsible stewards of the assets we oversee Influence investee companies to engender positive change Exercise strong governance over the asset managers we partner with\nAs a cross-cutting risk, climate change impacts will emerge through our existing risks. We have a Lloyds Banking Group Climate Risk Policy and Insurance Climate Risk Procedure which capture the overarching requirements for risk management, governance, scenario analysis and disclosure of climate risks. In addition to this overarching policy/procedure, internal policies where climate risk impacts might be expected have been reviewed and where relevant these have been updated, along with any related procedures and underlying processes. These include:\nClimate risk is the risk that the Group experiences losses and/or reputational damage, either from the impacts of climate change and the transition to net zero (‘inbound’) or as a result of the Group’s response to tackling climate change (‘outbound’). We have no appetite to fail to proactively manage the risks and opportunities for our business as a result of climate risk. We will take action to support the Group and our customers transition to net zero and maintain our resilience against the risks relating to climate change.\nIt aims to protect and maximise the value of investments in the long term, in line with our beneficiaries’ interests, through encouraging investee companies to plan and evolve their activities responsibly, to deliver value through stable and sustainable returns.\n### Lloyds Banking Group: Product Procedures\nThe product review process requires that climate risk, in particular the associated conduct risk, is specifically considered at all stages in the product lifecycle.\nThis policy was developed to meet the requirements of the FCA Policy Statement 19/13 (PS19/13) in relation to the Shareholders Directive II (SRD II) (COBS 2.2B) and the FRC Stewardship Code.\n### Insurance: Investment Exclusions Policy", "chunk_word_count": 430, "section_path": "Building asustainable and inclusive future > RISK MANAGEMENT > Risk appetite", "document_id": "2023 Lloyds sustainability report", "page": 174, "page_start": 174, "page_end": 174 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 228, "chunk_text": "# Building asustainable and inclusive future\n## RISK MANAGEMENT\n### Lloyds Banking Group: Credit Risk Policy and Insurance Credit Framework Policy\nIntroduced in 2020, this defines the rules for exclusions that will be applied to our investments and aligns to Principle 2 of our Responsible Investment Framework, which forms part of the Insurance Investment Policy: ‘To help us manage downside risk, we will take a position on the companies we will not support and will implement exclusions throughout funds managed or mandated by us’. This policy, which works in tandem with the Investment Stewardship Policy, defines our approach to public equities, bonds, and other corporate debt and is supplemented by the Group External Sector Statements which apply to the direct lending part of shareholder investments. We have key controls around communicating this policy to our investment managers.\nFor our Loan Investment book, we adhere to the Lloyds Banking Group Credit Risk Policy which was updated in 2021 to incorporate reference to ESG risk, and the Insurance Credit Framework Policy, which supplements the Lloyds Banking Group Policy and sets out the Scottish Widows Group specific approach to management of credit risk. As part of our credit risk assessment, both at origination and at annual review, we include a rating based on the output of the ‘ESG tool’, together with an assessment of the counterparty’s approach to ESG risk. Similar to our Insurance Investment Exclusions Policy, the Lloyds Banking Group External Sector Statements (which can be found here under Group codes and policies) apply to our Loan Investments book and set out our approach to key sectors where we have a direct lending relationship.\n### Insurance: Investment Policy\nThis policy also references the Responsible Investment Framework and that ESG factors should be considered as part of due diligence and assessment activity when selecting funds or purchasing assets.\nWe have aligned our risk preferences to our key risks, set out in the table on page 171. We have risk appetite metrics to help us monitor and report on key climate-related exposures, progress towards meeting key net zero commitments (for Investments), and to monitor the operation of key controls such as adherence to our External Commitments Framework.\n### Insurance: Reinsurance Policy\nAs part of the assessment of new reinsurance arrangements, reinsurers’ exposure to climate risk should be considered in their approach to managing forward-looking climate risk.\n### Insurance: Stress Testing Procedures\nClimate stress testing has been added as a regular requirement for medium and long-term strategic planning.\n## NATURE\nFollowing this training, Scottish Widows approached ZSL to collaborate on developing a suitable methodology for mapping nature-related risk in the investment portfolio, namely through identification of high-risk sectors and sub-sectors. As a nascent and fluid area of risk management for the financial services sector, the expertise of ZSL on not only the natural world, but also the use of appropriate methodologies and metrics, provides a strong foundation for well-informed action. Work to develop the methodology remains underway and updates will be made in due course.\n### Thinking environmentally\n### Policy and industry advocacy", "chunk_word_count": 508, "section_path": "Building asustainable and inclusive future > RISK MANAGEMENT > Lloyds Banking Group: Credit Risk Policy and Insurance Credit Framework Policy", "document_id": "2023 Lloyds sustainability report", "page": 174, "page_start": 174, "page_end": 175 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 229, "chunk_text": "# Building asustainable and inclusive future\n## NATURE\n### Work-to-date\nWe continue to be an active voice on policy enhancement and the imperative for collaborative action to make a difference on the climate and nature crises. In March 2023, we published an advocacy paper entitled ‘Nature and Biodiversity: the pensions imperative’ . Taking readers through fundamental science, the current state of the natural world, why it matters to pensions and other long-term investors, the risks posed and some of the ways those risks can be measured, we aimed to build awareness across the industry and beyond. Concluding the paper with a series of recommendations which highlighted opportunities for both government and industry, we issued a rallying call for much-needed action that would better enable our industry to help halt and reverse the loss of nature by taking action across investment activities.\nResponsible investment is at the heart of our investment approach at Scottish Widows – degradation of nature is a systemic risk for our portfolios and our beneficiaries, but the prevention of degradation or protection of nature is also an opportunity. As we reported last year, it is important for us as an investor to develop a clear understanding of the potential impact from nature on the risk/return profile of our investee companies, for whom this systemic risk presents physical, transition and litigation risks, which could impact investment value in the short, medium, and long term. We continue to advance our understanding on how best to understand and manage naturerelated risks emanating from portfolio exposure to dependency on and impact to the environment, and particularly, how best to consider in the context of the climate/nature nexus.", "chunk_word_count": 276, "section_path": "Building asustainable and inclusive future > NATURE > Work-to-date", "document_id": "2023 Lloyds sustainability report", "page": 175, "page_start": 175, "page_end": 175 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 230, "chunk_text": "# Building asustainable and inclusive future\n## NATURE\n### Nature-related risks and opportunities\nThe Responsible Investment team at Scottish Widows has recognised the importance of developing a working knowledge of the natural world through partnerships with external experts on nature. Accordingly, in early 2023, the team partnered with the Zoological Society of London (ZSL) to complete specialised training focused on biodiversity in finance and issues across soft commodity value chains, with deep dives into palm oil, tropical forestry, and natural rubber. Recognising the need to drive awareness and embed capability throughout the whole business – not just responsible investment – the team supported this imperative by rolling out this training opportunity to colleagues from various business lines, including risk, finance and audit.\nAs noted, management of nature-related risks also represents opportunities. In 2023, as part of a suite of new strategies, we worked with fund manager Schroders to launch a Global Environmental Solutions Fund. By targeting companies providing products and solutions – or delivering actions through their own policies – that help tackle critical environmental issues, this fund sees us taking steps towards driving major investment into better outcomes for the environment and our beneficiaries. The fund can invest in companies that are involved in advancing alternative energy generation and supply, clean mobility, transport and infrastructure sustainability, forestry, sustainable agriculture, biodiversity preservation and pollution prevention. As strong advocates for change through our stewardship programme, we recognise the imperative to support companies’ attempting to drive change – the fund also considers those which are directing 20 per cent of capital expenditure to the adaptation of their business and those exerting influence, through their policies and practices, over their supply chains or customers to reduce emissions.\nAn area of policy with particular importance is the mandating of economy-wide reporting aligned to the Taskforce on Naturerelated Financial Disclosure framework. Launched in September 2023, it provides a consistent approach for thinking through nature-related issues and disclosures. Following our call to the government to make the UK the first country to mandate the framework, we have been and continue to be actively engaged in industry initiatives in support of a better understanding, future widespread adoption, and consistent application.\nThrough our strategic engagement with industry and government initiatives, we remain committed to playing a role in the prevention of further degradation and look forward to working within our industry on contributing to real-world outcomes which are better for the environment, society and the economy.\nWe’ll continue to consider how we can best embrace nature as an investment theme so that matters linked to biodiversity and ecosystem loss such as deforestation, use of water, waste and pollution, and sustainable food can be included in our investment design.\n### Scottish Widows continued\n### Stewardship\nLast year we reported how we were looking ahead to further advancing our focus on nature through our stewardship programme, particularly through participation in relevant collective engagement initiatives, which serve as a key opportunity through which we will support the specific fights against loss of biodiversity and ecosystems. In 2023 we successfully applied to the United Nations Principles for Responsible Investment collaborative stewardship initiative on nature. Further information on this can be found in the Partnerships, Initiatives and Collaborations section.", "chunk_word_count": 536, "section_path": "Building asustainable and inclusive future > NATURE > Nature-related risks and opportunities", "document_id": "2023 Lloyds sustainability report", "page": 175, "page_start": 175, "page_end": 176 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 231, "chunk_text": "# Building asustainable and inclusive future\n## NATURE\n### Coming up next\nHaving contributed to the Global Canopy’s development of guidance for ‘deforestation-free pension funds’, we continue with our commenced adoption of appropriate areas of this guidance, which will help us to further identify and map key areas of deforestation risk within our portfolio and allow us to report on our activity to\nOur thematic stewardship and engagement programme now includes the specific theme of biodiversity including but not limited to issues such as deforestation, within the broader theme of climate change and the environment. We view the elimination of deforestation as key to a sustainable future and, accordingly, it is one of our engagement priorities.\nIn our inaugural Green Pensions research carried out in 2022\\*, 72 per cent of respondents agreed it was important to them that their employers invested their pension savings sustainably. It is important that we continue our ESG integration for our flagship pension default option given what we know about our customers’ attitudes.\nIn our engagement with asset managers and relevant investee companies, dialogue is now beginning to include broader environmental characteristics and factors which affect ecological limits. To support this focus, in 2022 we joined the FAIRR (Farm Animal Investment Risk & Return) Initiative, which will be a key mechanism for us to collaboratively engage on biodiversity – with expertise in sustainable proteins, the initiative opens avenues to collectively engage with the food and agriculture industry on identified major pathways to address biodiversity loss.\n\\* 2022 Green pensions report .\nFurthermore, we have advanced our approach to responsible investment and stewardship through the implementation of Voting Guidelines, which we use to monitor and, where appropriate, challenge our key managers’ voting policies and practices to influence and encourage them to make their own in-house policies more progressive. Where relevant, our guidelines adopt a stance that investee companies should promote biodiversity, conservation, water quality, waste management and nature-based solutions to allow nature and people to flourish. These guidelines also set out our expectations that companies have (or are actively working towards) adequate policies and programmes on sustainable land and water use to protect nature and address community concerns on land use.", "chunk_word_count": 365, "section_path": "Building asustainable and inclusive future > NATURE > Coming up next", "document_id": "2023 Lloyds sustainability report", "page": 176, "page_start": 176, "page_end": 176 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 232, "chunk_text": "# Building asustainable and inclusive future\n## NATURE\n### Forward-looking statements\n‘estimate’, ‘probability’, ‘goal’, ‘objective’, ‘deliver’, ‘endeavour’, ‘prospects’, ‘optimistic’ and similar expressions or variations on these expressions are intended to identify forward-looking statements. These statements concern or may affect future matters, including but not limited to: projections or expectations of the Group’s future financial position, including profit attributable to shareholders, provisions, economic profit, dividends, capital structure, portfolios, net interest margin, capital ratios, liquidity, risk-weighted assets (RWAs), expenditures or any other financial items or ratios; litigation, regulatory and governmental investigations; the Group’s future financial performance; the level and extent of future impairments and write-downs; the Group’s ESG targets and/or commitments; statements of plans, objectives or goals of the Group or its management and other statements that are not historical fact and statements of assumptions underlying such statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon circumstances that will or may occur in the future. There are inherent risks and uncertainties associated with achieving future emissions targets and implementing net-zero transition strategies and plans in a complex, interdependent, and continually evolving global landscape. The Group therefore reserves the right to adjust, amend, or adapt its metrics and targets in response to unforeseen circumstances or changes in external factors and dependencies which impact the feasibility of achieving the stated targets.", "chunk_word_count": 226, "section_path": "Building asustainable and inclusive future > NATURE > Forward-looking statements", "document_id": "2023 Lloyds sustainability report", "page": 177, "page_start": 177, "page_end": 177 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 233, "chunk_text": "# Building asustainable and inclusive future\n## NATURE\n### Forward-looking statements\nregulatory or competition proceedings, investigations or complaints; failure to comply with anti-money laundering, counter terrorist financing, anti-bribery and sanctions regulations; failure to prevent or detect any illegal or improper activities; operational risks including risks as a result of the failure of third party suppliers; conduct risk; technological changes and risks to the security of IT and operational infrastructure, systems, data and information resulting from increased threat of cyber and other attacks; technological failure; inadequate or failed internal or external processes or systems; risks relating to ESG matters, such as climate change (and achieving climate change ambitions) and decarbonisation, including the Group’s ability along with the government and other stakeholders to measure, manage and mitigate the impacts of climate change effectively, and human rights issues; the impact of competitive conditions; failure to attract, retain and develop high calibre talent; the ability to achieve strategic objectives; the ability to derive cost savings and other benefits including, but without limitation, as a result of any acquisitions, disposals and other strategic transactions; inability to capture accurately the expected value from acquisitions; assumptions and estimates that form the basis of the Group’s financial statements; and potential changes in dividend policy. A number of these influences and factors are beyond the Group’s control. Please refer to the latest Annual Report on Form $^ { 2 0 - F }$ filed by Lloyds Banking Group plc with the US Securities and Exchange Commission (the SEC), which is available on the SEC’s website at www.sec.gov, for a discussion of certain factors and risks. Lloyds Banking Group plc may also make or disclose written and/or oral forward-looking statements in other written materials and in oral statements made by the directors, officers or employees of Lloyds Banking Group plc to third parties, including financial analysts. Except as required by any applicable law or regulation, the forward-looking statements contained in this document are made as of today’s date, and the Group expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document whether as a result of new information, future events or otherwise. The information, statements and opinions contained in this document do not constitute a public offer under any applicable law or an offer to sell any securities or financial instruments or any advice or recommendation with respect to such securities or financial instruments.", "chunk_word_count": 405, "section_path": "Building asustainable and inclusive future > NATURE > Forward-looking statements", "document_id": "2023 Lloyds sustainability report", "page": 177, "page_start": 177, "page_end": 177 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 234, "chunk_text": "# Building asustainable and inclusive future\n## NATURE\n### Disclaimer\naccounting principles, and historical data may not be an accurate indicator of the future trajectory of climate change impacts. Moreover, measurement technologies and analytical methodologies are in constant development; there is a lack of international coordination on data and methodology standards, and there exists future uncertainty, which includes (amongst others) developing global and regional laws, regulations and policies and evolving classification frameworks and climate science knowledge and data.\nThe reader should be aware that this document, and the information contained within it, has been prepared on the following basis: $\\mathrm { ( i ) }$ this document and its contents are not externally audited; (ii) all material contained in this document is subject to change without notice; (iii) the material in this document does not constitute any investment, accounting, legal, regulatory or tax advice or an invitation or recommendation to enter into any transaction; (iv) estimates expressed in this document should be regarded as indicative, and for illustrative purposes only; and (v) this document has been prepared using models, methodologies and data which are subject to certain limitations (as explained in the “models, methodologies and data” section below). Expected and actual outcomes may differ from those set out in the document (as explained in the “forward-looking statements” section below).\nWhere the Group has used the methodology and tools developed by a third party, the application of the methodology (or consequences of its application) shall not be interpreted as conflicting with any legal or contractual obligations and such legal or contractual obligations shall take precedence over the application of the methodology. Where the Group has used underlying data provided or sourced by a third party, the use of the data shall not be interpreted as conflicting with any legal or contractual obligations and such legal or contractual obligations shall take precedence over the use of the data. Further development of reporting or other standards could impact the metrics, data and targets contained in this document. From one reporting period to another, direct comparisons of each statement of information or data may not always be possible, and information may be updated from time to time.", "chunk_word_count": 363, "section_path": "Building asustainable and inclusive future > NATURE > Disclaimer", "document_id": "2023 Lloyds sustainability report", "page": 177, "page_start": 177, "page_end": 177 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 235, "chunk_text": "# Building asustainable and inclusive future\n## NATURE\n### Public information\nSome information appearing in this document may have been obtained from public and other sources and, it has not been independently verified by the Group and no representation or warranty is made by the Group as to its quality, completeness, accuracy, fitness for a particular purpose or non-infringement of such information.\nFactors that could cause actual business, strategy, targets, plans and/or results (including but not limited to the payment of dividends) to differ materially from forward-looking statements include, but are not limited to: general economic and business conditions in the UK and internationally; acts of hostility or terrorism and responses to those acts, or other such events; geopolitical unpredictability; the war between Russia and Ukraine; the conflicts in the Middle East; the tensions between China and Taiwan; political instability including as a result of any UK general election; market related risks, trends and developments; changes in client and consumer behaviour and demand; exposure to counterparty risk; the ability to access sufficient sources of capital, liquidity and funding when required; changes to the Group’s credit ratings; fluctuations in interest rates, inflation, exchange rates, stock markets and currencies; volatility in credit markets; volatility in the price of the Group’s securities; tightening of monetary policy in jurisdictions in which the Group operates; natural pandemic and other disasters; risks concerning borrower and counterparty credit quality; risks affecting insurance business and defined benefit pension schemes; changes in laws, regulations, practices and accounting standards or taxation; changes to regulatory capital or liquidity requirements and similar contingencies; the policies and actions of governmental or regulatory authorities or courts together with any resulting impact on the future structure of the Group; risks associated with the Group’s compliance with a wide range of laws and regulations; assessment related to resolution planning requirements; risks related to regulatory actions which may be taken in the event of a bank or Group failure; exposure to legal,\n### Opinions and views of third parties\nAny opinions or views of third parties expressed in this document are those of the third parties identified, and not of the Group, its affiliates, directors, officers, employees or agents. By incorporating or referring to opinions and views of third parties, the Group is not, in any way, endorsing or supporting such opinions or views.\n### No liability\nWhile reasonable care has been taken in preparing this document, neither the Group nor any of its affiliates, directors, officers, employees or agents make any representation or warranty as to its quality, accuracy or completeness, and they accept no responsibility or liability for the contents of this material, including any errors of fact, omission or opinion expressed.", "chunk_word_count": 447, "section_path": "Building asustainable and inclusive future > NATURE > Public information", "document_id": "2023 Lloyds sustainability report", "page": 177, "page_start": 177, "page_end": 177 }, { "report": "2023 Lloyds sustainability report.pdf", "chunk_idx": 236, "chunk_text": "# Building asustainable and inclusive future\n## NATURE\n### Models, methodologies and data\nThe data contained in this document reflects best estimates at the relevant time. The models, methodologies and data used in information in this document, including in relation to the setting of the Group’s emissions targets, net-zero transition strategy, climate scenario analysis and transition plan, are subject to certain limitations. These include (i) that they are subject to future risks and uncertainties which may change over time, (ii) for external data, or methodologies and models developed by a third party, they could be subject to adjustment which is beyond the Group’s control; (iii) the quality of data can vary, which may impact the outputs of models and methodologies; (iv) in respect of climate-related models, methodologies and data in particular, are not of the same standard as those available for other financial information, nor subject to the same standards, benchmarks or standardised\n### Forward-looking statements\nPhoto credits\nThis document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended, and section 27A of the US Securities Act of 1933, as amended, with respect to the business, strategy, plans and/or results of Lloyds Banking Group plc together with its subsidiaries (the Group) and its current goals and expectations. Statements that are not historical or current facts, including statements about the Group’s or its directors’ and/or management’s beliefs and expectations, are forward-looking statements. Words such as, without limitation, ‘believes’, ‘achieves’, ‘anticipates’, ‘estimates’, ‘expects’, ‘targets’, ‘should’, ‘intends’, ‘aims’, ‘projects’, ‘plans’, ‘potential’, ‘will’, ‘would’, ‘could’, ‘considered’, ‘likely’, ‘may’, ‘seek’,\nPage 53: Liver Building – by Megan \nPage 54: Family internet browsing – by Alexander Drummer \nPage 104: Engineering – by thisisengineering-raeng-fiVBH51FALYunsplash.jpg \nPage 109: Bales – by Colin Watts Ploughing Field – by Luke Thornton Large tractor – by Spencer Scot-Pugh \nPage 113: Solar panels – by Vivent \nPage 121: Solar panel install – by Bill Mead \nPage 134: London Bus – by Jasper Garratt \nPage 135: London Taxi – by Tak-Kei Wong \nPage 138: Airplanes – by Tolu Olarewaju \nHead office \n25 Gresham Street \nLondon EC2V 7HN \n+44 (0)20 7626 1500 \nwww.lloydsbankinggroup.com \nRegistered office \nThe Mound \nEdinburgh EH1 1YZ \nRegistered in Scotland no. SC095000", "chunk_word_count": 371, "section_path": "Building asustainable and inclusive future > NATURE > Models, methodologies and data", "document_id": "2023 Lloyds sustainability report", "page": 177, "page_start": 177, "page_end": 178 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 0, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## 2022 ESG REPORT\n## CONTENTS\n## ABOUT THIS REPORT 02\n## PRACTICES 59\nCorporate Governance 60\n## CEO WELCOME 03\nCode of Ethics & Workplace Culture 64\n## OUR JOURNEY 07\nPurchasing Practices 65\nAbout AEO & Our Brands 08\nData Privacy & Security 66\nESG Oversight 16\nMaterial ESG Topics 18\n## APPENDIX 68\nESG Ratings of AEO 19\nSustainability Accounting Standards Board (SASB) Index 69\nTask Force on Climate-related Financial Disclosures (TCFD) Index 72\n## PLANET 20\nAnnual GHG Inventory Results 73\nGoals 21\nGHG Verification Statement 76\nWater Leadership 24\nMaterial Topics 77\nSustainable Raw Materials 27\nMemberships & Associations 79\nReal Good 28\nChemicals Management 31\nClimate: Reducing Energy & Emissions 32\nClimate: Waste Reduction 35\n## PEOPLE 36\nGoals 37\nOur Values & Our Culture 39\nInclusion, Diversity, Equity & Access (IDEA) 4 4\nCreating Impact: Customer & Community Engagement 49\nHuman Rights 53\nFactory Rating System 54\n## ABOUT THIS REPORT\nThe 2022 Building a Better World ESG Report highlights our strategy, goals and progress made through our People, Planet and Practices initiatives. Our key areas of focus are prioritized by what matters most to our business and our stakeholders, including our customers, associates, vendors, investors and regulators.\nPerformance reporting utilizes the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard and aligns with two internationally recognized frameworks: the Sustainability Accounting Standards Board (SASB) Apparel, Accessories & Footwear Standard and the Task Force on Climate-related Financial Disclosures (TCFD).\\*\nAdditional information can be found at www.aeo-inc.com.\nFor questions regarding this report, contact us at AEOBetterWorld@ae.com.\n## REPORT FAST FACTS\nData primarily covers fiscal year (FY) 2022: the 52-week• period from January 30, 2022 to January 28, 2023 $( \" 2 0 2 2 \" )$ , unless otherwise stated.\nScope of ESG data includes all of American Eagle• Outfitters, Inc.’s (AEO) operations and brands included in the Fiscal 2022 financial statements, unless otherwise stated.\nGHG emissions data for Scope 1 and Scope 2 emissions• provided in this report has been verified by Ruby Canyon Environmental, an accredited third-party GHG validation and verification body.\n\\*Specific framework indices can be found in the Appendix.", "chunk_word_count": 362, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > 2022 ESG REPORT", "document_id": "AEO 2022 ESG Report", "page": 2, "page_start": 2, "page_end": 3 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 1, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## CEO WELCOME\n“As we reflect on the numerous accomplishments over the past year, we continue to challenge ourselves, set new goals and prioritize our journey to build a better world.”\nWhile we have more work to do, I am pleased by the recognition our efforts have received to date, in particular MSCI’s upgrade of our ESG rating from “BBB” to “A.”\nIn working to preserve the planet, every design decision is being made with sustainability in mind. In 2022, we expanded our environmental targets after exceeding several goals, including reducing our water usage, ahead of schedule.\nOur brands are making great strides in expanding products under our Real Good label, which reflects high environmental standards compared to conventional methods and integrates more sustainable raw materials. Today, nearly all AE jeans are made under the Real Good label. We have reduced our water and energy usage, and incorporated more recycled polyester and sustainably sourced cotton into our Aerie and OFFL/NE merchandise.\nI am proud to introduce our second annual “Building a Better World” report, furthering our commitment to greater transparency on our ESG initiatives. Nearly five decades ago my father, Jerome Schottenstein, laid our foundation as an inclusive and welcoming retailer where associates and customers feel empowered, respected and recognized.\nWe care deeply about people and keep them at the heart of every decision. In 2022, we introduced Be Well@AEO—a holistic program providing our associates with tools and resources to manage their mental and physical health, financial goals and more.\nToday, these principles remain the cornerstone of AEO’s culture and guide our portfolio of beloved and enduring brands.", "chunk_word_count": 273, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > CEO WELCOME", "document_id": "AEO 2022 ESG Report", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 2, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## KEY AREAS OF FOCUS\nOur strong set of principles is one of the many reasons why AEO is consistently recognized for an authentic and rewarding culture. AEO was recently applauded by Fortune for innovation and named as one of the most trustworthy companies by Newsweek.\n### People(Social)\n### Planet (Environment)\n### Practices (Governance)\nWe have accomplished so much in the past year and continue to make substantial progress across the three pillars of our ESG strategy: Planet (Environment), People (Social) and Practices (Governance).\nProtect our planet with responsible choices, for future generations\nEmpower our people through inclusion, diversity, equity and access while supporting our communities\nOperate our business with integrity and best practices in everything we do\nOur 2021 inaugural report was incredibly useful for engaging with associates, investors, external partners and rating agencies.\nThis past year, together with our customers, we donated more than $\\$ 10$ million to local nonprofits that are paving the way for mental health, youth, women’s empowerment and education. Additionally, our associates volunteered more than 14,000 hours with organizations that are important to them.\nOperating with effective practices and consistently upholding our strong ethical standards remains a key priority. We have established an independent and highly competent board structure to oversee our company’s operations. The Board of Directors primarily focuses on strategy, risk management, corporate social responsibility, corporate governance and compliance. The risk oversight responsibilities of our Board are supported by highly engaged cross-functional teams that maintain our programs related to ethics and compliance, crisis management, data privacy and security, and supply chain management, among others.\nAs we continue to take action, we remain committed to enhancing transparency and communication around our ESG initiatives. With this report, we are introducing disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework. This will complement ongoing disclosure in accordance with the Sustainability Accounting Standards Board (SASB) standards, aligning our report with two industry-leading ESG disclosure frameworks.\nThis includes our recently enhanced Paid Parental Leave, new Paid Caregiver Leave to help our people balance a full life outside of work and facilitating more than $\\$ 200,000$ to help repay associates’ student loan debt.\nOur $\\$ 5$ million commitment to AEO’s Steven A. Davis Scholarship for Social Justice has progressed, with 30 new recipients receiving scholarships for 2022/2023, advancing their access to educational opportunities. To date, we have awarded 45 scholarships to associates who share our passion for creating a more equal and inclusive society. This investment in our associates is more important than ever.\nLooking ahead, I see no shortage of opportunities for our company. As we reflect on our accomplishments detailed in this report, we are excited for what’s to come in our journey to build a better world. We will continue to challenge ourselves to deliver meaningful progress while furthering our commitment to create a more sustainable and equitable future for our associates, customers, stakeholders and communities.\nOur charitable giving continues to have a tremendous impact on the communities where we live and work. In 2022, we established the Aerie Real Foundation—formalizing and expanding upon the brand’s decades-long history of philanthropy. With the introduction of signature and community-based grants, the Aerie Real Foundation strives to make the world a more positive place.", "chunk_word_count": 544, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > KEY AREAS OF FOCUS", "document_id": "AEO 2022 ESG Report", "page": 4, "page_start": 4, "page_end": 5 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 3, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## OUR LEGACY\nJerome Schottenstein was the chairman of the Schottenstein Stores Corporation, a privately held retail empire based in Columbus, Ohio. The son of a Lithuanian immigrant, Jerome successfully expanded the family business to overhaul and revive numerous troubled retail ventures. He preferred to be called a merchant and was an influential entrepreneur with a deep commitment to people and community. Jerome had a special affinity for supporting educational opportunities for youth and left a lasting legacy of positivity and inclusivity at AEO. He quietly supported numerous organizations including, the United Way, NAACP, Yeshiva University, the U.S. Holocaust Museum, Ohio State University and the Columbus Torah Academy, among many others.\n### True success is defined by the impact we have on our communities and the foundation we build for future generations.\nAmerican Eagle Outfitters was founded in 1977 in Pittsburgh, Pennsylvania, offering casual clothing and sportswear with a focus on the outdoors.\nSeeing great potential in an emerging brand, Jerome Schottenstein became an early investor in 1980, eventually purchasing the company outright in 1990 with a strategic vision to fuel continued growth. The company went on to launch its first private-label line for men and women, including the introduction of the iconic American Eagle jeans collection, seeding the powerful brand platform we know today. At the same time, a commitment to social responsibility that would remain central to the company’s DNA was cemented. Over the years, AEO’s growth has been anchored in being an inclusive, diverse organization dedicated to delivering an exceptional customer experience and quality products at affordable prices.\n“Since our earliest days, my father had a vision to be a retailer that was accessible and welcoming to all. A place where associates and customers alike felt not just respected, but celebrated. Nearly five decades later, these principles remain central to our values at AEO. We believe in creating great products, caring for our communities and building relationships that last.”\nToday, Jerome’s legacy and Jay’s leadership continue to be the catalyst for the success of AEO and its portfolio of beloved brands.\nJAY SCHOTTENSTEIN Executive Chairman of the Board & Chief Executive Officer\n## BUILDING A BETTER WORLD: 2022 HIGHLIGHTS\n\\~3x\n## 4 billion\nincrease of corporate associate population who identify as Black since 2018.\ngallons of water saved through better production practices by jeans factories since 2017.\n71%\nof AE, Aerie and OFFL/NE product collections are Real GoodTM.\n64% of total water used in denim laundries was recycled.\n49% of executive leaders identify as women\n## GOAL SURPASSED\n86% of the Board of Directors are independent.\n## OUR JOURNEY\nLeading with purpose and growing in a socially responsible and sustainable way are central to our mission.", "chunk_word_count": 454, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > OUR LEGACY", "document_id": "AEO 2022 ESG Report", "page": 6, "page_start": 6, "page_end": 8 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 4, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## A COMPANY LED BY PURPOSE\nAt AEO, we offer a welcoming and engaging customer experience – and we embrace all. Through our portfolio of unique, loved and enduring brands we offer high-quality, on-trend apparel, intimates, activewear, accessories and personal care products for women and men. We are a true omni-channel retailer with a global reach. Our brands are connected under the core tenet of being REAL, optimistic, empowering and a celebration of individual self-expression. That power and authenticity drives us to create a positive impact across every facet of our business, brands and products.\nMore than 10 years ago, we introduced AEO Better World—an initiative grounded in social responsibility and giving back to our communities. Across our brands, we support a number of important causes that are meaningful to our customers and associates. We operate with integrity and a strong set of values, which are ingrained across our business and in how we treat our associates, business partners and customers. Over the years, our focus has expanded to include strong commitments to protect our planet.\nAfter establishing goals to reduce water usage and greenhouse emissions in 2021, we exceeded our water goals two years ahead of schedule and have introduced new goals to strive for further progress. Our sustainable product line, Real Good, continues to grow across brands, driving us to formalize our strategies, set clear and measurable goals, and share our progress through reporting that aligns with the industry’s most comprehensive frameworks.\nAEO is consistently recognized as an industry leader for strong values, innovative solutions and for being an employer of choice.\nOur brands are optimistic, inclusive and diverse, designed to inspire self-expression and empower customers to celebrate their own unique personal style.\n## AMERICAN EAGLE\n### Rooted in authenticity, powered by positivity and inspired by our community.\nAE is the go-to destination for casual style, embraced by generations of youth since 1977. Our heritage is great American essentials, where modern life meets timeless style through jeans, bottoms, sweaters, fleece and tops, as well as accessories to complete the perfect outfit. Our collections are comfortable with a carefree vibe, exactly how our customers want to be. Laidback-styles. Had it forever washes. Softer-than-soft fabrics. In a nutshell, we make clothes that make you feel good and look good.\n“The American Eagle brand stands for optimism and individual self-expression. Inspiring good and welcoming all have always been fundamental to our mission and are the guiding principles for how we care for our customers and associates.”\n## JAY SCHOTTENSTEIN\nExecutive Chairman of the Board & Chief Executive Officer\nWe support causes that stand for youth empowerment, voter participation, mental health, education, inclusivity and our planet.\n## 5 billion\ngallons of water saved by sourcing cotton with better farming practices through Better Cotton", "chunk_word_count": 466, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > A COMPANY LED BY PURPOSE", "document_id": "AEO 2022 ESG Report", "page": 9, "page_start": 9, "page_end": 12 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 5, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## 2023 REPREVE® Champion of Sustainability Newcomer Award for $\\cos +$ million plastic bottles transformed into new product\n### Power. Positivity. No retouching. We are #AerieREAL.\nAerie is more than a brand. It’s a movement. Focused on all comfy everything, Aerie offers the softest, most feel good collections of intimates, cozy apparel, swim and activewear. With the #AerieReal movement, we celebrate our community by advocating for body positivity and the empowerment of women.\n“Nearly 10 years ago we changed the industry forever with the introduction of #AerieReal, a movement celebrating real women, unretouched beauty and body positivity. Empowering women, building confidence and fostering inclusivity is at the heart of inspiring our community to love their real selves.”\nJENNIFER FOYLE President, Executive Creative Director - AE & Aerie\n## OFFLINE\nby Aerie\n### Inspired by Aerie’s core values with an added emphasis on wellness.\nWe champion women’s health and wellness, empowerment, inclusivity and sustainability.\nOFFL/NE by Aerie is a brand extension of activewear and accessories built for real movement and designed for real comfort. These are pieces that help you sweat it and forget it because leggings and sports bras should feel amazing every way that you chill, play or move. Made with sustainable fabrics when we can—we believe good for the planet is good for you.\n78% of Aerie apparel\n## 21 million plastic bottles repurposed into recycled polyester\nRanked #15 on Forbes’ list of Best Brands for Social Impact\n## TODD SNYDER NEW YORK\n### The Ultimate Menswear Destination.\nTodd Snyder is a premium menswear brand informed by heritage, yet updated for today, with an emphasis on versatility and comfort. Collections offer timeless essentials, statement pieces, custom suiting, and iconic accessories that define quintessential American style. From bespoke tailoring to innovative capsule collections—good style can be attainable and even playful. Todd Snyder stores can be found in New York City, Los Angeles, San Francisco, Boston, East Hampton, Greenwich, Manhasset, Chicago, Miami and Washington, D.C., with plans to open several additional metropolitan locations.\n“Todd Snyder redefines how modern Americans can present themselves to the world in stylish, unexpected ways. Being stylish today is about more than looking good; it’s about doing what’s right. That’s why we choose to support causes that promote acceptance and equality through direct, meaningful action.”", "chunk_word_count": 384, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > 2023 REPREVE® Champion of Sustainability Newcomer Award for $\\cos +$ million plastic bottles transformed into new product", "document_id": "AEO 2022 ESG Report", "page": 13, "page_start": 13, "page_end": 14 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 6, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## IDEA COMMITMENT\n• Establishment of the Todd Snyder IDEA Council to ensure accurate and equitable creative representation and internal opportunities for growth and development.\nTODD SNYDER Executive Vice President - Chief Brand Officer\n• $58 \\%$ of Todd Snyder associates identify as persons of color.\n\\$10,000 donation to the Sylvia Rivera Law Project\n\\$25,000 donation to One Warm Coat and in-store coat drive\nWe champion causes that stand for inclusivity, equitable access and education.\n### wnsubscribeop\n### Kind, Conscious and Free-Spirited.\nOpting for carefully selected materials and practices that give back to the world, Unsubscribed offers an assortment of pieces designed to outlive seasons and feel effortless to wear. We don’t subscribe to styles that confine or conform. We subscribe to compassion and caring for the world, making two collections each year that are crafted upon kindness, consciousness and a freedom of spirit. To us, consciously made, slow fashion is a journey—not a destination. We take pride in recycled fabrics, natural fibers, wise choices and lasting designs.\n“Unsubscribed is inspired by the world and all its beauty. We celebrate the clothes you love to hold onto. Our collections of timeless pieces are effortlessly chic, embracing responsible design and the spirit of less is more.”", "chunk_word_count": 210, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > IDEA COMMITMENT", "document_id": "AEO 2022 ESG Report", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 7, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## JENNIFER FOYLE\nPresident, Executive Creative Director - AE & Aerie\nCozy basics like tees, sweatshirts and pullovers are made in Los Angeles to support local workers.\nAll Unsubscribed swim fabrics feature either dope dyed or recycled nylon to reduce their environmental impact.\n### OUR JOURNEY TO BUILD A BETTER WORLD: $\\pmb { 2 0 + }$ YEARS OF PROGRESS\n1999\n2014\nBecame a Better Work Partner, joining hands with the International Labor Organization (ILO) and the International Finance Corporation (IFC) to improve working conditions and competitiveness in the global apparel and footwear industry\nBegan Social Compliance Audits to assess factory working conditions and ensure safe environments\nJanice Page joins Board of Directors as first female member\nBanned \nsandblasting in \njeans production to ensure safe and healthy working conditions\nFirst AEO Better World Community Day, with over 1,000 associates volunteering across communities\nAEO Foundation established to support charitable efforts and build better communities\n### #AerieREAL\ncampaign launches the body positivity movement\nJoined the Better Cotton Initiative and the Sustainable Apparel Coalition\nFirst Eagle of the Year recipient is named for leaving a lasting impact on the company in a given year\nGreenhouse Gas Emissions goals established\nFounding signatory of the Bangladesh Accord on Fire and Building Safety\nVendor Code of Conduct established to set expectations for ethical and fair working conditions\nAEO Academy online learning and development portal launches to further associate education\nWhistleblower Policy published to support strong governance principles\nEstablished first Wastewater Management Standard\nLead Independent Director appointed to support best in class governance structure\n2015\n2023\nSigned International Accord for Health and Safety in the Textile and Garment Industry\nBoard of Directors expands scope to formally include ESG oversight\nSteven A. Davis \nScholarship for \nSocial Justice \nlaunches with \na $\\$ 5$ million \ncommitment to \nadvance educational \nopportunities for \nassociates\nIntroduced Real Good label for sustainable product collection\nDeb Henretta completes the Competent Boards Global ESG Certificate and Designation Program\nIDEA Alliance created to fuel inclusion, diversity and a sense of belonging\n### Aerie Real\n### Foundation\nestablished to expand on Aerie’s history of supporting causes that promote women’s empowerment, inclusivity and sustainability\nAppointed Chief Inclusion and Diversity Officer\nDeb Henretta joins Board of Directors as third female member\nSuja Chandrasekaran joins Board of Directors as second female member\nESG Steering Committee formalized\nJoined the U.S. Cotton Trust Protocol\nSteven Davis joins Board of Directors as first Black member\nLife@AEO internal communication app launched to further strengthen transparency and engagement\nAnnual charitable giving surpassed $\\$ 15$ million\nMeasurable planet goals established across water and energy reduction, sustainable materials and recycling\nAEO signs International Accord expanding our commitment to safer & healthier working conditions\nClimate Policy published to demonstrate our commitment to the planet\nHuman Rights Policy published\n### As we focus on growing our brands and generating shareholder returns, our corporate strategy and culture are rooted in ESG initiatives.", "chunk_word_count": 486, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > JENNIFER FOYLE", "document_id": "AEO 2022 ESG Report", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 8, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## ESG OVERSIGHT GOALS\nOngoing prioritization of ESG initiatives and considerations across company strategy\n1\n“Building a Better World” guides us to improve our performance through environmental initiatives to protect our planet; social responsibility efforts to improve the lives of people; and governance practices to operate ethically and with integrity. We are committed to greater transparency, communication and standardized reporting of our progress.\n2\nContinued transparency and alignment with the most relevant and comprehensive reporting standards\n## NOMINATING, GOVERNANCE AND CORPORATE SOCIAL RESPONSIBILITY COMMITTEE\nThe work articulated in this ESG report represents a longstanding commitment and important focus to AEO. Our Committee is structured to work cross-functionally with management, bringing together critical expertise to collaboratively ensure our goals and objectives are thoughtfully developed and communicated. We strive to incorporate best practices and achieve meaningful results.\nESG Strategy\nCorporate Strategy\n### ESG OVERSIGHT & COLLABORATION: Setting Best Practices\n### Over the past several years we have formalized our ESG program with increased oversight and collaboration across the organization.\nAs a company built on inclusivity, we know that our real opportunity to build a better world is by collaborating together to make a difference. We work as a cross-functional team across multiple levels of the organization to encourage diverse input and multiple points of view on our Planet, People, Practices initiatives. We have an established Board and Committee oversight of these initiatives, as well as an internal management-led ESG Steering Committee.\n### Three Board committees provide oversight of ESG activities and measurement, each reporting quarterly to the full Board.\n### Nominating, Governance and Corporate Social Responsibility Committee\n### Compensation Committee\n### Audit Committee\nOversight of Human Capital Management Disclosures, Executive Compensation and Employee Wellbeing\nMonitors Privacy and Data Security, Anti-Corruption and Bribery, Business Ethics and Integrity, Responsible Innovation, ESG Measurement, Controls and Reporting\nReviews Environmental Impact, Culture/IDEA, Human Rights, Charitable Giving, Board Structure and Governance Issues and Public Policy\n## MATERIAL ESG TOPICS", "chunk_word_count": 326, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > ESG OVERSIGHT GOALS", "document_id": "AEO 2022 ESG Report", "page": 17, "page_start": 17, "page_end": 19 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 9, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## PRACTICES\n### Climate\n### Human Rights in the Supply Chain\n### Board Governance\n• Climate action • Energy & emissions • Biodiversity\n• Board structure & effectiveness \n• Meaningful oversight of strategy, risk management \n& ESG \n• Continuing education\n• Forced labor • Labor conditions • Gender equity • Biodiversity\n### Circularity\nOur ESG strategy is centered on driving progress across the topics that are most important to our associates, customers, partners and shareholders.\n• Circular economy • Packaging • Waste reduction\n### Human Capital Management\n• Inclusion & diversity • Health, safety & wellbeing • Fair wages • Employee engagement, development & recognition\n### Responsible Business\n• Ethical and transparent business practices • Privacy & data security • Crisis & risk management • Policies & code of conduct\n### Resource Management\n• Sustainable materials • Water stewardship • Chemicals management\nOur material ESG topics guide our commitment to building a better world. A comprehensive materiality assessment and subsequent refresh was conducted in 2022, which included executive interviews, an associate survey, analysis of customer and industry data, as well as feedback from the majority of our shareholders. We continue to identify areas of importance within our ESG topics and ongoing engagement with key investors remains a priority as we drive our initiatives forward.\n### Community Impact\n• Community engagement • Charitable giving • Women’s empowerment\n### Supply Chain Management\n• Logistics \n• Responsible buying \n• Traceability \n• Transparency\n### Consumer Trust\n• Product quality & safety • Consumption behavior • Body confidence\n## ESG RATINGS OF AEO\nAs the ESG landscape continues to evolve, we remain committed to improving transparency around our strategy and initiatives. We will continue to provide comprehensive and relevant data and disclosures to help our investors and external stakeholders track our actions and progress toward our goals.\n## PLANET\nProtecting our planet means taking bold actions within our operations and using our influence to help drive meaningful change across our industr y.\n## BUILDING A BETTER PLANET - GOALS", "chunk_word_count": 339, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > PRACTICES", "document_id": "AEO 2022 ESG Report", "page": 19, "page_start": 19, "page_end": 23 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 10, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## BUILDING A BETTER PLANET\nIn 2013, we introduced our first set of targets to reduce greenhouse gas emissions within company owned operations, setting AEO on a path to build a more sustainable business. Since then, we’ve made important progress on the goals we set for ourselves. In return, we have expanded the scope to include indirect emissions from the inputs and manufacturing of our products, as well as water stewardship.\nFor more than a decade, Michelle Tarry has led sustainability efforts at AEO, creating positive action. She spearheaded the development of AEO’s corporate sustainability goals focused on water, energy and waste reduction and the use of more sustainable raw materials. Michelle has been instrumental to the progress we are making to meet and exceed a number of our planet goals. Her industry partnerships and thought leadership are also making a positive impact across the retail industry. She and her team oversee the relationship with AEO’s factory partners, ensuring\nWe’re proud of the progress we’ve made; however, we recognize that there is more work to do on our sustainability journey. We’re confident that we will continue to make strong progress toward our goals, working with our suppliers, customers and partners to lessen the environmental footprint of our industry.\nthey meet all requirements for working standards and safety, while moving practices forward to promote women’s equity and give workers a voice.\nMichelle serves as a board member of the U.S. Cotton Board and participates in a number of industry initiatives including the Sustainable Apparel Coalition, Textile Exchange, Better Cotton, Better Work, United Nations Convention on Climate Change, RE100, Science Based Targets Initiative, and International Accord for Health and Safety in the Textile and Garment Industry. In 2022, Michelle was elected as the U.S. Buyer Representative for the Better Work Advisory Council.\n“It’s been incredibly gratifying that AEO prioritizes meaningful change across the industry and is passionate about building a better planet. I love that our products make you feel good, and that we are furthering the ways in which our production has the least amount of impact on the environment. I’m proud of the team and our ongoing efforts to develop practices that are positively influencing the people and communities where our products are made.”\nMICHELLE TARRY Vice President - Responsible Sourcing & Sustainability\n## CONTINUING OUR WATER LEADERSHIP\nIn 2022, we surpassed several of our initial water reduction and recycling goals, allowing us to set more ambitious targets.\nWater is a precious global resource and we are on a continuous journey to reduce the amount of water used to create our products. The manufacturing of jeans is a water-intensive process and we are committed to improving efficiency and ensuring our factory partners are equally as dedicated to water conservation.\n## 2022 PROGRESS\nReduced freshwater intensity by• $3 8 \\%$ since 2017.\nRecycled $64 \\%$ of water in denim laundries in 2022, exceeding our goal of $50 \\%$ recycled water by 2023.", "chunk_word_count": 496, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > BUILDING A BETTER PLANET", "document_id": "AEO 2022 ESG Report", "page": 24, "page_start": 24, "page_end": 25 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 11, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## WATER LEADERSHIP PROGRAM\nAEO has made strong commitments to reduce the amount of water used to make our jeans, and we have worked tirelessly over the past years to implement new practices together with our suppliers. Key to this has been our Water Leadership Program (WLP), which focuses on water reduction management, proper wastewater and chemical management and water recycling.\n• $100 \\%$ of eligible jean laundries now recycle water back into production.\nThis unique approach goes beyond our own company into the supply chain to effect change. While we set a long-term goal in line with our corporate sustainability goal, we also set clear, incremental targets for our suppliers for each year of the program. Our intention was to improve water use across our suppliers and change the industry, one step at a time.\n## 4 billion gallons of water saved by jeans factories • in total since 2017.\n## 13 gallons of water reduced per AE jean, on average compared to 2017.\nOur WLP is the basis for our Real Good qualifications for jeans and woven bottoms. All jeans and garment-dyed woven bottoms made in factories and mills that meet our standards, and that are made using a majority of preferred fibers, qualify as Real Good.\n## 9 million gallons of water recycled at laundries in 2022.\n## FACTORY SPOTLIGHT: WORLD EASY\nThe Water Leadership Program is driving real impact in AEO’s supplier base. Since the launch of the WLP in 2017, AEO has worked with the World Easy factory in China. With a clear roadmap and protocol to follow, World Easy identified areas to focus on and an investment plan was developed to elevate factory practices to reach WLP requirements. The factory has invested $\\$ 1.5$ million to upgrade their wastewater treatment system, convert to a natural gas boiler, modernize laundry machinery, and incorporate green chemistry. World Easy is now aligned with the highest requirements of WLP.\n[IMAGE CAPTION] WATER USED PER ONE PAIR OF AE JEANS BY WORLD EASY\n## EXPANDING COMMUNITY WATER ACCESS\n“What began as a small idea to support those in need of clean drinking water has become an annual giving campaign for AEO associates and for our vendor partners. It has been an eye-opening experience to understand the difficulties some communities have accessing water and to realize the profound, life-changing impact we make together with every project we sponsor.”\nThe Production and Sourcing team began an annual campaign with The Water Project in 2017 to bring water to those in need. Since then, we have funded a total of 17 separate projects in Sub-Saharan Africa. With the funds raised, we have sponsored well-drilling and rainwater catchment systems that provide clean drinking water to communities in need, greatly improving the lives of many women and children.\nSINDI RUSIECKI Vice President – Production, American Eagle\nThe 2022 campaign raised over $\\$ 58,000$ which will be used to construct wells to provide drinking water to 20 villages in rural Pakistan.\n## OUR JEANS STORY\nJeans are a staple in closets across the world, but do you know what it takes to create the pair of jeans? From fields of cotton to mills and laundries, all of our jeans are made with incredible care.", "chunk_word_count": 544, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > WATER LEADERSHIP PROGRAM", "document_id": "AEO 2022 ESG Report", "page": 25, "page_start": 25, "page_end": 27 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 12, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## RAW MATERIALS\nCotton, the material that becomes denim, has countless benefits in a pair of jeans. Not only does cotton make them breathable and durable, it helps to create the iconic look we love. Our jeans start with sustainably sourced cotton or recycled cotton from jean scraps, saving water from the start.\n## MILLS\nOnce cotton is sourced for a pair of jeans, it’s sent to mills to make yarns, and then fabrics for dying and processing. AEO ensures that cotton for our jeans is dyed using less water-intensive and lower-carbon methods.\n## WASH\nOur washing team continues to engage in collaborative efforts with our factory and supply chain partners to modernize their machinery and digitize their operations to help reduce processing time and enhance efficiencies. We use smart foam for desizing, bleaching, softening and other washing processes, which can save more than $80 \\%$ of water consumption.\n## THE JEANS REDESIGN\n## LAUNDRIES\nBefore jeans can be sold, they must be laundered—this process is similar to at-home washing, but on a much larger scale. From 2017 to 2022, freshwater intensity decreased by $44 \\%$ at our denim laundries, and $100 \\%$ of eligible laundries are recycling water back into production.\n### Ellen MacArthur Foundation Jeans Redesign Project\nSince launching $\\mathsf { A E } \\times$ The Jeans Redesign Collection in 2021, we’ve created 100,000 pairs of jeans with $94 \\%$ organic cotton, $6 \\%$ recycled cotton, limited and easily removable trim and specialized washes and treatments. This collection was designed using some of the industry’s most progressive guidelines based on the principles of a circular economy, created by the Ellen MacArthur Foundation and over 80 industry experts. The collection places a strong emphasis on durability, recyclability, material health and traceability.\nTRIMS\nTrims are some of the most important parts of our jeans. Without them we wouldn’t be able to button or zip up our pants. Our jeans are fitted with trims made from recycled fabric, thread, poly and low-impact hardware.\nEND OF LIFE\nLong after we’ve created our jeans, they reach the end of their wearable lives. Since we first partnered with Cotton’s Blue Jeans Go Green, nearly 600,000 pairs of well-loved jeans have been recycled into new pairs.\n## INCREASING SUSTAINABLE RAW MATERIALS\nWe are working to increase the use of sustainable raw materials in our products while striving to eliminate materials sourced from endangered forests. Cotton, polyester, nylon and man-made cellulosic fibers (MMCFs) make up $8 9 \\%$ by weight of the materials used in our products, with cotton alone representing $6 1 \\%$ of our total materials usage. To guide our process, we reference the Textile Exchange Preferred Fiber and Material Matrix when determining our preferred fibers and criteria to meet the requirements for our Real Good designation.", "chunk_word_count": 468, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > RAW MATERIALS", "document_id": "AEO 2022 ESG Report", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 13, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## RECYCLED SYNTHETICS\nRecycled options replace the use of conventional fibers like nylon and polyester. AEO’s goal is to increase the use of recycled content in our assortment to prevent valuable materials from entering landfill.\nAEO uses the following programs for recycled synthetic fibers:\nUnifi’s REPREVE fiber is made using recycled bottles. A tracer is added to the fiber to allow for testing and verification.\nFor American Eagle’s use of REPREVE fibers in 2022 ( $^ { 2 5 + }$ million plastic bottles), Unifi awarded the company with the Champions of Sustainability Newcomer Award.\n### Textile Exchange\nThe Recycled Claim Standard (RCS) is an international standard, which sets requirements to track recycled raw materials through the supply chain by using a chain of custody requirements of the Content Claim Standard (CCS).\nThe Global Recycle Standard (GRS) is an international, voluntary, full product standard that sets requirements for third-party certification of recycled content, chain of custody, social and environmental practices and chemical restrictions.\n## FIRSTE\nWe work with the First Mile initiative to use recycled polyester made from responsibly collected bottles from Taiwan. This program supports income generation for people around the world and keeps plastic waste out of landfills and oceans. Verification for First Mile’s supply chain is done through the GRS process. Through this initiative, Aerie recycled 8.8 million plastic bottles into products in 2022.\n## EXPANDING REAL GOOD\n## HOW REAL GOOD SHOWS UP IN OUR PRODUCTS\n### Aerie Real Chill Bra\nLaunched in spring 2022, the Aerie Real Chill bra was the first Real Good cotton bra. It features recycled components like hook-and-eye closure and elastic straps made from recycled materials. The purchase of this bra also supports the Better Cotton Initiative, which promotes more sustainable cotton farming practices.\n### OFFL/NE Hugger Fabrication\nRelaunched in 2022, OFFL/NE’s hugger collection now meets Real Good standards. We use polyester active fabric, made with First Mile’s recycled yarns.\nThe “Real Good” badge was developed in 2020 to identify AE and Aerie products made with less environmental impact than conventional methods. AEO has developed the Real Good program as a label that covers a broad range of sustainability efforts used in the production of fibers, fabrics and finished goods.\nTo qualify as Real Good, a product must be made with majority sustainable fibers. We reference the Textile Exchange’s Preferred Fiber Materials & Materials Matrix (PFMM). Additionally, American Eagle’s Real Good jeans are manufactured in factories and fabric mills that meet our expectations for AEO’s Water Leadership Program (more information on page 25).\n### AE Heritage Fleece\nIntroduced in 2022, AE’s Heritage Fleece is an improved, heavier-weight fabric used across women’s tops and bottoms. Heritage Fleece products are created using Better Cotton sourced cotton, providing a super-soft handfeel and a brushed back for extra coziness.\nWe aim to continually raise the bar for garments labeled with our Real Good tag. From regular evaluation of our materials to supply chain improvements, our commitment to sustainable materials is driving real results for the planet. We are also proud of the increased number of Real Good products across our brands and collections.", "chunk_word_count": 523, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > RECYCLED SYNTHETICS", "document_id": "AEO 2022 ESG Report", "page": 28, "page_start": 28, "page_end": 29 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 14, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## BREAKDOWN BY MATERIAL\n### Closed Loop MMCF\nClosed-loop MMCF production refers to a manufacturing process for cellulosic fibers, such as rayon, viscose, modal, or lyocell, where the chemicals used in the production are captured, recycled and reused. This approach aims to minimize the environmental impact of producing these fibers by reducing the consumption of chemicals and water, as well as mitigating pollution.\n[IMAGE CAPTION] PROGRESS IN THE USE OF MORE SUSTAINABLE RAW MATERIALS\nThe closed-loop approach aligns with AEO Real Good criteria by promoting resource efficiency, reducing chemical pollution, and minimizing the overall environmental footprint of the fiber manufacturing process.\nAEO’s Real Good Program aligns with the Canopy-Style initiative by including MMCF which are both traceable and from a Closed-looped Green Shirt rated man-made cellulosic fibers, offering customers more sustainable choices in their fashion options.\nMan-made cellulosics\n### canopy\nThe world’s Ancient and Endangered Forests are irreplaceable. We work with the CanopyStyle initiative to eliminate the use of these fiber sources from our clothing - expanding our innovative solutions for viscose and rayon.\n### Polyester\nIn 2022, $2 5 \\%$ of all polyester used in our production was recycled. This is the equivalent to saving 174 million plastic bottles.\nThe CanopyStyle initiative’s Green Shirt ratings serve as an assessment tool for the fashion industry’s man-made cellulosic fiber sourcing practices. The key criteria emphasizes traceability and transparency specifically on forest impacts, including the commitment to eliminate the use of Ancient and Endangered Forests in viscose and other cellulosic fabrics. The criteria additionally focus on innovation of new alternative fibers to reduce impacts of chemical use and improve wastewater requirements.\n### Animal Welfare\nAt AEO, we respect the lives of animals. \nSee our Animal Welfare Policy to learn more.\n### Recycled Cotton\n### Cotton\nRecycled cotton is the repurposing of post-industrial or post-consumer cotton waste, such as discarded garments or fabric scraps, into new textile products, helping to promote circularity in the fashion industry and conserve resources.\n### better cotton\nSince 2014, we’ve partnered with Better Cotton to support more sustainable cotton farming practices, working toward a more climate-resistant and responsible industry. Through its implementing partners, Better Cotton trains farmers to use holistic approaches, which promote better growing processes through careful use of water, chemical fertilizers and pesticides. Better Cotton relies on a mass balance system, which means that Better Cotton and conventional cotton may be combined during the supply chain after the cotton is sent to a yarn spinner. As such, Better Cotton cannot be phsycially traced to end products; however, Better Cotton Farmers benefit from the demand for Better Cotton in equivalent volumes to those they “source”.\nRecycled cotton undergoes a series of sorting, cleaning and processing steps to remove impurities and transform it into usable fiber. For recycled products to be labeled as Real Good, manufacturers must be compliant with the third-party programs GRS or RCS.\n### Organic Cotton\nOrganic cotton restricts the use of synthetic chemicals and genetically modified seeds while promoting natural ways to control pesticides. For an organic product to be labeled as Real Good, manufacturers must be compliant with the third-party programs: The Organic Content Standard (OCS) or the Global Organic Textile Standard (GOTS).", "chunk_word_count": 535, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > BREAKDOWN BY MATERIAL", "document_id": "AEO 2022 ESG Report", "page": 30, "page_start": 30, "page_end": 31 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 15, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## U.S. COTTON TRUST PROTOCOL?\nThe U.S. Cotton Trust Protocol (Trust Protocol) is a sustainability program for U.S. cotton that provides a data-driven and verified approach to measuring sustainability performance in addition to article-level supply chain transparency. It aims to improve the environmental, social and economic sustainability of U.S. cotton production.\n$\\bullet$ We set a goal for $100 \\%$ sustainable cotton by 2023 and in 2022, increased our total to $62 \\%$ of total cotton, up from $15 \\%$ in 2019.\nOCS audits each step of the supply chain from farm to final product to verify the presence and amount of organic material. GOTS was developed by leading standard setters to define world-wide recognized requirements for organic textiles to provide a credible assurance to consumers.\nThis means, in 2022, an estimated 5.5 billion • gallons of water were saved and an estimated 29,333 lbs of pesticides were avoided thanks to our sourcing of Better Cotton.\nAEO signed on as a member of the Trust Protocol in 2022, and we are excited to begin to scale this program across our cotton products.\n## OUR APPROACH TO CHEMICAL MANAGEMENT\nAEO is committed to reducing the use and impact of harmful substances in our global supply chain. We maintain a Product Restricted Substance List (RSL), which is a dynamic document that is updated semi-annually informed by changes in global legislation and corporate requirements. Our Corporate Vendor Manual requires suppliers to comply with, and abide by, our RSL, and we validate compliance with regular audits. We work closely with a third-party accredited lab for expert regulatory advice and updates. We also monitor high-risk chemicals of concern in the industry with a third-party accredited lab, industry groups such as AAFA, AFIRM Group and RILA, and monitor Prop 65 notices in California.\nIn early 2022, we made the decision to ban the use of Poly- and Perfluorinated Alkyl Substances (PFAS), a chemical that creates a waterproof coating on apparel, in our products. PFAS was added to our RSL as a “prohibited” substance, and we have committed that there is no PFAS intentionally added to any AEO products.\nWe reference the Zero Discharge of Hazardous Chemicals (ZDHC) Manufacturing Restricted Substance List (MRSL) to guide manufacturers on acceptable chemicals. In 2022, AEO denim laundries and denim fabric mills used at least $90 \\%$ and $70 \\% ,$ respectively, of their chemical formulations with MRSL compliance certificates in the production process. We plan to keep increasing the certificate rate of chemicals used by our suppliers in the future.", "chunk_word_count": 424, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > U.S. COTTON TRUST PROTOCOL?", "document_id": "AEO 2022 ESG Report", "page": 31, "page_start": 31, "page_end": 32 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 16, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## CLIMATE: REDUCING ENERGY & EMISSIONS\nEnergy efficiency and renewable energy are central components in AEO’s journey to reduce our greenhouse gas (GHG) emissions and reach our climate goals. We have followed the GHG Protocol and Reporting Standard for calculating our emissions and the Science Based Target Initiative guidelines for setting targets. AEO is working to reduce Scope 1 and 2 greenhouse gas emissions by $80 \\%$ by 2030, and reduce scope 3 GHG emissions from purchased goods, services and capital goods by $40 \\%$ by 2030 and $60 \\%$ by 2040.\nAs we make progress toward our ambitious goals, we are setting our sights on net-zero emissions no later than 2050. To help us get there, we are proud to share that we have joined the RE100 initiative and set a goal to source $100 \\%$ of our electricity from renewable sources for our owned and operated facilities.\n## TCFD TASK FORCE ON CLIMATE-RELATED FINANCIALDISCLOSURES\nAEO understands that climate risks are impacting our business, and that our operations have an impact on the environment. The TCFD framework helps our stakeholders understand these risks and ensure we are mitigating as best we can. You can find our TCFD index located in the Appendix of the report.\nIn 2022, AEO received a B score from CDP in the climate category. Companies are scored on an A to F scale across environmental topics and risks, and ways companies are taking actions and implementing policies and strategies to address these issues.\n## OUR EMISSIONS REDUCTION PROGRESS\n## SCOPE 1 & 2", "chunk_word_count": 263, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > CLIMATE: REDUCING ENERGY & EMISSIONS", "document_id": "AEO 2022 ESG Report", "page": 33, "page_start": 33, "page_end": 33 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 17, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## SCOPE 3\nIt’s going to take continued, hard work to reach our Scope 1 and • 2 emissions goals. On our journey to $100 \\%$ renewable energy in our operations, we continue to source renewable energy for our offices, distribution centers and stores in Pennsylvania, Ohio, New York, Texas, Connecticut, Illinois, Massachusetts, Maryland and New Jersey, covering $23 \\%$ of our operation in 2022. This is down from $2 5 \\%$ in 2021, driven by store growth and the addition of Quiet Platforms, a new fullfillment and logistics subsidiary of national delivery services. We are focused on driving continued further improvement in our emissions outputs in the coming years.\nWe recognize that indirect emissions, Scope 3, represent a majority of our GHG footprint. Of these, we elected to focus on our manufacturing supply chain, Category 1—Purchased Goods and Services (PG&S) and Category 2— Capital Goods (which make up $8 5 \\%$ of our scope 3 emissions) for our SBTI verified goal. PG&S includes emissions from the production of raw materials, manufacturing of our product, and corporate spend on goods and services.\nOverall, PG&S emissions did increase; however, this was led by an increase in capital investments and not product or manufacturing emissions.\nProduct manufacturing emissions decreased• $9 , 0 0 0 \\ M \\mathrm { T C O } _ { _ 2 } \\mathrm { e } \\left( 0 . 8 \\% \\right)$ in 2022. Overall material emissions decreased• $3 \\%$ due to the increase in adoption of sustainable materials (recycled polyester and recycled nylon).\nIn 2022, we saw a• $10 \\%$ decrease in the average energy intensity per square footage across our facility types.\nAdditionally, in 2022 we completed upgrades to our Energy Management System (EMS) in 258 stores to ensure lights and heating and cooling systems are off when stores are empty. The Ottawa distribution center and all new retail stores have transitioned to LED lighting, which now covers $9 9 \\%$ of total lighting used in stores, helping to minimize energy.\nWhile we do not have direct control over our vendors and service providers, we recognize the importance of reducing our impact and will continue to look for ways to work with our supply chain.\nWhile not part of our SBTi goal, we continue to measure and carefully review emissions from Category 4—Upstream Transportation (from factory to distribution center) and Distribution, and Category 9—Downstream Transportation and Distribution (from distribution center to retail or customer).\nDue to the acquisition of Quiet Platforms, we saw a reduction in miles driven from distribution centers to final destinations, which helped reduce downstream transportation $6 \\%$ . \nOverall in 2022, we saw a $60 \\%$ decline in transportation emissions, well below baseline levels. \nUpstream transportation emissions decreased $6 1 \\%$ due to 1) the decrease in air travel from vendor to transloader, and 2) a decrease in average distance from vendor to transloader due to the addition of U.S.-based transloader facilities.\n### What’s next for 2023\nThere’s still more to do to reach our GHG targets and in 2023, we’re continuing our conversion to green energy suppliers where feasible. We’re also exploring investments into Virtual Purchasing Power Agreements and engaging with mall landlords and shipping companies about opportunities for improvement across our stores and logistics.", "chunk_word_count": 550, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > SCOPE 3", "document_id": "AEO 2022 ESG Report", "page": 34, "page_start": 34, "page_end": 34 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 18, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## CLIMATE: PARTNERSHIPS & PROGRAMS\n### apparel impact institute\n### AEO Carbon Leadership Program\nIn 2021, AEO launched our Carbon Leadership Program (CLP) for strategic factories that represent approximately $80 \\%$ of our procurement volume to encourage suppliers to develop their own GHG inventory, commit to reduction targets, and develop long-term climate-mitigation plans. Strategic suppliers are required to develop carbon inventory for Scope 1 and 2 and demonstrate that they have set energy and carbon reduction targets and implementation plans via the Higg FEM platform.\nSince 2021, we have partnered with Apparel Impact Institute (Aii) to implement factory improvement programs, including Carbon Tech Assessment consultations, to identify opportunities for energy. In 2022, we nominated an additional 60 factories and mills to join the program. On average, the facilities have around $20 \\%$ carbon reduction opportunities by 2023.\nBy 2023, we are expecting our suppliers to set a $40 \\%$ carbon reduction target by 2030, using 2018 as baseline year.\nAdditionally, we nominated our suppliers to join Aii Carbon Leadership Project to conduct a more in-depth onsite and offsite assessment by engineering experts in the industry and helping suppliers set carbon reduction targets with a detailed action plan. In 2022, we have sent three laundries and mills to join the Project and will continue to nominate suppliers to join this Project.\nStrategic suppliers are also required to complete the Climate Action Training, which is designed to help brands and manufacturers to meet the goals of the UN Fashion Industry Charter for Climate Action. As an introductory training, it aims to get suppliers started in achieving science-based reduction targets by 2030 and net zero emissions by 2050. The training is developed by a collaboration of brands (including AEO), manufacturers, UNFCCC and GIZ.\n### Coal Phase-Out\nAcknowledging the impact of coal use on the environment and our emissions, we have committed not to accept any new factories into the AEO supply chain who use coal-fired boilers after 2025. We are working with our existing factory base to phase out coal-fired boilers entirely by 2030.\n## WASTE REDUCTION\nWe’ve made strong progress in 2022 in our work to minimize and mitigate waste across our operations.\n## GARMENT RECYCLING\n## 2022 PROGRESS\nFree The Girls provides holistic reintegration services for women who are human trafficking survivors. As part of their programs, the organization collects new and used bras to serve as inventory in small businesses run by survivors. Since 2018, Aerie has collected over 71,000 bras and helped to connect customers with this important work through discounts and promotions encouraging bra donations.\n$100 \\%$ of on-product marketing (hang tags, price tags and accessory packaging) used Forest Stewardship Council (FSC) paper.\n$100 \\%$ of paper for in-store marketing (shopping bags, gift cards, marketing signage) used preferred paper sources.\n• $100 \\%$ of product tags (printed poly tags, woven labels, accessory packaging) were made from recycled plastic.", "chunk_word_count": 485, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > CLIMATE: PARTNERSHIPS & PROGRAMS", "document_id": "AEO 2022 ESG Report", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 19, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## BLUEJEANS GOGREEN\nAll vendor sourced polybags required to be • made from $100 \\%$ recycled content.\nWe work with Cotton’s Blue Jeans Go GreenTM program to recycle old jeans into new products like insulation and sustainable packaging. In 2022, we recycled more than 30,000 pairs of jeans, bringing our total contributions to over 600,000 pieces of denim since 2014. To incentivize the program, AEO loyalty customers who recycle their jeans receive a coupon for $\\$ 10$ off a new pair of jeans.\nGive Back Box, a mailin donation program, allows AEO customers to use any box, download a free shipping label, and send in old jeans and other clothes to be recycled. Once the clothes reach Give Back Box, they are sorted for resale or reuse. In 2022, our customers donated more than 4,000 pounds of clothing.\nA program of the New York Design Office, Fab Scrap collects and recycles leftover fabrics and samples. Since 2019, we’ve donated 30,632 pounds of fabric.\nAll plastic mailers contain more than $50 \\%$ recycled content and thinner material for less overall plastic use.\n### Minimizing Waste in New Stores\nSince recycling rules and regulations vary across the U.S., we’ve created a special program to make waste reduction of hard-to-recycle soft plastics easier when a new American Eagle, Aerie or OFFL/NE store opens. In the first year, more than 2,875 pounds of plastic have been eliminated from landfills!\n## PEOPLE\nWe show up for our associates, customers and communities and take positive ac tion to uplif t our people and champion causes that are impor tant to them.\n## OUR VALUES\nOur values are the cornerstone of our culture and heritage.\n“We believe in a collective sense of belonging and foster a culture of accountability. In 2022 we made intentional changes within our core values to reflect our commitment to Planet, People and Practices—empowering our teams to find solutions, take meaningful action and build a better world.”\nIn 2022, we refreshed our values to ensure they are purposefully aligned with our initiatives around Planet, People and Practices.\n### People\nWe believe Inclusion, Diversity, Equity and Access are the foundation to our REAL culture. We empower our associates so that they can achieve exceptional results for the business, for our customers and our communities.\nMARISA BALDWIN Executive Vice President, Chief Human Resources Officer\n### Innovation\n### Integrity\nWe are curious and change-oriented, constantly looking for ways to improve ourselves, the business and our planet. We make decisions in the face of ambiguity and take calculated risks in order to better serve our customers and communities, and protect our planet.\nWe are honest and authentic. Even in the face of difficulty, we maintain the highest ethical standards. We care deeply about people and our planet, and keep them at the center of every decision.\n### Teamwork\n### Passion\nWe celebrate when goals are achieved. We are collaborative and inspire others to deliver against business objectives. We come together to support the community and causes we believe in.\nWe are excited about the company direction and our future. We relentlessly pursue solutions to challenges and issues with a positive outlook.", "chunk_word_count": 529, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > BLUEJEANS GOGREEN", "document_id": "AEO 2022 ESG Report", "page": 36, "page_start": 36, "page_end": 40 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 20, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## OUR CULTURE\nRooted in excellence, teamwork and passion.\nCaring for our people and fostering a culture of respect, recognition and empowerment has been in our DNA since 1977.\nTogether, we play a pivotal role in fostering an environment where everyone feels seen and celebrated while we continue to grow as a community that promotes individuality and difference. To achieve this, we are consistently:\n• Listening to our associates, customers and candidates. Our doors are always open. We listen to our associates’ direct feedback through on-boarding surveys, culture surveys, exit surveys, Glassdoor reporting, LinkedIn responses and hotline reporting. We encourage transparency in day-to-day engagement, while also periodically facilitating company-wide town halls and roundtables to facilitate broader discussions.\n• Observing who we are and what our associates are doing. We study our demographic data and retention rates.\n• Supporting a positive company culture. Our strategies and processes promote AEO’s strong values while addressing leadership development opportunities, work-life integration, wellbeing initiatives, fair pay initiatives, family support and inclusion, diversity, equity and access programs.\n## CULTURE SURVEY ENHANCEMENTS\nOver the last five years we’ve expanded our global culture survey to include all associates across stores, distribution centers and corporate. This has grown our ability to listen directly to our population of approximately 40,000 people, tailoring the survey approach to best support meaningful action. In 2022, we heard from more than 27,000 associates, representing over two thirds of our total population.\n• Informing and clearly communicating our values. We pride ourselves on modeling the behaviors we expect and providing training, as well as constructive feedback.\n### A 360º APPROACH TO SUPPORTING OUR PEOPLE\n### Our Total Rewards Approach\nWe support our associates through competitive compensation and access to resources that enhance their lifestyles. We pay our associates fairly and equitably, and reward them for delivering results, through straightforward compensation programs composed of four key elements: competitive base pay rates, performance-based incentive bonuses, annual stock awards and extensive benefits that range from medical, dental, and vision plan offerings to gym/online fitness discounts, student loan debt management programs and mental health benefits.\nOur compensation and benefits programs are designed to attract and retain highly skilled and performance-oriented associates. We actively evaluate our programs to enhance our offerings to meet the evolving needs of our workforce.\nIn 2022, we introduced Be Well@AEO—a holistic approach to wellbeing that encompasses a wide range of benefits, tools and resources that support the physical, emotional, social and financial needs of our associates.\n### Health & Safety\n### Be Well Health $^ +$ Medical\nCreating a healthy, safe and secure environment for our associates and customers is a top priority. In addition to offering non-acute medical services at four health centers located in two of our corporate offices and two distribution centers, AEO’s Health and Safety Management Program focuses on accident prevention, training and response.\nNew hires are eligible for benefits on day one.\n### Be Well Mental + Behavioral\nAdditional time off is available through Care Days to support our associates with balance, mental wellbeing and recharging their battery.", "chunk_word_count": 513, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > OUR CULTURE", "document_id": "AEO 2022 ESG Report", "page": 41, "page_start": 41, "page_end": 42 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 21, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## SAFEST PLACE TO WORK & SHOP\nWe work hard to provide a safe environment for associates and customers, offering courses to inform, educate and empower our teams on the actions to take during an emergency. These resources are made available on mobile devices to ensure associates always have guidance when they need it most.\n### Be Well Financial $^ +$ Retirement\nThrough a partnership with Candidly, a student debt solutions program, we help associates move beyond their debt. AEO has contributed more than $\\$ 200,000$ toward the repayment of associates’ student loans.\n• Asset Protection Classes & Workshops: Dedicated to personal safety, active shooter and situational awareness.\n• AEO’s Safest Place App: Includes step-by-step outlines for multiple safety and security protocols, including workplace violence.\n### Be Well Parenting + Caregiving\nOur Paid Parental Leave Policy was significantly enhanced and we introduced a new Paid Caregiver Leave Policy, to give associates the time they need to care for their families at every stage of life.\n• Ready: U.S. Government readiness resources for a multitude of situations related to disasters and emergencies.\n## REAL OPPORTUNITIES\nEmpowering Our People to Achieve Their Fullest Potential\nWe provide associates – at every level – the chance to plan, discover and explore. This is key to our individual and collective success, now and in the future.\n## AEO NEXT\nWe empower our associates to discover what is NEXT for them through performance and development planning, helping to guide their career journey.\nOur consistent talent reviews, performance evaluations, equitable pay practices and succession planning in 2022 contributed to:\n• A full-time voluntary turnover rate, including our store associates, of approximately $30 \\%$ (consistent with our retail peer group and compares to a $2 5 \\%$ five-year company average). • A full-time promotion rate of approximately $28 \\%$ (compares to a $23 \\%$ five-year company average).\n### Close Knit Mentorship Program", "chunk_word_count": 319, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > SAFEST PLACE TO WORK & SHOP", "document_id": "AEO 2022 ESG Report", "page": 42, "page_start": 42, "page_end": 43 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 22, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## ACADEMY\nThis program is inspired by the notion that we all have something valuable to teach and to learn from others. Associates from different departments, levels, and experience are paired up to form new, enriching relationships across the business. Our goal is to foster an inclusive culture with diverse perspectives to ensure our people thrive at AEO and beyond.\nThrough our industry-leading learning module, associates can access thousands of courses to hone their skills or explore new ones. Associates completed more than 1 million AEO Academy learning modules in 2022, and over 3 million modules since 2019.\nThe Leadership Development Series and Emerging Leaders programs are designed to teach and promote leadership skills through workshops and cohort learning.\n### Personal Retail Enrichment Program (PREP)\nConnects associates to college students from underrepresented groups within retail, to provide them with both professional and personal development.\n### Developing Future Retail Leaders\n### ASSOCIATE SPOTLIGHT: From Intern to Senior Vice President\nAEO provides opportunities for the best and brightest young talent to learn what it takes to design, create, market and merchandise our industry-leading brands.\nJessica Catanese began her career at AEO more than 20 years ago as an intern in Human Resources. Today, she is Senior Vice President - Total Rewards and leads the teams responsible for Compensation, Benefits, HR Information Systems and People Analytics. Development opportunities, including company-sponsored training programs and conscious exposure to various aspects of the business, helped propel Jessica’s career— making her one of the many talented and passionate female leaders at AEO.\n### Full-Time Teammate Training Program\nOur 16-week paid training and onboarding program is a post-graduate opportunity to jumpstart a career at AEO. Participants learn classroom knowledge and work firsthand with product, inventory channels and learn the business with the support from mentors. The program builds a foundational understanding of retail and supports the transition to a full-time role.\n“AEO has supported my career advancement by providing opportunities to work alongside leaders who offered trust, exposure to multiple aspects of the business and formal training programs. The encouragement to explore my interests, take risks and continuously grow has been invaluable to my professional development.”\n### Internships\nStudents within two years of graduation can apply for a 10-week paid summer opportunity. Interns work alongside a mentor to gain skills in corporate retail—all while learning directly from executives and gain key company insights.\nJESSICA CATANESE Senior Vice President - Total Rewards\n### IDEA: Inclusion, Diversity, Equity and Access\nWe remain steadfast in our commitment to building a future that integrates IDEA into everything we do.\n## INCLUSION\nAEO will provide an environment where all associates feel a sense of belonging and are able to succeed as their authentic selves.\nOur IDEA journey formally began in early 2018, well before the momentous events of 2020 forever changed our lives and deepened many organizations’ commitment to engage with their communities and foster employee belonging.", "chunk_word_count": 489, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > ACADEMY", "document_id": "AEO 2022 ESG Report", "page": 43, "page_start": 43, "page_end": 45 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 23, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## DIVERSITY\nDifference and individuality make AEO stronger, higher-performing and more innovative.\nIt is a testament to the strength of our brands and the quality of our people that AEO continues to invest in our associates, build an authentic culture and embed the principles of IDEA into every aspect of our business. There remains much work to do; however, AEO is built on a bedrock of strong values, consistently rising to the challenge and putting its people first.\n## EQUITY\nAEO is committed to fairness in policies, practices, opportunities and outcomes.\n## ACCESS\nBarriers (both physical and non-physical) should be eliminated to allow stakeholders the ability to participate in, and realize, all that AEO has to offer.\n“The foundation of IDEA that we created nearly five years ago has proven invaluable in allowing us to continue moving forward in our mission—to achieve sustainable progress in the pillars of hiring, community and development through strategic, data-driven and people-centric action.”\nTERRY ROBERTS \nVice President - Employment Law and Chief Inclusion \nand Diversity Officer\n### IDEA: Notable New Initiatives in 2022\nOriginal signatory to Open to All’s Charter to Mitigate Racial Bias in retail establishments. AEO has taken a cross-functional approach by bringing together store operations, asset protection, human resources and the IDEA team to develop L.E.A.D to nurture positive customer interactions and eliminate perceptions of profiling and bias. This new framework has been incorporated into store management training and manager onboarding.\n### AEO Associates Graduate from TALI’s Emerging Leaders Program\n[IMAGE CAPTION] Left to Right: Miguelina Javier, Tammy Mack, Terry Roberts, Shana Shields\n## LIVE OUR VALUES.\nE\n## EDUCATE YOURSELF.", "chunk_word_count": 274, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > DIVERSITY", "document_id": "AEO 2022 ESG Report", "page": 45, "page_start": 45, "page_end": 46 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 24, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## ASSUME POSITIVE INTENT.\nD DELIVER INCREDIBLE GUEST SERVICE THROUGH OUR SELLING MODEL.\nBy championing our hiring and development pillars, TALI’s Emerging Leaders Program prepares rising Black leaders for professional success and meaningful advancement in both corporate and community roles. Offering associates the opportunity to participate in the program is part of AEO’s commitment to provide resources to those in our community to achieve personal and career growth while encouraging them to find what is next for them at AEO.\nSponsorship of The Advanced Leadership Institute (TALI). Investing in the development of high-performing and high-potential associates of color through their participation in TALI’s Emerging Leaders Program.\nCapturing greater amounts of qualitative and quantitative data through our IDEA-focused survey and innovative training platform, Emtrain. These tools continue to become more accessible to larger percentages of our associate population, with the information and learnings from these tools informing our strategies.\n“The Advanced Leadership Institute is an amazing representation of the value AEO places on inclusion, diversity and professional advancement of associates. Being offered the opportunity to participate in the program enabled me to enhance my interpersonal skills, learn new concepts and identify strategies to successfully tackle challenges I may face as a new leader.”\nMIGUELINA JAVIER \nSenior Analyst - International Support, Digital Customer Service \nTALI Class of 2022/2023\n### GUIDING PRINCIPLES & PILLARS: Hiring, Community and Development\nThe foundation of IDEA was created by our associates to ensure everyone feels respected and empowered. We structure our efforts under the following pillars: hiring, community and development. Each pillar is led by subject matter experts who develop plans and facilitate action to ensure that consistent progress is made on our IDEA mission and goals.\n### Hiring\n### Community\n### Development\nBuild and fulfill the pipeline of future and emerging leaders through external hiring and internal promotion of individuals from underrepresented groups into management positions.\nAttracting top talent from underrepresented groups to diversify and strengthen our teams and senior leadership.\nEmbody inclusion in action by activating our associates to authentically engage with each other and the communities we serve.\nEnsuring hiring process is objective, \nconsistent and equitable. \nStrengthening relationships with \ncommunity organizations and Historically Black Colleges and Universities. \nIncorporating inclusive leadership \nand unconscious bias training for all \nhiring managers.\nFostering a culture of inclusion and a true • sense of belonging.\nCreating an inclusive and supportive workplace through education. Continuously improving our talent development process, performance metrics, mentorship opportunities, and people analytics.\nMaking a lasting impact in our • communities through the AEO Foundation and corporate charitable giving programs.\n### PEOPLE DATA: Five Years of Progress\n\\~3x increase of corporate associates since 2018 who identify as Black.\n20% \nincrease in total associates \nsince 2018 who \nidentify as non-Caucasian.\nVP’s who identify as women went from 43% 49% in the past 5 years.\nPopulation of women grew from $7 3 \\% + 7 9 \\%$ over the past 5 years.\n## ASSOCIATE NETWORKS & CONNECTIONS\nFostering a sense of belonging allows our associates to bring their whole authentic selves to work each day.\n### women $\\textcircled{0} \\partial \\textcircled { < } \\bigcirc$", "chunk_word_count": 521, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > ASSUME POSITIVE INTENT.", "document_id": "AEO 2022 ESG Report", "page": 46, "page_start": 46, "page_end": 49 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 25, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## OUR GROUPS\nWomen@AEO fosters an environment where women are empowered and inspired to achieve their full potential. The network provides opportunities for professional development, networking, resource sharing and support. Events are hosted to expand skills, share inspiring speakers, address unique issues that women face in their careers, families and communities, and make time to give back to our communities.\nAEO Green Team \nREAL Parents \nREAL Pride Network \nWomen@AEO \nVeteran & Military Employee \nResource Group \nREAL Black Alliance \nThe Anti-Racism Connection \nNew-ish to Pittsburgh \nAEO REAL Creators \nAEO REAL Dogs \nAEO REAL Jewish Connection \nAsian-American Pacific Islander \n(AAPI) \nMental Inclusivity & Neurodiversity \nCommunity \nAEO Newish to Golf \nAEO Readers \nAEO Cats\n## THE \nREAL PRIDE \nNETWORK\nWelcomes all LGBTQ $^ +$ associates and allies in a safe, supportive space to advocate for equality and justice in the workplace and beyond.\nMIND (Mental Inclusivity $^ +$ Neurodiveristy Connection) fosters an inclusive Neurodivergent workplace through reducing stigma and building an environment that recognizes and emphasizes each person’s individual strengths and talents while providing support for their needs.\n### CREATING IMPACT: Partnerships That Make a Difference\nWe support causes that are important to our customers through local and national charity partnerships, grantmaking, matching gifts, customer activations and in-kind donations.\n### Good36O\n## GOODS FOR THE GREATER GOOD\nTogether, AEO, the AEO Foundation and our customers contributed more than \\$10 million to causes that share our vision for building a better world.\nSince 2016, AEO, customers and our associates have provided nearly $\\$ 1.4$ million in support of disaster recovery and response programs.\nWe also supported local communities by awarding 178 grants to organizations that are paving the way for mental health, youth empowerment and education programs for teens and young adults.\n### Special Olympics\nOFFL/NE by Aerie celebrated Global Week of Inclusion by honoring Special Olympics athletes with the help of Olympic gymnast, activist and #AerieREAL Role Model, Aly Raisman.\n## SHINE ALIGHT\n## IT GETS BETTER PROJECT\nWe are united in shining a light on antisemitism in all of its forms and denouncing hatred and bigotry.\n## NEDA\nAEO is the largest sponsor of the It Gets Better Project, making a transformative commitment to uplift, empower and provide connection for LGBTQ $^ +$ youth over the last seven years.\nFeeding hope.\nAerie was the first national brand to support the National Eating Disorders Association. Together with our customers, we’ve raised $\\$ 2.1$ million to date in support of their life saving mission.\nSince 2018, AEO has supported the Anti-Defamation League’s No Place For Hate education-based program, which empowers youth in more than 1,800 schools across the country to stand up against hatred and acts of bullying.\n## (O HEADCOUNT.\nWe are working to end hunger through our partnership with Feeding America and Food Banks Canada.\nWe encourage our customers and associates to use their voice, to register to vote and participate in democracy.\n### CREATING IMPACT: Together with Our Customers\nWe create opportunities for our customers to actively participate in our shared goal of building a better world.", "chunk_word_count": 511, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > OUR GROUPS", "document_id": "AEO 2022 ESG Report", "page": 49, "page_start": 49, "page_end": 51 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 26, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## TEGTYHER\n### Establishing the Aerie Real Foundation\nIn October 2022 the Aerie Real Foundation was created to expand upon the brand’s long history of giving back. The foundation seeks to champion and empower women, foster an inclusive community and protect the planet. Since its launch, the Aerie Real Foundation has supported organizations including the National Eating Disorders Association (NEDA), Delivering Good, PERIOD., Free The Girls and Special Olympics. Community Grants were also provided to 56 organizations across the country working to encourage girls to feel strong, smart and bold; inspire equality and inclusion; and cultivate the next generation of conservation leaders.\nCreated in 2022, Future Together allowed American Eagle customers to actively participate in our shared goal of building a better future.\nCustomers were able to submit applications for a grant to help create positive change in their local communities. In total, the program awarded $\\$ 10,000$ grants to 20 organizations focused on mental health awareness, sustainability, food insecurity and education.\n## WE WANT TO FUND YOU!\nOneUpAction supports marginalized youth trying to tackle the climate crisis within their communities.\nAerie customers are encouraging their favorite nonprofit organizations to submit grant proposals for awards of up to \\$10,000. In 2022, 56 organizations received grants to support programs in our customers’ local communities that are building confidence, fostering inclusion and protecting our planet.\nurban图恩 growth\nUrban Growth promotes sustainable farming through hydroponics.\n### Exhale to Inhale\nExhale to Inhale uses the healing practices of trauma-informed yoga to empower survivors of domestic violence and sexual assault, while helping communities to develop the skills and knowledge to support them.\nRecognizing that the climate crisis is a leadership crisis, Black Girl Environmentalist (BGE) is a supportive community dedicated to empowering Black girls, women and non-binary leaders across environmental disciplines to nurture a just and livable future.\n## GIVING BACK TO OUR PEOPLE & COMMUNITIES\ngive back and roll up our sleeves to make a difference in the communities where we live and work.\n### Volunteer Recognition Program and Volunteer Time Off\n$\\mathsf { O }$ HELPING AHANDS\nAEO associates volunteered with 100+ organizations providing more than 14,000 hours of service in their communities in 2022.\nDesigned to support individual associates’ volunteer efforts by providing a $\\$ 500$ donation to the charitable organization where they perform at least 25 hours of community service per year. Additionally, AEO offers full-time associates up to 8 hours of paid volunteer time off annually.\nLaunched in 2009, this program is funded by associates to support fellow associates experiencing a severe personal tragedy. To date, Helping Hands has provided more than $\\$ 375,000$ to hundreds of associates in need.\n### AEO Better World Community Day\n## VOLUNTEER SPOTLIGHT", "chunk_word_count": 454, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > TEGTYHER", "document_id": "AEO 2022 ESG Report", "page": 51, "page_start": 51, "page_end": 52 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 27, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## AEO\nEach year, associates participate in a day dedicated to volunteering to help make our communities vibrant places to live, work and play. Since 2013, associates have logged more than 25,000 hours at this annual service project by volunteering with nonprofits around the globe.\nFor more than seven years, Michael Ashbaugh, AE District Team Leader, has spent the weekends giving back to his local community through a nonprofit that provides food, medical\n### MAY sERVICE\nIn partnership with the AEO Foundation, AE and Aerie store teams across the U.S. and Canada work with store leadership to support a nonprofit that matters most to each district by completing a service project. Since 2021, $\\$ 745,000$ has been awarded to 184 organizations.\nand financial assistance to those in need.\n## CVUNT MEIN!\n“Giving back promotes a sense of unity and togetherness, leading to the development of a more inclusive and supportive community where everyone feels valued. I hope to serve as an inspiration to my peers to get involved, take action, and create positive change that can spread beyond our local communities and contribute to building a better world.”\nSince 2015, AEO associates have personally contributed more than $\\$ 1$ million to nonprofit organizations that empower youth in local communities through this charitable payroll deduction. The tax deductible donation to the AEO Foundation supports the community grants program, funding organizations in Pittsburgh (PA), New York City (NY), Hazleton (PA), San Francisco (CA), Ottawa (KS) and Mississauga (Ontario).\n### Team of Ten\nEncourages volunteer efforts by providing a $\\$ 500$ donation to a charitable organization where at least ten AEO associates participate in a community service or fundraising project together. If 20 or more associates participate in a project, AEO will donate $\\$ 1,000$ . In 2022, more than 500 associates participated and contributed more than 1,300 hours of service.\nMICHAEL ASHBAUGH, AE District Team Leader\n### CREATING IMPACT: Advancing Educational Opportunities for Our Associates\nAEO’s Steven A. Davis Scholarship for Social Justice is a $\\$ 5$ million commitment to advance educational opportunities for associates who are actively driving anti-racism, equality and social justice initiatives. Since the launch in 2021, we have awarded nearly $\\$ 850,000$ to 45 associate scholars who share our passion for creating a more equal and inclusive society.\n“I am incredibly grateful to be a scholarship recipient. This had a tremendous impact on my college experience. It helped me recognize that I am making a difference in the world and provided the opportunity to continue making positive change.”", "chunk_word_count": 425, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > AEO", "document_id": "AEO 2022 ESG Report", "page": 52, "page_start": 52, "page_end": 53 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 28, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## JAZMINE\nAMARYLIS Steven A. Davis Scholarship for Social Justice recipient “The support I have received from AEO has made me feel incredibly valued and given me the confidence to continue working on my dream to build a more open and equitable society postgraduation.”\nSteven A. Davis Scholarship for Social Justice recipient\nAmarylis was one of the first recipients of AEO’s Steven A. Davis Scholarship for Social Justice. We were inspired by her passion for igniting change in the community and her work to educate peers on the significance of Hispanic culture and heritage.\nJazmine shares our commitment to helping end racism, discrimination and inequality. She attended University of Denver where she spent time working as a research assistant for the Josef Korbel School of International Studies Human Trafficking Center. She was also a research associate on the Literature Review Team at the Frederick Pardee Center for International Futures, where she focused on women’s development across the globe.\nAmarylis graduated from Rhode Island College with a double major in Marketing and Spanish. During her studies, she served as the President of Unidos—a diverse organization that welcomes students from all backgrounds and minority groups. As President, Amarylis organized social justice events on campus and led open discussions on topics that are important to today’s youth, such as colorism and voting. Amarylis is looking forward to furthering her efforts in the community and working in the marketing field.\nNow a graduate with a dual degree in International Studies and English, Jazmine has been working on a poetry collection that explores human rights and the climate crisis. Jazmine will pursue a master’s degree and continue her work in research at the University of Denver’s Josef Korbel School of International Studies.\n### POSITIVE ACTION ACROSS OUR SUPPLY CHAIN: Women’s Equity, Safety & Workers’ Voice\n### Human Rights in Our Supply Chain\n“I am incredibly proud of AEO’s business commitment to prioritize factories that operate with the highest responsibility and social compliance performance. We have an extremely dedicated and thorough team that is continuously evaluating our factory partners to inform our decisions. We keep an open dialogue through meetings, onsite visits and continuing education to help advance training programs and industry standards.”", "chunk_word_count": 372, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > JAZMINE", "document_id": "AEO 2022 ESG Report", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 29, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## OUR PROMISE\nAEO’s Human Rights Commitment and Code of Conduct guide how we manage and partner with external suppliers. We work closely with more than 300 manufacturing factories in over 20 countries around the world. We do not own or operate any factories, so it is important to develop trusted relationships with suppliers to responsibly make our products.\nAEO will only source from suppliers that commit to the AEO Vendor Code of Conduct, establishing foundational requirements for workplace conditions.\n### Factory Inspection, Scoring and Improvement\nWe uphold an extensive factory inspection program to monitor compliance with our Code of Conduct. All factories are rated based on an internal rating system through social compliance audits, visits by the AEO team, or other touchpoints that arise throughout the year.\nMARK ROSE Senior Vice President - Production & Sourcing\nPotential factory partners are reviewed for social compliance before they can begin production. We review and rate factories annually to reassess social compliance monitoring needs. Depending on the circumstances, factories may: receive a new audit; send in an existing audit report that is acceptable by our equivalence standards; receive customized training; or be exempt from social auditing for a given year.\n## FACTORY RATING SYSTEM\n## BLUE\n## YELLOW\n## ORANGE", "chunk_word_count": 213, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > OUR PROMISE", "document_id": "AEO 2022 ESG Report", "page": 54, "page_start": 54, "page_end": 54 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 30, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## RED\nIdentified issue is minor. A remediation plan is required and business is encouraged.\nIsolated major \nissue. \nA remediation \nplan is required, no impact on \nbusiness.\nMultiple major or critical issues. Factory is moved to probation status, future business cannot increase over past seasons.\nIdentified one or more severe issues. Factory is deactivated until issue is resolved and cannot receive any new purchase orders.\nAEO is extending Tier 1 factory monitoring policies to include deeper tiers of our supply chain, with a focus on mills, laundries, trim and labeling suppliers.\nThrough a pilot program, we have begun to conduct audits and accept audit reports for facilities beyond Tier 1 and are expanding the program to more facilities in 2023.\n### Approved factories in 2022 that received an audit or visit by our internal team or external partners:\nSince 2013, our supplier scorecard has helped to measure factory compliance and improvement, and now includes a Responsible Sourcing and Sustainability score\nAEO is dedicated to the highest level of social and environmental responsibility. Based on internationally accepted standards, our Code of Conduct includes standards pertaining to:\n• Laws and Regulations \n• Discrimination \n• Harassment and Abuse \n• Forced Labor \n• Wages and Benefits \n• Health and Safety \n• Child Labor \n• Environment \n• Hours of Work \n• Monitoring and \nTransparency \n• Integrity \n• Freedom of Association \n• Subcontracting\nFor factories identified as Orange and Red, remediation steps and timelines are customized depending on the issues and circumstances. Our policy is to work with factories to improve whenever possible; however, AEO will end its relationship with factory partners for lack of improvement or non-compliance.\nNew factories rated Blue or Yellow after a presourcing audit are approved for production. If rated Orange or Red, factories must remediate all related issues before they can start production for AEO. In 2022, $8 6 \\%$ of new factories were approved as future partners.\nA partnership between the United Nations International Labour Organization (ILO) and the International Finance Corporation (IFC), a member of the World Bank Group – Better Work brings together all levels of the global garment industry to improve working conditions and respect labor rights for workers, while boosting the competitiveness of apparel businesses. Better Work programs assess factory working conditions and compliance, and also provide training and consistent advisory support throughout the year.\n## FACTORY SPOTLIGHT: REGINA MIRACLE\nA key supplier of intimate apparel and sports bras for the Aerie and OFFL/NE brands, Regina Miracle was recognized in 2022 by Better Work as a high-performance factory due to its demonstrated achievements in compliance, and sustained self-governance. This role model company employs 32,000 people across six production hubs in Vietnam.\nAs a vital member of AEO’s Responsible Sourcing Supplier Council, Regina Miracle is a positive example for factory peers, notably developing a Performance Improvement Consultative Committee, which plays an indispensable role in its self-governance.\nAs a Better Work global partner, AEO has active collaboration at the national level in Bangladesh, Vietnam, Cambodia, Indonesia and Jordan, and we supported the expansion of the program to Pakistan in 2022. We accept the Better Work assessments instead of requiring our own audits to leverage efficiencies.", "chunk_word_count": 532, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > RED", "document_id": "AEO 2022 ESG Report", "page": 55, "page_start": 55, "page_end": 56 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 31, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## FACTORY SPOTLIGHT: REGINA MIRACLE\n### Purchasing Practices: Better Buying Institute\nAnalysis of our purchasing practices is an important aspect of our responsible sourcing strategy. In 2022, AEO partnered with the Better Buying Institute to gather insights—based on a methodology identified by academics and experts—allowing suppliers to anonymously rate the purchasing practices of their brand customers, providing scored feedback in seven categories:\nMichelle Tarry, Vice President, Responsible Sourcing and Sustainability at AEO was recently elected as the U.S. Buyer Representative for the Better Work Advisory Council.\n• Planning and Forecasting Design and Development • Cost and Cost Negotiation • Sourcing and Order Placement\n• Payment and Terms \n• Management of the Purchasing Process \nWin-Win Sustainable Partnerships\nFollowing the exercise, analysis provided by the Better Buying Institute was reviewed and opportunities for improvement were identified. AEO intends to continue this engagement in the future to analyze trends and track progress.\n### We are committed to safe working conditions, supplier relations and human rights across our supply chain.\n### Creating a culture of safety in the workplace\n### Providing protection to vulnerable worker groups\nIn 2013, AEO was a founding signatory of the Bangladesh Accord on Fire and Building Safety—an unprecedented independent, legally binding agreement to build a safer and healthier ready-made garment industry. The program is very successful in the regular monitoring of safety conditions, establishment of an employee hotline, safety committees and regular training.\nWe ensure partner factories provide a safe work environment, which includes:\n• Disclosing the steps we take to mitigate the risk of slavery and human trafficking in our supply chain through our joint California Transparency in Supply Chains Act / UK Modern Slavery Act statement since 2017. \n• Committing to the American Apparel & Footwear Industry Commitment to Responsible Recruitment to address forced labor rights for migrant workers in 2018. \n• Implementing a Forced Labor and Migrant Worker Policy to ensure protection from exploitation for migrant workers in 2019. \n• Prohibiting the manufacture of any product or the use of any raw material from the Xinjiang Uygur Autonomous Region in China, due to allegations of forced labor since 2020. \n• Formalizing and rolling out specialized approaches for assessing migrant worker or gender-based concerns in our monitoring program in 2022.\nWe subsequently signed the 2021 International Accord for Health and Safety in the Textile and Garment Industry to continue this vital work. In 2022, AEO also became a signatory to the Pakistan Accord and supports expanding to suppliers in that country.\n### Ensuring that workers’ voices are represented and respected\nWe approach factory relationships from a long-term perspective, collaborating to foster an environment in which workers feel comfortable and have the ability to raise and discuss concerns. Our goal is for all strategic suppliers to have effective grievance systems and elected worker-management committees in place.", "chunk_word_count": 473, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > FACTORY SPOTLIGHT: REGINA MIRACLE > Purchasing Practices: Better Buying Institute", "document_id": "AEO 2022 ESG Report", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 32, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## OUR PROGRESS\n2015\n2018\n2019\n2022\nIntroduced the Worker Voice Program to better understand factory workers’ perceptions and feelings.\nLaunched a project with 14 factories in China to create elected worker-management committees to monitor and oversee responses to worker concerns.\nBecame a partner of Better Work Academy to leverage efforts globally and transform the apparel industry’s approach to improving working conditions and enhancing worker wellbeing by focusing on effective worker communication and representation.\nFinalized our guide and criteria for measurement of effective grievance systems for broad use across all suppliers.\n### Investing in women workers through health, life skills and employment training RISE\n### BSR+project\n### Women in Leadership Roles\n## FACTORY SPOTLIGHT: HIRDARAMANI GROUP\nAn estimated $80 \\%$ of the workforce in the factories that make AEO products are women. Because they play such a vital role, it is incredibly important that women are represented in managerial and leadership positions.\n### Building a More Inclusive Factory Environment\nAEO continues to advance women’s empowerment, helping to increase leadership opportunities through our 10-year partnership with BSR’s HERproject and their new initiative, RISE: Reimagining Industry to Support Equality.\nHirdaramani Group’s subsidiaries, Kenpark in Bangladesh and Fashion Garments in Vietnam, actively promote women’s empowerment and local talent growth. Hirdaramani’s Wonder of Wellbeing (WOW) program is central to their success and is a core facet of their strategy to elevate employee lives.\nAEO is focused on positively impacting the working environment so that women feel empowered and encouraged to take on leadership roles and are set up for success. We are currently measuring factories that have created environments where women can flourish in managerial positions. These factories have instituted preferential salaries reflecting overtime work, leadership training and mentorship.\nWe sponsored the launch of RISE in four Bangladesh factories and joined some of the world’s largest apparel brands to drive accelerated and lasting impact while promoting women’s wellbeing to ensure they can thrive in their roles. RISE focuses on training for women and pursues its mission through three core strategies: strengthening knowledge and skills for workers and managers, embedding gender equality in business practice, and influencing industry and public policy.\nBy incorporating social, mental, physical, environmental, and financial dimensions, the WOW program has effectively promoted female participation in supervisory positions in both Bangladesh and Vietnam. Notably, Bangladesh has achieved a remarkable $100 \\%$ representation of females in leadership roles. In addition, Fashion Garments in Vietnam stands out with an impressive $80 \\%$ female management, further highlighting the group’s dedication to nurturing diversity and skill development.\nTo date, more than 60 AEO partner facilities across Bangladesh, Vietnam, India, Pakistan, Cambodia and Indonesia have participated in a HERproject training- such as HERhealth, HERfinanace and HERrespect - with AEO serving as one of the lead brands supporting factory participation.\nHirdaramani Group demonstrates a commitment that not only cultivates skilled teams but also underscores how upholding social values drives remarkable accomplishments, showcasing their efforts to nurture a competent and diverse workforce while creating a positive influence across communities.\nPreviously, AEO assisted with the development of HERessentials, a digitalized package of critical resources for women workers during a time of crisis when the pandemic limited in-person training.", "chunk_word_count": 533, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > OUR PROGRESS", "document_id": "AEO 2022 ESG Report", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 33, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## RESPONSIBLE SOURCING SUPPLIER COUNCIL\nAEO highly values working with suppliers to gather input on our programs and share best practices.\nNow in its second year, AEO’s Responsible Sourcing Supplier Council was launched with a focus to:\nBring together a selected group of strategic suppliers to have open discussions on social and environmental issues in our supply chain. \n• Compare approaches and experiences, as well as share ideas for the future of our Responsible Sourcing program.\nThe council consists of three sourcing agents and 17 vendors who were invited to participate based on business relationship and their demonstrated performance on social compliance and worker engagement. These vendors represent 43 factories across eight countries: Bangladesh, China, Cambodia, India, Indonesia, Vietnam, Jordan and Sri Lanka.\nIn 2022, AEO hosted three working sessions for the council to identify best practices in the following areas:\n• Using a mobile app for tracking and resolution of complaints, as well as providing updates and feedback to factory workers on the progress of their concerns. • Identifying internal monitoring protocol to enhance transparency and sustained compliance. • Understanding diversity, equality and inclusion. Achieving high-performance factory status under the Better Work Program.\n## PRACTICES\nOperating with the highest ethical standards means we hold ourselves accountable in how we treat each other, the planet and all of our stakeholders.\n## CORPORATE GOVERNANCE & BOARD OF DIRECTORS HIGHLIGHTS\nOur commitment to effective corporate governance and the highest ethical standards starts at the top with our highly engaged Board of Directors. We aim to do what’s right to promote the long-term interests of our company and to maximize shareholder value.\nOngoing director education is vital, and our Board strongly encourages directors to participate annually in external education programs.\n### Board Recognition\n## INACD THREE RIVERS CHAPTER\nOur directors attend professional development forums and industry-leading conferences convened by the NACD, Harvard Business School, external accounting firms and retail organizations focused on topics that are relevant to their duties as directors, including topics focused on ESG. Continuing director education is also provided during Board meetings and discussions, and as part of information sessions. Throughout Fiscal 2022, our Board participated in roundtable discussions with external advisors as well as learning opportunities with management on topics including governance matters, executive compensation, regulatory developments, workplace culture, technology, environmental sustainability and cybersecurity.\nNational Association of Corporate Directors (NACD) Public Company Board of the Year\nAEO’s Board of Directors is responsible for oversight, counseling and providing direction to the management of the company. The Board’s primary areas of focus include strategy, risk management, corporate social responsibility, corporate governance and compliance, as well as evaluating management and guiding changes as circumstances warrant.\nNoel Spiegel, Lead Independent Director, named a NACD Top 100\nSuja Chandrasekaran is a two-time Directors to Watch by Directors & Boards, recognized for driving boards towards a higher level of inclusion and effectiveness.\n### Board Certifications\nDeb Henretta completed the Competent Boards • Global ESG Certificate and Designation (GCB.D)\n• Suja Chandrasekaran named a Governance Fellow by the NACD\n## NACD DIRECTORSH CERTIFICATION\n• Suja Chandrasekaran completed the NACD Cybersecurity Oversight CERT certification and holds the NACD.DC certification in corporate governance", "chunk_word_count": 530, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > RESPONSIBLE SOURCING SUPPLIER COUNCIL", "document_id": "AEO 2022 ESG Report", "page": 59, "page_start": 59, "page_end": 61 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 34, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## GOVERNANCE OVERVIEW\nIntegrity is one of AEO’s core values— how we do business is just as important as what we do.\n### OUR POLICIES: Planet, People and Practices\\*\n• AEO Training for Brand Ambassadors \n• Anti-Boycott Policy \n• Anti-Bribery & Anti-Corruption Policy \n$\\bullet$ Anti-Fraud and Financial Reporting \nWhistleblower Policy \n• Climate Policy \n• Code of Conduct \n• Code of Ethics \n• Customer Service \n• Forced Labor and Migrant Worker Policy \n• Human Rights Commitment \n• Insider Trading Policy \n• Open Door Reporting Policy \n• Prohibited Sourcing Regions Policy \n• Subcontracting Policy \n$\\bullet$ Workplace Culture Policy \n• Zero-tolerance Harrassment and \nDiscrimination Policy\nThe company maintains a robust, cross-functional ethics and compliance program. Based on our Code of Ethics, it includes clear policies and procedures, training and education, annual and quarterly auditing, monitoring and investigating functions and routine reporting mechanisms.\n## BEST PRACTICES\nContinue to prioritize representation in our Board of Directors to ensure diversity of backgrounds, experience and thought in the boardroom.\nMaintain business integrity through a majority independent Board of Directors.\nUphold corporate governance best practices including sustaining high ethical standards, providing oversight through defined roles and responsibilities and driving accountability through regular and comprehensive disclosures.\nMaintain consistent and open channels of communication and engagement with shareholders.\n## HIGHLY TALENTED, SKILLED & DIVERSE BOARD OF DIRECTORS\nWe believe diversity can and should be described and defined in many different ways. We encourage our associates and directors to bring their authentic selves to their work. In our journey to build a world-class public company governance structure, we have strengthened and developed a Board with a diverse set of backgrounds, skills, and experiences.\nOur Board embodies a broad and diverse set of experiences, qualifications, attributes, skills and viewpoints that are vital to the success of AEO.\n• Leadership \n• Retail Industry \n• Financial Literacy \n• Audit Committee / Financial Expertise \n• Risk Management \n• International \n• Marketing & Consumer Insights \n• Public Relations \n• Technology & Digital \nReal Estate \nCrisis Management \nMergers & Acquisitions \n• ESG \nCorporate Social Responsibility \nPhilanthropy/Fundraising \nOther Public Company Board Service", "chunk_word_count": 349, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > GOVERNANCE OVERVIEW", "document_id": "AEO 2022 ESG Report", "page": 62, "page_start": 62, "page_end": 63 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 35, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## MEET TWO OF AEO’S DIRECTORS\nA proven strategist and corporate executive with over 27 years of expansive retail apparel, merchandising, marketing and operating experience. Since 2004, Janice has been a highly engaged and influential board member. Her insights and guidance have been instrumental in helping us grow into a $\\$ 5$ billion multi-brand global company. Additionally, Janice has been passionate about AEO’s work in ESG, bringing it to the forefront of our strategy and ensuring board oversight. She has led the Board’s diversity, driving the appointment of two additional female directors with strong relevant experience in technology and operations. As AEO’s first female director, Janice has been a strong advocate for women and a valued role model for our female associates.\nA highly inspirational, creative thought leader who brings more than 30 years of leadership experience in advertising, marketing and digital entrepreneurship to AEO. David’s insights and diverse skill set has added tremendous value to our company and our brands. Since 2013, his creative energy has been instrumental in helping us craft our brand ethos and build genuine customer connections through innovative marketing campaigns. He has also been a passionate advocate for our initiatives across inclusion and diversity, protecting our planet and giving back to our communities. David was selected as both a Top 10 Most Generous Marketing Geniuses by Fast Company and a Top 20 Must-Know Global Influencer by LinkedIn.\n## JANICE E. PAGE", "chunk_word_count": 241, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > MEET TWO OF AEO’S DIRECTORS", "document_id": "AEO 2022 ESG Report", "page": 64, "page_start": 64, "page_end": 64 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 36, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## DAVID M. SABLE\n### Independent Director since 2004\nIndependent Director since 2013 Member - Audit, Compensation, and Nominating, Governance and Corporate Social Responsibility Committees\nChair - Nominating, Governance and Corporate Social Responsibility Committee\nMember - Audit and Compensation Committees\n“As a Co-founder, Chairman, Chief Marketing Officer, Chief Operating Officer and Senior Advisor to several successful companies, I have worn countless hats over the years, providing exposure to a myriad of responsibilities and challenges in the operating and marketing world. Scaling and integrating organizations has allowed me to develop a unique eye for innovative ideas and experience firsthand, the power of a vision that marries profit with purpose and a culture that emphasizes accountability for results and governance. Imparting these insights has been central to my engagement across the public and private boards I serve on.\n“Over my extensive career at Sears Roebuck & Company, I rose to Group Vice President, leading a variety of retail businesses. In this role, I was responsible for crafting strategies to address unique branding, buying, marketing, merchandising and operational needs. Having led large departments, I appreciate and respect the complexities of inspiring teams to achieve successful results. The breadth of this experience has been invaluable as a director of the public companies I have served.\nI believe AEO’s success is driven by its relentless pursuit of excellence. AEO’s culture, superior talent and powerful brands continue to fuel growth and innovation while seeking to implement best practices in every facet of the business.\nI am both proud and grateful to be a member of the AEO Board. Long before ESG was ‘fashionable’ our CEO and leadership were focused on doing the right things to achieve our goals and understood that purpose is a business driver. We are a company where success is defined by delivering returns to all stakeholders—our associates, investors, partners, vendors, the communities we touch, customers and the world.“\nI am extremely proud that we have been able to significantly advance AEO’s progress within Planet, People and Practices over the last several years. Our industry continues to evolve and we have the agility to continue to navigate new responsibilities and challenges.”", "chunk_word_count": 363, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > DAVID M. SABLE", "document_id": "AEO 2022 ESG Report", "page": 64, "page_start": 64, "page_end": 64 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 37, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## CODE OF ETHICS & WORKPLACE CULTURE\nOur Code of Ethics and Workplace Culture policies are provided to all associates during onboarding, including corporate, distribution and store associates. Additionally, all corporate associates receive annual training on these policies with associates in the United States also receiving annual training on Preventing Workplace Harassment and Discrimination.\n### Anti-Bribery & Anti-Corruption\n### Code of Ethics Guiding Principles:\nWe have a zero tolerance policy for bribery and corruption within our organization and with our business partners. Our Anti-Bribery and Anti-Corruption Policy provides strict guidelines around prohibited activities, with annual training provided to all corporate associates on these topics. Our suppliers are also required to adhere to AEO’s Vendor Code. Our operations are audited quarterly and annually as part of our company-wide ethics and compliance program to ensure alignment with our policies.\nAccountability includes leading • by example, asking questions, and speaking up with no fear of retaliation.\n• Honesty is inclusive of our anti-corruption and bribery policy as well as other financial subjects.\nBeing respectful means treating • each other and our customers ethically and with dignity.\nBeing authentic includes customer privacy, security, product quality and other matters that can impact our reputation.\n### Associate Hotline\nAEO’s culture fosters an atmosphere of open communication and encourages associates to speak up when they have concerns. In addition to having the option to speak directly with Human Resources, department managers, our General Counsel/Chief Compliance Officer or any member of our Executive Leadership Team, associates also have access to an associate hotline hosted by an independent provider to report incidents in the workplace. The hotline is free, confidential and available online and by telephone 24 hours a day, seven days a week, around the world (interpreters are available). Associates have the option to report anonymously and all issues raised through the hotline receive fair, prompt and thorough investigation. Investigations are overseen by the Compliance team in partnership with all appropriate departments depending on the nature of the report, with quarterly updates provided to the Audit Committee on the number of reports, nature of reports and actions taken. The company prohibits any retaliation against associates making a good faith report of a violation of our internal policies.", "chunk_word_count": 374, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > CODE OF ETHICS & WORKPLACE CULTURE", "document_id": "AEO 2022 ESG Report", "page": 65, "page_start": 65, "page_end": 65 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 38, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## PURCHASING PRACTICES\nOur policies aid in fulfilling our commitments to responsibly operate our supply chain.\n### Uzbek and Turkmen Cotton Ban\n### Sandblasting Ban\nIn 2011, we banned sandblasting in the production of our denim as well as the presence of sandblasting equipment in any facility producing for AEO.\nIn response to issues around forced and child labor practices, we have banned the use of cotton from Uzbekistan and Turkmenistan. Given the widespread improvements noted in Uzbekistan by the International Labor Organization (ILO) we are in the process of reevaluating our position to allow cotton verified and traced to sources meeting our standards.\n### Supply Chain Security\nSince 2004, AEO has been a certified, validated member of the Customs-Trade Partnership Against Terrorism program (CTPAT), a voluntary program offered by U.S. Customs and Border Protection (CBP) working with CBP to strengthen overall supply chain security. In 2016, we were accepted into one of CBP’s Centers of Excellence and Expertise, the Apparel, Footwear and Textiles Center.\n### Raw Materials and Manufacturing in the Xinjiang Uygur Autonomous Region in China\nDue to allegations of forced labor, we prohibit the manufacturing of any product or the use of any raw material from this region.\n### Code of Conduct\nWe require our suppliers, sourcing agents, vendors, factories and their own suppliers to share our vision of ethical and fair working conditions. Our Code of Conduct outlines our minimum standards and is based on internationally accepted standards, including the International Labor Organization (ILO)’s core conventions and the Universal Declaration of Human Rights.\n### Animal Welfare Policies\nWe oppose the inhumane treatment of animals and do not tolerate animal cruelty in the design, manufacturing or testing of our products, including our stance on specific materials and procedures.", "chunk_word_count": 296, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > PURCHASING PRACTICES", "document_id": "AEO 2022 ESG Report", "page": 66, "page_start": 66, "page_end": 66 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 39, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## DATA PRIVACY & SECURITY\nProviding data privacy and security protections for AEO customer information is critical to building and maintaining customer trust and supports our growth and success.\nSecurity Training - All AEO associates and contractors with access to company systems are required to complete an Information Security Awareness Training program on an annual basis. The training covers a wide variety of topics designed to familiarize associates with the Information Security Program, set security expectations, and provide guidance on how to help protect associates and AEO from internal or external cyber threats at work and at home.\nPrivacy Notice - AEO’s publicly available Privacy Notices outline how and why we collect and use customer data across various brands’ websites, apps and stores that proudly serve a variety of global jurisdictions. We transparently collect and maintain required consent from our customers across our platforms for the purposes stated in our Privacy Notice.\nCustomers entrust us with their persona information. It is our responsibility to safeguard that data as we use it in our business to ensure our customers receive the best possible service and experience from our brands.\nOversight - The Audit Committee receives quarterly reports from the Chief Information Security Officer on, among other things, the company’s cyber risks and threats, the status of projects to strengthen our information security systems, assessments of the company’s cybersecurity program, cyber insurance coverage and the emerging threats in this area.\nIncident Response - AEO maintains a comprehensive Incident Response Program that is tested annually through internal tabletop exercises and provides for notification of data subjects in the event of a breach.\nAEO has dedicated teams whose mission is to ensure that we comply with all applicable data protection and privacy laws around the globe. The Audit Committee of the Board provides regular oversight to ensure these areas receive appropriate attention and resources.\nAEO’s information security program is in full compliance with the latest Payment Card Industry (PCI) Data Security Standard (DSS), which includes but is not limited to annual policy updates and review/attestation of compliance by an independent PCI Qualified Security Assessor.\nCybersecurity Team - To effectively identify, protect, detect and respond to information security threats, we have a dedicated Chief Information Security Officer whose team leads our enterprise-wide security strategy, policy, standards, architecture and processes.", "chunk_word_count": 389, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > DATA PRIVACY & SECURITY", "document_id": "AEO 2022 ESG Report", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 40, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## DATA PRIVACY & SECURITY\n### New SEC Cybersecurity Disclosure Rules\nOn July 26, 2023, the U.S. Securities and Exchange Commission adopted final rules regarding cybersecurity risk management, strategy, governance and incident reporting by public companies. AEO intends to fully comply with these new rules which are effective beginning in December 2023.\nGlobal Privacy Team - To ensure that AEO customer data is collected and used appropriately, and in compliance with all relevant laws, our Global Privacy Team works closely with marketing, technology, security and other business teams to develop and execute enterprise-wide privacy strategy, policy, standards and expectations. AEO’s data protection policy covers all brands and subsidiaries. We also work to maintain contracts with third parties with whom we may share data that include coverage for security and privacy risks up to AEO’s high standards.\nInformation Security Program/Policies - AEO’s Information Security Program and Policies are built upon industry best practices. This program includes, but is not limited, to:\nIndependent Testing - The security team commissions independent penetration testing against its systems at least annually to identify and mitigate security concerns.", "chunk_word_count": 187, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > DATA PRIVACY & SECURITY > New SEC Cybersecurity Disclosure Rules", "document_id": "AEO 2022 ESG Report", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 41, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## FORWARD-LOOKING STATEMENTS\nsubject to future evolution and calibration. Such information is subject to additional uncertainties, as there are limitations inherent in the data collection and analysis methods. While we consider information from external resources and consultants to be reliable, we do not assume responsibility for its accuracy. Additionally, all numbers referenced are on Form 10-Q filed with the Securities and Exchange Commission $( ^ { \\prime \\prime } \\mathsf { S E C } ^ { \\prime \\prime } )$ , which should be read in conjunction with the forward-looking statements in this report, as well as other assumptions, risks, uncertainties and factors identified in this report.\nUnless otherwise indicated, this report covers our fiscal year ended January 28, 2023.\nThis ESG report contains certain forward-looking statements based on AEO’s current assumptions and expectations. These statements are typically accompanied by the words “aim,” “anticipate,” “believe,” “commit,” “could,” “drive,” “estimate, “envision,” “ensure,” “goal,” “intend,” “may,” “might,” “mission,” “seek,” “strategy,” “strive,” “target” and “will” or similar words or phrases. The principal forward-looking statements in this report include: our sustainability goals, commitments and programs; our social goals, initiatives, programs and objectives; the scope and impact of ESG risks and opportunities; and standards and expectations of third parties.\nThe information contained in this ESG report also is subject to the quality and comprehensiveness of the reporting received by the Company from internal and external sources and, therefore, are approximate and/or estimated values. It is also important to note that the availability of data varies from section to section in this report.\nAll of our forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Although we believe there is a reasonable basis for the forwardlooking statements, our actual results, including the achievement of our targets, goals or commitments, could differ materially. These forward-looking statements are based largely on our expectations and judgments and are subject to a number of risks and uncertainties, many of which are unforeseeable and beyond our control. These risks include, but are not limited to, our ability to achieve our stated diversity, equity and inclusion, ESG and sustainability, and climate change goals, as well as those risks identified in Item 1A of our most recent Annual Report on Form 10-K and subsequent quarterly reports precision of our data collection and analysis methods, which are\nOur goals and commitments include aspirational components that may take years or decades to achieve. AEO cannot assure you that the results reflected or implied by any forward-looking statement will be realized or, even if substantially realized, that those results will have the forecasted or expected consequences and effects. We urge you to consider all of the risks, uncertainties and factors identified above or discussed in this and other reports carefully in evaluating the forward-looking statements in our reporting. The forward-looking statements in our reporting are made as of the date they are made, and we undertake no obligation to update these forward-looking statements to reflect new information, subsequent events or circumstances or otherwise.\n## APPENDIX", "chunk_word_count": 523, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > FORWARD-LOOKING STATEMENTS", "document_id": "AEO 2022 ESG Report", "page": 68, "page_start": 68, "page_end": 68 }, { "report": "AEO 2022 ESG Report.pdf", "chunk_idx": 42, "chunk_text": "# AEOBUILTIER PLANET WORLD PRAPTICE\n## SUSTAINABILITY ACCOUNTING STANDARDS BOARD (SASB) INDEX\nSustainability Accounting Standards Board (SASB) is an independent standards-setting organization that promotes the disclosure of material sustainability information to meet investor needs. This index refers to relevant indicators from the Apparel, Accessories & Footwear Standard.\n## ANNUAL GHG INVENTORY RESULTS\n## 1. GHG Emissions\n## 2. Energy/Electricity (kWh)\n## 3. Fleet Fuel Consumption (gallons)\nFootnotes:\n## GHG VERIFICATION STATEMENT\nAmerican Eagle Outfitters – 2022 Greenhouse Gas Emissions Inventory\nRuby Canyon Environmental, Inc. (RCE) conducted the verification of American Eagle Outfitters GHG Emissions Inventory (Project) according to the requirements found in ISO 14064-3:2019. The objective of this verification was to ensure that the GHG statement is materially correct and conforms to all relevant criteria. The GHG statement is the responsibility of American Eagle Outfitters.\nThe data and information supporting the GHG statement were historical and estimated in nature.\nBased on the examination of the evidence, nothing comes to RCE’s attention which gives cause to believe that the GHG statement is not a fair representation of GHG data and information.\n### A summary of the GHG statement is as follows:\n### RCE confirms that there is no evidence that the GHG statement has not been prepared:\nGHG-related activity: AEO is a retail clothing and accessories• company based in Pittsburgh, Pennsylvania. AEO’s Scope 1 and 2 inventory boundary includes global facilities open during the fiscal year. AEO’s operational components (facilities) include Scope 1 emissions from stationary combustion, mobile combustion, and refrigerants; Scope 2 emissions were calculated using market-based and location-based approach.\n• Without material discrepancy, • In accordance with all applicable criteria, and • Verified to a limited level of assurance.\nGHG statement: 02/01/2022 – 01/31/2023•\nCriteria:•\n• The Greenhouse Gas Protocol (GHG Protocol): Corporate Accounting and Reporting Standard, World Resources Institute and World Business Council for Sustainable Development, March 2004.\n• ISO 14064-3:2019 “Greenhouse gases – Part 3: Specification with guidance for the validation and verification of greenhouse gas assertions”.\n## COMPLETE MATERIAL TOPIC LIST\n## A AEO\nFor questions regarding this report, contact us at AEOBetterWorld@ae.com.", "chunk_word_count": 347, "section_path": "AEOBUILTIER PLANET WORLD PRAPTICE > SUSTAINABILITY ACCOUNTING STANDARDS BOARD (SASB) INDEX", "document_id": "AEO 2022 ESG Report", "page": 70, "page_start": 70, "page_end": 81 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 0, "chunk_text": "# Sustainability Report 2023\n## About this report\nThis is our ninth annual Sustainability Report, outlining our approach and progress from 1 January to 31 December 2023, unless otherwise stated.\n## Contents\nSustainability overview 3\nEnvironmental protection 15\nChief Executive Officer’s statement 3\nIntroduction and overview 16\nPerformance highlights 4\nAmbition Zero Carbon 17\nAbout us 5\nProduct sustainability 20\nOur Sustainabiltiy Report is prepared on a consolidated basis – all of our business operations worldwide are in scope regardless of their function, unless otherwise stated.\nGovernance 6\nNatural resources 22\nWhat sustainability means at AstraZeneca 7\nIn 2023, the Sustainability Report remains aligned with the materiality assessment we conducted in 2021. In 2024, there will be changes to our sustainability reporting in accordance with new requirements including the EU Corporate Sustainability Reporting Directive and a new materiality assessment.\nMateriality assessment 7\nEthics and transparency 24\nOur value chain 8\nIntroduction and overview 25\nStakeholder engagement 8\nEthical business culture 25\nInclusion and diversity 27\nAstraZeneca has reported the information cited in this GRI content index for the period from 1 January 2023 to 31 December 2023, with reference to the GRI Standards.\nWorkforce safety and health 28\nAccess to healthcare 9\nIntroduction and overview 10\nEquitable access 10\n## Annual Report 2023\nData annex 29\nAffordability and pricing 12\nwww.astrazeneca.com/annualreport2023\nHealth system resilience 13\nMetrics and performance data 29\n## AstraZeneca sustainability resources\nhttps://www.astrazeneca.com/ sustainability/resources.html\n## What science can do\n## Assurance\n## Cardiovascular, renal and metabolic (CVRM) diseases\nBureau Veritas has provided limited assurance for sustainability activities reported in the sustainability data annex and in the Annual Report 2023. Details are described in the Letters of Assurance, which are publicly available. Assurance is in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information and with International Standard on Assurance Engagements 3410 – ‘Assurance Engagements on Greenhouse Gas Statements’ (‘ISAE 3410’), issued by the International Auditing and Assurance Standards Board.\nCVRM diseases are complex and interconnected. It’s by understanding their interconnections and targeting the mechanisms that drive them that we’ll be able to detect, diagnose and treat people earlier and more effectively. Stop disease progression and, ultimately, improve and save the lives of the millions of patients living with these diseases.\nWe must recognise the strong correlation between healthy people and a healthy planet – the science is clear. The number of heat-related deaths could more than triple by 2050 without significant action, and we’re witnessing a steep rise in heart and metabolic conditions, cancers and respiratory illnesses linked to environmental factors. The COP28 Declaration on Climate and Health was a milestone moment in recognising the urgent need to tackle the global climatehealth crisis in 2023.", "chunk_word_count": 460, "section_path": "Sustainability Report 2023 > About this report", "document_id": "AstraZeneca Sustainability Report 2023", "page": 2, "page_start": 2, "page_end": 3 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 1, "chunk_text": "# Sustainability Report 2023\n## Chief Executive Officer’s statement\n[IMAGE CAPTION] CEO Pascal Soriot during London Climate Week 2023. Photograph: Sophia Evans.\nWith the healthcare sector responsible for around five per cent of global emissions, we must significantly reduce our environmental footprint. At AstraZeneca, we’re driving deep decarbonisation across our value chain through our flagship Ambition Zero Carbon strategy. We’re investing $\\$ 1$ billion to reduce emissions from the lab to the patient and are integrating more circular approaches into the discovery, development and delivery of medicines with the latest digital technologies and innovation.\nImproving health system sustainability is also central to our flagship Healthy Heart Africa programme. In collaboration with nine African governments and partners, we’re working to prevent and control hypertension and decrease the burden of cardiovascular disease. Over nine million people with elevated blood pressure have been identified to date, helping reduce the pressure on health services.\nWe’re also restoring nature and supporting biodiversity through our AZ Forest programme, which expanded in 2023 to a $\\$ 400$ million initiative to plant and maintain 200 million trees by 2030. Learning from scientific and ecological experts and local communities is central to our approach, with 19.9 million trees planted to date.\nAt AstraZeneca, we’re guided by our Values and commitment to ethics and transparency. We champion a culture of inclusion and belonging, recognising the power of diversity in driving innovation around the globe. In our latest employee survey, 87 per cent said they understand how they can contribute to AstraZeneca’s sustainability priorities, which fills me with both pride and hope.\nWe embed this collaboration mindset across all of our sustainability efforts, recognising that when we come together, we can transform the delivery of healthcare to become more resilient, equitable and net zero. We want people to live their healthiest lives, wherever they live.\n## When we come together, we can transform the delivery of healthcare to become more resilient, equitable and net zero.\nIn 2024, we remain focused on our commitment to delivering positive impact for the health of people, society and our planet. A sustainable future starts with health.\nThe Sustainable Markets Initiative Health Systems Task Force is a public-private partnership we’re proud to convene which focuses on accelerating the transition to net zero health systems. In 2023, we launched joint environmental targets for suppliers, saw the establishment of a China Health Working Group, and recently concluded a multi-party agreement to access renewable power in China.", "chunk_word_count": 408, "section_path": "Sustainability Report 2023 > Chief Executive Officer’s statement", "document_id": "AstraZeneca Sustainability Report 2023", "page": 3, "page_start": 3, "page_end": 3 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 2, "chunk_text": "# Sustainability Report 2023\n## Pascal Soriot\nAstraZeneca Chief Executive Officer\nHealthcare is our common foundation. It’s the bedrock of society, and when we’re healthy, communities thrive and economies prosper. Yet, with ageing populations, the rising burden of chronic disease and the growing impact of the climate crisis on health, health systems are struggling to meet people’s health needs. And around the world, inequities in healthcare are growing from low- to high-income countries, with vulnerable populations the most affected.\nThe Partnership for Health System Sustainability and Resilience is a further example of our commitment. Together with partners, we’re delivering evidence-based recommendations which are leading to policy reforms to strengthen health systems. For example, in Italy, clinical pathways for chronic diseases are being reviewed to identify the investments needed; in Japan, a digital medical information platform is being prioritised; and in Brazil, the improvement of community-based prevention and disease management services is now a key area of focus. These are three of the 40 countries in which our Young Health Programme is active. Here, we’re empowering young people to make healthier choices and have directly engaged over 15 million young people on non-communicable disease risk factors since 2010.\n## Memberof Dow Jones Sustainability Indices\n2023 recognition\nAs a global business we have a responsibility to lead. We are committed to using our capabilities to help tackle some of society’s greatest challenges.\nPowered by the S&PGlobal CSA\n## Performance highlights\n## Sustainability overview\n87%\n25/27\n15\nglobal leaders from the public and private sectors are members of the Sustainable Markets Initiative Health Systems Task Force, chaired by AstraZeneca CEO Pascal Soriot to accelerate the transition to net-zero health systems\nof employee survey respondents say that they understand their contributions to our sustainability priorities\nsustainability targets in sustainability data annex are ‘On plan’\n## Access to healthcare\n127,384\n66.4m\n13.6m\nSDG 3 Good health and wellbeing SDG 17 Partnerships for the goals\nhealthcare workers trained since 2010 (cumulative)\npeople reached through access to healthcare programmes (cumulative)\npeople reached through patient access programmes (cumulative)\n## Environmental protection\n67.6%\n19.5%\n13.2% reduction in Scope 1 and 2 greenhouse gas (GHG) emissions since 2015\nSDG 6 Clean water and sanitation \nSDG 7 Affordable and clean \nenergy \nSDG 12 Responsible consumption \nand production \nSDG 13 Climate action \nSDG 15 Life on land \nSDG 17 Partnership for the goals\nreduction in water use from 2015\nreduction in waste from 2015\nEthics and transparency\n50.1%", "chunk_word_count": 406, "section_path": "Sustainability Report 2023 > Pascal Soriot", "document_id": "AstraZeneca Sustainability Report 2023", "page": 3, "page_start": 3, "page_end": 4 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 3, "chunk_text": "# Sustainability Report 2023\n## 10 countries\n83%\nSDG 3 Good health and wellbeing SDG 5 Gender equality SDG 8 Decent work and economic growth SDG 17 Partnership for the goals\nsenior middle management roles held by women\nwith supplier diversity programmes outside the US of employee survey respondents feel we have a ‘speak up’ culture\n### Our Values\n### About us\n### Our Purpose\nWe push the boundaries of science to deliver life-changing medicines.\n### Our business model\nWe are a global pharmaceutical business with a science-led and patient-focused value proposition committed to excellence in the research, development, manufacturing and commercialisation of prescription medicines.\nInspired by our Values and what science can do, we are focused on accelerating the delivery of life-changing medicines that create enduring value for patients, society, the planet and our shareholders.\nWe are also committed to operating sustainably, in a way that recognises the interconnection between business growth, the needs of society and the limitations of our planet. We invest resources to create financial and non‑financial value that benefit patients, society, the planet and our business.\n### Our strategic priorities\nOur priorities reflect how we are working to deliver our growth through innovation strategy and achieve our Purpose:\n### Our global business\nWe work to meet our goals through innovation and commercial excellence. We have an active presence in 85 countries and sell our products in more than 125 countries.\n[IMAGE CAPTION] Employees by reporting region\n89,900 employees worldwide\nGlobal Research & Development (R&D) centres\nOther R&D centres with discovery research labs\n## 1. Gaithersburg, MD, US 4. Gothenburg, SE \n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n6. San Francisco, CA, US 9. Macclesfield, UK \n7. Santa Monica, CA, US 10. Amsterdam, NL \n8. New Haven, CT, US\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Governance\nOur Senior Executive Team (SET) takes the lead in developing our sustainability strategy with governance and oversight provided by our Board of Directors and relevant Board Committees. Whilst all Board Committees consider sustainability in their work, three Board Committees have delegated authority from the Board for oversight and decision-making in connection with specific sustainability-related matters: the Sustainability, Audit and Remuneration Committees.\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Board of Directors\nThe newly created Sustainability Steering Committee reports on progress to the Audit and Sustainability Committees and keeps SET updated on current developments.\nThe Directors are collectively responsible for the success of the Group. The Board maintains and periodically reviews a list of matters that can only be approved by them. Matters that have not been expressly reserved to the Board in this way are delegated to the Chief Executive Officer (CEO) or one of the Board’s five Committees.", "chunk_word_count": 464, "section_path": "Sustainability Report 2023 > 1. Gaithersburg, MD, US 4. Gothenburg, SE \n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ) > Governance", "document_id": "AstraZeneca Sustainability Report 2023", "page": 4, "page_start": 4, "page_end": 6 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 4, "chunk_text": "# Sustainability Report 2023\n## 1. Gaithersburg, MD, US 4. Gothenburg, SE \n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### The Audit Committee\nAmbition Zero Carbon measure within the PSP and when considering the potential for other ESG performance measures. Performance outcomes under the Ambition Zero Carbon measure are assessed and validated by the Sustainability Committee and shared with the Remuneration Committee for its consideration.\nThe Board’s responsibilities include approving our sustainability strategy and policies, overseeing risk and corporate governance and monitoring progress towards meeting our objectives and annual plans. The Board is accountable to our shareholders for the proper conduct of the business and our long-term success and seeks to represent the interests of all our stakeholders.\nThe Board’s Audit Committee is responsible for overseeing sustainability-related disclosures that are linked to the Financial Statements, including the Task Force on Climate-related Financial Disclosures (TCFD) Statement and the EU Taxonomy disclosures in the Annual Report and the extended TCFD Statement, published separately and reviewed by the Board’s Sustainability Committee.\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Sustainability Steering Committee\nIn 2023, we established an internal Sustainability Steering Committee (SteerCo) comprised of leaders representing functions relevant to the sustainability strategy. The SteerCo is responsible for monitoring key sustainability impacts, risks and opportunities, including reporting and compliance, and ensuring (1) appropriate mitigation measures, (2) sustainability data quality and transition to reasonable assurance and (3) that crossfunctional teams are in place to manage ESG risks, regulatory reporting compliance and ESG ratings. The SteerCo is co-chaired by the SVP Finance, Group Controller and Head of Global Finance Services and the VP Global Sustainability and SHE.\nThe Audit Committee is kept informed about regulations that could impact our financial and sustainability reporting. In 2023, the Committee received updates regarding adopted and proposed sustainability reporting regulations in the US, EU and UK, and potential new audit requirements.\nOn our Board, we have $46 \\%$ female representation and $31 \\%$ ethnic minority representation.\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### The Remuneration Committee", "chunk_word_count": 349, "section_path": "Sustainability Report 2023 > 1. Gaithersburg, MD, US 4. Gothenburg, SE \n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ) > The Audit Committee", "document_id": "AstraZeneca Sustainability Report 2023", "page": 6, "page_start": 6, "page_end": 6 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 5, "chunk_text": "# Sustainability Report 2023\n## 1. Gaithersburg, MD, US 4. Gothenburg, SE \n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### The Sustainability Committee\nThe Remuneration Committee, working alongside the full Board, seeks to ensure that the remuneration of our Executive Directors and our wider workforce reflects the underlying performance of the business and incentivises the delivery of our strategy. When approving the Annual Bonus outcomes for the Executive Directors, the Remuneration Committee considers enterprise achievements over the performance period, including financial and scientific delivery, and the experience of shareholders and other stakeholders. The Committee also considers the individual’s performance, including environmental, social and governance (ESG) achievements. Ambition Zero Carbon has been included as a performance measure within the Performance Share Plan (PSP) since 2021. The Remuneration Committee works with the Sustainability Committee when it sets the targets for the\nEstablished in 2021, the Board’s Sustainability Committee assesses progress on the implementation of our sustainability strategy, oversees communication of sustainability activities with stakeholders, provides input to the Board and other Board Committees on sustainability matters, and helps ensure we move forward in the most impactful way.\nFor further details on Corporate Governance, please see pages 75-138, in the Annual Report 2023.\nDuring 2023, the Committee held two formal meetings and considered topics such as sustainability reporting, product sustainability, development of the Company’s health equity strategy, the ongoing double materiality assessment and the Company’s investment in sustainability. At each meeting, the Committee received sustainability updates from the Company’s Corporate Affairs, Investor Relations and other relevant functions, including progress on Ambition Zero Carbon.\nOther governance information relating to specific priorities is included in the overview sections of this report.\nWe seek to create value beyond the impact of our medicines by embedding sustainability into everything we do – from the lab to the patient. We are committed to contributing to a more sustainable future for people, society and planet.\nWe believe these challenges are interconnected and require collaboration within and beyond the health sector. Through science-based solutions, we believe we can drive positive change and a healthier future.\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### What sustainability means at AstraZeneca\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Materiality assessment\nWe currently have nine material focus areas, each with their own targets, grouped under three interconnected priorities. We conduct materiality assessments to identify the sustainability issues that matter most to AstraZeneca and our stakeholders and show where we can have a positive impact. We assess the relevance of our strategy and material focus areas annually, through continuous dialogue with our stakeholders and horizon-scanning for emerging sustainability topics. This process has confirmed that our existing focus areas remained a priority in 2023.\nAs a global organisation, we are committed to operating ethically and responsibly. We are helping tackle the biggest challenges of our time, such as climate change, biodiversity loss, health equity and health system resilience.\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Our sustainability strategy\nWe have nine material focus areas, each with their own targets, grouped under three interconnected priorities:\nAccess to healthcare\nEnvironmental protection\nEthics and transparency", "chunk_word_count": 534, "section_path": "Sustainability Report 2023 > 1. Gaithersburg, MD, US 4. Gothenburg, SE \n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ) > The Sustainability Committee", "document_id": "AstraZeneca Sustainability Report 2023", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 6, "chunk_text": "# Sustainability Report 2023\n## 1. Gaithersburg, MD, US 4. Gothenburg, SE \n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Sustainability at AstraZeneca\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Our ambitions\nBuilding a healthy future - for people, society and planet\nPromoting prevention, increasing access to life-saving treatments, and strengthening health system resilience and sustainability.\nAccelerating the delivery of net-zero healthcare, proactively managing our environmental impact across all activities and investing in nature and biodiversity.\nEnsuring ethical, open and inclusive behaviour across our organisation and value chain.\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Our value chain\nOur global supply chain supports key operational areas of our business with a wide range of goods and services, including raw materials and equipment. Many of our business-critical operations have also been outsourced to third party providers. For more information on our business structure, workforce, and operations please see pages 10-11 in our Annual Report 2023.\nFollowing the science, we have disease area-focused R&D organisations that are responsible for discovery through to late-stage development for Oncology, BioPharmaceuticals and Rare Disease. Two commercial units, one for Oncology and one for BioPharmaceuticals, align product strategy and commercial delivery across our US and Europe-Canada regions. Our International Commercial region has responsibility for emerging markets, including China, as well as Australia and New Zealand. Japan reports separately. Our Operations function plays a key role in developing, manufacturing, testing and delivering our medicines to our customers. Our Rare Disease group, in addition to R&D, also manages the commercial and operations functions for our rare disease portfolio in established markets.\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Suppliers and raw materials\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Downstream distribution\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Disposal\nSourcing and supplying raw material and manufacturing medicinal products\nDistributing our medicines to consumers and patients\nDisposal of waste products and packaging by AstraZeneca, consumers and patients\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### AstraZeneca own operations\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Patients\nR&D, manufacturing and marketing of our medicines\nUse of our medicines by consumers and patients", "chunk_word_count": 389, "section_path": "Sustainability Report 2023 > 1. Gaithersburg, MD, US 4. Gothenburg, SE \n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ) > Sustainability at AstraZeneca", "document_id": "AstraZeneca Sustainability Report 2023", "page": 7, "page_start": 7, "page_end": 8 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 7, "chunk_text": "# Sustainability Report 2023\n## 1. Gaithersburg, MD, US 4. Gothenburg, SE \n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Stakeholder engagement\nWe also work closely with academia and R&D partners across the healthcare and environmental fields, as well as our industry peers and other major companies with a shared ambition to tackle sustainability challenges, through global forums and collaborations.\nWe also aim to have a positive impact in the communities where we operate, often through collaborations with others facing shared local challenges.\nConsidering the interests of our stakeholders is fundamental to our sustainability strategy.\nForemost among our stakeholder groups are our patients – including patient communities and advocacy groups.\nFinally, we have an extensive process of communication and engagement with our employees, who are critical to the achievement of our sustainability goals.\nWe partner with a wide range of governmental and non-governmental bodies across our sustainability priorities. In addition, our suppliers are key to achieving many of our environmental targets and our commitments to ethical behaviour and transparency.\nOther priority stakeholders include governments, particularly in relation to access to healthcare and health systems, the investor community on ESG matters, and healthcare professionals $( { \\mathsf { H C P s } } )$ regarding the development and delivery of medicines.\nThe remainder of this report is organised by our strategic priorities and focus areas, followed by the data annex section for details of performance against targets and progress on our priorities.\nFor more details on the interests, engagements and outcomes of contact with these and other stakeholder groups, please see ‘Connecting with our stakeholders’ in the Corporate Governance section of our Annual Report 2023 (pages 84-86).\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Access to healthcare\nGood health is at the heart of a sustainable future\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Our ambition\nPromoting prevention, increasing access to life-saving treatments and strengthening health system resilience and sustainability.\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Connection to health\nInnovative and sustainable healthcare solutions are essential to improving global health outcomes.\n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ)\n### Our material focus areas\n• Equitable access • Affordability and pricing • Health system resilience\n## 2023 performance\n66.4m people reached by access to healthcare programmes (cumulative)\n13.6m people reached by patient assistance programmes (cumulative)\n127,384 healthcare workers trained (cumulative)\n4,157 health facilities activated (cumulative)\nHealth should not be determined by who you are, where you live or where you were born. We are working to remove barriers to healthcare and give everyone the chance to be as healthy as possible.\n### The big picture\n### Governance", "chunk_word_count": 460, "section_path": "Sustainability Report 2023 > 1. Gaithersburg, MD, US 4. Gothenburg, SE \n2. Boston, MA, US 5. Shanghai, CN \n3. Cambridge, UK (HQ) > Stakeholder engagement", "document_id": "AstraZeneca Sustainability Report 2023", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 8, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Access to healthcare overview\nEveryone should have access to healthcare, no matter who they are or where they live. This is critical across the patient care pathway – from prevention, early detection and diagnosis to the effective treatment of disease.\nOverall responsibility for Access to healthcare is at Board-level, where progress is tracked against our Group People and Sustainability strategic priority, including our ESG goals.\nWe incentivise select senior executives and in-country managers to perform on access initiatives with financial and non financial rewards. Our CEO also has access related incentives linked to the company’s ESG performance.\n### Integration with our strategy and business model\nWe are working to identify barriers to access and are innovating to deliver our life-changing medicines in a sustainable and equitable way, through global, regional and local partnerships.\nWe are transforming healthcare to secure a future where all people have access to affordable, sustainable and innovative care.\nWe publicly disclose outcomes of our access activities, including progress on our commitments, measurable goals, objectives and targets for improving health equity for patients in the countries where we operate.\nCentral to this is our commitment to promoting prevention, increasing access to diagnostics and treatments, and strengthening health system sustainability and resilience.\nWe collaborate on our Access to healthcare material focus areas on a cross-functional basis to deliver our strategy and measure progress.\n### We are focused on:\n• Innovating to deliver life-changing medicines and future-proof global health systems • Partnering to improve health equity for patients now and in the long term • Transforming healthcare to secure a future where all people have equitable access to treatment\nWe also have a dedicated team within Global Corporate Affairs who oversee progress against targets and report on these to the Board Sustainability Committee, along with the development of our health equity strategy and expansion of our access programmes.\nWe have therefore aligned our access initiatives to improve health equity by addressing local needs. To do this, we are:\nWe are playing our part to address health inequities and eliminate discrimination from the delivery of healthcare. As a company at the forefront of scientific and medical innovation, we are also harnessing the latest digital technologies to support improved access. This includes using the power of data and analytics for early diagnosis and expanding access to the latest medical research and training for healthcare professionals.\n### Equitable access\n• Creating integrated approaches including through collaboration with governments and utilising local expertise to identify and address shared priorities • Collaborating in cross-sector partnerships to improve health outcomes\n### Scope of this focus area\nTo drive equitable access to healthcare by embedding practices across the product portfolio - including digital health, clinical trial diversity, patient centricity, investing in rare diseases, open innovation and intellectual property (IP) sharing arrangements.\n### Strategic approach\nWe are committed to improving equitable access to healthcare for patients globally, including to our innovative product portfolio. Our approach includes integrating programmes into local systems and delivering affordable medicines to patients. We seek to drive positive global health outcomes by:\n### We are committed to improving equitable access to healthcare for patients globally, including to our innovative product portfolio.", "chunk_word_count": 536, "section_path": "Sustainability Report 2023 > 2023 performance > Access to healthcare overview", "document_id": "AstraZeneca Sustainability Report 2023", "page": 10, "page_start": 10, "page_end": 10 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 9, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Why it matters\nHealth should not be determined by who you are, where you live or where you were born. We are working to remove barriers to healthcare and give everyone the chance to be as healthy as possible. Economic and supply barriers, as well as geographic impediments, inhibit universal access to high quality, evidence-based healthcare.\n• Addressing unmet medical need and barriers to access • Increasing the speed and breadth of patient access • Driving excellence in product life-cycle management • Understanding the long-term impacts of scientific advances\nAdditionally, in developing countries there is an epidemiological shift from the prevalence of communicable to non-communicable diseases (NCDs), however local healthcare provision varies in quality and the systems may not be in place to tackle this growing burden. Programmes to control priority public health conditions also need to recognise the importance of the economic and social determinants of health.\n### Actions – key initiatives:\n### Rare diseases\nThere are more than 10,000 known rare diseases, and the vast majority $( > 9 0 \\% )$ do not have an approved treatment. This means that rare disease patients also face unique challenges in pursuing equitable access to healthcare, such as significant delays in diagnosis, greater chances of hospitalisation from preventable conditions, scheduling and travelling to appointments, and accessing available treatments.\n### Diversity in clinical trials\nWe are committed to designing clinical programmes with equity at the forefront – from idea inception to patient care. Our approach is patient-centric, data-driven and science-led. We are improving the diversity of clinical trial participants with strong data foundations, tools and standards to align and track progress, and external partnerships. We work with industry groups, regulatory agencies and local community groups to shape clinical trial diversity policies of the future while delivering for patients today.\n### Intellectual property\nAstraZeneca recognises our role in helping to make our products accessible and affordable to patients in need. Our Commitment to Deliver Our Science to Patients details our efforts to address barriers our patients face – financial or otherwise – in developing and developed markets. Those efforts include our approach to IP. AstraZeneca seeks to protect innovations worldwide, and we prioritise the countries where we seek patent protection. AstraZeneca does not file patent applications in any low income countries (LICs) or least developed countries (LDCs). AstraZeneca also does not file in a number of low- to middle-income countries (LMICs) and medium human development countries (MHDCs).\nWe believe people with rare diseases deserve the same attention and investment to find and access therapies as anyone else. As we expand the geographies where our rare disease medicines are available, we continue to build relationships with patient communities early in our development programmes to better understand their needs. We focus on: increasing clinical trial diversity; developing improved data collection processes to enhance our understanding of how rare diseases affect specific patient populations; improving access to diagnostic tools; and supporting efforts to improve the experience of those participating in our clinical trials. We also supply medicines for rare diseases through our patient support and expanded access programmes.\nReducing time to diagnosis and engaging policymakers are critical to advancing equitable access for rare disease patients.", "chunk_word_count": 538, "section_path": "Sustainability Report 2023 > 2023 performance > Why it matters", "document_id": "AstraZeneca Sustainability Report 2023", "page": 10, "page_start": 10, "page_end": 11 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 10, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Targets and progress Equitable access\n### Target\n### Progress\nReach 50 million people (cumulative) through Healthy Heart Africa (HHA), Young Health Programme (YHP), and Healthy Lung programmes by 2025.\nMore than 66.4 million people reached (cumulative) through HHA, YHP and Healthy Lung programmes.\nStatus: Target met\n### \\$115.4m\nTotal community investment (not including patient assistance programmes).\n### Strategic approach\n### Actions – key initiatives:\n### Affordability and pricing\nAstraZeneca has adopted four key pricing principles that are designed among other things to support our affordability efforts globally:\n### Patient access programmes\nOur patient access programmes, including patient assistance programmes, use fully donated products, without expectation of payment from the patient for any portion or to access the programme. Our largest patient assistance programme is AZ&Me in the United States, which provides eligible patients with AstraZeneca medicines free of charge.\n•\t Sustainability: of both the healthcare system and our research-led business model\n### Scope of this focus area\n•\t Value: reflects the clinical benefit of our medicines to patients and the broader impact on society, along with the positive economic impact to the healthcare system by reducing the need for additional medical intervention •\t Access: collaboration with payers and providers on solutions to enable sustainable access to our medicines\nTo drive accessibility of medicines for diverse, equitable and inclusive patient groups, through company policy and programming, including core pricing principles and access programmes.\n### Patient affordability programmes\nPatient affordability programmes (PAPs) aim to close the gap in the ability to pay of patients who fund their own medicines, and sometimes close a funding gap between capped, governmentsponsored funding and the patient’s ability to pay once funding from government ends. We track PAPs in 25 countries, most of which are LMICs where we adopt different programme types. Examples include fixed PAP schemes, tiered PAPs, co-pay support, micro-financing and bridging programmes.\n### Why it matters\nWe are committed to addressing barriers to access and affordability. Our industry, policymakers and payers need to work together to identify solutions. Through collaborations, partnerships and stakeholder coalitions we are working to ensure essential and innovative medicines become more widely available. As a global business, there are challenges that affect our flexibility to provide access to our medicines. These include pricing controls, reimbursement mechanisms, taxation and mark-up systems, plus a high frequency of regulatory changes. In addition, supply chain complexity can increase costs, and the economic downturn is adversely affecting ability to pay (where applicable).\n•\t Flexibility: in pricing to reflect variation in health system needs and ability to pay\n### Tiered pricing\nWe believe tiered pricing is a key enabler for broader and accelerated patient access in LMICs. We do this by linking the cost of medicines with government and patient ability to pay based on macroeconomic indicators of local affordability (such as Gross National Income per capita, national healthcare budgets and other relevant health economics considerations).\nWe are committed to addressing barriers to access and affordability. Our industry, policymakers and payers need to work together to identify solutions.", "chunk_word_count": 510, "section_path": "Sustainability Report 2023 > 2023 performance > Targets and progress Equitable access", "document_id": "AstraZeneca Sustainability Report 2023", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 11, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Value based agreements\nValue-based agreements, across multiple therapy areas, enable patient access while reducing uncertainty for payers (clinical or economic) by linking access, reimbursement or price to real-world clinical benefit or other agreed terms.\nWhile we are thoughtful in our pricing approach, we understand the challenges that healthcare systems and patients face in terms of equity and affordability. Recognising our shared responsibility, we take a broad, flexible approach to pricing to reflect the variation in healthcare systems. We are committed to working in partnership with patients, policymakers, payers and the wider healthcare community to ensure access is as equitable, widespread and as sustainable as possible.\nWe work closely with governments, private and public payers, and in some cases individual patients, to create patient access opportunities using local real-world data tailored to address unmet needs.\n### Targets and progress Affordability and pricing\n### Strategic approach\n### Actions – key initiatives:\n### Health system resilience\nSustainable healthcare for all requires investment in strengthening health systems with the infrastructure required to be responsive to population needs. Our integrated approach puts health at the centre of a sustainable future by advocating for more strategic investment in health, earlier action on disease and enhanced use of digital, data and technology.\n### Partnership for Health System Sustainability and Resilience (PHSSR)\nThe PHSSR is a non-profit, multi-sector, global collaboration established in 2020 by the London School of Economics, the World Economic Forum and AstraZeneca, with a unified goal to improve global health by building more sustainable and resilient health systems. The partnership has since been joined by other members including Philips, KPMG, the Center for Asia‐Pacific Resilience and Innovation (CAPRI) and the WHO Foundation alongside additional organisations at regional and national levels. It is now active in more than 30 countries worldwide.\n### Scope of this focus area\nTo strengthen health systems, by:\nAs shown by the COVID-19 pandemic, where we learned what can be achieved when we collaborate at speed and at scale, partnering with stakeholders across the healthcare ecosystem is key to our shared success. We are investing in ground-breaking global collaborations, company initiatives, local partnerships and fast-tracked innovation to give access to higher quality healthcare for more people worldwide.\n• Partnering with stakeholders in the development of research-based recommendations, advocating for health system policy reform and building capabilities to strengthen the delivery of health services.\n• Improving access to quality healthcare and providing solutions along a continuum of care – from prevention, awareness, diagnosis and treatment to post-treatment and wellness.\nWith its unmatched collective expertise spanning health research, policy and innovation, the PHSSR has built, and continues to expand upon, one of the largest bodies of work on the sustainability and resilience of health systems globally. Global experts work with national academics and policymakers to understand domestic challenges and develop tailored recommendations that can be actioned. In 2023, PHSSR published its second summary report, capturing research conducted in 18 countries, a regional EU report featuring recommendations on tackling the growing burden of NCDs and several country-specific reports.", "chunk_word_count": 511, "section_path": "Sustainability Report 2023 > 2023 performance > Value based agreements", "document_id": "AstraZeneca Sustainability Report 2023", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 12, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Specific activities include:\n• Supporting the continuity of integrated and essential quality healthcare in communities affected by humanitarian emergencies through disaster relief.\n• Improving preparedness for future shocks and enhancing international coordination on scenario planning, response protocols and reserve capacities \n• Optimising the location and focus of patient care through digital technologies \n• Addressing the social, economic, and ecological costs of disease through targeted prevention measures that are optimised to address risk factors and local challenges, while leveraging our experience in health programming \nImproving the effectiveness of care for chronic diseases through defining, implementing and monitoring improved quality of care standards\n### Why it matters\nThe shifting burden of disease, geopolitical fragmentation and the frequency of extreme weather events linked to the climate emergency all put pressure on health systems. The COVID-19 pandemic tested health systems’ ability to respond to sudden shocks and crises while ensuring continuous access to healthcare services for patients.\nThe PHSSR is activating global leaders and partnering with national stakeholders to drive focused interventions and policy change. In 2023, PHSSR has engaged with over 40 national and multilateral platforms and events, including the World Health Assembly, the World Health Summit and at the European Parliament.\nHealth system capacity remains under pressure at global, regional and local levels, with outbreaks of infectious diseases such as respiratory syncytial virus (RSV) and influenza, as well as the increasing prevalence of NCDs, exacerbated by the growing impacts of climate change and ecosystem degradation on human health. Health system resilience and capacity must be strengthened.\n### We aim to build the capabilities of health systems to best respond to patient needs by:\n• Ensuring programming is locally and culturally relevant • Using our footprint to scale partnerships and collaborations Establishing mechanisms for collaboration with our partners, for example through joint coordination, planning, follow-up and alignment on key performance indicators Considering the long-term sustainability of our partnerships to effectively transfer resources, skills and capabilities, and enable local ownership Keeping the communities we serve at the heart of our partnerships by involving them in the design and delivery of programmes\n### We are working towards a future where:\n• Resilient health systems can respond and adapt effectively to crises while managing ongoing population health needs \nEquitable health systems ensure everyone is able to live their healthiest life, by removing barriers to early disease detection, accurate diagnosis, access to clinical trials and high-quality therapies \nNet-zero health systems improve patient outcomes and limit the environmental impact of care", "chunk_word_count": 421, "section_path": "Sustainability Report 2023 > 2023 performance > Specific activities include:", "document_id": "AstraZeneca Sustainability Report 2023", "page": 13, "page_start": 13, "page_end": 13 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 13, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Healthy Heart Africa\nglobal, youth-led advocacy movement. It is now active in 40 countries worldwide, combining community programmes, research, advocacy and supporting the development of young leaders, with a focus on vulnerable and under-resourced communities. Through partnerships with more than 60 non-profit partners around the world including UNICEF, the YHP has directly reached more than 15 million young people and trained more than 580,000 youth as Peer Educators since its launch in 2010. In 2023, the YHP reached more than five million young people through prevention and education programmes.\nOur Healthy Heart Africa (HHA) programme is committed to reducing hypertension and the burden of cardiovascular disease, aiming to reach 10 million people with elevated blood pressure across Africa by 2025. We work with local and global partners to raise cardiovascular awareness and offer training, screening and reduced cost treatment, where applicable. By the end of 2023, the programme had conducted more than 47.9 million blood pressure screenings and trained more than 11,300 healthcare workers since launch in 2014. Also in 2023, the programme launched in eight of 10 new countries planned by 2024, working with implementing partners the African Christian Health Association Platform (ACHAP) and PATH, in addition to the existing nine countries of operation.\nSustainable healthcare for all requires investment in strengthening health systems to deliver an infrastructure designed to be responsive to the needs of the population it serves.\n### Community investment\nCommunity investment at AstraZeneca is built upon the principles of equity, transparency and partnership, and working together to build healthy and resilient communities. In 2023, we contributed $\\$ 123.4$ million in financial and non-financial donations (including product donations), to more than 810 non-profit partners across 76 countries. We also donated $\\$ 4.7$ billion of medicines through patient assistance programmes around the world, the largest of which is our AZ&Me Prescription Savings program in the US.\n### Young Health Programme\nOur Young Health Programme (YHP) aims to empower young people to make more informed choices about their health and catalyse a\n### Targets and progress Health system resilience\n### Target\nTrain 170,000 healthcare workers (cumulative) to strengthen health systems throughout the world through our Healthy Heart Africa, Healthy Lung and Phakamisa programmes by 2025.\nMore than 127,300 healthcare workers trained (cumulative).\nStatus: On plan\n### Environmental protection\n### Our ambition\nAccelerating the delivery of net-zero healthcare, proactively managing our environmental impact across all activities, and investing in nature and biodiversity.\nRecognising the interconnection between a healthy planet and healthy people\n### Connection to health\nSupporting a healthy environment is critical to the health of people, society, and the planet. We aim to improve health outcomes and help tackle the increasing prevalence of diseases linked to the impacts of climate change. We are also investing in nature and biodiversity, recognising the strong interconnection with population health.\n### Our material focus areas\n• Ambition Zero Carbon • Product sustainability • Natural resources", "chunk_word_count": 491, "section_path": "Sustainability Report 2023 > 2023 performance > Healthy Heart Africa", "document_id": "AstraZeneca Sustainability Report 2023", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 14, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n67.6%\nreduction in Scope 1 and 2 GHG emissions since 2015, a reduction of 420 kilotonnes $\\mathrm { C O } _ { 2 } \\mathrm { e }$\n>19.9m\ntrees planted in Australia, Brazil, Ghana, India, Indonesia, Rwanda, the UK, and the US since 2020\n97.6%\nof paper-based product packaging materials used supplied from sustainable sources, achieving the 2023 target\n750+\nThe conservation and sustainable use of natural resources and the protection and restoration of ecosystems are vital to shape a healthy future with resilient people and communities, building harmony between society and the natural environment.\nmaterial suppliers with a critical role in patient supply screened to understand climate vulnerability in the upstream value chain\n### Environmental protection overview\n### Environmental Management System\nBeyond the benefits of our medicines to patients, our contribution to society must respect our environment and ensure that our use of the planet’s finite natural resources is sustainable. We know that a healthy environment is critical for human health.\nOur Code of Ethics guides our behaviours and states that we operate in an environmentally responsible manner, working to minimise our reliance and impact on natural resources and promote environmental sustainability, as well as minimising the environmental impact of our products from discovery to disposal. The guide for our Environmental Management System is embedded in our Code of Ethics supported by our Safety, Health, and Environment (SHE) Standard. This Standard sets out the principles central to our workplace under AstraZeneca’s Code of Ethics and Global Policy Framework (GPF), together with our OneSHE Framework of internal standards, procedures and guidelines.\n### Natural Resource Efficiency Fund\nTo drive our climate action initiatives and meet our environmental targets, we have a dedicated Natural Resource Efficiency Fund (NREF), which has invested approximately $\\$ 175$ million in environmental efficiency projects since 2015. This, together with other central capital investments, has seen a further $\\$ 36.6$ million spent in 2023, including 72 new projects.\n### The big picture\nOur SHE management system is implemented in line with recognised international standards such as ISO 14001 and 50001. It ensures the environmental risks of our activities are assessed, operational controls are in place, checks are completed through a risk-based audit programme guided by an independent organisation and there is an annual management review process.\nClimate change, pollution and the degradation of ecosystems are already impacting human health – including through a rise in NCDs such as heart disease, stroke, lung cancer and respiratory diseases – and undermining the capacity of health systems. Bold climate action and investments in nature and biodiversity are vital to improve health outcomes. The environmental challenges we face are multifaceted and ecosystem issues are interconnected. Systems-level thinking is needed to deliver better health outcomes with a lower environmental footprint.\n### Task Force on Climate-related Financial Disclosures (TCFD)\nWe support the Task Force on Climate-related Financial Disclosures (TCFD) framework, which we have applied annually since 2020. All our business operations worldwide are in scope, unless otherwise stated. The framework applies a risk-based approach, focusing on the most material physical and transitional risks and opportunities. We will build resilience across the value chain through adaptation and business continuity planning.", "chunk_word_count": 534, "section_path": "Sustainability Report 2023 > 2023 performance > Environmental protection overview", "document_id": "AstraZeneca Sustainability Report 2023", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 15, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Governance\nOur executive-led Ambition Zero Carbon Governance Group is accountable for the delivery of Ambition Zero Carbon across all three of our Environmental protection focus areas. In 2023, this Governance Group included our CEO, CFO, and the EVP, Global Operations, IT & Chief Sustainability Officer.\nThere is increasing focus on the environmental footprint of goods and services across the whole value chain. Companies are also under greater scrutiny, reinforcing the need to have robust scientific evidence underpinning environmental targets, performance reporting and the solutions being implemented.\nA TCFD Steering Group with cross-functional membership has oversight of the physical and transitional risks and opportunities posed to AstraZeneca by climate change. The identification and assessment of climate risk forms part of our existing risk management processes. In many cases, mitigation measures are already in place, including for the risks and opportunities presented by the transition to a low-carbon economy and the provision of netzero healthcare. Based on current assessments, physical and transitional climate-related risks are included within a specific risk in the Group’s risk landscape ‘Failure to meet regulatory or ethical expectations on environmental impact, including climate change’, which is not currently considered to be a Principal Risk for the Group.\nSince 2021, delivery of Ambition Zero Carbon Scope 1 and 2 commitments has been included in our executive incentive arrangements for the Performance Share Plan (PSP), with a weighting of $10 \\%$ of award. This measure reflects the importance of reducing our Scope 1 and 2 GHG emissions on the way to achieving our verified science-based target of a $9 8 \\%$ reduction by 2026 from the 2015 baseline. GHG emissions are calculated in line with the World Resources Institute/World Business Council for Sustainable Development GHG Protocol methodology for accounting and reporting of our emissions footprint. The PSP is determined by the Board’s Remuneration Committee and approved by the Annual General Meeting.\n### Integration with our strategy and business model\nWe manage our Environmental protection material focus areas in an interconnected way. Sustainable product design, sourcing and manufacturing aim to achieve lower natural resource use, reduced chemical and water demand, and generate less waste and pollution, as well as a lower GHG emissions footprint.\nWe follow the science to lower the economic and environmental burden of healthcare, while improving health outcomes and reducing our exposure to environmental risks. To achieve this, we are accelerating the delivery of net-zero healthcare, proactively managing our environmental impact across all activities, investing in nature and biodiversity, and assessing and managing both risks and opportunities. At AstraZeneca, we are demonstrating that this can be achieved alongside business growth, but there is more to do. By investing in new ways of working and through innovative collaborations, we can maximise the efficiency of how we use natural resources to further reduce our footprint.\nFor further details on TCFD please see pages 51-53 in the Annual Report 2023 and our TCFD Report on www.astrazeneca. com/annualreport2023.\n### Ambition Zero Carbon\n• We follow the science to understand the climate and health nexus and set our targets\n• We follow a hierarchy to address each emission source (eliminate-reduce-substitute)", "chunk_word_count": 525, "section_path": "Sustainability Report 2023 > 2023 performance > Governance", "document_id": "AstraZeneca Sustainability Report 2023", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 16, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Scope of this focus area\n• We recognise the importance of our supply chain and suppliers, whom we engage with, educate, support and incentivise to act\nTo develop an effective response, we need to increase a shared understanding with our suppliers, investing time to help align with our expectations across our supply chain. By enabling suppliers to reduce their GHG emissions, we can reduce our own Scope 3 emissions and achieve our net-zero targets.\nAcross our value chain:\n• To achieve net zero by avoiding GHG emissions through our product and facility design, optimising energy efficiency, shifting to renewable energy sources, transitioning to a battery electric vehicle (BEV) fleet, and investing in nature-based removals to compensate for any residual GHG footprint • To build resilience by managing the physical (sites, supply chain) and transitional (regulatory, technological, market and reputational) risks and opportunities arising from climate change and in a low-carbon economy, through adaptation and business continuity planning\n• We partner with our sector peers, including at a high-level through the SMI Health Systems Task Force and in addressing key emissions sources through the Energize and Activate collaborations\n• We are transparent about our performance, methodologies, transition plan and assessment of climate-related risks and opportunities presented by a low-carbon economy and net-zero healthcare\nOther challenges include difficulties in accessing renewable sources of heat, exacerbated by the energy crisis and the relative immaturity of commercial-scale clean heat solutions. The global transition to BEVs is being impeded by a lack of vehicles and charging infrastructure in some markets, although the supply of vehicles has improved and we are on plan to transition by the end of 2025 where technically feasible.\n• We have nature-based and technical measures in place to identify and address physical climate risks at site level and in local business continuity planning\n### Why it matters\n• We focus on delivering absolute reductions in all our direct and indirect GHG emissions sources across the value chain – Scopes 1, 2 and 3\nWe are working to deliver net-zero healthcare, acknowledging that approximately $5 \\%$ of GHG emissions are from the healthcare sector.\n### Strategic approach\nThrough our Ambition Zero Carbon strategy, we are pursuing ambitious science-based decarbonisation targets, accelerating our progress towards net zero, and managing the risks and opportunities presented by climate change:\nA significant proportion of our value chain footprint results from our product lifecycle, from raw material extraction to manufacturing, packaging, distribution, patient use and disposal. Pharmaceutical products have a long development cycle, which makes it critical to design in and embed climate considerations at an early stage. To achieve our goals, we must also tackle emissions from our existing commercial portfolio, which creates challenges with heavily regulated production processes and materials.\n[IMAGE CAPTION] Scope 1 & 2 emissions, strategic approach\n[IMAGE CAPTION] Scope 3 emissions, strategic approach\n### Actions – key initiatives:", "chunk_word_count": 484, "section_path": "Sustainability Report 2023 > 2023 performance > Scope of this focus area", "document_id": "AstraZeneca Sustainability Report 2023", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 17, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Energy efficiency and renewable energy\nIn 2023, we invested $\\$ 33.7$ million in energy efficiency and on-site renewable energy through the NREF, together with other central capital investments, to progress towards our targets. We have achieved a $1 7 . 5 \\%$ absolute reduction in total energy consumption from our 2015 baseline and we are committed to using $100 \\%$ renewable energy sources to meet all our needs by the end of 2025. As part of our renewable energy strategy we investigated how to maximise the positive impact of our renewable energy procurement and identified three focus areas for development to align with our ambition to lead in sustainability:\n•\t Additionality – investments and energy purchase agreements that deliver on-site or new-to-grid renewable energy capacity. We are aiming for over half of our renewable energy globally to come from new sources •\t Geographic relevance – energy purchase agreements that deliver real world GHG emissions reductions by displacing fossil energy sources in the grid systems where we consume that energy\n•\t Temporal relevance – energy attribute certificates (EACs) that are tagged with the time and date of generation can improve the utilisation of renewable energy sources and deliver real world GHG emissions reductions. We are aiming to better understand, disclose and improve the alignment between when our energy is generated and consumed\nTo this end, in 2023 we entered into a 10-year PPA agreement with Statkraft, Europe’s largest renewable energy producer, to source electricity from a wind farm in Sweden that will supply 200 GWh per year from a new-to-grid project. This provides additional zero carbon electricity to the grid and will correspond to approximately $80 \\%$ of our total electricity needs at our Gothenburg and Södertälje sites.\nRNG produced by Vanguard Renewables for our Newark campus in Delaware, and by 2026, this collaboration will enable up to 190 GWh per year of RNG to be used across AstraZeneca’s US sites, equivalent to $3 6 \\%$ of our total global gas consumption.\nIn 2023, we entered into a 15-year agreement with Future Biogas to establish the first unsubsidised industrial-scale supply of biomethane in the UK. This supply of green gas will contribute to heat for our sites in Macclesfield, Cambridge, Luton and Speke. The new biomethane plant will add renewable energy capacity to existing UK infrastructure and supply more than 100 GWh of biomethane, equivalent to $1 9 \\%$ of our total global gas consumption. Using crops grown locally as part of diverse crop rotations, the plant will also contribute to the development of a circular economy, supporting UK farms with sustainable land management practices.\n### Clean power\nIn 2021, we transitioned to $100 \\%$ imported electricity from certified renewable sources through purchasing certificates from the same country, and same year, as our consumption. As we were unable to purchase renewable electricity certificates for Russia in 2022, this reduced to $9 9 \\%$ and has been maintained in 2023. We are members of the Eurelectric-led 24/7 taskforce to learn about measuring and improving the temporal relevance of our energy procurement.\n### Clean heat\nAccess to certified low- and zero-carbon fuels and imported heating and cooling sources globally is very limited.", "chunk_word_count": 537, "section_path": "Sustainability Report 2023 > 2023 performance > Energy efficiency and renewable energy", "document_id": "AstraZeneca Sustainability Report 2023", "page": 18, "page_start": 18, "page_end": 18 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 18, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### We are striving to develop new sustainable sources of energy to achieve our Ambition Zero Carbon targets.\nWe recognise the many benefits of self-generated renewables to site energy costs, resilience, temporal relevance and employee engagement, and have spent $\\$ 19.4$ million from 2022 to 2023 on on-site solar photovoltaic (PV) installations at nine locations in seven countries.\nOur approach to each of our locations prioritises demand reduction in the first instance and the assessment of electrification options, such as heat pumps and electric boilers, while also looking at substitution of fossil fuels (mostly gas) with sustainable alternative fuels and a preference for innovative and new-to-grid solutions.\nWe need to increase shared understanding with our suppliers, investing time to help align with our expectations, across our supply chain.\nOnce operational, the total output from all our on-site solar PV will be 32 gigawatt hours (GWh) of electricity, equivalent to over $4 . 1 \\%$ of our global electricity use. There is a limit to the scale that can be achieved through on-site solar PV, and so to deliver additional renewables with geographic and temporal relevance, as outlined above, we are aiming to meet most of our electricity needs in our primary locations – Sweden, UK and US – through new power purchase agreements (PPAs) in the grids where we operate.\nSince 2022, we have been developing a solution for our US sites, which are collectively our largest-consuming market for fossil gas globally. In 2023, we collaborated with Vanguard Renewables to enable the delivery of renewable natural gas (RNG – biomethane) to all our sites in the contiguous US by the end of 2026. From June 2023, we began purchasing", "chunk_word_count": 286, "section_path": "Sustainability Report 2023 > 2023 performance > We are striving to develop new sustainable sources of energy to achieve our Ambition Zero Carbon targets.", "document_id": "AstraZeneca Sustainability Report 2023", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 19, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Value chain collaboration\nThrough the SMI Health Systems Task Force, convened by AstraZeneca CEO Pascal Soriot, we are partnering across the healthcare sector to accelerate the delivery of net-zero health systems, including through supply chain decarbonisation and patient care pathways, and the use of digital innovation in clinical research.\nIn March 2023, the Task Force announced joint, minimum climate and sustainability targets for suppliers, to address emissions across the value chain and reduce the complexity of multiple asks for suppliers. In July 2023, AstraZeneca’s CEO was one of seven global healthcare leaders in the Task Force who signed an open letter, calling on suppliers to sign up to these targets and play their part in decarbonising the healthcare value chain.\nAhead of COP28 in November, to accelerate the transition to net-zero health systems, it was announced that global healthcare leaders from the Task Force were in advanced discussions with energy providers in China and India to scale renewable power across their supply chains, in an industry-first initiative in these countries. China and India are key markets for pharmaceuticals manufacturing, estimated to account for up to $50 \\%$ of materials for medicines.\nWe are tackling $20 \\%$ of our Scope 3 footprint through our commitment to developing a nextgeneration pressurised metered-dose inhaler (pMDI) using the propellant HFO-1234ze(E), which has a near-zero Global Warming Potential (GWP) – see details below in Product sustainability key initiatives.\nWe also joined other global pharmaceutical companies in accelerating the decarbonisation of active pharmaceutical ingredient (API) supply chains, helping suppliers gain access to green funding and support through the Activate Programme.\nWe are working to build transparent supply chains by asking our partners to assess and disclose their GHG emissions to the CDP Supply Chain Programme, with 708 suppliers $( 5 9 \\%$ of in-scope spend).\nIn January 2024, it was announced that AstraZeneca was one of five global healthcare leaders – including four members of the SMI – to sign an industry-first renewable power agreement in China, with leading renewable energy company Envision Energy, resulting in potential annual carbon dioxide equivalent savings of approximately 120 kilotonnes.\nWe were a founding member of Energize, a collaboration between Schneider Electric and 19 global pharmaceutical companies to facilitate access to renewable power at scale for our suppliers, with the programme’s first PPA buyers’ cohort to purchase 2 TWh renewable electricity announced in November 2022. To date, 286 AstraZeneca suppliers have registered with the programme. In 2023, a partnership was announced between Energize and the Pharmaceutical Supply Chain Initiative (PSCI) to accelerate the adoption of renewable energy across the pharmaceutical sector supply chain to support the transition to net zero.\n### Targets and progress\nAmbition Zero Carbon", "chunk_word_count": 455, "section_path": "Sustainability Report 2023 > 2023 performance > Value chain collaboration", "document_id": "AstraZeneca Sustainability Report 2023", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 20, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Target\nProgress\nReduce absolute Scope 1 and 2 GHG emissions by $9 8 \\%$ by 2026, from a 2015 base year.\nReduced Scope 1 and 2 GHG emissions by $6 7 . 6 \\%$ since 2015, a reduction of 420 kilotonnes $\\mathtt { C O } _ { 2 } \\mathtt { e }$ .\nStatus: On plan\nReduce absolute Scope 3 GHG emissions by $50 \\%$ by 2030 and $90 \\%$ by 2045, from a 2019 base year.\nTotal Scope 3 increased by $1 8 . 6 \\%$ from a 2019 baseline and Scope 3 intensity reduced by $2 4 \\%$ . Significant increase in use of primary data and suppliers setting science-based targets (SBTs) will support future absolute emissions reductions towards 2030 target.\nStatus: On plan\n### Product sustainability\n[IMAGE CAPTION] We follow a life cycle approach that covers all stages of our products\n### Scope of this focus area\nTo follow processes throughout the life cycle of our products with the aim of understanding and addressing their environmental impact, from discovery through development and production, to launch of a new product and to end of product life.\n### Why it matters\nPeople and the planet will benefit from those medicines which have the smallest possible environmental impact yet maintain the highest medical efficacy and safety standards. As technologies and healthcare systems evolve, so should solutions to reduce energy, water, material use, waste and pollution generated from designing, manufacturing and delivering medicines to patients. We know that the GHG emissions from our product value chains are the most significant contribution to our company Scope 3 emissions, and we are addressing these across our business using a data-driven approach.\n### Actions – key initiatives:\nSustainable decision-making and environmental improvements are embedded across the product life cycle:\nPharmaceuticals enter the environment mainly from patient use, where some can pass through our bodies and into waterways. APIs are biologically active molecules and may interact with and impact wildlife when in the environment. Drug manufacture and the improper disposal of unused medicines can also add to the trace levels of pharmaceuticals in rivers, lakes, soils, and sometimes drinking water. We recognise that, even in very low concentrations, the risks associated with Pharmaceuticals in the Environment (PIE) should be determined and managed. With increased access to medicines worldwide and an ageing population, potentially more patients will pass pharmaceutical residues into the environment.", "chunk_word_count": 407, "section_path": "Sustainability Report 2023 > 2023 performance > Target", "document_id": "AstraZeneca Sustainability Report 2023", "page": 19, "page_start": 19, "page_end": 20 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 21, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### F-gas regulatory developments and next-generation pressurised metered-dose inhaler (pMDI)\n• Integrated business processes to ensure safety, health and environmental aspects are considered throughout drug development, with guidance on environmental assessment of API manufacturing, formulation, packaging and devices\nEssential medicines for respiratory diseases include pMDIs which rely on fluorinated gases (F-gases) as propellants. Driven by the Kigali Amendment to the Montreal Protocol, governments are developing legislation to phase down the use of hydrofluorocarbons (HFC), a type of F-gas. AstraZeneca supports the phase down of these high Global Warming Potential (GWP) propellants and recognises the significant positive impact it could have on climate and health. It is critical, however, that legislation avoids the risk of limiting access to life-saving inhaled medicines for patients, thereby protecting both people and planet.\n• Targets for API manufacturing emissions from both AstraZeneca and our external supply sites\n• We conduct, fund and support research on the environmental impact of our products and apply the principles of green chemistry in our business\n• Our life cycle assessment (LCA) programme determines the type and magnitude of environmental impacts across our product value chains and is in line with ISO standards 14040 and 14044\nMore details of our approach can be found in our position statement on Pharmaceuticals in the Environment (PIE).\nAn important product-related element of our Ambition Zero Carbon strategy is our commitment to developing a next-generation pMDI using the propellant HFO-1234ze(E), which has near-zero GWP. In 2023, project milestones achieved include further Phase III investment decisions, a harmonised development programme defined globally, readouts of pivotal studies and initiation of key studies needed to file for regulatory approval.\n### Strategic approach\n• We invest in new science and disruptive technologies, allowing design of shorter chemical sequences to our APIs, and improve processes for our new modality medicines, significantly reducing environmental impact\nTo deliver medicines that improve patient outcomes and minimise the burden on the planet, we evaluate and aim to address the environmental impact of materials and processes across the entire product value chain.\n• We are working on redesigning our packaging to make it more sustainable • We are a leading partner in collaborations to drive common standards for illustrating environmental footprints of our medicines\nWe have implemented an internal Product Sustainability Index (PSI) to understand the environmental impacts of our products and inform improvement plans. We also lead our industry in the management of PIE and promote responsible product stewardship.", "chunk_word_count": 413, "section_path": "Sustainability Report 2023 > 2023 performance > F-gas regulatory developments and next-generation pressurised metered-dose inhaler (pMDI)", "document_id": "AstraZeneca Sustainability Report 2023", "page": 20, "page_start": 20, "page_end": 20 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 22, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### European Union (EU) pharmaceutical and chemicals regulatory developments\nconsensus among the sector’s stakeholder groups including healthcare systems, providers and professionals, representative bodies, academics and patients to establish the standard. With support from experts including Quantis, the delivery of this LCA standard will improve transparency and support the assessment and reduction of the environmental impact of medicines across their manufacture, supply, use and end of product life.\nAs part of the European Commission’s pollution reduction strategy, updates and changes to pharmaceutical and chemical regulations could influence the way medicines are manufactured and approved in future. Monitoring these regulatory risks, providing evidence-based responses to ongoing consultations, and proactively managing the chemicals used in our processes, including those categorised as per- and polyfluoroalkyl substances (PFAS), will help minimise the impact on supply of medicines to patients.\n### Ecopharmacovigilance (EPV)\nAs part of our engagement with the IHI, AstraZeneca has joined a coalition of pharmaceutical companies to co-fund a major initiative to progress the sustainable manufacture of healthcare products and their quantitative environmental impact, due to start in 2024.\nEcopharmacovigilance (EPV) is our approach to understanding pharmaceuticals in the environment. Our EPV process reviews emerging science and literature, looking for new information that might change the way we assess the environmental risks associated with our APIs. Our industry-leading dashboard, where users can visualise the relative risks of our APIs that are found in the environment, is available on our website.\n### Life cycle assessments for pharmaceuticals\nRecognising the importance of a harmonised method to measure and report the environmental impact of medicines and healthcare products, the SMI Health Systems Task Force has worked with the Pharmaceutical Environment Group (PEG) through a newly created consortium and NHS England to support the development of a sector-wide standard for medicines LCA. The consortium and NHS England intend to work with the British Standards Institution (BSI) to reach a\nWe are part of the HORIZON ETERNAL consortium that brings 17 different companies, universities and institutes together from across the EU to contribute to sustainable development of pharmaceutical manufacture, use and disposal.\n### Innovative Health Initiative (IHI) PREMIER\nAs part of our commitment to drive thought leadership and innovation to manage PIE, we are the industry lead of the IHI PREMIER consortium, a public-private partnership between the European Commission and the European Federation of Pharmaceutical Industries and Associations (EFPIA). We are helping develop tools to identify potential environmental risks of APIs and make these tools and data more accessible to all stakeholders. In 2023, PREMIER published an evidence-led prioritisation for environmental data generation, an important step aimed at significantly reducing reliance on fish studies.", "chunk_word_count": 443, "section_path": "Sustainability Report 2023 > 2023 performance > European Union (EU) pharmaceutical and chemicals regulatory developments", "document_id": "AstraZeneca Sustainability Report 2023", "page": 21, "page_start": 21, "page_end": 21 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 23, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Targets and progress Product sustainability\nTarget\nProgress\nEnsure $90 \\%$ of total syntheses meet resource efficiency targets at launch by 2025.\n$6 4 \\%$ of total syntheses met resource efficiency target at launch. For the remainder, continuous improvement work is ongoing in process development functions to maximise resource efficiency. We work to balance the priority to provide medicines to patients at the earliest opportunity with minimising their environmental impact.\nStatus: Lagging\nEnsure $100 \\%$ of AstraZeneca site discharges and ${ \\tt p 9 0 \\% }$ of supplier site discharges are in compliance with safe API discharge concentrations.\n$9 9 \\%$ of API discharges from AstraZeneca sites and $94 \\%$ of discharges from direct suppliers were in compliance. Out of 42 measurements for one API, at a single site, one sample marginally (1.4-fold) exceeded our safe discharge target. This exceedance lasted less than 5 days and, based on available data, was not considered to impact the environment. The cause has been identified and site improvements have been agreed.\nStatus: Lagging\n### Our circular economy approach\n### Natural resources\nIncorporate the principles of the circular economy into the design of all our processes and products, from initial research and development through to production\n### Scope of this focus area\nSeek to minimise the amount of materials required and waste generated during manufacture and use of our products\nDevelop suitable metrics to monitor our progress towards a more circular economy\nNatural resources, and the benefits that humans receive from nature, are essential to produce our medicines and operate our sites.\n### We are committed to:\n• Reducing our impact on the planet through responsible sourcing and efficient, circular use and disposal of natural resources across the value chain\nIncrease reused or recycled content of the materials we use (both directly, and in our supply chain)\nMaximise proportion of waste recycled and aim to eliminate waste to landfill\n• Protecting and restoring ecosystems to improve health outcomes and tackle environmental drivers of disease, such as water and air quality, through our focus on water stewardship and biodiversity\nWhere possible, regenerate nature and use renewable natural resources instead of non-renewable ones", "chunk_word_count": 365, "section_path": "Sustainability Report 2023 > 2023 performance > Targets and progress Product sustainability", "document_id": "AstraZeneca Sustainability Report 2023", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 24, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Why it matters\nWe recognise that a healthy environment is inextricably linked to the health of people and society, and we need to operate within our planetary boundaries for a healthy planet. We are taking action to protect and restore ecosystems by limiting environmental impacts across our value chain, investing in nature and water stewardship, and protecting biodiversity on and around our sites. The conservation and sustainable use of natural resources and the protection and restoration of ecosystems are vital to shape a healthy future with resilient people and communities, building harmony between society and the natural environment.\nTo do this, we are leveraging our experience with lean manufacturing, which includes tools to enhance efficiency and eliminate waste, and embedding recognised best practices from partners such as My Green Lab into our business as usual. These efforts empower employees across our global network to identify and implement ideas that contribute to our environmental targets.\nRecognising that our supply chains have the potential to impact biodiversity, we have committed to developing a framework to systematically assess biodiversity risks and dependencies across our value chain during 2024. We will build on this knowledge to ensure all agricultural, forestry and marinederived materials used in our products and research activities are sustainably sourced by 2028. We are also committed to demonstrating key forest risk commodities are free from deforestation and ecosystem conversion by 2025.\nSupply chains from the pharmaceutical sector are highly complex, making it difficult to define our impacts and dependencies on nature and prioritise mitigating actions, especially because local conditions often necessitate unique solutions for shared challenges. Many materials needed to produce medicines are hazardous in nature and difficult to replace, generating waste streams that are challenging to reuse, recycle or repurpose. These factors mean cross-sectoral collaboration with suppliers, regulators, and other companies and organisations are needed to address the growing threats and changes to local ecosystems that our business relies upon.\nOur key targets aim to decouple water use and waste generation from business growth, supported by efficiency projects, partnership, and engagement with suppliers, and designing out waste and pollution in support of water security and minimised environmental impact where we operate.\nMore details can be found in our position statements on Water stewardship and Biodiversity.\nMoving beyond efficiency within our direct operations, we are working in collaboration with key stakeholders, including our ongoing collaboration with the World Wide Fund for Nature (WWF) Sweden, to make positive contributions to nature and local communities near our sites while mitigating risks from a changing climate. We are also working to embed emerging best practice into our own operations and across our supply chain, for example using tools and guidance that Science Based Targets for Nature (SBTN) is developing, to set long-term, science-led water and biodiversity targets that are informed by local context by 2025.", "chunk_word_count": 479, "section_path": "Sustainability Report 2023 > 2023 performance > Why it matters", "document_id": "AstraZeneca Sustainability Report 2023", "page": 22, "page_start": 22, "page_end": 22 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 25, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Why it matters\nWe are also furthering our commitment to assess and minimise environmental impacts from our supply chain. While making progress on our existing responsible sourcing targets to create action plans for identified key raw materials of natural origin, we are building a risk-based approach to assess additional new and existing materials’ impacts and dependencies on nature. This is helping prepare us for future reporting to the Taskforce on Nature-related Financial Disclosures (TNFD) framework, where we have announced we will be an early adopter.\nStrategic approach\nWe are committed to reducing our impact on the planet and investing in nature and biodiversity to benefit planetary and societal health. We recognise that adopting circular business approaches and implementing efficient processes to develop and produce our medicines are key to reducing natural resources used in our value chains.\nMore details of our approach can be found in our Raw Materials Responsible Sourcing Framework.\n### Actions – key initiatives:\n### Taskforce on Nature-related Financial Disclosures (TNFD)\n### AZ Forest\nWe are beginning to identify our impacts and dependencies on nature across our value chain as we prepare for the Locate, Evaluate, Assess and Prepare (LEAP) model from TNFD. We are discovering further opportunities for local collaborations to make a positive impact on locations of global importance to us. Starting in 2024, we will invest $\\$ 5$ million per year to fund nature restoration and water stewardship projects in the communities where we operate.\nIn 2023, we announced an expansion of our AZ Forest programme, raising our commitment to plant and ensure the long-term survival of 200 million trees by 2030, bringing our investment to $\\$ 400 m$ . This includes new or expanded projects in Brazil, India, Vietnam, Ghana, Rwanda and Kenya that will contribute to our climate action, restore nature, promote biodiversity and build ecological and community resilience, spanning over 100,000 hectares worldwide. In addition, the AZ Forest programme will deliver benefits to local communities, positively impacting an estimated 80,000 livelihoods.\nAZ Forest contributes to the World Economic Forum’s 1t.org initiative, a public-private partnership to conserve, restore and grow one trillion trees by 2030.\n### Site waste circularity rate metric\nIn 2023, we introduced a new site waste circularity rate metric across our sites. Applied together with our global waste reduction target, this new metric will focus efforts at the top of the waste hierarchy and drive improvements in circularity through increased recycling and the external re-use or repurposing of waste materials.", "chunk_word_count": 419, "section_path": "Sustainability Report 2023 > 2023 performance > Why it matters", "document_id": "AstraZeneca Sustainability Report 2023", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 26, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### We need to operate within our planetary boundaries for a healthy planet.\nThe investment builds on our initial AZ Forest commitment, announced in 2020. Since launch, planting has progressed at pace, with over 19.9 million trees planted across Australia, Brazil, Ghana, India, Indonesia, Rwanda, the UK, and the US, using over 300 different tree species, allowing the restoration of biodiversity and natural habitats.\nAZ Forest projects are co-designed with planting experts, local communities and governments to deliver natural forest restoration and agroforestry. Co-benefits include the creation of new skills and jobs, the protection and recovery of threatened and endangered species and improved public health. Projects will be audited and assessed by world-leading delivery partners and independent third-party experts, including the European Forest Institute (EFI).\n[IMAGE CAPTION] Site waste circularity rate metric\nAs part of our commitment to reforestation, we have also partnered with the EFI and the Circular Bioeconomy Alliance (CBA) to publish an innovative, science-based framework for sustainable, resilient and locally appropriate landscape regeneration. The CBA Principles for Regenerative Landscapes support the development of projects which promote community and ecological resilience, mitigating the risks which the landscapes will face over the coming decades.\n### Targets and progress Natural resources\n### Target\nProgress\nReduce water use by $20 \\%$ below the 2015 baseline by 2025.\nWater footprint was 3.59 million $\\mathsf { m } ^ { 3 }$ , a $1 9 . 5 \\%$ reduction from 2015.\nStatus: On plan\nReduce waste by $10 \\%$ below the 2015 baseline by 2025.\nTotal waste was 26,213 tonnes, representing a $1 3 . 2 \\%$ reduction from 2015.\nStatus: On plan\n### Ethics and transparency\nEthical and transparent business delivers positive impacts for patients and society\n### Our ambition\nEnsuring ethical, open and inclusive behaviour across our organisation and value chain.\n### Connection to health\nFostering a culture of doing the right thing across our value chain promotes health and wellbeing.\n### Our material focus areas\n• Ethical business culture • Inclusion and diversity • Workforce safety and health\n50.1%\nsenior middle management roles are held by women\n10\ncountries with supplier diversity programmes outside the US\n83%\nof employee survey respondents feel we have a ‘speak up’ culture\nAstraZeneca respects the rights of all people. We are committed to treating everyone with dignity and respect and to ensuring the third parties we work with do the same.\n### Ethics and transparency overview", "chunk_word_count": 410, "section_path": "Sustainability Report 2023 > 2023 performance > We need to operate within our planetary boundaries for a healthy planet.", "document_id": "AstraZeneca Sustainability Report 2023", "page": 23, "page_start": 23, "page_end": 24 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 27, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Governance\nAs outlined in our Code of Ethics, we are committed to driving the highest ethical standards. As members of the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), and the EFPIA, we adhere to their codes.\nAstraZeneca embraces the cognitive differences of neurodivergent employees and supports employees with both seen and unseen disabilities in line with their countryspecific laws and regulations. Where risk assessments can be performed, we will consider accommodating adjustments to the working environment that support an inclusive and safe workplace. Our Global Standard for Inclusion and Diversity sets out how we foster an inclusive and diverse workforce where everyone feels valued and respected because of their individual abilities and perspectives.\nWe seek to create positive societal impact and embed ethical behaviour in all our business activities, markets and value chain. We promote ethical, transparent and inclusive policies internally as well as with our partners and suppliers.\nWe value speaking up as part of our ethical business culture. We want anyone who has a concern about our ethics or conduct to report it without delay. With our AZethics platform, we are making it easier for individuals to make a report using a simple, one-step intake form and the option to remain anonymous where permitted by local law. Internally, we also encourage a culture of transparent reporting of concerns to the relevant manager, Human Resources or Compliance functions. We are committed to investigating and responding to all concerns of alleged misconduct or breaches of law or policy that are raised to us.\n### Building trust by demonstrating integrity, transparency and fair treatment is central to everything we do.\nOur Code of Ethics and its supporting Standards are designed to help protect against unlawful discrimination on any grounds, including disability. The Code and its supporting Standards cover recruitment and selection, performance management, career development and promotion, transfer, training (including, if needed, for people who have become disabled), and reward.\n### The big picture\nIt is important that we create value beyond the impact our medicines have on patients. We need to ensure that we retain and increase trust across all our stakeholder groups to deliver life-changing medicines to patients.\n### Our Values\n### Integration with our strategy and business model\nBuilding trust by demonstrating integrity, transparency and fair treatment is central to everything we do, and supports our ability to operate, to innovate and to bring healthcare solutions to more people. Our shared Values underpin all our activities and serve as a compass to guide us.\n### Why it matters\nThe expanded interest in and use of Artificial Intelligence (AI) creates opportunities for improved patient engagement and data analysis but also increases data privacy and data use concerns. We must ensure that we meet regulatory and stakeholder expectations around responsible use of AI, as well as data protection and security in this evolving environment, achieved through our Global Privacy Standard, our Global Standard on the Ethical Use of AI and our internal data and AI governance committees.", "chunk_word_count": 506, "section_path": "Sustainability Report 2023 > 2023 performance > Governance", "document_id": "AstraZeneca Sustainability Report 2023", "page": 25, "page_start": 25, "page_end": 25 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 28, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Ethical business culture\nAn ethical business culture is essential to successful risk management, and we are committed to increasing public trust in our industry.\nRecently, Norway, Canada and Germany have implemented legislation mandating human rights due diligence and greater transparency. The EU Corporate Sustainability Due Diligence Directive and Corporate Sustainability Reporting Directive also requires companies to consider social and environmental impacts, with a focus on transparency. This new legislation will require additional reporting on our supply chain.\nScope of this focus area\nDrive the highest standards of conduct and accountability beyond compliance including, but not limited to, anti-bribery and anti-corruption, product safety, use of human tissue and animals for research, human rights and building supplier capabilities to uphold high social standards.\n### Strategic approach\nPrinciples on Business and Human Rights, which we have committed to as signatories to the UN Global Compact (UNGC).\nambition is to achieve $100 \\%$ ethical spend, ensuring we only work with suppliers that share our Values. Our approach fosters our suppliers’ progress on sustainability, enables us to innovate together on challenges and accelerates supplier diversity. To achieve our goal, in 2023 we continued our partnership with EcoVadis to assess our suppliers’ environmental, ethical, and social performance; of the $70 \\%$ of our suppliers (by spend) that were assessed, $6 6 \\%$ achieved an acceptable score of more than 45.\n### The key elements of our commitment to an ethical business culture are:\nWe continue to benchmark and improve our approach to Human Rights through industry working groups including PSCI, Business for Social Responsibility (BSR) and Fair Wage Network with particular focus on due diligence, new legislation and responsible sourcing initiatives.\n• Our Code of Ethics and Values – which guide everything we do and ensure that we deliver life-changing medicines in a responsible way. We reinforce our commitment to ethical business conduct through annual Code of Ethics training, delivered to all employees and relevant third parties\n### Responsible supply chain\nWe expect all employees and contractors to follow our Global Standard for the Procurement of Goods and Services. We monitor compliance through assessments and improvement programmes, and all our suppliers and partners must meet our Global Standard on Expectations of Third Parties. We conduct audits on high-risk commercial suppliers (external manufacturing partners) to ensure appropriate practices and controls.", "chunk_word_count": 391, "section_path": "Sustainability Report 2023 > 2023 performance > Ethical business culture", "document_id": "AstraZeneca Sustainability Report 2023", "page": 25, "page_start": 25, "page_end": 26 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 29, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Animals in research\n• Values-based decision making – we emphasise values-based decision making, and encourage our workforce and suppliers to adopt a sustainability mindset that embraces our core Values\nAnimal studies remain a small but necessary part of discovering, developing and licensing medicines. AstraZeneca is committed to the 3Rs (Replacement, Reduction and Refinement of animals in research) and have programmes to accelerate the development of new approach methodologies (NAMS), which have potential to reduce and eventually replace the need for animals. We focus on robust experimental design and analysis, to ensure the fewest animals are needed to achieve scientific objectives, with our scientists’ refining procedures and applying high standards of animal care. We extend our focus on animal welfare with an assurance programme that ensures research conducted by our third parties meets our high standards. Transparency is also a priority, and we are signatories to the Concordat on Openness on Animal Research (UK), the Openness Agreement on Animal Research and Teaching (Australia/New Zealand) and contribute to the U.S. Animal Research Openness Initiative.\n• Visibility and transparency – being visible and transparent about our business supports learning and development for our employees, suppliers and partners, which is fundamental to meeting the expectations of patients, investors and broader society\n### Anti-bribery and anti-corruption\nWe do not tolerate bribery or any other form of corruption. Prevention of bribery and corruption is a focus of our third-party risk management and due diligence processes, as well as our monitoring and audit programmes. We reinforce our commitment to ethical business conduct through our annual Code of Ethics training, which is delivered to all employees and relevant third parties.\n### Human rights\nAstraZeneca respects the rights of all people. We are committed to treating everyone with dignity and respect and to ensuring the third parties we work with do the same. Our commitment to human rights arises from our Values, which is the basis of our Code of Ethics, and is formalised in our Code, Global Standard on Expectations of Third Parties, Modern Slavery Statement, sustainability initiatives, and other requirements, procedures and practices. We are guided by international human rights principles in the Universal Declaration of Human Rights, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work, and the United Nations Guiding\n### Actions – key initiatives\n### Positive sourcing\nOur Sustainable Procurement programme embeds responsible sourcing practices in endto-end procurement processes and promotes ethical behaviour among our suppliers. Our\nFor further details on Bioethics please see page 36 in the Annual Report 2023.", "chunk_word_count": 428, "section_path": "Sustainability Report 2023 > 2023 performance > Animals in research", "document_id": "AstraZeneca Sustainability Report 2023", "page": 26, "page_start": 26, "page_end": 26 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 30, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Targets and progress\nEthical business culture\nTarget\nProgress\nMaintain $100 \\%$ of active employees trained on the Code of Ethics.\n$100 \\%$ of active employees trained on the Code of Ethics in 2023.\nStatus: On plan\nImprove the AstraZeneca global biennial human rights survey results and use Fair Wage Network data to more robustly assess our performance against local living wage data.\nThe biennial human rights survey has been completed in 2022 and action plans are in progress. The analysis of Fair Wage Network data has enabled us to ensure we continue to pay a fair living wage globally.\nStatus: On plan\nOur global I&D strategy includes three strategic focus areas that guide how inclusion, diversity, and belonging are embedded within the entire ecosystem in which AstraZeneca exists – from our employees to our patients and to local communities and beyond. They include:\n### Accelerating Supplier Diversity\n### Inclusion and diversity\nOur Supplier Diversity Programme maximises opportunities for small and diverse businesses to be part of our value chain and supports their growth. This helps support local economies through job opportunities, enabling diverse supplier development through mentorship schemes (36 mentee companies in 2023), and making a positive socio-economic impact by supporting the growth of local businesses in underrepresented communities. Our programme aimed to launch in 10 countries outside of the US by 2025, and we reached this goal two years early. The programme is now active in 10 countries outside of the US, including Brazil, South Africa, UK, Australia, New Zealand, Poland, Sweden and most recently launched in Switzerland, Ireland and Canada in 2023.\n• Inclusion: Cultivate inclusion and belonging • Diversity: Build and sustain a diverse leadership and talent pipeline • Impact: Advance societal change", "chunk_word_count": 294, "section_path": "Sustainability Report 2023 > 2023 performance > Targets and progress", "document_id": "AstraZeneca Sustainability Report 2023", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 31, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Scope of this focus area\nTo create a working environment where every employee has a sense of belonging and feels valued for the contribution they make, regardless of age, sex, disability, ethnicity, gender identity or re-assignment, nationality, pregnancy, race, religion, sexual orientation, country of origin or other forms of diversity. This includes equitable reward and opportunities for development and advancement. Additionally, our Inclusion and Diversity (I&D) priorities extend to AstraZeneca’s value chain through supplier diversity efforts that enhance our socio-economic impact in local communities.\nWe recognise that everyone plays a role, and our global I&D ecosystem engages a diverse cross-section of colleagues and suppliers. Our Global I&D Ambassador Group comprises senior and rising leaders who are representative of our global workforce and organisational structure, with our CEO Pascal Soriot as Executive Sponsor. This group is accountable for advising on and enhancing organisational progress towards our global I&D ambitions, as well as working with local leaders to ensure an approach that is tailored to meet local needs. I&D is central to our commitment to being a great place to work, for the benefit of our employees, our business and for society.\nTo support our diverse suppliers to make progress on sustainability, in 2023 we extended our Diverse Supplier Sustainability Accelerator Programme and Climate Action Series to 230 small and diverse suppliers to help them increase their sustainability capabilities. Supplier diversity partnerships include WEConnect International, Minority Supplier Development UK, Social Enterprise UK, National Minority Supplier Development Council, NGLCC, National HubZone Council, WBEC East and WBEC Greater DMV, Disability:IN and the Diversity Alliance for Science. We were a founding member of the European Supplier Diversity Project (ESDP), a collaboration effort between MSD UK and 14 global companies to establish supplier diversity across Europe and empower ethnic minorityowned businesses across European markets.\n### Why it matters\nWe believe that inclusion is a right and diversity is a strength. Both make a fundamental contribution to the success of our Company because innovation requires breakthrough ideas that only come from a diverse workforce empowered to challenge conventional thinking. Our ongoing commitment to I&D underpins our ability to maintain a sustainable workforce by ensuring that we continue to attract, develop and retain top talent from various backgrounds and with different experiences. Every component of our I&D mission is critical to our success.\n### Actions – key initiatives\n### Global Power of Diversity\nEach year we recognise, celebrate and learn more about the rich diversity within our organisation and the power we can unlock by utilising it. Since its inception in 2020, Power of Diversity has become an internal movement with global and local events, communications and initiatives taking place year-round engaging our entire workforce.\nThe power of our diversity drives innovation and allows us to push the boundaries of science to deliver life-changing medicines to patients.\n### Strategic approach\nOur approach to I&D prioritises efforts in areas where we can drive lasting systemic change for our organisation and for society.", "chunk_word_count": 501, "section_path": "Sustainability Report 2023 > 2023 performance > Scope of this focus area", "document_id": "AstraZeneca Sustainability Report 2023", "page": 27, "page_start": 27, "page_end": 27 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 32, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Targets and progress Inclusion and diversity\nSee data annex for full metrics\nTarget\nProgress\nReach gender equality in management positions by 2025.\n$5 0 . 1 \\%$ of senior middle management roles are occupied by women.\nStatus: On plan\nLaunch supplier diversity programme in 10 countries (outside of US) by 2025.\nProgrammes launched in a total of 10 countries outside of US, with three countries being launched in 2023: Switzerland, Canada, Ireland.\nStatus: Target met\napplicable to all employees, temporary staff and contractors across AstraZeneca sites and all business areas and functions. We work with regulators, vendors, and our own Legal function to ensure we maintain compliance within the various local regulatory frameworks that apply.\n### Preventing serious injury and fatality at work\n### Workforce safety and health\nWe launched a Serious Injury and Fatality Prevention and Mitigation Programme in 2021, led by our Global SHE team and guided by a senior-level steering committee. Process and life safety subject matter experts evaluate high-risk activities with the potential to result in a serious injury or fatality and prioritise these against internal audit findings and past events. In 2023 we implemented the final year of our three-year plan to address 12 high-risk areas, focusing on process safety management, explosive atmospheres and instrumented protective systems. Besides reviewing and uplifting existing standards and materials, followed by a gap assessment at site-level, we have now also included questions for leaders to ask during routine workplace interactions, to provide process confirmation. This involves leaders watching the process and engaging with those who do the work to learn if there are further improvement opportunities. The successful approach to focus on hazardous activities is now being built into existing ways of working, ensuring sustainable implementation and continuous improvement.\nWe manage SHE risks, opportunities, and performance by using effective management systems utilising a ‘Plan, Do, Check, Act’ process to ensure continuous improvement. This requires engagement throughout the organisation, effective leadership, open communication, and a commitment from every employee to themselves, our colleagues, our workplace, our community and our environment.\n### Scope of this focus area\nTo provide a safe and healthy working environment, based on a culture of learning and improvement rather than blame. This includes the application of human and operational performance principles, including training for leaders and managers, supporting employee health through flexible ways of working, access to disease prevention, treatment and mental health services.\nOur AZ SHE System provides a single, transparent source of SHE data across our enterprise. This drives innovation in the management and reporting of SHE events and sustainability metrics. By collecting data from 504 locations and 81 countries on SHE events (including near misses), SHE observations and SHE inspections in one system, we have quick notification of and response to events, and we can trend our safety, health, and environmental performance. This further enables us to ensure safety and health initiatives are focused on the right areas and implement corrective and preventive action plans.", "chunk_word_count": 500, "section_path": "Sustainability Report 2023 > 2023 performance > Targets and progress Inclusion and diversity", "document_id": "AstraZeneca Sustainability Report 2023", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 33, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Why it matters\nTo continue to deliver medicines to patients, we must foster an environment where people feel safe, energised and inspired. The resources we put into supporting the physical and mental health and safety of our workforce are an investment in society at large, the communities where we operate and their long-term economic health. Contributing to a safe and healthy environment is the right thing to do and can also have positive business impacts in terms of productivity.\n### Drive Success driver safety campaign to protect employees and communities\nAs outlined in the Sustainability Report 2022, AstraZeneca responded to an increasing collision trend by developing a safe driving campaign and training programme endorsed by the Commercial SHE Executive Committee. This campaign continued into 2023 and has shown a positive impact on collisions per million kilometres (CPMK). In 2023 the CPMK was 1.96, exceeding the 2.5 target for the year and on course to meet or exceed the target for 2025 of 1.90.\n### Actions – key initiatives\n### Strategic approach\n### SHE compliance with local legislation\nIn 2023 we have increased our focus to assure compliance with local SHE legislation as well as company Global SHE standards. We have partnered with an external vendor to scan for SHE regulatory changes and provide a platform for most of our Operations and R&D sites to document compliance.\nThrough our Global Standards we are committed to maintaining or exceeding compliance with all local company, legal and regulatory requirements. Our (SHE) Standard, is covered by our Code of Ethics and supported by our OneSHE Framework and accompanying ‘SHE: Everybody’s Business’ training, which establishes minimum standards and is\n### Targets and progress Workforce safety and health\nTarget\nProgress\n$7 5 \\%$ reduction in total injury rate from 2015 baseline by 2025.\n$5 9 . 6 \\%$ reduction in total injury rate.\nStatus: On plan\n$5 5 \\%$ reduction in collisions per million kilometres driven from 2015 baseline by 2025.\n$5 2 . 5 \\%$ reduction in collisions.\nStatus: On plan\n### Data annex\nTargets for a healthy future\n### We are committed to contributing to a more sustainable future for people, society and the planet.\nWe describe our targets and progress on our priorities in this data annex. Bureau Veritas has provided limited assurance for sustainability activities reported here and in the Annual Report 2023. Details are described in the Letters of Assurance.\nSelected metrics identified with the symbol (BV) have been prepared in accordance with the AstraZeneca Sustainability Data Reporting Criteria 2023 and Greenhouse Gas Methodologies 2023.\n### Access to healthcare\n### Focus areas: Equitable access, Affordability and pricing, Health system resilience\n### Environmental protection\nFocus area: Ambition Zero Carbon\n### Safe active pharmaceutical ingredients (API) discharges\nResource efficiency\n\\*Data has been restated due to methodology changes to improve data quality. \n† Data represents the proportion of primary data in the year of reporting to demonstrate progress.\n### Focus area: Natural resources\n### Green Labs Programme\n### Additional metrics\n### Ethics and transparency\nPolitical donations\nContributions to U.S. national political organisations, state-level political party committees and to campaign committees (USD, million) BV\n### Human rights\n### Data privacy\n### Human biological samples\n### Focus area: Inclusion and diversity", "chunk_word_count": 543, "section_path": "Sustainability Report 2023 > 2023 performance > Why it matters", "document_id": "AstraZeneca Sustainability Report 2023", "page": 28, "page_start": 28, "page_end": 39 }, { "report": "AstraZeneca Sustainability Report 2023.pdf", "chunk_idx": 34, "chunk_text": "# Sustainability Report 2023\n## 2023 performance\n### Focus area: Workforce safety and health", "chunk_word_count": 14, "section_path": "Sustainability Report 2023 > 2023 performance > Focus area: Workforce safety and health", "document_id": "AstraZeneca Sustainability Report 2023", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 0, "chunk_text": "# AT&T 2022 Sustainability Summary\n## Contents\nOverview 3\nShareholders & Customers 5\nCommunities 9\nEmployees 16\nEnvironment 23\nSuppliers 28\nProgress toward Goals 30\n## About this report\nThis report reflects the global operations of AT&T, Inc., and relates to the financial year ending December 31, 2022, except where otherwise noted.\nInclusion of information in this report should not be construed as a characterization of the financial materiality or impact of that information. Please see our corporate Annual Report or Form 10-K for the year ended December 31, 2022 and other publicly-filed documents available at investors.att.com.\n## Letter from our Chief Executive Officer\n• Guided by our science-based target, we’re taking action to address climate change in ways relevant to our business, and to prepare for its impacts on our operations, customers and communities. We’ve set meaningful goals by year-end 2035, including to be carbon neutral across our global operations and to save our business customers a gigaton of greenhouse gas emissions through AT&T connectivity solutions. We’re also using cutting-edge climate projections to build a more climate-resilient network, and we’re sharing that data publicly to help communities better prepare for extreme weather events.\nEvery year, the internet continues to improve how we live, work and communicate. Fast and reliable connectivity provides extraordinary access to real-time information and better opportunities for education, healthcare, employment and commerce.\nAt AT&T, we take pride in the role we play to connect people to greater possibility. From helping NASA call a man on the moon in 1969 to our work today helping bridge the digital divide, what we do matters.\n• We remain committed to building a “big tent” that fosters a diverse, equitable and inclusive environment for our workforce. Our Employee Groups are at the forefront of this effort. We continue to integrate DE&I considerations into hiring, engagement and training activities, and I’m proud our efforts have earned AT&T recognition as one of the best workplaces for diversity.\nThis report details how we continue to address our most important environmental, social and governance issues for the long-term success of our business and better futures for all of us. For example:\n• Employees are dedicated to our mission to help close the digital divide. At AT&T Connected Learning Centers across the country, we’re helping underserved students and parents access the internet and get the most out of free AT&T resources focused on digital learning, literacy, online safety and career readiness. It’s all part of the 3-year, $\\$ 2$ billion commitment we made in 2021 to provide greater access to affordable high-speed internet and help people use it in a safe and positive way.\nWe’ve come a long way, but we know there’s more to do. Our commitment to stewardship ensures we are here for our employees, customers and communities as we continue to deliver on our purpose to connect people to greater possibility. I invite you to read on and learn more about how our work is creating long-term value across our operations and how we’re making a difference in the lives of others and the environment around us.\nJohn Stankey\nChief Executive Officer, AT&T Inc.\n## Overview\n## 2022 Highlights", "chunk_word_count": 527, "section_path": "AT&T 2022 Sustainability Summary > Contents", "document_id": "AT&T 2022 Sustainability Summary", "page": 2, "page_start": 2, "page_end": 3 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 1, "chunk_text": "# AT&T 2022 Sustainability Summary\n## SUSTAINABILITY GOVERNANCE\nOur commitment starts at the top, with oversight \nfrom the AT&T Board of Directors and \nguidance from the Governance and Policy Committee, \nAudit Committee, and Human Resources Committee. \nOur Chief Sustainability Officer leads our CSR Governance \nCouncil, comprising more than a dozen officers responsible for business operations aligned to our most important ESG focus areas. We also convene 5 core issue committees to implement or enhance ESG programs and policies.\n## CORPORATE SUSTAINABILITY AT AT&T\n## EMPLOYEES\nOur Company purpose is to connect people to greater possibility, and that focus on a better tomorrow is why the sustainability of our company, our communities and our world are so important. We’re taking bold action to help bridge the digital divide, and we’re innovating with connectivity solutions to address some of society’s greatest challenges such as climate change. We’re also creating long-term value by reducing our environmental footprint, enhancing workforce diversity, and integrating ESG considerations into corporate risk management.\n75% of open positions were filled by women and/or people of color candidates1\n69% of internal promotions were filled by women and/or people of color candidates1\n## SHAREHOLDERS & CUSTOMERS\n## ENVIRONMENT\n\\$9.9B dividends returned to stockholders\n>99.5% network reliability\n45% Scope 1 and 22 emissions reductions since 20153\n2.9M MWh annual energy production of our U.S. renewable energy portfolio\n## SUPPLIERS\n## COMMUNITIES\n\\$16.3B spend with diverse suppliers5\n53% suppliers by spend4 have set science-based targets\n50+\n\\~4.4M FirstNet connections\nConnected Learning Centers committed through 2024\n## READ MORE\n### How We Create Value\n### Our Purpose\n[IMAGE CAPTION] Connecting people to greater possibility\n### What we do\n### ESG approach\n### Key inputs\nOutcomes\nWe create connection by bringing the benefits of high-quality connectivity and digital access.\nThe resources that we rely upon to create value.\nWe integrate ESG issues into our operations and use our platform to drive positive impact.\nThe stakeholder value that we create through delivering on our purpose.\n### Shareholders & Customers\nBy 2025, we estimate that broadband and wireless users will consume at least five times more data than they did in 2021. Through investment in innovation, we’re sharpening our customer focus and transforming our operations to provide connectivity in ways that benefit both shareholders and society at large.\n## PERFORMANCE SUMMARY (FULL-YEAR 2022)\n## DIVIDENDS RETURNED \\$9.9BTO STOCKHOLDERS\n## ADJUSTED EPS8FROM CONTINUINGOPERATIONS\n\\$2.57\n## NETWORK RELIABILITY >99.5%\nNetwork Quality & Reliability\nFinancial Performance 2022", "chunk_word_count": 407, "section_path": "AT&T 2022 Sustainability Summary > SUSTAINABILITY GOVERNANCE", "document_id": "AT&T 2022 Sustainability Summary", "page": 4, "page_start": 4, "page_end": 6 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 2, "chunk_text": "# AT&T 2022 Sustainability Summary\n## CAPITAL INVESTMENT9 \\$24.3B\nPage 6\nPage 7\n### Financial Performance 2022\n### Our focus on fiber and 5G\nOur solid financial performance in 2022 reflected our renewed focus on being the best connectivity provider through 5G and fiber. The divestiture of WarnerMedia in April 2022 created a more streamlined AT&T and helped enable us to invest at record levels to bring the benefits of our 5G and fiber technologies to even more people (page 7).\nOur world is being transformed by the widespread and growing availability of 5G and fiber. And AT&T is leading the charge with our ongoing investments in these technologies across our network.\nFiber network connections support more bandwidth and faster uploads than standard cable – in addition to ${ > } 9 9 . 5 \\%$ proven reliability. We remain committed to our target of passing more than 30 million fiber locations – including 5 million business locations – by the end of 2025, having achieved the milestone of passing approximately 24 million fiber locations (including 4 million business locations) at the end of 2022.\nOur network investment supports increasing customer demand for reliable, high-quality connectivity solutions. In 2022, we realized a $7 . 7 \\%$ increase in mobility subscribers, $3 . 5 \\%$ increase in postpaid phone subscribers from the previous year, and 15.6 million mobility net subscriber additions. We had 1.2 million net additions of AT&T Fiber® broadband connections, an increase of $1 7 . 5 \\%$ in 2022. From July 2020 through the end of 2022, we’ve demonstrated sustainable momentum, with 7.5 million postpaid phone net customer additions and 2.9 million AT&T Fiber net adds. This momentum, combined with continued demand for high-quality connectivity services, gives us confidence in our trajectory to deliver profitable and durable growth in 2023 and beyond.\nOur expanding fiber footprint also helps more people enjoy 5G, as fiber provides critical bandwidth connecting our cell towers back to the internet. We’ve enhanced 5G reliability and launched our mid-band 5G spectrum. At the end of 2022, our 5G network covered more than 285 million people.\n## CONNECTING MORE PEOPLE TO GREATER POSSIBILITY\nIncrease in mobility \nsubscribers \n7.7%\nIncrease in AT&T Fiber broadband connection net adds 17.5%\nPeople across the country rely on our fast and secure 5G network, which is critical to our efforts to help close the digital divide (page 10), reimagine healthcare and tackle supply chain challenges. AT&T 5G also supports FirstNet® – America’s public safety network – providing first responders with the critical connectivity they need to save lives (see page 14).\nTotal U.S. Mobility Subscribers (thousands)\nU.S. Postpaid Phone Subscribers (thousands)\nAT&T Fiber Broadband Connections (thousands)\nAT&T fiber passed at \\~24M\nAt year-end 2022, more than 285M\n## READ MORE\n• 2022 Annual Report\n• 2022 10-K\n• 2023 Proxy Statement\nlocations at year-end 2022 people covered by AT&T 5G\n### Network Quality & Reliability\n### We provide customers with the connectivity they need via a network built for speed, security, reliability and overall performance.\n## INCREASE IN WIRELESS NETWORK COVERAGE (SQUARE MILES)\n## NETWORK TRAFFIC ON AN AVERAGE BUSINESS DAY (PETABYTES)", "chunk_word_count": 522, "section_path": "AT&T 2022 Sustainability Summary > CAPITAL INVESTMENT9 \\$24.3B", "document_id": "AT&T 2022 Sustainability Summary", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 3, "chunk_text": "# AT&T 2022 Sustainability Summary\n## \\~100K\n594\nOver the past 5 years, we've invested more than $\\$ 140$ billion primarily in our U.S. wireless and wireline networks, including capital investments and acquisitions of wireless spectrum.10 Our network covered more than 2.9 million square miles at the end of 2022, including:\n## INCREASE IN LENGTH OFFIBER LAID IN THE U.S.(MILES)\n## \\$24.3B\n## CAPITAL INVESTMENT9\n• Reliable 5G that covered more than 285 million people in nearly 24,000 cities and towns. \n• Fiber passed at approximately than 24 million locations across more than 100 U.S. metro areas.\n### Reliability when it’s needed most\nFor example, in the lead up to Hurricane Ian, AT&T was able to position disaster response equipment and personnel in strategic areas to respond faster when the storm made landfall (see page 14 for more on our response to Hurricane Ian).\nBecause network connectivity is central to our lives, we are collecting and analyzing data on our network 24/7 to ensure it’s working correctly, to improve its performance and to deliver the best customer experience.\n## >\\$140B\ninvested primarily in our U.S. wireless and wireline networks over the past five years (2018–2022), including capital investments and acquisitions of wireless spectrum10\nWe’ve developed a comprehensive network resilience program to maximize service continuity in the face of extreme weather and other disruptions. The AT&T Weather Operations Center helps us stay prepared by proactively monitoring potential nature-related threats to our network, employees and communities.\nWhen disaster strikes, AT&T is there. Our Network Disaster Recovery program helps rapidly restore communications to affected areas. We have invested more than $\\$ 650$ million in the program, and our employees have dedicated 160,000 working hours to recovery exercises that test the preparedness of our equipment and capabilities.\nMore than \\$650M\ninvested in our Network Disaster Recovery program\n## READ MORE\nAT&T was awarded most reliable 5G network according to Global Wireless Solutions OneScore for the 2nd year in a row.\n• Network Quality & Reliability Issue Brief\n### Network Quality & Reliability\n### Increasing climate resilience\nOur approach to climate risk recognizes that we must not only transition to a low-carbon economy (page 24), but importantly, address the physical impacts of climate change. Building climate resilience means understanding the threats we face from climate change and taking steps to prepare our infrastructure to withstand more frequent extreme weather. Fortifying our network helps ensure continuity for the millions of people who depend on our connectivity services every day.", "chunk_word_count": 413, "section_path": "AT&T 2022 Sustainability Summary > \\~100K", "document_id": "AT&T 2022 Sustainability Summary", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 4, "chunk_text": "# AT&T 2022 Sustainability Summary\n## PRIVACY AND NETWORK SECURITY\nEveryone deserves a safe, secure online experience, and AT&T is committed to protecting the privacy and security of all our customers. Our products and services are designed with privacy in mind, and we give customers controls over how their information is shared. We also invest in customer solutions and trainings to help customers protect themselves from fraud.\nIn collaboration with the U.S. Department of Energy’s Argonne National Laboratory (Argonne), we developed AT&T’s Climate Change Analysis Tool (CCAT), which helps visualize wind, drought, wildfire and flooding at the neighborhood level – up to 30 years in the future. With CCAT, we can take climate change into account as we plan for network buildouts, maintenance and disaster preparedness. We also collaborated with Argonne and the Federal Emergency Management Authority to share our climate expertise more widely through the launch of ClimRR, a climate risk and resilience portal that offers CCAT data for community preparedness initiatives across the U.S. (page 15).\nA safe customer experience depends on a secure network. Our experts are always looking for emerging challenges, and we regularly evaluate and deploy new tools and systems that deliver highly effective safeguards against attempted cyberattacks.\n## OUR PRIVACY PRINCIPLES\nIn 2022, we continued to enhance our climate risk management by engaging an external vendor to conduct a scenario analysis, building on our existing climate impact assessment work. Relevant insights will be incorporated into AT&T sustainability governance, risk management, and financial and strategic planning processes.\n## READ MORE\nREAD MORE\n• Privacy Issue Brief\nClimate Change & Greenhouse Gas Emissions Issue Brief\n• Network Quality & Reliability Issue Brief\nNetwork & Data Security Issue Brief\n### Communities\nThe internet is increasingly vital to our everyday lives, whether it be learning in and outside the classroom, accessing healthcare, finding jobs, or socializing and staying close to family. But many people can’t reliably access the internet, as millions of Americans still don't have broadband internet access at home. Others also miss out because they don’t have the skills necessary to take full advantage of its potential. Through our ongoing investment to help close this digital divide, we’re helping more people get online and connected to greater possibilities.\n20\nDigital Divide\nCommunity Resilience\n## \\~4.4M\nPage 10\nPage 14\n### Digital Divide\nWe’ve committed $\\$ 2$ billion to helping close the digital divide by focusing not only on access to affordable high-speed internet, but also the skills and community resources that encourage safe and successful adoption.\n## CONNECTING TOWNS ACROSS AMERICA\nNearly 1 in 4 rural Americans say that broadband internet access is a major problem in their communities.11 Throughout 2022, AT&T continued to partner with state and local authorities in smaller towns and cities to address this issue. These efforts contribute to our target to pass more than 30 million fiber locations, including business locations, in the United States by the end of 2025.", "chunk_word_count": 489, "section_path": "AT&T 2022 Sustainability Summary > PRIVACY AND NETWORK SECURITY", "document_id": "AT&T 2022 Sustainability Summary", "page": 9, "page_start": 9, "page_end": 11 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 5, "chunk_text": "# AT&T 2022 Sustainability Summary\n## ACCESS\nWe’re keeping customers and communities connected through investing in our network (page 7) and working with state and local officials to extend our broadband networks.\nWe’re also providing access to AT&T Fiber, Wi-Fi, and computers at AT&T Connected Learning Centers in underserved neighborhoods (page 11).\nWe began work on a \\$24 million collaboration between AT&T and the city of Amarillo, Texas to bring reliable, high-speed internet to more than 22,000 residential and business locations in the city. One of the areas that will benefit directly is East Amarillo’s Barrio neighborhood, which has been the focus of a revitalization plan since 2018.\n## AFFORDABILITY\nAT&T is participating in the FCC’s Affordable Connectivity Program (ACP)12 to help make wired and wireless services more affordable for millions of American households.\nIn Kentucky, Oldham County selected AT&T to build a state-of-the-art fiber network that will connect every home and small business in the county. In neighboring Indiana, we’ve been working with the City of Martinsville, the City of Boonville and Vanderburgh County on fiber projects that will bring the benefits of broadband to their communities.\nBy combining the federal ACP benefit with one of the Access from AT&T plans, eligible households can take advantage of free high-speed internet.", "chunk_word_count": 211, "section_path": "AT&T 2022 Sustainability Summary > ACCESS", "document_id": "AT&T 2022 Sustainability Summary", "page": 11, "page_start": 11, "page_end": 11 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 6, "chunk_text": "# AT&T 2022 Sustainability Summary\n## ADOPTION\nAll these investments help narrow the digital divide so all Americans have the opportunity to connect to a better future.\nHaving a broadband connection and digital resources isn’t enough. The AT&T Connected Learning initiative equips people and communities with digital literacy skills so they can thrive online (page 13). It also helps communities understand and appreciate the value of their connectivity.\n### Digital Divide\n### Expanding access to low-cost broadband\n### AT&T Connected Learning\nEstablished in 2016, Access from AT&T makes low-cost internet service available for qualifying low-income households. In 2022, we expanded the program’s eligibility to all households that qualify for ACP and apply the federal benefit to AT&T internet service. We also updated the program to include speeds up to 100 Mbps where available. We work with grassroots organizations to ensure low-income people and families are aware and can take advantage of the offer.\nThrough AT&T Connected Learning(SM), we’re investing in technology, digital literacy and digital learning solutions to help connect today’s learners with success. We’re guided by our target to reach 1 million people in need with digital resources by year-end 2025, and had reached more than 290,000 by the end of 2022.\n### PROGRESS: PROVIDE 1 MILLION PEOPLE IN NEED WITH DIGITAL RESOURCES BY YEAR-END 2025\n### 290,000 people reached\n0\nWe’ve established AT&T Connected Learning Centers in underserved neighborhoods across the country, working with local community organizations to provide students and families free access to high-speed fiber internet, Wi-Fi and Dell computing devices. AT&T employees also serve as tutors and mentors at these centers through our AT&T Believes(SM) volunteerism initiative (page 21).\n\\$2B our 3-year commitment to address the digital divide\nWe’re also providing technology and equipment directly to low-income learners who need it most. We partnered with nonprofit device refurbishers such as Digitunity, Compudopt and Human-I-T to get more than 40,000 computers into the hands of students and families nationwide.\nIn 2022, we opened centers in cities including:\n• Atlanta • Detroit • Tupelo, Mississippi • Augusta, Georgia • Houston • Raleigh, Chicago • Los Angeles North Carolina • Cleveland San Francisco\n### More than\n50+ Connected Learning Centers to be opened by end of 2024\n## 20 Connected Learning Centers opened by end of 2022\n40,000 • Digital Divide Issue Brief\n40,610\ncomputers distributed to those in need through nonprofit device refurbishment organizations\nWi-Fi hotspots distributed to underserved students in 2022\nWe reached our target to open at least 20 AT&T Connected Learning Centers by 2023 and have increased our ambition to establish more than 50 centers by the end of 2024.\n## READ MORE\nPROGRESS: OPEN MORE THAN 50 CONNECTED LEARNING CENTERS BY YEAR-END 2024", "chunk_word_count": 450, "section_path": "AT&T 2022 Sustainability Summary > ADOPTION", "document_id": "AT&T 2022 Sustainability Summary", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 7, "chunk_text": "# AT&T 2022 Sustainability Summary\n## 20 centers opened • Access from AT&T website\n• Digital Divide Issue Brief\n### Digital Divide\n“There are a lot of people like me, who are struggling, and the AT&T Connected Learning Center at Esperanza brings us hope.”\n### Connectivity for all ages in Cleveland\nCleveland resident Ivy Fontanez came to the AT&T Connected Learning Center at Esperanza after her kids left home and she had no idea what to do next. The Esperanza center offered her free access to high-speed broadband, Wi-Fi and computers, as well as educational and mentoring resources. Despite thinking it was too late at age 42 to learn digital skills, Ivy got online at Esperanza and has started taking college classes.\nOn the other side of Cleveland, the AT&T Connected Learning Center within the Ashbury Senior Computer Community Center hosted a block party in 2022 that brought together more than a hundred neighbors. At the event, attendees learned about how they can access low-cost internet through Access from AT&T and many parents with school-age children took home refurbished laptops.\nOur 2 Cleveland AT&T Connected Learning Centers – and the growing number of others across the country – demonstrate one way AT&T is committing to closing the digital divide, from school kids to retirees and everyone in between.\n• Digital Divide W Issue Brief\nAT&T Connected Learning website\n### Digital Divide\n### Digital literacy and digital learning\nEven with access to affordable internet, many lack the skills, tools and resources to navigate the web safely and effectively. Through AT&T Connected Learning, we provide free digital literacy and learning resources for parents, caregivers and families. In 2022, we made hundreds of educational videos, lessons and learning activities available to students through The Achievery, a free and safe online distance learning platform offering educational content and lesson plans aligned with academic standards.", "chunk_word_count": 310, "section_path": "AT&T 2022 Sustainability Summary > 20 centers opened • Access from AT&T website", "document_id": "AT&T 2022 Sustainability Summary", "page": 12, "page_start": 12, "page_end": 14 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 8, "chunk_text": "# AT&T 2022 Sustainability Summary\n## COLLABORATING FOR IMPACT\nThrough our collaboration with the Public Library Association (PLA), we worked to bring bilingual, in-person digital literacy workshops to 160 libraries in 2022.\nTo help us gauge the effectiveness of our workshops, we collaborated with the PLA to survey participants about their experience. As indicated by the results below, the vast majority felt more confident and knowledgeable about digital resources as a result of their participation in a library workshop and intend to apply what they’ve learned.\nWe also collaborated with organizations including All4Ed, National After School Association, Connected Nation, Digitunity and others – to help bring The Achievery to students in and out of school. In 2022, more than 78,000 students participated in learning with The Achievery.\n88% feel more confident using digital resources\n### 78,000 $^ +$ students\n### participated in learning activities through The Achievery\nOur impact is amplified when we equip community members with the tools and expertise necessary to act as digital navigators - facilitators that help others in their community develop digital skills necessary to leverage their internet access. In 2022, we invested $\\$ 2.5$ million to launch our digital navigator program and community-based IT helpdesk that will provide training to community members in navigator roles. Deploying digital navigators within local communities has been proven to drive adoption across underrepresented communities because residents feel more comfortable and safer receiving help through local organizations.\n90%\nfeel more knowledgeable about using digital resources\n91% intend to apply what they’ve learned\n### CommunitieCommunity sResilience\n### When disaster and tragedy strike, it’s crucial that people are able to connect with loved ones and access what they need to get back on their feet.\n### Connecting first responders through FirstNet®\nWhen first responders get the call, a reliable network is essential to coordinate their response. To address this critical need, the First Responder Network Authority (FirstNet Authority) partnered with AT&T to deliver FirstNet, Built with AT&T – the only network built specifically for America’s first responders and extended public safety community. FirstNet stands above commercial offerings by providing first responders with truly dedicated coverage and capacity when they need it, unique benefits like always-on priority and preemption and innovative mission-ready solutions. Throughout 2022, FirstNet played an important role in supporting community safety, including during and after the Colorado and Yosemite fires, flooding in Kentucky, and Hurricane Ian.\nRecognizing the important role we play as a connectivity provider, we’ve set a target to help 1 million people prepare for and recover from the impacts of disasters by year-end 2030. This commitment focuses on essential support for communities and public safety through strategic partnerships beyond our normal emergency response and network disaster recovery operations. For example, we have partnered with Information Technology Disaster Resource Center, a volunteer organization that provides connectivity and charging solutions to support survivors in times of crisis.", "chunk_word_count": 479, "section_path": "AT&T 2022 Sustainability Summary > COLLABORATING FOR IMPACT", "document_id": "AT&T 2022 Sustainability Summary", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 9, "chunk_text": "# AT&T 2022 Sustainability Summary\n## OUR RESPONSE TO HURRICANE IAN\nHurricane Ian struck Florida in September 2022, bringing record flooding and significant devastation to Gulf Coast communities. Prior to landfall, the AT&T Weather Operations Center (page 7) tracked Ian’s approach to help us set up resources in strategic locations to expedite our response. As the storm passed, the FirstNet Response Operations Group at AT&T responded to more than 110 public safety requests with first responders and deployed more than 85 full-scale communications solutions to support response efforts.\nSince establishing the target in 2021, we have helped more than 500,000 individuals prepare for and recover from natural disasters.\nRecognizing that disasters have contributed to a mental health crisis among our nation’s first responder community, we established the FirstNet Health & Wellness Coalition to coordinate holistic health and wellness support. Through the Coalition, we provided health and wellness training to nearly 12,000 first responders.\n[IMAGE CAPTION] PROGRESS: HELP 1 MILLION PEOPLE PREPARE FOR AND RECOVER FROM NATURAL DISASTERS BY YEAR-END 2030\nIn the aftermath, we opened our networks so people from all carriers could connect with loved ones – even if their carriers’ services were not available because of the storm. To ease financial pressures as communities recovered and rebuilt, we waived various service charges and fees for affected residents and businesses.\n>99% U.S. population covered by AT&T and FirstNet networks\nAT&T and the AT&T Foundation provided further support by donating \\$400,000 to local organizations for recovery efforts (page 22).\n### Community Resilience\n“Our resilience is interconnected with that of our communities – that's why we're helping others prepare for the impact of severe weather in the years to come.”\n### Helping communities adapt to climate change\n1 in 3 Americans say they have been personally affected by an extreme weather event in the past 2 years. As these events become more frequent and intense, community leaders need to understand how they can better protect critical infrastructure and vulnerable populations.\nWe’re helping communities enhance their resilience through the launch of a climate data platform called the Climate Risk and Resilience Portal (ClimRR) – developed in partnership with the Federal Emergency Management Agency and Argonne National Labs.\nClimRR gives local and state leaders free access to localized climate data about potential future climate-related risks and how their community could be affected. Similar to how AT&T uses climate data to inform its own investment decisions (page 8), ClimRR can inform where and how communities can make their own infrastructure more resilient. It can also support community preparation initiatives through an enhanced understanding of how climate hazards may evolve into the future.\n## READ MORE\nClimate Change & Greenhouse Gas Emissions Issue Brief\n• ClimRR on AT&T website\n### Employees\nAcross all 50 U.S. states and in more than 55 countries, AT&T employees deliver technology and telecommunications services to millions of consumers and businesses every day. We strive to be an employer of choice and invest in our people through well-paying jobs, competitive benefits and skills development programs that open advancement opportunities.\nWe aim to ensure a workforce that is representative of the communities where we live and work. Our approach seeks to establish diversity at all levels and instill a sense of belonging across our entire workforce.", "chunk_word_count": 544, "section_path": "AT&T 2022 Sustainability Summary > OUR RESPONSE TO HURRICANE IAN", "document_id": "AT&T 2022 Sustainability Summary", "page": 15, "page_start": 15, "page_end": 17 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 10, "chunk_text": "# AT&T 2022 Sustainability Summary\n## EMPLOYEE ENGAGEMENT SCORE\n82%\n## TOTAL HOURS OF EMPLOYEE TRAINING17\nCommunity Engagement Page 21\n### Employee Engagement\nDiversity, Equity & Inclusion\n### Training & Career Development\nOPEN POSITIONS FILLED BY WOMEN AND/OR PEOPLE OF COLOR CANDIDATES1\n75%\nPage 17\nPage 18\nPage 20\n### Employee Engagement\n### Engaged employees are essential to bringing our company’s purpose to life. We are committed to helping employees to feel connected to and fulfilled by their work.\n\\~163K employees7 across\n82%\nemployee engagement score in 2022\nThe annual AT&T Employee Survey is a key input to our employee listening program. Through this survey, we obtain feedback on employee sentiment and gain actionable insights on how to enhance the employee experience at AT&T.\n## 50 states and\nThe 2022 AT&T Employee Survey recorded a strong employee engagement score of $8 2 \\%$ .13 The feedback behind this score demonstrates that employees are proud to be associated with AT&T and feel a sense of personal accomplishment from their work, among other factors.\n55+ countries\nyear-over-year employee engagement\nEngagement scores and other AT&T Employee Survey results are shared throughout the organization, and leaders take responsibility for targeted initiatives based on feedback from their teams. For example, as part of our ongoing cultural transformation initiative, we’ve been amplifying our most effective corporate behaviors and empowering employees to simplify or discontinue business practices that no longer aid in the success of our company.\n## CONNECTING OUR PEOPLE TO WHAT MATTERS\nEmployees who participate in community engagement programs are significantly more likely to stay with the business, recommend AT&T as a place to work, and generally feel better about working for the company.\nRecognizing the importance of connecting our people to our social and environmental efforts, we’re working to increase employee awareness of our commitments to address the digital divide and climate change.\nAT&T employees are volunteering to bridge the digital divide in their local communities (page 21), stepping up as Environmental Champions (page 22), and innovating to help our business customers reduce their emissions (page 26).\n### Diversity, Equity & Inclusion (DE&I)\n[IMAGE CAPTION] Best Place to Work for Disability Inclusion\n## EMPLOYEE DEMOGRAPHICS\nBy building a diverse, equitable and inclusive workforce, we help strengthen and empower the many communities in which we live, work and play. Our approach to DE&I puts our employees and their experiences at the heart of our inclusive culture, valuing and celebrating the diversity of their backgrounds, perspectives and abilities.", "chunk_word_count": 412, "section_path": "AT&T 2022 Sustainability Summary > EMPLOYEE ENGAGEMENT SCORE", "document_id": "AT&T 2022 Sustainability Summary", "page": 17, "page_start": 17, "page_end": 19 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 11, "chunk_text": "# AT&T 2022 Sustainability Summary\n## (END OF YEAR 2022)14\n37% women in senior management15\n49% people of color in U.S. workforce\nWe prioritize recruiting and hiring talented people who reflect the world in which we live, with heightened focus on growing our senior leadership pipeline of diverse talent. We also continue to focus on ensuring diversity in promotions and professional development (see page 20 for more on how we integrate DE&I into our training efforts).\n>6.7K\n>11.4K veterans in U.S. workforce16\nindividuals with disability in U.S. workforce16\nEmployee Group members are our organization’s cultural lifeblood and at the forefront of our efforts to advance DE&I. In 2022, more than 40,800 employees participated in networking, volunteering and fundraising opportunities sponsored by Employee Groups. In addition, our Employee Groups awarded more than 300 scholarships totaling more than $\\$ 565,000$ .\n>2.7K\nindividuals identify as LGBTQ+ in U.S. workforce16\nWe’re proud to be recognized by top DE&I organizations for our support of diverse communities in 2022.\n## HIRING AND ADVANCING AT AT&T (2022 REPORTING PERIOD)\n65% of new hires were people of color\n37% of new hires were women\n[IMAGE CAPTION] DiversityInc Top 50 Companies for Diversity\n[IMAGE CAPTION] Best Places to Work for LGBTQ+ Equality\nBloomberg Gender Equality Index\n75%\n69%\nof open positions were filled by women and/or people of color candidates1\nof internal promotions were filled by women and/or people of color candidates1\nREAD MORE\nDiversity, Equity & Inclusion Issue Brief\nAT&T Diversity, Equity & Inclusion website\n### Diversity, Equity & Inclusion (DE&I)\n### Equality First", "chunk_word_count": 257, "section_path": "AT&T 2022 Sustainability Summary > (END OF YEAR 2022)14", "document_id": "AT&T 2022 Sustainability Summary", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 12, "chunk_text": "# AT&T 2022 Sustainability Summary\n## PEOPLE, PURPOSE AND POSSIBILITY\nIn 2022, we expanded the Equality First offering to introduce a desktop experience focused on building inclusive leadership practices. This imperative provides people leaders the tools needed to make small, incremental changes to their behaviors that add up to big cultural changes over time. The platform offers bite-sized learning on our key DE&I pillars that can be integrated into daily operations and provides a safe, private forum for discussing the content, asking questions, and sharing challenges. With this experience, our people leaders:\nIn 2021, we began our Equality First movement with the launch of the Equality First mobile app, giving employees access to an immersive hub of content and hands-on tools. The content within the app continues to grow, including personal storytelling from employees across the broad spectrum of diversity at AT&T, as well as major film festival shorts that bring stories from the communities we serve to employees. We provide this content at no cost to our employees, all while investing back in the filmmakers who create it to continue their art and connect with greater possibilities.\nThe annual AT&T Employee Group conference is one of the most anticipated employee events of the year. Under the banner of People, Purpose and Possibility, the 2022 conference brought together 1,000 employees in five locations across the U.S. and Mexico, and another 15,000 online attendees from 21 different countries. Employees said that the conference showcased how AT&T is truly living diversity and inclusion, and more than $90 \\%$ of attendees said they would recommend the conference to a colleague.\n• Improve trust-building know-how, built on a foundation of psychological safety. Learn how to communicate to inspire broader audiences. Sharpen their ability to recognize and counteract how bias impacts their teams’ work and relationships. Upskill in assessing team members' contributions through the lenses of inclusion and equity. \nGain expertise to more consciously and comfortably build diverse teams.\nWhen surveyed about the AT&T Employee Group conference, our people said:\n“\u0007I loved the energy, it really helped to keep me engaged and I would attend this event again.”\n“\u0007Great event, it really provided a big picture of the level of diversity at AT&T.”\n## READ MORE\n• Diversity, Equity & Inclusion Issue Brief\nAT&T Diversity, Equity & Inclusion website\n### Training & Career Development\n### When our employees succeed, our company does better. We invest in skills development programs for our people throughout their careers. Through these efforts, we help our employees – and our business – thrive.", "chunk_word_count": 423, "section_path": "AT&T 2022 Sustainability Summary > PEOPLE, PURPOSE AND POSSIBILITY", "document_id": "AT&T 2022 Sustainability Summary", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 13, "chunk_text": "# AT&T 2022 Sustainability Summary\n## PROGRAMS FOR ALL CAREER STAGES\nOur training and skills development activities are designed to maximize our employees’ success in their current roles and support their future aspirations.\nIn 2022, our employees completed an average of 30 courses per employee1 through AT&T Learning & Development – our award-winning internal training organization that engages our team with training, mentoring and career development programs. We also partner with learning institutions such as Harvard Business and LinkedIn Learning to offer leadership and career courses. Key outcomes of our training and development programs in 2022 include:\nWe focus on creating a positive onboarding experience for all candidates to ensure their job readiness and continued engagement. In 2022, we delivered 4 million hours of new hire training to help incoming employees learn about the company and their department-specific roles and responsibilities.\n## NEW HIRE TRAINING\n## DEVELOPING LEADERSHIP SKILLS\nIn 2022, we reimagined our approach to leadership development. We focused on developing and enhancing leadership skills and capabilities that aim to develop leaders who can play a role in developing others and who can role model key future capabilities for the rest of the organization. Participants in programs AT&T Learning & Development facilitates gain strategic exposure and engagement opportunities with their peers and other AT&T leaders.\n\\$135M investment in employee training and professional development programs17\n197K employees reached17\nWe help employees develop role-specific skills through training optimized to their current position. For example, our Real Time Training method helps employees develop role-specific skills by using machine learning to deliver short-form training content to the right employees at the right time. With Real Time Training, we are able to identify who needs training and when, as well as which training solution is most likely to drive the greatest performance improvements for the employee’s respective key performance indicators.\n## ROLE-SPECIFICSKILLS\n326K \nhours devoted to upskilling \nfor future roles17\n8M total hours of employee training17\nConsistent with our talent strategy to meaningfully improve leadership diversity at AT&T, AT&T Learning & Development facilitates several programs targeted at developing diverse leaders. Examples include:\n\\$10.5M tuition assistance for employees1\nOur advanced learning programs help employees identify the most impactful path to grow their skills. In 2022, employees recorded 2.1 million training hours on advanced learning programs, with 326,000 hours registered toward employee upskilling for a future role.17\nREAD MORE • Human Capital Management Issue Brief\n## ADVANCED LEARNING PROGRAMS\nLeadership Education for Asian Pacifics SMU Rising Latino Leaders Program Black Enterprise Black Men Xcel Summit Black Enterprise Black Women of Power Summit\n### Community Engagement\n### Through their jobs and beyond, our employees connect people to greater possibility every day.", "chunk_word_count": 444, "section_path": "AT&T 2022 Sustainability Summary > PROGRAMS FOR ALL CAREER STAGES", "document_id": "AT&T 2022 Sustainability Summary", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 14, "chunk_text": "# AT&T 2022 Sustainability Summary\n## AT&T BELIEVES AND THE DIGITAL DIVIDE\nOur people are dedicated to amplifying their positive impact through a range of community engagement initiatives. Throughout the year, AT&T employees contribute their time and resources to organizations and causes including bridging the digital divide, disaster relief, and environmental stewardship. Recognizing the importance of community engagement to our team, we established a target to engage $5 0 \\%$ of employees in grassroots volunteering and charitable giving initiatives by year-end 2030. At the end of 2022, we had engaged $3 1 \\%$ of employees and continue to progress toward our target.18\nThrough AT&T Believes(SM), our global employee volunteer program, our people participate in grassroots efforts to create positive change in local communities.\nAddressing the digital divide was a major focus for AT&T Believes in 2022. Throughout the year, U.S. employees volunteered to support underserved learners at AT&T Connected Learning Centers both virtually and in-person (see page 11 for more on AT&T Connected Learning Centers). Our employees helped students reach their full potential by serving as tutors and mentors, teaching digital literacy workshops, and participating in computer distribution events.\nHelping close the digital divide was the focus of a company-wide employee engagement campaign, Bridge to Possibility: Closing the digital divide, together. During the campaign, AT&T employee volunteers beautified five Connected Learning Centers and our Employee Groups (see page 18) assembled 10,000 connected learning kits for distribution to 18 local communities. The kits provide tools to support students in completing their schoolwork online.\n### Community Engagement\n### Our Environmental Champions\n## TOTAL AMOUNT OF CORPORATE AND AT&T FOUNDATION GIVING20\n## \\$89.1M\nOur Environmental Champions program engages employees in our work to protect the environment by equipping them with information and skills to help them live and work more sustainably. The program has grown to include more than 1,800 individuals, who incorporate learnings into their own lives and share information with colleagues and friends. Our employees also took part in environmental stewardship projects including building bee habitats, planting seed balls, and cleaning up parks and lakes.\n## TOTAL AMOUNT CONTRIBUTED ORDIRECTED THROUGH CORPORATE,EMPLOYEE AND AT&T FOUNDATIONGIVING PROGRAMS\n## \\$104.8M\n### The generosity of our people\n## TOTAL VALUE OF EMPLOYEE VOLUNTEERISM21\n## \\$11.6M\nWe encourage our employees to donate to causes they care about through a year-round giving program. In 2022, more than 40,000 AT&T employees generously donated $\\$ 15.7$ million to more than 17,000 charities.19 AT&T is committed to helping employees further their philanthropic impact. We offer a program that matches employee charitable contributions to 501(c)(3) nonprofits and allows employees to earn Volunteer Rewards – grants based on time volunteering in the community that can be directed to the 501(c)(3) charity of their choice. In 2022, more than 45,000 employees earned Matching and Volunteer Rewards.\n### PERCENTAGE OF EMPLOYEES WORLDWIDE ENGAGED IN COMMUNITIES THROUGH GRASSROOTS VOLUNTEERISM AND GIVING INITIATIVES\n31%\nOur people also supported special fundraisers throughout the year. Employees donated more than $\\$ 250,000$ to support the citizens of Ukraine, the communities of Uvalde and Buffalo, survivors of Hurricanes Fiona and Ian, and more (see page 14 for additional information on our community resilience efforts).", "chunk_word_count": 525, "section_path": "AT&T 2022 Sustainability Summary > AT&T BELIEVES AND THE DIGITAL DIVIDE", "document_id": "AT&T 2022 Sustainability Summary", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 15, "chunk_text": "# AT&T 2022 Sustainability Summary\n## READ MORE\n• Community Engagement & Philanthropy Issue Brief\n### Environment\nAs one of the world’s largest companies, we can play a role in creating a better, more environmentally sustainable future. We’re acting to address climate change and prepare for its impacts because it is good for our business, for the stakeholders we serve and for our planet.\nWe’re on our way to carbon neutrality by the end of 2035 and are actively working with our suppliers and customers to help reduce their environmental impact as well.\nANNUAL ENERGY PRODUCTION OF OUR U.S. RENEWABLE ENERGY PORTFOLIO3\n2.9M MWh\n## U.S. EPA GREEN POWER PARTNER LIST RANKING\nCUSTOMER EMISSIONS REDUCTIONS ATTRIBUTABLE TO AT&T SMART CLIMATE SOLUTIONS SINCE 2018 (METRIC TONS CO2e)\n149.2M\nGROSS ANNUALIZED COST SAVINGS SINCE 2015 FROM ENERGY EFFICIENCY PROJECTS \\$663M\nCarbon Neutrality\nGigaton Goal\nWaste Management\nPage 24\nPage 26\nPage 27\n### Carbon Neutrality\n### Climate change is one of the world’s most pressing challenges. Our connectivity can be part of the solution.\n### Enhancing our efficiency\nOur greatest opportunity for emissions reductions is to reduce electricity consumption and accelerate our energy efficiency efforts. Being smarter with purchased electricity also brings financial savings – as we drive kilowatts out of the business, we remove both emissions and energy-related costs.\nGuided by our Climate Strategy and Transition Plan, we’re acting to address climate change and prepare for its impacts. We have set a goal to be carbon neutral, targeting net zero Scope 1 and 2 greenhouse gas $( \\mathsf { G H G } )$ emissions2 for our operations by the end of 2035, guided by a science-based target (SBT) aligned with keeping global temperature increases to below 1.5 degrees Celsius.\nFrom 2015 through 2022, we’ve implemented approximately 161,000 energy efficiency projects across the organization. These projects reduced our Scope 2 emissions and amounted to gross annualized savings of approximately $\\$ 663$ million.23 We will continue to act on opportunities to drive down energy consumption in support of our carbon neutral goal.\nWe continue to progress toward our carbon neutral and SBT ambitions, having reduced emissions by more than $4 1 \\%$ at the end of 2022 (2015 baseline).3\nLooking beyond AT&T’s operations, we’ve achieved our objective for at least $5 0 \\%$ of our suppliers22 to set their own science-based targets (page 29). We’ve also committed to supporting a gigaton of customer emissions reductions through our Gigaton Goal (page 26).\n\\$663M gross annualized cost savings since 2015\n161K >7M M Wh of annual energy savings since 2015\nenergy efficiency \nprojects \nimplemented \nsince 2015\n[IMAGE CAPTION] PROGRESS: REDUCE SCOPE 1 AND 2 GHG EMISSIONS 63% BY YEAR-END 20303\n### Reducing fleet emissions\nOur carbon neutral goal also includes reducing emissions from our global fleet. We expect to reduce our fleet emissions – which currently account for $5 1 \\%$ of our Scope 1 emissions – at least $7 6 \\%$ by 2035. Our strategy involves optimizing routes, switching to hybrid and electric vehicles and reducing the overall size of the fleet.", "chunk_word_count": 509, "section_path": "AT&T 2022 Sustainability Summary > READ MORE", "document_id": "AT&T 2022 Sustainability Summary", "page": 23, "page_start": 23, "page_end": 25 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 16, "chunk_text": "# AT&T 2022 Sustainability Summary\n## READ MORE\nEnergy Management Issue Brief\nClimate Change & Greenhouse Gas Emissions Issue Brief\n### Carbon Neutrality\n### “We're investing in renewable energy because it is good for the planet and good for our business.”\n### Supporting clean energy\nAT&T is one of the largest corporate buyers of renewable energy in the U.S.24 Over the past few years, AT&T has transitioned from generating only a few megawatt-hours of renewable energy to being #6 on the EPA Green Power Partner List.\nGoing big on renewable energy also benefits local communities. AT&T-backed renewable energy projects are creating hundreds of construction jobs and dozens of permanent jobs in the fast-growing clean energy sector. In early 2022, we confirmed 2 virtual power purchase agreements from new solar projects in Maryland and Pennsylvania – generating up to 300 construction jobs in each state.\nWe also administered a national request for proposal in 2022 to procure community solar subscriptions. This resulted in executed agreements with 38 vetted community solar projects across 4 states – totaling a maximum capacity of 55 MW – that are projected to save AT&T $\\$ 15$ million over a 15-year term. These agreements will enable the production of over 191,000,000 kWh of clean energy per year, avoiding over 135,000 metric tons of ${ \\mathsf { C O } } _ { 2 }$ emissions.\nWe remain committed to expanding our clean energy efforts and expect to continue to grow our renewable energy portfolio. This will be an integral part of how we meet our emissions reduction goals.\n### 2.9M MWh\nannual energy production of our U.S. renewable energy portfolio\n### Gigaton Goal\nWe are amplifying our climate efforts by developing innovations that help others become more efficient and manage their carbon footprints. Since 2015, we have been working with business customers and nonprofits to drive adoption of AT&T Smart Climate Solutions that reduce GHG emissions.\n### Connected Climate Initiative\nThrough the Connected Climate Initiative (CCI), we convene the brightest minds from leading technology companies, AT&T Business customers, universities and nonprofits to identify best practices, develop new products and scale innovations. The CCI drives our Gigaton Goal progress through increasing the adoption of Smart Climate Solutions that use AT&T connectivity to reduce emissions.\nRecognizing the opportunity for connectivity solutions to support emissions reductions at scale, we established the Gigaton Goal – a commitment to help our customers collectively reduce a gigaton of GHG emissions by the end of 2035 (2018 baseline). At the end of 2022, we’ve supported 149.2 million metric tons of customer emissions reductions – approximately $1 5 \\%$ of the way toward our Gigaton Goal.25\nSome of the Smart Climate Solutions that the CCI worked on in 2022 include:\n## DATA MANAGEMENT FOR NET ZERO\nMonitoring and reducing an organization’s GHG emissions can be complex. Our IoT solutions enable customers to monitor and manage many different types of equipment, including lighting, heating, cooling and other mechanical equipment to optimize their use. For example, AT&T developed Equipment and Machinery Solutions to better track, monitor, control and optimize heavy machinery and equipment, such as dozers, forklifts and cranes, and help companies manage their performance all in a single view.", "chunk_word_count": 533, "section_path": "AT&T 2022 Sustainability Summary > READ MORE", "document_id": "AT&T 2022 Sustainability Summary", "page": 25, "page_start": 25, "page_end": 27 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 17, "chunk_text": "# AT&T 2022 Sustainability Summary\n## SALESFORCE\nIntegrating AT&T Internet of Things (IoT) solutions into the Salesforce Net Zero Cloud to make it easier for customers to monitor assets in near real-time and quickly identify emissions reduction opportunities.\n[IMAGE CAPTION] PROGRESS: GIGATON GOAL – SUPPORT 1 BILLION METRIC TONS OF CUSTOMER GHG EMISSIONS REDUCTIONS BY YEAR-END 2035\n## GEOTAB\nThis IoT solution helps companies collect and survey vital equipment data, such as engine hours and fuel consumption of machinery, to calculate emissions within the Salesforce Net Zero Cloud ‑ enabling businesses to better track their sustainability goals from the job site to the boardroom. Net Zero Cloud provides AT&T’s customers with critical data accessible from virtually any location via a web portal or mobile app. This AT&T capability is available for any of our business customers.\nWorking with GeoTab to help customers make informed decisions about how to electrify their fleets.\n## READ MORE\n## MICROSOFT AND DELOITTE\nClimate Change & Greenhouse Gas Emissions Issue Brief\n• AT&T Reducing Emissions website\nCollaborating with Microsoft and Deloitte to bring the Connected Spaces product to market, which helps facility operators track emissions data with more accuracy.\n### Waste Management\nAs the scale of human impact on our planet continues to grow, it’s become clear that conventional, linear methods of production and disposal need to be reconsidered. We must move toward a circular economy, which involves embedding sustainability throughout the life cycle of a product or service.\n### Progressing toward circularity\nAll electronic devices should be reused, refurbished or recycled. Reusing devices contributes to a circular economy and helps create more affordable product options for consumers.\nMany materials that we work with can be reused or repurposed instead of being sent to landfill. Together with our waste management partners, we’ve progressed closer toward our target to reduce the amount of U.S. waste sent to landfill by $3 0 \\%$ by year-end 2030 (2019 baseline).\nIn 2022, we recovered 14.9 million devices including mobile phones, internet gateways and television set top boxes.27 Some of these devices are refurbished and distributed to students affected by the digital divide (page 10). If a device cannot be reused in its entirety, we extract individual parts that may be reusable and recycle any remaining plastics and metals.\nAt the end of 2022, we reduced the amount of landfill waste by $2 7 . 9 \\%$ from 2019.26\nAT&T makes it easy for customers to give a second life to their old devices, including:", "chunk_word_count": 415, "section_path": "AT&T 2022 Sustainability Summary > SALESFORCE", "document_id": "AT&T 2022 Sustainability Summary", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 18, "chunk_text": "# AT&T 2022 Sustainability Summary\n## GIVING A SECOND LIFE TO OLD DEVICES\nPROGRESS: REDUCE AMOUNT OF U.S. WASTE SEND TO LANDFILL 30% BY YEAR-END 2030\n14.9M consumer devices reused or recycled in $\\pmb { 0 } \\pmb { 2 2 }$\n11%\n27.9% reduction\nEncouraging customers to return old phones during the upgrade process or by taking advantage of our trade-in programs. \nRefurbishing or recycling broadband internet devices through in-home appointments where an AT&T technician will recover used equipment. \nOffering options for customers to mail their devices back to us to recycle.\nmaterials from take-back programs recycled28\nWe worked to reduce our waste footprint in 2022 through:\n• Improving data accuracy in our supply chain through targeted training for mobility and fleet vendors. Contracting with more vendors located closer to our waste streams, which increases diversion opportunities and reduces waste-related emissions. \nContinuing to divert fiber-optic cable scrap, which can be shredded and milled to serve as components for roofing materials.\n89% materials from take-back programs reused or sold28\n0% materials from take-back programs landfilled28\nWe’re proud that $0 \\%$ of materials from take-back programs went to landfill in 2022.28\nThese efforts provide a solid foundation for our circular economy approach, which we expect to expand in 2023.\n## READ MORE\nProduct Life Cycle Issue Brief\nWaste Management Issue Brief\n### Suppliers\nWhether it’s combatting climate change, enhancing diversity, or upholding human rights, we accomplish more when we work together with our trusted suppliers.\nAs a global company, we rely on a diverse set of suppliers around the world.29 We partner with suppliers who hold themselves to high ethical standards and who work with us to advance sustainable business practices throughout our supply chain.\n## SUPPLIERS4 WITH THEIR OWN SCIENCE-BASED GHG TARGETS\n53%\n## SPEND WITH DIVERSE SUPPLIERS IN 20225", "chunk_word_count": 300, "section_path": "AT&T 2022 Sustainability Summary > GIVING A SECOND LIFE TO OLD DEVICES", "document_id": "AT&T 2022 Sustainability Summary", "page": 28, "page_start": 28, "page_end": 29 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 19, "chunk_text": "# AT&T 2022 Sustainability Summary\n## \\$16.3B\n### Responsible Supply Chain\n### Combatting climate change together\n### Enhancing supplier diversity\n### Supplier sustainability integration\nWe're using our scale and influence to encourage AT&T suppliers to reduce their own carbon emissions. Part of AT&T’s science-based target (page 24) includes a commitment to ensure $5 0 \\%$ of our suppliers4 set their own science-based $\\mathtt { G H G }$ targets by year-end 2024. We’re proud to report that we achieved our goal – as of year-end 2022, $5 3 \\%$ of our suppliers have set science-based targets.\nAT&T is proud to be a long-standing leader in supplier diversity. Over the last 54 years, we have spent more than $\\$ 230$ billion with businesses and enterprises owned by minorities, women, veterans, $\\mathsf { L G B T Q + }$ persons, and people with disabilities. In 2022, we met our annual goal to exceed $2 1 . 5 \\%$ of supplier spend and $\\$ 10$ billion in total procurement expenditures with diverse suppliers, reaching $\\$ 16.3$ billion.5 This represents $2 6 . 3 \\%$ of our overall procurement spend. As we adopt new and emerging technologies critical to our business initiatives, we’re focused on ensuring diverse businesses are part of our transformation.\nWe engage our strategic suppliers to integrate sustainability performance metrics into sourcing decisions. These assessments cover a range of ESG factors such as environmental management, circular economy, stakeholder engagement and a supplier’s management of its own supply chain. Our objective is for at least $8 0 \\%$ of spend to be covered by supplier sustainability assessments through 2025.\nAs a signatory to the UN Global Compact, we recognize the importance of upholding human rights in our supply chain. Through our membership in the Joint Alliance for CSR (JAC) we conduct audits annually within our supply chain using a common audit framework that includes facility evaluations, management interviews, confidential worker interviews and supplier documentation reviews. The JAC audit framework addresses 10 focus areas, including human rights considerations such as the use of child labor and forced/bonded labor.\nThrough the year, we also trained suppliers on using environmental reporting to track progress and reduce their environmental impact over time. Suppliers representing more than $\\$ 7$ billion in annual spend participated in the training.\nWe participate in regional and national supplier diversity events and work with several diversity business organizations, such as the National Minority Supplier Development Council, for targeted supplier identification. In 2022, AT&T sponsored or participated in roughly 250 in-person and virtual supplier diversity outreach events.\n[IMAGE CAPTION] PROGRESS: ENSURE 50% OF SUPPLIERS ADOPT SCIENCE-BASED GHG TARGETS BY 2024\nOur supplier financing programs allow small, diverse businesses to leverage the credit power of AT&T. In 2022, participants in our supplier financing program included 96 certified women-owned business enterprises, 91 certified minority business enterprises and 10 certified disabled-veteran enterprises.\nIn 2022 JAC audited 79 factory locations,30 including 41 AT&T suppliers, impacting over 133,000 individuals. AT&T led a combination of 6 audits and Mobile Worker Surveys of AT&T suppliers’ factory locations. JAC identified 549 corrective actions and closed $5 1 \\%$ of all open and newly identified corrective actions – including $6 1 \\%$ rated as major, $3 0 \\%$ rated as minor and $1 0 \\%$ flagged for priority.31", "chunk_word_count": 547, "section_path": "AT&T 2022 Sustainability Summary > \\$16.3B", "document_id": "AT&T 2022 Sustainability Summary", "page": 30, "page_start": 30, "page_end": 30 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 20, "chunk_text": "# AT&T 2022 Sustainability Summary\n## \\$16.3B\n### 82%\nsupplier spend in 2022 with businesses owned by minorities, women, veterans, LGBTQ+, and people with disabilities5\nof spend had sustainability performance metrics embedded in sourcing decisions in 202232\n### Progress toward Goals\n### Communities\n### Suppliers\n### Environment\n### Endnotes\nI nclusive of AT&T Corporate and AT&T Communications.\n9 Capital investment from continuing operations is a non-GAAP financial measure that provides an additional view of cash paid for capital investment to provide a comprehensive view of cash used to invest in our networks, product developments and support systems. In connection with capital improvements, we negotiate with some of our vendors to obtain favorable payment terms of 120 days or more, referred to as vendor financing, which are excluded from capital expenditures and reported in accordance with GAAP as financing activities. Capital investment from continuing operations includes \\$19.6 billion of capital expenditures from continuing operations and \\$4.7 billion of cash paid for vendor financing.\n## 24 U.S. Environmental Protection Agency. Green Power Partnership National Top 100. https://www.epa.gov/greenpower/green-power-partnership-nationaltop-100.\n2 Scope 1 emissions include direct emissions from sources owned or controlled by the company (such as our fleet). Scope 2 emissions include indirect emissions that result from the generation of purchased energy.\nData does not include DIRECTV or Vrio.\n3 2018-2022 data is inclusive of all AT&T operations (U.S. and international). Starting in 2022, data does not include DIRECTV, Vrio, Xandr and WarnerMedia. Note: In July 2021, we completed a transaction with TPG Capital involving our North America video business – including DIRECTV, AT&T TV and U-verse – to form a new company called DIRECTV. In November 2021, we completed the sale of our Latin America video operations, Vrio, to Grupo Werthein. In April 2022, we completed a transaction to combine our WarnerMedia segment, subject to certain exceptions, with a subsidiary of Discovery Inc. In June 2022, we completed the sale of the programmatic advertising marketplace of Xandr Inc to Microsoft.\n## 2022 data is inclusive of AT&T Communications, U.S. operations.\n27 2018-2022 data include mobility devices, broadband devices and internal AT&T devices. Data (2018-2022) covers AT&T’s U.S. operations. 2018-2021 data have been restated to exclude DIRECTV. Note: In July 2021, we completed a transaction with TPG Capital involving our North America video business – including DIRECTV, AT&T TV and U-verse.\n10 The years ended December 31, 2020 through 2022 present results from continuing operations, and the years ended December 31, 2018 and 2019 include comparable adjustments to remove capital expenditures from discontinued operations.\n## 28 2018-2022 data include AT&T’s U.S. operations.\n29 Our Global Supply Chain (GSC) organization manages the supply chain of AT&T Communications and AT&T International operating companies. This represents the largest and most complex portion of our supply chain. Because of the scale of this work, supplier-related content in this document reflects the efforts of GSC unless otherwise noted. Supplier diversity and supplier sustainability metrics represent the effort of our entire U.S. operations. AT&T’s Global Supplier Diversity team administers the Supplier Diversity program on behalf of all AT&T affiliates (herein referred to as “AT&T”). This report includes results for all affiliates of AT&T Corporate.", "chunk_word_count": 524, "section_path": "AT&T 2022 Sustainability Summary > \\$16.3B", "document_id": "AT&T 2022 Sustainability Summary", "page": 30, "page_start": 30, "page_end": 32 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 21, "chunk_text": "# AT&T 2022 Sustainability Summary\n## 11 “Broadband Access Still a Challenge in Rural Affordable Housing.” The Pew Charitable Trusts.\n4 Refers to $5 0 \\%$ of our suppliers covering purchased goods and services, capital goods and downstream leased assets as a portion of spend.\n12 Eligibility determined by the National Lifeline Eligibility Verifier (National Verifier), managed by the Universal Service Administrative Company. For more information on eligibility criteria for the ACP, visit https://acpbenefit.org.\n5 Supplier diversity spend excludes content and programming spend, and reflects the activities of the AT&T Global Connections and Supply Chain organization within AT&T Communications.\nThe 2022 AT&T Employee Survey response rate was 65%.\n6 Based on nationwide GWS drive test data. GWS conducts paid drive tests for AT&T and uses the data in its analysis. AT&T 5G requires compatible plan and device. 5G not available everywhere. Go to att.com/5Gforyou for details.\nData does not include WarnerMedia, DIRECTV or Vrio.\nThis number reflects Joint Audit Cooperation (JAC) and Validated Assessment Program (VAP) audits.\nSenior Management Positions are defined as roles that are a maximum of two levels away from the CEO or comparable positions.\nData inclusive of AT&T Communications, AT&T Corporate and AT&T International; does not include DIRECTV or WarnerMedia.\nTotals may not add to $100 \\%$ because of rounding.\n16 As self-identified via AT&T iCount. AT&T Inc and AT&T Communications only. These metrics are only tracked in the U.S. Employees in other countries do not have the ability to identify in any of these areas. This data is voluntarily selfreported, which means there may be a discrepancy between employees who are part of these groups and employees willing to report that they are part of these groups.\n32 The supplier sustainability management approach reflects the activities of the AT&T Global Connections and Supply Chain organization within AT&T Communications.\n8 Adjusted diluted EPS from continuing operations includes adjusting items to revenues and costs that we consider non-operational in nature, including items arising from asset acquisitions or dispositions. We adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often-significant impact on our results (we immediately recognize this gain $\\mathsf { O } \\mathsf { I }$ loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses). Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income. The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude, can drive a change in the effective tax rate, in these cases we use the actual tax expense or combined marginal rate of approximately $2 5 \\% .$\nAT&T follows the GHG Protocol for Scope 1, Scope 2 and Scope 3 reporting. \n2022 GHG emissions data contains Q4 estimations.\nInclusive of AT&T Communications, AT&T Corporate and AT&T International.\nRepresentative of all AT&T operations, excluding AT&T Mexico.\nRepresentative of all AT&T operations, including WarnerMedia.\n\\$67.5 million of 2022 philanthropic giving was provided by AT&T and \\$21.6 million was provided through the AT&T Foundation.", "chunk_word_count": 528, "section_path": "AT&T 2022 Sustainability Summary > 11 “Broadband Access Still a Challenge in Rural Affordable Housing.” The Pew Charitable Trusts.", "document_id": "AT&T 2022 Sustainability Summary", "page": 32, "page_start": 32, "page_end": 32 }, { "report": "AT&T 2022 Sustainability Summary.pdf", "chunk_idx": 22, "chunk_text": "# AT&T 2022 Sustainability Summary\n## 11 “Broadband Access Still a Challenge in Rural Affordable Housing.” The Pew Charitable Trusts.\nFor 2022, Adjusted EPS from continuing operations of \\$2.57 is Reported EPS from continuing operations of (\\$1.10) adjusted for \\$3.59 impairments, abandonments and restructuring, \\$0.19 benefit-related and other costs, \\$0.16 proportionate share of intangible amortization at the DIRECTV equity method investment, and \\$0.06 impact of ASU No. 2020-06, minus \\$0.20 actuarial gain on benefit plans and \\$0.13 benefit from tax items.\nThe value of volunteer time was calculated using the Independent Sector value of a volunteer hour, which was \\$29.95 for 2022.\nCovering purchased goods and services, capital goods and downstream leased assets as a portion of spend.\n## 2022 increase in annualized energy costs savings driven by large scale renewable energy and decommissioning projects.\n## AT&T\nThe AT&T ESG reporting website provides comprehensive disclosure additional to this Sustainability Summary:\nESG Issue Briefs \nTCFD Report \nCDP Climate Change Disclosure \nPolitical Engagement Report \nTransparency Report \n2023 Proxy Statement\n@ATTimpact ATTimpact att.com/csr", "chunk_word_count": 170, "section_path": "AT&T 2022 Sustainability Summary > 11 “Broadband Access Still a Challenge in Rural Affordable Housing.” The Pew Charitable Trusts.", "document_id": "AT&T 2022 Sustainability Summary", "page": 32, "page_start": 32, "page_end": 33 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 0, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Contents\n## 3 Introduction / \n3 President and CEO Message \n5 CSO Message \n7 2022 Highlights\n## 49 Operations /\nIntroduction\n## 50 Quality \n52 Sustainable Operations \n62 Responsible Supply Chain \n66 Enterprise Security and Data Privacy\nApproach & Governance\nPeople\n## 9 Approach & Governance /\n10 Company Profile \n11 Advancing Our Sustainability Journey \n12 Sustainability Goals \n13 Governance and Risk Management \n15 Enhancing a Sustainability Culture \n16 Ethical and Compliant Business \n68 Community Engagement \n69 Our Heroes \n70 Our Homes \n72 Our Future\n## 67 Communities /\nProducts & Services\nOperations\nCommunities\n## 73 Reporting /\nReporting\n## 18 People /\n19 Workplace Safety \n21 Employee Well-Being \n24 Global Equity, Diversity and Inclusion \n26 Professional Development, Education \nand Learning \n74 Key ESG Data \n79 GRI Index \n91 SASB Index \n93 TCFD Index \n94 U.N. Sustainable Development Goals \n97 Awards and Recognition \n98 Select Memberships and Partnerships \n99 Forward-Looking Statements\n27 Products & Services /\n## 28 Global Aerospace Safety \n31 Sustainable Product Life Cycle \n33 Innovation and Clean Technology\n### President and CEO Message\nContents\nIntroduction \nPresident and CEO Message \nCSO Message \n2022 Highlights\n### Sustainability\nAlongside our strong commitment to safety, quality, and integrity, sustainability is tightly woven into the fabric of our values, our culture and our aerospace industry. Aviation is integral to our modern world, touching many sectors of the global economy and enabling personal human connections. That’s why we title our report “Sustainable Aerospace Together.” Each of us has a role to play to ensure we make the world better for future generations.\nApproach & Governance\nPeople\nIn this report, you’ll see examples of our collective efforts and partnerships to advance environmental stewardship, human development and inclusion — underpinned by transparency at every level as we strive to make aerospace more sustainable, together.\nProducts & Services\nOperations\n### Working Together for the Environment\nCommunities\nCollaboration with global industry partners, the energy sector, governments, nongovernmental organizations, higher education institutions and other stakeholders to advance sustainable solutions is more necessary than ever. To increase education around the commercial aviation industry’s carbon footprint, and its ambition to reach net-zero carbon emissions by 2050, Boeing created an innovative visual data modeling tool known as Cascade, which you will learn more about in this report. Cascade models the climate impact of the commercial aviation industry and explores paths to decarbonize and reach net zero by 2050.\nReporting\nWithin our manufacturing operations, it is not just what we build, but how we build our products. We increasingly look at every stage of the product life cycle through a sustainability lens. Our people have worked hard to reduce our environmental impact by investing in conservation and procuring more renewable electricity.", "chunk_word_count": 459, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 2, "page_start": 2, "page_end": 3 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 1, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### President and CEO Message\nContents\n### Working Together for Our Employees and Communities\nBoeing, we support science, technology, engineering and math (STEM) education initiatives; assist military members, veterans and their families; promote environmental stewardship; advance racial equity; and provide for communities in need — including disaster recovery and relief.\nIntroduction \nPresident and CEO Message \nCSO Message \n2022 Highlights\n### Our Values\nWe also continue our focus on providing a transparent, inclusive workplace culture in which teammates’ voices are heard and managers are empowered to make meaningful change when necessary. Our latest progress and efforts in 2022 are seen within our Global Equity, Diversity & Inclusion report, including an increase in women’s representation in our global workforce and racial/ethnic minority representation in the U.S. workforce and connecting incentive compensation to inclusion.\n### How We Operate\n### How We Act\nStart with engineering excellence\nLead on safety, quality, integrity and sustainability\nApproach & Governance\n### Transparency at Every Level\nWe continue to prioritize safety, quality, integrity and sustainability every step of the way. Trust is earned one airplane and one interaction at a time. Our leadership team also works closely with the Boeing Board of Directors to help ensure industry standards and ethical practices are followed. Our Board and specifically the Governance & Public Policy Committee provides oversight and holds us accountable to our sustainability policies, practices and strategy.\nBe accountable — from beginning to end\nFoster a Just Culture grounded in humility, inclusion and transparency\nPeople\nProducts & Services\nApply Lean principles — eliminate traveled work\nImport best leadership practices\nWe routinely encourage use of our Seek, Speak & Listen habits in internal interactions. Quarterly enterprise culture surveys indicate that a majority of our teammates are comfortable discussing concerns with managers and feel comfortable telling others at work when they have made an error. Our goal is to provide a safe environment so that each employee’s voice is heard.\nOperations\nCrush bureaucracy\nEarn stakeholder trust and preference\nCommunities\nReward predictability and stability — everywhere in our business\nRespect one another and advance a global, diverse team\nReporting\nWe are in the era of more sustainable aerospace, and together, we look forward to achieving it.\nOur employees are also at the heart of our community work. Through our global community engagement efforts across\nInnovate and operate to make the world better\nDavid L. Calhoun President and CEO\nRead more about our values\n### CSO Message\nContents", "chunk_word_count": 414, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > CSO Message", "document_id": "Boeing 2023 Sustainability Report", "page": 4, "page_start": 4, "page_end": 5 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 2, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Mapping the Sustainable Aerospace Future Together\n[IMAGE CAPTION] Chris Raymond, Chief Sustainability Officer\nIntroduction \nPresident and CEO Message \nCSO Message \n2022 Highlights\nDecarbonizing aerospace is both the challenge and opportunity of our lifetime. We have long maintained that decarbonizing aerospace will take everything — technology, policy, capital, energy, entrepreneurship — and everyone — employees, customers, financiers, regulators, academics and business partners. For that reason, we just convened global thought leaders and decision-makers from across these communities to review our progress to date and discuss the way forward toward achieving Sustainable Aerospace Together.\nDuring the event, we also launched a public version of Cascade, a web-based application that uses public aviation and energy data to visualize how various approaches might be combined to lower emissions. It was rewarding to see our partners and stakeholders engage with the tool, and we can’t wait for the global user community to further refine Cascade over time. We invite everyone to check it out at SustainabilityTogether.aero.\nApproach & Governance\nPeople\nThis Sustainable Aerospace Together Forum was a culmination of many activities and events that took place throughout 2022 with the same common theme — together. We made important progress over the past year with valued partners around the globe.\nAerospace is more than an industry. We connect people around the globe and promote an understanding of different cultures; we protect through national security and humanitarian relief; we contribute to the global economy with jobs, trade, technology and commerce; and we inspire young minds to seek careers in STEM. Commercial aviation also generates about $2 . 5 \\%$ of the world’s carbon emissions and $12 \\%$ of transport emissions, so we must find ways to further decouple forecasted growth of aerospace from greenhouse gas emissions (GHG) … and continue to do so safely and transparently.\nProducts & Services\nOperations", "chunk_word_count": 313, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Mapping the Sustainable Aerospace Future Together", "document_id": "Boeing 2023 Sustainability Report", "page": 5, "page_start": 5, "page_end": 5 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 3, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Together …\nCommunities\nWe launched Cascade. At the Farnborough International Airshow in July 2022, we announced Cascade and provided a live demonstration of Version 1.0. Cascade was developed to visualize the climate impact of aviation across the world and explore scenarios to most effectively decarbonize commercial aviation by 2050: fleet renewal, operational efficiency, sustainable aviation fuel (SAF) and new aviation technologies such as transonic truss-braced wing structures, hybrid-electric, all-electric or hydrogen airplanes. This tool allows stakeholders across the industry — in particular customers and policymakers — to make informed decisions and trade-offs about how to best reach the commercial aviation industry’s net-zero 2050 ambition. We look forward to the additional feedback from the recent public launch and will continue to invest in Cascade through collaborating with founding members of the Community to include IATA, NASA, University of Cambridge’s Whittle Laboratory and the MIT Laboratory for Aviation and the Environment.\nReporting\nThe engagement was energizing and encouraging as sector leaders leaned into the issues and potential roadblocks that could slow the commercial aviation industry’s progress toward meeting its net-zero 2050 ambition. What struck me was the collective decision in tackling this issue together for the greater good of the industry and humanity at large. It was also a reminder that this hard to abate industry has historically solved hard challenges — from inventing flight to discovering the universe. It’s with humility and resolve that we collectively take on the challenge of more sustainable aerospace.", "chunk_word_count": 253, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Together …", "document_id": "Boeing 2023 Sustainability Report", "page": 5, "page_start": 5, "page_end": 5 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 4, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\nIntroduction \nPresident and CEO Message \nCSO Message \n2022 Highlights\nNeil Titchener, Ellen Ebner and Chris Raymond unveil the public version of Cascade during the Sustainable Aerospace Together Forum in Renton. (Boeing photo)\nThe Sustainable Aerospace Together Forum, presented by Boeing in partnership with the Financial Times, brought together the aviation, energy, finance and policy sectors. (Boeing photo)\nBoeing President and CEO Dave Calhoun discusses the importance of working together for a sustainable aerospace future with Boeing communicator Elisa Hahn at the pre-forum reception. (Boeing photo)\nWe advanced SAF. Nearly all industry and governmental decarbonization road maps conclude that SAF is the biggest lever we have to reduce GHG emissions from commercial aviation. Our company is focused on multiple areas to catalyze SAF scaling, including investing in airplane efficiency and compatibility, purchasing SAF for our own fuel use in our operations, engaging global regulators on smart policies, promoting robust sustainability criteria, and investing in Cascade to further industry partnerships and policy advocacy to scale up SAF supply and bring down cost.\nFinally, the Boeing ecoDemonstrator team partnered with NASA on emissions testing to better understand SAF and contrails.\nincluding airline customers, suppliers and regulatory agencies. From the first ecoDemonstrator in 2012 through this year’s effort, the ecoDemonstrator program will have evaluated more than 225 technologies with approximately one-third of those getting implemented. Projects include technologies that reduce fuel use, emissions and noise, enhance safety and incorporate more sustainable materials.\nApproach & Governance\nWe advanced the future of flight. While SAF is a necessary lever to decarbonize commercial aviation, we have a ${ } ^ { \\mathfrak { s o A F } }$ and” view and not a “SAF or” approach to achieving the commercial aviation industry’s net zero goal by 2050. Together with partners, we continue to explore the safety and viability of other renewable energy carriers and technologies for aircraft. You’ll read about several of these developments in this report, including our Wisk joint venture’s announcement of the world’s first self-flying, all-electric four-passenger vertical takeoff and landing (eVTOL) air taxi. As Wisk’s go-to-market aircraft, the latest generation of this aircraft represents the first-ever candidate for type certification by the U.S. Federal Aviation Administration of an autonomous eVTOL. We also value our partnerships around the world to advance sustainable technologies, such as the new Boeing Research and Technology center in Japan with a focus on sustainability. We are also honored to be selected by NASA for the Sustainable Flight Demonstrator program, which will inform future designs that could lead to breakthrough aerodynamics and future efficiency gains.\nPeople\nProducts & Services\nSustainable Aerospace starts within our four walls and Boeing continues to make progress on our 2025 operational targets as outlined on Page 53.\nOperations\nWe continue to make progress on the technical journey working with our suppliers to ensure our commercial airplanes are $100 \\%$ SAF compatible by 2030. We are seeing exciting SAF innovation occurring in sustainable feedstocks and partnering on technologies including wasteand-biomass-based SAF, power-and-biomass-to-liquid and power-to-liquid enablers that can make existing and future SAF pathways more sustainable over time.", "chunk_word_count": 522, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 6, "page_start": 6, "page_end": 6 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 5, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nSee Page 7 for a more comprehensive snapshot of our accomplishments last year and Page 45 for an overview of how we partnered around the globe to advance sustainable aerospace together.\nCommunities\nReporting\nTogether as an industry, we’ve made modern jet travel a reality, helped defend freedom around the world, and made space exploration possible. We now enter the era of more sustainable aerospace. The foundation we are laying now will be carried forward by future generations to preserve and grow the societal benefits of this industry. We are proud to be on this journey — together — with so many capable and committed partners around the globe.\nWe purchased 5.6 million gallons (21.2 million liters) of blended SAF to support our commercial operations. The challenge remains scaling SAF availability and lowering its cost. Together, we’ve made important progress this year on building the industry. Governments around the world are unlocking policy mechanisms to scale SAF, including a blending mandate and corresponding offtake requirement in Europe, and incentives such as the Blenders Tax Credit for SAF producers in the U.S. These policies and incentives are beginning to attract necessary capital to scale production.\nThe aforementioned Boeing ecoDemonstrator program embodies our “together” theme and is celebrating its 10-year anniversary this year. The ecoDemonstrator takes promising technologies out of a lab and tests them in operational environments with a variety of partners,\nChris Raymond Chief Sustainability Officer\n### Sustainable Aerospace Together 2022 Highlights\nContents\n### January 2022\n### May\n### September\nIntroduction \nPresident and CEO Message \nCSO Message \n2022 Highlights\necoDemonstrator technology testing featured in Aviation Week\nWisk secured $\\$ 450$ million from Boeing to advance certified autonomous electric flight\nNamed ENERGY STAR Partner of the Year\nBoeing and Wisk unveiled concept of operations for urban air mobility\nBoeing and MIT announced research project to help decarbonize aerospace\nBoeing and Alder Fuels partnered to scale SAF globally\nApproach & Governance\n### June\n### November\nPeople\n### February\nProducts & Services\nBecame founding member of UK Innovation Hub to drive SAF development\nDebuted future flight concepts at Farnborough Airshow\nNew Boeing Additive Manufacturing facility in Auburn, Washington, uses 3D printing to produce essential components, reducing waste\nOperations\nPartnered with Avolon, an aircraft leasing company, to scale SAF in Ireland\nUnveiled 2022 ecoDemonstrator, a 777-200ER serving as a test bed for 30 new technologies to help decarbonize aviation\n### August\nCommunities\n### January 2023\nPurchased 2 million gallons (7.6 million liters) of SAF for Boeing’s commercial airplane operations\n### October\nReporting\nBoeing and Mitsubishi Heavy Industries partnered on innovative climate change solutions\nOpened Japan Research Center and expanded sustainability partnerships\n### April\nSelected for NASA Sustainable Flight Demonstrator award\nWisk unveiled world’s first autonomous, four-seat, all-electric, vertical takeoff and landing air taxi\nDebuted Cascade, a data modeling tool that visualizes how to get to a net-zero carbon emission future for commercial aviation\nAnnounced multiyear commitment to Yale Center for Natural Carbon Capture\nAnnounced research project with the University of Cambridge to further advance Aviation Impact Accelerator\nAnnounced as the aviation sector champion in First Movers Coalition, global alliance established by the U.S. government and World Economic Forum\necoDemonstrator program collaborated with NASA to test SAF emissions", "chunk_word_count": 541, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Sustainable Aerospace Together 2022 Highlights", "document_id": "Boeing 2023 Sustainability Report", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 6, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Connecting Globally to Advance Sustainable Aerospace\nContents\nIntroduction \nPresident and CEO Message \nCSO Message \n2022 Highlights\nApproach & Governance\nPeople\nProducts & Services\nOperations\n### Americas\nIndonesia, Malaysia, Vietnam — Supported aviation industry forums and workshops with regulators, airlines and academics, sharing key aviation decarbonization priorities and strategies.\n### United Kingdom\n• Farnborough Airshow: Unveiled Cascade and announced several sustainability initiatives, including partnerships with University of Sheffield Energy Innovation Centre, Cambridge – Aviation Impact Accelerator, Alder Fuels, Mitsubishi Heavy Industries and MIT. Joined UK Ministry of Defense and industry partners to discuss how sustainability enhances operational effectiveness and resilience. • Jet Zero Council: Boeing hosted the Council meeting in London in February 2023, showcasing both Boeing’s UK presence and the Cascade modeling tool, which informs future climate policy choices such as UK SAF mandates.\nBrazil — Boeing Sustainability Forum: Boeing celebrated its 90th anniversary in Brazil at an inaugural summit with the Roundtable on Sustainable Materials and Brazilian-American Chamber of Commerce in São Paulo in September.\nCommunities\n### Singapore\n• Singapore Airshow: Engaged with key industry and policy stakeholders to advocate for sustainable aviation initiatives and partnerships. • Singapore Sustainable Air Hub Report: Contributed key sustainability insights as part of international advisory panel established by the Civil Aviation Authority of Singapore.\n### U.S.\nReporting\n• Summit of the Americas: Hosted a roundtable on sustainable aviation with IATA as part of Summit of the Americas in Los Angeles in June. • Decarbonizing Aviation “Everything for Zero”: Hosted an event in Washington, D.C., in November, sharing Boeing’s vision and a Cascade demo with U.S. and non-U.S. policymakers, legislators and think tanks.\nRepublic of Ireland — Airfinance Journal Dublin: Joined a panel on carbon offsetting and operational strategies for carbon reduction.\n### Europe\n### Asia-Pacific\n### Belgium", "chunk_word_count": 304, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Connecting Globally to Advance Sustainable Aerospace", "document_id": "Boeing 2023 Sustainability Report", "page": 8, "page_start": 8, "page_end": 8 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 7, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Middle East & North Africa\n• European Parliament Sustainability Event: Organized a joint event with Ryanair in October, engaging with members of the Parliament, media, industry and EU stakeholders about ongoing policies and regulations that contribute to accelerating SAF supply and use. Conference on National Armaments Directors: Joined NATO’s first Industry Symposium on Climate Change and Capabilities, which brought together over 150 representatives from NATO Allies and industry. Participants discussed the military challenges of a climate changed world, navigating the energy transition and the national security opportunities of technologies like SAF.\nAustralia — Indo-Pacific Clean Energy Forum: Co-hosted a high-level SAF panel discussion in July in Sydney.\nUnited Arab Emirates — Power-to-Liquid Report Launch: Supported and joined the launch event of the Power-to-Liquid roadmap led by the UAE government in July.\nChina\n• Peking University Institute of Energy’s Report Launch: Supported the report launch in October, which compiled results of SAF research. • Boeing participated at the 1st China Civil Aviation Green Development Forum, which was sponsored by CAAC and in the Annual Civil Aircraft Industry International Forum.\nEgypt — COP27: Engaged government, industry, civil society partners and local and international media.\nBahrain — Energy & Sustainability Forum MENA 2023: Joined panel and discussed opportunities for alternative fuels, rising importance to diversify and build out low-carbon fuels and green chemical industry to create development opportunities.\nGermany — Berlin Air Show: Briefed media about Boeing’s work to decarbonize both commercial and defense products.\nJapan — Boeing Tokyo Sustainability Summit: Hosted a two-day sustainability summit to celebrate a new research center opening in August.\nContents\nIntroduction\nAdvancing Our Sustainability Journey\nSustainability Goals\nGovernance and Risk Management\nEnhancing a Sustainability Culture\nEthical and Compliant Business\nPeople\nProducts & Services\nOperations\nCommunities\n## APPROACH & G O V E R N A N C E\nReporting", "chunk_word_count": 312, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Middle East & North Africa", "document_id": "Boeing 2023 Sustainability Report", "page": 8, "page_start": 8, "page_end": 10 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 8, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Company Profile\nContents\nIntroduction\n### The Boeing Company\nAs a leading global aerospace company, Boeing develops, manufactures and services commercial airplanes, defense products and space systems for customers in more than 150 countries. As a top U.S. exporter, the company leverages the talents of a global supplier base to advance economic opportunity, sustainability and community impact. Boeing’s diverse team is committed to innovating for the future, leading with sustainability and cultivating a culture based on the company’s core values of safety, quality and integrity and sustainability. Learn more at boeing.com.\n### Approach & Governance\nCompany Profile\nAdvancing Our Sustainability Journey\nSustainability Goals\nGovernance and Risk Management\nEnhancing a Sustainability Culture\nEthical and Compliant Business\nPeople\nProducts & Services\n### Commercial Airplanes\n### Defense, Space & Security\n### Global Services\nOperations\nThis business provides services to our commercial and defense customers worldwide. Boeing Global Services sustains aerospace platforms and systems with a full spectrum of products and services, including supply chain and logistics management; engineering, maintenance and modifications; upgrades and conversions; spare parts; pilot and maintenance training systems and services; technical and maintenance documents; and data analytics and digital services.\nThis business develops, produces and markets commercial jet aircraft, principally to the commercial airline industry worldwide. We are a leading producer of commercial aircraft and offer a family of commercial jetliners designed to meet a broad spectrum of global passenger and cargo requirements of airlines. This family of commercial jet aircraft in production includes the 737 standard-body model and the 767, 777 and 787 widebody models. We ended production of the 747 widebody model in 2022. Development continues on the 777X program and the 737-7 and 737-10 derivatives.\nThis business engages in the research, development, production and modification of manned and unmanned military aircraft and weapons systems for strike, surveillance and mobility, including fighter and trainer aircraft; vertical lift, including rotorcraft and tilt-rotor aircraft; and commercial derivative aircraft, including anti-submarine and tanker aircraft. In addition, this segment engages in the research, development, production and modification of the following products and related services: strategic defense and intelligence systems, including strategic missile and defense systems, command, control, communications, computers, intelligence, surveillance and reconnaissance, cyber and information solutions, intelligence systems, satellite systems, including government and commercial satellites and space exploration.\nCommunities\nReporting", "chunk_word_count": 388, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 10, "page_start": 10, "page_end": 10 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 9, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Advancing Our Sustainability Journey\nContents\n### Stakeholder-Driven Transparency\nexpectations. We have organized our sustainability efforts around four key pillars: People, Products & Services, Operations and Communities. Our sustainability priorities and enterprise initiatives are managed through these pillars, with key goals and metrics monitored by company leaders including our Global Sustainability Council (See Page 13). Our efforts reflect the shared value we create with our key stakeholders. You will see our sustainability priorities, listed below, emphasized in this report. Our collaborative relationships inform these priorities and our sustainability goals, driving long-term value for our stakeholders.\nIntroduction\nBoeing is committed to transparency. Boeing considers stakeholders’ interests to identify and prioritize the most relevant issues and to assess the most significant challenges and risks facing the company. Through our annual disclosure and reporting cycle, we compile and share a broad set of data, information and operating examples that are relevant to our stakeholders, including our employees, customers, industry partners, investors, regulatory authorities, communities and others. These diverse groups of stakeholders have been identified by Boeing as being key to the business because of their potential to influence or be affected by Boeing’s mission to protect, connect and explore our world and beyond. Using widely applicable disclosure frameworks, Boeing reports each year on our financial performance and company priorities; our employee demographics and progress toward achieving equity, diversity and inclusion goals; our sustainability performance; our community investments and advocacy; and our industry-leading aerospace market outlooks.\nTo supplement this report, we publish additional information at boeing.com/sustainability.\nApproach & Governance Company Profile\nAdvancing Our Sustainability Journey\nSustainability Goals\nGovernance and Risk Management\n• Global Aerospace Safety \n• Employee Safety and Well-Being \n• Climate Action \n• Environmentally Responsible Operations \n• Global Equity, Diversity & Inclusion \n• Ethical and Compliant Business \n• Data Privacy and Information Security \n• Professional Development, Education and Learning \n• Community Engagement \n• Responsible Supply Chain \n• Economic Performance\nEnhancing a Sustainability Culture\nEthical and Compliant Business\nPeople\nProducts & Services\nThroughout 2022, we maintained a comprehensive engagement strategy that focused on engaging with key stakeholders through proactive ongoing dialogue, surveys, industry forums and events, and monitoring external data, some of which is discussed throughout this report. This dialogue and collaboration informs our approach, goals and actions to drive sustainable, long-term value for our stakeholders. We look forward to continuing to evolve and refine our stakeholder engagement strategy throughout 2023 and beyond.\nOperations\nCommunities\n### Reporting Approach and Alignment\nTo address the diverse interests of our stakeholders, we have provided a detailed overview of our sustainability activities and data in this report. We are providing indexes with alignment to the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD) and the United Nations Sustainable Development Goals (U.N. SDGs) in the Reporting section.\nReporting\n### Embedding Sustainability at Boeing\nWe continue to embed sustainability practices across our business, learning and evolving to meet stakeholder\n### Sustainability Goals\nContents\nIntroduction\nApproach & Governance \nCompany Profile \nAdvancing Our \nSustainability Journey \nSustainability Goals\nGovernance and Risk Management\nEnhancing a Sustainability Culture\nEthical and Compliant Business\nPeople\nProducts & Services\nOperations\nCommunities\nReporting", "chunk_word_count": 531, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 10, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Governance and Risk Management\nContents\n### Corporate and Sustainability Governance\n### Risk Management\n### Oversight of Sustainability\nIntroduction\nThe Board of Directors has extensive oversight of strategy development, company culture, political and charitable contributions, corporate sustainability and key strategic, operational and compliance risks. Please see our corporate governance materials for more information.\nWith over 100 years at the forefront of innovation, Boeing has established processes to identify, assess, mitigate and manage risk. It is the responsibility of the Board and senior management to ensure that we avoid imprudent risks and mitigate the strategic, technological, operational and compliance risks we face, all with our core values of safety, quality, integrity and sustainability at the forefront. Our Board has significant climate change risk expertise and management skills and experience, which is described further in the Proxy Statement. Senior management is responsible for day-to-day management of risk, including the creation of appropriate risk management policies and procedures.\nApproach & Governance \nCompany Profile \nAdvancing Our \nSustainability Journey \nSustainability Goals\n### Board of Directors\nrnance and Public Policy Commit\nSustainability is rooted in Boeing’s values. The Board, and specifically the Governance and Public Policy (GPP) Committee, oversees a variety of sustainability topics and Boeing’s Chief Sustainability Officer (CSO), Chris Raymond, is an Executive Council member reporting to Boeing’s CEO. As CSO, Raymond reports the progress of Boeing’s sustainability objectives and stakeholder-oriented reports regularly to the GPP Committee and the full Board. The Board reviews and provides input on the sustainability report.\nOversees Boeing’s sustainability policies and practices, including matters related to environmental stewardship and climate change\nGovernance and Risk Management\nEnhancing a Sustainability Culture\nBoeing has two overarching risk processes: Enterprise Risk Management (ERM) and Compliance Risk Management (CRM). All functions and business units participate in both ERM and CRM, including the Global Enterprise Sustainability organization. Global ERM and CRM risk assessments are completed annually to determine the most critical risks to Boeing.\n### Chief Sustainability Of\u001fcer\nEthical and Compliant Business\nExecutive Council Member\nLeads Global Enterprise Sustainability\nResponsible for enterprisewide sustainability strategy, focusing on priorities, stakeholderoriented reporting and company performance\nRead the Governance and Public Policy Committee’s Charter.\nPeople\n### Oversight of Political Activity\nBoeing’s sustainability organization, informed by internal and external stakeholders and augmented by a digital tool, determined the most relevant sustainability priorities to our business. You can learn more about our 11 sustainability priorities on Page 11.\nProducts & Services\nTogether, the Board, the GPP Committee and senior leadership are committed to aligning political activities with the company’s values, business strategies, long-term shareholder interests and long-term strategic imperatives. This includes regular discussions about the company’s public policy priorities; the company’s memberships in and payments to trade associations and other tax-exempt organizations; Boeing Political Action Committee (BPAC) strategy and expenditures; and the company’s network of compliance procedures related to these activities.\n### Global Sustainability Council and Extended Council\nOperations\nGlobal leaders from across business units and functions provide leadership, partnership and action to advance objectives and strategy for sustainability\nCommunities\nSubcouncils\nTo learn more about our lobbying and political activity governance, see:\nReporting\n• Boeing’s Oversight and Compliance Procedures for Political Activity \n• BPAC Contributions \n• 2022 Trade Association Memberships", "chunk_word_count": 539, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 13, "page_start": 13, "page_end": 13 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 11, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nThe results from the risk assessments and sustainability priority assessment are compared for commonality, and overlapping risks receive additional monitoring and management. For example, Innovation and Clean Tech is a key priority for Boeing and our 2030 goal of $100 \\%$ SAF-compatible current and future commercial airplanes is a key component to the commercial aviation industry’s climate goals. Within the ERM process, Boeing mitigates and manages the key strategic risk to this priority and goal — the ability to scale SAF supply to meet the demand needed to achieve the commercial aviation industry’s net-zero ambitions. SAF as a drop in fuel is currently approved to be blended at 50/50 blend with Jet A and works with existing airplanes and offers the largest potential to reduce carbon emissions over the next 20 to 30 years in all aviation segments. Boeing’s intent is to help catalyze SAF scaling through subject matter expertise, investments in product compatibility work, purchasing SAF for our own fuel use, and our partnerships and policy advocacy. As mentioned on Page 45, Boeing continued to make key investments to scale SAF in 2022.\nContents\n### Enterprise Risk Management and Compliance Risk Management\nIntroduction\n### Audit Committee\nApproach & Governance \nCompany Profile \nAdvancing Our \nSustainability Journey \nSustainability Goals\nThe Audit Committee receives annual reports on Boeing’s Enterprise Risk Management (ERM) and Compliance Risk Management (CRM) processes and regular reporting on the company’s compliance and ethics programs from the Company’s Controller and Chief Compliance Of\u001fcer (CCO).\n### Enterprise Risk Management\n### Compliance Risk Management\nThe full Board of Directors reviews enterprise risks on a regular basis as well as conducts regular reviews of our ethics and compliance programs. ERM assesses strategic risks to the company and industry, including topics within the environmental, social and governance elements of sustainability, such as climate and policy change.\nThe CRM process is overseen by the Compliance Risk Management Board (CRMB), chaired by Boeing’s chief compliance of\u001fcer. The CRMB includes senior company leaders who provide oversight on Boeing’s CRM process designed to identify, evaluate and prioritize the most signi\u001fcant compliance risks; assess mitigation strategies; and provide visibility to Boeing’s CEO and Audit Committee of the Board of Directors.\nGovernance and Risk Management\nEnhancing a Sustainability Culture\nEthical and Compliant Business\nAnnual Employee Training\nPeople\nAll employees, from senior leaders to entry-level, receive annual training on compliance risk areas tailored to their speci\u001fc duties and responsibilities, such as U.S. Department of Defense procurement rules, proper handling of sensitive information, safety training, Seek, Speak & Listen Habits and anti-corruption.\nWithin the sections of this report, we will continue to discuss our governance, risk identification and management of our key priorities.\nProducts & Services\nOperations\n### Business Continuity Management\nBoeing navigated challenges in 2022 that added to the company’s risk profile, including:", "chunk_word_count": 476, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Enterprise Risk Management and Compliance Risk Management", "document_id": "Boeing 2023 Sustainability Report", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 12, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Tax Governance and Compliance\nBoeing strengthens its resiliency through Business Continuity Management (BCM), managing and mitigating risks should a significant incident disrupt business operations. This entails five key preparedness programs: Business, Emergency, Information Technology, Supply Chain and Human Resources, working together to facilitate company resiliency. The primary objective of these preparedness functions is to develop and maintain guidelines, standards, processes and tools that enable business units and functions to mitigate risk and recover critical programs, applications and suppliers.\nCommunities\nWe are committed to being a responsible taxpayer wherever we operate. Our global tax team is responsible for maintaining the highest compliance standards, being transparent in our dealings with authorities and sustaining robust internal controls for risk management. Boeing’s principled tax approach is grounded in ethical business practices and tax guidance that follows business substance.\nLearn more about Boeing’s approach to global tax governance and compliance.\n• Social and political issues • Organizational and structural challenges • Regulatory review of the 737 MAX\nReporting\nBCM continues to identify risks and to implement strategies and processes to mitigate those risks to our people, programs, infrastructure, network and supply chain.", "chunk_word_count": 197, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Tax Governance and Compliance", "document_id": "Boeing 2023 Sustainability Report", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 13, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Enhancing a Sustainability Culture\nContents\n### Good Habits: Seek, Speak & Listen\n### Annual Incentive Plans Reinforce Sustainability Goals\nIntroduction\nTeammates across the company continue to build Seek, Speak & Listen habits, which are fundamental to how we work together. These habits are foundational to our culture of integrity and inclusion, and they enable us to improve — in safety, quality, production, performance and inclusion. Individual performance is also assessed using our Seek, Speak & Listen habit framework.\n### Our Habits\nStarting in 2022 and continuing into 2023, Boeing enhanced its enterprise annual incentive design to incorporate climate and equity, diversity and inclusion metrics into the Company Performance Score formula, which determines payouts under the company’s largest employee incentive plans. These include the Performance-Based Incentive Plan, the Employee Incentive Plan, the Management Incentive Plan, and the Executive Annual Incentive Plan.\nApproach & Governance \nCompany Profile \nAdvancing Our \nSustainability Journey \nSustainability Goals\n### Seek\n### Speak\n### Listen\nGovernance and Risk Management\nBecause awareness can teach us and help us improve\nBecause it’s the right thing to do and every voice matters\nBecause listening builds trust and leads to better decisions\nBy embracing these simple habits, we make better decisions, drive innovation and build connection. We seek out the places where things aren’t going well and where potential issues could arise, so we can learn and address issues before they become problems. We get all perspectives on the table and ensure every team member feels safe to speak up. We listen to each other with humility and grace. This is a key part of our commitment to collective progress, lasting cultural change and enhancing trust from within.\nEnhancing a Sustainability Culture\nThe climate metric is designed to incentivize and reward employee behavior that reduces our energy consumption across the enterprise, and along with equity, diversity and inclusion and our other operational goals, accounts for $2 5 \\%$ of the overall Company Performance Score driving payouts under our incentive plans. Individual performance is also taken into account in determining individual employee payouts under most of our incentive plans.\nEthical and Compliant Business\n[IMAGE CAPTION] The Olathe Pollinator Prairie, near Kansas City, is an ecological habitat supported by Boeing. (Boeing photo)\nPeople\nProducts & Services\nOperations\nThe habits are simple acts of caring so our people can be their best at work and in life. We will continue to embed the habits into our daily work, processes, systems and communications to hold ourselves accountable.\nCommunities\nLearn more about Boeing’s 2022 company performance in our Proxy Statement.\nReporting\n### Ethical and Compliant Business\nContents\n### The Boeing Code of Conduct", "chunk_word_count": 446, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Ethical and Compliant Business", "document_id": "Boeing 2023 Sustainability Report", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 14, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Understanding Ethical Concerns: 2022 Data1\nIntroduction\nAt Boeing, our first commitment is to the people and customers who rely on our products and services to protect, connect and explore our world and beyond. Each Boeing employee has a personal responsibility to honor that promise and to serve as stewards of Boeing’s legacy of aerospace excellence and innovation. New employees sign the Code of Conduct and complete Recommitment training when they join the company — and we all reaffirm this commitment every year. Learn more about our Code of Conduct and Recommitment.\nBoeing recognizes that the company’s long-term interests are advanced when employees are responsive to the concerns of employees, customers, public officials, investors, suppliers and the communities we serve. This starts with our Board who actively fosters a corporate culture that puts safety, quality, integrity and sustainability at the forefront of all that we do.\n### 47%\n2,405\ninquiries2\nApproach & Governance \nCompany Profile \nAdvancing Our \nSustainability Journey \nSustainability Goals\nof investigated requests were substantiated4\n2,120 conflict of interest determinations\n3,132 investigative requests3\nGovernance and Risk Management\n2,507\nEnhancing a Sustainability Culture\nOur annual Code of Conduct signing and Recommitment remind all of our employees of their obligation to speak up and be a voice for others when something does not align with our values.\n7,657 total contacts to Ethics and Business Conduct of investigative requests had enough information to investigate\nBoard members commit to, and use, a Code of Ethics as guiding principles; the Code emphasizes the importance of compliance with all applicable laws, rules and regulations; maintaining confidentiality; avoiding any conflicts of interest; and reporting of illegal or unethical behavior.\nEthical and Compliant Business\n1. Data reflects the reporting period of November 2021 through October 2022. \n2. Inquiries comprise Requests for Guidance and Information Requests. Requests for Guidance are situations where employees are seeking guidance when facing ethical dilemmas or when they need assistance in understanding company policies or expected behaviors. Information Requests are situations where employees are seeking general information. Both demonstrate awareness of Boeing’s Compliance and Ethics program, but Requests for Guidance are viewed as the most positive types of contact. \n3. Investigated matters are considered unsubstantiated when investigation findings demonstrate that no misconduct occurred or where there is a lack of evidence to support a finding of misconduct. \n4. Ongoing evaluations demonstrate that Boeing’s substantiation rate is slightly higher than other published benchmarks, indicating an effective investigation process and informed reporting by company employees.", "chunk_word_count": 419, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Understanding Ethical Concerns: 2022 Data1", "document_id": "Boeing 2023 Sustainability Report", "page": 16, "page_start": 16, "page_end": 16 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 15, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Robust Anti-Corruption Program\nPeople\nProducts & Services\nThe Audit Committee and the full Board oversee our compliance and ethics programs through close collaboration with Boeing’s Chief Compliance Officer and periodic reviews of program metrics. These touch points provide visibility to the Board of significant compliance and ethics risks, as well as specific cases that are identified through the company’s various reporting channels.\nOperations\nBoeing publishes an internal policy that explains its anticorruption and anti-bribery requirements and expectations for employees, while making its guidelines for ethical business conduct publicly available to employees and other stakeholders. The company also makes employees aware of their federally protected whistleblower rights, which are designed to protect employees against retaliation for reporting potential wrongdoing by a U.S. contractor or subcontractor.\nCommunities\n### Contacting Ethics\nReporting\nBoeing encourages employees, subsidiaries, suppliers and external stakeholders to promptly raise concerns about safety, quality or potential violations of the law or Boeing policies. For more information, visit our Boeing Ethics website.\nLearn more about our Ethics and Compliance Program.\nContents\n### Commitments and Actions on Human Rights\n### Strengthening compliance engagement through localized support\nIn 2022, Boeing continued to make tangible improvements to its compliance program and meaningful progress toward strengthening its culture of compliance and safety at locations around the globe. The company deployed two localized teams — the Site Compliance and Ethics Officers (SCEOs) and the Ethics Ambassadors — both of which are embedded within the business and serve as amplifiers for the company’s compliance and ethics efforts, resulting in thousands of engagements with employees.\nmeetings, new employee outreach, and manager trainings to answer questions, provide guidance, and help address compliance and ethics concerns.\nBoeing is committed to responsible business practices and promoting positive change while simultaneously creating value for our customers, shareholders and other stakeholders. In recognition of this commitment, the company has developed policies and practices designed to enforce our Code of Basic Working Conditions and Human Rights. Learn more about our approach to human rights.\nIntroduction\nApproach & Governance \nCompany Profile \nAdvancing Our \nSustainability Journey \nSustainability Goals\nThe Ethics Ambassador Program, originally piloted in 2021, is currently deployed at sites including North Charleston, South Carolina; Mesa, Arizona; Michoud Assembly Facility in New Orleans; San Antonio; and St. Louis. Ambassadors are emerging leaders embedded within the business who extend the reach of the company’s compliance program by fostering a culture of compliance and integrity by amplifying our values, listening to teammate concerns and encouraging them to speak up. Ambassadors also work with their designated SCEO to promptly elevate local risks and issues to site leadership.\nGovernance and Risk Management\nThe SCEOs are physically deployed at 22 locations around the globe, leading localized and targeted compliance activities. SCEOs partner with company leaders, leveraging site-specific data to proactively address risks and foster a speak-up culture. SCEOs also serve as an on-site resource for employees, engaging through floor walks and team\nEnhancing a Sustainability Culture\nEthical and Compliant Business\nThrough our Supplier Code of Conduct, we establish foundational expectations of prospective and active suppliers, including adherence to human rights standards.\nPeople\nProducts & Services\nOperations\nCommunities\nReporting", "chunk_word_count": 528, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Robust Anti-Corruption Program", "document_id": "Boeing 2023 Sustainability Report", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 16, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\nIntroduction\nApproach & Governance\n### People\nWorkplace Safety Employee Well-Being Global Equity, Diversity and Inclusion Professional Development, Education and Learning\nProducts & Services\nOperations\nCommunities\nReporting\n### Workplace Safety\nContents\nIntroduction\nBoeing knows that operating to keep ourselves and our teammates safe in the workplace is everyone’s responsibility. Safety is central to everything we do for ourselves, those we care about and our communities. The Safety Guiding Principles provide a framework to achieve the goal of zero workplace injuries so every person who works at, or visits, a Boeing site leaves as safe and healthy as when they arrived. Boeing’s workplace safety program, Go for Zero – One Day at a Time, takes a holistic approach to worker safety, striving for a goal of zero injuries, which is underpinned by the belief that every injury is preventable.\n### Celebrating 10 years of Go for Zero\nApproach & Governance\n### People\nGo for Zero was introduced to help increase safety in our workplaces. Today, we take a look at how our company has performed in workplace safety since 2013.\nWorkplace Safety Employee Well-Being Global Equity, Diversity and Inclusion Professional Development, Education and Learning\nMichael Dreyer is a Quality systems specialist, based at London’s Gatwick Airport. (Boeing photo)\nProducts & Services\n### Continuous improvement\nOperations\nThe goal of zero injuries IS possible\nCommunities\nOur occupational health and safety management system is modeled after the International Organization for Standardization (ISO) 45001. As of 2022, four sites are certified to ISO 45001 with multiple sites conforming to ISO 45001 in support of our business objectives.\n26% decrease in serious injuries (since 2015)\n39% decrease in recordable injuries (since 2013)\nReporting\n31% i ncrease in lost workday cases (since 2013)\n71% decrease in ergonomic injuries (since 2013)\n[IMAGE CAPTION] Travis Sinclair at Renton factory in Washington. (Boeing photo)\nContents\n### Boeing’s Lifesaving Rules\n## 2022 Workplace Safety by the Numbers:\nSafety is a core value at Boeing. Some operations performed at Boeing are recognized as High Hazard Processes due to their potential for a serious injury or fatality. Lifesaving Rules go beyond regulatory requirements and are intended to reduce or eliminate the risks created when around or performing these processes and prevent life-critical incidents by increasing accountability for following safety policies and procedures.\nIntroduction\n44:1 \nNear Miss to Hazard1\nApproach & Governance\n### People\n98% Found/Fixed Metric2\nWorkplace Safety Employee Well-Being Global Equity, Diversity and Inclusion Professional Development, Education and Learning\n### Pedestrian/Vehicle\n### Chemical Processing\nFollow safe driving and walking rules.\nControl sources of hazardous chemical exposure.\n1,096\nProducts & Services\nHealth and Safety Training Courses Available\nOperations\n### Crane Operations\n### Machine Operations\n### Aircraft Towing\nPlan lifting operations \nand control the \nload path.\nOperate machines safely.\nKeep myself and others safe during aircraft towing operations.\nCommunities\n### 1.2 Lost Workday3 (includes COVID-19 cases)\nReporting\nHazardous Energy\n### Working at Heights\nVerify control of hazardous energy or a zero-energy state before work begins.\nProtect against falls and dropped objects while working at heights.\n### Employee Well-Being\nContents", "chunk_word_count": 514, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Employee Well-Being", "document_id": "Boeing 2023 Sustainability Report", "page": 18, "page_start": 18, "page_end": 21 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 17, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Boeing continues to demonstrate strong commitment to employee well-being\n• Pain: Contributing factors and getting support: The science of pain, factors affecting the experience, and how exercise therapy can help improve overall health and well-being.\nIntroduction\nBoeing takes a holistic approach to employee safety and overall well-being, including physical, financial and mental health components at work and at home. We value human life and well-being above all else and take action to improve many aspects of an employee’s life. Read more information about our benefits.\nApproach & Governance\nWhy it matters: Boeing has increasingly put a spotlight on the importance of striving to achieve and maintain good physical and mental health.\n• Loss and grief: The stages of grief, myths and facts, symptoms, coping mechanisms, self-care, the difference between grief and depression, and when to contact a grief counselor.\n• Diabetes 101: How to lower your risk or manage your diagnoses with small, impactful changes.\n### People\nWorkplace Safety\nEmployee Well-Being", "chunk_word_count": 171, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Boeing continues to demonstrate strong commitment to employee well-being", "document_id": "Boeing 2023 Sustainability Report", "page": 21, "page_start": 21, "page_end": 21 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 18, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### The Topic and Numbers\n• Women’s health through life stages: Factors related to women’s health during each life stage decade (e.g., 20s, 30s, 40s), including health conditions, preventive care and programs for support.\n• The gut-brain connection: The microbiome and why we might care about the microbiome’s effect on health.\nBoeing is committed to employees’ well-being and believes that providing ongoing education about well-being topics is an important complement to the company’s health benefits. The company offered engaging content to a diverse breadth of employees throughout 2022.\nGlobal Equity, Diversity and Inclusion\nProfessional Development, Education and Learning\n• How to find a therapist: Common terminology used in the mental health field, including types of mental health providers and types of therapy; insurance navigation tips; how to find the right fit, including questions to ask yourself and potential providers.\n• Health and well-being for Black employees: Discussed health conditions that are prevalent among African Americans, as well as behavioral health, prevention and management programs.\nProducts & Services\nWe hosted more than 60 well-being-related webinars, with ${ 2 0 , 0 0 0 + }$ employees participating. Some of the webinar topics included:\nOperations\n• Latinx health: Focused on the physical and mental health disparities, as well as disease risk factors, chronic diseases, preventive care and health care access resources in the Latinx community.\n• Staying emotionally happy and healthy: Practical tips to find joy, inner peace and fun by prioritizing what is important in your life and setting boundaries.\nCommunities\n• Finding balance: How to balance demands on time and feel fulfilled when managing work and life becomes challenging.\nReporting\n• Sleep and emotional well-being: Why sleep is an important component of emotional wellness and how to improve sleeping habits to optimize health and productivity.\n• Fertility wellness: The best time to start seeing an infertility specialist, how to walk through the journey feeling supported emotionally and available benefits.\n• LGBTQIA+ inclusion in health care: Barriers and inequalities that are experienced within the community, how the cycle is being broken, and benefits and resources available.\n• Managing trauma and intense emotions: The relationship between trauma, fear and anxiety and the tools for managing the range of intense emotions that may be experienced after distressing events.\n• Family nutrition and the farmers market: Fruits’ and vegetables’ peak growing seasons, how to pick them and store after purchase, and tips to help children with fear of new/unfamiliar food.\nWhat’s next: Boeing will continue to provide educational resources to empower employees to make informed decisions about their physical and emotional well-being and understand the many benefits and resources that are available to them.", "chunk_word_count": 449, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > The Topic and Numbers", "document_id": "Boeing 2023 Sustainability Report", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 19, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\n### Boeing stands with our Ukraine team\n“It is incredible to witness the team spirit of our colleagues in Ukraine. We admire our local colleagues for facing all challenges upfront. Our role is to provide them with everything necessary to continue their fantastic engagement with a laser focus on safety and care.”\nIntroduction\nWhen the war in Ukraine started, Boeing immediately informed its employees in Ukraine that they did not have to work and should make their safety a first priority. Despite the challenging situation, the Ukraine team continued to work and grow during the war. Boeing is supporting the local team with everything needed to stay safe and online.\nApproach & Governance\n### People\nWorkplace Safety\nEmployee Well-Being\nSuzanne Purdum, senior director, Human Resources, Europe, Israel & Ukraine\nGlobal Equity, Diversity and Inclusion\nA unified effort by Boeing and the initiative of individual employees kept the Ukraine team safe. Employees from Poland welcomed colleagues and other people who crossed the border to seek shelter in their neighboring country. The company provided housing opportunities for them in Poland and gave the team members who stayed in Ukraine financial means and the necessary IT equipment to work safely from home.\nProfessional Development, Education and Learning\nProducts & Services\nOperations\nCommunities\nIt comes down to this: Supporting Ukraine is a priority for Boeing and its employees. In addition to the support of the Boeing team, the company has committed $\\$ 2$ million to support Ukraine relief efforts. Boeing employees, with a boost from the Boeing Gift Match program, donated more than $\\$ 1$ million.\nReporting\nVideo: Learn more about how our Boeing Poland team supported our Ukraine employees.", "chunk_word_count": 286, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 22, "page_start": 22, "page_end": 22 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 20, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\n### Boeing Employee Assistance Program provides help in times of need\nIntroduction\nApproach & Governance\nWhy it matters: “Some Boeing employees, like individuals in many communities, were impacted by tragic events and natural disasters — whether directly or indirectly,” said Andrea Landsman, manager, Boeing Employee Assistance Program (EAP). Boeing offers an EAP to provide support to employees and eligible family members navigating difficult life events.\n“The Boeing EAP was available 24/7 worldwide to provide counseling and other resources for our employees, some of whom were faced with very challenging circumstances.”\n### People\nWorkplace Safety\nEmployee Well-Being\nGlobal Equity, Diversity and Inclusion\n### A few examples of how the EAP helped employees:\nProfessional Development, Education and Learning\n• Conflict Zones: In addition to providing emotional support to leaders, managers and employees during the war in Ukraine, the EAP offered local employees and their families help with locating emergency resources and information. In March, Boeing extended EAP services to European-based subsidiaries and contract workers to help them cope with the crisis.\nAndrea Landsman, manager, Boeing EAP\nProducts & Services\nOperations\n• Pandemic Relief: To assist employees in China impacted by strict COVID-19-related travel restrictions and lockdowns, EAP provided virtual group support for employee work groups in both Mandarin and English.\nCommunities\nReporting\nAndrea Landsman, manager, Boeing EAP • Natural Disasters: The EAP prepared resources to support multiple natural disasters occurring in the U.S., including employees affected by Hurricane Ian in September.\n• Trauma Care: Following the Robb Elementary School shooting in Uvalde, Texas, in May and the Highland Park shooting near Chicago in July, counselors were available to support employees and provide information about the EAP.\n• Suicide Prevention: EAP coordinated with the Boeing Veteran Engagement Team (BVET) employee resource group to offer suicide prevention webinars to their membership.\nOur final thought: The Boeing EAP provides support to employees and eligible family members at no cost. Professional EAP counselors can provide help with navigating life events, stress management, work-life challenges, grief and loss, substance abuse and more.\n• Mental Health Screenings: All employees were encouraged to complete online anxiety and depression screenings to help assess their risks and learn about getting help if they needed it.\n• Stress Relief: To relieve stress and promote emotional well-being, the EAP conducted 597 Mindfulness Meditation sessions with more than 3,100 participants.", "chunk_word_count": 396, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 23, "page_start": 23, "page_end": 23 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 21, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Global Equity, Diversity and Inclusion\nContents\nIntroduction\nEquity, diversity and inclusion are foundational values at Boeing and key drivers of business outcomes. Each member of our global team brings a unique perspective, and we grow stronger when everyone has an opportunity to contribute. We are committed to the necessary and challenging work of\nbuilding an environment in which each teammate has a voice and feels inspired to achieve their full potential. Transparency is the foundation of this commitment, and we have been sharing our progress each year in our Global Equity, Diversity & Inclusion Report and our EEO-1 Report.\nApproach & Governance\nRead more about Boeing’s Global Equity, Diversity & Inclusion efforts in our 2023 report.\n### People\nWorkplace Safety Employee Well-Being\n### U.S. Disability4\nGlobal Equity, Diversity and Inclusion\n[IMAGE CAPTION] Gender1\nSelf-ID participation rate $40 \\%$\nSelf-ID as having a disability 7.7%\n[IMAGE CAPTION] Race and Ethnicity3 U.S. Overall pt change from previous year\nProfessional Development, Education and Learning\nU.S. Veterans5 14.6%\nProducts & Services\nOperations\n## U.S. LGBTQIA+6\nGender identity self-ID participation rate 14%\nSexual orientation self-ID participation rate 12%\nCommunities\nReporting\n6. LGBTQIA+ is a term that includes people of all genders and sexualities, such as lesbian, gay, bisexual, transgender, questioning, queer, intersex, asexual, pansexual and all others. Gender identity and sexual orientation data reflects the U.S. workforce only based on voluntary, confidential selfidentification. Data related to gender identity and sexual orientation are not shared with the government, unlike gender and race/ethnicity data, which Boeing is required to submit to the Equal Employment Opportunity Commission for U.S. employees. The gender identity options include female, male, nonbinary, not listed, prefer not to answer, transgender female and transgender male. Gender identity and sexual orientation participation rates are reported as of March 1, 2023. We will continue our efforts to educate and encourage all team members to self-identify and expand self-ID options outside the U.S. where it is safe and lawful to do so.\n1. All data on gender is collected globally. Numbers for gender may not total $100 \\%$ due to team members who identify as nonbinary or who choose not to disclose. \n2. International indicates team members outside the U.S. \n3. Race and ethnicity data reflects the U.S. workforce only. Numbers may not total $100 \\%$ due to inclusion of people who choose not to disclose or due to rounding. Racial and ethnic minority representation includes Asian, Black, Hispanic/Latino/a/x, Native American, Pacific Islander and Two or More Races as defined by the U.S. Equal Employment Opportunity Commission. \n4. A disability is defined as a physical or mental impairment or medical condition that substantially limits a major life activity or a history or record of such an impairment or medical condition. \n5. Veteran data reflects the U.S. workforce only based on voluntary, confidential self-identification. A veteran is defined as a person who served in the active military, naval or air service and who was discharged or released therefrom under conditions other than dishonorable.", "chunk_word_count": 505, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 24, "page_start": 24, "page_end": 24 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 22, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Global Equity, Diversity & Inclusion Report reflects Boeing’s journey\nContents\nBoeing recently released its third annual Global Equity, Diversity & Inclusion (GEDI) report, which shared demographics data, progress toward the company’s six 2025 aspirations, and stories from across the enterprise and around the world about policies, teams and individuals who are making a difference. The report is an invitation to all prospective and current employees, suppliers, customers and community partners to join us on our journey toward becoming a more equitable and inclusive company.\ndirectors and executives — and increased racial and ethnic representation in the U.S. at junior and senior levels. We also saw increased rates of participation in our self-identification process, which encourages employees to confidentially share their disability status, sexual orientation, gender identity and veteran status.\nWe reformed our Racial Equity Steering Team (newly named Equity & Inclusion Council) to include Executive Council champions and representatives from each of our nine Business Resource Groups, which increased transparency and access to senior leadership. We also made progress on our six specific 2025 aspirations we announced and continue to report against.\nIntroduction\nApproach & Governance\nPeople Workplace Safety Employee Well-Being\n### Key Highlights Included:\nAs we look forward to 2023 and beyond, we are energized by the progress we’ve made and are committed to continuing the hard work because it is necessary not just for our business success but also for the sustainability of aerospace and our communities.\nIn 2022, Boeing tied inclusive hiring processes to its incentive compensation: $9 2 \\%$ of candidate interview slates in 2022 for manager or director-level roles included at least one woman globally, or at least one woman or racial/ethnic minority in the U.S., showing that specific, measurable and financially relevant accountability has an affect on incentivizing the right behaviors that naturally lead to more diverse outcomes.\nBoeing has roughly 156,000 employees representing 47 nationalities in 65 countries. In 2022 we hired more than 23,000 new teammates, resulting in an increase in female representation across virtually all job levels — production and maintenance, individual contributors, managers,\nGlobal Equity, Diversity and Inclusion\nProfessional Development, Education and Learning\nProducts & Services\nOperations\n### Pay equity summary\nCommunities\nWe foster a diverse, collaborative and inclusive environment that empowers employees to do their best. Equal pay for equal work is a foundational element of our approach. We hold ourselves accountable to equal pay for equal work by conducting regular compensation reviews to ensure that employees are compensated equitably throughout their careers — independent of race, gender or ethnicity. It’s the right thing to do and makes us a better, more inclusive and higher-performing company. We’re committed to continuing and expanding our analysis globally and doing the work to ensure pay equity at the time of hire and throughout every employee’s career.\nReporting", "chunk_word_count": 475, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 25, "page_start": 25, "page_end": 25 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 23, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Professional Development, Education and Learning\nContents\nIntroduction\nBoeing is dedicated to growing and developing a diverse pipeline of aerospace talent at all levels. Our professional development programs provide education and training opportunities for current and future employees. We want our people to think about working at Boeing as a lifetime endeavor — full of opportunities to achieve their personal and professional goals. We understand that by supporting our team today, we build a successful tomorrow.\n### Growing with Boeing: Learning to build a great career\nApproach & Governance\nIn 2022, we launched Learn@Boeing, a new digital learning resource that makes it easier for teammates to find learning content aligned to business goals. Learn@Boeing was leveraged by 77,000 teammates to develop knowledge and skills for their current role or to prepare for a future role. See more of the ways we invest in our employees’ learning and development to help them foster new skills, boost performance and build a great career at Boeing.\nPeople \nWorkplace Safety \nEmployee Well-Being \nGlobal Equity, Diversity \nand Inclusion \nProfessional Development, \nEducation and Learning\nBoeing employees in St. Louis at the Cortex, an innovation community. (Boeing photo)\nProducts & Services\nOperations\n5Mt rainings completed\n77,000 learners leveraged a new learning resource to build knowledge and skills\n2M hours of production training delivered\nRead more about the learning and professional development opportunities we offer our employees here.\nCommunities\nReporting\n5,000 coaching sessions to develop managers and executives globally\n4,300 leaders developed through programs and courses\n450,000 certifications and skill trainings completed\n10,000 employees received tuition assistance for degree and nondegree programs\nContents\nIntroduction\nApproach & Governance\nPeople\n### Products & Services\nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nOperations\n## PRODUCTS & SERV I CES\nCommunities\nReporting\n### Global Aerospace Safety\nContents", "chunk_word_count": 317, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Global Aerospace Safety", "document_id": "Boeing 2023 Sustainability Report", "page": 26, "page_start": 26, "page_end": 28 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 24, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Boeing’s safety journey: Every step is purposeful\nIntroduction\nThe big picture: The safety of our products starts with our culture and is supported by technology and training. Advancements in both areas have led to progress in our safety journey.\nApproach & Governance\nSafety is a fundamental value. We take seriously the responsibility to ensure those who operate, fly on and service our products are safe.\nPeople\nWhy culture is first: When more teammates feel comfortable speaking up about safety issues and ideas — and more leaders listen — we will have safer products. Our Speak Up program is the fuel for our enterprise SMS that helps manage safety risks throughout the product and services life cycle. Through efforts in the past year:\nRead more about our safety journey in the Boeing Chief Aerospace Safety Officer Report, including how we’re working with industry to strengthen aviation safety and created a new Safety Experience website — a resource intended for employees to better understand their role in Boeing’s safety culture.\nOur Board of Directors oversees global aerospace safety through a dedicated subcommittee of the board, the Aerospace Safety Committee, to which our chief aerospace safety officer provides regular updates. More information about the subcommittee’s oversight can be found in our Chief Aerospace Safety Officer Report.\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\n• Submissions to our Speak Up reporting channel doubled from 2021 to 2022 — a sign of progress toward a healthy reporting culture.\nIn 2020, Boeing began implementing its enterprise Safety Management System, or SMS. As an integrated framework for managing safety risks throughout the product and service life cycle, SMS incorporates data from employee reporting, production, compliance, quality and safety processes. This provides line of sight to risks, incidents and identified hazards to enable proactive mitigation of issues and to continuously improve safety performance. Ultimately, SMS brings the right data into the right forums with the right people to make data-driven, risk-based decisions that result in safer products. It is a journey of continuous improvement informed by existing data and ongoing development of increasingly better safety analytics.\n• Inducted a new real-time data and analytics platform called Boeing Safety Intelligence into our SMS.\n• We trained more than 130,000 of our teammates on SMS, safety culture and why it matters.\n• Delivered competency-based training and assessment (CBTA) courses to four commercial customers. Additionally, Boeing Next-Generation 737, 737 MAX and 787 CBTA courses were approved by multiple regulatory agencies.\n• We established a dedicated ombudsperson for FAA Organization Designation Authorization representatives to support their independence and transparency (see Page 29).\nOperations\nWhy it matters: “Over the next few years, we’re going to see the maturity of our SMS, increased collaboration with our customers to get ahead of safety risks and deployment of our Safety Experience tool for increasing transparency and learning throughout the organization,” said Mike Delaney, Boeing chief aerospace safety officer. “Every step is purposeful to make our products safer. These efforts and more have laid both the cultural and structural foundation for our safety journey. It’s up to us to keep that foundation strong and build on it.”", "chunk_word_count": 546, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Boeing’s safety journey: Every step is purposeful", "document_id": "Boeing 2023 Sustainability Report", "page": 28, "page_start": 28, "page_end": 28 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 25, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Boeing’s safety journey: Every step is purposeful\nHow technology and training help: Alongside culture improvements, advancements in technology are helping us identify safety hazards and risks through data, and are helping customers. Last year, we:\nCommunities\nLearn more about our progress in the Chief Aerospace Safety Officer Report .\nReporting\n• Introduced the Boeing Virtual Procedures Trainer and Maintenance Synthetic Trainer for pilots and mechanics to provide experiential training and complement current training.\nContents\n### Ombudsperson empowers regulatory representatives\nIntroduction\nApproach & Governance\nDedicated focus: In June 2022, Boeing established a dedicated ombudsperson for Boeing employees who work on behalf of the U.S. Federal Aviation Administration (FAA). These employees — known as Organization Designation Authorization (ODA) representatives — serve a critical role in the design certification and conformance of aircraft.\n“Boeing is working to ensure the ODA program operates with the independence needed to fulfill all our FAA requirements. The appointment of a dedicated ombudsperson strengthens Boeing’s commitment to foster an environment where ODA representatives carry out their duties independently and without interference.”\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nODA Ombudsperson Mark Fava, a lawyer with more than 35 years of aviation experience, serves as a neutral, independent third party to advise and assist ODA representatives. He supports them on work-related concerns relevant to their delegated authority and related matters, including those associated with independence and transparency, without fear of retaliation or reprisal.\nMark Fava, ODA Ombudsperson\nWhy it matters: The strength of the Boeing safety system is rooted in a transparent and open culture, one that gives all team members multiple ways to speak up when they have concerns. Boeing works every day to be trusted with the responsibility of holding an ODA, and the establishment of an ombudsperson demonstrates the company’s commitment to strengthening its safety culture.\nOperations\nCommunities\nReporting", "chunk_word_count": 330, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Boeing’s safety journey: Every step is purposeful", "document_id": "Boeing 2023 Sustainability Report", "page": 28, "page_start": 28, "page_end": 30 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 26, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\n“The breadth and depth of our Technical Fellowship is unique to the industry, and we count on our fellows to be stewards of technical excellence across the enterprise. This group will continue to strengthen our company and represent engineering excellence throughout the industry.”\n### Engineering excellence, technically speaking\n• Datz is an expert on life cycle assessment tools and their application to Boeing’s design processes, providing critical proof points about how we use sustainability principles in our product development and design.\nBoeing Technical Fellows are shaping the future of Boeing and aerospace.\n• Wong is a technical expert in conceptual commercial aircraft design and analysis, and specializes in creating engineering tools and methods for design and analysis of aircraft with alternative energy and propulsion systems. Wong helped develop Cascade, Boeing’s emissions modeling and analysis tool.\nWhy it matters: Recognized as technology leaders inside and outside the company, the Boeing Technical Fellowship program represents the top $3 \\%$ of Boeing’s technical and scientific community.\nOperations\nCelebrating firsts: Christin Datz, Hugh Wong and Helen Lee are among Boeing’s newest Associate Technical Fellows (ATF). They also share other distinctions. Lee is Boeing’s first Technical Fellow appointed in China. Datz and Wong are the most recent ATFs appointed in the area of Sustainability. Together, they will help innovate and continue integrating sustainability into Boeing’s engineering teams and functions to make our products, services and operations better for people and the environment.\n• Lee is the regional director of airspace and airport programs for Boeing China’s Global Support Center, supporting the Greater China region. In her role, Lee thinks about ways advanced technologies like artificial intelligence can be applied to improve air traffic management operations.\nCommunities\nHoward McKenzie, Boeing chief engineer and executive vice president of Engineering, Test & Technology\nReporting\nIt comes down to this: Technical Fellows are trusted consultants, advisers and mentors, and possess expertise in a variety of areas spanning the full life cycle of all Boeing products, processes and services, across a number of engineering disciplines.", "chunk_word_count": 373, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 30, "page_start": 30, "page_end": 30 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 27, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Sustainable Product Life Cycle\nContents\n### Boeing increasingly looks at every stage of the product life cycle through a sustainability lens\nIntroduction\nApproach & Governance\n“Across Boeing Defense, Space & Security, we believe that operational effectiveness and sustainability are two sides of the same coin. A more sustainable, lower cost, energy efficient defense enterprise is a more operationally effective one. That’s why we have a history of partnering with our customers to pioneer the use of sustainable aviation fuels and are leveraging digital design and production to reduce our carbon footprint throughout the life cycle of our products”\nWe continue to evolve our approach so that our next generation of products consider the full breadth of sustainability including environmental, health, safety and human factors improvements by targeting the following seven areas:\nPeople\nDemand/Sales. Customers continue to demand higherefficiency, lower emissions products. Globally, airlines and governments are increasingly accountable to emerging sustainability standards, which requires that they evaluate the life cycle of aircraft the\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\noperate.\nCascade: Boeing’s data modeling and visualization tool quantifies the potential of four strategies to cut emissions, including fleet renewal, operational efficiency, renewable energy and future aircraft introduction.\nDesign/Technology. Boeing evaluates new product designs and technologies to determine if they are safe and sustainable by conducting an environmental life cycle assessment. We strive to evaluate new aircraft design concepts, materials and technologies early in the development process to assess how much we can reduce the risks and expenses associated with its environmental footprint. We aim to examine whether more sustainable approaches exist for new product design, considering everything from selecting materials and parts to improving manufacturing processes and in-service operations to recycling the plane.\nSAF-Compatible Commercial Airplanes: Boeing is collaborating with suppliers to achieve our goal that all commercial airplanes we deliver by 2030 will be compatible with SAF.\nOperations\nMaterials/Feedstocks. Boeing examines coatings that improve our planes’ aerodynamics, fuel efficiency and longevity, in part by using more parts that can be repurposed. Lighter composite materials permit us to design more fuel-efficient aircraft like our primarily composite 787 Dreamliner. Boeing simultaneously supports research into regenerative feedstocks that can replace constituents that are nonrenewable resources. For example, the bio-based regenerative feedstocks from forestry waste and pine root oil that we are researching at Villanova University may one day be integrated into the epoxy resins used in our interior parts, enabling us to reduce the feedstock-related emissions from extraction and refining compared to petrochemical-based feedstocks. Meantime, we recycle the metals used in manufacturing our aircraft back into our supply chain, reducing reliance on virgin materials.\nCommunities\nTed Colbert, president and CEO of Boeing Defense, Space & Security\nReporting", "chunk_word_count": 472, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 28, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nParts. Boeing aims to reduce carbon emissions and waste from parts, components and systems procured from suppliers. We reduce carbon emissions from the movement of millions of airplane spare parts by consolidating shipments, eliminating single-use packaging and redesigning warehousing networks to regional hubs. In addition, we use additive manufacturing to 3D print some of our own parts. Doing so allows us to change the designs of some parts in a way that can lessen their environmental impact by creating lighter consolidated parts that use less raw material, fewer machining processes and leave less waste. See Page 64 for more information.\nContents\nIntroduction\nSupplier Collaboration: In 2021, Boeing co-founded an industry effort through the International Aerospace Environmental Group to establish a voluntary sectoral framework for ESG engagement, including assessment and awareness, throughout the aerospace manufacturing industry.\nApproach & Governance\nUsed Serviceable Material Offerings: Boeing Service business provides access to recertified used parts from retired aircraft called used serviceable material.\nPeople\nBuild/Test. Reducing waste from operations while boosting the use of renewable energy and digital technologies can help our manufacturing and other work sites reduce their environmental impact while building and testing a product. Boeing cuts waste to landfill, water, energy and hazardous chemicals. Read more about how we do so on Page 52. For example, when testing aircraft, Boeing uses blended sustainable aviation fuels.\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nSustainable Operations: Since 2020, Boeing has maintained workplace net-zero GHG emissions at manufacturing sites and other facilities (Scope 1 and Scope 2) and in its business travel (Scope 3, Category 6) by expanding conservation and renewable energy use while securing carefully selected, third-party-verified offsets for the remaining GHG emissions.\necoDemonstrator: To accelerate innovation for current and future airplane sustainability, our 10-year-old ecoDemonstrator flying test bed program takes promising technologies out of a lab and tests them in an operational environment.\nUse. Boeing provides solutions for customers to lower their carbon footprints while they are using our aircraft. For example, armed with real-time data, flight crews can make adjustments to optimize fuel use, and thus minimize the carbon footprint of each flight. Digital tools empower our airline customers to conserve fuel, track emissions and enhance their operations’ overall efficiency, while defense customers can conserve fuel and lower emissions with platform-agnostic digital systems with maintenance, supply chain and flight planning recommendations based on analytics.\nGovernment Services: As our tools ingest flight, maintenance and supply data, our analytics produce results that drive efficiency across the system. \nRead more on Page 37.\nOperations\nEnd of Service. Up to 90 percent of the parts and materials in Boeing aircraft can be reused and recycled across aerospace and other industries. We manage and recertify used parts for aircraft, and engine platforms for our customers.\nCommunities\nRemanufactured: Boeing remanufactures aircraft, such as the 115 AH-64D Apache for government customers, which includes upgrading configurations with the latest technology and keeping valuable materials in a closed loop.\nReporting\nBoeing Converted Freighter Fleet Renewal: Boeing’s passenger-to-freighter programs provide airlines an economical way to replace less efficient, older-generation freighters with more efficient freighters created from repurposed passenger aircraft.", "chunk_word_count": 542, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 32, "page_start": 32, "page_end": 32 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 29, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Innovation and Clean Technology\nContents\nIntroduction\nOur company and our industry recognize finding solutions to climate change as an urgent challenge of our time. We are united in our goal to ensure billions of passengers can continue to fly every year to connect with friends and family, discover new places and cultures, engage in commerce and care for those in need.\nSharing Cascade at the opening of the Boeing Research & Technology Sustainability Research Center in Tokyo, CSO Chris Raymond explains how the modeling tool projects the multiple paths to net-zero carbon emissions for commercial aviation. (Boeing photo)\nApproach & Governance\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nAchieving this objective requires a portfolio of innovative solutions and partnerships that allows our sector to decarbonize. We are focused on four key areas: fleet renewal, operational efficiency, renewable energy and advanced technology. In 2022 we set ambitious 2030 targets related to our products, and throughout this section we share progress toward those goals and essential partnerships that will help us achieve them.\n### The Cascade effect\nBoeing debuted The Boeing Cascade Climate Impact Model (Cascade) at the Farnborough International Airshow in 2022. This web application uses digital technical data pulled from across the world to visualize how introducing various sustainable aviation options would impact global emissions. Cascade uses life cycle modeling to accurately quantify how choices in the four key areas impact the atmospheric concentrations of carbon dioxide.\nOperations\nCascade is a way to visualize the climate impact of global commercial aviation while creating scenarios to calculate what kind of positive impacts our levers to decarbonize aviation would have on carbon emissions: fleet renewal, operational efficiency, renewable energy and new aviation technologies like hybrid, electric or hydrogen airplanes.\nCommunities\nMore about the governance of this strategy can be found in the Approach & Governance Section on Page 13 of this report.\nReporting\nNeil Titchener, program leader, Cascade. (Boeing photo)\nWhy it matters: It’s a data-driven way for our stakeholders to make informed decisions about how to reach the commercial aviation industry’s net-zero 2050 ambition.\nNeil Titchener, program leader, Cascade\nLearn more about Cascade “Cascade helps airline operators, industry partners and policymakers see when, where and how different energy carriers and life cycle emissions affect their sustainability goals. The tool shows how incremental changes can cut emissions in commercial aviation.”\n### Four Strategies to Advance Sustainable Aerospace Together\nContents\nIntroduction\n[IMAGE CAPTION] Renewable Energy\nApproach & Governance\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nOperations\nOperational Efficiency\nFleet Renewal\nAdvanced Technology\nCommunities\nReporting", "chunk_word_count": 465, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 30, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Fleet Renewal\nContents\n### New orders mean more efficient fleets\nIntroduction\nNew airplanes provide significant efficiency gains — historically each generation reduces fuel use and emissions $1 5 \\% - 2 5 \\%$ . Deploying the latest generation of airplanes is one of the most significant contributions to ${ \\mathsf { C O } } _ { 2 }$ emissions reduction available over the next decade. Boeing will continue to invest in efficiencies that reduce fuel use and carbon emissions. More detail on the sustainability of Boeing’s products can be found here.\n774 big things: In 2022, our customers ordered 774 new commercial aircraft. New airplanes provide significant efficiency gains — each generation has reduced fuel use and emissions by $1 5 \\% - 2 5 \\%$ .\nApproach & Governance\nWhy it matters: Deploying the latest generation of airplanes is one of the most significant contributions to reducing carbon emissions available over the next decade.\nPeople\n### Products & Services\nResearch matters: The emissions reductions available today in our latest generation of aircraft are a direct result of Boeing committing a significant amount of its research and development investment to sustainable technologies, such as:\nSustainable Product Life Cycle\nInnovation and Clean Technology\n• The Advanced Technology Winglet on the 737 MAX that reduces drag and increases lift. \n• Lightweight carbon-fiber composite material on the 787 that is $30 \\%$ lighter than aluminum. \n• Folding wingtips on the 777X that offer unconstrained wingspan and contribute to $5 \\%$ greater aerodynamic efficiency.\nFleet Renewal Operational Efficiency Renewable Energy Advanced Technology Partnerships\nGo deeper: Read about our orders and deliveries here.\nOperations\nCommunities\n“With this investment in its future fleet, the 737 MAX and 787 will help United accelerate its fleet modernization and global growth strategy. The Boeing team is honored by United’s trust in our family of airplanes to connect people and transport cargo around the world for decades to come.”\nReporting\nContents\n### Showing up, sustainably\nBoeing’s newest and largest members of its 737 MAX and 777X airplane families flew to the 2022 Farnborough International Airshow on sustainable aviation fuel blended with conventional jet fuel at a 30/70 ratio, using the same SAF blend for their daily flying displays. The 737 MAX family leverages advanced aerodynamic design and highly efficient engines to reduce fuel use and emissions $20 \\%$ , and the noise footprint is $50 \\%$ less than the airplanes they replaced. The 777-9 will deliver $10 \\%$ better fuel use, emissions and operating costs.\nIntroduction\nApproach & Governance\nPeople\n### Products & Services\nGlobal Aerospace Safety\nSustainable Product Life Cycle\nInnovation and Clean Technology\nVideos:\nFleet Renewal Operational Efficiency Renewable Energy Advanced Technology Partnerships\n777-9: Watch it fly.\n737-10: See efficient flight.\nOperations\nCommunities\nReporting\nArriving at EAA AirVenture in Oshkosh, Wisconsin, on a 30/70 blend of SAF, the 2022 Boeing ecoDemonstrator provided tours to more than 5,000 show visitors and served as a beautiful backdrop for attendees celebrating WomenVenture day. Boeing sponsored EAA WomenVenture as it celebrated its 15th year of programming designed to encourage and support women in aviation. (Boeing photo)\n### Operational Efficiency\nContents", "chunk_word_count": 529, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Operational Efficiency", "document_id": "Boeing 2023 Sustainability Report", "page": 35, "page_start": 35, "page_end": 37 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 31, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Managing air traffic efficiently\nIntroduction\nSafe, sustainable skies are the priority. Boeing continues to invest to ensure our aircraft have the latest equipment and services to support advanced procedures, and we also work with airlines, government customers, air navigation service providers and airports on efficiency improvements. These include procedures such as continuous descent approaches and equipment upgrades such as GPS-based navigation for more direct routings. We develop services to leverage data for fuel and flight efficiency, help customers optimize flight planning and provide pilots with real-time weather and traffic information.\nBoeing works with governments, airports, airlines and air navigation service providers around the world on exploring new approaches to air traffic management (ATM).\nApproach & Governance\nWhy it matters: Optimized ATM is a critical component needed to reach the commercial aviation industry’s net-zero ambition — collaboration on how to manage airspace more efficiently can reduce emissions by about $10 \\%$ , according to EUROCONTROL.\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nAround the globe: ATM solutions designed to address specific, local and regional needs help airports and airlines operate more safely, quietly and sustainably:\nExecutive operations support assistant in EUROCONTROL’s Maastricht Upper Area Control Centre, which enables air traffic controllers to provide safe and efficient air traffic services. (EUROCONTROL photo)\n• China: Boeing is supporting China’s Air Traffic Management Bureau in exploring a new approach to ATM called “EoR” — Established on Required Navigation Performance (RNP). It’s a separation standard for landing aircraft established by the ICAO, which enables safe separation on parallel runways through simultaneous RNP-equipped arrivals, while reducing fuel burn, greenhouse gas emissions and noise.\nresearch and innovation. To do so, it is harnessing, developing and accelerating the implementation of the most cutting-edge technological solutions to manage conventional aircraft, drones, air taxis and vehicles flying at higher altitudes.\n• India: Boeing completed the development of a 10-year road map for Communication, Navigation and Surveillance/Air Traffic Management (CNS/ATM) for Airports Authority of India (AAI). Backed by the U.S. Trade and Development Agency, Boeing and AAI conducted an analysis across operational, environmental, regulatory, technological, safety and financial factors. The resulting road map focuses on improving airspace utilization and maintaining safe and efficient aircraft operations — helping to modernize the Indian National Airspace System with domestic traffic expected to double by the end of this decade.\n• Europe: Boeing is participating in seven new Single European ATM Research (SESAR) 3 Joint Undertaking research projects, renewing a 20-year-plus commitment to aircraft operational efficiency and air traffic management in Europe and paving the way to a future sustainable sky. The seven projects address critical areas for change, including emissions reduction, automation enabled by artificial intelligence, resilient ATM service provision, as well as the swift uptake of solutions for the integration of drones (U-space), urban air mobility, multimodality and reduced emissions operations. The partnership is a Europea undertaking between private and public sector partners to accelerate the delivery of the Digital European Sky through\n“Boeing has multiple digital solutions available today and even more that are in development to help customers improve their fuel and flight efficiency while reducing carbon emissions.”\nOperations\nCommunities\nReporting", "chunk_word_count": 547, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Managing air traffic efficiently", "document_id": "Boeing 2023 Sustainability Report", "page": 37, "page_start": 37, "page_end": 37 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 32, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Managing air traffic efficiently\nThe bottom line: Boeing will continue developing local and global partnerships within the aviation ecosystem, enabling exchange of expertise and technology to help build a safer and more sustainable future of flight.\nStephanie Pope, president and CEO of Boeing Global Services\n### Celebrating a decade of paperless flight decks\nContents\nIntroduction\nThe big picture: In the summer of 2012, Boeing’s Jeppesen FliteDeck Pro launched — the very first electronic flight bag (EFB) application to test what, at the time, felt revolutionary: pilots flying with digital charts and maps, free of paper binders. A decade later, the digital solutions revolution in aerospace continues to enable airlines to make impressive strides in operational efficiency and their sustainability targets.\nApproach & Governance\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\n### 305,000\n### 300,000+\ntrees saved\npilots supported\n5B+ sheets of paper not printed\n6,111 acres of forest not needed for printing\n40,000+ paperless flights enabled daily\n270,000 \ntonnes of \nfuel saved\nOperations\nCommunities\n6.3M kg (13.9M pounds) of paper removed from airplanes\n100M+ paperless flights enabled\n857,722 tonnes of ${ \\mathsf { C O } } _ { 2 }$ emissions avoided\nReporting\n### Renewable Energy\nContents\nIntroduction\nRenewable energy can help reduce carbon emissions inside our operations and from our products and services. For our products, renewable energy can help reduce the carbon intensity of an energy powering our products, such as Sustainable Aviation Fuel (SAF), green hydrogen and batteries. Boeing believes SAF is a necessary lever to decarbonize aviation. However, it will take a “SAF and” approach and not a “SAF or” approach to support the commercial aviation industry’s ambition for net zero by 2050. As part of the “SAF and” approach, Boeing continues to advance the viability of other renewable energy carriers and their safe use on aircraft.\n### Creating a decarbonized solution in the UAE\nApproach & Governance\nPeople\nWhen Boeing was invited to analyze a study that looked at developing SAF in the United Arab Emirates (UAE), the decision to participate was easy and will support the growth of SAF production in the region.\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nThe Emirates flight test utilized 18 tons of SAF in one engine of a 777-300ER blended from two producers, Neste and Virent. The flight flew over the Dubai coastline for just over an hour. (Emirates photo)\nThe “Power-to-Liquids Roadmap” report examines the financial, economic and environmental benefits of decarbonizing the country’s aviation industry with an emerging SAF technology.", "chunk_word_count": 458, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Managing air traffic efficiently", "document_id": "Boeing 2023 Sustainability Report", "page": 37, "page_start": 37, "page_end": 39 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 33, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Here’s how it’s made:\n• Electricity is applied to the water $( { \\mathsf { H } } _ { 2 } { \\mathsf { O } } )$ . The hydrogen is collected and the oxygen is set aside. • The hydrogen is mixed with the carbon dioxide in a reactor until it matures. • The liquid is removed from the reactor, which results in PtL jet fuel.\nBoeing’s role: The report was developed by the UAE Ministry of Energy and Infrastructure in collaboration with the World Economic Forum’s Clean Skies for Tomorrow Initiative. Boeing participated by offering expertise at the launch event, analyzing the findings and being an active member of the UAE’s SAF task force, which is led by the Ministry of Energy and Infrastructure and provides strategic guidance on a range of fuel options, including Power-to-Liquids (PtL), a type of SAF.\nThe upshot: The UAE report shows that it would be ambitious but feasible for the country to produce as much as 11 million tons of PtL SAF by 2050 — equivalent to approximately $70 \\%$ of national jet fuel consumption.\nOperations\nIt’s all about partnerships: “We collaborate with policymakers across six continents to support the SAF value chain, including its supply, use, certification and life cycle,” said Mohammed Al Ghailani, Boeing’s sustainability lead for the Middle East and Africa. “We were thrilled to support the UAE’s ongoing research into developing a renewable fuel that would be suitable to the region.”\nResources needed: This PtL relies on two things in the UAE: tapping into the UAE’s abundant sources of renewable energy (intense sunshine and sustained winds), as well as its ability to capture carbon dioxide from the air or from point sources such as industrial waste gases.\nCommunities\nFor additional information on SAF, please reference the SAF Fact Sheet.\nReporting\nWhat is PtL? SAF requires careful attention to detail. There are several pathways to creating PtL (Power-to-Liquid) including the process where renewable electricity, ${ \\mathsf { C O } } _ { 2 }$ and water are synthesized into a liquid hydrocarbon, including jet fuel.\nPtL is considered a significant technology for the UAE to decarbonize aviation. Other countries are also studying PtL to mature the technology and assess how this pathway may help them decarbonize.", "chunk_word_count": 390, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Here’s how it’s made:", "document_id": "Boeing 2023 Sustainability Report", "page": 39, "page_start": 39, "page_end": 39 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 34, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Feedstocks and forces – Boeing’s work to scale up SAF around the world\nContents\nWhy it matters: Today, SAF is made from waste-based agricultural products and used cooking oil and reduces emissions by up to $80 \\%$ compared to conventional jet fuel. Most is currently blended with fossil fuel. Boeing is working to make SAF more accessible to help deliver on its commitment that commercial airplanes will be compatible to fly on $100 \\%$ SAF by 2030. SAF development and production deliver economic growth, provide energy security for countries and create jobs across multiple industries.\n• Europe: Boeing’s technology office in Madrid participates in research and development activities with the Horizon Europe program to develop new pathways and to join consortia focused on energy transition for both small and large airports.\n• UK: Boeing is focused on supporting the creation of a policy, capital and innovation ecosystem in the UK to enable the Government’s Jet Zero Strategy commitment of having five plants in construction by 2025. Boeing was proud to be the founding partner of the Energy Innovation Centre at the University of Sheffield, which has since been selected as the home of the UK SAF clearing house.\nIntroduction\nApproach & Governance\n• India: In collaboration with World Economic Forum’s Clean Skies for Tomorrow initiative, India produced a road map detailing how to scale production and use of SAF, including feedstock analysis, production capacity and technological maturity.\nPeople\n• U.S.: Boeing focuses on SAF procurement, research and development, and promoting SAF commercial scale-up in the U.S. and around the globe. Boeing also recently announced the purchase of 5.6 million gallons of SAF for its commercial operations in 2023.\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nSAF sources and building scale: Boeing is researching, developing and advocating for SAF across the globe, working with the most sustainable feedstocks that are available.\n• Japan: In August 2022, Boeing announced its new center focusing on sustainability and supporting a newly expanded cooperation agreement with Japan’s Ministry of Economy, Trade and Industry. Read more on our partnerships in Japan on Page 45.\n• Australia and New Zealand: Boeing is working on a SAF road map, in partnership with the Commonwealth Scientific and Industrial Research Organisation (CSIRO), to help analyze the availability of sustainable feedstocks in the Asia-Pacific region, primarily focusing on Australia and New Zealand.\n• Middle East: Boeing also participated in the Sustainable Bioenergy Research Consortium’s (SBRC) Seawater Energy and Agriculture System (SEAS), which is an integrated system of aquaculture, halo-agriculture and mangrove silviculture to produce SAF and seafood. The first airplane flight fueled with jet fuel produced through SBRC’s SEAS happened in January 2019.\n• Brazil is the second-largest biofuel producer globally. Boeing’s focus includes feedstocks that can be sourced sustainably, such as sugar cane, eucalyptus and other residual biomass options.\n• Mexico: Boeing is the only multinational company working with the Biojet Consortium, established in 2016 and is comprised of 14 research centers and companies that are exploring alternative aviation fuel supply chain in Mexico.\nOperations", "chunk_word_count": 531, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Feedstocks and forces – Boeing’s work to scale up SAF around the world", "document_id": "Boeing 2023 Sustainability Report", "page": 40, "page_start": 40, "page_end": 40 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 35, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Feedstocks and forces – Boeing’s work to scale up SAF around the world\n• China is planning to scale up SAF adoption and Boeing has partnered with Peking University to develop fundamental research meant to guide the industry in identifying promising SAF feedstocks and pathways.\nCommunities\n• South Africa: Since 2014, Boeing has been working with RSB and World Wildlife Fund-South Africa to help small-hold farmers to grow crops that produce SAF. Boeing is partnering with Stellenbosch University to deliver SAF e-learning.\n• Ethiopia: Boeing supports a SAF e-learning and academic program in partnership with Roundtable for Sustainable Biomaterials (RSB). Boeing conducted a feasibility study on Carinata (Ethiopian mustard) as a feedstock for SAF production.\nReporting\n### Fond childhood memories propel a passion for possibility and sustainable fuel\nContents\n“The sugar cane ethanol co-op provided much-needed jobs, and that sparked hope in the lives of many people I care about,” said Andrade. “The success of the ethanol plant catalyzed other co-ops and sparked capacity-building opportunities — including a co-op-led school started by my mother.”\nIntroduction\nBoeing’s SAF feedstock expert Onofre Andrade witnessed the transformative economic power sustainable biofuels had on his job-deprived rural village, while growing up in central-west Brazil.\nApproach & Governance\nAndrade joined Boeing before SAF was a hot topic, but his early experience continues to give purpose to him and his family.\nWhen he was a young boy, his father joined with other farmers to form a co-operative that built a sugar cane ethanol plant. It still operates today. Prior to this co-op being developed, the sole source of jobs was farm labor.\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nPeter Nease and Clarence Santiago fueling ecoDemonstrator\n“I hope to inspire my kids the way my dad inspired me.”\nOnofre Andrade, sustainable aviation fuel feedstock expert\nOperations\nCommunities\nReporting", "chunk_word_count": 329, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Feedstocks and forces – Boeing’s work to scale up SAF around the world", "document_id": "Boeing 2023 Sustainability Report", "page": 40, "page_start": 40, "page_end": 41 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 36, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Advanced Technology\nContents\nIntroduction\nTo meet the commercial aviation industry’s net-zero ambition by 2050, it will take an approach that includes SAF and other advanced technologies. Boeing has extensive experience on the “and,” through research, studies, testing and partnerships. The future of flight will incorporate the latest digital design, test and production tools, airframe, propulsion and systems technology, and different power and energy solutions will apply to different market segments and aircraft sizes.\n### NASA awards sustainable flight program to Boeing and partners\nApproach & Governance\nIn January 2023, NASA selected Boeing and its industry team to lead the development and flight testing of a full-scale Transonic Truss-Braced Wing (TTBW) demonstrator airplane through the Sustainable Flight Demonstrator (SFD) program. Through this unprecedented public-private partnership with NASA, Boeing and its industry partners are contributing more than half of the funding needed to shape the demonstrator program.\nWhen combined with expected advancements in propulsion systems, materials and systems architecture, a single-aisle airplane with a TTBW configuration could see reduced fuel consumption and emissions of up to $30 \\%$ relative to today’s most efficient single-aisle airplanes, depending on the mission.\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nYears in the making: The TTBW airframe concept is the result of more than a decade of development supported by NASA, Boeing and industry investments. Under previous NASA programs, including the agency’s Subsonic Ultra Green Aircraft Research program, Boeing conducted extensive wind tunnel testing and digital modeling.\nWhy it matters: The technologies demonstrated and tested will inform future designs and could lead to breakthrough aerodynamics and fuel efficiency gains.\n“One of the key outputs of this activity is really the learning, the knowledge. What at the integrated airplane level ... will the benefits be? And depending on the results of this effort, and market conditions — that’ll dictate whether this shows up on a future commercial product.”\nInformed by the company’s extensive evaluation and testing of alternative propulsion sources and renewable energy and its research partnerships, and supported by Boeing’s expertise in commercial aircraft design and history of innovation on alternative energy and propulsion systems, Boeing has launched a new effort to conceptually design and assess the potential environmental impacts of “Future Flight Concepts.” These concepts are exploring applications of technologies including electrification and alternative fuels, such as hydrogen.\nOperations\nCommunities\nReporting\nTodd Citron, Chief Technology Officer", "chunk_word_count": 418, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 42, "page_start": 42, "page_end": 43 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 37, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\n### Wisk unveils self-flying, eVTOL aircraft\nWisk, a technology joint venture, is developing its 6th Generation aircraft. Designed with the highest safety standards, it will be the first candidate for certification of an autonomous, passenger-carrying electric vertical takeoff and landing (eVTOL) aircraft in the U.S. The Gen 6 aircraft has room for four passengers, carry-on luggage and personal items, can fly 90 miles (145 kilometers) and recharges in 15 minutes.\nWhy it matters: Wisk will be the first candidate for certification of an autonomous, passenger-carrying electric vertical takeoff and landing (eVTOL) aircraft in the U.S.\nIntroduction\nApproach & Governance\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\n“Wisk is excited to partner with Boeing on the development of this autonomous aircraft. Our combined experience uniquely positions Wisk to succeed in this exciting new mobility market.”\n### Taking a SAF and other advanced technology approach\nBrian Yutko, CEO, Wisk\nIt will take a “SAF and” approach, not a “SAF or” approach, to achieve the commercial aviation industry’s net zero ambition by 2050. As part of our approach, which includes SAF and other technologies, Boeing continues to advance the safety and viability of other energy carriers and their use on aircraft. Since the mid-2000s, Boeing has conducted six hydrogen technology demonstrations with crewed and uncrewed aircraft using hydrogen fuel cells and combustion engines. Boeing successfully tested a cryotank designed for space with the capacity to hold 16,000 gallons of liquid hydrogen or the energy equivalent of the Jet A fuel in a typical regional jet.\nOperations\nCommunities\nReporting", "chunk_word_count": 282, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 43, "page_start": 43, "page_end": 43 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 38, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Sustainability test bed turns 10\nContents\nThe Boeing ecoDemonstrator marked its 10-year anniversary in 2022 — accelerating innovation by taking promising technologies out of the lab and rigorously testing them in an operational environment.\nIntroduction\nApproach & Governance\n### By the numbers:\nThe program has tested over 225 technologies to help enhance safety, decarbonize aviation and improve operational efficiency and the passenger experience.\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\n• Nine platforms served as flying test beds: • 2012: American Airlines 737-800. • 2014: Boeing 787-8 Dreamliner. • 2015: TUI 757. • 2016: Embraer E170. \n• 2018: FedEx 777 Freighter. • 2019: Boeing 777-200. • 2020: Etihad Airways 787-10. • 2021: Alaska Airlines 737-9. • 2022-2024: Boeing 777-200ER (Extended Range). \n• Approximately one-third of those technologies progressed \nonto Boeing’s products and services, including: • More aerodynamically efficient winglets on the 737 MAX. • iPad apps that provide real-time weather and other information to pilots, enabling them to improve fuel efficiency and reduce emissions. • Custom approach path information to lower community noise. • Flight deck touch-screen displays and a camera system on the 777X that will enhance safety by helping pilots avoid ground obstacles.\n“I am proud of the ecoDemonstrator’s role in pioneering the use of sustainable aviation fuel (SAF) for the industry. Not only has almost every one of our platforms flown on SAF, we conducted the industry’s first commercial flight on $100 \\%$ SAF in both engines in 2018 with FedEx Express and tested SAF emissions with NASA. That is what we do — partner across the industry to help safely decarbonize aerospace.”\nThe 2022 Boeing ecoDemonstrator, a 777-200ER (Extended Range) flies on a blend of 30% SAF and 70% conventional jet fuel. (Boeing photo)\nOperations\nCommunities\nVideo: See flying lab.\nReporting\nRae Lutters, ecoDemonstrator program manager\n### Partnerships\nContents", "chunk_word_count": 330, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Partnerships", "document_id": "Boeing 2023 Sustainability Report", "page": 44, "page_start": 44, "page_end": 45 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 39, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Boeing partners for a clean energy economy\nAt the Farnborough Airshow in June 2022, Boeing and Mitsubishi Heavy Industries announced we will build on our decadeslong partnership. (Boeing photo)\nIntroduction\nApproach & Governance\nThroughout 2022, Boeing joined forces with innovative partners from around the world to scale renewable energy and sustainable technologies for a more sustainable aerospace and future.\nPeople\nWhy it matters: Boeing is aware that no one entity can decarbonize the commercial aviation industry alone. It will take “everyone” to achieve the industry’s net zero ambition by 2050. We recognize the significant capital investment required in the journey and appreciate the partnership and support of the financial community to channel liquidity into the ongoing transition pathway.\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\n• Mitsubishi Heavy Industries (MHI): Building on their decades-long partnership, Boeing and MHI agreed to study sustainable technologies for a low-carbon society. Their focus areas include green hydrogen, carbon capture, electrification, sustainable materials, emissions propulsion technologies, new aircraft design concepts as well as new feedstocks and technologies for SAF production.\n• SpiceJet, Council of Scientific and Industrial Research-Indian Institute of Petroleum (CSIR-IIP): Boeing partnered with these organizations to explore SAF use in India, supporting the country’s environmental goals and self–reliance initiative. Boeing is currently assisting in the certification process for SAF developed by CSIR–IIP by providing review and support.\n• Avolon and SkyNRG: Boeing partnered with Avolon, ORIX Aviation, SFS Ireland and SkyNRG to identify opportunities for a commercial-scale SAF production facility in Ireland. The country is a global leader in aviation finance and airline operations with a planned growth of renewable energy sources. The study will be completed in 2023.\n• NASA: Boeing and NASA continued their partnership testing the emissions from SAF. This year, the team conducted tests on the 2022 Boeing ecoDemonstrator, a 777-200ER (Extended Range) with Rolls-Royce Trent 800 engines and a 787-10 with GEnx-1B engines (see Page 44).\n• Virgin Atlantic: In December 2022, partnering with Boeing, Virgin won the UK Department for Transport’s $100 \\%$ SAF Trans-Atlantic Flight Fund Competition. This UK government initiative, which will see a 787 cross the Atlantic on $100 \\%$ SAF in 2023, will showcase the spectrum of sustainable aviation approaches to the flying public and inform our journey toward routine commercial industry $100 \\%$ SAF flights by 2030.\n• Alder Fuels: Boeing has committed to support testing and qualification of Alder Fuels-derived SAF on its airplanes to further grow the global SAF market. This technology enables the conversion of sustainable forest and agricultural residues into a low-negative carbon “greencrude” for jet fuel conversion — displacing the typical jet fuel need by up to $7 5 \\%$ in the U.S. The first plant will be completed in 2024.\n• Rocky Mountain Institute and Five U.S. Airlines: Boeing, along with five major U.S. airlines and others, joined the Contrail Impact Task Force led by the Rocky Mountain Institute to explore the formation, impact, and mitigation of persistent condensation trails, or “contrails,” and their climate effects.\nOperations", "chunk_word_count": 527, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Boeing partners for a clean energy economy", "document_id": "Boeing 2023 Sustainability Report", "page": 45, "page_start": 45, "page_end": 45 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 40, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Boeing partners for a clean energy economy\nWhat’s next: The commercial aviation industry’s ambition is to achieve net-zero carbon emissions for global civil aviation operations by 2050, while also growing the societal benefits of air transportation. Boeing will continue to work across sectors and industry to ensure the benefits of aerospace remain available for generations to come.\nCommunities\nReporting\n• Roundtable on Sustainable Biomaterials (RSB): Boeing has been a member of the Board of Directors since 2021 and has chaired RSB’s SAF Policy Platform to advance stakeholders’ collaboration on renewable energy.\n• ACT FOR SKY: Boeing is a member of ACT FOR SKY, a voluntary organization of 19 companies that works to commercialize, promote and expand the use of SAF produced in Japan.", "chunk_word_count": 133, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Boeing partners for a clean energy economy", "document_id": "Boeing 2023 Sustainability Report", "page": 45, "page_start": 45, "page_end": 45 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 41, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### University partnerships strengthen sustainability at Boeing\nContents\n• University of Cambridge: In 2023, Boeing is celebrating 20 years of collaboration with the University of Cambridge. Among other research projects, Boeing is partnering with the university’s Whittle Lab on its Aviation Impact Accelerator (AIA) to draw from a multidisciplinary range of expertise. AIA develops interactive, evidence-based models, simulations and visualization tools for decision-makers and others to understand low-emissions flight pathways, complementing our own Cascade tool. The AIA tool will help Boeing and interested parties understand how policies, scenarios and technology transitions support the industry’s net-zero carbon emissions from commercial aviation by 2050.\nWhy it matters: Strong university partnerships are one way Boeing demonstrates that it is looking outside the aerospace industry to give and receive support for research and development and to attract top talent.\nIntroduction\nApproach & Governance\nHere are some universities partnering with Boeing on sustainability:\nPeople\n• Yale Center for Natural Carbon Capture: In April 2022, Boeing pledged $\\$ 10$ million to research efforts in natural carbon sequestration to scale natural solutions to mitigate GHG. The Center’s focus is on near-term solutions that can capture approximately one gigaton of ${ \\mathsf { C O } } _ { 2 }$ per year, the equivalent to current annual airline emissions. This approach offers potential co-benefits such as improved soil health and biodiversity conservation.\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nStudying sustainable materials in forestry waste: University partnerships nurture the sustainability talent pipeline, which benefits graduates and the company. Alicia Piscitelli secured a position on Boeing’s Research & Technology team after completing three company internships and earning both master’s and doctorate degrees from Villanova’s sustainable engineering program.\n• Cranfield University’s Digital Aviation Research and Technology Centre: This partnership focuses on technologies that are relevant to the operational efficiency pillar of our sustainable aerospace strategy.\n• University of Sheffield: Boeing is the founding member of the Energy Innovation Center (EIC), which is focused on driving SAF development. In early 2023, the EIC was announced as the UK’s SAF Clearing House, in partnership with the University of Dayton, reinforcing the critical role this first-of-its-kind facility in the UK will play in the global ecosystem. The EIC builds on Boeing’s long-standing relationship with Sheffield, which started with the co-founding of an advanced research center for manufacturing and led to the opening of Boeing’s first European manufacturing facility, demonstrating a successful model for university and industry collaboration.\n• Villanova University: The Resilient Innovation through Sustainable Engineering (RISE) Forum advances corporate sustainability by identifying and applying data-driven sustainability solutions. Boeing has access to faculty and graduate students who possess the technical expertise to examine real-world problems by evaluating various technologies or operational innovations through a systems perspective.\nBoeing’s circular economy expert and Associate Technical Fellow (see Page 30), Christin Datz, was Piscitelli’s master’s thesis adviser as she researched ways to advance the sustainable product life cycle. Piscitelli’s doctoral research focused on renewable feedstock material for thermoset polymers used in interior aircraft composites. She studied ways to synthesize phenolics with renewable feedstocks derived from pine root oil and forestry waste.\nOperations", "chunk_word_count": 542, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > University partnerships strengthen sustainability at Boeing", "document_id": "Boeing 2023 Sustainability Report", "page": 46, "page_start": 46, "page_end": 46 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 42, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### University partnerships strengthen sustainability at Boeing\nWhat’s next: We will continue to partner with academic institutions at the forefront of sustainable aerospace research.\nCommunities\nReporting\nMost recently, she’s helping Boeing to find sustainable ways to manage polymers at the end-of-life phase of the sustainable product life cycle.\nBoeing Global Sustainability Policy & Partnerships Vice President Brian Moran (right) is joined by Mohamed Al Ghailani, Boeing’s sustainability lead for Middle East, Türkiye and Africa, at COP27, where they engaged with government, industry and civil society partners. (Boeing photo)", "chunk_word_count": 97, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > University partnerships strengthen sustainability at Boeing", "document_id": "Boeing 2023 Sustainability Report", "page": 46, "page_start": 46, "page_end": 47 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 43, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Boeing partners with decision-makers for sustainable aerospace\nContents\n• Europe: Boeing became a member of the European Commission’s Renewable and Low-Carbon Fuels Value Chain Industrial Alliance. As part of the Aviation Working Group, Boeing is partnering with the European policymakers to inform how to scale production and uptake of SAF. In 2022, Boeing also took the lead as Sector Champion for Aviation in the World Economic Forum’s First Movers Coalition (FMC), which has assembled 24 of the world’s leading companies. All airlines and air transport companies in this sector have set a target to procure $5 \\%$ of their fuel demand as advanced SAF. The group works to overcome technology barriers and bring forward supply with the intent of striking binding commitments between buyers and sellers.\nIntroduction\nBoeing is working with decision-makers and policy institutions globally to create tailor-made paths forward to decarbonize commercial aviation.\nApproach & Governance\nWhy it matters: The commercial aviation industry’s ambition of net-zero carbon emissions by 2050 has multiple levers to work toward meeting this target. SAF is seen as the best solution to accelerate toward this goal as it is a drop-in solution to the aviation ecosystem.\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\n• U.S.: The SAF Grand Challenge engages federal government agencies to develop a comprehensive strategy for scaling up new technologies to produce SAF on a commercial scale from renewable or waste resources. Objectives include: expanding SAF supply and end use; reducing its cost; enhancing its sustainability; supplying at least 3 billion gallons of SAF annually by 2030; and sufficient SAF to meet $100 \\%$ of aviation fuel demand by 2050, which is projected to be around 35 billion gallons per year.\nAround the globe: Here’s a snapshot of Boeing’s global policy partnerships.\n• Middle East: Boeing discussed real-world climate actions at the 2022 COP27 via panels and keynotes with partners and stakeholders, amplifying that the only way to keep 1.5 degrees C alive is through cross-sector partnerships, strategies, regulation and data to keep all parties on track.\n• Americas: Partnering with International Air Transport Association (IATA), Boeing hosted a SAF Roundtable at the IX Summit of the Americas and asked heads of state to develop sound policies to incentivize the production of SAF across the western hemisphere, highlighting the potential of the region. Boeing also partnered with seven airlines from across the Americas, using nearly 400,000 liters (106,000 gallons) of SAF for commercial flights during the week of the summit, avoiding the release of over 214 tonnes of ${ \\mathsf { C O } } _ { 2 }$ .\n• Singapore: Boeing joined the International Advisory Panel (IAP) set up by the Civil Aviation Authority of Singapore to develop Singapore Sustainable Air Hub Blueprint by 2023. Boeing provided insight into IAP’s report on scaling SAF and improving air traffic management to create a conducive policy framework for the region’s busiest aviation hub. Boeing also briefed the Association of Southeast Asian Nations Air Transport Ministers on key strategies for sustainable aviation, encouraging further discussion amongst the member states on accelerating regional cooperation.", "chunk_word_count": 539, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Boeing partners with decision-makers for sustainable aerospace", "document_id": "Boeing 2023 Sustainability Report", "page": 47, "page_start": 47, "page_end": 47 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 44, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Boeing partners with decision-makers for sustainable aerospace\nWhat’s next: Boeing will continue to work closely with governments, customers and decision-makers globally to achieve our shared goal in 2023 and beyond, including:\n• Partnering on SAF road maps across the APAC region, including Australia, New Zealand, Southeast Asia and Japan.\n• Australia: SAF will unlock its share of an extra $\\$ 10$ billion each year in GDP, generating 26,000 jobs, while reducing emissions by around $9 \\%$ . Boeing and Bioenergy Australia hosted a panel at the Prime Minister’s Sydney Energy Forum to accelerate the production of SAF, where the Australia Transport Minister announced plans for a Jet Council. Boeing also chaired the SAF Alliance of Australia and New Zealand to make key policy recommendations on scaling SAF.\nOperations\n• Helping to develop Australian Jet Zero Council.\nCommunities\n• Advocating to policymakers, the finance community and suppliers through regional workshops with FMC around the world to build local capacity for SAF supply, enhance demand commitments and unlock commercial challenges.\n• UK: Boeing hosted the seventh Jet Zero Council meeting in its offices, presenting its Cascade tool to the Secretary of State for Transport and Secretary of State for Energy and Net Zero. The work of the council is crucial for the UK Jet Zero Strategy. Boeing was appointed co-chair of the Defence Supplier Forum Climate Change and Sustainability Aviation Group with the Royal Air Force. Boeing also leads a NATO group on behalf of the UK focused on accelerating military adoption of SAF to support defence sustainability and energy security.\nReporting\n• China: Boeing and Peking University Institute of Energy released a report that compiles results of a yearlong research effort into SAF, the basis of a plan to decarbonize air travel in the world’s second-largest commercial aviation market.\n• Supporting the release of global SAF guidance on future supply and demand issues for buyers and sellers.\n• Working closely with the UAE government on shaping sustainable transport agenda at COP28.\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services \nGlobal Aerospace Safety \nSustainable Product \nLife Cycle \nInnovation and \nClean Technology \nFleet Renewal \nOperational Efficiency \nRenewable Energy \nAdvanced Technology \nPartnerships\nGonzaga University Senior Design students receive the Adient Aerospace Ovation seating; left to right in photo: Hannah Dunn, Micah Donald, Brady Jurgens, Emily Andresen. (Zack Berlat, Gonzaga photo)\nOperations\n### Lighter seats lift efficiency\nCommunities\nBoeing’s Cabin and Interiors and Payloads Engineering teams are finding innovative ways to reduce waste, emissions and weight during the product life cycle for complete customer solutions that promote sustainability. One of those ways involves a group of college students in Spokane, Washington. Boeing and joint venture aircraft seating partner, Adient Aerospace, joined with Gonzaga University’s School of Engineering and Applied Science students to support a sustainability-focused research initiative. The students are using Adient Aerospace’s Ovation seat prototype to study cabin product design, manufacturing and maintenance to find new approaches to increase sustainability measures.\nGonzaga University senior design students Brady Jurgens, Hannah Dunn, Emily Andresen and Micah Donald study Ovation seat design and structure. (Zack Berlat, Gonzaga photo)\nReporting", "chunk_word_count": 523, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Boeing partners with decision-makers for sustainable aerospace", "document_id": "Boeing 2023 Sustainability Report", "page": 47, "page_start": 47, "page_end": 48 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 45, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\n### Operations\nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange \nConserving Resources \nReducing Waste \nBiodiversity and \nEnvironmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\n## O P E R A T I O N S\nCommunities\nReporting\n### Quality\nContents\nIntroduction\nWe design quality into every aspect of our business and drive personal accountability to ensure quality in everything we do and in every product we deliver. We promote quality with our people, our culture, metrics and oversight.\nApproach & Governance\nPeople\nThe Boeing Quality Management System (QMS) has a foundation in AS9100, which is the internationally recognized and premier aerospace QMS standard. Boeing aims to flow down AS9100 certification and compliance to its suppliers in order to enable effective and efficient processes that meet multiple customer, statutory and business requirements.\nProducts & Services\n### Operations\nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange \nConserving Resources \nReducing Waste \nBiodiversity and \nEnvironmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\n“When we send a purchase order to a supplier, it can be a detailed process to ensure we receive high-quality products that meet our exacting requirements. This early involvement approach involves a cross-functional team that works proactively with the supplier to go through the purchase order together, including all the critical technical requirements, and establish confidence and clarity from the start. It also demonstrates that we are invested in their success.”\n### A sustainable approach to supplier quality success\nQMS and the company’s Safety Management System (SMS) work together and are built into the company’s organizational structure, policies, processes, procedures and resources. Our customers and our regulators have extremely high expectations of Boeing, and these systems help to operationalize safety and quality in order to meet those expectations.\nBoeing is expanding a new proactive quality tool called Requirements Consumption Review (RCR) to ensure suppliers fully understand all requirements prior to building a product — and it’s significantly reducing waste and rework down the line to enable first-time quality.\nWe incorporate safety and quality metrics into our primary annual incentive structures, further driving our focus across the enterprise at every level of the organization. We operate with four enterprisewide operations councils focused on strengthening quality, manufacturing, supply chain and program management in every program. We deliver quality through a relentless commitment to integrity, safety and sustainability, which is fundamental to our mission.\nWhy it matters: The program is having a positive impact on quality.\n• Boeing conducts the review for newly designed products or products that have moved to a new supplier and that may generate a defect, for example, given the part’s complexity.\n• RCRs have resulted in a $9 5 \\%$ first-time quality yield, compared to $60 \\%$ for similar parts that did not involve the tool.\nCommunities\n• First deployed across Boeing’s Defense, Space & Security business, RCRs are now being implemented across Commercial Airplanes and Global Services as well.\nDoug Ackerman, vice president of Supplier Quality\nReporting\nLearn more about our approach to quality .", "chunk_word_count": 520, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 46, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\n### Digital factory of the future\nBoeing is utilizing an industry-leading technology to transform the way we design, test and build airplanes. Today, Boeing engineering teams are studying how recent lessons learned from across the company could shape the factory of the future — with digital transformation as a major driver.\nIntroduction\nApproach & Governance\nWhy it matters: Stability and optimized performance is happening.\nPeople\n• Boeing’s T-7A Red Hawk team was able to build the first several aircraft in simulations before production even started and then join the aft and forward fuselages in less than a half-hour, a process that would normally take days.\nProducts & Services\n### Operations\nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange Conserving Resources Reducing Waste Biodiversity and Environmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\n• Although commercial airplanes are larger and production requirements are different from military aircraft, Boeing teams will apply those learnings to future programs. That knowledge, combined with more than a century of development experience on other programs, will guide future production.\nIt comes down to this: This will enable Boeing to predict performance of the production system and see how changes in the airplane design affect that performance, or vice versa. It will also allow teams to “build” the first several aircraft in a simulation, flattening the learning curve. Supplier readiness and success around first-time quality enables Boeing to operate more sustainably as a business.\n“Creating a digital twin of our factory operations will help to increase stability and optimize performance prior to physically building a product. We have long used models to predict aircraft performance and refine them with test data as it comes available. Similarly, we will build models to predict production system performance and refine them as systems come online.”\nA simulated view of what a future commercial factory could look like. The concept builds off of lessons learned from how the T-7A program operates in St. Louis — no fixed tooling, no holding fixtures. The part becomes the tool, which is a revolutionary concept. (Boeing image)\nBy driving quality within the supply chain, Boeing demonstrates its commitment to sustainability by reducing rework and/or delayed parts in the value stream to minimize time lost and waste.\nCommunities\nHoward McKenzie, chief engineer and executive vice president of Engineering, Test & Technology\nReporting", "chunk_word_count": 399, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 51, "page_start": 51, "page_end": 51 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 47, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Sustainable Operations\nContents\nIntroduction\nBoeing appreciates sustainable aerospace starts inside our four walls. We are focused on continuous improvements in pursuit of the sustainable product life cycle across key elements including greenhouse gas emissions (Scope 1 and Scope 2), energy usage, water and waste management. We take action to decrease our impact through renewable energy procurement, targeted infrastructure and equipment investments, efficiency standards and conservation initiatives that include deployment of best practices and employee engagement strategies. Core to this strategy is the ongoing engagement of our employees each year through education and initiatives focused on ways in which they can reduce their environmental impact at work, and at home. Boeing’s environmental strategy is guided by a comprehensive review and assessment of the most significant environmental challenges and risks facing the company, and our environmental priorities are set with internal and external stakeholders. The analysis includes direct input and perspectives on industry best practices and community requirements from diverse stakeholders, such as customers, environment-focused nongovernmental organizations (NGO) and the company’s global leadership. The information helps Boeing identify and update our understanding of current and emerging sustainability issues that are critical to the company and our stakeholders. It also informs our next-generation environmental strategy and targets.\nApproach & Governance\nPeople\nProducts & Services\nOperations \nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange \nConserving Resources \nReducing Waste \nBiodiversity and \nEnvironmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\nSince 2020, Boeing has achieved net-zero GHG emissions at manufacturing and work sites by expanding conservation and renewable energy use while securing carefully selected, third-party-verified offsets for the remaining greenhouse gas (GHG) emissions.\nCommunities\nReporting", "chunk_word_count": 282, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 52, "page_start": 52, "page_end": 52 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 48, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Operational Targets Progress\nContents\nIntroduction\nBoeing invests in sustainable operations to reduce the impact of our manufacturing sites and is focused on conserving resources. We prioritize reducing emissions, energy, water and waste throughout our global operations and have set 2025 waypoints toward 2030 goals to share our progress and remain accountable as we increase production. Boeing’s sustainable operations strategy is managed within the Global Enterprise Sustainability organization, in close partnership with stakeholders across the enterprise. Through our Sustainable Operations subcouncil, we track performance across the enterprise and at the site level to assess our progress, identify challenges and opportunities, and share best practices.\nApproach & Governance\nPeople\nProducts & Services\nOperations \nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange \nConserving Resources \nReducing Waste \nBiodiversity and Environmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\n1. Operational goals shown are absolute targets and not indexed to production levels or growth. 2022 performance was affected by changes associated with occupancy and operations during the COVID-19 pandemic, as well as conservation and changes in how Boeing purchases energy. The targets were established against a 2017 base year. The 2025 goals will act as a milestone to guide actions and progress to the 2030 goals. \n2. All 2025 reduction goals were set with an operational boundary of the Core Metric Sites, which represent the majority $( 7 0 \\% )$ of Boeing’s operations, and includes emissions from electricity use and natural gas. \n3. The 2030 reduction goals set with an operational boundary of The Boeing Company and includes all Scope 1 and Scope 2 emissions. \n4. The net-zero achievement covers Scope 1 and Scope 2 emissions for all manufacturing and work sites within the company’s operational control as well as Scope 3, business travel. This is achieved by expanding conservation and renewable energy use while securing carefully selected, third-party-verified offsets for the remaining greenhouse gas (GHG) emissions. \n5. Energy includes natural gas, other fuels and electricity. \n6. Water data represents approximately $8 4 \\%$ of operations square footage. \n7. Solid waste numbers represent values determined from scale-weighed containers as well as calculated weights. Nonhazardous solid waste is sent to landfill for disposal. This measure applies to all waste streams where Boeing is responsible for waste disposal service as a normal part of daily operations (excludes remediation and construction-related waste). \n8. Hazardous waste is determined from U.S. EPA hazardous manifest or equivalent government shipping documents. All types of hazardous wastes that are generated at a facility and are discarded from the site for disposal, and would be considered part of the environmental footprint of the site. Actual tons of all Production or routine wastes shipped as hazardous waste (excludes remediation and construction-related waste).\nCommunities\nReporting", "chunk_word_count": 462, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 53, "page_start": 53, "page_end": 53 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 49, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Addressing Climate Change\nContents\nIntroduction\nWe consider climate change to be an urgent issue. We support the goals of the Paris Agreement and encourage our value chain partners to do the same. Boeing achieved netzero carbon emissions at manufacturing and other work sites and in business travel in 2022 for the third consecutive year, by expanding conservation and renewable energy use while securing carefully selected, third-party-verified offsets for the remaining greenhouse gas (GHG) emissions. Boeing strives to reduce operational GHG emissions, both during times of growth and during times of challenge. Our strategy for Scope 1 and Scope 2 emissions, which we detail in the following section, aligns to a 1.5 degrees Celsius global warming potential scenario, in support of the global climate goals.\nand updated throughout the reporting year. The emissions factors for these energy sources are validated at least annually and updated when appropriate following guidance from the World Resources Institute GHG Protocol. The energy data and emissions factors are verified as part of a third-party limited assurance process.\nApproach & Governance\nPeople\nFor the third year in a row, Boeing has achieved net-zero GHG emissions at manufacturing and work sites by implementing high-impact conservation investments, emphasizing and incentivizing conservation practices by employees, and increasing renewable electricity use while securing carefully selected, third-party-verified offsets for the remaining GHG emissions.\nProducts & Services\nOperations \nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange \nConserving Resources \nReducing Waste \nBiodiversity and \nEnvironmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\nTo achieve our goals related to the climate and to GHG, we actively monitor emissions, fuel use and energy efficiency. We have set 2030 targets for performance in each of these areas that aim to reduce absolute emissions, maintain netzero emissions for Scope 1 and Scope 2, and increase our adoption of renewable energy sources. As part of Boeing’s business continuity program, we also monitor the length and severity of business interruptions. The scope of monitoring includes damaging weather, natural disasters, pandemics and public health crises. It helps us understand how to increase resiliency in light of a changing climate.\n### In 2022:\n• 2025 GHG Target Progress: Boeing had a $31 \\%$ reduction in GHG emissions compared to 2017. GHG emissions were $8 \\%$ lower than anticipated for the year. Procurement of renewable energy and renewable energy credits, low commercial production activity and infrastructure investments contributed to reduction in emissions from the operational footprint. The implementation of long-lasting infrastructure improvements and the contracting of renewable energy allow us to build on emissions reductions each year.\nEnterprise GHG emissions from operations are calculated after the conclusion of the reporting year. However, the emissions from natural gas and electricity usage at Core Metric Sites are calculated and monitored on a monthly basis through the use of utility bills and are continuously validated\n• 2025 Energy Reduction Target Progress: Boeing had a $1 1 \\%$ reduction in energy consumed compared to 2017. Energy consumption was $6 \\%$ lower than anticipated for the year due to the impact of conservation initiatives, infrastructure investments, remote work and reduced production activity.\nCommunities\nReporting", "chunk_word_count": 528, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 54, "page_start": 54, "page_end": 54 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 50, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\nIntroduction\n“Sustainability is something everyone should be thinking about. What kind of planet do you want to leave behind for future generations?”\nApproach & Governance\nPeople\nProducts & Services\nGregory Kurth, Mesa site facility maintenance engineer, Facilities & Asset Management\nOperations \nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange \nConserving Resources \nReducing Waste \nBiodiversity and \nEnvironmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\n### Boeing facilities prioritize conservation, energy efficiency and renewable energy\n### U.S.:\nBoeing expanded its strong presence in Europe with a new state-of-the art distribution warehouse near Hamburg, Germany. (Boeing photo)\n• Mesa, Arizona, recently completed construction of a new composites manufacturing facility. A quarter of the electricity used at the site is solar power. This partnership between Boeing and the Salt River Project brings the company closer to achieving its 2030 goal of $100 \\%$ renewable electricity.\nIt comes down to this: Boeing will continue to invest in conservation and renewable energy projects to advance the company’s operational environmental goals.\nAs energy consumption gives rise to GHG emissions, conservation and energy reduction measures help achieve both energy and GHG reductions.\n• Switching to LED lighting in Boeing’s Everett, Washington; Frederickson, Washington; and El Segundo, California, facilities is driving an annual recurring savings of 25.3 million kilowatt-hours, which is equivalent to powering more than 2,300 U.S. homes per year.\n### Creating sustainable facilities:\nGermany: Boeing’s new distribution center in Hamburg meets high sustainability standards and will be seeking Gold certification from the German Sustainable Building Council. To minimize the environmental footprint, the building is equipped with a heat pump and a photovoltaic system will be installed on the roof in the later half of 2023.\nCommunities\nIndia: Boeing’s new engineering and technology campus in Bengaluru will leverage multiple design elements, including efficient ventilation systems, LED lighting, rainwater recovery and solar power generation.\nReporting", "chunk_word_count": 319, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 55, "page_start": 55, "page_end": 55 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 51, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Conserving Resources\nContents\n### Earth Month photo contest winners\nIntroduction\n### Engaging Employees in Conservation\nBoeing’s Earth Month celebrations included a photo contest. Participants had the opportunity to submit a photograph with a description of what sustainability means to them.\nBoeing has implemented multiple approaches to encourage the workforce to support conservation by fostering sustainable behaviors. Employees are a source of innovation; champions of projects and their combined actions contribute to achieving Boeing’s goals.\nApproach & Governance\n### Winner: Kaitlin Brush Brevig, BCA, Interiors Responsibility Center\nPeople\nThe programs that Boeing utilizes to get employees involved and contribute to the enterprise sustainability goals are designed to reach all aspects of the workforce (Page 12). Elements of sustainability are embedded within the Boeing Production system content and linked to Lean methodologies that eliminate waste and promote more efficient, sustainable practices within operations. Additionally, Boeing provides behavior change training and encourages recognition programs to help employees develop sustainable habits and reward them for their efforts.\nProducts & Services\nFor Kaitlin, sustainability means being able to find secret beauty in nature, without negatively affecting it. Photo entitled “Fog Camano,” located in the Puget Sound.\n### Operations\nQuality\nSustainable Operations\nOperational Targets Progress\nThe approaches used include elements of gamification, which involves turning sustainable behaviors into fun and engaging programs. Key employee engagement avenues include:\nAddressing Climate Change\n### Runner-Up: Katie Ziegler, 777 Fleet Chief Office\n• The Conservation Best Practices program, which is deployed across the enterprise to prioritize reducing energy, water and waste at our largest areas of operation.\nConserving Resources\nReducing Waste\nFor Katie, sustainability includes protecting the honey bees that pollinate plants, sustaining food sources for humans and animals. Factors threatening honey bees include pesticides, disease and their natural predators like the giant hornet. Making honey bees a regulatory and lifestyle priority is critical.\nBiodiversity and Environmental Compliance\n• The Energy Star Battle of the Buildings competition to encourage employees to work together toward our sustainability goals and promote a culture of environmental stewardship.\nResponsible Supply Chain\nEnterprise Security and Data Privacy\n• Aerospace Sustainability Foundations Training, an internal credential training that allows employees to learn more about sustainable aerospace and practices and how they can incorporate them into their work.\nCommunities\nBy emphasizing employee engagement throughout the sustainability programs, Boeing is benefiting local communities and utilizing the capabilities of its diverse workforce to achieve its operational sustainability goals.\nReporting\nContents\n### Employees more than double goal in annual conservation competition\nWhile Boeing focuses on conservation every day, the company hosts an annual competition starting on Earth Day in April to encourage Boeing employees to take daily actions that advance sustainable operations.", "chunk_word_count": 452, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 52, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## • BGS\nIntroduction\n• Everett, Washington \n• San Antonio \n• Winnipeg, Canada \n• Seattle Spares Distribution Center \n• Berlin\n“When employees engage in taking 60 seconds for the environment, we know it cuts costs, helps protect the environment and gives employees a sense of belonging, drive and purpose.”\nApproach & Governance\nPeople\nEmployees across the globe took more than 231,000 60-second actions for the environment from Earth Day on April 22 to May 31, 2022. This was the equivalent of reducing carbon emissions by not driving 7.8 million miles (12.6 million kilometers). Top 60-second actions included using refillable water bottles, recycling and turning off equipment not in use.\nWinners from across the globe: The Battle of the Buildings competition among sites was based on the number of actions per capita and the winners in each category were:\nProducts & Services\nOperations \nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange \nConserving Resources \nReducing Waste \nBiodiversity and \nEnvironmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\nSteve Shestag, director, Sustainable Operations, Global Enterprise Sustainability\nAlways with quality and pride, the Boeing Spares Distribution Center employees in SeaTac, Washington, step up as Battle of the Buildings winners, including (left to right): April Nelson, Steven Yaummarath, Jo Dollente, Brandon Stanfield, Justin Roberts, Brett Nichols and AJ Flores. (Boeing photo)\nCommunities\nReporting\n## 2023 Boeing Sustainability Report\n### Reducing Waste\nContents\nIntroduction\nBoeing is making strides to protect the land, water and air in our communities by reducing waste from work sites and our supply chain. Waste streams are as complex as our facilities, which range from office space to part fabrication to assembly of aircraft and space vehicles. Solid waste includes material that has been discarded or abandoned or that is no longer useful or usable and has been designated for removal. Items that are reused or reclaimed are excluded from solid waste. Boeing has dedicated teams working to prevent waste from going to landfills and to assess opportunities to return or reuse packaging for parts.", "chunk_word_count": 339, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Reducing Waste", "document_id": "Boeing 2023 Sustainability Report", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 53, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### The Stingray gets Lean\nA focus on the customer: “We know what Lean means to our Navy customer — operational excellence, stability and execution,” Troy Rutherford, MQ-25 vice president and program manager. “When we focus on removing waste from the system and listening to those who do the work, then production, innovation and creativity all take a huge leap forward. We’re excited to be the first program to engage with the Lean workshops.”\nApproach & Governance\nAs the U.S. Navy’s uncrewed aerial refueler, the MQ-25 Stingray is a model of efficiency, in the air and on the production line.\nPeople\nThe digitally engineered aircraft features a highly efficient engine and lightweight composite skin, allowing it to stay in the air much longer, using little fuel itself to complete its mission.\nProducts & Services\nBoeing generates hazardous waste primarily from a variety of research, manufacturing and facilities maintenance processes. Hazardous waste may be recycled upstream or downstream, as on-site or off-site reclamation and avoided generation through processes that extend useful life of consumable chemicals to avoid hazardous waste. We look to reduce hazardous waste in upstream activities by preventing or reducing the amount of hazardous waste generated through extending system life through contaminant removal. Downstream, we look at hazardous waste generated from site operations. We implement several recycling and recovery activities to reduce the need for new chemicals.\n### Operations\nQuality\nWhat is Lean? Lean is a way of thinking and acting that enables us to solve problems and continually improve. It is the foundation of Boeing’s production system and embraces just-in-time delivery, error-free production and continuous flow. Lean helps spot and eliminate waste, wherever it is found, which also reduces costs.\nWithin the factory setting, robotic automation and advanced assembly techniques eliminate the need for drilling during aircraft assembly.\nSustainable Operations\nOperational Targets Progress\nNow, the futuristic aircraft is setting new standards for efficiency with a renewed focus on reducing waste through Lean manufacturing.\nAddressing Climate Change\nConserving Resources\n### Progress Toward 2025 Hazardous and Nonhazardous Waste Goals\nReducing Waste\nAcross Boeing’s production system, teams are building momentum with Lean principles. The MQ-25 is the first program within Boeing Defense, Space & Security to undergo a renewed focus on Lean.\nBiodiversity and Environmental Compliance\n• Solid Waste – $40 \\%$ reduction compared to 2017. The continued trend of increased remote working conditions influences the overall reduction in solid waste. Conservation initiatives and vendor management continue to be opportunities to drive further reductions.\nResponsible Supply Chain\nEnterprise Security and Data Privacy\n• Hazardous Waste $- 9 \\%$ reduction compared to 2017. Hazardous waste was $1 \\%$ higher than anticipated during the year. Benefits from implementing conservation initiatives were outweighed by key events across the enterprise, including a historical flood event in St. Louis, which caused an unplanned increase in hazardous waste disposal from a water treatment system.\nCommunities\nReporting\n### Boeing honors employees who embrace environment\nContents", "chunk_word_count": 496, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > The Stingray gets Lean", "document_id": "Boeing 2023 Sustainability Report", "page": 58, "page_start": 58, "page_end": 59 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 54, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Reducing water consumption\nEmployee innovation recognized: Below is a sampling of the 15 environmental leader winners in six categories that focused on reducing waste, energy and water use.\nBoeing sets rigorous water use reduction targets at our manufacturing sites to preserve this natural resource for the environment and our communities. Boeing’s water is sourced from local public utilities (surface, ground and reclaimed water) and company generation (on-site well, on-site reclamation and rain capture). This sourced water supports manufacturing, sanitation, drinking water, cooling and irrigation across the company. The majority of our water is from public water supply systems, and most consumption measurement is from water system revenue-grade meters. Water used within our facilities is discharged to public sanitary sewer systems. In some cases, Boeing pre-treats wastewater before discharging it to public sanitary sewer systems, in compliance with regulatory requirements. Boeing does not set voluntary effluent discharge standards beyond those set by regulation.\nIntroduction\nFacilities & Asset Management Reclamation team member Jon Kelley is Boeing’s 2022 Environment Champion. (Boeing photo)\nApproach & Governance\n• In Everett, Washington, 260 Boeing employees from 40 organizations generated 1,800 sustainability ideas to consider for future products in a “sustainability lab.”\nPeople\n### Boeing Recognizes 2022 Environment Champion\n• Seattle employees reclaimed about 2,500 gallons of water per day at the Seattle Developmental Center by reconfiguring piping and installing a more efficient system.\nProducts & Services\nJon Kelley, Facilities & Asset Management Reclamation team member, brings heart, commitment and skill to reduce waste to landfill, conserve valuable resources and ensure the company is compliant with regulations that protect the environment and the public.\n• Winnipeg employees conserved electricity equivalent to 60 homes’ annual use by installing occupancy sensors and upgrading LED lights, saving almost 720,000 kWh yearly.", "chunk_word_count": 301, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Reducing water consumption", "document_id": "Boeing 2023 Sustainability Report", "page": 59, "page_start": 59, "page_end": 59 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 55, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Operations\nQuality\nSustainable Operations\n• A Mesa team worked with the local utility company to lessen demand on high peak utility days during summer months by programming the Building Automation System to improve processes and generate 5,400 kWh, which earned rebates of $\\$ 30,000$ annually.\nIn 2022, Kelley was recognized as the Environment Champion for his environmental passion and 40 years of commitment to Boeing. Throughout his career, Kelley has done more than his job required for conservation and protection of the environment and public safety. By doing this, he has helped Boeing’s Puget Sound sites maximize the conservation of materials and properly handle regulated materials, while providing guidance to business partners.\nOperational Targets Progress\nAddressing Climate Change\nBoeing specialists work to identify efficiencies, best practices and new technologies to reduce water use and identify alternatives. We monitor irregularities that may require action and created a Conservation Best Practice program to minimize water use, applying many water management techniques endorsed by the U.S. Environmental Protection Agency.\nConserving Resources\n• An Everett team reduced the amount of solvents required to flush paint pumps by removing filter housing. The result cut solvent use by 12 gallons per airplane and more than 10,000 pounds per year, saving almost $\\$ 19,000$ .\nReducing Waste\nBiodiversity and Environmental Compliance\nKelley constantly redefines his job by raising the bar of efficiency and standard of quality. Leaning on his decades of experience, Kelley has helped to develop tools and training methods to increase his team’s efficiency without compromising safety or quality. He further demonstrates his commitment to sustainability by training and inspiring employees to prioritize conservation and cross-functional collaboration.\n• In Chennai, India, employees reduced $\\mathtt { G H G }$ emissions by consolidating shipments and transitioning from air to sea shipments for India suppliers.\nResponsible Supply Chain\nIn 2022, we achieved a $1 9 \\%$ reduction compared to consumption in 2017. Water consumption was $7 \\%$ lower than anticipated with sites implementing conservation initiatives to increase water intake efficiencies and with production activity remaining low. Building off the reductions seen by 2025, Boeing will transition to an absolute reduction goal to focus on the most waterintensive processes across the company.\nEnterprise Security and Data Privacy\nBoeing subsidiary Liquid Robotics was recognized for its Wave Glider Ocean Microplastics Demonstrator project for ocean plastics education and demonstrated the company’s commitment to sustainability. (Boeing photo)\nCommunities\nReporting\nKelley humbly describes his work as simply: “Doing the right thing to keep things out of the landfill.”", "chunk_word_count": 426, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Operations", "document_id": "Boeing 2023 Sustainability Report", "page": 59, "page_start": 59, "page_end": 59 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 56, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Biodiversity and Environmental Compliance\nContents\n### Sustaining biodiversity from Seattle to Charleston\nIntroduction\nBoeing owns thousands of acres of habitat across five locations that are being protected or restored. Each habitat is actively managed and maintained by site employees, nonprofit organizations or contract biologists. For some locations, additional agreements and monitoring are in place to ensure all legal, contractual and certification requirements are met.\nThe big picture: The WHC helps companies like Boeing advance biodiversity, sustainability, employee engagement and community relations goals with programs that translate sustainability goals and objectives into tangible and measurable on-the-ground actions. WHC Awards recognize programs and projects that demonstrate excellence in corporate conservation. Boeing’s restored Emery Landfill in Wichita, Kansas, was recognized with three awards in 2022 (see left column for details).\nApproach & Governance\nPeople\nEach habitat is certified by the Wildlife Habitat Council (WHC), with three certified at the Gold level. The WHC’s certification program is the only voluntary sustainability standard designed for broad-based biodiversity enhancement and conservation education activities on corporate landholdings.\nProducts & Services\n### 5.85 acres of marine habitat, Boeing Plant 2, Seattle, Washington\nOperations \nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange \nConserving Resources \nReducing Waste \nBiodiversity and \nEnvironmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\n### 1.5 acres of pollinator gardens, Pollinator Prairie, Olathe, Kansas\n2,668 acres of diverse habitat, Santa Susana, Canoga Park, California\n• Avian Project Award: Awarded to Boeing for monitoring targeted species and food sources — and being managed by adapting to the environment. The Grasshopper Sparrow is also a happy recipient.\n• Grasslands Project Award: Awarded to Boeing for monitoring of vegetation, wildlife use of vegetation, wildlife use and evaluation to create next steps for the project.\nCommunities\n• Pollinator Project Award: Awarded to Boeing for monitoring targeted species and food sources yearly, and recognizes a policy integrated into overall site operations to minimize, eliminate or apply responsible use practices of pesticides and herbicides.\nReporting", "chunk_word_count": 335, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 60, "page_start": 60, "page_end": 60 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 57, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\n### Boeing biodiversity efforts are virtual with real impact\nresearch that would not be possible, or practical, otherwise. 2021 Environment Champion, Kristin Marshall, has organized monthly online Zooniverse events with employees.\n### Environmental Compliance is Good for Business, People and the Planet\nA fundamental element of Boeing’s environmental policy is to maintain regulatory compliance. When noncompliance is identified in our environmental management systems, Boeing evaluates and analyzes the incident, implements corrective actions and shares process improvements to build the learning into the organization.\nIntroduction\nBoeing encouraged virtual volunteering for employees during the pandemic, including, Zooniverse — the largest platform for people-powered research where over a million volunteers assist professional researchers to amplify their biodiversity, and other work, to advance science and the humanities.\nEngagement in 2022: In 2022, 186 employees volunteered 420 hours through Zooniverse, spotting and identifying animals, and generating thousands of dollars in gift-matching by Boeing’s gift-match program.\nApproach & Governance\nPeople\nBoeing paid one significant environmental penalty in 2022, where “significant” is determined by a fine greater than $\\$ 10,000$ . At the end of 2021, stormwater samples collected at the Santa Susana Field Lab exceeded the site-specific permit limits for copper, chronic toxicity, iron, manganese, dioxin (TCDD), and biochemical oxygen demand (BOD) at one or more outfalls. The penalty incurred was $\\$ 22,000$ . The site experienced high-intensity rain events in the fourth quarter of 2021 that resulted in higher-than-normal rates of erosion from the site; the excess levels are believed to be attributable to natural sources — such as increased erosion of natural soils, decaying vegetation or waterfowl waste — and nonindustrial sources — such as road runoff and soils adjacent to telephone/utility poles. Excess copper and chronic toxicity were not attributed to an identifiable source and were episodic in nature where laboratory error was suspected.\nIt comes down to this: A wide range of animals, plants and microorganisms create the healthy ecosystems that all living beings depend on for clean air, land and water. This research results in new discoveries, data sets useful to the wider research community and many publications.\nWhy it matters: Organizations like Zooniverse accelerate important research by volunteers and professionals making real discoveries together. Boeing volunteers access photos captured in various habitats to identify species and their activities. The goal is to enable\nProducts & Services\nOperations \nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange \nConserving Resources \nReducing Waste \nBiodiversity and \nEnvironmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\n“Boeing’s work with Zooniverse underscores two important lessons. Many hands make light work and biodiversity reminds us that we’re part of something bigger than ourselves.”\nOn July 26, 2022, a significant rainfall event in the St. Louis region caused flooding that impacted the St. Louis site Industrial Wastewater Treatment Plant (IWTP). Floodwaters overtopped the IWTP, resulting in a release of untreated wastewater and associated sludges, as well as approximately 100 gallons of diesel fuel from a ruptured above-ground storage tank. The release was reported to the Missouri Department of Natural Resources, the National Response Center, and the St. Louis Metropolitan Sewer District, and appropriate response actions were completed after the flooding subsided.\nChris Raymond, Chief Sustainability Officer\nCommunities\nReporting", "chunk_word_count": 541, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 61, "page_start": 61, "page_end": 61 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 58, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Responsible Supply Chain\nContents\n### Stepping up for sustainability: Boeing deploys supplier assessments\n“Boeing seeks to ensure that our supply chain operates ethically, sources responsibly and creates economic opportunities for diverse communities. An industry voluntary approach is key for efficiency and demonstrating ESG maturity to customers, investors and regulators.”\nIntroduction\nResponsible supply chain practices are key to advancing industry sustainability standards. It requires transparency about business processes and supplied goods, meeting stakeholder expectations, addressing regulations, and creating positive environmental and social impact. Boeing is driving a holistic approach to responsible supply chain practices that align with the Organisation for Economic Co-operation and Development’s Due Diligence Guidance for Responsible Business Conduct.\nApproach & Governance\nBoeing is taking the next step to advance sustainability efforts by deploying an industry voluntary approach to sustainability assessments established by the IAEG and implemented by EcoVadis. This allows Boeing to address sustainability considerations in procurement processes and manage risk in its supply chain.\nPeople\nProducts & Services\nWilliam Ampofo, chair, Boeing Supply Chain Operations Council, and vice president, Parts & Distribution Services and Supply Chain, Boeing Global Services\n### Operations\nQuality\n### Why it matters:\n• As an IAEG founding member, Boeing played a fundamental role in the selection of EcoVadis, a sustainability rating platform, to power an industry sustainability assessment approach.\nSustainable Operations\n• Boeing has an opportunity to help influence and drive positive sustainability change because of the size of its supply chain with more than 11,000 Tier-1 suppliers around the globe.\nIn 2021, we co-founded an industry effort through the International Aerospace Environmental Group (IAEG) to establish a voluntary sectoral framework for ESG engagement, including assessment and awareness, throughout the aerospace manufacturing industry.\nOperational Targets Progress\n• IAEG member companies participating in the sector initiative can access completed assessments to benchmark their suppliers’ sustainability performance.\nAddressing Climate Change\nConserving Resources\n• Boeing’s engagement in this industry approach reduces the supplier burden to complete multiple, unique assessment requests. Suppliers also can access educational materials to help drive sustainability improvements.\nReducing Waste\nBiodiversity and Environmental Compliance\nEthical, responsible and sustainable business conduct is at the core of how Boeing operates. These core principles extend to our suppliers. The Boeing Supplier Code of Conduct, based on the International Forum on Business Ethical Conduct for the Aerospace and Defense Industry’s model code, provides suppliers with a set of responsible business conduct expectations consistent with our policies, principles and sustainability efforts. Read our Supplier Code of Conduct here.\nResponsible Supply Chain\nIt comes down to this: Boeing is demonstrating its commitment to responsible aerospace in a collaborative manner and will continue to partner with industry associations to advance its responsible supply chain practices and deliver innovative solutions that will usher in the next era of sustainability progress.\nEnterprise Security and Data Privacy\nCommunities\nReporting", "chunk_word_count": 476, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 62, "page_start": 62, "page_end": 63 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 59, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Responsible supply chain: Advancing sustainability together\nContents\nIntroduction\nThe big picture: How suppliers operate is just as important as how Boeing operates. Boeing is driving supply chain sustainability awareness and advances by collaborating with its supplier network and promoting responsible business practices.\nApproach & Governance\nPeople\nRead more about Boeing’s dedication to driving sustainability progress in the aerospace supply chain.\nProducts & Services\nOperations \nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange \nConserving Resources \nReducing Waste \nBiodiversity and \nEnvironmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\n11,000+ Tier-1 suppliers\n### Lead through industry\n### Lead by engagement and education\n### Lead with commitment and reporting\n• Founding member of the International Aerospace Environmental Group. • Demonstrated commitment to collaborate, adopt and amplify industry solutions.\n• Creating understandable, actionable educational materials. • Driving enduring change by transparently addressing key topics, risks and opportunities.\n• Benchmarking through voluntary standard \nassessments. \n• Setting expectations \nfor supplier sustainability performance.\n## 229 tons of packaging waste diverted from landfill (2022)\n114M pounds (51.7M kilograms) recycled aerospace titanium (2013-2022)\n### Global network and Tier-1 suppliers\nCommunities\nAustralia: 900+\nEurope: 570+\nMiddle East: 40+\nNorth America: (Non-U.S.) 515+\nSouth America: 1\n## U.S.: 8,800+\nAsia: 215+\nReporting", "chunk_word_count": 213, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 63, "page_start": 63, "page_end": 63 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 60, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\n### Boeing ships, stores and manages parts and supplies sustainably\n• Repurposed and refurbished containers and carts saved 26 metric tons of containers and packaging materials.\nEmpowering organizations to conquer the biggest challenges in energy today.\nIntroduction\n• Prevented 18,500 cardboard boxes from being shipped to Puget Sound factories, saving time and eliminating material waste. Consolidation centers continue to enable the use of generic reusable containers, such as shipping reusable containers through Southern California.\nApproach & Governance\nWhy it matters: Getting supplies from point A to point B in a large supply chain takes expertise. Add a passion for reducing waste, maintaining quality, preventing workplace injuries and saving money, and you’ve got what motivates Boeing’s Transportation, Warehousing & Logistics (TWL) team.\nPeople\n• Boeing also began using cross-docking — a logistics procedure where products from a supplier or manufacturing plant are distributed directly to a customer with marginal to no handling or storage time. Cross-dock benefits include reduced transportation costs, fewer lost or damaged parts, and predictable pickup and delivery schedules. As a result, 145 suppliers and Boeing sites across Commercial, Services and Defense businesses reduced transportation costs, standardized pickups and optimized transportation routes using cross-docks.\nProducts & Services\n### In 2022, TWL team members:\n• Eliminated packaging waste by converting from singleuse and disposable packaging to reusable containers, preventing waste, which resulted in 234 metric tons diverted from landfills. For example, certain 787 parts previously came in a roughly built, wooden crate that took six people to unload. TWL’s new reusable container is safer, allows faster processing and will prevent damage to parts. These 787 packaging improvements will result in 161 metric tons of crating wood diverted from landfills annually once fully implemented.\nOperations \nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange Conserving Resources \nReducing Waste \nBiodiversity and \nEnvironmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\nEdison Energy’s Chris Rader (senior Clean Energy adviser) and Julia Berg (director, Business Development) are part of the team that provides strategic sustainability services, energy management and clean energy supply advisory to Boeing. (Edison Energy photo)\n• Reduced GHG emissions — Regional truck pickups consolidated shipments at the sorting center to better use long-haul trucks while reducing less-than-full shipments and transit time, which reduces GHG emissions.\n## 2022 Sustainability Supplier of the Year: Edison Energy\nEdison Energy received Boeing’s inaugural Sustainability Supplier of the Year award for its demonstrated leadership and partnership to help Boeing achieve its renewable energy and GHG emissions reductions. This partnership:\nWhat’s next: The team continues to optimize the Boeing logistics network by analyzing shipment volume, truck utilization, supplier distance from cross-docks, identifying consolidation opportunities and route changes on shipments from overseas suppliers.\n• Supported Boeing’s renewable procurement strategy, resulting in Boeing using $3 5 \\%$ renewable electricity in 2022.\nCommunities\n• Enabled several Power Purchase Agreements that will increase Boeing’s renewable energy use.\nReporting\n• Helped develop a 15-year purchasing plan for energy purchases — with renewable energy being a requirement.", "chunk_word_count": 506, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 64, "page_start": 64, "page_end": 64 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 61, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\n### Supplier’s landmark delivery milestone showcases Boeing’s commitment to “Make in India”\n### Supplier diversity is essential to Boeing\nIntroduction\nSupplier diversity and small business utilization are key elements in responsible and sustainable supply chain practices. Boeing is committed to collaborating with and providing opportunities to diverse suppliers (including women-owned, veteran-owned and minority-owned businesses) and small businesses.\nApproach & Governance\n• The company was the inaugural partner for Boeing’s “Skill India” initiative to train and develop Indian workers and students in aerospace skills. They also provide development opportunities for individuals with disabilities.\nRossell Techsys, a supplier in Bengaluru, India, completed 120,000 deliveries of wire harnesses, electrical panels and modification kits for multiple Boeing defense programs. Boeing’s continued collaboration with suppliers and investment in India’s aerospace and defense ecosystem has helped build local infrastructure, capabilities, workforce development and partnerships, while harnessing the strength of Indian talent and its growing network of more than 300 suppliers.\nPeople\nProducts & Services\n• Rossell Techsys received a Boeing Supplier of the Year Award in 2016 and 2019.\n## 2022 Highlights\n5,240 Total Diverse Suppliers1 \nand Small Businesses 2\n### Operations\nNext steps: Boeing will continue to collaborate with suppliers around the globe to create an agile and resilient aerospace supply chain, and support a healthy, stable supply base reflective of the company’s global customers and communities.\nQuality\nWhy it matters: It’s producing positive results.\nSustainable Operations\n• Diverse suppliers1 and small businesses 2 are vital to Boeing; their innovation, agility and ability to provide creative product and service solutions are essential to delivering greater value to customers.\n\\$4.6B Total Amount Spent with Diverse Suppliers and Small Businesses\nOperational Targets Progress\nAddressing Climate Change\n• Boeing’s partnership with Rossell Techsys demonstrates its commitment to small and diverse 1 businesses.\nConserving Resources\nReducing Waste\n## 550 Minority Owned\n## 770 Women Owned\n## 420 Veteran Owned\nBiodiversity and Environmental Compliance\n“Indian suppliers are integral to Boeing’s global supply chain. We work closely with our suppliers in India to support supply chain health, identify new ways to drive innovation and deliver greater value to our customers.”\nResponsible Supply Chain\nEnterprise Security and Data Privacy\n560+ New Diverse Suppliers and Small Businesses Onboarded\nCommunities\nAshwani Bhargava, senior director, Supply Chain Management, Boeing India • Rossell Techsys, the Aerospace & Defense division of Rossell India Limited, was established in 2011, and is a key supplier in India’s “Aatmanirbhar Bharat” vision, promoting people native to the area and self-reliance in defense manufacturing.\nReporting\nRossell Techsys Quality Control Inspector, Sandeep D., inspects a wiring harness. A startup company in 2011, Rossell Techsys has now become a key supplier in India’s “Aatmanirbhar Bharat” vision. (Rossell Techsys photo)", "chunk_word_count": 455, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 65, "page_start": 65, "page_end": 65 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 62, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Enterprise Security and Data Privacy\nContents\nIntroduction\nBoeing’s Global Privacy Office is responsible for overseeing the management, use and security of personal information held by the company, including personal data from employees, customers and suppliers. Our privacy program focuses on protecting data, respecting privacy and enabling trust. To safeguard personal information, we employ a principles-based approach to data privacy that aligns with key privacy laws and frameworks in the U.S., European Union and other jurisdictions.\n### Boeing self-phishing program helps reduce security threats\nApproach & Governance\n“Phishing is one of the most effective ways threat actors exploit people and companies. It relies on pushing a high volume of phishing-related content and distraction — the worst condition in the modern workplace today. If users aren’t careful and trained to spot a phishing email, they may carelessly click on a link or attachment, thus placing Boeing at risk.”\nPeople\nBoeing Enterprise Security’s Self-Phishing Program educates employees about phishing, which involves sending simulated emails to create a “sense-of-urgency” response to click on a link, enter sensitive information, or, best-case scenario, report the “fake” phishing scam.\nProducts & Services\n## 2022 by the numbers:\nOperations \nQuality \nSustainable Operations \nOperational Targets \nProgress \nAddressing Climate \nChange Conserving Resources \nReducing Waste \nBiodiversity and \nEnvironmental Compliance \nResponsible Supply Chain \nEnterprise Security \nand Data Privacy\n• $2 2 \\%$ drop in employee clicks on phishing simulations from 2021. • $1 7 \\%$ improvement from 2021 in simulated suspicious email reporting.\nBoeing has also established a Global Security Governance Council to further strengthen governance and enhance coordination of our security activities. Learn more about the work of our council in our Proxy Statement.\nIt comes down to this: Phishing is the most typical way companies are hacked. It’s important for employees to be vigilant against cyberattacks to protect the business and personal data.\nBoeing Enterprise Security is critical to Boeing’s operations around the world, and we continue to employ industry-leading security practices, while leveraging software and product security engineering to protect our people, property, networks, systems and information from physical and cyber threats. Boeing’s security strategy prioritizes detection, analysis and response to known, anticipated or unexpected threats, effective management of security risks and resiliency against incidents. In order to protect both commercial and defense-related businesses and support our production operations, Boeing has adopted security principles that align with global security standards, such as the National Institute of Standards and Technology Cybersecurity Framework, and adheres to contractual and regulatory security requirements.\n### Security News\nRichard Puckett, chief security officer and vice president, Boeing Enterprise Security\nStatus: Cleared For Take-Off No Action Required Have A Great Flight!\nCommunities\nReporting\nQuestion or Issue?Check out the FAQ page.\nVIEW DASHBOARD\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities \nCommunity Engagement \nOur Heroes \nOur Homes \nOur Future\nReporting", "chunk_word_count": 476, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 66, "page_start": 66, "page_end": 68 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 63, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2022 Community Engagement Highlights\nContents\nIntroduction\nInvested approximately \n\\$2B in Boeing communities \nover the last 10 years\nApproach & Governance\nThrough purposeful investments, employee engagement and advocacy efforts, Boeing supports partnerships and programs that align with our business, create value and help build better communities worldwide. We have an opportunity and a responsibility to be a positive force for change in the places we call home. Boeing focuses on opportunities that inspire our future, empower our heroes and strengthen our homes, with an emphasis on advancing racial equity and social justice, and protecting the environment.\nPeople\nProducts & Services\n### Contributed\n### Invested\n\\$80Mi n charitable grants in 52 countries in 2022 \\$50M across 444 grants in support of STEM education and workforce development programs in 2022\nOperations\nCommunities \nCommunity Engagement \nOur Heroes \nOur Homes \nOur Future\n\\$197M + to help build better communities worldwide in 2022\nReporting\nEmployees donated \\$63M+1 a nd 366,000 volunteer hours to charitable causes in 2022\nPartnered with 13,000 + community partners globally in 2022\nLearn more about our community engagement work in the Boeing 2023 Community Impact Portfolio.\nDonated\n\\$13.3M across 116 grants in support of veterans programs in 2022\nRead about: Boeing Global Engagement 2023 purposeful partnerships and giving.\n## 2023 Boeing Sustainability Report\nContents\n### Our Heroes\nIntroduction\n### Boeing employees help build homes for veterans\nApproach & Governance\nOn a sunny, but chilly December day in 2022, more than a dozen Boeing volunteers learned the trade of home construction with Boeing’s community partner in St. Louis, Veterans Community Project (VCP).\nPeople\nProducts & Services\nThey helped cut, measure and install siding on a tiny home in the new VCP Village, where approximately 50 tiny homes and a community center for homeless veterans are currently under construction.\nOperations\nCommunities \nCommunity Engagement \nOur Heroes \nOur Homes \nOur Future\nWhy it matters: Boeing helps veterans and their families after their military service has ended, investing more than $\\$ 14,100,000$ in 2022 in support of skills development and job training, and recovery and rehabilitation programs. Since 2021, Boeing has invested $\\$ 150,000$ with VCP to help with home construction and education programs.\nReporting\n[IMAGE CAPTION] Boeing supports the Korea Green Foundation in a program teaching children about healthy food and how and where it comes from in a local food market engagement. (Korean Green Foundation photo)", "chunk_word_count": 396, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2022 Community Engagement Highlights", "document_id": "Boeing 2023 Sustainability Report", "page": 68, "page_start": 68, "page_end": 70 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 64, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Our Homes\nContents\n### Boeing supports environmental sustainability in communities around the globe\nIntroduction\nApproach & Governance\nWhy it matters: Boeing is working to build better, more equitable communities through corporate investments, employee engagement programs and advocacy efforts, which include support to protect the environment around the world. Boeing contributed $\\$ 5$ million in support of environmental programs in 2022.\nPeople\nProducts & Services\nOperations\nteachers to adopt ecological models of behavior and awareness of sustainable development and environmental protection. The initiative provides Italian youth in kindergarten through sixth grade with early access to learning about sustainability and developing a sense of responsibility. By discovering the best practices of environmental protection around the world, students understand the impact of their actions on the future of our planet.\n### Americas\nCommunities \nCommunity Engagement \nOur Heroes \nOur Homes \nOur Future\n• U.S.: Boeing supports the National Forest Foundation’s Project Green Drone, an educational program dedicated to strengthening the STEM pipeline in the Phoenix area. Together with the Ecoculture Team at Northern Arizona University and other local partners, the National Forest Foundation engages more than 500 local middle and high school students in STEM-focused activities to address real-world environmental projects, including a watershed restoration project on the Lower Salt River. The project is diversifying the pipeline for conservation talent while working on protecting fresh water supplies and using innovative technology to preserve public lands.\n### Asia\n• Korea: Boeing supports the Climate Science Class program, which is part of Korea Green Foundation, benefiting 550 young leaders. The goal of the program is to foster next-generation green leaders who will solve climate change problems, including biodiversity loss and forest destruction. It also examines human influence and regional environmental issues and technology solutions. Climate change, in particular, is a broad and complex phenomenon and is a suitable subject for implementing the purpose of modeling-based learning, which constitutes an explanatory framework based on a variety of data.\n### Middle East and Northern Africa\nReporting\n• Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico and Panama: Boeing is supporting the Pan American Development Foundation (PADF) that is active in eight countries, working with teachers, and primary and university or post-university students to find solutions to local environmental issues. For example, in Bolivia, PADF works with partners to develop a curriculum about alternative energy, waste management, natural resources and identifying local solutions. In Ecuador and Mexico, local partners will work with teachers to design lessons that address local needs such as reducing pollution, using plastic alternatives or storing electricity.\nEurope\n• Italy: “School Cleaning Day” is an environmental education program — organized by ScuolAttiva Onlus with support from Boeing — that works to encourage Italian students and • Türkiye: With Boeing’s support, the Istanbul Technical University Foundation’s Enhanced Training Content program within the Aviation Sustainability Alliance Türkiye raises awareness about and supports the creation of sustainability developments in aviation through three signature programs. The training program, tailored for specific audiences, provides educational content to students, teachers and aviation professionals; the Hackathon encourages students to think creatively about how to help lessen the environmental impact of aviation; and the Innovation Conference brings together students, academics, industry experts and others to explore innovative ideas in aviation sustainability.", "chunk_word_count": 546, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 70, "page_start": 70, "page_end": 70 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 65, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\n### Rain gardens under busy Seattle bridge filter water, protect salmon\nIntroduction\nApproach & Governance\nThe Aurora Bridge Bioswale project was designed to clean up polluted stormwater coming off this Seattle bridge. Runoff passes through a series of rain gardens below. The project serves as a model for others that The Nature Conservancy and its partners support, such as the I-5 Ship Canal stormwater park, which is currently being planned with funding from Boeing.\nPeople\nProducts & Services\n(Photo: Courtney Baxter/The Nature Conservancy)\nOperations\nCommunities \nCommunity Engagement \nOur Heroes \nOur Homes \nOur Future\n### Boeing grant teaches students about stormwater stewardship\nReporting\nMiddle school students plant in their rain garden in the Seattle suburb of Burien. (EarthGen photo)\nWith support from a Boeing grant in 2022, EarthGen engaged 2,000 students across four Puget Sound school districts in its Stormwater Stewards program.\nGo deeper: A 2021 grant from Boeing helped EarthGen expand the Stormwater Stewards program into two additional Puget Sound school districts, which worked to add sustainable treatment for approximately 625,000 gallons of water.\nWhy it matters: Middle and high school students learned about watersheds and the impact of stormwater runoff, investigated their local watersheds and then designed and implemented green stormwater infrastructure projects to improve water quality in their community. Students cared for and maintained these rain gardens as part of the program.\n### Our Future\nContents\n### Boeing and Amideast partner to expand STEM access\nIntroduction\nAt the UN Climate Change Conference COP27 held in Sharm El-Sheikh, Egypt, Amideast and Boeing announced an expanded partnership to support more Egyptian young people through STEM education with a focus on sustainability.\nBoeing and Amideast have supported 22,000+ students in Egypt since 2007\nApproach & Governance\nGo deeper: The expanded partnership will include STEM programs in robotics, graphics, animation, 3D printing, programming and web development; a STEM entrepreneurship competition; and a new STEM Program for Climate Sustainability, including advocacy efforts like STEM Talks and a sustainability podcast.\nPeople\nProducts & Services\nWhy it matters: This grant from Boeing helps Amideast align STEM activities with Egypt’s sustainable development strategy. In line with the UN Sustainable Development Goal (SDG) 4, Quality Education, STEM education fosters creativity and empowers young people to become critical thinkers and problem solvers who can address global challenges.\nKuljit Ghata-Aura, Boeing president in the Middle East, Türkiye and Africa, and Shahinaz Ahmed, Amideast country director in Egypt (pictured, center), announce an expanded partnership between Boeing and Amideast. (Boeing photo)\nOperations\nCommunities \nCommunity Engagement \nOur Heroes \nOur Homes \nOur Future\nReporting", "chunk_word_count": 431, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 71, "page_start": 71, "page_end": 72 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 66, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nThis Sustainability Report has been prepared in alignment with the GRI 2021 Standards. The GRI Index below indicates the location of each GRI disclosure within this Sustainability Report, on our external website or other Boeing reports, or it states the information directly. In the SASB Index and TCFD Index, we have aligned our disclosures with the recommended disclosures and metrics in the SASB Aerospace & Defense Standard and the TCFD framework. We will continue to evaluate our disclosure approach moving forward to ensure we are providing relevant information in an efficient and effective manner.\nAll data within Key ESG Data, GRI, SASB and TCFD indexes is for the period from Jan. 1, 2022, through Dec. 31, 2022, unless otherwise noted.\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\n### Key ESG Data\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements \n1. Waste data represents approximately $8 3 \\%$ of operations by square footage. \n2. Hazardous waste is determined from U.S. EPA hazardous manifest or equivalent government shipping documents, with profile waste designations determining the type of waste and Management codes determining the disposal method.\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\nContents\n### Employee Health and Well-Being footnotes\n## 1. Represents U.S. data. \n2. Represents U.S., Canada, Australia and UK data. \n3. Represents global data.\nIntroduction\nApproach & Governance\nPeople\n### For all Global Equity, Diversity and Inclusion data:\nUnless otherwise indicated, data presented are snapshots taken in December of the year referenced.\nProducts & Services\n4. Veteran data reflects the U.S. workforce only based on voluntary, confidential self-identification. A veteran is defined as a person who served in the active military, naval, or air service and who was discharged or released therefrom under conditions other than dishonorable.\nOperations\n## 5. All data on gender is collected globally.\nCommunities\n6. Numbers for gender may not total $100 \\%$ due to team members who identify as nonbinary or who choose not to disclose.", "chunk_word_count": 444, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 73, "page_start": 73, "page_end": 77 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 67, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 7. Non-U.S. indicates team members outside the U.S. 8. Executive Council gender data includes both U.S. and non-U.S. leaders.\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\n9. Race and ethnicity data reflects the U.S. workforce only. Numbers may not total $100 \\%$ due to inclusion of people who choose not to disclose $\\mathsf { O } \\mathsf { r }$ due to rounding. Racial and ethnic minority representation includes Asian, Black, Hispanic/Latino/a/x, Native American, Pacific Islander and Two or More Races as defined by the U.S. Equal Employment Opportunity Commission.\n10. Mandatory and voluntary employee training hours represent different types of learning that are stored in separate data sources. Training data residing in Boeing’s Learning Management System (LMS) includes mandatory and compliance training. Voluntary training is not considered mandatory and represents hours spent participating in learning tracked outside of our LMS.\n## 11. Data was first reported in 2021.\n## 2023 Boeing Sustainability Report\nContents\n### Community Engagement footnotes\n## 1. Community giving is inclusive of Boeing and employee giving.\nIntroduction\n### Ethics Metrics footnotes\n## 2. Data reflects the reporting period of November 2021 through October 2022.\nApproach & Governance\n3. Inquiries comprise Requests for Guidance and Information Requests. Requests for Guidance are situations where employees are seeking guidance when facing ethical dilemmas or when they need assistance in understanding company policies or expected behaviors. Information Requests are situations where employees are seeking general information. Both demonstrate awareness of Boeing’s Compliance and Ethics program, but Requests for Guidance are viewed as the most positive types of contact.\nPeople\nProducts & Services\n4. Investigated matters are considered unsubstantiated when investigation findings demonstrate that no misconduct occurred or where there is a lack of evidence to support a finding of misconduct.\nOperations\nCommunities\n5. Ongoing evaluations demonstrate that Boeing’s substantiation rate is slightly higher than other published benchmarks, indicating an effective investigation process and informed reporting by company employees.\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\n### GRI Index\nContents\nBoeing has reported in alignment with the GRI Standards for the period of 1/1/2022-12/31/2022.\nIntroduction\nDisclosure Disclosure Title\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements", "chunk_word_count": 518, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 7. Non-U.S. indicates team members outside the U.S. 8. Executive Council gender data includes both U.S. and non-U.S. leaders.", "document_id": "Boeing 2023 Sustainability Report", "page": 77, "page_start": 77, "page_end": 82 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 68, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\nContents\nIntroduction\nApproach & Governance\n### GRI 203: Indirect Economic Impacts\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\n### GRI 205: Anti-Corruption\n### GRI 301: Materials\nGRI 302: Energy\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\nContents\n### CDP Water Report W1.2\nBoeing utilized the Aqueduct project of the World Resources Institute (WRI) to systematically evaluate each location to determine whether a facility is located in a water- stressed area.\nIntroduction\n[IMAGE CAPTION] Source: Third-party data, municipal water meters Boundary: 4-Walls Metric Sites, $8 4 \\%$ of Company Population\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\n[IMAGE CAPTION] Source: Third-party data, municipal water meters Boundary: 4-Walls Metric Sites, $8 4 \\%$ of Company Population\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\nCDP Water Report\nGRI 304: Biodiversity\nDuwamish Waterway Santa Susana\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\n### GRI 306 (2016): Effluents and Waste\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\nContents\nIntroduction\nApproach & Governance\n### GRI 404: Training and Education\nPeople\nProducts & Services\n### GRI 405: Diversity and Equal Opportunity\nOperations\n### GRI 406: Nondiscrimination\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\n### GRI 407: Freedom of Association and Collective Bargaining\n### GRI 413: Local Communities\nContents\nIntroduction\nApproach & Governance\n### GRI 418: Customer Privacy\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\n### SASB Index\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements\n### TCFD Index\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting Key ESG Data GRI Index SASB Index TCFD Index\nU.N. Sustainable Development Goals", "chunk_word_count": 519, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 83, "page_start": 83, "page_end": 93 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 69, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\nU.N. Sustainable Development Goals (SDG) are a universal call to action to end poverty, protect the planet, and improve the lives and prospects of everyone, everywhere.1 Boeing supports all 17 SDGs and has identified 10 goals of focus, listed below and on the following pages, in which we are committed to outcomes that make the world a better place for all.\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting Key ESG Data GRI Index SASB Index TCFD Index\nU.N. Sustainable Development Goals\nAwards and Recognition Select Memberships and Partnerships Forward-Looking Statements\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting Key ESG Data GRI Index SASB Index TCFD Index\nU.N. Sustainable Development Goals\nAwards and Recognition Select Memberships and Partnerships Forward-Looking Statements\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting Key ESG Data GRI Index SASB Index TCFD Index\nU.N. Sustainable Development Goals\nAwards and Recognition Select Memberships and Partnerships Forward-Looking Statements", "chunk_word_count": 172, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 94, "page_start": 94, "page_end": 96 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 70, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Awards and Recognition\nContents\n• Military Times Best for Vets: Employers \n(No. 11 in 2022) \n• U.S. Department of Labor Hire Vets \nMedallion – HIRE Vets Platinum \nMedallion Award \n• Vets in Tech Educated Award \n• WayUp’s Top 100 Internship Programs \nfor 2022\n### People\n• DiversityInc Top Companies for Mentoring \n(No. 11 in 2023) \n• DiversityInc Top Companies for Talent \nAcquisition for Women of Color (No. 12 \nin 2023) \n• Inclusion in Bloomberg’s 2023 Gender-Equality Index \n• LinkedIn Top Companies – United States \n(No. 11 in 2023) \n• National Organization on Disability – \nLeading Disability Employer \n• Scored $100 \\%$ on the Disability:IN – Disability Employment Index (DEI) for the \nseventh consecutive year \n• Scored $100 \\%$ on the Corporate Equality \nIndex – Human Capital Index \n• Woman Engineer Magazine’s annual Top 5 Employer list (No. 12 in 2022)\n• Military Friendly Top 10 Supplier Diversity \n(No. 1 in 2022) \n• National Veteran Small Business Coalition (NVSBC) Champion of Veteran Enterprise Award (2022) \n• U.S. Environmental Protection \nAgency (EPA) • Green Power Partnership Fortune 500 Partner List (No. 26 in 2022) • EPA ENERGY STAR Partner of the Year Award for Sustained Excellence \n• Wildlife Habitat Council awards for Wichita Emery Landfill\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\n### Products & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements \n• AAEOY recognized Vishwa Uddanwadiker as Asian American Executive of the Year in 2022 \n• Career Communications Group Inc. Top Supporters of HBCU Engineering Schools – Industry (No. 4 in 2022) \n• DiversityInc Top 50 Companies for Diversity (No. 12 in 2023) \n• DiversityInc Top Companies for Veterans (No.1 in 2023) \n• DiversityInc Top Companies for Black Executives (No. 26 in 2023) \n• DiversityInc Top Companies for Native American/Pacific Islander (NAPI) Executives (No. 21 in 2023) \n• DiversityInc Top Companies for Board of Directors (No. 20 in 2023) \n• DiversityInc Top Companies for People With Disabilities (No. 7 in 2023) \n• DiversityInc Top Companies for Sponsorship (No. 16 in 2023) \n• DiversityInc Top Companies for Environmental, Social & Governance (ESG) (No. 18 in 2023) \n• DiversityInc Top Companies for Executive Diversity Councils (No. 11 in 2023)\nExecutive Flight Operations received the Sustainable Flight Department Accreditation from the National Business Aviation Association.\n### Operations\n### Communities\n• Australia’s Supply Nation Supplier Diversity Partnership of the Year between Boeing and the Indigenous Defence and Infrastructure Consortium • Executive Flight Operations received the Sustainable Flight Department Accreditation from the National Business Aviation Association • Gold Wildlife Habitat Council certification for Pollinator Prairie remediation site\n• Best Commitment to Education Program by U.S. Chamber of Commerce \n• Best Global Engagement Support Provider Award \n• Forbes’ America’s Best Employers for Veterans (No.10 in 2022) \n• Housing Hope Partner Award \n• Military Friendly Employer list’s $> \\$ 5 B$ category for 2023 (Gold Award – No. 8) \n• Airforce Technology Excellence Awards \nand Rankings 2022 \n• Cisco 2022 Fast Future Innovation Awards Enterprise West (No. 1 for The Future of Risk Management) \n• Clarivate Top 100 Global Innovators 2023 \n• Popular Science 2022 Best of What’s New Award for Starliner", "chunk_word_count": 544, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report", "document_id": "Boeing 2023 Sustainability Report", "page": 97, "page_start": 97, "page_end": 97 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 71, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Select Memberships and Partnerships\nContents\nIntroduction\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements \n• Aeronautics and Space Engineering Board \n• Aerospace Chromate (and Cadmium) Elimination Team \n• Aerospace Industries Association of America Inc \n• Air Line Pilots Association, International \n• Air Transport Action Group \n• Aircraft Fleet Recycling Association \n• Alliance of Western Energy Consumers \n• American Indian Science and Engineering Society \n• American Institute of Aeronautics and Astronautics \n• APEX Accelerators \n• Association for Unmanned Vehicle Systems International \n• Association of Certified Fraud Examiners \n• Association of International Risk Intelligence Professionals \n• Association of Public-Safety Communications Officials — International \n• Association of Threat Management Professionals \n• Association of Washington Business \n• Aviation-Information Sharing and Analysis Center \n• Billon Dollar Roundtable \n• Brazil-U.S. Business Council \n• Business Roundtable \n• California Chamber of Congress \n• Canadian Aboriginal Minority \nSupplier Council \n• Cargo Compartment Halon Replacement \nAdvisory Group \n• Centre for Information Policy Leadership \n• Contrail Impact Task Force \n• Corporate Eco Forum \n• Dallas Regional Chamber \n• Defense Industry Initiative \n• Disability:IN \n• Domestic Security Alliance Council \n• Domestic Security Partnership \n• Embry-Riddle Aeronautical University \n• Ethics and Compliance Initiative \n• FIRST Robotics \n• Flight Safety Foundation \n• General Aviation Manufacturers Association \n• Global Privacy Alliance \n• Greater Seattle Chamber of Commerce \n• Halon Alternatives Research Corporation \n• Halon Recycling Corporation \n• Hostage US \n• HUBZone Contractors National Council \n• Institute of Business Ethics \n• International Aerospace \nEnvironmental Group \n• International Air Transport Association \n• International Association of \nPrivacy Professionals \n• International Aviation Womens Associatio \n• International Civil Aviation Organization \n• International Coordinating Council of Aerospace Industries Association \n• International Federation of Airline Pilots’ Associations \n• International Forum on Business Ethical Conduct \n• MIT Climate & Sustainability Consortium \n• MIT Zero Impact Aviation Alliance \n• National 8(a) Association \n• National Association of Manufacturers \n• National Center for American Indian Enterprise Development \n• National Defense Industrial Agency \n• National Defense-Information Sharing and Analysis Center \n• National Minority Supplier Development Council \n• National Society of Black Engineers \n• Newton Europe \n• Out in Science, Technology, Engineering, and Mathematics \n• Overseas Security Advisory Council \n• Professional Background Screening Association \n• Renewable Energy Buyers Alliance \n• Responsible Business Alliance \n• Roundtable on Sustainable Biomaterials \n• SAE International \n• Society for Corporate Governance \n• Society of Asian Scientists and Engineers \n• Society of Corporate Compliance and Ethics \n• Society of Hispanic Professional Engineers \n• Society of Women Engineers \n• St. Louis Regional Chamber of Commerce \n• Sustainability 50/World 50 \n• The Conference Board \n• U.S. Chamber of Commerce \n• United Service Organization \n• United States Council for International Business \n• Villanova Resilient Innovation Through Sustainable Engineering Forum \n• Washington Roundtable \n• WEConnect International \n• Wildlife Habitat Council \n• Women in Aviation International \n• Women’s Business Enterprise National Council \n• World Economic Forum \n• Yale Center for Natural Carbon Capture\n### Forward-Looking Statements\nContents", "chunk_word_count": 512, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Forward-Looking Statements", "document_id": "Boeing 2023 Sustainability Report", "page": 98, "page_start": 98, "page_end": 99 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 72, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### Caution Concerning Forward-Looking Statements\nAdditional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made, and we assume no obligation to update or revise any such statement, whether as a result of new information, future events or otherwise, except as required by law.\nstandards; (4) changing budget and appropriation levels and acquisition priorities of the U.S. government; (5) our dependence on our subcontractors and suppliers, as well as the availability of highly skilled labor and raw materials; (6) competition within our markets; (7) our non-U.S. operations and sales to non-U.S. customers; (8) changes in accounting estimates; (9) realizing the anticipated benefits of mergers, acquisitions, joint ventures/strategic alliances or divestitures; (10) our dependence on U.S. government contracts; (11) our reliance on fixed-price contracts; (12) our reliance on costtype contracts; (13) contracts that include in-orbit incentive payments; (14) unauthorized access to our, our customers’ and/or our suppliers’ information and systems; (15) potential business disruptions, including threats to physical security or our information technology systems, extreme weather (including effects of climate change) or other acts of nature, and pandemics or other public health crises; (16) potential adverse developments in new or pending litigation and/ or government inquiries or investigations; (17) potential environmental liabilities; (18) effects of climate change and legal, regulatory or market responses to such change; (19) changes in our ability to obtain debt financing on commercially reasonable terms, at competitive rates and in sufficient amounts; (20) substantial pension and other postretirement benefit obligations; (21) the adequacy of our insurance coverage; (22) customer and aircraft concentration in our customer financing portfolio; and (23) work stoppages or other labor disruptions.\nIntroduction\nCertain statements in this report may be “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates” and similar expressions generally identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future plans, business prospects, financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on expectations and assumptions that we believe to be reasonable when made, but that may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Among these factors are risks related to: (1) general conditions in the economy and our industry, including those due to regulatory changes; (2) our reliance on our commercial airline customers; (3) the overall health of our aircraft production system, planned commercial aircraft production rate changes, our ability to successfully develop and certify new aircraft or new derivative aircraft, and the ability of our aircraft to meet stringent performance and reliability\nApproach & Governance\nPeople\nProducts & Services\nOperations\nCommunities\nReporting \nKey ESG Data \nGRI Index \nSASB Index \nTCFD Index \nU.N. Sustainable \nDevelopment Goals \nAwards and Recognition \nSelect Memberships \nand Partnerships \nForward-Looking \nStatements", "chunk_word_count": 557, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > Caution Concerning Forward-Looking Statements", "document_id": "Boeing 2023 Sustainability Report", "page": 99, "page_start": 99, "page_end": 99 }, { "report": "Boeing 2023 Sustainability Report.pdf", "chunk_idx": 73, "chunk_text": "# SUSTAINABLE AEROSPACE TOGETHER\n## 2023 Boeing Sustainability Report\n### The Boeing Family of Reports\nWe are continually collecting, assessing and making available data about our company and the broader aerospace ecosystem to keep our employees, customers, communities, industry partners, investors and other stakeholders informed and engaged.\n### Annual Report and Proxy Statement\n### Global Equity, Diversity and Inclusion\n### Community Engagement\nView our Annual Report and Proxy Statement to find additional information about our financial performance and Boeing business practices. boeing.com/annual-report.\nWe believe in a culture and workplace where everyone is respected, valued and inspired to reach their fullest potential. Learn more about our Global Equity, Diversity and Inclusion efforts at boeing.com/diversity.\nThrough purposeful investments, employee engagement and thoughtful advocacy efforts, Boeing and its employees are helping build better communities worldwide. Learn more at boeing.com/community.", "chunk_word_count": 136, "section_path": "SUSTAINABLE AEROSPACE TOGETHER > 2023 Boeing Sustainability Report > The Boeing Family of Reports", "document_id": "Boeing 2023 Sustainability Report", "page": 100, "page_start": 100, "page_end": 100 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 0, "chunk_text": "# Refresh the World. Make a Difference.\n## We build loved brands that bring joy to our consumers’ lives with beverage choices for all occasions, tastes and lifestyles. Our growth strategy is grounded in our core values and commitment to social and environmental responsibility.\n## CHAIRMAN & CEO MESSAGE\n## PEOPLE & COMMUNITIES\n## WATER LEADERSHIP\n## CLIMATE\n## ABOUT THIS REPORT 69\n## DATA APPENDIX 70\nFinancial and Portfolio Data 71 \nPackaging 76 \nWater 77 \nGreenhouse Gas Emissions \n& Waste 78 \nWorkplace, Safety & Giving Back 80 \nHuman Rights & Agriculture 83 \nDefinitions of Priority Topics 84 \nAssurance Statements 86 \nHuman Rights 52 \nSafety & Health 55 \nDiversity, Equity & Inclusion 56 \nGiving Back to Our Communities 60 \nEconomic Empowerment 62\n24\n43\n51\n## BOARD OF DIRECTORS 5 \nEXECUTIVE SUMMARY 6\n## PORTFOLIO: BEVERAGES FOR ALL\n## SUSTAINABLE AGRICULTURE\n## OUR COMPANY\n31\n47\nAt a Glance \nHow We Operate \nInnovation \nFinancial Highlights \nGovernance & Management \nPriority Topics \nStakeholder Engagement & \nPartnerships\n## OPERATIONS HIGHLIGHTS\n### REPORTING FRAMEWORKS & SDGs 87\nAsia Pacific \nEurope, Middle East & Africa \nLatin America \nNorth America \nGlobal Ventures/Bottling \nInvestments Group\n## PACKAGING: WORLD WITHOUT WASTE\n22\n36\nSCOPE OF THIS REPORT\nThis 2022 Business & Sustainability Report is The Coca-Cola Company’s fifth report to integrate overall business and sustainability performance, data and context, reflecting our continued journey toward drivin sustainable business practices into our core strategy.\nept as otherwise noted, this report covers the 2022 performance of The Coca-Cola Company and the Coca-Cola system (our company and our bottling partners), as applicable.\nAs used in this report, the terms “material,” “materiality,” “immaterial,” “substantive,” “significant” and other similar terminology are not used, or intended to be construed, as they have been defined by or onstrued in accordance with the securities laws or any other laws of the United States or any other jurisdiction or as they are used in the context of financial statements and financial reporting.\nFor detailed information on the scope of this report, please see About This Report on page 69.\n### The Coca-Cola Company’s purpose is to refresh the world and make a difference.\nWe have remained true to that purpose for 137 years, and I am as encouraged today about the future of our business as I have ever been.\n• Sprite Limelight: A music and cultural extension of the brand’s global platform “Heat Happens,” Sprite Limelight aims to unite fans from different cultures and lifestyles by bringing together different artists from around the world.\nOur strategy is clear. It’s centered around people— our consumers and employees—and driving sustainable solutions that build resilience into our business to respond to current and future challenges, while creating positive change for the planet.\nWe’re also experimenting with new drinks. We’ve launched Jack Daniel’s & Coca-Cola as a ready-to-drink cocktail through a relationship with Brown-Forman. This is one example of our ongoing journey to bring Coke to consumers in new and dynamic ways. We take the new responsibilities that come with our entry in this space very seriously. As a result, we’ve embedded our Global Policy on Alcohol Responsibility into our business processes to ensure we grow our alcohol brands in a responsible and sustainable way.", "chunk_word_count": 534, "section_path": "Refresh the World. Make a Difference. > We build loved brands that bring joy to our consumers’ lives with beverage choices for all occasions, tastes and lifestyles. Our growth strategy is grounded in our core values and commitment to social and environmental responsibility.", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 2, "page_start": 2, "page_end": 3 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 1, "chunk_text": "# Refresh the World. Make a Difference.\n## GREAT BRANDS, BOLD EXPERIMENTATION\nAs a total beverage company, we are committed to offering people more of the drinks they want across a range of categories and in a variety of sizes. In 2022, we launched 246 low- or no-sugar beverages and continued to see doubledigit growth for Coca-Cola Zero Sugar, which is now available in more than 170 markets. This helped to drive our volume of low- and no-calorie beverage sales to $2 9 \\%$ of total volume.\n## SUSTAINABILITY IS CORE TO OUR BUSINESS STRATEGY\nWater: Water is a priority for our company because it is the first ingredient in all our beverages and is essential to the communities we serve. As a local business operating in more than 200 countries and territories, we have a responsibility to help protect critical resources.\nWe’re driving the most significant marketing transformation in our history, focused on digital-first engagement with consumers. We’re combining partnerships, technology and our consumers’ passions to create unforgettable experiences in music, gaming and sports, including:\nOur 2030 Water Security Strategy focuses on increasing water security. We work with partners to provide access to a steady supply of clean water for people and ecosystems in the areas where we operate and source ingredients. We recently announced a more focused effort to prioritize the most waterstressed regions. As we’ve done since 2015, we’ll continue to replenish the water we use in our finished beverages to nature and communities. In 2022, we replenished $159 \\%$ .\n• \u0007Coca-Cola Creations: This global innovation platform lends the iconic Coca-Cola brand to new expressions, driven by collaboration, creativity and cultural connection. Launched in ${ 2 0 2 2 } ,$ we introduced five limited-edition drinks that drew inspiration from music, gaming and culture. These were complemented with experimental packaging designs and various digital experiences.\nPackaging: We seek to drive a circular economy for our packaging because this helps to reduce waste and carbon emissions. We’re working to use more recycled content in our packaging, to expand our use of refillable bottles, and to collect packaging for recycling through our World Without Waste initiative. We also partner to design new solutions for packaging. For example, we licensed our technology for a $100 \\%$ plant-based plastic bottle to a company building a commercialscale facility in Germany. This bio-based plastic packaging has a lower carbon footprint than other plastics. While we’re making progress, we know there is more work to be done. In 2022, we collected $61 \\%$ of the equivalent bottles and cans that we introduced into the market and used $1 5 \\%$ rPET in our bottles.", "chunk_word_count": 441, "section_path": "Refresh the World. Make a Difference. > GREAT BRANDS, BOLD EXPERIMENTATION", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 3, "page_start": 3, "page_end": 4 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 2, "chunk_text": "# Refresh the World. Make a Difference.\n## A COMPANY FOR FUTURE GENERATIONS\n66\nWe’re committed to creating a culture of inclusion and belonging and to driving meaningful change in our communities. By 2030, we aspire to be $50 \\%$ led by women globally. Today, $39 \\%$ of our senior leaders are women.\nOur strategy is clear. It’s centered around people—our consumers and employees—and driving sustainable solutions that build resilience into our business to respond to current and future challenges, while creating positive change for the planet.”\nThe Coca-Cola Foundation, the philanthropic arm of The Coca-Cola Company, contributed $\\$ 94.8$ million to 301 organizations around the world in 2022 to help create a better shared future for the communities our business serves.\nOur continued success would not be possible without our people. I am grateful for the company and system employees who live our purpose every day. Their collective passion and focus to build loved brands and make a difference in the world is how our business will continue to thrive for generations to come.\nTo galvanize collective action, we invest in solutions and partnerships across industry, governments and society. In ${ 2 0 2 2 } ,$ we became a Strategic Partner of the Ellen MacArthur Foundation. This group includes companies within key industry sectors that can help drive the transition to a circular economy.\nClimate: Our water, packaging and climate goals are interconnected. For example, by creating a circular economy for packaging, we can lower our carbon footprint. By approaching water stewardship from a basin perspective, we participate in initiatives that increase communities’ resilience to extreme weather events, alongside our partners. Our approach to climate is rooted in science, and we’ve set a science-based target to reduce absolute greenhouse gas emissions by $2 5 \\%$ by 2030, against a 2015 baseline. As of 2022, we have reduced our emissions by $7 \\%$ against this baseline.\n### James Quincey\nChairman and Chief Executive Officer April 26, 2023\n66\nOur Board of Directors is proud of our company’s ongoing success. As the business continues to grow and evolve, our Board also continues to evolve. Through our Board refreshment efforts, we strive to maintain a balance of skills, tenure and diversity among our Directors. I am extremely proud that in 2022 we achieved gender parity in the composition of our Board. And as this report demonstrates, our actions and our business success remain grounded in our strong values and purpose: to refresh the world and make a difference.”\n## MARIA ELENA LAGOMASINO\nLead Independent Director\nALEXIS M. HERMAN $\\textcircled{7}$ Chair and Chief Executive Officer, New Ventures LLC\nCHRISTOPHER C. DAVIS $\\textcircled{5}$ Chairman, Davis Selected Advisers, L.P.\n## DAVID B. WEINBERG\nChairman and Chief Executive Officer, Judd Enterprises, Inc.\nHERB ALLEN $\\textcircled{6}$ President, Allen & Company LLC\n## JAMES QUINCEY\n## ANA BOTÍN\nChairman and Chief Executive Officer, The Coca-Cola Company\nExecutive Chair, Banco Santander, S.A.\nCAROLYN EVERSON $\\textcircled{1}$ Senior Advisor, Permira\nHELENE D. GAYLE $\\textcircled{1}$ President, Spelman College\nBARRY DILLER $\\textcircled{1} \\textcircled{5} \\textcircled{5 }$ Chairman and Senior Executive, IAC Inc. and Expedia Group, Inc.\nMARC BOLLAND $\\textcircled{4}$ Chairman, Blackstone Europe\n## AMITY MILLHISER", "chunk_word_count": 522, "section_path": "Refresh the World. Make a Difference. > A COMPANY FOR FUTURE GENERATIONS", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 4, "page_start": 4, "page_end": 5 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 3, "chunk_text": "# Refresh the World. Make a Difference.\n## MARIA ELENA LAGOMASINO\nVice Chair, \nPricewaterhouseCoopers LLP \n(Not pictured)\nLead Independent Director Chief Executive Officer and Managing Partner, WE Family Offices\nCAROLINE J. TSAY $\\textcircled{4}$ \nTechnology Company Advisor/ \nLimited Partner of \nVenture Capital Funds\nMember\n### Executive Summary\n## OUR PRIORITIES & PROGRESS\nWe focus on the highest-priority sustainability issues facing our company, stakeholders and communities, with the goal of maximizing collective impact. These issues, which we review on a regular basis in collaboration with leading NGO partners, are integrated into both our business strategy and systemwide operations to simultaneously build resilience and drive growth. They also inform our ambitious sustainability goals and how we report on progress against these interconnected goals.\n## OUR SUSTAINABILITY GOALS\n## PORTFOLIO: BEVERAGES FOR ALL\n## WATER LEADERSHIP\nWater is a priority for The Coca-Cola Company because it is essential to life, our beverages and the communities we serve. We have operations nearly everywhere in the world—in more than 200 countries and territories. That means we have a responsibility to help those who face water scarcity and to protect local water resources where we operate, especially in places with the biggest challenges.\nAs a total beverage company, we are committed to offering people more of the drink choices they want across a range of categories and in a variety of packages. Evolving consumer tastes and preferences help steer our business strategy and shape the lineup of beverages we bring to market.\n## 900,000+ TONS OF ADDED SUGAR REMOVED\n159%\nOF THE WATER USED IN OUR FINISHED BEVERAGES RETURNED TO NATURE AND COMMUNITIES IN 20221\nFROM OUR GLOBAL PORTFOLIO CUMULATIVELY THROUGH EFFORTS TO REFORMULATE MORE THAN 1,000 BEVERAGES FROM 2017–2022\nWe take a disciplined approach to product innovation and portfolio management, ensuring we develop and deliver preferred, great-tasting beverages for all occasions and lifestyles. This includes offering drinks with reduced added sugar and more brands with nutrition and wellness benefits; providing small package options and clear nutrition information on packaging and in our communications; and marketing our drinks responsibly.\nOur 2030 Water Security Strategy is focused on accelerating the actions needed to increase water security where we operate, source ingredients and touch people’s lives. We do that by contributing toward sustainable, clean water access that improves livelihoods and wellbeing while protecting against water-related disasters. We understand water challenges are different in each region, so we are focused on doing what matters most locally, where the challenges are greatest.\n## 291B LITERS\n## 19 OF TOP 20 BRANDS ARE REDUCED-SUGAR OR ZERO-SUGAR, OR HAVE A REDUCED-SUGAR OR ZERO-SUGAR OPTION\n## READ MORE PORTFOLIO: BEVERAGES FOR ALL\nOF WATER RETURNED TO NATURE AND COMMUNITIES IN 2022\nWe have set three key goals designed to achieve our vision:\n• Achieve $100 \\%$ regenerative water use across 175 of our facilities, identified as facing high levels of water stress by 2030. • Improve the health of 60 watersheds identified as most critical for our operations and agricultural supply chain by 2030. • Return a cumulative total of 2 trillion liters of water to nature and communities globally over the life of our strategy, between 2021–2030.", "chunk_word_count": 524, "section_path": "Refresh the World. Make a Difference. > MARIA ELENA LAGOMASINO", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 5, "page_start": 5, "page_end": 8 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 4, "chunk_text": "# Refresh the World. Make a Difference.\n## 10% WATER EFFICIENCY IMPROVEMENT\n### Portfolio Marketing\n29% OF OUR VOLUME SOLD IN 2022 WAS LOW- OR NO-CALORIE\nWe continue to use our marketing to drive growth of our low- and no-calorie portfolio. Coca-Cola Zero Sugar has experienced double-digit growth in five of the last six years. In 2022, several leading lowand no-calorie brands in North America launched consumer campaigns with celebrity partners and sponsorship assets.\n## ACROSS ALL SYSTEM OPERATIONSCOMPARED TO 2015\n## \\~68% OF THE PRODUCTS\n### READ MORE WATER LEADERSHIP $\\otimes$\nIN OUR BEVERAGE PORTFOLIO HAVE LESS THAN 100 CALORIES PER 12-OUNCE SERVING\nWe have exceeded our $100 \\%$ replenishment goal every year since 2015.\n## PACKAGING\n## CLIMATE\nWe recognize our responsibility to help solve complex plastic waste challenges facing our planet and society. Our ambitious strategy to drive change through a circular economy for our packaging is called World Without Waste. This strategy is a global sustainable packaging platform focused on these fundamental goals: Making $100 \\%$ of our packaging recyclable globally by 2025—and using at least $50 \\%$ recycled material in our packaging by 2030 (Design); collecting and recycling a bottle or can for each one we sell by 2030 (Collect); and bringing people together to support a healthy, debris-free environment (Partner).\nWe are making progress against each of these objectives, which are embedded in how we operate as a business, and we take a transparent approach to reporting our actions, results and learnings. Local teams are executing in ways appropriate for their markets, and we are using a networked approach to deliver impact at scale.\nTaking well-informed, decisive action to help address climate change is a priority for our company. Climate change poses risks to our business and our stakeholders. By implementing an interconnected approach across our priority sustainability issues, we are reducing the Coca-Cola system’s greenhouse gas (GHG) emissions and building resilience in our business, value chain and local communities.\nAs of 2022, we reduced our absolute emissions by $7 \\%$ against $a 2 0 1 5$ baseline, making progress toward our science-based reduction target of $2 5 \\%$ by 2030 against the baseline. Our ambition also includes achieving net zero emissions by 2050. Several of our bottling partners and suppliers have set or committed to setting their own science-based reduction targets to drive climate action across our value chain.\nWe are working to reduce our carbon footprint in line with science to help avoid the worst impacts of climate change. We do this by analyzing and prioritizing the sources of GHG emissions across our value chain and by partnering with stakeholders to drive down emissions.\n## READ MORE PACKAGING\n## READ MORE CLIMATE\n21% \nRENEWABLE \nELECTRICITY \nUSAGE \nIN OUR SYSTEM—AN INCREASE FROM 12% IN 2021\n## AMBITION\nTo achieve net zero emissions by 2050\n## 378 OF OUR SUPPLIERS (OUT OF 495 REQUESTED) PROVIDED CLIMATE DATA TO CDP IN 2022 (A 12% INCREASE FROM 2021)\nThe Coca-Cola Company applies the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in this report and in a TCFD Index and provides comprehensive disclosures to CDP on Climate Change.\n## SUSTAINABLE AGRICULTURE", "chunk_word_count": 527, "section_path": "Refresh the World. Make a Difference. > 10% WATER EFFICIENCY IMPROVEMENT", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 8, "page_start": 8, "page_end": 10 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 5, "chunk_text": "# Refresh the World. Make a Difference.\n## HUMAN RIGHTS\nOur products and some of our packaging are made from a wide variety of agricultural ingredients, which we source from around the world. This complex global supply chain includes many kinds of suppliers, from multinational companies to smallholder farmers. Our Principles for Sustainable Agriculture (PSA) communicate our expectations for environmental, social and economic performance to our agricultural suppliers at the farm level. The PSA, introduced in 2021, take a long-term perspective and reflect the most recent science, our total beverage company portfolio, and our increasingly diverse supply chain. The PSA are designed to encourage continuous improvement in farming practices and lead to more ethical and sustainable sourcing.\nRespecting human rights is one of our core values. The Coca-Cola Company was among the first companies to commit to the United Nations Guiding Principles on Business and Human Rights, and we have strived to inspire and drive responsible business practices ever since.\n[IMAGE CAPTION] 2022 Progress on Sustainable Sourcing2\n## READ MORE HUMAN RIGHTS\n[IMAGE CAPTION] Percentage of bottling partners that achieved compliance with our Supplier Guiding Principles\nWe are proud to introduce Real Impact, a new vision for the company’s human rights program. Our mission is to take actions that lead toward a better tomorrow. We will take the lessons learned from existing programs and partnerships and seek to scale and adapt best practices across more geographies to deliver real impact to more people across our value chain. We will work to drive progress across our company, our industry and beyond through rigorous analysis, creative partnerships and constant innovation to turn commitment into action.\nOur goal is to sustainably source all our ingredients over time—such as sugar cane, corn, fruit, coffee, tea and soybeans. Sustainably sourcing our ingredients increases the resilience of our supply chain, helps to conserve nature, and empowers producers and farm workers. In practice, we encourage and support our ingredient suppliers to drive continuous improvement in sustainable farming practices, based on our PSA.\n## READ MORE SUSTAINABLE AGRICULTURE\n## IN 2022, 64%\nOF OUR GLOBAL PRIORITY INGREDIENT VOLUMES WERE SUSTAINABLY SOURCED TO OUR LEADER STANDARD1 , IN LINE WITH OUR PRINCIPLES FOR SUSTAINABLE AGRICULTURE.\n[IMAGE CAPTION] Percentage of company operations that achieved compliance with our Supplier Guiding Principles\n[IMAGE CAPTION] Percentage of direct suppliers that achieved compliance with our Supplier Guiding Principles\n## DIVERSITY, EQUITY & INCLUSION", "chunk_word_count": 399, "section_path": "Refresh the World. Make a Difference. > HUMAN RIGHTS", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 10, "page_start": 10, "page_end": 11 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 6, "chunk_text": "# Refresh the World. Make a Difference.\n## GIVING BACK TO OUR COMMUNITIES\nWe help create a better shared future for everyone our brands and business system touches by working to provide access to equal opportunity and fostering belonging both in our workplaces and the communities we serve. We partner with global, national and local organizations—plus our network of bottling partners— to improve people’s lives. While we continued to make meaningful progress in 2022, our work is an ongoing journey in an ever-changing landscape. That’s why we continue to prioritize listening and learning; executing our strategy consistently; and holding ourselves accountable for continuous progress.\nThe Coca-Cola Foundation’s mission is to make a difference in communities where our company operates and where our employees live and work. As the independent philanthropic arm of The Coca-Cola Company, The Coca-Cola Foundation supports transformative ideas and institutions that address pressing and complex global challenges. Our goal is to leave a measurable and lasting impact in local communities through a focus on the environment and society. In 2022, The Coca-Cola Foundation contributed $\\$ 94.8$ million to 301 organizations globally.\n### Our Refreshed Giving Approach\nAs of 2022, our giving is focused on impacting these areas:\nWe approach our DEI strategy through the lens of three core ambitions:\nASPIRE TO CREATE a workforce that mirrors the markets we serve.\nENABLE an inclusive culture where our employees thrive.\nADVANCE equity within our business, communities, and the marketplace.\n### The Coca-Cola Foundation: 2022 Contributions\n## 2022 Race/Ethnicity Representation by Level (U.S. only)1\n### Our Company\nWe are a total beverage company with products sold in more than 200 countries and territories. We are constantly transforming our portfolio, from reducing added sugar in our drinks to bringing innovative new products to market. We seek to positively impact people’s lives, communities and the planet through water replenishment, packaging recycling, sustainable sourcing practices and carbon emissions reductions across our value chain. Together with our bottling partners, we employ more than 700,000 people, helping bring economic opportunity to local communities worldwide.\n## OUR SUSTAINABILITY BUSINESS PRIORITIES\n200+ \nCountries and \nterritories where our products \nare sold\n\\~200 M nds\n## 137 YEARS of refreshing the world and making a difference\nATLANTA, GEORGIA Global headquarters\nWater Leadership\nReducing Added Sugar\nPackaging\nClimate\nSustainable Agriculture\nPeople & Communities\n## THE COCA-COLA SYSTEM\n## 2022 PERFORMANCE\n## 2022 GLOBAL UNIT CASE VOLUME MIX BY OPERATING SEGMENT\n\\$43.0B Net Operating \nRe\n\\~950 Production facilities\n700K+ System employees\n11% 2022 Net Operating Revenue Growth\n## RETAIL VALUE", "chunk_word_count": 419, "section_path": "Refresh the World. Make a Difference. > GIVING BACK TO OUR COMMUNITIES", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 11, "page_start": 11, "page_end": 13 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 7, "chunk_text": "# Refresh the World. Make a Difference.\n## UNIT CASE VOLUME\n### The Coca-Cola Company markets, manufactures and sells:\n### The Coca-Cola System1\n• Beverage concentrates and syrups • Finished beverages (including sparkling soft drinks; water, sports, coffee & tea; juice, valueadded dairy & plant-based beverages; and emerging beverages).\nIn our concentrate operations, The Coca-Cola Company typically generates net operating revenues by selling concentrates and syrups to authorized bottling partners.\nOur bottling partners combine the concentrates and syrups with still or sparkling water and sweeteners (depending on the product), to prepare, package, distribute and sell finished beverages.\nOur finished product operations consist primarily of company-owned bottling and distribution operations.\nWe also operate retail outlets through Costa Limited (Costa), which has nearly 4,000 Costa coffee shops and over 14,000 Costa Express self-serve coffee bars worldwide. Costa’s portfolio also includes ready-to-drink and athome coffee solutions.\n## BOLD BEVERAGES AND NEW EXPERIENCES\nWe’re taking global innovation to the next level. In 2022, we combined partnerships, technology and our consumers’ passions to create unforgettable experiences in music, gaming and sports.\n### Costa Coffee Smart Café\nLaunched in the United States in 2022, the Costa Coffee Smart Café delivers a range of more than 200 drink options, from espresso to hot chocolate. These innovative touch-screen machines always use fresh milk and freshly ground Signature Blend beans.\n### Coke Studio\nCoke Studio expanded into a global, digital-first platform. Seven diverse artists from seven countries teamed up on a remake of Queen’s “A Kind of Magic” to kick off the platform. Coke Studio launched in 2008 in Pakistan as a TV series featuring live collaborations between established and emerging musical artists before growing into an international music franchise with editions in India, the Philippines, Africa and the Middle East.\n### “Recycled Records”\nLegendary music producers Mark Ronson and Madlib teamed up with Sprite, Fresca and Seagram’s to showcase the parallels between recycling sounds and beverage bottles. “Recycled Records” is an original EP created almost entirely from “recycled” sound samples captured during the PET bottle-to-bottle recycling process. The project is a creative, culturally relevant way to celebrate the brands’ switch from green to clear PET packaging.\n### Coca-Cola Creations\nCoca-Cola Creations is a new global innovation platform that lends the iconic Coca-Cola brand to new expressions, driven by collaboration, creativity and cultural connection. In 2022, we launched five limited-edition drinks: Coca-Cola Starlight, Coca-Cola Byte, the artist Marshmello’s Limited Edition Coca-Cola, Coca-Cola Dreamworld, and Coca-Cola Soul Blast. Coca-Cola Creations draws inspiration from music, gaming and culture, and is complemented with experimental packaging designs, digital experiences and more.\n### A Metaverse Milestone\nCoca-Cola thanked fans who participated in the brand’s journey into the metaverse with a special digital collectible drop on International Friendship Day 2022. The collectible, featuring a design inspired by the bubbles inside a Coke bottle as well as themes of connection and unity, airdropped to the digital wallets of Coca-Cola collectible owners in July. Recipients could share a second International Friendship Day collectible with a friend to build Coke’s community of fans.", "chunk_word_count": 505, "section_path": "Refresh the World. Make a Difference. > BOLD BEVERAGES AND NEW EXPERIENCES > Costa Coffee Smart Café", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 13, "page_start": 13, "page_end": 16 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 8, "chunk_text": "# Refresh the World. Make a Difference.\n## BOLD BEVERAGES AND NEW EXPERIENCES\n### Sprite Limelight\nSprite Limelight launched as the music and cultural extension of “Heat Happens,” the brand’s global platform unveiled in 2022. Grammy-winning producer James Blake crafted a lyrical hook rooted in keeping life’s “heat” at bay, and three distinctive global artists—American rapper Coi Leray, African singer-songwriter and social media sensation Omah Lay, and Chinese pop/rock singer Hua Chenyu—used the hook as inspiration for their own original songs.\n### POWERADE: ‘Pause is Power’\n### Lil Nas X and vitaminwater\nGlobal superstar Lil Nas X teamed up with vitaminwater’s “Nourish Every You” campaign to showcase six videos featuring his unreleased track, “Give Me One Chance.” Each featured a unique vitaminwater flavor—focus, shine, energy, xxx zero, gutsy and ice—to create a fantasy world inspiring fans to nourish all of their “yous.” “Nourish Every You” was inspired by the insight that vitaminwater fans want to take care of themselves, but are living with fluctuating physical, emotional and spiritual needs.\nPOWERADE celebrated the power of the pause—prioritizing wellbeing over winning—with a global communications platform featuring USA gymnast Simone Biles and other accomplished athletes and coaches spanning a variety of sports. The campaign kicked off in March 2022 during NCAA March Madness.\n[IMAGE CAPTION] Comparable Currency Neutral Operating Income Growth (Non-GAAP)2\n[IMAGE CAPTION] Adjusted Free Cash Flow Conversion Ratio (Non-GAAP)4\n[IMAGE CAPTION] Comparable Currency Neutral Diluted Earnings Per Share Growth (Non-GAAP)3\n3 Reported diluted earnings per share grew 38%, declined 13%, grew 26% and declined 3% for the years ended December $3 1 ,$ 2019, 2020, 2021 and 2022, respectively. \n4 Adjusted free cash flow conversion ratio $=$ free cash flow adjusted for pension contributions divided by net income adjusted for noncash items impacting comparability.\n## CORPORATE GOVERNANCE\nincluding progress toward the company’s sustainability goals. The Committee assesses a range of issues relevant to the company’s business, our shareowners, the broader stakeholder community or the general public. This entails evaluating and reviewing information pertaining to social, political and environmental trends, in addition to oversight of the company’s sustainability goals and human rights practices.\nThe Coca-Cola Company’s innovative and collaborative culture is underpinned by a robust framework of policies and processes to promote ethical behavior, accountability and transparency. Our Board of Directors is responsible for overseeing our governance framework as part of its risk oversight function. Board Committee charters, our Code of Business Conduct, Corporate Governance Guidelines, Certificate of Incorporation and Corporate By-Laws can be viewed on our website.\nThe Corporate Governance and Sustainability Committee oversees our plans and strategies on climate-related issues. For a deeper dive into our climate governance, visit the Climate section. The Committee also oversees and reviews, at least annually, the company’s public policy agenda, its position on significant public policy matters, political contributions and lobbying activities. The Committee reviews shareowner proposals on sustainability issues to be included in the company’s proxy statements and makes recommendations to the Board. In addition, the Committee receives updates on priority sustainability issues, including actions and progress toward goals.\n### Board Committees\n• Audit \n• Corporate Governance and Sustainability \n• Executive \n• Finance \n• Talent and Compensation", "chunk_word_count": 524, "section_path": "Refresh the World. Make a Difference. > BOLD BEVERAGES AND NEW EXPERIENCES > Sprite Limelight", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 16, "page_start": 16, "page_end": 18 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 9, "chunk_text": "# Refresh the World. Make a Difference.\n## SUSTAINABILITY GOVERNANCE\nThe Audit Committee oversees certain processes related to external sustainability disclosures and works jointly with the Corporate Governance and Sustainability Committee to oversee sustainability risks facing the company. Finally, the Talent and Compensation Committee oversees the company’s human capital management policies and strategies. This includes talent management, leadership and company culture initiatives, such as those promoting diversity, equity and inclusion (DEI). This Board-level commitment and alignment drives top-down accountability toward our DEI goals and helps support a positive company culture.\nThe Board has delegated oversight of sustainability matters to its various committees in order to leverage each committee’s experience and subject-matter strengths in overseeing the varied and technical matters encompassed by sustainability. The Corporate Governance and Sustainability Committee has primary responsibility for overseeing the company’s sustainability strategies and initiatives—and related risks—that concern environmental, social, legislative, regulatory and public policy matters,\nTo reinforce the importance of meeting our sustainability goals, the Talent and Compensation Committee approved plans to link sustainability performance to our annual and long-term incentive programs for executives in 2022. In the annual incentive program, we have reinforced our commitment to DEI by incorporating quantitative and qualitative components tied to our 2030 aspirations to be 50% led by women globally and, in the United States, to align race and ethnicity representation to U.S. census data. Similarly, in the long-term incentive program, predefined goals related to our World Without Waste packaging strategy and our 2030 Water Security Strategy were incorporated into the 2022–2024 incentive awards.\n### Driving Sustainability Performance through Executive Compensation\nBeginning in 2022, performance as it relates to diversity, packaging and water goals is reflected in our incentive programs for executives.\nThe company follows all national laws regarding political engagement and discloses political contributions according to each country’s legal framework and through the relevant national regulatory authorities. In early 2023, the company enhanced its disclosures to include links to our non-U.S. political contributions.\n## PUBLIC POLICY & POLITICAL ENGAGEMENT", "chunk_word_count": 331, "section_path": "Refresh the World. Make a Difference. > SUSTAINABILITY GOVERNANCE", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 10, "chunk_text": "# Refresh the World. Make a Difference.\n## OUR APPROACH TO DISCLOSURE\nWe have a comprehensive sustainability reporting process that spans many years, and we aim to provide stakeholders with complete, transparent and candid information in all our public communications. This is our fifth annual Business & Sustainability Report, which combines financial and sustainability performance in one publication. We also respond to the CDP climate, water and forests questionnaires and make those disclosures publicly available.\nIntegrity, transparency and nonpartisanship underpin our approach to engagement in the public policy and political process. In the United States and Canada, we promote public policy solutions about key issues for our business that include environmental sustainability, consumer preference, tax and trade, and workplace and economic inclusion. Our advocacy often involves education, participation and thought leadership within industry, business and policy forums. When significant to our business interests, we share our policy positions through advocacy initiatives.\nThe Corporate Governance and Sustainability Committee of the Board of Directors annually reviews our public policy agenda and advocacy program. These reviews ensure that our activities align with our business interests and serve the needs of our shareowners and broader stakeholder community. The North America Operating Unit Vice President of Public Policy, Federal Government Relations & Political Engagement is responsible for management of our public policy agenda and political engagement, in consultation with the North America Operating Unit Senior Vice President & Chief of Public Affairs, Communications and Sustainability, and the Legal Department. Our political participation is conducted in an open and nonpartisan manner and in strict compliance with the Code of Business Conduct, the U.S. Political Engagement Policy, and applicable laws and regulations.\nWe recognize there is a desire for standardization across reporting frameworks, and we’re continually evaluating reporting options and listening to stakeholder feedback. This report is prepared in accordance with the Global Reporting Initiative (GRI) Standards, a globally recognized framework. In addition, we provide indexes for the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures, the United Nations Sustainable Development Goals (SDGs), the United Nations Global Compact (UNGC) and the United Nations Guiding Principles Reporting Framework (UNGPRF). We also submit packaging data to the Ellen MacArthur Foundation/UN Environment Programme’s New Plastics Economy Global Commitment, the WWF ReSource Plastic disclosure platform and the U.S. Plastics Pact.\nConsistent with U.S. federal law, the company does not use corporate funds to contribute to federal candidates, political parties or political committees, or otherwise employ its resources, including in-kind, even when permitted by law. The company has a long-standing policy against use of corporate funds for independent expenditures or super PACS, including toward electioneering communications. Effective as of January 1, 2021, the company does not use corporate funds to directly support state or local political candidates, even if permitted by law.", "chunk_word_count": 464, "section_path": "Refresh the World. Make a Difference. > OUR APPROACH TO DISCLOSURE", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 11, "chunk_text": "# Refresh the World. Make a Difference.\n## OUR SUSTAINABILITY APPROACH\nThe Coca-Cola Company works closely with approximately 200 bottling partners across more than 200 countries and territories to achieve our sustainability goals. We have established internal processes and an internal control environment that help us identify and manage risks. One hallmark of our approach is regular communication between the Board, our Chairman and CEO, and internal teams such as the Enterprise Risk Management team, the Risk Steering Committee and the Networked Corporate Sustainability team, which includes Technical, Innovation and Supply Chain; Public Affairs, Communications and Sustainability; Global Human Rights; and Procurement. The company’s Compliance, Legal and Finance functions serve in an advisory role. Our networked teams also collaborate with operating units, bottling partners, NGOs, governments, investors and people in communities all around the world to identify risks and make progress toward our sustainability goals. For more about our approach to risk management and priority issues, see Priority Topics.\nDuring 2022, we undertook a comprehensive review of the highest priority topics for our company, system and stakeholders.\nThe updated matrix continues to demonstrate that our priority topics are Packaging & Circularity and Water Stewardship, followed by Health & Nutrition and Climate Change. Responsible Sourcing and Talent Attraction, Retention and DEI increased in importance versus the prior year.\nIdentifying and prioritizing our material topics, in collaboration with a cross-functional internal team and key external stakeholders, is a foundational step in how we develop our corporate strategy, conduct and evolve our business, and report on progress.\nWe have implemented management initiatives to address these priority topics. We also continue to evolve our strategic approach to effectively manage associated business risks and opportunities in light of the ongoing changes to both our business and the external context in which we operate. This is detailed in the individual sections of the report.\nPrior to 2022, our last comprehensive review was conducted in 2019, with refreshes being undertaken in 2020 and 2021 to establish closer alignment between priority topics and businessrelevant issues and practices.\nOur 2022 review included a robust analysis and broader engagement guided by ERM, a leading sustainability consultancy. This was followed by interviews with more than 30 internal and external stakeholders and an online survey that had 90 responses from across the globe.\nThe horizonal axis represents impact to the company and the vertical axis represents the importance to stakeholders. The quadrants help identify where the combined views of the priority topics fall.\nStakeholders we talked to represent a diversity of views and have deep expertise across a range of issues and sectors. The stakeholders included investors and financial institutions, NGOs, bottling partners, trade and industry associations, business peers, customers and suppliers.\nOur comprehensive 2022 review process resulted in an updated priority topics matrix, which reflects adjustments to several key issues in response to feedback from both internal and external stakeholders.\n### Global Leadership Events\n### Partnership Highlights", "chunk_word_count": 486, "section_path": "Refresh the World. Make a Difference. > OUR SUSTAINABILITY APPROACH", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 12, "chunk_text": "# Refresh the World. Make a Difference.\n## PARTNERING FOR IMPACT\n. Coca-Cola Philippines and Indorama Ventures partnered to establish PETValue Philippines, a full operation recycling facility that is the first of its kind in the country. The facility is helping to drive collective action toward a circular economy for PET plastic, by providing more than 800 collection points for PET bottles in the country. PETValue’s projected capacity, or the amount of used plastic bottles it can process, is 30,000 metric tons per year, which requires around 2 billion PET bottles as input to be recycled.\nIn ${ 2 0 2 2 } ,$ as COVID-19 restrictions eased, we were able to attend several global events in person. We used these opportunities to engage with diverse stakeholders, to listen and to explore ways to drive collective action to positively impact people, communities and our environment.\nAs one of the world’s largest and most recognized companies, we have an opportunity to use our size and scale to help address global challenges.\nWhile we strive to make progress on our own, we are committed to fostering partnerships that drive collective impact in areas including water stewardship, packaging circularity, climate action and many more. As a global business that operates locally, we can extend our impact and reach because of the strength of the Coca-Cola system, which includes our approximately 200 bottling partners worldwide.\n• In partnership with WWF-Pakistan, we are working to address water scarcity and quality issues for approximately 360,000 people in Lahore, Pakistan who rely on the Ravi River as a freshwater source.\n• We partnered with the CEO Water Mandate, denkstatt and others to help build the business case for Nature-Based Solutions (NBS) by developing a standardized methodology to quantify the co-benefits of NBS projects and calculate the social return on investment.\nWe engage with stakeholders, including governments, NGOs, communities, suppliers, investors, business partners, customers and consumers around the world and throughout our network, in many forums and formats. Feedback from our stakeholders allows us to learn and improve, and informs our business and sustainability strategy.\nWorld Economic Forum Davos, Switzerland\nThe Consumer Goods Forum \nGlobal Summit \nDublin, Ireland\nWorld Water Week Stockholm, Sweden\n• We joined the Supplier Leadership on Climate Transition initiative along with 18 other companies to mobilize collective climate action by providing suppliers with resources, tools and knowledge to accelerate their decarbonization. Ten suppliers that we sponsored, who completed the program, have set or committed to setting emissions reduction targets through the Science-Based Targets initiative.\nIn all our engagements with stakeholders, we are committed to upholding the principles of transparency, consistency, accountability and integrity.\n• We joined with the Business Coalition for a Global Plastics Treaty and the International Council of Beverages Associations in support of a UN Global Plastics Treaty. The Business Coalition is supporting the treaty negotiations around the vision of a circular economy in which plastic never becomes waste or pollution, and the value of products and materials is retained in the economy.\nBusiness Coalition for a Global Plastics Treaty Launch New York, NY, U.S.\nForbes Sustainability Summit New York, NY, U.S.\nUN Climate Change Conference Sharm El Sheikh, Egypt", "chunk_word_count": 528, "section_path": "Refresh the World. Make a Difference. > PARTNERING FOR IMPACT", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 22, "page_start": 22, "page_end": 22 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 13, "chunk_text": "# Refresh the World. Make a Difference.\n## PARTNERING FOR IMPACT\nSECTION SCOPE: In this section our stakeholder engagement and partnership work refers to actions by the company as well as our owned and independent bottling partners and our independent suppliers and partners.\n## CONVENING MEANINGFUL CONVERSATIONS\n## KEY REGIONAL EVENTS IN 2022\n### OPEN Conversation\nCoca-Cola Netherlands held its fifth OPEN conversation in October involving our local bottling partner and key stakeholders to discuss topics such as packaging, water, climate, diversity, equity and inclusion and how we can all contribute to a healthier living environment.\n### Break the Ceiling Touch the Sky\nThe Coca-Cola Company became a Strategic Partner of the Ellen MacArthur Foundation with the announcement shared during its annual Summit on July 5, 2022. The Foundation’s Strategic Partners include some of the world’s largest and most influential organizations, with transformative potential to demonstrate what’s possible to accelerate the transition to a circular economy.\nCoca-Cola is a World Sponsor of House of Rose Professional’s Break the Ceiling Touch the ${ \\mathsf { S k y } } ^ { \\circledast } ,$ a global women's leadership platform. In September, the 2022 Middle East edition brought together over 300 women from top companies across the region to Dubai to learn, network, share and apply best practices on leadership, success, diversity and inclusion.\n### Africa Social Impact Summit\nWe partnered with Sterling One Foundation to hold the inaugural Africa Social Impact Summit under the theme “rethink, rebuild, recover— accelerating growth for the sustainable development goals (SDGs)” in Abuja, Nigeria in July. The summit provided a platform for dialogue on regional inclusive development aimed at stimulating the private sector and impact investors, to shape market-led solutions for the SDGs.\n### Water Leadership\n159%\nWater is a priority for The Coca-Cola Company because it is essential to life, our beverages and the communities we serve. It is also critical to public health, food security, biodiversity and the climate crisis. The world is experiencing increased water insecurity, which is evident through water scarcity, with demands for safe, usable water exceeding supply in certain areas.\nOF THE WATER USED IN OUR FINISHED BEVERAGES RETURNED TO NATURE AND COMMUNITIES IN 20222, 3\nWE HAVE REPLENISHED MORE THAN 100% OF THE WATER USED IN OUR FINISHED BEVERAGES EVERY YEAR SINCE 2015\nWe have operations nearly everywhere in the world— in more than 200 countries and territories. That means we have a responsibility to accelerate our efforts to help address water stress, protect local water resources and help build community climate resilience—communities’ ability to adapt to these changing conditions. That’s why our 2030 Water Security Strategy is focused on accelerating the actions needed to increase water security where we operate, source ingredients and touch people’s lives.1\n291B LITERS OF WATER RETURNED TO NATURE AND COMMUNITIES IN 2022\nSECTION SCOPE: In this section our water leadership work refers to actions by the company, The Coca-Cola Foundation as well as our owned and independent bottling partners and our independent suppliers and partners.", "chunk_word_count": 503, "section_path": "Refresh the World. Make a Difference. > PARTNERING FOR IMPACT", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 22, "page_start": 22, "page_end": 25 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 14, "chunk_text": "# Refresh the World. Make a Difference.\n## 2030 WATER SECURITY STRATEGY\nVision: Our 2030 Water Security Strategy is focused on accelerating the actions needed to increase water security where we operate, source ingredients and touch people’s lives. We do that by contributing toward sustainable, clean water access that improves livelihoods and wellbeing while protecting against water-related disasters. We also work to preserve nature and biodiversity as well to promote advanced water management practices.\nOur 2030 strategy is grounded in the fact that water is a shared resource. As such, our work is organized to address water security in:\n### Open Call to Accelerate Action on Water\nOver the last couple of years, we followed a process to segment and prioritize our operating facilities, commercial regions, sourcing regions for global priority ingredients, watersheds, and communities based on those with the highest water-related risks (read more on the following page). As a result of this work, we have set three key goals designed to achieve our vision:\nTo achieve our goals, collective action is critical.\nThe Coca-Cola Company and our bottling partners Coca-Cola FEMSA, Coca-Cola Europacific Partners and Arca Continental joined the “Open Call to Accelerate Action on Water”, an initiative of the UN Global Compact, the CEO Water Mandate, and others. This means we will partner to build water resilience across operations and supply chains, and we will work together to achieve collective positive water impact in at least 100 vulnerable water basins by 2030.\nWe work collaboratively with partners across sectors to implement actions in our operations, watersheds (including agricultural ingredient sourcing regions) and communities:\n## GOAL 1\n## GOAL 2\n## GOAL 3\nActions within Our Operations • Use less water • Reuse and treat wastewater\nAchieve $100 \\%$ regenerative water use across 175 of our facilities identified as facing high levels of water stress by 2030.\nImprove the health of 60 watersheds identified as most critical for our operations and agricultural supply chain by 2030.\nReturn a total of 2 trillion liters of water to nature and communities globally between 2021 and 2030.\n### Actions in Our Watersheds & Our Communities\n• Support nature-based solutions \n• Invest in landscape solutions (gray infrastructure) \n• Help farmers use less water and implement sustainable agriculture practices \n• Help provide communities with access to safe water, sanitation and hygiene (WASH) \n• Advocate for good water governance and smart policies\n## PRIORITIZING OPERATIONS, COMMUNITIES AND WATERSHEDS\nIn 2022, we completed our analysis of waterrelated risks in areas where we can make the greatest impact1 . We prioritized our operating facilities, commercial regions, sourcing regions for global priority ingredients, watersheds and communities.\n### Watersheds\nSimilarly, we undertook a comprehensive process to identify priority watersheds across our system. These include our Leadership Locations and their water sources, where we source global priority ingredients, key growth markets and priority communities.\n### Prioritizing operations, watersheds and communities in Türkiye", "chunk_word_count": 483, "section_path": "Refresh the World. Make a Difference. > PRIORITIZING OPERATIONS, COMMUNITIES AND WATERSHEDS > Watersheds", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 25, "page_start": 25, "page_end": 26 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 15, "chunk_text": "# Refresh the World. Make a Difference.\n## PRIORITIZING OPERATIONS, COMMUNITIES AND WATERSHEDS\n### Operations\nWe analyzed water sourcing risks across approximately 700 operational locations (mainly concentrate plants and bottling facilities) and mapped the minor river basins and sourcing basins of these facilities. We catalogued these locations based on the detailed mapping and results from an Enterprise Water Risk Assessment from the World Resources Institute’s Aqueduct 3.0 tool and from Facility Water Vulnerability Assessments—our site-level, internal proprietary tool.\n### Communities\nIn Türkiye, we identified an operating facility located in a waterstressed area as a priority facility (Leadership Location) in the city of Bursa in the north-west of the country. The facility is owned and operated by our bottling partner Coca-Cola İçecek. Further, we identified the Bursa/Balikesir watershed as a priority because it not only serves as a water source for our facility but also because it supports the growing of apples, peaches and nectarines that we source as ingredients in our products. In addition, we identified seven farming villages in the same province as priority communities, based on their location in ingredient sourcing and key market growth regions.\nWe also began mapping priority communities, based on their lack of access to water, sanitation and hygiene (WASH) and resilience to waterrelated impacts of climate change (e.g., floods and droughts), with a focus on communities close to our facilities, and/or in urban growth centers where we sell our products, and/ or in rural farming communities where we source ingredients.\nBy mapping and overlaying our priority facilities, watersheds and communities, we have developed a framework of prioritization and a deeper understanding of risks, which will help us develop holistic, integrated and context-based approaches to help increase water security where it matters the most in our business, operations and supply chains.\nAs a result, each facility has been placed within one of three categories:\nThe watershed faces high levels of water scarcity and pollution of water sources from local industries, including textiles and agriculture (e.g., use of insecticides). Rural farming communities have relatively low levels of access to clean water.\n• \u0007LEADERSHIP LOCATIONS: Approximately $2 5 \\%$ of our facilities face the highest level of water-related risks and are on a path to $100 \\%$ regenerative water use by 2030.\nThe operating facility is driving water efficiency improvements by conducting a gap assessment against the Coca-Cola system’s Water Resource Sustainability Standard compliance process and working with a third-party consultancy to screen options for improving water efficiency in our operations. We developed a watershed stewardship plan which includes supporting farmers to improve irrigation efficiency and reduce water contamination, reforestation efforts to help filter water pollution and regulate precipitation and evaporation flows, and helping communities to install rainwater harvesting systems.\n• ADVANCED EFFICIENCY LOCATIONS: System facility locations in a water-stressed context that will drive advanced water efficiency improvements in operations.", "chunk_word_count": 474, "section_path": "Refresh the World. Make a Difference. > PRIORITIZING OPERATIONS, COMMUNITIES AND WATERSHEDS > Operations", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 26, "page_start": 26, "page_end": 26 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 16, "chunk_text": "# Refresh the World. Make a Difference.\n## PRIORITIZING OPERATIONS, COMMUNITIES AND WATERSHEDS\n### Defining Regenerative Water Use\nRegenerative water use means facilities must reduce, reuse, recycle and replenish the water used in operations in the local correlated watersheds for beneficial social, economic and/or environmental uses by other stakeholders and nature.\n• CONTRIBUTING LOCATIONS: System facility locations in areas with low water-related risks. These will contribute to water security overall by implementing the Coca-Cola system's Water Resource Sustainability Standard, achieving industry benchmark water efficiency and $100 \\%$ compliance with wastewater discharge standards.\nIn this way we are working to help improve water security by focusing on actions we can take both within and outside our operations to help improve water efficiency and watershed health as well as support local communities and farmers through Lake Manyas interventions that are relevant to the local context.\nSee the Sustainable Agriculture section for more details on how we are supporting farmers to improve water management in growing our ingredients in this region.\n## REDUCING WATER CHALLENGES IN OUR OPERATIONS\n## IMPROVING WATERSHED HEALTH\nAll our production operations will continue to implement the Coca-Cola system’s Water Resource Sustainability Standard.\noperational costs associated with water use. Better understanding of these costs will help strengthen decision making and the business case for investment in initiatives that respond to local challenges.\nWatershed Stewardship Plans\n### Water Stewardship in Concentrate Plants\nWithin our 18 concentrate production plants, which produce the concentrates used to make many of our sparkling beverages, the company has committed to driving water efficiency improvements. In 2022, we achieved a $7 \\%$ average water efficiency improvement across all our concentrate plants compared to a 2015 baseline. These facilities have worked as a network to review and assess the implementation of best practices and governance of water use, known as “Water Efficiency Maturity Assessments.”", "chunk_word_count": 307, "section_path": "Refresh the World. Make a Difference. > PRIORITIZING OPERATIONS, COMMUNITIES AND WATERSHEDS > Defining Regenerative Water Use", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 17, "chunk_text": "# Refresh the World. Make a Difference.\n## MEXICO\nThe purpose of this standard is to identify and reduce water quality- and quantity-related challenges for our operations.\nIn 2022, we also worked with Bluerisk and Valuing Impact and a number of peer companies to better understand how projects returning water to communities and nature help create societal value. Across the 22 projects analyzed, we learned that these projects not only generated 210 million cubic meters of volumetric water benefits, but also delivered $\\$ 39$ million in societal value, with an average societal return on investment (SROI) of 3.9.\nIn Chihuahua, Mexico, we partnered with The Nature Conservancy, a global environmental nonprofit organization, to develop a watershed stewardship plan for the Lago Bustillo y de los Mexicanos watershed. It was identified as a priority watershed because it supplies water to a manufacturing facility owned by our bottling partner Corporación del Fuerte, which is a Leadership Location. In addition, the watershed includes orchards from which the system sources apples. The agricultural sector and the city of Cuauhtémoc are major water users. The watershed is forecasted to face increasing water quality and quantity challenges in the coming years due to population growth and rising temperatures. With funding from Fundación Coca-Cola Mexico, our projects in this watershed have helped to improve rural communities’ access to water, mainly through rainwater harvesting systems and check dams. The watershed stewardship plan completed in 2022 helped identify key context-specific interventions to consider for future projects including, reforestation, rainwater harvesting, dams, plant nurseries, conservation of springs and community access to WASH, as well as the need to strengthen local partnerships. These plans will also help us to track improvements in watershed health and cobenefits of projects (e.g., enhanced biodiversity and carbon sequestration). One project currently in the pipeline is working with an agri-tech partner, Kilimo, to help local farmers save water by adopting technology-enabled irrigation management tools.\nTo decrease water use in our operations, we use internal tools such as the Water Efficiency Catalogue, which assesses technical standards (e.g., on-line flow monitoring, water collection and reuse capabilities) and team culture (e.g., training and communication on the importance of water efficiency) regarding water efficiency in our production facilities and provides innovative best practices (e.g., water reuse for package rinsing and water-free lubrication of conveyor belts).\nWe have a goal to achieve $100 \\%$ regenerative water use in all our 175 Leadership Locations globally by 2030. In 2022, we included progress against water replenishment in Leadership Locations as a metric for the Long-Term Incentive (LTI) plan for our executive leadership team. Over the past year, our Talent and Compensation Committee approved the inclusion of a metric related to water replenishment in Leadership Locations in line with the goals of our 2030 Water Security Strategy.\nAs an example, in 2022, one of our concentrate plants in Ireland reduced its water consumption by more than 13,000 cubic meters compared to the previous year by implementing circular washing in its clean-in-place process. A monitor-toimprove mindset in our local team is also key to achieving and sustaining this level of performance.\nIn the development of new plants, we leverage our Sustainability by Design Tool to ensure that water-efficient processes are implemented and that we achieve best-in-class water efficiency.", "chunk_word_count": 543, "section_path": "Refresh the World. Make a Difference. > MEXICO", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 27, "page_start": 27, "page_end": 27 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 18, "chunk_text": "# Refresh the World. Make a Difference.\n## MEXICO\nWe have set an ambitious target to reduce our water use ratio by $20 \\%$ by 2030 from a 2015 baseline for all operations across the system. We are focused on water efficiency improvements in Leadership Locations and Advanced Efficiency Locations that operate in water-stressed contexts, which has resulted in a water use ratio of 1.79 liters of water used per liter of beverage in 2022. This is our highest achievement in water efficiency to date and significantly better than the industry average for carbonated soft drinks of 1.91 l/l of beverages.1\n[IMAGE CAPTION] Community members transport materials for the construction of water storage tanks\nDeveloping watershed stewardship plans at the catchment-scale is critical to helping water users in a particular region identify and address the drivers of water risk. Working with partners to implement solutions, stakeholders can take an effective sciencebased approach to improve water resilience for both people and nature.”\nAs a member of the Alliance for Water Stewardship (AWS), we are proud to be a part of a global movement to advance good water stewardship practices. The AWS certification confirms that the highest global standard for responsible water stewardship has been met in support of social, cultural, environmental and economic benefits at both the site and catchment level. We plan to certify all our 18 concentrate production sites against the latest AWS Standard by 2025.\nWe have continued to improve the efficiency of our water use.\n$1 0 \\%$ IMPROVEMENT i n water efficiency across all system operations compared to 2015.\nALEJANDRA LÓPEZ RODRÍGUEZ Director, The Nature Conservancy Mexico Water Program\nCost of Water\nIn 2022, The Coca-Cola Foundation provided support to Ceres for the Valuing Water Finance Initiative to drive investor leadership on valuing water and to broaden investors’ perspective on the role that water plays in many industries’ value chains.\nWe have partnered with denkstatt to develop a “Cost of Water” tool for our teams. This tool will help us get a better understanding of the cost of water by evaluating the costs associated with potential water risks in addition to the\n### IMPROVING WATERSHED HEALTH (continued)\nProtecting watersheds and recognizing the unique challenges and characteristics of water sources around the world has long been a focus of our work.\nWatersheds supply water for drinking, agriculture and manufacturing; provide habitat for plants and animals; and offer opportunities for recreation. Based on our 2030 Water Security Strategy, we are placing even greater emphasis on the holistic improvement of watershed health. We set a goal to improve watershed health in 60 watersheds identified as most critical for our operations and agricultural supply chain by 2030.\nThe Coca-Cola Foundation and the Coca-Cola system have a long history of watershed projects. A selection of these projects is shown below.\n## NORTH AMERICA\n## EURASIA & MIDDLE EAST\n## LATIN AMERICA", "chunk_word_count": 480, "section_path": "Refresh the World. Make a Difference. > MEXICO > IMPROVING WATERSHED HEALTH (continued)", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 19, "chunk_text": "# Refresh the World. Make a Difference.\n## USA:\nBrazil: Ecological restoration\nTürkiye: Sustainable agricultural practices\n– Riparian habitat restoration \n– Invasive species removal \n– Wet meadow restoration \n– Reforestation \n– Floodplain reconnection Beaver dam analogs \n– Community rain barrel distribution \n– Native prairie protection \n– Tallgrass prairie restoration \n– Stream channel restoration \nMexico: \n– Reforestation – Infiltration trenches for \ngroundwater replenishment\nPakistan: Community water treatment\nThese projects include support for nature-based solutions such as reforestation, wetland and meadow restoration, as well as irrigation system improvements, invasive species removal and check dam construction. Many of the projects work in agricultural contexts to improve availability of water for irrigation and more efficiently use water in agriculture.\nPeru: Forest protection\n## INDIA & SOUTHWEST ASIA\n## EUROPE\nIndia: Check dams for groundwater recharge\n## OUR AGRICULTURAL WATER FOOTPRINT\nAustria: Soda lake protection\nIndia/Nepal: Rainwater harvesting and aquifer recharge\nProducing the ingredients used in our beverages accounts for an estimated $92 \\%$ of our total blue water1 footprint, which is the volume of surface water and groundwater consumed in producing our finished products (evaporated or embedded in the product). That’s why, in 2022, we expanded our analysis and prioritization to include watersheds that support our priority ingredient sourcing, in addition to our operating facilities and those necessary for key market growth.\nBulgaria: Wetland restoration and protection\n[IMAGE CAPTION] Many projects have multiple locations.\nCroatia/Serbia: – Oxbow restoration Wetland restoration and floodplain reconnection\n## GREATER CHINA & MONGOLIA\nChina: Wetland water level management\nHungary Oxbow restoration – Floodplain restoration\nItaly: Irrigation efficiency improvement\n## JAPAN & SOUTH KOREA\nRomania: Floodplain wetland restoration\nJapan: Forest protection\nSpain: Wetland restoration – Irrigation system improvements\n## ASEAN & SOUTH PACIFIC\n### Water Quality\nWe’re working with several partners, including the World Resources Institute (WRI) and The Nature Conservancy, to develop a Water Quality Benefit Accounting (WQBA) methodology that seeks to provide guidance on identifying shared water quality challenges, activity selection, and recommended water quality indicators and benefit calculation methods.\nIndonesia: Infiltration wells for aquifer recharge\n## AFRICA\nThailand: Check dams and water supply for agriculture\nEgypt: Soil improvement to reduce irrigation demand\nVietnam: Floodwater retention\nSouth Africa: Invasive species removal\n## BUILDING COMMUNITIES’ WATER RESILIENCE\n## INTEGRATING GENDER INTO WASH PROGRAMS\nWe adopt a human-rights based approach to water and communities.", "chunk_word_count": 384, "section_path": "Refresh the World. Make a Difference. > USA:", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 28, "page_start": 28, "page_end": 29 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 20, "chunk_text": "# Refresh the World. Make a Difference.\n## INTEGRATING GENDER INTO WASH PROGRAMS\n### Aliados por el Agua (Allies for Water)\nGender has always been a core focus for our WASH programs because we know that women and girls suffer disproportionately from poor access to clean water, sanitation and hygiene.\nIn Latin America and the Caribbean, $25 \\%$ of the population lack access to safely managed drinking water services.1 Climate change, urbanization, accelerated water usage, and inadequate infrastructure are among the leading causes. In response to this, Coca-Cola Latin America, in alliance with the Global Environment Technology Foundation (GETF) and local civil society organizations, designed and launched a platform called Aliados por el Agua (Aliados) to help improve access to water, sanitation and hygiene (WASH) for 2 million people across 18 countries by 2030.\nWe recognize the connection between our social license to operate and functional, resilient water infrastructure. Insufficient access to water, sanitation and hygiene (WASH) infrastructure and poor water quality are key challenges faced by communities around the world. These challenges are being exacerbated by population growth, climate change, political conflict and forced migration.\nIn 2018, The Coca-Cola Foundation partnered with Global Water Challenge (GWC), USAID and Ipsos through the Water and Development Alliance (WADA) on a study across three countries in Africa—Nigeria, Rwanda, and Eswatini—of the impact of improved WASH on women’s empowerment. This “Ripple Effect” study found that improved WASH had positive impacts on a number of important facets of women’s lives including time savings. The research established that of women who utilized time savings for economic activities, $91 \\%$ saw an increase in income. Providing women with greater economic opportunity helps build resilience in their families and communities.\nIn 2022, Aliados implemented more than 30 projects across 12 countries, in partnership with 26 civil society organizations, as well as local municipalities, utility providers and communities, and funding from The Coca-Cola Foundation.\nIn addition, Coca-Cola Latin America partnered with Global Water Challenge and its women for water platform to develop the Women for Water Framework for Action—which is based on the Ripple Effect Study—and helps to integrate gender and women’s empowerment into the Aliados por el Agua platform by focusing projects on three key areas: income generation, health and wellbeing, and resilience.\nFor more than a decade, The Coca-Cola Company has established strong leadership in community water programs with the support of The Coca-Cola Foundation and many nonprofits, governments, customers and other partners.\nWith our partners and support from The Coca-Cola Foundation, we are piloting the framework across four projects in Mexico, Bolivia and Brazil to empower women through water-related programming.\nWe are updating our reporting methodology for our community water programming data to align with our 2030 Water Security Strategy and upcoming external frameworks, and we will apply it to future data reporting when ready.\nIn ${ \\scriptstyle 2 0 2 2 , }$ we were pleased to build on this work and help develop, along with WaterAid and Diageo, practical guidance to help companies and their implementing partners turn strategic commitments on community WASH and gender equality into integrated projects that result in better, more sustainable outcomes which are critical parts of the pathway to gender equality and women’s empowerment.", "chunk_word_count": 536, "section_path": "Refresh the World. Make a Difference. > INTEGRATING GENDER INTO WASH PROGRAMS > Aliados por el Agua (Allies for Water)", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 29, "page_start": 29, "page_end": 29 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 21, "chunk_text": "# Refresh the World. Make a Difference.\n## INTEGRATING GENDER INTO WASH PROGRAMS\n### Aliados por el Agua (Allies for Water)\nIn 2022, our operating units began the identification of priority communities based on communities’ access to WASH and/or their resilience to the impacts of climate change (e.g., floods and droughts). We aim to support our priority communities in addressing shared water challenges by identifying and implementing interventions focused on:\n### Recognition\n### Collective Action\nIn 2022 the Company scored an “A–” on Water, which indicates a strong water security strategy and best-in-class governance, including tying executive compensation to our water replenish targets. For details, read our 2022 CDP Water Response. Our bottling partner Coca-Cola Europacific Partners (CCEP) was recognized with the highest score of A, while Swire Coca-Cola Limited, Coca-Cola HBC and Coca-Cola Bottlers Japan Inc. (CCBJI) received a score of A–.\nThe shared nature of water resources requires collective action to help solve water challenges. Some of our key partnerships are with:\n2030 Water Resources Group, hosted by the World Bank \nAlliance for Water Stewardship (AWS) \nCEO Water Mandate, a partnership between the UN Global Compact and the Pacific Institute \ndenkstatt \nGlobal Water Challenge \nScience Based Targets Network (SBTN) \nThe Nature Conservancy \nThe Water Resilience Coalition, an initiative of the CEO Water Mandate \nWASH4Work, an initiative hosted by the CEO Water Mandate \nWaterAid \nWorld Wildlife Fund (WWF)\n1. Improving access to safe drinking water, sanitation and hygiene. \n2. Enabling adaptation to water-related climate change impacts. \n3. Ensuring rapid recovery from crises.\nOur smartwater brand, in partnership with Global Water Challenge and its women for water\nplatform, launched smart solutions: global water challenge, a grant program in 2022 to support non-profits to improve communities’ access to WASH, improve watershed health and empower women through water-based activities. Read more.\nThe Co-Benefits of WASH Access We’re working with WASH4Work, an initiative hosted by the CEO Water Mandate, to develop a standardized methodology of accounting for the co-benefits of WASH projects (e.g., health, income, nutrition, safety and security, and education) and strengthen the business case for investments in WASH programs.\n## SPOTLIGHT: INVESTING IN NATURE-BASED SOLUTIONS\nRecognizing that nature itself often offers the best mechanisms for restoring watershed health, the company, The Coca-Cola Foundation and our bottling partners invest in nature-based solutions (NBS), such as forest protection and floodplain management, which build on natural processes to manage water systems.", "chunk_word_count": 397, "section_path": "Refresh the World. Make a Difference. > INTEGRATING GENDER INTO WASH PROGRAMS > Aliados por el Agua (Allies for Water)", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 29, "page_start": 29, "page_end": 30 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 22, "chunk_text": "# Refresh the World. Make a Difference.\n## SPOTLIGHT: INVESTING IN NATURE-BASED SOLUTIONS\n### Reforestation Helps Restore Watershed Health in the Philippines\nThe Ipo Watershed in Bulacan in the Philippines supplies water to Metro Manila, the second most populous region of the country. Forest cover within the watershed has dramatically dropped from $\\pmb { \\mathcal { Q } }$ to just 40% in recent years1 due to illegal logging and unsustainable forest practices, which has resulted in a reduction in the natural water storage capacity of the basin. Malnutrition is also a pervasive challenge in local communities. Since 2016, The Coca-Cola Foundation and Coca-Cola Foundation Philippines have worked in partnership with WWF-Philippines to protect rainforests of the area, replant trees and provide livelihood opportunities. The project has reforested 165 hectares of degraded land in the watershed and supported local communities to start household gardens to grow food.\nThrough our work, we have learned that NBS projects often have multiple co-benefits, such as better water quality, carbon sequestration, increased climate resilience, and enhanced richness and variety of life of natural habitats (biodiversity).\nIn 2022 the project was assessed using the NBS valuation methodology. Overall, the project provided a very positive return on social investment and its specific co-benefits included:\nWe worked with denkstatt to develop a methodology to help us quantify and test the cobenefits of NBS projects. In 2022, we partnered with the CEO Water Mandate, denkstatt and others to help build the business case for NBS by developing a standardized methodology to measure benefit accrual and a means to value social return on investment. The methodology has been tested across several of our water replenishment projects in key geographies.\nWATER QUANTITY: The replenishment of approximately 400 million liters of water per year due to decreased runoff and improved water access for local communities.\n• CARBON SEQUESTRATION: Approximately 2,500 metric tons of CO e per year from reforestation.\nFOOD SUPPLY: Household gardens helped to tackle food insecurity and some of the trees planted have edible fruits (e.g., rambutan, coffee).\nThis valuation methodology supports the broader Benefit Accounting of Nature-Based Solutions for Watersheds project, including The NBS Benefits Explorer tool, led by the Pacific Institute and CEO Water Mandate, in partnership with The Nature Conservancy and LimnoTech. Our aim is to support public, private and non-profit sectors in developing effective policies and programs to incentivize greater implementation of and investment in NBS because water is at the nexus of many goals, including protecting habitats, increasing biodiversity, sequestering carbon and promoting community resilience in the face of changing weather patterns.\n### Portfolio: Beverages for All", "chunk_word_count": 433, "section_path": "Refresh the World. Make a Difference. > SPOTLIGHT: INVESTING IN NATURE-BASED SOLUTIONS > Reforestation Helps Restore Watershed Health in the Philippines", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 30, "page_start": 30, "page_end": 30 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 23, "chunk_text": "# Refresh the World. Make a Difference.\n## SPOTLIGHT: INVESTING IN NATURE-BASED SOLUTIONS\n### Major Milestone for fairlife\nAs a total beverage company, we are committed to offering people more of the drink choices they want across a range of categories and in a variety of packages. Ever-evolving consumer tastes and preferences help steer our business strategy and shape the lineup of beverages we bring to market.\nIn 2022, fairlife became our first-ever \\$1 billion dairy brand. Over the last decade, fairlife—now available in the United States and Canada—has focused on innovation and providing consumers with high-quality nutrition through a growing portfolio of value-added dairy products, including ultra-filtered, lactosefree milks; protein shakes; and sports recovery drinks. This builds on beverages available in other markets in the juice, value-added dairy and plant-based beverages category, such as AdeS, Chi, Santa Clara, Toni and Nutriboost.\nWe take a disciplined approach to product innovation and portfolio management, ensuring we develop and deliver preferred, great-tasting beverages for all occasions and lifestyles. This includes offering drinks with reduced added sugar and more brands with nutrition and wellness benefits; providing small package options and clear nutrition information on packaging and in our communications; and marketing our drinks responsibly.\nSECTION SCOPE: In this section our Portfolio work refers to actions by the company as well as our owned and independent bottling partners and our independent suppliers and partners.\nWe currently offer \\~200 master brands worldwide in five beverage categories:\n## LESS SUGAR, MORE CHOICES\nWe support the recommendations of leading health authorities that individuals should consume less than $10 \\%$ of their total calories from added sugar. That’s why, from $2 0 1 7 - 2 0 2 2 ,$ we removed more than 900,000 tons of added sugar from our global portfolio through more than 1,000 beverage reformulations.\nWe support more than 50 calorie and sugar reduction pledges globally, in collaboration with industry peers. In 2022, we joined an updated industry-wide pledge in Australia to reduce the sugar content in our portfolio by $2 5 \\%$ by 2025. In Kazakhstan, we are among nine members of the national beverage association to sign an industry pledge to reduce average added sugar in our drinks by $10 \\%$ by the end of 2026. And we support guidelines released by the Health Ministry of Türkiye and Federation of Food and Drink Industry Associations of Türkiye to reduce sugar in nonalcoholic beverages and certain food categories by $10 \\%$ by 2025.\n900,000+ tons of added sugar removed from our global portfolio cumulatively through efforts to reformulate more than 1,000 beverages from 2017–2022", "chunk_word_count": 431, "section_path": "Refresh the World. Make a Difference. > SPOTLIGHT: INVESTING IN NATURE-BASED SOLUTIONS > Major Milestone for fairlife", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 31, "page_start": 31, "page_end": 32 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 24, "chunk_text": "# Refresh the World. Make a Difference.\n## 19 OF TOP 20\nbrands are reduced-sugar or zero-sugar, or have a reduced-sugar or zero-sugar option\n\\~1,400 tons of added sugar removed on an annualized basis through recipe changes in 2022\nIn Europe, we are leading the soft drinks industry in voluntarily committing to sugar reduction. Together with peers through the industry association UNESDA Soft Drinks Europe, we have reduced average added sugars in soft drinks by $2 8 . 6 \\%$ across the European Union and United Kingdom since 2000. In June 2021, as part of the EU Code of Conduct for Responsible Food Business and Marketing Practices, we joined a UNESDA Soft Drinks Europe pledge to reduce the sugar in our drinks by an additional $10 \\%$ by 2025, which will represent a $33 \\%$ average sugar reduction when completed by 2025 compared to 2000. The European soft drinks sector is the only sector to have made an additional sugar reduction commitment under the EU Code of Conduct.\n## EUROPE\nof the products in our beverage portfolio have less than 100 calories per 12-ounce serving\nBy ${ 2 0 2 5 , }$ we aim for $50 \\%$ of the drinks we sell in Europe to be low- and no-calorie drinks (we’re currently at $45 \\%$ ) in support of the EU Commission’s Farm-to-Fork strategy to accelerate the transition to sustainable food systems.\n12\n29%\nrecipe changes to reduce added sugar in 2022\n## UNITED STATES\nWe’re offering more low- and nocalorie options in more places. For example, $9 9 . 7 \\%$ of U.S. outlets carry our low- and zero-sugar SKUs—and, on average, 24 zero-sugar sparkling soft drink SKUs are found per store. 1\n246\nlaunched in 2022 \\~68% of our volume sold in 2022 was low- or no-calorie\n### Portfolio Marketing", "chunk_word_count": 303, "section_path": "Refresh the World. Make a Difference. > 19 OF TOP 20", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 32, "page_start": 32, "page_end": 33 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 25, "chunk_text": "# Refresh the World. Make a Difference.\n## SWEETENER INNOVATION\nCoca-Cola Zero Sugar took center court during the 2022 Men’s and Women’s NCAA College Basketball Final Four tournaments in the United States with March Madness-themed “Best Coke Ever?” ads showcasing the brand’s reformulated taste. Read more.\nWe continue to use our marketing to drive growth of our low- and no-calorie portfolio. Coca-Cola Zero Sugar has delivered doubledigit volume growth in five of the last six years.\nvitaminwater tapped global superstar Lil Nas X for the “Nourish Every You” campaign encouraging self-expression and self-care. Read more.\nOne of the ways we achieve great taste without sugar is by using low- and no-calorie sweeteners. We only use sugar alternatives that have been thoroughly tested through scientific studies and confirmed as safe by globally recognized food safety authorities, including the U.S. Food and Drug Administration (FDA), the European Food Safety Authority (EFSA) and Food Standards Australia and New Zealand (FSANZ). When used as part of a healthy diet and lifestyle, we believe the science shows that sugar alternatives can help meet public health recommendations to reduce added sugar. Additionally, food additives such as non-sugar sweeteners help make food systems more sustainable by both reducing sugar and lowering our carbon emissions.\nIn 2022, several leading low- and no-calorie brands in North America launched consumer campaigns with celebrity partners and sponsorship assets:\nSimply and actor/comedian Eugene Cordero invited consumers to “Say Yes to Simple” in a new campaign showcasing the brand’s fastgrowing lineup of juices, ades, plant-based milk alternatives, smoothies and more. Read more.\n## FLAVOR BREAKTHROUGHS\nsmartwater and global ambassador Zendaya, an acclaimed actor and performer, celebrated those who define “smart” on their own terms. Together, smartwater and Zendaya are also helping address the water crisis in communities across the world by partnering with the Global Water Challenge’s women for water platform, which focuses on mobilizing clean water access for every woman and her community. Read more.\nSeveral of our core brands took creative approaches to promoting zero-calorie choices to younger consumers in 2022 through flavor innovations, packaging designs and digital experiences. The global Coca‑Cola Creations platform introduced a series of limited-edition offerings inspired by consumer passion points of music, gaming and sports—starting with the outer space-inspired Coca-Cola Starlight, which offered fans a taste of outer space. In the United States, a limited-edition lineup of mysteriously flavored Fanta beverages was anchored by a zero-sugar option.\nSprite Zero Sugar teamed up with Marvel Studios’ Black Panther: Wakanda Forever for the “Infinite Potential. Zero Limits” campaign. Read more.\nGold Peak ready-to-drink tea collaborated with Grammy- and Oscar-winning artist Questlove on the “Tea is for Trying” campaign. Read more.\nOur recent efforts have focused on collaborating with an ecosystem of suppliers and research organizations to develop, continuously improve and commercially scale stevia and other naturally derived sugar alternatives. A global list of more than 70 published journal articles dating back to 2008, reflecting research we have directly funded or authored, can be found on our website.\nSince 2008, we have invested more than $\\$ 100$ million in sweetener innovation and sugar reduction research.", "chunk_word_count": 516, "section_path": "Refresh the World. Make a Difference. > SWEETENER INNOVATION", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 33, "page_start": 33, "page_end": 33 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 26, "chunk_text": "# Refresh the World. Make a Difference.\n## NUTRITION AND WELLNESS BENEFITS\nMinute Maid sparkling juice gives consumers in China a zero-sugar option made with real fruit juice and refreshing bubbles, along with B3 vitamins and zinc to supplement nutritional needs.\nWe’re bringing teas, juices, waters, and dairy and plant-based beverages to more people in more places. Some of these beverages are enhanced by fortifying them with vitamins and minerals.\nCappy Immunity Support is a wellness beverage in Europe powered by fruit multi-blends (orange, carrot and peach mix) along with vitamins C and B12, and zinc.\nFuze Tea launched in Pakistan in two flavors— lemon and peach. The innovative brand is a fusion of reinvigorating tea extract from $100 \\%$ sustainably sourced tea leaves and fruit flavors.\nChun Yue launched as first-ever functional soda water in China, with added vitamins and minerals. Two zero-sugar, zerocalorie options offer a slightly sweet, fruity taste. They are also fortified with niacin or zinc.\nMinute Maid Honey Infused ready-to-drink fruit drinks in India contain added dietary fiber to support healthy digestion. The new preservative-free line is available in three delicious flavors: apple, mixed fruit and guava.\nfairlife Core Power Elite contains 42g of highquality protein to help build muscle and replenish, repair and rebuild. It is available in North America in three flavors: chocolate, strawberry and vanilla.\nNutriboost flavored milks have calcium, vitamin D and no added sugar.\n## SMALLER PACKAGING", "chunk_word_count": 237, "section_path": "Refresh the World. Make a Difference. > NUTRITION AND WELLNESS BENEFITS", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 27, "chunk_text": "# Refresh the World. Make a Difference.\n## RESPONSIBLE MARKETING\nOur commitment to offering more consumer choice includes our expansion into the fastgrowing alcohol ready-to-drink (ARTD) market. In 2022, we launched Jack Daniel’s & Coca-Cola in Mexico, with more markets to follow in 2023 through our relationship with Brown-Forman. Jack Daniel’s & Coca-Cola joins our growing portfolio of ARTD offerings including Lemon-Dou, Topo Chico Hard Seltzer and Schweppes Pre-Mixed Cocktails. In the United States, we authorize third parties to produce and sell Topo Chico Hard Seltzer, Simply Spiked Lemonade and Fresca Mixed.\nPeople can enjoy our drinks in sizes that help control portions and added sugar intake. These include 7.5-oz. mini cans and 8-oz. glass bottles in many markets. We continue to expand availability of these packages and introduce newer offerings, including 150-ml mini cans and 250-ml slim cans, so people can enjoy the same great tastes in sizes that are right for them.\nWe respect the role of parents and caregivers as the primary decision-makers for what their children drink, and we do not market any of our products directly to children under 13, regardless of nutritional profile. Effective January 1, 2022, we raised the age threshold from under 12 to under 13 and reduced the audience threshold from $3 5 \\%$ to $30 \\%$ . This means we will not place our marketing or advertising in any media, platform or event where more than $30 \\%$ of the audience is under 13. Our policy goes beyond media and includes packaging, in-store and point of sale. Our approach is consistent with the International Chamber of Commerce Marketing & Advertising Code and its Framework for Responsible Food and Beverage Marketing Communication.\nIn 2022, we joined the International Alliance for Responsible Drinking (IARD), a consortium of leading beer, wine and spirits producers committed to reducing harmful drinking and promoting moderation through robust responsibility standards. In Brazil, we are working with three NGO partners on the Pega Leve (“Take it Easy”) program, which promotes moderation by communicating the risks of drinking and driving and excessive consumption, with a focus on 18- to 29-year-olds.\nIn 2022, we kicked off a pilot of a Coca-Cola Freestyle compact fountain dispenser at on-thego and at-work locations in France, Belgium, Great Britain and the Netherlands. In addition to giving consumers an expanded array of personalized, on-demand beverage choices—including low- and no-calorie options—the innovation helps reduce our carbon and packaging footprints.\nWe take the new responsibilities that come with our entry in this space very seriously. Recognizing the risks associated with alcohol consumption, we created guardrails outlined in our Global Policy on Alcohol Responsibility to ensure we grow our alcohol brands in a responsible and sustainable way. The policy articulates our commitment to:\nWe hold everyone involved in our marketing and communications accountable to our Global Responsible Marketing Policy, from employees and bottling partners to agency and media partners. We are a founding member of the International Food & Beverage Alliance (IFBA), a group of leading companies that self-regulate globally on responsible marketing to children. Additionally, we collaborate with industry peers at regional and local levels to scale collective action in responsible marketing pledge programs.", "chunk_word_count": 527, "section_path": "Refresh the World. Make a Difference. > RESPONSIBLE MARKETING", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 35, "page_start": 35, "page_end": 35 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 28, "chunk_text": "# Refresh the World. Make a Difference.\n## RESPONSIBLE MARKETING\nThe Coca-Cola Company is also a member of Drinkwise in Australia and Drinkaware in the United Kingdom and the Republic of Ireland, which are independent not-forprofit organizations that work with partners and members to reduce alcohol-related harm in those countries.\nToday, about $44 \\%$ of our sparkling soft drink brands come in packages of 8.5 ounces or less.\n## MORE INFORMATION FOR MORE INFORMED DECISIONS\n1. Ensure the responsible marketing of our alcohol brands; 2. Support local responsible consumption partnerships and communications programs to help reduce the harmful use of alcohol; 3. Provide tools and information to enable people to make informed choices; and 4. Enable our employees and partners to be ambassadors for responsible consumption.\nWe are committed to providing transparent nutrition information about all of our products, in line with local regulations, so consumers can make informed decisions. We were the first beverage company to place calorie information on the front of nearly all our packaging worldwide. Today, we provide nutrition information on product labels, with the exception of certain returnable bottles, fountain beverages and waters (unsweetened, unflavored). For these beverage and packaging types, we offer nutrition information through websites and consumer hotlines.\nIn North America, 10-pack mini cans grew $39 \\%$ in 2022.\nOur responsible alcohol marketing policy determines how we innovate and bring to market ARTD brands. This policy has been reviewed by the World Federation of Advertisers and endorsed by the International Alliance for Responsible Drinking. At the heart of our approach is ensuring that our alcohol brands are only directed at adults over the legal purchasing age who choose to drink, and encouraging only drinking in moderation. This means our brands will never be directed to minors below the legal purchasing age. We run regular trainings for our people and our partners, and always apply the appropriate safeguards across all channels of communications and sales.\n### Packaging\n## WORKING TOWARD A WORLD WITHOUT WASTE\nWe recognize our responsibility to help solve complex plastic waste challenges facing our planet and society. That’s why, in 2018, we launched an ambitious strategy called World Without Waste to drive systemic change through a circular economy for our packaging.\nONE OF OUR PACKAGING \nDESIGN GOALS IS TO REDUCE OUR USE \nOF VIRGIN PLASTIC DERIVED \nFROM NON-RENEWABLE SOURCES \nBY A CUMULATIVE\nWorld Without Waste is a global sustainable packaging platform focused on measurable and interconnected goals, each of which are supported by additional targets:", "chunk_word_count": 414, "section_path": "Refresh the World. Make a Difference. > RESPONSIBLE MARKETING", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 29, "chunk_text": "# Refresh the World. Make a Difference.\n## 3M METRIC TONS BETWEEN 2020 AND 2025\nMaking 100% of our packaging recyclable globally by 2025—and using at least 50% recycled material in our packaging by 2030 (DESIGN); Collecting and recycling a bottle or can for each one we sell by 2030 (COLLECT); Bringing people together to support a healthy, debris-free environment (PARTNER).\nIN 2022, WE ANNOUNCED A NEW GLOBAL REUSABLE PACKAGING GOAL\nBY 2030, WE AIM TO HAVE AT LEAST 25% OF OUR BEVERAGES SOLD BY VOLUME\nWORLDWIDE IN REFILLABLE/ RETURNABLE GLASS OR PLASTIC BOTTLES OR IN FOUNTAIN DISPENSERS WITH REUSABLE PACKAGING\nWe are making progress against each of our objectives, which are embedded in how we operate as a business, and we are taking a transparent approach to reporting our actions, results and learnings.\n• In France, a 250-ml returnable glass bottle (RGB) launched in hotels, restaurants and cafes for Fuze Tea, Tropico, Sprite, Fanta and Minute Maid. Additionally, Coca-Cola and Coca-Cola Zero Sugar are now offered in RGBs nationwide, eliminating more than 15 million single-use glass bottles in 2022.", "chunk_word_count": 180, "section_path": "Refresh the World. Make a Difference. > 3M METRIC TONS BETWEEN 2020 AND 2025", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 30, "chunk_text": "# Refresh the World. Make a Difference.\n## 3M METRIC TONS BETWEEN 2020 AND 2025\n### Our Packaging Portfolio\nLocal teams are executing in ways appropriate for their markets, and we are using a networked approach to deliver impact at scale. Our work has also shown us where the major challenges are, and some of our markets will have challenges meeting goals as quickly as others.\nWe deliver our beverages in a variety of packaging formats—from glass and PET bottles, to aluminum cans, to refillable packaging. Just as we offer drink choices for a range of occasions, our packaging portfolio gives consumers multiple ways to enjoy our brands conveniently and safely.\n• In the United States, a 500-ml returnable glass bottle pilot program in approximately 100 retail and foodservice outlets in El Paso, Texas, generated a $7 5 \\%$ return rate, and we are exploring expansion capabilities in 2023. We also are working with Reuse Seattle to reduce single-use plastic waste by encouraging customers to transition to reusable cups for our dispensed products, as part of a broader multistakeholder effort on foodservice packaging across the metro region.\nBecause packaging accounts for approximately $30 \\%$ of our carbon footprint, nearly all of our World Without Waste efforts align with our 2030 science-based climate target and net zero ambition. When we lightweight our packaging, incorporate more recycled and bio-based material, invest in local recycling programs and increase our use of reusable packaging, we can reduce both waste and our greenhouse gas (GHG) emissions.\nSince glass, aluminum and PET plastic are all recyclable materials, they all can play a role in a circular economy. Refillable packages, both glass and plastic, can have the lowest carbon footprints of our packaging options. PET packages with recycled content can have a lower carbon footprint than aluminum and glass, which require more energy to produce, recycle and transport.\n• In South Africa, we extended the rollout of refillable 2-liter and 1.5-liter PET plastic bottles.\n• In Sri Lanka, we responded to the ongoing economic crisis by introducing the Large Returnable Glass Bottle (LRGB), nicknamed the “Big Buddy Pack,” to provide an affordable and returnable, mealtime-focused option for families. Coca-Cola, Fanta and Sprite are offered in the 750-ml bottles, which feature paper labels and aluminum caps.\n• In Scotland, Costa Limited (“Costa”) carried out a 14-store pilot of an on-the-go reusable cup scheme, which invited consumers to rent a cup by scanning a QR code before enjoying their drink and then returning the cup for it to be washed and reused. The effort supports Costa’s global goal for $2 5 \\%$ of its drinks to be served in reusable or refillable packaging by 2030.\nOur Design goals establish a foundation for enabling a circular economy for our packaging materials. Creating a circular economy requires designing out waste by using, collecting and reusing recycled materials, which have inherent value. It also means embracing refillable and fountain/dispensed packaging solutions.\nworldwide sold in refillable/returnable glass or plastic bottles or in fountain dispensers with reusable packaging by 2030.", "chunk_word_count": 506, "section_path": "Refresh the World. Make a Difference. > 3M METRIC TONS BETWEEN 2020 AND 2025 > Our Packaging Portfolio", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 37, "page_start": 37, "page_end": 37 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 31, "chunk_text": "# Refresh the World. Make a Difference.\n## 3M METRIC TONS BETWEEN 2020 AND 2025\n### Our Packaging Portfolio\n• In Sweden, we are collaborating with Reitan Convenience on a reusable packaging pilot in Stockholm. Shoppers who visit the sustainabilityfocused PDX store can choose from more than 60 fountain beverages, many of which are not available in bottles or cans. Shoppers are encouraged to bring their own refillable vessels or purchase a reusable stainless steel tumbler.\nWe continue to test and scale returnable glass bottle (RGB) and reusable PET pilot programs, including:\nWe tailor our refillable packaging approach by market, based on local conditions. In 2023, we launched an end-to-end refillables operations guide to help local teams implement more effective strategies and plans.\n• In Latin America, the “Let’s Be Different” campaign kicked off on World Environment Day 2022, inviting consumers to trade any recyclable PET bottle for a refillable bottle of Coca-Cola Zero Sugar. In Brazil, returnable, refillable PET bottles of Coca-Cola, Fanta and Sprite can be returned, cleaned and refilled up to 25 times. The package gives shoppers an affordable option and drives repurchase rates.\n## REFILLABLE PACKAGING\n• In Hong Kong, China, we have installed almost 100 Bonaqua Water Stations along hiking trails and in shopping malls and transportation hubs. Consumers pay a small fee to fill their own bottles with hot or cold Bonaqua water.\nReusable packaging can reduce single-use packaging waste. Expanding refillable packaging options helps ensure high levels of collection of beverage containers. In 2022, we were proud to announce an industry-leading goal to have at least $2 5 \\%$ of our beverage volume\n### Building a Global rPET Supply Chain", "chunk_word_count": 277, "section_path": "Refresh the World. Make a Difference. > 3M METRIC TONS BETWEEN 2020 AND 2025 > Our Packaging Portfolio", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 37, "page_start": 37, "page_end": 38 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 32, "chunk_text": "# Refresh the World. Make a Difference.\n## VIRGIN PET REDUCTION\nbeverages now include Bahrain, Bangladesh, Indonesia, Kuwait, Nigeria, Oman, Qatar, Saudi Arabia, South Korea, Thailand and Yemen.\nThrough joint ventures and long-term supplier agreements, our system is making strategic investments to boost recycling capacity, unlock new supplies of recycled plastic and scale new technologies.\nIn 2021, we set a goal to reduce our use of virgin plastic derived from nonrenewable sources by avoiding a cumulative 3 million metric tons by 2025 compared to 2020. We are pursuing this goal, which represents about $20 \\%$ of our virgin plastic use, through more than 150 lightweighting projects and advancements on use of recycled and renewable materials.\nCoca-Cola Beverages Philippines Inc. and Indorama Ventures—the world’s largest recycled PET flake producer—began operations at the new PETValue recycling facility. The country’s first bottle-to-bottle production site will process 2 billion clear PET plastic bottles into new bottles for Coca-Cola brands. Indorama Ventures will open a similar facility in Indonesia in 2023.\nIn 2022, we avoided around half a million metric tons of virgin plastic usage through these efforts with an incremental avoidance of over 50,000 metric tons since last year. However, growth of plastic packaging has outpaced efforts on lightweighting and use of recycled content, so that we have not reduced our use of virgin plastic overall.\nAround the world, many of our biggest brands are taking major steps to support a circular economy for plastic packaging. More than 40 markets currently offer at least one brand in $100 \\%$ rPET packaging. A few highlights from 2022 include:\n• In the United States and Canada, we recently began offering the majority of DASANI bottles— from 20-oz. and 1.5-liter singles to 10-oz. and 12-oz. multipacks—in $100 \\%$ rPET plastic. The shift supports the DASANI brand's pledge to remove the equivalent of 2 billion virgin plastic bottles from production by 2027 compared to 2021 levels. The announcement followed the launch of $100 \\%$ rPET bottles in New York, California and Texas, which also included Coca-Cola 20- oz. bottles. Bold, on-pack labels drive consumer awareness with $\" 1 0 0 \\%$ Recycled Bottle” and “Recycle Me Again” calls to action.", "chunk_word_count": 362, "section_path": "Refresh the World. Make a Difference. > VIRGIN PET REDUCTION", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 38, "page_start": 38, "page_end": 38 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 33, "chunk_text": "# Refresh the World. Make a Difference.\n## VIRGIN PET REDUCTION\n### MOVING TOWARD 100% rPET1\nDemand for recycled PET plastic for food-grade applications currently exceeds supply, so we need to help build a sustainable pipeline of high-quality material. We work with communities to boost PET recycling and collection; collaborate with recycling partners; and secure rPET to help ensure material for our bottles is used again and again.\nIn recent years, system partners and suppliers have announced significant investments, both individually and through joint ventures, to boost the global rPET infrastructure. Many investments are coming online in the next two years and will change the rPET landscape, particularly in Asia.\n• Eight markets in Europe (Austria, Belgium, Iceland, Luxembourg, Netherlands, Norway, Sweden, Switzerland) offer their entire locally produced portfolios in $100 \\%$ rPET.\nWe continue to work with industry peers to advocate for government regulations permitting the use of rPET in food and beverage packaging. Notable countries with food-grade recycled plastics acceptance standards for use in\n• In Qatar, Coca-Cola, Sprite, Fanta and Arwa water were sold in $100 \\%$ rPET bottles in FIFA World Cup 2022 stadiums and fan zones. This marked both the FIFA World Cup debut of the sustainable packaging format and the Middle East’s first $100 \\%$ rPET rollout. Dedicated recycling bins and on-site communication ensured proper collection of all bottles to be recycled and converted locally back into new ones, closing the loop and leaving behind a green legacy.\n• In Vietnam, we launched $100 \\%$ rPET Coca-Cola bottles, which is projected to avoid 2,000 metric tons of virgin plastic usage annually.\n• In Japan, we achieved our World Without Waste goal of $50 \\%$ recycled material use in Q1 2022. Four brands are now offered in $100 \\%$ recycled PET and supported by an educational marketing campaign.\nWe continue to deliver breakthrough technologies to lightweight our plastic packaging:", "chunk_word_count": 314, "section_path": "Refresh the World. Make a Difference. > VIRGIN PET REDUCTION > MOVING TOWARD 100% rPET1", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 38, "page_start": 38, "page_end": 39 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 34, "chunk_text": "# Refresh the World. Make a Difference.\n## SPRITE TRANSITIONS FROM GREEN TO CLEAR PET\nWe continued to transition Sprite plastic bottles from green to clear PET to help increase the efficiency of recycling systems. The move, which the brand has completed or is in process in over 100 countries, improves the efficiency of recycling systems and boosts availability of food-grade rPET. As one example, Coca-Cola North America’s entire green plastic portfolio—including packaging for Sprite, Fresca, Seagram’s and Mello Yello— made the transition to clear PET in 2022.\n66\nAs The Coca-Cola Company’s second-largest brand, Sprite is proud to demonstrate its commitment to circularity through our packaging by ensuring every bottle we make can be recycled and made into a new one. We can only achieve our World Without Waste goals by creating closed-loop packaging streams, and that starts with clear PET.”\nOur technology is being licensed for a $30 \\%$ plant-based plastic bottle to a company building a commercial facility in Germany, which is scheduled to deliver material in 2024. A $100 \\%$ plant-based plastic bottle prototype has been developed with plans to explore scalability of a $100 \\%$ biobased PET resin and bottle (bottle, not cap and label). Biobased plastic packaging can have a lower carbon footprint than petroleumbased packaging.\nLabel-less bottles are now available across a range of brands in Japan, South Korea and China. Laser engraving technology used directly on the bottle helps improve recyclability and reduce carbon emissions.\nBottles with tethered caps, which enable bottles and caps to be collected together for recycling, are being piloted for our entire portfolio in Germany, Bulgaria and Italy. Additionally, a new lightweighted bottle neck finish in Europe will save an estimated 9,100 tons of plastic per year by 2024.\nThe KeelClip®1 packaging solution made from recyclable cardboard replaces plastic rings for multi-packs. Following a successful rollout across Europe, the first-of-its-kind solution is being piloted in select U.S. markets.\nSHRENIK DASANI Global Senior Director, Sprite Trademark", "chunk_word_count": 327, "section_path": "Refresh the World. Make a Difference. > SPRITE TRANSITIONS FROM GREEN TO CLEAR PET", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 35, "chunk_text": "# Refresh the World. Make a Difference.\n## WORLD WITHOUT WASTE: COLLECT\nOur Packaging Types\n[IMAGE CAPTION] Material Mix Collection Rates by Packaging Type1\n61%\nof the equivalent bottles and cans we introduced into the market in 2022 were collected and refilled or collected for recycling.1\nWe work with partners across business, government and civil society to create or support closed-loop systems that ensure our packages are collected and recycled or reused. Delivering a circular economy will require significant and urgent improvement in waste management and recycling systems around the world. Preserving the inherent economic value of our packaging—and ensuring circularity— requires robust collection and recycling systems across packaging types.\nIn emerging markets, we advocate for government regulations permitting the use of rPET in food and beverage packaging, and we seek ways to empower the informal waste collection sector in the circular economy. In developed markets, we are working with industry peers to build collection infrastructures—including our more than 40 years of experience operating $^ { 4 0 + }$ local Deposit Return Systems (DRS). Countries with a well-designed DRS scheme, like Germany, can achieve high levels of collection (approximately $9 7 \\%$ collection for non-refillable packages in Germany).\nCollection challenges vary, as every country has unique governments, regulatory environments and consumer behaviors. Though some countries have high recycling rates across packaging types, in many regions the recycling rate for PET bottles lags that of some other materials. While we continue to focus on national collection rates, in 2022, with input from key external stakeholders, we updated our collection tracking guidance to account for material collected through systemled efforts. Company and bottler teams in markets with limited recycling infrastructures (including parts of Latin America, Africa and Asia) are financing system-led collection initiatives to supplement national systems and are launching our own tracking systems. In 2023, we will start incorporating Coca-Cola system-led collection data into our aggregate numbers.\nWe advocate for well-designed Extended Producer Responsibility (EPR) schemes, in which companies that produce packaging fund collection, sorting and recycling with the goal of increasing recycling rates. Recognizing that industry cannot achieve a circular economy on its own, we are part of a Consumer Goods Forum (CGF) coalition of 40 companies supporting the development of EPR programs in collaboration with governments. The coalition has published guiding principles and key design parameters for optimal EPR programs.", "chunk_word_count": 392, "section_path": "Refresh the World. Make a Difference. > WORLD WITHOUT WASTE: COLLECT", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 40, "page_start": 40, "page_end": 41 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 36, "chunk_text": "# Refresh the World. Make a Difference.\n## WORLD WITHOUT WASTE: COLLECT\n### Additional 2022 highlights:\n• In the Philippines, we partnered with the Technical Education and Skills Development Authority to pilot a certified skills training program for workers in the informal waste collection sector. These workers have access to training, tools and equipment for efficient waste collection and connections to materials recovery facilities (MRF) that buy the waste that is collected. We also are creating more than 2,000 collection hubs in sari-sari (convenience) stores and other retail outlets where community members can drop off used, clear PET bottles in return for incentives. Participating retailers earn income from selling collected PET bottles to waste management companies and recyclers. Similar programs are in place in Malaysia, Myanmar and Thailand.\nIn the United States, we’re making progress one community at a time, through our industry initiative Every Bottle Back. As of November 2022, the initiative has launched over 25 projects which are projected to collect and capture nearly 700 million pounds of PET over ten years.\nWe also work with peers and partners to advocate for legislation that enables a circular economy, like a recent EPR law passed in Colorado and minimum recycled content laws passed in California, Washington and New Jersey. However, collection rates in the United States trail those of many other countries, and we know there is much more work to do.\n• In Brazil, SustentaPET collection centers take in more than 700,000 PET bottles a day to produce recycled resin that ultimately becomes new packaging. In its first three years, the program has recycled more than 83,000 metric tons of PET—and will expand to additional states in 2023.\n• In Egypt, we partner with BariQ, the largest bottle-to-bottle recycling plant in the Middle East, to recycle 14,000 metric tons of plastic waste annually to food-grade product compatible with the European Food Safety Authority (EFSA), Food and Drug Administration (FDA) and Egyptian Organization for Standardization (EOS).\nEnsuring respect for the human rights of vulnerable workers in the informal waste sector is an important pillar of our Collection efforts. Over the last two years, we have partnered with industry peers and Tearfund, an NGO advocating for improved livelihoods for informal waste sector workers, on the Fair Circularity Initiative to develop human rights principles and guidelines for engaging with the informal waste collection industry. For more information, see the Human Rights section.\n• In India, we’re teaming with bicycle grocery delivery service Zepto for the “PET Return and Recycle” initiative. Using the Zepto mobile app, consumers can return up to four empty PET bottles (across any brand) to be collected by Zepto riders during home delivery trips. Following a successful pilot in Mumbai, the program will expand to additional cities.\n## WORLD WITHOUT WASTE: PARTNER", "chunk_word_count": 464, "section_path": "Refresh the World. Make a Difference. > WORLD WITHOUT WASTE: COLLECT > Additional 2022 highlights:", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 37, "chunk_text": "# Refresh the World. Make a Difference.\n## WHAT’S NEXT\nTackling the global plastic waste crisis requires cross-sector collaboration and alignment on common principles and targets. We work with a range of stakeholders at a global, regional and local level. This includes partnering with governments and community organizations to strengthen recycling infrastructures and boost collection rates; collaborating with customers, peers and industry associations to shape public policy that supports a circular economy; and teaming up with suppliers, startups and R&D partners to fuel sustainable packaging innovation.\nWe have been working with the Foundation on plastics across a range of projects and initiatives, including as a signatory to their Global Commitment in collaboration with the UN Environment Programme. In the past couple of years, we increased our ambition and set virgin plastics reduction and reusable packaging targets.\nfrom the last cycle (2021–2022) with ReciVeci (Ecuador) and RecyclePoints (Nigeria) resulted in ongoing partnerships that are helping to further our World Without Waste plans.\nIn Morocco, we are collaborating with WWF on the Plastic Smart Cities project, which brings together cities and tourism destinations to fight plastic pollution. The partnership in Tangier aims to reduce leakage of plastic waste into nature by $30 \\%$ . In 2021 and 2022, the partners and the local waste management department have collected more than 3,900 metric tons of plastic waste.\nWe now have five years of experience implementing the World Without Waste program. With targets for both 2025 and 2030, in 2023 we are taking stock of our current status across markets to ensure our local teams have the plans and investments in place to continue to make progress. Our experience in a handful of markets that are already achieving high performance against specific goals, or the full suite of targets, indicates that these goals can be met. However, we are not currently on track to meet the World Without Waste targets for 2030. Package design and the use of recycled materials are areas that are ultimately in our control, but costs, quality, technology and consumer preferences are dynamic factors that affect our ability and timelines for implementation. The key challenge for us is collection for recycling of beverage packaging, which is the key step to ensure a functioning circular economy.\nIn the Philippines, we are partnering with Save Philippine Seas on a campaign to find and scale community-based plastic waste solutions. In 2022, five startups—Barrio Studios, Sagip Kalikasan, KAKASIE Eco-Park, #RefillNotLandfill and Alon and Araw—received grants from The Coca-Cola Foundation to advance their collection, recycling and education projects.", "chunk_word_count": 423, "section_path": "Refresh the World. Make a Difference. > WHAT’S NEXT", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 38, "chunk_text": "# Refresh the World. Make a Difference.\n## WHAT’S NEXT\nIn September 2022, we also joined the Business Coalition for a Global Plastics Treaty convened by the Ellen MacArthur Foundation and WWF, and we have an active role as a Co-Chair of the Coalition’s Policy Working Group. Over 80 organizations, including businesses from across the plastics value chain, financial institutions and NGOs, are supporting the development of an ambitious, effective and legally binding UN treaty to end plastic pollution—which will set common goals, rules and obligations for member states, and in turn, for businesses. Through a shared vision we believe that a legally binding treaty must set the right enabling conditions to successfully scale a circular economy for plastic and end plastic pollution, and in doing so, will level the playing field across countries and industries. This will help ensure all plastics users participate in the funding of collection systems and will set consistent targets for areas such as recyclability, recycled content and collection.\nWe look forward to partnering with more likeminded organizations and communities to make the vision of a World Without Waste a reality.\nIn 2022, we enhanced our partnership with the Ellen MacArthur Foundation by becoming a Strategic Partner alongside some of the world’s largest and most influential organizations, with transformative potential to demonstrate what’s possible in the transition to a circular economy. As a Strategic Partner we support the Foundation’s mission to develop and promote a circular economy beyond our work on plastics and deepen our engagement globally, regionally and locally.\n### Collaborating for Impact\nIn 2022, we continued to strengthen existing partnerships and establish new ones to align strategically with our World Without Waste priorities and collectively drive progress toward a circular economy. Here are a few examples:\nWe will continue to invest in innovation for the small percentage of our packaging that currently has recycling challenges, including juice pouches, opaque packaging currently used for dairy beverages, and cartons. And, we will invest in new recycling technologies for PET plastic and other packaging materials.\n## DESIGN PARTNERS", "chunk_word_count": 342, "section_path": "Refresh the World. Make a Difference. > WHAT’S NEXT > Collaborating for Impact", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 39, "chunk_text": "# Refresh the World. Make a Difference.\n## COLLECT PARTNERS\n66\nAB InBev $\\mathrm { 1 0 0 + }$ Accelerator\nA&W\nWe have no time to waste. The need for global coordination to tackle the plastic pollution crisis has never been more urgent. A Business Coalition for a Global Plastics Treaty will push strongly for a framework that leaves the business-asusual approach at the door and ushers us into a new era where ending plastic pollution is finally within reach.”\nWe see a significant opportunity to work more proactively with global and regional customers, many of which have announced their own sustainable packaging goals that can only be achieved in collaboration with key suppliers. Looking ahead, we will build on our longstanding relationships to make collective progress.\nANZPAC Plastics Pact\nBanQu\nBenioff Ocean Institute\nBurger King® and Loop™\nWe continue to play an active role in the AB InBev 100+ Accelerator program, a global open innovation program committed to crowdsourcing and piloting sustainability-focused startups and solutions. The program’s 2022 cohort is supporting 46 startups with funding, training, mentoring and other hands-on support to execute pilot projects in a partner company’s supply chain. Within the Coca-Cola system, we are pursuing six pilot projects, building on the five pilots from last year. We have focused our investments in concepts that support a circular economy, water and climate. And while we are early in the process, we are seeing promise. Pilot projects\nCoca-Cola Europacific Partners & Pact Group, Cleanaway and Asahi Beverages\nCircular Solutions Advisors\nCirculate Capital\nChangchun Meihe Science & Technology\nGlobal Plastic Action Partnership & World Economic Forum GPAP\nTesco and Loop™\n## ERIN SIMON\nUPM\nIndorama Ventures\nVice President and Head of Plastic Waste and Business, WWF\nVirent\nPETCO\nProject RECAPP\nSolar Coca-Cola\nThe Ocean Cleanup™\n### Climate\n7% DECLINE IN IN ABSOLUTE EMISSIONS SINCE 2015 TOWARD A 25% SCIENCE-BASED REDUCTION TARGET BY 2030\nTaking well-informed, decisive action to help address climate change is a priority for our company. Climate change poses risks to our business and our stakeholders. By implementing an interconnected approach across our priority sustainability issues, we are reducing the Coca-Cola system’s greenhouse gas (GHG) emissions and building resilience in our business, value chain and local communities.\n## 21% SYSTEM-WIDE RENEWABLE ELECTRICITY USAGE IN 2022\n## 378 OF OUR SUPPLIERS (OUT OF 495 REQUESTED) PROVIDED CLIMATE DATA TO CDP IN 2022 (A 12% INCREASE FROM 2021)\nSECTION SCOPE: In this section our climate emissions reduction work refers to actions by the company as well as our owned and independent bottling partners and our independent suppliers and partners.\n## 2030 SCIENCE-BASED TARGET\nWe are working to reduce our carbon footprint in line with science to avoid the worst impacts of climate change.\n### Our Carbon Footprint and the Actions We Are Taking\n0\nWe do this by analyzing and prioritizing the sources of GHG emissions across our value chain and by partnering with stakeholders to drive down those emissions.\n## PACKAGING 30–35%\n## INGREDIENTS 10–15%\n## MANUFACTURING & OTHER FACILITIES 10–15%\n## DISTRIBUTION 5–10%", "chunk_word_count": 507, "section_path": "Refresh the World. Make a Difference. > COLLECT PARTNERS", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 42, "page_start": 42, "page_end": 44 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 40, "chunk_text": "# Refresh the World. Make a Difference.\n## REFRIGERATION 30–35%\nAs of 2022, we reduced our emissions across Scopes 1, 2 and 3 by $7 \\% , 1$ making progress toward our science-based reduction target of $2 5 \\%$ by 2030 against a 2015 baseline1 . Our ambition is to achieve net zero emissions by 2050. Several of our bottling partners have announced their own science-based targets and net zero pledges to drive climate action across the global Coca-Cola system.\nWe work with our agricultural suppliers to increase energy efficiency and realize carbon sequestration benefits from Nature-Based Solutions (NBS). We also work with leading sustainable sourcing schemes to quantify the impact of sustainable sourcing on emissions reduction. See Sustainable Agriculture for more.\nWe’re working to increase fuel efficiency and the use of hybrid and electric vehicles across the system. Coca-Cola Europacific Partners (CCEP) increased their use of hybrid and electric cars and vans in Europe from $12 \\%$ in 2021 to $20 \\%$ in 2022 and introduced 30 electric trucks to make last mile deliveries to customers in Belgium, covering approximately $40 \\%$ of the country’s local delivery routes.\nA circular economy helps reduce GHG emissions. We are incorporating more recycled material, lightweighting our packaging, investing in recycling infrastructure and using more reusable packaging. In 2023, we are building our capabilities in life cycle assessment (LCA) to further drive synergies between our work on packaging and climate.\nWe are continuing to replace older equipment with hydrofluorocarbon (HFC)-free and more energy-efficient coolers. In 2022, $88 \\%$ of all new coolers placed were HFC-free. This is an increase from $61 \\%$ of coolers placed in 2016.\nWe provide system guidance to improve energy efficiency and increase the generation and purchase of renewable energy. In 2022, there has been new renewable energy generation at system bottling plants in Europe, Latin America, the Philippines, India and the Middle East.\nIn 2022, our scope 1 emissions were 4.4 million metric tons, scope 2 emissions were 3.5 million metric tons2 and scope 3 emissions were 57.0 million metric tons.\n## CLIMATE CHANGE GOVERNANCE\n### The Coca-Cola System’s Emission Percentages by Scope in 2022\n### Networks Support Our Net Zero Journey\nThe Corporate Governance and Sustainability Committee of our Board of Directors oversees climate-related issues. The Committee assists our Board in overseeing the company’s environmental, social, legislative, regulatory and public policy matters, including progress against our science-based emissions reduction target. The committee reports regularly to the full Board on these and other matters.\nWe are part of a number of business networks that are supporting our journey to net zero. As a member of the WWF Climate Business Network, we share best practices to drive collective ambition and scale action together. Participation in the Clean Energy Buyers Association (CEBA) allows us to help deploy market and policy solutions toward a carbon-free energy system. Membership in Ceres’ Company Network has helped to identify opportunities to drive further progress toward net zero emissions.\n## SCOPE 2 INDIRECT EMISSIONS\n## SCOPE 1 DIRECT EMISSIONS", "chunk_word_count": 504, "section_path": "Refresh the World. Make a Difference. > REFRIGERATION 30–35%", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 44, "page_start": 44, "page_end": 44 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 41, "chunk_text": "# Refresh the World. Make a Difference.\n## UPSTREAM AND DOWNSTREAM SOURCES\n7%\n5%\n88%\nTo learn more about our governance structure, see the Governance section. For more on climaterelated governance, see our CDP 2022 Climate Change response, Section C1.\nDownstream transportation and distribution\nPurchased goods and services\nFossil fuels\nElectricity\nFleet vehicles\nHeat and steam\nBusiness travel\nProcessing of sold products\n### Coca-Cola Europacific Partners Signs Landmark Renewable Electricity Agreement\nThe involvement of our bottling partners and suppliers is essential to achieving our sciencebased target to reduce absolute scope 1, 2 and 3 GHG emissions by $2 5 \\%$ by 2030. The following are examples of how we are working on climate initiatives with partners across our value chain.\n## BOTTLING PARTNERS SET SCIENCE-BASED EMISSIONS TARGETS\n66\nCoca-Cola Europacific Partners (CCEP) in Australia signed an eight-year agreement with Alinta Energy, which includes large-scale generation certificates and 13,000 MWh per year of renewable electricity supplied from the Yandin Wind Farm. The long-term agreement started in January 2023 and will help CCEP move closer to its goal of using $100 \\%$ renewable electricity across all of its markets by 2030.\nThanks to The Coca-Cola Company, in April 2022 we had the great opportunity to join the Supplier LoCT initiative. This program helped us to improve the way we calculate our Scope 1 & 2 emissions and to calculate our Scope 3 emissions for the first time. Last November, we committed to setting a science-based emissions target.”\nGiven the size of our network of bottling partners, they are critically important in making progress toward our climate ambitions. Our bottling partners have a major influence on emissions reductions based on what they buy, make and deliver for our shared customers and consumers.\n## INCREASING RENEWABLE ENERGY (ELECTRICITY) IN MANUFACTURING\nNICOLAS LOOTENS \nGroup Sustainability Manager, \nVetropak\nOne critical strategy for reducing emissions in our system is the increased use of renewable energy in our manufacturing processes. Renewable electricity usage, which was thirdparty assured for the first time in 2021, increased from $12 \\%$ in 2021 to $21 \\%$ in 2022.\nIn September 2022, Arca Continental committed to setting a science-based target. This adds to the growing list of our bottlers with approved emissions reductions goals through the Science-Based Targets initiative (SBTi). This list includes Coca-Cola Hellenic Bottling Company (CCHBC), Coca-Cola Europacific Partners (CCEP), AB Inbev, Swire Coca-Cola Limited and Coca-Cola FEMSA.", "chunk_word_count": 397, "section_path": "Refresh the World. Make a Difference. > UPSTREAM AND DOWNSTREAM SOURCES", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 44, "page_start": 44, "page_end": 45 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 42, "chunk_text": "# Refresh the World. Make a Difference.\n## MANAGING CLIMATE RISK\nOur Risk Steering Committee oversees regular system-wide risk assessments. We integrate climate risk planning into this cross-functional and cross-company Enterprise Risk Management (ERM) process. We regularly evaluate commodityspecific risks and resilience associated with climate impacts on water and our supply chain.\nIn total, more than 160 of our suppliers have set or committed to setting SBTi-approved emissions targets.\nTo build knowledge across our system and increase the generation, procurement and accurate reporting of renewable energy, we published a Renewable Energy Implementation Guidebook in March 2022. This guidebook provides a step-by-step process for associates across the system to implement on-site solar photovoltaic and solar hot water and steam systems, on-site and off-site renewable energy power purchase agreements (PPAs), coupled with energy attribute certificates to align with GHG Protocol Scope 2 quality criteria.\nWe will be working to grow this list in 2023.\n### Reducing Emissions from Coolers\nCoolers have long been a key opportunity because approximately one-third of our emissions comes from cold-drink equipment and dispensing. In early 2023, building on analysis we conducted in 2022, we published internal guidance for coolers used across our value chain. The guidance sets specific energy usage limits, which will require increasing energy efficiency between now and 2030 and help drive the replacement of older, less efficient coolers.\nRisks that could materially affect our business, financial condition and results of operations are disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022. This includes risks related to the effects of climate change and legal or regulatory initiatives to address climate change. Our management team works to mitigate these risks through, among other things, business continuity planning, setting targets that drive efficiency and making investments to improve our performance and increase resilience. Ultimately, the Corporate Governance and Sustainability Committee of our Board of Directors oversees climate-related risks.", "chunk_word_count": 318, "section_path": "Refresh the World. Make a Difference. > MANAGING CLIMATE RISK", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 45, "page_start": 45, "page_end": 45 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 43, "chunk_text": "# Refresh the World. Make a Difference.\n## ENGAGING WITH SUPPLIERS TO TAKE ACTIONON CLIMATE\nWe continue to find new ways to collaborate and support our suppliers to collectively reduce emissions.\nIn 2022, we joined the Supplier Leadership on Climate Transition (Supplier LoCT) initiative, led by Guidehouse along with 18 other companies to mobilize collective climate action by providing suppliers with resources, tools and knowledge to accelerate their decarbonization. As of the end of 2022, there were 94 suppliers to the Coca-Cola system participating in the initiative. The company is directly sponsoring 56 of these suppliers. The program is showing signs of success—10 suppliers that we sponsored, who successfully completed the program, have since set or committed to setting their own SBTiapproved emissions targets.\nIn addition to the guidebook, we launched a future-facing initiative called the Renewable Energy Project Pipeline in 2022, where we work closely with bottling partners to increase the number of renewable energy projects throughout our system. Approximately 20 bottling partners and 13 concentrate plants have developed 2023–2025 renewable energy plans. As the number and scope of these projects expands, we will look for opportunities to collaborate and share best practices.\nWe are also installing more “intelligent connected” coolers that can transmit data such as product throughput, maintenance status, temperature and energy use, which has operational benefits in addition to helping reduce emissions.\nIn 2022, $8 8 \\%$ of all new coolers placed were HFC-free. This is an increase from $61 \\%$ of coolers placed in 2016.\n## WHAT’S NEXT?\n## IMPROVING DATA SCOPE AND ACCURACY\n### Accounting for Land Use Emissions\nGathering complete and accurate data is critical to identifying a path to achieving our sciencebased target. We are continuously improving the scope and detail of our data collection to ensure all significant sources of emissions across our value chain are included in our inventory. We are updating our 2015 baseline data due to recent acquisitions. Improving our data helps us prioritize projects and programs with the greatest impact, including more detail on renewable energy usage and more data from suppliers.\nIn line with the launch of the SBTi’s Forest, Land and Agriculture (FLAG) requirements, we are working to update our current science-based target in line with this methodology and a more ambitious trajectory. This new target would consider emissions from land use change in our supply chain as part of our overall GHG footprint and would consider carbon sequestration from land-based projects we implement in our supply chain. While we already work closely with suppliers to engage on water and sustainable agriculture, accounting for land use emissions would require an even closer partnership with our agricultural suppliers. As we incorporate more work across the agricultural supply chain, this would also help us meet evolving climate risk and data disclosure requirements.\n### Coca-Cola Ballina Plant Recognized by World Economic Forum", "chunk_word_count": 474, "section_path": "Refresh the World. Make a Difference. > IMPROVING DATA SCOPE AND ACCURACY > Accounting for Land Use Emissions", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 45, "page_start": 45, "page_end": 46 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 44, "chunk_text": "# Refresh the World. Make a Difference.\n## IMPROVING DATA SCOPE AND ACCURACY\n### Validate Renewable Energy Claims\nOne area of focus has been to validate the accuracy and completeness of our renewable energy claims. We have done this through assuring our claims to the GHG Protocol. This work began in 2021 and continued through 2022.\nThe World Economic Forum’s Global Lighthouse Network recognized The Coca-Cola Company’s concentrate manufacturing facility in Ballina, Ireland, as a manufacturer showing leadership in applying Fourth Industrial Revolution technologies at scale to drive step-change financial, operational and sustainability improvements by transforming factories, value chains and business models. Investments in the facility’s IT infrastructure, advanced technologies and employee training has led to a $6 . 8 \\%$ increase in production in three years (2019–2022) and a $29 \\%$ energy reduction, which brought emissions back to 2011 levels. The Ballina team’s learnings are being shared globally.\nEven deeper in our supply chain, work is underway to map and understand how land, water use and farming practices in our major agricultural sourcing regions both generate emissions and have the potential to reduce emissions. Costa began its own work in 2022, launching a Climate Smart coffee project in partnership with the Rainforest Alliance. Phase 1 of the project has been to conduct a GHG feasibility study to better understand the carbon footprint of coffee farms from Costa’s key sourcing origins, including Colombia and Brazil. This study is being used to inform the design of scalable climate mitigation interventions.\n### Suppliers Disclose Data and Targets\nBecause approximately $85 \\%$ of our total carbon emissions come from goods and services we buy, it is essential to engage with suppliers to accurately capture our full scope 3 emissions and ensure our suppliers join our decarbonization journey. Each year, we encourage key suppliers to complete CDP’s Supply Chain Climate Change questionnaire, which provides useful data on GHG emissions in our supply chain and information on supplier targets and initiatives to reduce emissions. In 2022, 378 suppliers provided climate data to CDP out of 495 requested, a $12 \\%$ increase from 2021.\nAdditionally, we are working to improve data accuracy in partnership with several major suppliers across ingredients and packaging, starting with sugar and aluminum, in order to develop supplier-specific emissions factors for the commodities we procure. This allows us to better understand our supply chain, drive change and more accurately track emissions reductions of specific suppliers and commodities in key areas.\n### Sustainable Agriculture\nOur products and some of our packaging are made from a wide variety of agricultural ingredients which we source from around the world. Our goal is to sustainably source all our ingredients over time. We publicly report on our 12 global priority ingredients—such as sugar, corn, fruit, coffee, tea and soybeans. Sustainably sourcing our ingredients increases the resilience of our supply chain, helps to conserve nature and empowers producers and farm workers. In practice, we encourage and support our ingredient suppliers to drive continuous improvement in sustainable farming practices, based on our Principles for Sustainable Agriculture (PSA).\nIN 2022,\n## 64% OF OUR GLOBAL PRIORITY INGREDIENT VOLUMES\nWERE SUSTAINABLY SOURCED TO OUR LEADER STANDARD1 , IN LINE WITH OUR PRINCIPLES FOR SUSTAINABLE AGRICULTURE\n## PRINCIPLES FOR SUSTAINABLE AGRICULTURE", "chunk_word_count": 539, "section_path": "Refresh the World. Make a Difference. > IMPROVING DATA SCOPE AND ACCURACY > Validate Renewable Energy Claims", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 46, "page_start": 46, "page_end": 48 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 45, "chunk_text": "# Refresh the World. Make a Difference.\n## IMPROVING WATER MANAGEMENT TO GROW OUR INGREDIENTS\nThriving farmers and farming communities are critically important for our supply chain. Our ability to deliver quality products depends on having a sustainable and secure supply of agricultural ingredients.\nIrrigated agriculture remains the largest user of water globally, accounting for $70 \\%$ of water use worldwide,3 and has significant impacts on watershed health.\n### Based on the PSA framework, suppliers are designated as:\n[IMAGE CAPTION] 2022 Progress on Sustainable Sourcing2\n• LEADER: Supply volume is verified to company approved standards, with thirdparty assurance aligned with the PSA.1 \u0007MOVER: Supply volume is sourced from farms using other agricultural farming standards, effectively identifying and addressing key sustainability issues and advancing sustainable practices. IMPROVER: Supply volume is sourced from smallholder/small-scale producers participating in a support program to continuously improve their priority sustainability practices.\nAgriculture is also one of the sectors most impacted by water stress and drought.\nOur complex supply chain spans the globe and includes many kinds of suppliers, from multinational companies to smallholder farmers. Our Principles for Sustainable Agriculture (PSA) communicate our expectations for environmental, social and economic performance to our agricultural suppliers at the farm level.\nWater use within our agriculture supply chain accounts for the vast majority of the surface water and groundwater consumed in the production of our beverages. Therefore, we are working with our suppliers to help promote the long-term sustainability of water resources through the implementation of advanced water management practices at the farm level.\nThis partnership has guided us with a focus on the right solutions for young farmers in highly water-stressed regions of Türkiye.”\nThe PSA, introduced in 2021 to replace our Sustainable Agriculture Guiding Principles (SAGP), take a long-term perspective and reflect the most recent science, our total beverage portfolio, and our increasingly diverse supply chain. The PSA are designed to encourage continuous improvement in farming practices and lead to more ethical and sustainable sourcing.\nTANZER BILGEN Doktar Co-Founder and CEO\nIn addition, we are including our priority sourcing regions as part of our water replenishment programs. For example, in 2022, in partnership with Doktar, an agri-tech company, and with funding from The Coca-Cola Foundation, we launched a project in the regions of Bursa and Tekirdağ in Türkiye, which are priority sourcing regions for apples. The project aims to improve irrigation efficiency and agricultural practices on approximately 500 acres of land growing apples, peaches, nectarines and tomatoes, which are major water users. Sensors will be installed to monitor climate and soil moisture conditions and satellite data (Sentinel-2 and PlanetScope) will be used to calculate levels of evapotranspiration. All of this data will be combined to provide personalized irrigation programs for participating farmers and help to avoid excessive watering. Drip irrigation infrastructure will be built on selected sites, which helps to reduce water use, and artificial reservoirs will be constructed to capture and hold rainwater to be used for irrigation purposes.", "chunk_word_count": 492, "section_path": "Refresh the World. Make a Difference. > IMPROVING WATER MANAGEMENT TO GROW OUR INGREDIENTS > Based on the PSA framework, suppliers are designated as:", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 48, "page_start": 48, "page_end": 48 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 46, "chunk_text": "# Refresh the World. Make a Difference.\n## IMPROVING WATER MANAGEMENT TO GROW OUR INGREDIENTS\n### Our long-term ambition is two-fold:\ntomato growing as farmers shift from a floodbased irrigation system. We estimate the project will replenish approximately 500 million liters of water per year. The improvements in water-use efficiency are expected to help reduce costs and increase profitability for the farmers.\n• All of our agricultural-based suppliers will demonstrate continuous improvement and will be categorized by The Coca-Cola Company as either a Leader, Mover or Improver.\nThe PSA framework for evaluating the compliance and performance of our supply farm base recognizes the on-the-ground realities in sustainable farming practices across a diversity of supply chains, farm structures and risk contexts. Based on the PSA framework, suppliers are designated as either a Leader, Mover or Improver.\n• All of our global priority ingredient suppliers and their farm supply base will work toward achieving “Leader” status over time.\nOver the past year, we have worked closely with our suppliers to map our sourcing regions for our global priority ingredients. While we recognize that traceability is not always perfect, and our supplier base is dynamic, we have begun to understand sourcing regions for our global priority ingredients that are exposed to high or extremely high water stress. We are focusing on engagement with suppliers in these priority sourcing watersheds.\nWe are currently analyzing against the PSA framework the volume of the 12 global priority ingredients we procure. This mapping, which we aim to complete by the end of 2025, will help determine how we engage with suppliers to drive continuous improvement.\nIn 2022, $64 \\%$ of our global priority ingredient volumes were sustainably sourced to our Leader standard, in line with our PSA. We currently only report our Leader-level volumes publicly. We do not currently report Mover or Improver volumes publicly.\nIn 2022 and early 2023, we approached more than 45 suppliers that source ingredients from regions facing high or extremely high water stress, to gather data on their water management practices. In 2023, we plan to analyze this information to develop a baseline that will feed a supplier engagement strategy and collective action plan.\nIt is estimated that drip irrigation will lead to a $20 \\%$ increase in water efficiency for apple, peach and nectarine production and a $50 \\%$ increase for\n## SUPPORTING SMALLHOLDER FARMERS", "chunk_word_count": 394, "section_path": "Refresh the World. Make a Difference. > IMPROVING WATER MANAGEMENT TO GROW OUR INGREDIENTS > Our long-term ambition is two-fold:", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 48, "page_start": 48, "page_end": 48 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 47, "chunk_text": "# Refresh the World. Make a Difference.\n## SUPPORTING SUSTAINABLE AGRICULTURAL PRACTICES\nRegenerative agriculture is often referred to as a system of farming that focuses on positive outcomes that ensure the long-term viability of land to sustain production by working “with nature” rather than against it.\nSmallholder farmers play an essential role in our supply chain.\nTheir livelihoods can be particularly vulnerable because they lack the resources and scale of commercial farmers. We partner with a range of nonprofits, communities, industry organizations and other companies to support smallholder farmers in becoming more efficient and productive while improving water and climate footprints, managing soil health, maintaining crop protection, and respecting the human rights of their workforce and labor contractors. The “Improver” category of our PSA segmentation includes smallholders who may never be able to gain formal certification but who can, with appropriate support, contribute to more sustainable and regenerative agriculture while increasing their own incomes and resilience.\nA number of our completed and ongoing projects promote sustainable agriculture practices (e.g., use of cover crops) and contribute to positive outcomes, including reduced soil erosion and the buildup of organic matter.\n### Strengthening Sustainable Production of Oranges in Brazil\nWe will use key learnings from these projects to inform the design of future projects and incorporate regenerative agriculture principles and practices.\nWe are working with partners to support smallholder farmers in Brazil’s citrus sector, which is the largest in the world. Many smallholder farmers in Brazil have struggled, particularly during the COVID-19 pandemic. As part of an industry initiative named Fruto Resiliente, which began in 2019, we are partnering with Eckes-Granini, Cutrale, one of our citrus juice suppliers, Solidaridad and innocent drinks, with co-funding from The Coca-Cola Foundation, to support nearly 500 smallholder farmers. The project aims to improve sustainable agriculture practices in the production of oranges by providing training to smallholders, including female farmers, in topics such as water, soil management and labor standards. Technical materials and resources (including booklets, podcasts, and videos) are shared for free online, and smallholders benefit from field visits to a demonstration farm operated by Sylvio Moreira Citrus Research Center (CCSM) of the Agronomic Institute (IAC). With project support, this state experimental farm reached the FSA/SAI gold level1 . In 2022, the project directly assisted approximately 200 orange farms.\nAs a founding member of the SAI Platform’s Regenerative Agriculture Framework, we are supporting the development of an industry solution for measuring outcomes of regenerative agriculture practices at the farm level. We are also actively involved with SAI Platform’s work on the Farm Sustainability Assessment (FSA), a global verification framework and benchmark reference designed to accelerate sustainable agriculture. The latest version, FSA 3.0, includes a self-assessment questionnaire and a continuous improvement module that offers guidance for developing, implementing and monitoring performance improvement plans.\nFor details on how we address human rights risks in our agricultural supply chain, see the Human Rights section.", "chunk_word_count": 484, "section_path": "Refresh the World. Make a Difference. > SUPPORTING SUSTAINABLE AGRICULTURAL PRACTICES > Strengthening Sustainable Production of Oranges in Brazil", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 49, "page_start": 49, "page_end": 49 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 48, "chunk_text": "# Refresh the World. Make a Difference.\n## SUPPORTING SUSTAINABLE AGRICULTURAL PRACTICES\n### Applying Compost Drives Positive Outcomes for Egyptian Vegetable Farmers\nFor details on how we address deforestation risks in our agricultural supply chain, see our CDP Forests disclosure.\nAgriculture in Egypt faces many challenges, including water scarcity, water pollution, desertification and land degradation. Through a grant from The Coca-Cola Foundation to Global Water Challenge (GWC), United Nations Development Programme (UNDP) and the Egypt Network for Sustainable Development (ENID) implemented a project in the Qena governorate in Upper Egypt to demonstrate the value of using a greenhouse cultivation model to produce vegetables (e.g., eggplants and tomatoes), and the recycling and use of crop residues (materials left over after a crop harvest, e.g., stalks and stems) as compost on local farms. Local farmers and laborers received equipment and training in these improved farming techniques.\nThe application of compost increased the soil moisture holding capacity on farmland and reduced the need for synthetic fertilizer. It is estimated that composting reduced the use of water for irrigation by as much as 23%. This decreased farming costs and generated an additional revenue stream for farmers. The recycling of crop residues provided income and short-term job opportunities for local residents along with longer-term employment prospects for approximately 500 individuals, including almost 100 women, who received training in the production and application of compost. The project also reduced the need for burning, which is the traditional way of disposing of agricultural waste.\n### Improving Water Use in Agriculture\nThe Coca-Cola system and The Coca-Cola Foundation have a long history of supporting projects that help improve efficiency of water use in irrigation, promote advanced water management, and drive improvement in sustainable farming practices. Below is a snapshot of some of our projects.\n## NORTH AMERICA\n## LATIN AMERICA\n## EURASIA & MIDDLE EAST\n## INDIA & SOUTHWEST ASIA\n## EUROPE\n## AFRICA\nUSA/Arizona, Colorado, Nebraska, Florida, Georgia: Farm irrigation efficiency (alfalfa, corn, peanuts, cotton, pecans)\nBrazil/Sao Paolo: Improved agricultural practices (oranges)\nSpain/Sevilla: Irrigation efficiency (oranges)\nEgypt/Qena: Irrigation efficiency (banana)\nTürkiye/Konya: Conservation agriculture (wheat, barley, rye, oats, corn)\nBangladesh: Irrigation efficiency (rice, mango)\nHonduras/San Pedro Sula: Agroforestry and forest protection (fruits)\nIndia/Uttar Pradesh, Karnataka Maharashtra: Yield improvement and water use efficiency (sugar cane)\nUK/East Anglia: Water quality improvement (sugar beet)\nEgypt/Qena: Hydroponics (vegetables, quinoa)\nTürkiye/Sanliurfa, Bursa: Improved irrigation (cotton, apple, pear, peach, nectarine)\nUSA/Montana: Water distribution system improvement (alfalfa, barley, beet)\nSpain/Huelva, Valencia: Irrigation efficiency (strawberries, oranges)\nKenya/Turkana: Improved irrigation (many crops)\nPanama/Colon: Agroforestry and forest protection (coffee, plantain)\nIndia/12 states: Yield improvement and water use efficiency (many fruits)\nKyrgyzstan/Naryn: Improved irrigation (wheat, barley, potatoes)\nItaly/Sicily: Irrigation efficiency (citrus fruits)\nMorocco/Tata, Demnate, Nicer, Assa, Ourika Valley: Irrigation efficiency (date palm, fruits, nuts, medicinal and aromatic plants)\nUSA/Indiana, Michigan, Iowa: Water retention and quality improvement (corn, soybean)\nParaguay/Canindeyú: Sustainable agricultural practices (black oats, perennial crops)\nUzbekistan/Navoy: Water-saving technologies (cotton, wheat)\nUSA/California: Groundwater recharge basins (fruits, nuts)\nSouth Africa/Eastern Cape: Sustainable agriculture (rosemary, lavandin, livestock)", "chunk_word_count": 496, "section_path": "Refresh the World. Make a Difference. > SUPPORTING SUSTAINABLE AGRICULTURAL PRACTICES > Applying Compost Drives Positive Outcomes for Egyptian Vegetable Farmers", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 49, "chunk_text": "# Refresh the World. Make a Difference.\n## GREATER CHINA & MONGOLIA\nGaza: Greywater reuse for irrigation (fruits, alfalfa)\nUSA/Illinois, Iowa, Minnesota: Treatment wetland (corn, soybean)\nChina/Sichuan, Guangxi, Tarim Basin: Irrigation efficiency (tea, pear, sugarcane, cotton, wheat)\nKazakhstan/Kyzylorda, South Kazakhstan: Water-saving technology (many crops)\nChina/Jilin: Irrigation efficiency (corn)\nKazakhstan/Kyzylorda, Karoy, Eskeldi, Jambyl: Improved irrigation (many crops)\n### Demonstrating Sustainable Sugarcane Production\nPakistan: Wastewater treatment and reuse for irrigation (sugarcane, wheat, cotton)\n## JAPAN & SOUTH KOREA\nIn partnership with Biofábrica Siglo XXI, an agro-biotechnological company, and Unión Nacional de Cañeros, A.C.–CNPR, one of the most important canegrower organizations in Mexico, we developed a project in 2021–2022 in Huasteca Potosina and the state of Morelos in Mexico to demonstrate the positive outcomes of regenerative agriculture practices in the production of sugarcane. Farming practices promoted include the use of biofertilizers—made from microorganisms—and compost. The 24-month project is expected to show that such a production model can increase productivity, reduce the need for chemical fertilizer, improve soil health and increase carbon sequestration and retention. In 2022, the project was one of the winners of the Bonsucro Impact Fund.\nJapan/Kumamoto, Kanagawa: Water retention and recharge (rice)\nPakistan/Western Himalaya: Conservation agriculture and forest conservation (vegetables)\nPakistan/Gilgit-Baltistan: Improved irrigation (many crops)\n## ASEAN & SOUTH PACIFIC\nPakistan/Lahore: Floating wetlands (sugarcane, wheat, barley)\nAustralia/Queensland: Water quality improvement (sugarcane)\nVietnam/Mekong: Improved flood-based agriculture (rice, lotus, fish)\nIndonesia/Central Java, East Nusa Tenggara: Improved irrigation (fruits, grains)\n### People & Communities\n## OUR PEOPLE POWER OUR PURPOSE\nOur focus on people starts with our employees. They steward our beloved beverage brands, fuel our innovation agenda, drive our sustainability priorities and programs, and create a multiplier effect in local communities through partnerships with governments, nonprofits, industry peers and other stakeholders.\nWe remain committed to caring for the people across our value chain who contribute to our success— by respecting human rights across our operations and supply chain, empowering access to equal opportunities, supporting more sustainable agriculture practices, and giving back to communities through our philanthropic initiatives. And we use our global scale as a force for progress and for good.\n\\~700K EMPLOYED BY THE COCA-COLA COMPANY AND OUR APPROXIMATELY 200 BOTTLING PARTNERS\n## \\~82.5K EMPLOYED BY THE COCA-COLA COMPANY1\n### Respecting human rights is one of our core values.", "chunk_word_count": 378, "section_path": "Refresh the World. Make a Difference. > GREATER CHINA & MONGOLIA", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 50, "page_start": 50, "page_end": 51 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 50, "chunk_text": "# Refresh the World. Make a Difference.\n## OUR COMMITMENT TO HUMAN RIGHTS\n### Our New Framework to Transform TomorrowTo make our ambiti\nAs a part of our Real Impact framework, we are renewing and refining our Human Rights Policy. The new Policy will draw on our stakeholder engagement and risk assessment to better align with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.\nThe Coca-Cola Company was among the first companies to commit to the United Nations Guiding Principles on Business and Human Rights in 2011, and we have strived to inspire and drive responsible business practices ever since, embedding respect for human rights across our business and value chain.\n### The future of human rights at The Coca-Cola Company is empowerment.\nReal Impact is our new framework for tomorrow. It is about respecting rights while working to drive progress. We will seek to bring enduring changes to the lives of those we touch around the world. To make our ambition concrete, Real Impact is grounded in three signature initiatives.\nThe rights underpinning our commitment are drawn from the International Bill of Human Rights, the ILO Core Conventions, and other instruments foundational to the dignity of vulnerable stakeholders. While we are committed to respecting all human rights, we have identified 10 of our most salient issues:", "chunk_word_count": 225, "section_path": "Refresh the World. Make a Difference. > OUR COMMITMENT TO HUMAN RIGHTS", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 52, "page_start": 52, "page_end": 52 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 51, "chunk_text": "# Refresh the World. Make a Difference.\n## REAL IMPACT: SETTING THE STAGE FOR THE FUTURE\nThe foundation of our human rights program is our commitment to continuous improvement. That’s why, in 2022, we engaged a human rights advisory firm to conduct a holistic and rigorous review of our human rights program to ensure that we remain at the vanguard of responsible business.\n1. Safe and healthy workplace \n2. Diversity and inclusion \n3. Freedom of association \n4. Prohibition on slavery and forced labor \n5. Prohibition of child labor \n6. Work hours, wages, and benefits \n7. Land rights \n8. Water and environmental stewardship \n9. Privacy \n10. Consumer wellbeing\nThe process included extensive engagement with internal and external stakeholders to understand their primary human rights concerns and their expectations of an industry-leading program. We also conducted a global risk assessment to identify salient human rights risks1 across our global value chain and evaluate the strength of our governance to meet future challenges. The aim of this extensive analysis was to establish a framework to drive meaningful human rights progress across our operations and value chain.\nOur Human Rights Policy is embedded in expectations of our employees through the company’s Code of Business Conduct, and its precepts are extended through our supply chain through the Supplier Guiding Principles (SGP) and our Principles for Sustainable Agriculture (PSA).\nThe result of our year-long assessment is Real Impact, a new vision for the company’s human rights program. Our mission is to take actions that lead to a better tomorrow. We will take the lessons learned from existing programs and partnerships and seek to scale and adapt best practices across more geographies to deliver real impact to more people across our value chain. We will work to drive progress across our company, our industry and beyond through rigorous analysis, creative partnerships and constant innovation to turn commitment into action.\nIn line with the UN Guiding Principles, we carry out human rights due diligence across our value chain. We regularly assess our key human rights risks to ensure that we are taking sufficient steps to identify and address them and, if needed, to support remediation of impacts.\nFor more information about our vision for the future, click on the icon.\n## EMBEDDING HUMAN RIGHTS ACROSS OUR NETWORK", "chunk_word_count": 379, "section_path": "Refresh the World. Make a Difference. > REAL IMPACT: SETTING THE STAGE FOR THE FUTURE", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 52, "page_start": 52, "page_end": 53 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 52, "chunk_text": "# Refresh the World. Make a Difference.\n## COLLABORATING TO COMBAT FORCED LABOR\nForced labor is a human rights issue that plagues global supply chains and is a risk in virtually every company’s value chain. No company can solve this systemic failure alone—collaboration is the cornerstone of progress. We have joined with other companies as part of The Consumer Goods Forum to support its Human Rights Coalition (HRC). Serving as Co-Chair of the HRC, The Coca-Cola Company has helped HRC drive action to:\nOur industry-leading global audit program is a key component of our long-term, ongoing commitment to supporting human rights. We use the same rigorous SGP protocols to audit our own operations as we do our bottling partners and Tier 1 suppliers (packaging and ingredients). In 2022, we conducted 2,770 audits and found that $9 9 \\%$ of our own operations, $9 3 \\%$ of system bottlers and $91 \\%$ of our Tier 1 suppliers complied with our SGP protocols. These audit results are reviewed by the Corporate Governance and Sustainability Committee of our Board of Directors on an annual basis.\n### Our Value Chain\n### Examples of Human Rights Due Diligence Approaches\n## PRINCIPLES FOR SUSTAINABLE AGRICULTURE (PSA) VALIDATION\n## FARMS GROWING INGREDIENTS\n• Help make Human Rights Due Diligence (HRDD) the norm in our industry by implementing forced labor-focused HRDD systems; \n• Implement HRDD systems in certain targeted high-risk supply chains, starting with palm oil in the People Positive Palm Project; and \n• Support the development of responsible recruitment markets through capacity building and government advocacy.\nThird-party validation programs approved under our PSA\nWhile this process helps us hold our company and partners accountable, we also focus on building capacity to support respect for human rights across our value chain. This includes providing training and resources such as checklists, toolkits and guidelines. In 2022, we conducted bottler and supplier human rights-focused training across seven of our operating units, attended by over 1,000 participants.\n## SELF-ASSESSMENT ECOVADIS PLATFORM\n## INDIRECT SUPPLIERS\nValidated self-assessments to monitor environmental and social performance—over 2,000 system suppliers on the platform\n(e.g., information technology)\nWe also collaborate with leading responsible businesses as part of the Leadership Group for Responsible Recruitment. This business group works closely with international organizations, trade unions, and key NGOs such as the Institute for Human Rights and Business and Verité to eliminate all worker fees in recruitment, both in law and in practice, by 2026.\n## TIER 1 SUPPLIERS\n2,770 AUDITS conducted in 2022\n(Packaging & Ingredients)\n## SUPPLIER GUIDING PRINCIPLES (SGP) AUDITS\nAudits against our SGP protocols at facilities— \\~2,700 audits annually\n## MANUFACTURING\n(Company-owned facilities & bottling partners)\nSee our Human Rights 2022 Overview for comprehensive disclosures of our human rights policies, governance, due diligence, as well as access to remedy and grievance mechanisms.\n## SGP AUDITS FOR WASTE MANAGEMENT\n## END-OF-USE PACKAGING COLLECTION\nCustomized audit module to understand and improve the economic conditions and practices for people working across the waste collection sector\nenactment of significant labor reforms and FIFA’s announcement of a Legacy Fund to establish a labor excellence hub in partnership with the International Labor Organization.\n## HUMAN RIGHTS CONFERENCE", "chunk_word_count": 525, "section_path": "Refresh the World. Make a Difference. > COLLABORATING TO COMBAT FORCED LABOR", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 53, "chunk_text": "# Refresh the World. Make a Difference.\n## LIVING WAGE\nAs part of our commitment to respect human rights, we are actively engaging on the topic of a living wage. Over the past year, we have partnered with Business for Social Responsibility (BSR) to conduct a rigorous living wage gap analysis across our global offices and companyowned manufacturing sites. While further analysis is needed, we are proud to meet or exceed the BSR living wage benchmark in the vast majority of our own operations. Where gaps exist, we will be developing a roadmap to progress toward a living wage. We have also been working with peers through AIM-Progress, a forum of fast-moving consumer goods companies enabling and promoting responsible sourcing practices, to advance industry understanding and progress toward living wages in global supply chains. Visit AIM-Progress for additional information about our work.\nIn October, The Coca-Cola Company was delighted to host the 14th Annual Engaging Business Forum at our headquarters in Atlanta. Sponsored by the International Organization of Employers, the United States Council for International Business and the U.S. Chamber of Commerce, the Forum has become one of the preeminent business and human rights conferences, where business leaders and experts from civil society, trade unions and governments hold candid discussions on business experience in respecting human rights across their operations and supply chains. The theme of this latest Forum was The Future of Responsible Business Conduct, with stakeholder panels discussing subjects such as the increasing regulation of human rights, grievance mechanisms and effective remedy collaborations, and the growth of investor benchmarks.\n## INFORMAL WASTE COLLECTION WORKERS& HUMAN RIGHTS\nThe Coca-Cola Company has been a leader in driving ambitious sustainable packaging through our World Without Waste program. We have collaborated with peers across our industry, government, and civil society to tackle the issue of ocean-bound plastics.\nInformal waste workers—or grassroots recyclers— collect and sort up to $60 \\%$ of plastic waste that is recycled around the world.1 They are integral to the functioning of an efficient, circular economy for packaging. They are also extremely vulnerable to human rights abuse. The severity and complexity of human rights impacts on grassroots recyclers makes multi-stakeholder collaboration essential. In 2022, we partnered with other leading consumer goods companies and NGOs to launch the Fair Circularity Principles, which apply the expectations and responsibilities in the UN Guiding Principles to grassroots recycling. For more information, see the Packaging section.", "chunk_word_count": 402, "section_path": "Refresh the World. Make a Difference. > LIVING WAGE", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 54, "page_start": 54, "page_end": 54 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 54, "chunk_text": "# Refresh the World. Make a Difference.\n## SPORTS & HUMAN RIGHTS\nThe Coca-Cola Company is a long-time sponsor of global sporting events, including the Olympic Games and the FIFA World Cup. As a sponsor, the company has worked consistently with sport governing bodies, NGOs, governments, and unions to embed respect for human rights into the life cycle of these events. This work includes our leadership in the Centre for Sport & Human Rights, an organization that promotes human rights in the world of sport. We have seen progress in this space, including the International Olympic Committee issuing its first Strategic Framework on Human Rights, and FIFA adopting its own human rights policy and establishing a dedicated human rights program. Leading up to the 2022 FIFA World Cup in Qatar, the company and other sponsors engaged with FIFA, the Government of Qatar, and NGOs to help improve labor rights in the country, with important developments including Qatar’s\n### Using Technology-Led Solutions for Deeper Supply Chain Due Diligence", "chunk_word_count": 167, "section_path": "Refresh the World. Make a Difference. > SPORTS & HUMAN RIGHTS > Using Technology-Led Solutions for Deeper Supply Chain Due Diligence", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 54, "page_start": 54, "page_end": 54 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 55, "chunk_text": "# Refresh the World. Make a Difference.\n## SPORTS & HUMAN RIGHTS\n### Improving Sustainable and Responsible Labor Practices in Our Sugar Supply Chain in Pakistan\nThe Coca-Cola Company has developed a digital platform that identifies recruitment-related human rights risks within supply chains together with our partners Diginex, an impact technology company, and Reckitt, another consumer goods company. The platform aims to improve respect for human rights in the hiring process through due diligence and ethical recruitment.\nOur company has been working with Bonsucro, a leading international NGO, as well as other local and international experts to address human rights risks in the sugarcane supply chain in Pakistan. Our partners include GoodWeave International, a non-profit with expertise in stopping child, forced and bonded labor in global supply chains, and AgNovate, a respected local organization and licensed Bonsucro trainer. This two-and-a-half-year project, which runs to the end of 2024, aims to improve the adoption of sustainable and responsible labor practices in sugar production and develop remediation plans to address child labor and forced labor prevalent in the industry. In November 2022, AgNovate delivered the first training session of the project to 31 participants, including managers of sugar mills. The training was based on GoodWeave’s best practices on ending child and worker exploitation. Gap assessments were then conducted of the six partner sugar mills and selected smallholder farmers on their compliance with the requirements of the Bonsucro Production Standard, which includes ensuring workers do not suffer from forced labor and there is no child labor. The project will support the mills to develop their own action plans toward continuous improvement and compliance with version 5.1 of the Bonsucro Production Standard.\nWe were pleased to convene the Fair Circularity Initiative, which was launched by The Coca-Cola Company and three of their peers in late 2022. When companies adopt and advance the new Fair Circularity Principles in their value chains, engaging meaningfully with waste pickers, it will lead to human rights being respected, including better incomes and working conditions, and inclusion in decision-making processes that affect their lives.”\nThe platform evolved to include a multilingual workervoice tool, diginexAPPRISE, which allows companies to conduct digital worker interviews in supply chains at scale, increasing transparency and preventing unethical recruitment practices. The use of smartphone technology allows a greater number of workers to be reached and helps ensure that foreign migrant workers with low literacy levels are included in the interview process.\nNIGEL HARRIS\nChief Executive, Tearfund\n### Zero Is Possible—Our Safety Framework", "chunk_word_count": 416, "section_path": "Refresh the World. Make a Difference. > SPORTS & HUMAN RIGHTS > Improving Sustainable and Responsible Labor Practices in Our Sugar Supply Chain in Pakistan", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 56, "chunk_text": "# Refresh the World. Make a Difference.\n## SPORTS & HUMAN RIGHTS\n### Human and Organizational Performance\nWe make and deliver our products and provide services with a goal of zero work-related injuries for our employees, contractors and communities. Providing our employees with a safe workplace environment is among the company’s greatest responsibilities and is part of our commitment to employees, customers and consumers. Our employees are our most valuable partners, sources of best practices and the implementors of our strategy to embed safe habits and strengthen our safety culture.\nWe have strengthened our health and safety strategy with multi-year purposeful actions across our end-to-end supply chain. We have committed to integrating the Human and Organizational Performance (HOP) philosophy into our operational learning processes; building an environment of active employee engagement; accelerating learning and improvement processes; building better controls based on work in practice; and supporting the right culture.", "chunk_word_count": 149, "section_path": "Refresh the World. Make a Difference. > SPORTS & HUMAN RIGHTS > Human and Organizational Performance", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 55, "page_start": 55, "page_end": 55 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 57, "chunk_text": "# Refresh the World. Make a Difference.\n## OVERARCHING GOALS\nKeep safety at the center\nReinforce through leadership\nSeveral of our bottling partners across regions have deployed HOP operational learning into their organizations. To date, over 100 operations across our system have begun integrating HOP principles with significant improvements, and this journey will continue in 2023 and onwards.\nThe Coca-Cola Company’s global Lost-Time Incident Rate (LTIR) was 0.25 in 2022.1\nOur “Zero Is Possible” vision aims to identify risks and control preventable serious incidents in our system facilities, fleet and distribution operations. We are focused on creating safe and healthy workplaces and supporting a culture of continuous learning and improvement. Management commitment and strong employee engagement are foundational to establishing this culture.\nOrganizational Performance (HOP) philosophy that focuses on critical and interconnected aspects including people, culture, equipment, work systems and processes.\n• SERIOUS INCIDENT PREVENTION: We expanded our selfassessments and governance audits beyond production operations to include fleet and distribution operations (route-to-market). We continue our focus on identifying, implementing and strengthening controls to prevent serious injuries. We also continue to build unique solutions (i.e., toolkits, guidance) to enhance the capacity and capability of our system in identifying and mitigating risks.\nSafe, high-quality drinks people can trust, and a safe, secure workplace are an essential part of who we are at The Coca-Cola Company. Although we have seen significant improvements in our safety performance, we know there is more to be done. By building capabilities across our system, identifying where we need to improve, leveraging industry best practices and engaging with our employees, we are working toward our vision of “Zero Is Possible” as it relates to serious injuries in the workplace.”\nWe have implemented comprehensive, preventative programs to further identify and mitigate the potential for serious incidents to occur in our facilities. We are integrating operational learning while also demonstrating progress and embedding safety as a key organizational value.\n• TECHNOLOGY AND INNOVATION: We continued investing in new technologies and shared learnings across the organization. We completed more than 20 technology pilots globally, which are now being implemented by many of our bottling partners. These include AI technology camera systems to detect unsafe conditions and driver simulators to train and prepare drivers, among others.\nIn 2022, we focused on three key pillars of our safety program:\n• CULTURE: We revamped our Safety Training Academy in 2022, providing enhanced resources, tools and training which include operational safety and road safety programs. As part of our approach to safety culture across the Coca-Cola system, we incorporated a new Human and\nSECTION SCOPE: In this section our safety and health strategy refers to actions by the company as well as our owned and independent bottling partners. The data reported for LTIR only includes companyowned facilities.\nZOLTAN SYPOSS Chief Quality, Safety & Environmental Officer\nAs a purpose-driven company, we help create a better shared future for everyone our brands and business system touches by working to provide access to equal opportunity and fostering belonging both in our workplaces and the communities we serve.\n### We approach our DEI strategy through the lens of three core ambitions:", "chunk_word_count": 522, "section_path": "Refresh the World. Make a Difference. > OVERARCHING GOALS", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 55, "page_start": 55, "page_end": 56 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 58, "chunk_text": "# Refresh the World. Make a Difference.\n## EQUAL PAY FOR EQUAL WORK\nPay equity is defined as compensating employees fairly and equitably, without regard to gender (globally), or race and ethnicity (in the United States). On an annual basis, we conduct audits to ensure our employees are paid equitably. Additionally, we are diligent and stay aware of the changing regulatory landscape. In 2022, we published our first-ever pay gap report for Coca-Cola Ireland.\nASPIRE TO \nCREATE \na workforce that mirrors the markets we serve.\nTogether with global, national and local organizations—plus our network of bottling partners—we remain focused on investing to improve people’s lives, from our employees to those our business system touches to the communities we call home. While we continued to make meaningful progress in 2022, our work is an ongoing journey in an ever-changing landscape. That’s why we continue to prioritize listening and learning; executing our strategy consistently; and holding ourselves accountable for continuous progress.\nJAPAN: We earned a “Rainbow”, the highest rating in the 2022 PRIDE Index, for our LGBTQI+-friendly workplace initiatives.\n## ENABLE\nWe are working to embed our philosophy into our business practices and processes, and to extend our analyses beyond base pay to broader aspects of our total rewards policies. Read more about our pay equity philosophy.\nSOUTH AFRICA: We participated in Johannesburg Pride by partnering with Pride of Africa, an umbrella brand born out of need for LGBTQI+ representation in Africa.\nan inclusive culture where our employees thrive.\n## BUILDING AN INCLUSIVE CULTURE\n\u0007ITALY: As a continuation of a longstanding partnership, we were the primary sponsor of the XXXVII edition of the Special Olympics National Summer Games in Turin, where athletes with intellectual disabilities competed in 20 sports. More than 90 Coca-Cola system volunteers supported the event, which also included a communications campaign celebrating participating athletes.", "chunk_word_count": 305, "section_path": "Refresh the World. Make a Difference. > EQUAL PAY FOR EQUAL WORK", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 56, "page_start": 56, "page_end": 56 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 59, "chunk_text": "# Refresh the World. Make a Difference.\n## ADVANCE\nIn 2022, we added specific inclusion-related questions to our annual Culture & Engagement Survey. Responses serve as a baseline for an Inclusion Index reflecting employee sentiment about belonging, fairness, respect and psychological safety, as well as conditions and behaviors that create an inclusive environment at our company.\nequity within our business, communities, and the marketplace.\n66\nOur employee-led Inclusion Networks serve as valuable resources to both employees and our company by providing opportunities to connect with colleagues who share similar interests and backgrounds. They also create diverse sounding boards for business strategies and initiatives, capturing input on potential actions through the lens of diversity, equity and inclusion.\nDiversity, equity and inclusion is in our DNA. It’s woven into all aspects of how we do business and function as a team—from talent acquisition, to supply chain, to the processes that shape our strategy and operations. It fosters greater creativity, innovation and connection to the wider community. This journey requires ongoing determination, and we are committed to developing lasting change through sustainable and measurable actions.”\nAs part of our efforts to create a diverse, equitable and inclusive workplace, we are partnering with the Valuable 500’s Generation Valuable initiative. This program, which kicks off in 2023, is designed to accelerate opportunities for people with disabilities to become the talented voices of tomorrow’s C-Suite.\n[IMAGE CAPTION] Inclusion Networks\nThese regionally structured, globally connected employee groups help build affinity and allyship that enhance our ability to recruit, retain, engage and develop diverse talent. Inclusion Networks enable associates to participate in professional and personal growth opportunities through training and education, community projects, networking events, cultural heritage month celebrations and management opportunities.\nTAMEKA HARPER \nGlobal Chief Diversity, Equity & \nInclusion Officer\n## MIRRORING THE MARKETS WE SERVE\n## CHALLENGING OURSELVES TO EMPOWER COMMUNITIES\nBy 2030, we aspire to be $50 \\%$ led by women globally and, in the United States, to align race and ethnicity representation to U.S. census data. While these metrics are important indicators of our progress, we are taking an iterative and holistic approach focused on continuous learning. Here’s a 2022 update on our progress against these aspirations:\nThe Coca-Cola North America operating unit recently launched Asian Pacific, Black and Hispanic Equity Accountability Councils (EACs) to guide community engagement and investment, with an emphasis on economic equity. The EACs are designed to drive quality of life improvements in under-resourced communities through economic mobility, financial stability and the well-being of individuals and households. The councils will identify initiatives that reflect diversity in communities which have direct links to our DEI strategy.\n## DRIVING ACCOUNTABILITY\nTo continue progress toward achieving our sustainability goals, the Talent and Compensation Committee approved DEI links to executive compensation as part of the annual incentive for our executive officers, which will help drive our 2030 DEI aspirations. The links to executive compensation are based on achieving predefined qualitative and quantitative DEI components.", "chunk_word_count": 490, "section_path": "Refresh the World. Make a Difference. > ADVANCE", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 60, "chunk_text": "# Refresh the World. Make a Difference.\n## TRANSPARENCY AND REPORTING\nWe believe in full transparency and disclosure. We share diversity metrics quarterly with senior leaders, and we externally publish our representation data annually by race/ ethnicity (U.S.) and gender (globally) for our overall workforce and leadership. We publish data submitted to the U.S. Equal Employment Opportunity Commission (EEO-1 survey results) on our website.\n## RECRUITING AND DEVELOPING DIVERSE TALENT\n## SUPPLIER DIVERSITY\nIn ${ 2 0 2 2 } ,$ we continued to enhance our diversity hiring efforts through equitable recruitment, interviewing and onboarding processes.\nCoca-Cola is working to maximize procurement opportunities and proactively engaging and building partnerships with diverseowned suppliers spanning a range of industries.\nWe expanded our partnerships with Historically Black Colleges and Universities as well as leadership development organizations, including the National Black MBA Association, Executive Leadership Council and Thurgood Marshall National Black Talent Bank.\nWe are focused on increasing the overall diversity of our suppliers and are working to spend at least \\$1 billion annually with diverse suppliers. We aspire to join the Billion Dollar Roundtable—the gold standard of supplier diversity, currently with only 27 member companies.\nIn 2022, our supplier diversity team connected independent Coca-Cola bottlers in the United States and Canada with business partners to boost our overall impact via sponsored matchmaking events at the National Minority Supplier Development Council and Women’s Business Enterprise National Council conferences. The team is exploring ways to expand our supplier diversity program internationally.\n### Crowdfunding for Minority-Owned Small Business\nWe are a founding sponsor of Rise Up Crowdfunding, an equity crowdfunding portal focused on women and minority-owned businesses. The platform connects diverse startups with investors to expand access to capital while also providing business management resources and coaching.\n## \\$900M+\n## \\$200M\nspent in 2022 with diverse Tier 1 suppliers in the United States, an increase over prior years and progress toward our \\$1 billion annual goal.\nof incremental spend with Black-owned enterprises in the United States, contributing to the company’s overall goal of \\$500 million.\n66\nWe share Rise Up’s mission to support businesses and underrepresented groups within the communities we serve. This much-needed resource can, in many cases, help small businesses scale up or expand their operations, open new locations and grow their brands.”\nFERNANDO HERNANDEZ\nSenior Director, Supplier Diversity\n## LEVERAGING THE POWER OF OUR BRANDS AND PARTNERSHIPS\n### Coca-Cola Backlot Movie Experience\n### Extending Our Partnership With ESSENCE", "chunk_word_count": 405, "section_path": "Refresh the World. Make a Difference. > LEVERAGING THE POWER OF OUR BRANDS AND PARTNERSHIPS > Coca-Cola Backlot Movie Experience", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 57, "page_start": 57, "page_end": 59 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 61, "chunk_text": "# Refresh the World. Make a Difference.\n## LEVERAGING THE POWER OF OUR BRANDS AND PARTNERSHIPS\n### Multicultural Marketing\nCoca-Cola returned for its 26th year as Presenting Sponsor of the 2022 ESSENCE Festival of Culture in New Orleans as part of a five-year partnership extension with ESSENCE Communications, a leading media, technology and commerce company dedicated to serving Black women and communities. In 2021, we committed to doubling our spend with minority-owned media companies—to $8 \\%$ of our total annual media budget—by 2024. By working with legacy partners like ESSENCE, along with new minority-owned and minority-led media companies, we are on track to meet this commitment.\nIn 2022, our brands further expanded into diverse and inclusive marketing. In the United States, smartwater and vitaminwater launched brand ambassador partnerships with Zendaya and Lil Nas X, respectively, and Minute Maid Aguas Frescas (a Latin-inspired fruit drink innovation) partnered with Mexican NASCAR driver Daniel Suárez for a Hispanic Heritage Month activation. Sprite Zero Sugar teamed up with Marvel Studios’ Black Panther: Wakanda Forever on the “Infinite Potential. Zero Limits” campaign, which highlighted underrepresented Black and Latino creators from STEAM (Science, Technology, Engineering, Arts and Mathematics) communities. Globally, our Coca-Cola campaign for the FIFA World Cup 2022™ was anchored by a multicultural music anthem recorded by female artists from the Middle East and Latin America.\nFor the sixth consecutive year, Coca-Cola sponsored Univision’s “Premios Juventud” awards show in 2022, expanding the Coca-Cola Backlot Movie Experience at La Marqueta in Puerto Rico. Attendees enjoyed Coca-Cola and Latin food pairings, cooking demos, live music performances and more.\nIn ${ \\cal 2 } 0 2 2 ,$ The Coca-Cola Foundation, the philanthropic arm of The Coca-Cola Company, contributed $\\$ 94.8$ million to 301 organizations around the world to help create a better shared future for the communities our business serves. Grants funded by the Foundation complement the contributions of our company operating units and bottling partners.\n[IMAGE CAPTION] The Coca-Cola Foundation: 2022 Contributions\n### Disaster Relief\nWe have a long history of supporting local communities in times of crisis— a commitment we continued in 2022. In addition to our support for Ukraine, the Foundation provided approximately $\\$ 4$ million in funding for natural disaster and humanitarian relief efforts in 11 countries around the world, complementing financial and in-kind donations from The Coca-Cola Company and bottling partners.", "chunk_word_count": 389, "section_path": "Refresh the World. Make a Difference. > LEVERAGING THE POWER OF OUR BRANDS AND PARTNERSHIPS > Multicultural Marketing", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 59, "page_start": 59, "page_end": 60 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 62, "chunk_text": "# Refresh the World. Make a Difference.\n## LEVERAGING THE POWER OF OUR BRANDS AND PARTNERSHIPS\n### Standing with Ukraine\nIn addition to supporting local communities, the Coca-Cola system’s top priority following a natural disaster is to ensure the safety of all associates and their families. The Coca-Cola Employee Disaster Relief Fund (EDRF) provided nearly $\\$ 5$ million (including humanitarian relief for Ukraine) through more than 4,000 grants to company and bottling partner employees impacted by natural disasters and humanitarian crises in 2022. The EDRF consists of contributions from The Coca-Cola Company, The Coca-Cola Foundation, bottling partners and system associates.\n\\$1.5B+ \nDONATED \nby The Coca-Cola Foundation since its inception in 1984\n1.4%\nThe Coca-Cola Foundation awarded more than \\$3 million in grants to support the International Federation of Red Cross and Red Crescent Societies (IFRC) and other humanitarian organizations providing onthe-ground emergency relief to millions of people impacted by the war in Ukraine. These grants will also provide support to displaced people and refugees in surrounding countries. The Coca-Cola Foundation, along with The Coca-Cola Company and its global bottling partners, committed to contributions totaling more than $\\$ 20$ million to support employees and humanitarian relief efforts.\nof operating income invested back into local communities from The Coca-Cola Company and The Coca-Cola Foundation in 2022—above our annual goal of 1%1\n### A Refreshed Giving Approach\n### Hometown Support\nAtlanta—where the first Coca-Cola was served in 1886—is a thriving city we are proud to call home. In 2022, the Foundation continued to invest in community organizations working to create a better shared future for our hometown:\nThe Coca-Cola Foundation remains committed to making a difference by addressing the complex global challenges that impact our communities around the world.”\nThe Coca-Cola Foundation’s mission is to make a difference in communities where our company operates and where our employees live and work. The Foundation supports transformative ideas and institutions that address pressing and complex global challenges. Our goal is to leave a measurable and lasting impact in local communities through a focus on the environment and society. As of ${ 2 0 2 2 } ,$ our giving is focused on impacting these areas:\n## SAADIA MADSBJERG\nPresident of The Coca-Cola Foundation and Vice President of Global Community Affairs for The Coca-Cola Company\n• \\$3 million to fund scholarship programs at 10 Atlanta institutions of higher learning \n\\$1 million to the Atlanta Police Foundation to expand youth development services for at-risk youth \\$500,000 to the Atlanta Women’s Foundation to educate, train and prepare 1,000 women for employment or to become entrepreneurs \\$500,000 to the National Center for Civil and Human Rights to expand its civil rights education curriculum \\$300,000 to the Latin American Association to expand entrepreneurial education throughout the state of Georgia", "chunk_word_count": 459, "section_path": "Refresh the World. Make a Difference. > LEVERAGING THE POWER OF OUR BRANDS AND PARTNERSHIPS > Standing with Ukraine", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 60, "page_start": 60, "page_end": 61 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 63, "chunk_text": "# Refresh the World. Make a Difference.\n## ENVIRONMENTAL\n### The following three grants reflect the Foundation’s new giving strategy:\n\\$1 million to fund the CARE Humanitarian Surge Fund, a global reserve fund to support life-saving relief efforts immediately following natural disasters, plus preparedness efforts such as prepositioning supplies, training staff and partnering with local and national organizations to develop crisis plans.\n\\$1 million to the American Red Cross to support the Global Disaster Preparedness Center (GDPC) in seven countries facing significant climate risks and social vulnerability: Bangladesh, El Salvador, Guatemala, Honduras, Indonesia, Nepal and the Philippines.\n\\$1.25 million to Imagine H20 to launch the Sustainable Access Solution Fund, a fund that will support water and climate-focused innovation projects in both emerging markets and the United States with a focus on ensuring sustainable access to safe drinking water.\n### The Coca-Cola Company has a long history of enhancing the livelihoods of the people in the communities we proudly serve.\nWe have seen evidence that helping female entrepreneurs overcome social and economic barriers to success creates a ripple effect in local communities with both societal and commercial impacts. According to a 2015 McKinsey Global Institute report, if women were to play an identical role in the global labor market to that of men, it is estimated that $\\$ 28$ trillion could be added to the global gross domestic product (GDP).\nWe continue to help enable the economic empowerment of a diverse network of customers, suppliers and communities across our value chain. This includes smallholder farmers that supply agricultural ingredients used in our beverages and juice processors and sugar millers—to warehousing, construction engineering, transportation and facilities management partners, IT, marketing and other service providers.\n## NEPAL\n## KAZAKHSTAN\nThe Saksham initiative has provided skills training, planning tools and networking opportunities to help over 1,000 small-scale women entrepreneurs from three provinces grow their retail businesses.\nThe Belesteri (“Stepping Stones”) program has empowered more than 50,000 aspiring business owners in rural areas over the last 10 years. An annual competition awards financial grants to women entrepreneurs to launch or expand their enterprises. The program, which is supported by The Coca-Cola Foundation, has helped create more than 300 jobs and has provided life-changing income streams for hundreds of families. More than 15,000 women were trained in 2022.\nWhile women’s entrepreneurship continues to play an active role in business sustainability, we are broadening economic empowerment efforts to help create shared value—and a better shared future—through training, networking and mentoring programs aimed at working with underrepresented groups. These programs focus on building financial and digital literacy and enabling access to opportunities through our supplier diversity work.", "chunk_word_count": 439, "section_path": "Refresh the World. Make a Difference. > ENVIRONMENTAL", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 61, "page_start": 61, "page_end": 62 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 64, "chunk_text": "# Refresh the World. Make a Difference.\n## THE PHILIPPINES\nAn estimated 1,500 micro-entrepreneurs from Davao del Norte have completed iSTAR, an enhanced digital version of the Sari-Sari Store Training and Access to Resources (STAR) program featuring entrepreneurship training, access to financial resources and online business development tools. The collaboration with the Technical Education and Skills Development Authority (TESDA) and Tagum City Council of Women Foundation supports Coca-Cola Philippines’ broader economic empowerment strategy to break the cycle of generational poverty.\nWe embrace the Organization for Economic Co-operation and Development (OECD) definition of economic empowerment, which we see as fundamental to strengthening human rights and enabling all people, particularly vulnerable and underrepresented groups, to have control over their lives and positively influence society. Our economic empowerment efforts deliver tangible results in markets around the world, where we harness partnerships and deliver programs tailored to local needs and nuances. This work builds on the momentum created by our decade-long 5by20® program, created in 2010 to enable the economic empowerment of 5 million women entrepreneurs. Together with our public and private sector partners, including our bottling partners and The Coca-Cola Foundation, we exceeded our target, enabling the economic empowerment of more than 6 million women.\n## LATIN AMERICA\nIn 2022, the Coca-Cola system in Latin America continued to support small retailers to rebound from the adverse economic impacts of COVID-19 through business and financial skills training programs in Bolivia, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Mexico, Paraguay and Peru.\nEconomic empowerment is one of The Coca-Cola Foundation’s six new priority giving pillars. The Coca-Cola Foundation envisions inclusive economies around the world with expanded opportunities for shared prosperity, especially for the communities that face the greatest barriers to advancing their well-being.\n## AFRICA\nCoca-Cola Beverages Africa recently expanded its approach to promoting economic inclusion across its value chain to include under-served women, youth and persons with disabilities. Our bottling partner has worked with local non-profits to launch entrepreneurship and employability programs in Ethiopia, Kenya, South Africa, Tanzania and Uganda.\nSECTION SCOPE: In this section our economic empowerment work refers to actions by the company, The Coca-Cola Foundation, our owned and independent bottling partners and our independent suppliers and partners.\n### Operations Highlights\nOur networked organization is comprised of nine operating units that are focused on regional and local execution and sit under four geographic operating segments—Asia Pacific; Europe, Middle East & Africa; Latin America; and North America—plus Global Ventures and Bottling Investments Group. This structure is supported by our Platform Services organization and center functions, which collectively provide global services and expertise across a range of critical capabilities.\nThe following pages offer a look at our operations, their business results and some key activities from 2022.\n## 2022 HIGHLIGHTS", "chunk_word_count": 458, "section_path": "Refresh the World. Make a Difference. > THE PHILIPPINES", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 62, "page_start": 62, "page_end": 64 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 65, "chunk_text": "# Refresh the World. Make a Difference.\n## 2022 Unit Case Volume Mix by Operating Unit\n• In 2022, the company gained value share in total nonalcoholic ready-to-drink beverages, led by share gains in India, Australia, Japan and South Korea.\n[IMAGE CAPTION] Organic Revenue Growth (Non-GAAP)1\n• We made significant progress on World Without Waste initiatives in the Maldives by launching a returnable glass bottle and commissioning a can line, scaling up collection and recycling, and advocating for Extended Producer Responsibility regulation embracing circularity.\n• With funding from The Coca-Cola Foundation, we supported Planet Water Foundation in scaling the deployment of AquaTower community water filtration systems in Cambodia, providing communities in need with clean water access and hygiene education.\n• Our Unnati Grapes initiative in India trained over 3,000 smallholder farmers to increase the quality and yield of grape cultivation, and supported an all-women farmer producer company.\n• Coca-Cola Australia and Coca-Cola Europacific Partners Australia pledged to reduce the sugar content in their nonalcoholic beverage portfolio by $2 5 \\%$ by ${ } ^ { 2 0 2 5 , }$ as part of an updated industry-wide pledge announced by the Australian Beverages Council.\n## 2022 Unit Case Volume Mix by Category\n[IMAGE CAPTION] Comparable Currency Neutral Operating Income Growth (Non-GAAP)2\nTrademark Coca-Cola \nSparkling Flavors \nWater, Sports, Coffee and Tea \nJuice, Value-Added Dairy and Plant-Based Beverages\n### Renewable Energy in Japan\nCoca-Cola Japan Company has taken steps to transform their offices and concentrate plant to renewable energy sources for their electricity use. The headquarters in Shibuya has been running on renewable electricity since May 2021.\n## 2022 HIGHLIGHTS\n• For the year, the company gained value share in total nonalcoholic readyto-drink beverages, led by share gains in France, Spain and Poland.\n[IMAGE CAPTION] 2022 Unit Case Volume Mix by Operating Unit\n[IMAGE CAPTION] Organic Revenue Growth (Non-GAAP)1\n• The Coca-Cola Foundation funded a partnership between the Water and Development Alliance, the Global Environment and Technology Foundation, U.S. Agency for International Development and the Soran Water Directorate to improve water access and quality and to reduce water losses in Iraq.\n• We launched the Coca-Cola “Believing is Magic” global campaign for FIFA World Cup Qatar 2022 by creating end-to-end, digitally driven experiences. Our digital platform, the Coca-Cola Fan Zone, was activated in 41 markets and featured social experiences for soccer fans.\n• In Eswatini, The Coca-Cola Foundation supported the Ministry of Health’s Project Last Mile to strengthen the government’s capacity to store ultracold chain COVID-19 vaccines.\n• Coca-Cola Europacific Partners is supporting the hospitality industry across Spain to measure their emissions, identify emissions reduction opportunities and offset emissions to help reach carbon neutrality through the Hosteleria #PorElClima campaign.", "chunk_word_count": 447, "section_path": "Refresh the World. Make a Difference. > 2022 Unit Case Volume Mix by Operating Unit", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 64, "page_start": 64, "page_end": 65 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 66, "chunk_text": "# Refresh the World. Make a Difference.\n## 2022 Unit Case Volume Mix by Category\n[IMAGE CAPTION] Comparable Currency Neutral Operating Income Growth (Non-GAAP)2\nTrademark Coca-Cola \nSparkling Flavors \nWater, Sports, Coffee and Tea \nJuice, Value-Added Dairy and Plant-Based Beverages\n### Improving Watershed Health in Pakistan\nWe worked with WWF-Pakistan to develop a watershed stewardship plan for the Ravi River watershed, a sub-basin of the Indus River Basin, and a priority watershed because it is a key ingredient sourcing (sugarcane) and market growth region. The river extends through both India and Pakistan and supports approximately 38 million people. Our analysis found that the river faces increasing water scarcity and quality challenges. The plan addresses infrastructure and ecosystems, community wellbeing, information management, policy and regulations, finance and planning. One project already underway is a partnership with WWF-Pakistan to address the identified water issues for approximately 360,000 people in Lahore. Between 2022–2023, the project will install household rainwater harvesting systems, recharge wells to replenish a groundwater aquifer, reforest urban areas and construct floating treatment wetlands. The treatment wetlands will allow wastewater to be reused for agriculture purposes and remove pollutants and excess nutrients from village ponds.\n## 2022 HIGHLIGHTS", "chunk_word_count": 196, "section_path": "Refresh the World. Make a Difference. > 2022 Unit Case Volume Mix by Category", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 65, "page_start": 65, "page_end": 66 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 67, "chunk_text": "# Refresh the World. Make a Difference.\n## 2022 Unit Case Volume Mix by Category\n• Coca-Cola Brazil joined the Yes to Racial Equality program run by the Identities of Brazil Institute to help generate opportunities for 3 million people in the coming years, and 10,000 new leadership positions for black people by 2030.\nTrademark Coca-Cola \nWater, Sports, Coffee and Tea \nSparkling Flavors \nJuice, Value-Added Dairy and Plant-Based Beverages\n[IMAGE CAPTION] Organic Revenue Growth (Non-GAAP)1\n• Coca-Cola Argentina and four bottling partners launched “Ruta Verde” or the “Green Road”, a recycling project that aims to increase the recovery of materials at collection points. This new project connects 28 municipalities across three provinces and helps more than 590,000 people access public places to recycle plastic, paper, cardboard, glass and cans.\n• In the face of the 2022 water shortage in Nuevo Leon, Mexico, Coca-Cola and its bottling partners responded quickly to implement additional measures including rehabilitating 15 public water wells, with the goal of expanding water access to families throughout the city of Monterrey and its more than 5 million inhabitants. We also continued to provide clean drinking water, at all times, free of charge, to local families through an outdoor faucet at the Topo Chico bottling plant.\n[IMAGE CAPTION] Comparable Currency Neutral Operating Income Growth (Non-GAAP)2\n• Funded by The Coca-Cola Foundation, the Safe Water project in Pucusana, Peru, focused on providing running water systems for the soup kitchens in the district, guaranteeing adequate hygienic conditions for meal preparation. The project installed elevated water tanks and piping for each community kitchen, allowing proper washing of the ingredients. Safe Water for Pucusana has installed 19 running water systems, guaranteeing safe meal preparation for more than 1,600 neighbors and users of the community kitchens.\n### Encouraging Consumers to Shop Local\nCoca-Cola launched the “Little Giants” or “Pequeños Gigantes” campaign in Latin America to encourage consumers to buy from their local store or market. The project demonstrates the importance of these mini markets in every neighborhood and\nthe role of consumers and companies to contribute to their growth. This campaign was launched in Colombia, Peru, Costa Rica, Guatemala, the Dominican Republic and other countries in Latin America as part of our efforts to promote the economic development and empowerment of the traditional trade.\n## 2022 HIGHLIGHTS", "chunk_word_count": 383, "section_path": "Refresh the World. Make a Difference. > 2022 Unit Case Volume Mix by Category", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 66, "page_start": 66, "page_end": 67 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 68, "chunk_text": "# Refresh the World. Make a Difference.\n## 2022 Unit Case Volume Mix by Category\n• The company gained value share in total nonalcoholic ready-to-drink beverages for the year, driven by the continued recovery in away-fromhome channels along with strong performance in at-home channels for sparkling soft drinks and value-added dairy beverages.\nTrademark Coca-Cola \nWater, Sports, Coffee and Tea \nSparkling Flavors \nJuice, Value-Added Dairy and Plant-Based Beverages\n[IMAGE CAPTION] Organic Revenue Growth (Non-GAAP)2\n• In 2022, Sprite began shifting all of its plastic packaging from green to clear, which helps with the recycling process and increases the material’s likelihood of being remade into new beverage bottles. Coca-Cola North America’s entire green plastic portfolio—including packaging for Fresca, Seagram’s and Mello Yello—is also making the transition to clear PET.\n• The Coca-Cola Company donated \\$2 million to support the Smithsonian’s landmark new National Museum of the American Latino and Molina Family Latino Gallery. The museum will showcase Latino achievements and stories in U.S. art, history, culture and science, and will be built over a 10-year period.\n• Minute Maid launched Aguas Frescas, a Latin American-inspired, noncarbonated beverage made with real fruit juices and natural flavors. The juice drinks deliver a bold, “refreshing AF” sensorial experience tailored to Gen Z tastes.\n[IMAGE CAPTION] Comparable Currency Neutral Operating Income Growth (Non-GAAP)3\n### DASANI $100 \\%$ rPET Launch\nA majority of DASANI bottles in the United States—from 20-oz. and 1.5-liter singles to 10-oz. and 12-oz. multipacks— are now offered in $100 \\%$ recycled plastic1 . In Canada, this innovation spans all DASANI bottles. The brand’s transition to $100 \\%$ recycled plastic1 is projected to save\nmore than 20 million pounds of new plastic, compared to 2019, and cut more than 25,000 metric tons of greenhouse gas emissions in 2023 alone.\n## GLOBAL VENTURES\n## BOTTLING INVESTMENTS GROUP\nGlobal Ventures includes Costa Limited (Costa), Monster beverages, innocent, and doğadan tea. The majority of Global Ventures’ revenue consists of Costa and innocent, which together account for approximately $90 \\%$ of total Global Ventures’ revenue.\nIn January 2006, our company-owned bottling operations were brought together to form the Bottling Investments Group, or BIG. BIG ensures these operations receive the appropriate investments and expertise to foster long-term success. Our current footprint of bottlers exists in Southeast and Southwest Asia, the Middle East, and parts of Africa.\n## 2022 HIGHLIGHTS\nWe continue to drive strong performance within BIG while maximizing returns on our investments.\n• In 2022, innocent launched the Big Rewild, its first pan-European campaign to give nature a helping hand. Together with 11 NGOs and local organizations, innocent is aiming to protect and restore 2 million hectares of land by 2025. • In 2022, doğadan made all packaging for its tea products plastic-free and added a “plant-based teabag” badge to inform consumers.\n• To celebrate the Christmas spirit, Costa launched Costa Expressions, a unique platform that celebrates and nurtures young artists in India. • Costa Coffee was voted the Nation’s Favorite Coffee Shop in the UK for the 12th consecutive year, according to a World Coffee Portal survey. • In 2022, innocent launched its Revitalise super smoothie, the lowest sugar smoothie recipe it has ever launched. It has 11% less sugar than the brand’s other super smoothies.", "chunk_word_count": 539, "section_path": "Refresh the World. Make a Difference. > 2022 Unit Case Volume Mix by Category", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 67, "page_start": 67, "page_end": 68 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 69, "chunk_text": "# Refresh the World. Make a Difference.\n## 2022 HIGHLIGHTS\n• Gained share in sparkling soft drinks in India, Bangladesh and Singapore. \n• Strengthened supply chain resilience and operational efficiency.\n[IMAGE CAPTION] Coca-Cola Beverages Africa\n[IMAGE CAPTION] Other BIG Bottlers\n## SCOPE OF THE REPORT\nHistorical performance data may be revised due to reasons such as new data availability; industry-driven changes to methodologies; improvement in data collection and measuring systems; or activities such as joint ventures, mergers and acquisitions or divestitures. In cases where historical information is revised, we will footnote the change with a clear explanation. Statements about future developments and past occurrences are based on information and assumptions available as of the date of publication. While we are committed to providing timely updates, the company holds no obligation to update information or statements.", "chunk_word_count": 135, "section_path": "Refresh the World. Make a Difference. > 2022 HIGHLIGHTS", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 68, "page_start": 68, "page_end": 69 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 70, "chunk_text": "# Refresh the World. Make a Difference.\n## ELECTRONIC DELIVERY\nwarranted, concerning product safety or quality, workplace and human rights, obesity or other issues; an inability to successfully manage new product launches; an inability to maintain good relationships with our bottling partners; deterioration in our bottling partners’ financial condition; an inability to successfully manage our refranchising activities; increases in income tax rates, changes in income tax laws or the unfavorable resolution of tax matters, including the outcome of our ongoing tax dispute or any related disputes with the U.S. Internal Revenue Service (“IRS”); the possibility that the assumptions used to calculate our estimated aggregate incremental tax and interest liability related to the potential unfavorable outcome of the ongoing tax dispute with the IRS could significantly change; increased or new indirect taxes; changes in laws and regulations relating to beverage containers and packaging; significant additional labeling or warning requirements or limitations on the marketing or sale of our products; litigation or legal proceedings; conducting business in markets with high-risk legal compliance environments; failure to adequately protect, or disputes relating to, trademarks, formulas and other intellectual property rights; changes in, or failure to comply with, the laws and regulations applicable to our products or our business operations; fluctuations in foreign currency exchange rates; interest rate increases; an inability to achieve our overall long-term growth objectives; default by or failure of one or more of our counterparty financial institutions; impairment charges; an inability to protect our information systems against service interruption, misappropriation of data or cybersecurity incidents; failure to comply with privacy and data protection laws; failure to achieve our sustainability goals and targets or accurately report our progress due to operational, financial, legal and other risks, many of which are outside our control and are dependent on the actions of our bottling partners and other third parties; increasing concerns about the environmental impact of plastic bottles and other packaging materials; water scarcity and poor quality; increased demand for food products, decreased agricultural productivity and increased regulation of ingredient sourcing due diligence; climate change and legal or regulatory responses thereto; adverse weather conditions; and other risks discussed in our filings with the Securities and Exchange Commission (the $^ { \\mathfrak { w } } \\mathsf { S E C } ^ { \\mathfrak { n } } )$ , including our Annual Report on Form 10-K for the year ended December 31, 2022, which filing is available from the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements.\nIf you are a shareowner of record, you have an opportunity to help the environment by signing up to receive your shareowner communications, including proxy materials, account statements and tax forms, electronically.", "chunk_word_count": 470, "section_path": "Refresh the World. Make a Difference. > ELECTRONIC DELIVERY", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 71, "chunk_text": "# Refresh the World. Make a Difference.\n## ELECTRONIC DELIVERY\nThis 2022 Business & Sustainability Report is The Coca-Cola Company’s fifth report to integrate overall business and sustainability performance, data and context, reflecting our continued journey toward driving sustainable business practices into our core strategy. This report has been prepared in accordance with Global Reporting Initiative (GRI) Standards: Core option. In addition, we provide indices for the standards set by the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures, the United Nations Sustainable Development Goals (SDGs), the United Nations Global Compact (UNGC) and the United Nations Guiding Principles Reporting Framework (UNGPRF).\nTo enroll in e-delivery, please log on to your account at www.computershare.com/investor and click on “View and update your profile” and then click on “Communication Preferences.” As a thank you, the company will have a tree planted on your behalf through American Forests.\n## COMMON STOCK", "chunk_word_count": 151, "section_path": "Refresh the World. Make a Difference. > ELECTRONIC DELIVERY", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 72, "chunk_text": "# Refresh the World. Make a Difference.\n## FORWARD-LOOKING STATEMENTS\nThe Coca-Cola Company common stock is listed on the New York Stock Exchange, traded under the ticker symbol KO. The company has been one of the 30 companies in the Dow Jones Industrial Average since 1987. As of December 31, 2022, there were approximately 4.33 billion shares outstanding and 188,068 shareowners of record.\nThis report may contain statements, estimates or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause The Coca-Cola Company’s actual results to differ materially from its historical experience and our present expectations or projections. These risks include, but are not limited to, unfavorable economic and geopolitical conditions, including the direct or indirect negative impacts of the conflict between Russia and Ukraine; increased competition; an inability to be successful in our innovation activities; changes in the retail landscape or the loss of key retail or foodservice customers; an inability to expand our business in emerging and developing markets; an inability to successfully manage the potential negative consequences of our productivity initiatives; an inability to attract or retain a highly skilled and diverse workforce; disruption of our supply chain, including increased commodity, raw material, packaging, energy, transportation and other input costs; the negative impacts of, and continuing uncertainties associated with the scope, severity and duration of the global COVID-19 pandemic and the substance and pace of the post-pandemic economic recovery; an inability to successfully integrate and manage our acquired businesses, brands or bottling operations or an inability realize a significant portion of the anticipated benefits of our joint ventures or strategic relationships; failure by our third-party service providers and business partners to satisfactorily fulfill their commitments and responsibilities; an inability to renew collective bargaining agreements on satisfactory terms, or we or our bottling partners experience strikes, work stoppages, labor shortages or labor unrest; obesity and other health-related concerns; evolving consumer product and shopping preferences; product safety and quality concerns; perceived negative health consequences of certain ingredients, such as nonnutritive sweeteners and biotechnology-derived substances, and of other substances present in our beverage products or packaging materials; failure to digitalize the Coca-Cola system; damage to our brand image, corporate reputation and social license to operate from negative publicity, whether or not\nLimited assurance under attestation standards American Institute of Certified Public Accountants over select sustainability metrics was obtained from Ernst & Young LLP (as indicated in the Independent Accountant’s Review Report).\nExcept as otherwise noted, this report covers the 2022 performance of The Coca-Cola Company and the Coca-Cola system (our company and our owned and independent bottling partners), as applicable. Therefore, references to “currently,” “to date” or similar expressions reflect data and information as of December 31, 2022. Some initiatives that were launched in early 2023 are included to provide the most relevant information to stakeholders.", "chunk_word_count": 503, "section_path": "Refresh the World. Make a Difference. > FORWARD-LOOKING STATEMENTS", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 73, "chunk_text": "# Refresh the World. Make a Difference.\n## DIVIDENDS\nAt its February 2023 meeting, the Board of Directors increased our quarterly dividend $4 . 5 \\%$ to $\\$ 0.46$ per share, equivalent to an annual dividend of $\\$ 1.84,$ up from \\$1.76 $\\mathrm { i n } 2 0 2 2 .$ . The company has increased its dividend per share in each of the last 61 years. Dividends are normally paid four times a year, usually in April, July, October and December. The company has paid 407 consecutive dividends, beginning in 1920.\nIn this report, any use of the terms “material,” “materiality,” “immaterial,” “substantive,” “significant” and other similar terminology refers to topics that reflect important economic, environmental and social impacts of The Coca-Cola Company or the Coca-Cola system or to topics or standards designated as “material” or “substantive” under the GHG Protocol, GRI or SASB standards. These terms as used in this report are not used, or intended to be construed, as they have been defined by or construed in accordance with the securities laws or any other laws of the United States or any other jurisdiction, or as these terms are used in the context of financial statements and financial reporting.\n## DIRECT STOCK PURCHASE AND DIVIDEND REINVESTMENT\nComputershare Trust Company, N.A., sponsors and administers a direct stock purchase and dividend reinvestment plan for common stock of The Coca-Cola Company. The Computershare Investment Plan allows investors to directly purchase and sell shares of company common stock and reinvest dividends. To view or request plan materials please log on to www.computershare. com/investor and click on “invest now.”\nThe data presented in this report is collected using accepted and relevant scientific and industry accepted methodologies, which in some instances, are based on assumptions and estimates. Although our data has been internally vetted, there are inherent uncertainties and limitations in the collection and presentation of our data. For example, certain information in this report regarding the Coca-Cola system’s progress against our sustainability goals comes from third-party sources and operations outside of our control. While we believe such information is reasonably accurate and is based on generally accepted principles and methodology, the collection of this data is beyond our direct influence. In addition, the achievement of certain of our sustainability goals and targets that are discussed in this report are dependent on the actions of our bottling partners, suppliers and other third parties, all of which are outside of our control.\n## SHAREOWNER ACCOUNT ASSISTANCE\nFor information and maintenance on your shareowner of record account, please contact:\nComputershare Investor Services \nP.O. Box 43078 \nProvidence, RI 02940-3078 \nTelephone: (888) COKE-SHR (265-3747) or (781) 575-2653\nHearing Impaired: (800) 952-9245 Email: coca-cola@computershare.com Internet: www.computershare.com/coca-cola", "chunk_word_count": 449, "section_path": "Refresh the World. Make a Difference. > DIVIDENDS", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 74, "chunk_text": "# Refresh the World. Make a Difference.\n## SHAREOWNER INTERNET ACCOUNT ACCESS\nFor account access via the internet, please log on to www.computershare.com/investor. Once registered, shareowners can view account history and complete transactions online.\n### DataAppendix\nTo respond to stakeholder interest and provide greater disclosure and transparency, we have prepared this Data Appendix. It provides additional financial and sustainability data, including performance data for our sustainability goals as well as other important topics. Some data provided is for The Coca‑Cola Company, while some is for the Coca‑Cola system. This is noted with color‑coded circles.\nTHE COCA-COLA COMPANY $\\textcircled { \\scriptsize { 1 } }$ COCA-COLA SYSTEM\n## FINANCIAL AND PORTFOLIO DATA\n### Equity Method Investments in Publicly Traded Bottling Companies\n(Top 5 based on unit case volume)\n### Coca‑Cola FEMSA S.A.B. de C.V.\nCoca‑Cola FEMSA is the largest independent Coca‑Cola bottler in the world by volume. Coca‑Cola FEMSA operates in Mexico and nine other countries in Central America and South America.\n### Coca-Cola Europacific Partners\nCoca-Cola Europacific Partners is the second largest independent Coca‑Cola bottler by volume and the largest independent bottler by revenues, operating in 29 countries in Europe and the South Pacific—serving a population of more than 600 million people.\n### Coca‑Cola HBC AG (Coca‑Cola Hellenic)\nCoca‑Cola Hellenic is the third largest independent Coca‑Cola bottler by volume, operating in 29 countries across three continents—serving a population of more than 715 million people.\n### Coca‑Cola Icecek A.S.\nCoca‑Cola Icecek is one of the largest independent Coca‑Cola bottlers, with operations in 11 countries across Eurasia and the Middle East—serving a population of more than 430 million people.\n### Coca‑Cola Bottlers Japan Holdings Inc.\nIn 2017, Coca‑Cola West Co., Ltd. and Coca‑Cola East Japan Co., Ltd. integrated their businesses to establish Coca‑Cola Bottlers Japan, the largest Coca‑Cola bottler in Japan, serving a population of more than 100 million people.\n### Reconciliation of GAAP and Non-GAAP Financial Measures\nThe company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP” or referred to herein as “reported”). However, management believes that certain non-GAAP financial measures provide investors with additional meaningful financial information that should be considered when assessing our underlying business performance and trends. Management also uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions and in evaluating the company’s performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company’s reported results prepared in accordance with GAAP. Our non-GAAP financial measures do not represent a comprehensive basis of accounting.\nYear ended December 31, (Percent change)\n### Net Operating Revenues\n### Reported Net Operating Revenues (GAAP)\nLess: Adjustments to Reported Net Revenues Currency Impact Impact of Acquisitions, Divestitures and Structural Changes, Net \nOrganic Revenues (Non-GAAP)\n### Operating Income\n## EPS", "chunk_word_count": 464, "section_path": "Refresh the World. Make a Difference. > SHAREOWNER INTERNET ACCOUNT ACCESS", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 69, "page_start": 69, "page_end": 72 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 75, "chunk_text": "# Refresh the World. Make a Difference.\n## . The Coca‑Cola Company $\\bigcirc$ Coca‑Cola System\n### Reconciliation of GAAP and Non-GAAP Financial Measures\nThe company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP” or referred to herein as “reported”). However, management believes that certain non-GAAP financial measures provide investors with additional meaningful financial information that should be considered when assessing our underlying business performance and trends. Management also uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions and in evaluating the company’s performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company’s reported results prepared in accordance with GAAP. Our non-GAAP financial measures do not represent a comprehensive basis of accounting.\n### Free Cash Flow and Adjusted Free Cash Flow Conversion Ratio\n### Reconciliation of GAAP and Non-GAAP Financial Measures\nThe company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP” or referred to herein as “reported”). However, management believes that certain non-GAAP financial measures provide investors with additional meaningful financial information that should be considered when assessing our underlying business performance and trends. Management also uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions and in evaluating the company’s performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the company’s reported results prepared in accordance with GAAP. Our non-GAAP financial measures do not represent a comprehensive basis of accounting.\nYear ended December 31,\n### Reported Net Operating Revenues (GAAP)\nLess: Adjustments to Reported Net Operating \nRevenues Currency Impact Impact of Acquisitions, Divestitures and Structural Changes, Net \nOrganic Revenues (Non-GAAP)\n### Operating Income by Geographic Operating Segment\nYear ended December 31,\nReported Operating Income (GAAP) Less: Adjustments to Reported Operating Income Items Impacting Comparability Currency Impact Comparable Currency Neutral Operating Income (Non-GAAP)\n### Portfolio\n## . The Coca‑Cola Company $\\textcircled { \\scriptsize { 1 } }$ Coca‑Cola System\n### World Without Waste\nTotal weight of our packaging (metric tons)1 \nPercentage of recycled material in our packaging3 \nPercentage of recycled material used in our PET plastic packaging globally \nPercentage of bottles and cans we collected and refilled or collected for recycling5 \nPercentage of bottles and cans we collected and refilled or collected for recycling6 \nPercentage of packaging recyclable globally 7\n### Packaging Mix (by units)\nPlastic (primarily PET) bottles \nAluminum and steel bottles and cans \nOther \nRefillable glass bottles \nNon-refillable glass bottles \nBeverage cartons and juice boxes \nRefillable (primarily PET) plastic bottles \nPouches\n### Number of Packages\nPlastic (primarily PET) bottles \nAluminum and steel bottles and cans \nRefillable glass bottles \nNon-refillable glass bottles \nRefillable (primarily PET) plastic bottles \nBeverage cartons and juice boxes \nPouches\n### Corrections since issuance of report in April 2023:\nPage 39 was updated to correct details about the plantbased plastic bottle technology licensed to a company in Germany and plant-based plastic bottle prototypes.\nPage 40 was updated to correct information about the collection rate in Germany and the types of packaging to which the collection rate applies.", "chunk_word_count": 518, "section_path": "Refresh the World. Make a Difference. > . The Coca‑Cola Company $\\bigcirc$ Coca‑Cola System", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 73, "page_start": 73, "page_end": 77 }, { "report": "Coca-Cola Business Sustainability Report 2022.pdf", "chunk_idx": 76, "chunk_text": "# Refresh the World. Make a Difference.\n## . The Coca‑Cola Company Coca‑Cola System\nNote: Due to joint venture or merger and acquisition activities, certain brands may not be accounted for in The Coca-Cola Company-specific metrics included on this page\n## GREENHOUSE GAS EMISSIONS & WASTE\n### GREENHOUSE GAS EMISSIONS & WASTE (continued)\n\n## WORKPLACE, SAFETY & GIVING BACK\n### Gender Representation by Level (global)3\nFemale (global) Senior Leadership Middle Management Professionals Total\nMale (global) Senior Leadership Middle Management Professionals Total\n### WORKPLACE, SAFETY & GIVING BACK (continued)\nYear ended December 31,\n### Human Rights Cases Reported by Category1\nAsk a Workplace Rights Question \nChild Labor \nDiscrimination \nForced Labor \nFreedom of Association \nRetaliation \nSafe and Healthy Workplace \nWork Hours and Wages \nWorkplace Security \nTotal Cases\n## . Investment Back Into Local Communities\nAmount of charitable contributions made by The Coca-Cola Company and The Coca-Cola Foundation (in millions)3 Percentage of the company’s operating income4\n\n## HUMAN RIGHTS & AGRICULTURE\n## DEFINITIONS OF PRIORITY TOPICS\n### DEFINITIONS OF PRIORITY TOPICS (continued)\n### Stakeholder Priority Topics\nThe topics stakeholders identified in order of priority are as follows:\n### Reporting Frameworks & SDGs\nIn a separate PDF document available here, we index the contents of this report to several reporting frameworks and standards.\nGRI provides a globally recognized framework for companies to measure and communicate their environmental, economic, social and governance performance. We prepared this report in accordance with the GRI Standards: Core option. This is the twelfth consecutive year that these reporting principles have informed our reporting process, and we regularly assess our progress against these guidelines. In this report, the GRI General Disclosures are solely for The Coca-Cola Company. For all other indicators, the scope is identified in the referenced documents. Beyond reporting on performance indicators required by the GRI, we report on additional indicators important to our broad range of stakeholders.\nThis report also meets the requirements of the UNGC Advanced Communication on Progress and aligns with the UNGPRF, which addresses reporting on human rights. We review our reporting regularly and aim to be as responsive as possible to our stakeholders’ feedback.", "chunk_word_count": 351, "section_path": "Refresh the World. Make a Difference. > . The Coca‑Cola Company Coca‑Cola System", "document_id": "Coca-Cola Business Sustainability Report 2022", "page": 77, "page_start": 77, "page_end": 87 }, { "report": "CostCo Climate Action Plan.pdf", "chunk_idx": 0, "chunk_text": "# Climate Action Plan\n## Our 2023 Climate Action Plan shares an update on the progress we made this year and explains our future plans to advance our work on climate-related issues.\nOur approach to addressing our climate impacts is rooted in our sustainability principles, with a strong emphasis that we are learning as we go and seeking continuous improvement. This year’s Climate Action Plan update is a reflection of that learning and progress we have made to address our impact on global climate change. This section outlines our efforts to reduce emissions across our business, build supply chain resilience, and reduce our environmental impact.\nIntroduction\nThe viability of our Climate Action Plan depends upon many external factors that may be directly or indirectly beyond our control and include: our suppliers’ ability to meet our expectations, socio-economic and public health risks, the direct and indirect impacts of global climate change on our operations and global value chain, changes in the international and national policy and regulatory landscape, permitting requirements, the availability of refrigerant equipment and low-GWP refrigerant alternatives, the availability of qualified refrigerant and HVAC service providers, requisite supply of clean energy. Supply chain volatility, energy and commodity pricing, regulatory signals, and shifting member preferences and stakeholder attitudes also are material factors that can impact our Climate Action Plan timeline. The data reported is compiled from sources that we believe are reasonable to rely on at the time of publication, may change as new information becomes available, and future reports may change accordingly.\nOur Climate Action Plan:\nAligns with regulatory requirements and global standards: We incorporate regulatory requirements, certain global standards and industry guidance across measurement, disclosure and reporting and will continue to monitor evolving standards and guidance. These frameworks and standards continue to inform our approach to climate action1 .\nIncludes an accountability and governance model for climate progress: Our approach to governance and reporting is aligned with the Task Force for Climate-Related Financial Disclosures (TCFD) and the Sustainability Accounting Standards Board (SASB), both part of the International Sustainability Standards Board (ISSB) standards. More information can be found on the Governance & Reporting section of our Sustainability Commitment.", "chunk_word_count": 359, "section_path": "Climate Action Plan > Our 2023 Climate Action Plan shares an update on the progress we made this year and explains our future plans to advance our work on climate-related issues.", "document_id": "CostCo Climate Action Plan", "page": 1, "page_start": 1, "page_end": 2 }, { "report": "CostCo Climate Action Plan.pdf", "chunk_idx": 1, "chunk_text": "# Climate Action Plan\n## Governance Structure\n1 While we have not adopted Science Based Targets, we actively consider SBTi’s Corporate Net Zero Standard as a framework for ambitious climate strategy and will continue to utilize SBTi’s guidance. Solutions must be operationally viable and fulfill our obligations to our shareholders, employees, members, suppliers, and the communities we serve. Additional guidelines and frameworks we consider include the GHG Protocol Accounting & Reporting Standard, TCFD, TNFD, IPCC, COP, SDGs, and CDP.\nProvides transparent disclosure: Transparency and disclosure of our progress toward our climate goals are important. We believe in measuring our progress and sharing what we have learned with our community and stakeholders. We currently disclose to industry-wide forums, such as CDP-Climate and CDP-Forests, and we offer detailed information about our projects and efforts via our Sustainability Commitment website.\nSupports a holistic approach to climate: We have aligned our sustainability efforts and initiatives related to climate using a holistic and integrated approach. Climate has a number of interdependent issues, in addition to emissions, that we consider. These include but are not limited to: water, forests, biodiversity and a just transition for people and communities. While we focus on our emissions progress in this year’s update, in fiscal year (FY) 2024, we will also be working on our global water strategy and analyzing select supply chains for biodiversity risk.\nOver the past few years, we have made strides in our climate journey. Our Scope 1 and 2 emissions work is more mature, having started with the inception of our STAR Program (more information can be found in the Operations section of our Sustainability Commitment) in 2021, and helps us prepare for Scope 3 improvement in a way that resonates with our culture. To meet our decarbonization goals for Scopes 1, 2 and 3, we need our employees to contribute in innovative ways, from reinforcing programs that have been in place to changing practices going forward. This requires broadening awareness and learning and implementing new policies and procedures.\nEmissions Executive Summary\nWe have been able to use learnings generated from work on climate within our own direct control to inform our Scope 3 emissions strategy and approach. As a result, there are common themes to our approach across all scopes, such as broadening awareness, providing education, shifting toward clean energy, and focusing on resource efficiency and efficient transportation. In addition, our approach to reducing emissions is to set targets accompanied with pragmatic action plans that we believe will help us reach these targets.\nAcross the entire business, notable accomplishments of the past year include:", "chunk_word_count": 430, "section_path": "Climate Action Plan > Governance Structure", "document_id": "CostCo Climate Action Plan", "page": 2, "page_start": 2, "page_end": 4 }, { "report": "CostCo Climate Action Plan.pdf", "chunk_idx": 2, "chunk_text": "# Climate Action Plan\n## Governance Structure\n● Launched a Global Energy Strategy to address Scope 1 and 2 emissions in our operations portfolio and a Scope 3 Energy Transition Strategy targeting our Tier 1 and 2 suppliers. To make progress in Scope 2, continued to increase clean energy2 procurement, which as of the end of calendar year 2022 represented $1 9 \\% ^ { 3 }$ of our global purchased energy and is on track to meet our $100 \\%$ clean energy commitment by 2035. Developed a Scope 3 emissions intensity reduction target and action plan (see below). Reported all scopes for FY20, FY21 and FY22 (all third-party verified) to CDP Climate in July 2023 and participated in CDP Supply Chain, which requests our top 500 suppliers to disclose their Scope 1, 2 and 3 emissions to CDP. Submitted our CDP Forests report for the second year in a row, disclosing our metrics on key forestry commodities that are related to climate change. Invested in our technology and data infrastructure to build a platform for reporting and measurement across all scopes.\nOur emissions footprint across all three scopes for FY22 totaled to 174M MT CO2e, up $10 \\%$ from FY21 on an absolute basis. Our Scope 1 emissions increased $1 5 \\%$ , driven by bunker fuel related to the vessels Costco chartered due to the global pandemic. Costco has ceased this activity and will no longer incur these Scope 1 emissions in FY24. If one excludes this activity, our FY22 Scope 1 emissions were flat, despite our sales and square footage growth.\nOur Scope 2 market-based emissions, despite our growth, decreased $3 \\%$ over the past year, driven by purchasing more clean energy. Scope 3 emissions increased $10 \\%$ — mostly driven by the increase in demand of our gas business, as well as a strong general merchandise sales growth rate.\nWe recognize the significant opportunity to decarbonize our global operations, from our warehouses to our depots and business centers. We also understand that our climate and energy-focused efforts in our operations can create near and long-term business value through lower operating costs, reliable, clean energy supply to power our warehouses, depots and business centers, and more resilient infrastructure.\n## Scope 1 & 2 Emissions\n## Our Scope 1 and 2 Reduction Target\nWe have committed to an ambitious Scope 1 and Scope 2 emission reduction target: $39 \\%$ absolute reduction by 2030 compared to our 2020 base year. We have also committed to power our operations with $100 \\%$ clean energy by 2035. To achieve these ambitious targets, we are evaluating, piloting and implementing a range of initiatives in our warehouses, expanding our procurement of clean energy and enhancing our framework to measure and monitor progress toward our goals.", "chunk_word_count": 462, "section_path": "Climate Action Plan > Governance Structure", "document_id": "CostCo Climate Action Plan", "page": 4, "page_start": 4, "page_end": 6 }, { "report": "CostCo Climate Action Plan.pdf", "chunk_idx": 3, "chunk_text": "# Climate Action Plan\n## Our Scope 1 and 2 Action Plan\nOur Global Energy Strategy is the foundation of our Scope 1 and Scope 2 Action Plan. Led by select members of our executive leadership team, this cross-functional strategy focuses on five areas:\nEnergy Supply: Our priority is to purchase clean energy and integrate on-site energy generation systems when operationally and financially feasible. Since 2020, we have been using a portfolio-wide approach to procure, generate and use clean energy in our operations. Where clean energy procurement or on-site generation may not be feasible, we acquire source-specific power with the verified emissions-free certificates (EFEC, REC) to reduce our Scope 2 emissions.\n## Emissions-Free Energy Certificates\nDuring 2023 we contracted to purchase certified, time-stamped 24/7 clean power for 124 warehouses across nine states. The clean power is sourced with hourly attributes, either Emissions-Free Energy Certificates (EFECs) or Renewable Energy Certificates (RECs), for 100% of the energy, 24/7. These time-stamped certificates demonstrate both where the clean energy is generated and the hour and date of production.\nEnergy Efficiency: Increasing the energy efficiency of our warehouses, depots and business centers is crucial to long-term decarbonization as well as creating energy cost savings and financial return on our investment. We are implementing programs to improve the efficiency of heating, ventilation, air conditioning (HVAC) and refrigeration systems, light fixtures and other aspects of our warehouse operations.\nRefrigeration: Fugitive emissions is an area of continued focus to reduce the harmful impacts from hydrofluorocarbons and other gases from the refrigeration systems in our operations. We are committed to accelerating the phase-out of HFCs and increasing our investment in refrigeration retrofits to reduce refrigerant emission Global Warming Potential (GWP) by $30 \\%$ by 2030 as compared to our 2020 baseline.\nTransportation: We are exploring clean energy for our transportation equipment where it makes financial and operational sense. This includes testing and deploying electric yard goats, exploring additional fleet electrification opportunities and using renewable diesel throughout our California depots and business delivery centers. For more information, see the “Transportation & Logistics” page in the Operations section.\nDesign & Site Selection: We understand the impact that the materials we use in the construction of our facilities and the locations we choose for our warehouses, depots and manufacturing facilities have on our carbon footprint and the natural environment. We continue to explore ways in which we can minimize our carbon footprint and environmental impact with our design and construction choices.", "chunk_word_count": 409, "section_path": "Climate Action Plan > Our Scope 1 and 2 Action Plan", "document_id": "CostCo Climate Action Plan", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "CostCo Climate Action Plan.pdf", "chunk_idx": 4, "chunk_text": "# Climate Action Plan\n## Where We Are Today\nSince setting our initial Scope 1 and Scope 2 absolute reduction target in 2021, we have nearly doubled our 2030 absolute reduction target during 2022. In 2023, we further expanded our decarbonization efforts across our global footprint. Here are some highlights from FY23:\nWe increased the share of clean energy powering our global operations, reaching $19 \\%$ of our total supply as of the end of calendar year 2022. \nWe expanded our onsite generation capabilities at our Mira Loma, California, distribution center to include a solar canopy and battery storage system to charge our electric yard goats. This brings the campus to 3.3MW. \nWe began using renewable diesel to power our depot and business center fleets in California, replacing over 2.4 million gallons of diesel with renewable diesel. \nWe continued to reduce our use of harmful HFCs, completing 38 retrofits of our refrigeration systems, replacing harmful R-22 with lower GWP refrigerants, while also installing seven \nadditional CO2-based refrigeration systems globally. \nWe deployed energy-efficient LED lighting to 167 warehouses across the U.S., reducing the average wattage by $3 5 \\%$ .\nCostco is committed to doing our part to reduce emissions and improve the resilience of our supply chain. Scope 3 emissions, unlike Scope 1 and 2, are outside of our direct control. We will need to rely upon and partner with our suppliers to make substantial transformation. We have developed a comprehensive approach to our Scope 3 emissions that focuses on five key pillars: supplier energy transition, regenerative and deforestation-free agriculture, sustainable livestock, energy efficient items, and sustainable packaging (described in detail below). Underpinning these pillars will be a supplier engagement plan, education programs for our merchandising teams, and IT infrastructure to support reporting and measurement.\n## Scope 3 Emissions\n## Our Scope 3 Reduction Target\nWe estimate that our five-pillar plan will lead to a $20 \\%$ reduction in our Scope 3 emissions intensity (inflation-adjusted) by 2030 from our baseline year of FY20, excluding fuel. We recognize that this Scope 3 reduction target is not fully aligned to a 1.5-degree pathway. That pathway is not currently achievable for us if we are to continue to provide for all of our stakeholders. However, we believe this is an ambitious yet achievable target based on existing technologies, and we continue to explore opportunities for further improvement.\nWhile we are excluding fuel from the target, we are working to develop a separate climate transition plan for our fuel business (see below).", "chunk_word_count": 418, "section_path": "Climate Action Plan > Where We Are Today", "document_id": "CostCo Climate Action Plan", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "CostCo Climate Action Plan.pdf", "chunk_idx": 5, "chunk_text": "# Climate Action Plan\n## Our Scope 3 Action Plan\nWe believe that the below five pillars are the best path for us to reduce our Scope 3 emissions. We hope our supplier efforts in reducing their Scope 1 and 2 emissions will lower our Scope 3 emissions and that we can learn from these successes to continue to drive change:\nSupplier Energy Transition: One common thread throughout our supply chain is the reliance on energy. We believe that supporting our suppliers, through educational resources or direct partnership and investments to procure, generate and utilize clean energy in their operations can help them reduce their Scope 2 emissions.\nRegenerative and Deforestation-Free Agriculture: A significant portion of our business is reliant on agriculture-based commodities, which are high carbon emitters. We are committed to supporting nature-based solutions, such as regenerative agriculture practices. These practices also have the benefits of protecting our soils, water and biodiversity as well as creating greater resiliency in times of more extreme weather events. In FY23, we worked on two pilot programs with Cargill and ADM related to regenerative agriculture to help us learn more about how to best support the farmers making this transition. We are also engaging our suppliers on supply chain traceability and supporting them in minimizing risk of sourcing from deforestation areas.\nSustainable Livestock: We sell foods created from animal agriculture that can carry higher carbon footprints. We want to do our part to reduce the intensity of those emissions. We will focus on collaborating with various suppliers, scientists, civil society and animal welfare experts to help accomplish this. We recognize that beef can be a driver of deforestation in certain regions, and we work to make sure our Kirkland Signature™ items containing beef are not sourced from high deforestation risk countries such as Brazil, Argentina, Colombia or Paraguay.\n## Regenerative Agriculture: Cargill\nFor an example of what one Costco supplier, Cargill, is doing to support regenerative agriculture practices, see the “Environmental Impacts & Land Stewardship” page in our Merchandising section. These practices improve crop productivity and soil health, support the livelihood of farmers and help reduce carbon emissions.\nEnergy Efficient Items: We sell items that consume energy. We believe that working toward greater energy efficiency with our suppliers and leveraging existing energy efficiency certifications (e.g., EnergyStar™) can help us to reduce our Scope 3 Category 11 emissions footprint.\nSustainable Packaging: We have made progress on sustainable packaging over the years and will continue to make this a focus. We will continue to work with our suppliers to find ways to reduce unnecessary packaging, implement reuse models in operations, adopt lightweight packaging optimized for shipping efficiencies, and increase recycled content opportunities.", "chunk_word_count": 447, "section_path": "Climate Action Plan > Our Scope 3 Action Plan", "document_id": "CostCo Climate Action Plan", "page": 9, "page_start": 9, "page_end": 11 }, { "report": "CostCo Climate Action Plan.pdf", "chunk_idx": 6, "chunk_text": "# Climate Action Plan\n## Where We Are Today\nA majority of our Scope 3 emissions come from Category 1 (Purchased Goods and Services) and Category 11 (Use of Sold Product). For Category 1, our emissions are highly concentrated in livestock, agriculture (including crops that tend to be drivers of deforestation) and manufacturing of the items we sell. For Category 11, we recognize the role that our fuel business plays (more below) and the opportunity to continue to find ways to drive energy efficiency in the items we sell.\nEmissions from our fuels business comprise ${ \\sim } 4 0 \\%$ of Costco’s total emissions, largely Scope 3. We are taking actions to directly address these emissions, as outlined in this transition plan. At the same time, we will continue ensuring that our members have access to affordable and high-quality transportation fuels. Similarly, we’re providing additional members with the necessary infrastructure to shift toward new lower-carbon transportation options such as EVs.\n## Fuel Transition Plan", "chunk_word_count": 165, "section_path": "Climate Action Plan > Where We Are Today", "document_id": "CostCo Climate Action Plan", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "CostCo Climate Action Plan.pdf", "chunk_idx": 7, "chunk_text": "# Climate Action Plan\n## Overall Action Plan\nWe plan to take action across the entire span of the fuels business, including emissions upstream of the fuel station, at the fuel station and downstream of the station (i.e., combustion).\nUpstream of the fuel station, our focus will be on procuring the lowest carbon intensity fuels available. We estimate that ${ \\sim } 2 0 \\%$ of fuel Scope 3 emissions stem from Costco’s fuel supply, and can be reduced by purchasing from refineries that prioritize clean procurement and production. We are engaging fuel suppliers to better understand their carbon footprint, climate goals, disclosure protocols and carbon reduction initiatives. We also expect this engagement to encourage refineries to use cleaner production methods.\nAt the fuel station, we have a high degree of control to influence and minimize Scope 1 and Scope 2 emissions. Our efforts to date, highlighted in the next section, reflect our commitment to reducing negative environmental impact while ensuring members have continued access to affordable transportation fuels. To build on this progress, we are exploring the use of microgrids to power fuel station operations where feasible, and maintaining a focus on purchasing and maintaining state-of-the-art fueling equipment to minimize spills and vapor loss.\nEmissions are also driven by combustion of fuel in members’ vehicles. To combat these emissions, we will continue to use and refine proprietary additives in all gasoline fuel grades, which could provide an emissions reduction vs. LAC fuels6 . We are also focusing on enabling members to shift toward lower carbon intensity transportation methods when they’re ready. We are closely monitoring the market as new technologies evolve (e.g., battery electric vehicles, hydrogen fuel cell vehicles and plug-in hybrids) to provide our members with the infrastructure necessary to utilize their preferred transportation methods.\nTo support our members who have already purchased EVs and to encourage those considering a purchase, we are expanding our EV charging offering, with plans to open fast chargers at 20-plus warehouses. Our first fast EV charging station opened in Denver, Colorado, in 2023, and is serving as a pilot site to explore how to best provide EV charging services.\n6 LAC $=$ Lowest Allowable Concentration; Results shown in scenarios where Kirkland Signature™ Gasoline was tested against the minimum U.S. government-mandated detergency gasoline. Outcomes vary based on driving behaviors, engine type and vehicle maintenance intervals.", "chunk_word_count": 392, "section_path": "Climate Action Plan > Overall Action Plan", "document_id": "CostCo Climate Action Plan", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "CostCo Climate Action Plan.pdf", "chunk_idx": 8, "chunk_text": "# Climate Action Plan\n## Where we are today\nCurrent efforts to minimize emissions and environmental impact include initiatives across the fuel station value chain:\nUpstream of the fuel station\nFuel procurement: We procure only from refineries that are compliant with EPA Tier-3 regulations, resulting in some Kirkland Signature fuels containing lower sulfur content.\nBiofuels: We offer R99 $( 9 9 \\%$ renewable diesel, $1 \\%$ USLD #2) at all California fuel retail sites providing diesel, and plan to expand R99 offerings in Washington and Oregon. Renewable diesel has up to a ${ \\sim } 6 5 \\%$ lower carbon intensity than petroleum diesel.7\nFuel delivery: We deliver ${ \\sim } 3 5 \\%$ of fuels after warehouse close times, which reduces delivery truck delivery times and resulting emissions. Additionally, over 40,000 fuel deliveries in 2023 were performed by carriers with $90 \\%$ renewable diesel penetration or greater.\nAt the fuel station\nStation design: Stations are designed with environmental protection in mind. We use double walled and electronically monitored underground tanks and piping, continuous remotely monitored leak detection with automatic shut down, oil and water separators, trained and certified full-time attendants, and best-in-class components throughout the station.", "chunk_word_count": 197, "section_path": "Climate Action Plan > Where we are today", "document_id": "CostCo Climate Action Plan", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "CostCo Climate Action Plan.pdf", "chunk_idx": 9, "chunk_text": "# Climate Action Plan\n## 7 California Air Resources Board, LCFS Pathway Certified Carbon Intensities, DOE\nFuel storage: We upgraded our fuel storage tanks to manage tank pressure and minimize release of gasoline vapors through the installation of 393 vapor management systems. Combined, these efforts equate to an estimated reduction of $1 . 5 \\mathsf { k }$ tons of volatile organic compounds, $4 . 6 \\mathsf { k }$ tons of CO2 and 522k gallons of gasoline.\nSpill management: We use dripless and spitless fuel nozzles that yield a $90 \\%$ reduction in spills, with a corresponding reduction in volatile organic compounds released. Additionally, employing full-time attendants allows quick response to rare spills.\nDownstream of the fuel station\nEV fast charging: We offer EV charging at over 50 warehouses, including locations in the U.S., Canada, Spain, Korea and the United Kingdom. Charger speeds range from 7 to $3 5 0 \\mathsf { k W h }$ , allowing members to charge a vehicle in $\\sim \\mathfrak { s o }$ minutes at our fastest locations.\nResidential charging: We stock residential charging products, ensuring members can purchase hardware to enable home charging, with speeds allowing vehicles to fully charge overnight.\nEV sales: The Costco Auto Program offers members more than 30 different EV models through the program’s approved dealer network. To date, approximately 90,000 EVs have been purchased via the Costco Auto Program.\nEV rentals: Costco Travel offers a selection of electric and hybrid rental cars through our rental car suppliers at a variety of locations in the U.S., Canada and Europe. While these rentals reflect a small percentage of Costco Travel’s rental car production, the category continues to grow. For a rental car on CostcoTravel.com, members can filter their search results to show “Eco friendly” options to include these car categories if available at the location they’re renting from.\nElectric micro-mobility: We sell multiple eBike models and eScooter models in the warehouse and on Costco.com.\nThrough all these efforts, our goal is to support a just transition by providing members with low-cost best-in-class fuels, and opportunities to purchase, charge and rent electric vehicles. As the energy transition progresses, we look forward to continuing to meet members’ energy transportation needs for a variety of vehicle types.", "chunk_word_count": 376, "section_path": "Climate Action Plan > 7 California Air Resources Board, LCFS Pathway Certified Carbon Intensities, DOE", "document_id": "CostCo Climate Action Plan", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 0, "chunk_text": "# CT Real Estate Investment Trust\n## 2022 Environmental, Social and Governance Report\n### Message from the President & CEO\nI am very pleased with the progress CT REIT has made with respect to reducing our environmental impact, improving social outcomes, and continuing our track record of strong governance. Our second Environmental, Social and Governance (ESG) report provides us with an opportunity to publicly share our achievements, efforts and the results associated with this work with you, our stakeholders.\nWe are equally focused on improving social outcomes for our employees, tenants, and the communities in which we operate. In 2022, we created a new Social Engagement Committee to align with the priorities of our employees, and to ensure that learning, engagement, personal development and philanthropy remain key areas of focus for CT REIT.\nCT REIT was established in 2013 with an emphasis on strong governance principles and ethical business conduct. As we continue to grow and evolve, so too does our approach to governance. For example, our Board of Trustees recently adopted a board diversity policy that reflects evolving best practices.\nWe remain committed to our ESG strategic pillar, which guides our interactions with the environment, our employees, and the communities in which we operate, and which also supports the continued development of governance best practices. We will continue to communicate our progress and position ourselves to better understand our ESG-related impacts, while working towards improving our key focus areas over the long term.\nESG remains a key pillar of CT REIT’s overall strategy. As we continue to hone our ability to measure and benchmark our performance, our talented teams and engaged Board of Trustees are focused on sustainability, social outcomes, and good governance, all of which continue to be integrated into our business. I want to thank all our stakeholders for the trust that they have placed in us as we work towards improving our performance, mitigating our impacts, and refining our disclosure, and as we continue to walk the path along our ESG journey.\nOur commitment to make meaningful and impactful changes through the decisions we make and how we run our business is ongoing. In 2022, we started construction on our new net zero distribution centre in Calgary, Alberta. This is CT REIT’s first net zero development, and one of the first such projects to achieve the Net Zero Carbon – Design Standard certification from the Canada Green Building Council. Alongside Canadian Tire Corporation, Limited (CTC), we will aim to construct all new Canadian Tire stores to a net zero ready standard, commencing in 2024. Real change requires commitment and investment, and both CT REIT and CTC are devoting the time, resources and capital towards sustainable development, a key component of our ESG strategy.\nSincerely,\nKevin Salsberg President & Chief Executive Officer\n## 2022 ESG Highlights\nConducted energy and water audits across the portfolio.\nBegan construction of our first net zero energy and net zero carbon project, a 350,000 square foot distribution centre in Calgary, Alberta.\nTo date, together with CTC, 386 electric vehicle charging stations have been installed, at 92 CT REIT properties.\nIn the past year, $100 \\%$ of our employees completed ESG related training.\nFormed our Social Engagement Committee.\nOur Board of Trustees approved our new Diversity Policy.", "chunk_word_count": 544, "section_path": "CT Real Estate Investment Trust > 2022 Environmental, Social and Governance Report", "document_id": "CT REIT 2022 ESG Report", "page": 1, "page_start": 1, "page_end": 3 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 1, "chunk_text": "# CT Real Estate Investment Trust\n## LAND ACKNOWLEDGEMENT\nWe acknowledge that long before Canada was a country, strong nations and cultures existed here – and continue to exist. The Canadian lands on which CT REIT properties are located have been the site of human activity for 15,000 years. Today these lands and lakes continue to be home to many First Nations, Inuit and Métis communities from across Turtle Island, also known as North America.\nOur home office, located in what is currently known as Toronto, is situated on the traditional territory of the Anishinaabeg, Huron-Wendat and the Haudenosaunee Nations. This location is covered by Treaty 13, signed with the Mississaugas of the Credit, and the Williams Treaties, signed with multiple Mississauga and Chippewa bands. We are grateful that we can live and work here, and we are committed to building and sustaining a relationship with Indigenous peoples based on respect, dignity, trust and cooperation.\nAt CT REIT, we know that land acknowledgements mark a small but important step in the journey of confronting the truth and working towards reconciliation with Indigenous peoples. We are in the early stages of our journey. As we look ahead, we are committed to acknowledging the truth and advancing our reconciliation journey.\n### About CT REIT\nCT REIT owns, manages, and develops income producing commercial properties located in all ten provinces and in two territories across Canada. The REIT’s geographically diversified portfolio comprises stand-alone properties, primarily occupied by Canadian Tire stores, multi-tenanted properties, typically anchored by a Canadian Tire store, Industrial Properties, a mixed-use commercial property, and three Development Properties.\nThe principal objective of the REIT is to create Unitholder value over the long-term by generating reliable, durable and growing monthly cash distributions on a tax-efficient basis. To achieve this objective, management is focused on expanding the REIT’s asset base, while growing the REIT’s book value per unit as well as increasing its Adjusted Funds From Operations (“AFFO”) per unit.\nCT REIT focuses primarily on triple-net, long-term leases to investment grade tenants. With triple-net leases, the tenant is primarily responsible for many of the property expenses, including property taxes, operating costs, and building insurance.\n### CT REIT ESG Timeline\n2013\n2016\n2020\n2021\n2022\n2023", "chunk_word_count": 371, "section_path": "CT Real Estate Investment Trust > LAND ACKNOWLEDGEMENT", "document_id": "CT REIT 2022 ESG Report", "page": 3, "page_start": 3, "page_end": 5 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 2, "chunk_text": "# CT Real Estate Investment Trust\n## 2024 & beyond\nAmid the COVID-19 \npandemic, we \nsupported our tenants and provided rent relief, implemented enhanced cleaning protocols, \nand delivered \nsanitizing supplies.\nOngoing development of our ESG Strategy with a focus on reducing our GHG emissions, fostering talent, supporting communities and good governance. Expansion of BOMA BEST certification program.\nCT REIT’s Initial Public Offering takes place with strong governance practices in place.\nAcquired the 1.4-million-square-foot Bolton Distribution Centre. Built with many ground-breaking, environmentally sustainable features, the state-of-the-art facility achieved LEED Gold certification by the Canada Green Building Council.\nFirst GRESB submission.\nInaugural ESG Report published outlining our 2021 activities.\nFirst BOMA BEST Silver certifications achieved at eight enclosed and open-air retail properties.\n### Also in 2021:\n• Materiality Assessment conducted \n• Climate Risk Assessment conducted \n• Conducted HVAC motor retrofits at over $90 \\%$ of our properties\n### Also in 2022:\n### Also in 2023:\n• Our GRESB submission became publicly available Donation made in support of the development of a multi-sport court in Welland, Ontario supporting Jumpstart \nConstruction of our first Net Zero distribution centre began\n• Our new distribution centre was awarded the Zero Carbon Building – Design Standard certification • Adoption of Board Diversity Policy • Adoption of Sustainable Investment Corporate Policy\n### Also in 2020:\n• Exterior LED retrofits were conducted at over $90 \\%$ of our properties • Our Sustainability Committee was formed\n### About This Report\nThis report contains information about CT REIT’s ESG initiatives. It describes our ESG strategy and philosophy and approach to proactively addressing the environmental and social challenges facing our industry and country.\nand beliefs that are current, reasonable, and complete, this information is necessarily subject to a number of factors, risks, and uncertainties, which could cause actual results to differ materially from management’s expectations and plans as set forth in such forward-looking information. For more information on the risks, uncertainties and assumptions that could cause CT REIT’s actual results to differ from current expectations, refer to section 12.0 (Enterprise Risk Management) of the REIT’s 2022 Management’s Discussion and Analysis as well as CT REIT’s other public filings, available at www.sedarplus.ca and at www.ctreit.com/Investors.\n## SCOPE\nOur 2022 ESG Report is focused on the activities and outcomes of CT REIT during the 2022 fiscal year. This report also includes work that commenced in 2022 but was completed in 2023.\nUnless otherwise indicated, all references to employees in this report include all permanent employees of CT REIT.", "chunk_word_count": 414, "section_path": "CT Real Estate Investment Trust > 2024 & beyond", "document_id": "CT REIT 2022 ESG Report", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 3, "chunk_text": "# CT Real Estate Investment Trust\n## FORWARD-LOOKING INFORMATION\nCertain statements made in this ESG Report, including those related to our ESG strategy and objectives, may constitute forward-looking information under applicable securities laws. Such statements include, but are not limited to, the REIT’s intention to build new Canadian Tire stores to CTC’s net zero ready prototype. CT REIT is not required under securities laws to prepare or file this ESG Report, and the information contained herein should therefore not be read as necessarily rising to the same level of materiality of disclosure required in our securities law filings.\nUnless otherwise indicated, the forward-looking information contained in this ESG Report describes our expectations and, accordingly, is subject to change after the initial publication of this ESG report on September 29, 2023. CT REIT does not undertake to update any forward-looking information, whether written or oral, that may be made from time to time by the REIT, or on its behalf, to reflect new information, future events or otherwise, except as is required by applicable securities laws.\nThese statements are being provided for the purpose of assisting readers in understanding our approach to key ESG topics, and in obtaining a better understanding of our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes.\n## ASSURANCE\nWe received third-party limited assurance with respect to certain 2022 data presented in Appendix 1 – Environmental Data. Claims and assertions are explained further in this limited assurance statement. We did not seek or receive external assurance from third parties with respect to other information.\nAlthough CT REIT believes that the forward-looking information in this ESG Report is based on information, assumptions\n### Our Approach to ESG\nCT REIT’s strategic imperatives are rooted in being Canada’s premier net lease REIT. It is important that our ESG strategy and related initiatives align with that of our key stakeholders, including our most significant tenant and majority unitholder, CTC. We continue to advance our ESG strategy, embedding it in all aspects of our business, and driving initiatives to support it, from our building operations and property development to our tenant and employee engagement activities.\n## OUR ESG PILLAR\n## REDUCING GREENHOUSE GAS EMISSIONS\nOur focus areas under our ESG strategic pillar help guide our interactions with our environment, our employees and the communities in which we operate, and support the continued development of governance best practices.\nReducing our carbon footprint and supporting CTC’s emissions reduction strategy through the development of new net zero ready stores and distribution centres, as well as retrofitting existing stores.\nThis focus on, and investment in, ESG initiatives will also help drive long-term value for our stakeholders by managing applicable risks, fostering innovation, generating new revenue streams, and strengthening the environmental, social and governance systems on which our business relies.\n## SUPPORTING COMMUNITIES\nReinvesting and contributing to the neighbourhoods in which we operate.\nAs we progress along our ESG journey, we are monitoring regulatory developments and reviewing the applicability of other ESG related frameworks and standards, including the Sustainability Accounting Standards Board (SASB) and the International Sustainability Standards Board (ISSB) standards.\n## TALENT\nFostering diversity, inclusion, and development amongst our people.", "chunk_word_count": 532, "section_path": "CT Real Estate Investment Trust > FORWARD-LOOKING INFORMATION", "document_id": "CT REIT 2022 ESG Report", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 4, "chunk_text": "# CT Real Estate Investment Trust\n## GOOD GOVERNANCE\nStriving for best practices on behalf of all stakeholders.\n### Our Approach to ESG\n## PRIORITY ESG TOPICS\nWe focus our efforts on ESG topics that offer the greatest potential for positive impact on both our business and on the communities in which we operate. These topics rank high in terms of importance to our overall strategy, to key stakeholders and to our ability to leverage our enterprise capabilities to create meaningful change.\n### ESG Topics\n### Environmental\n### Social\n### Governance\nClimate Change Sustainable Building Design Operational Efficiency\nCommunity Impact \nDiversity, Inclusion & Belonging \nTalent & Culture\nBusiness Ethics Risk Management Privacy & Data Security\nIn 2021, the REIT conducted a materiality assessment to identify, refine and prioritize the ESG topics that may impact our business and are important to our key stakeholders.\nThe assessment included external research and benchmarking, a focused stakeholder engagement process, internal analysis and discussion, and alignment with senior leadership.\nThe results of the assessment informed our ESG strategy and priorities, which generally align with those of CTC, our most significant tenant, who prides itself on being an integral part of Canadian communities.\nThis report outlines our approach to ESG topics identified as being the most relevant to our strategy and important to our stakeholders.\n### Environmental\nAs a pillar in the communities in which we operate, we can lead change not only by reducing our greenhouse gas emissions but also by leveraging our knowledge, innovation, and relationships to empower our tenants and partners to improve sustainability. At CT REIT, addressing climate change, improving operational efficiency, and focusing on sustainable building design are integral to how we conduct our business and provide many opportunities to improve operational performance and reduce our environmental impact.\n### Climate Change\n### CT REIT is committed to limiting our environmental footprint. Our existing initiatives further our efforts to conduct our operations in a manner that reduces our greenhouse gas emissions and conserves energy and water.\nThe vast majority of CT REIT’s properties are single-tenanted, net-leased assets, where the tenant controls much, if not all, of the activities at the property, including the consumption of energy and water, as well as the resulting GHG emissions. CT REIT has therefore focused its efforts on those aspects of its operations over which it has influence or control including: the energy usage of the common areas of our properties, the design and construction of new development projects, and collaborating with tenants to improve the overall operations at our properties.", "chunk_word_count": 424, "section_path": "CT Real Estate Investment Trust > GOOD GOVERNANCE", "document_id": "CT REIT 2022 ESG Report", "page": 7, "page_start": 7, "page_end": 10 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 5, "chunk_text": "# CT Real Estate Investment Trust\n## REDUCING THE GHG INTENSITY OF OUR BUILDINGS\nWe continue to work on reducing our Scope 1 and 2 emissions by focusing on key areas of impact such as how we heat, cool, and light our buildings. Our pathway to reducing our heating, cooling, and lighting-related emissions relies on proven technologies, with new technologies, greening of the energy grid, and the purchase of renewable energy and/or carbon offsets being potential considerations to fill certain gaps.\nBy understanding the business risks of climate change, we are better positioned for the future, to understand and mitigate risks and to assess potential opportunities. We continue to make ongoing investments, as well as find new ways to work with our partners to reduce operational emissions and limit our footprint.\nWe are also developing plans to mitigate the carbon impacts of new development projects that we undertake at our properties. For example, our first net zero (both net zero energy and net zero carbon) project is a state-of-the-art distribution centre being constructed for CTC in Calgary, Alberta, which is expected to be completed in 2023. Once completed, the building is expected to generate as much energy as it consumes on an annual basis.\nFollowing the release of the TCFD recommendations, CT REIT worked with a third-party consultant to better understand the potential implications of climate change on the REIT’s portfolio and conducted a climate risk and opportunity assessment. This exercise included scenario analyses which now inform CT REIT’s decision-making regarding investments on an ongoing basis.\n## TCFD RESPONSE\nThe recommendations set out by the Task Force for Climate-related Financial Disclosures (TCFD) provide a framework for reporting on the risks associated with climate change. CT REIT believes in the importance of working to align with TCFD’s four elements of the recommendations: governance, strategy, risk management and metrics. We are working on development plans to address these recommendations and to better understand the risks and opportunities posed by climate change events, such as floods, forest fires and rising temperatures on our business, and provide transparent disclosures on our progress.\n### Sustainable Building Design\nWe are committed to reducing our environmental impact through continued improvements to both building design and construction and where possible pursuing green building certifications such as LEED, Net Zero Carbon and Net Zero Energy. The design process includes consideration of compliance with applicable zoning and building requirements and/or certifications, as well as the needs and impact on the local economy.", "chunk_word_count": 412, "section_path": "CT Real Estate Investment Trust > REDUCING THE GHG INTENSITY OF OUR BUILDINGS", "document_id": "CT REIT 2022 ESG Report", "page": 10, "page_start": 10, "page_end": 11 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 6, "chunk_text": "# CT Real Estate Investment Trust\n## GREEN BUILDING CERTIFICATION PROGRAMS\nWhat is LEED? The Leadership in Energy and Environmental Design standard is an internationally recognized symbol of sustainability excellence and green building leadership.\nWhat is Building Owners and Managers Association (BOMA) BEST? A certification program that encourages smart and sustainable solutions for existing buildings, promoting health, efficiency, cost-effectiveness, and low-carbon performance.\nWhat is WELL Health & Safety? An evidence-based, third-party verified rating for all new and existing buildings focusing on operational policies, maintenance protocols, stakeholder engagement and emergency plans.\nCommencing in 2024, together with CTC, we intend to build new Canadian Tire stores to CTC’s net zero ready prototype. These net zero ready stores will be significantly more energy efficient than previous prototypes and will have the capacity to become fully net zero with the addition of on-site solar panels. The net zero ready stores will feature enhanced construction details such as thicker insulation that will improve building envelope tightness, reducing the need for heating and cooling. Air-source heat pumps may also be installed, where appropriate, which can further reduce carbon emissions given their efficiency and reliance on electricity rather than natural gas to generate heat.\n[IMAGE CAPTION] TOTAL GLA OF GREEN BUILDINGPROJECTS CERTIFIED\n[IMAGE CAPTION] TOTAL NUMBER OF GREEN BUILDINGPROJECTS CERTIFIED\nPROJECT SPOTLIGHT\n### Net Zero Calgary Distribution Centre\nConstruction of our new distribution centre in Calgary, Alberta began in 2022 and is expected to be one of the first net zero energy and carbon industrial properties in Canada, and the first in our portfolio. The project was awarded Zero Carbon Building – Design Standard certification by the Canadian Green Building Council (CaGBC) and, once completed, CT REIT will seek Zero Carbon Building Performance Standard certification through the CaGBC.\n### Operational Efficiency\nWe are committed to reducing our carbon footprint and improving the operational performance of our portfolio. Examples of such commitment include managing energy usage, focusing on waste diversion, and continuing to support the installation of EV charging stations at our properties. We have also established more sustainable processes throughout our operations and, where possible, have used more environmentally sustainable materials. We continue to collaborate with partners and tenants to leverage new technologies to create additional efficiencies and cost savings over time.", "chunk_word_count": 375, "section_path": "CT Real Estate Investment Trust > GREEN BUILDING CERTIFICATION PROGRAMS", "document_id": "CT REIT 2022 ESG Report", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 7, "chunk_text": "# CT Real Estate Investment Trust\n## AIR-SOURCE HEAT PUMP INVESTMENT\nPlanning began in 2022 for a 2023 pilot to transition one of our retail properties from rooftop heating to air-source heat pumps. Air-source heat pumps are more efficient, relying on electricity to generate heat instead of natural gas. As most of our Scope 1 and 2 emissions result from the use of natural gas to heat our properties, focusing on the electrification of our heating systems will significantly reduce our carbon footprint, contributing to a more sustainable future.\nWe invest in initiatives and seek opportunities that support the ongoing evolution of our business and our goal to improve operational efficiencies. Examples include:\n• Energy, Water, and Indoor Air Quality audits – conducted across several properties as part of our BOMA BEST certification projects. \n• Begun implementation of new initiatives to improve waste diversion, including the introduction of new collection streams and tenant education materials across properties within our operationally controlled portfolio. \n• Installation and improvement of smart building monitoring systems at selected properties.\nAs we continue our efforts to reduce emissions from our existing properties, we proactively review the lifecycle of our systems and equipment and, where possible, invest in Heating, Ventilation and Air Conditioning (HVAC) system retrofits, improved thermal performance and other energy efficiency initiatives.\nOPERATIONAL CONTROL\nAreas within those properties where we have Operational Control are common areas and other landlord-controlled areas, such as: parking lots, mechanical and other maintenance rooms, storage rooms, vestibules, interior hallways and public washrooms in enclosed shopping centres, and property management offices.\n## ENVIRONMENTAL PERFORMANCE\nThe following environmental performance data is for the areas of our properties under our Operational Control. In 2022, the REIT had Operational Control over approximately $10 \\%$ of our portfolio by number of properties. Certain data presented in this section received limited data assurance by an external third-party following industry standard ISAE3000/3410.\n[IMAGE CAPTION] TOTAL ENERGY CONSUMPTION AND GHG EMISSIONS\n[IMAGE CAPTION] LIKE-FOR-LIKE ENERGY CONSUMPTION AND GHG EMISSIONS\n### CT REIT’s approach to energy consumption and carbon emissions performance\nWe track energy consumption data and associated greenhouse gas emissions for properties within our Operational Control.\nAt CT REIT, our energy conservation initiatives underway at various operationally controlled properties include:\n“Like-for-Like” includes assets that were owned and managed between January 1, 2020 to December 31, 2022 which includes comparative data in each reported year from 2020 to 2022. “Total” data includes assets which were owned and managed partly or wholly during the same period without any adjustments.\n• Monitoring our energy consumption via check meters. • Conducting energy audits to determine potential opportunities for implementation of additional conservation measures. • Upgrading our lighting fixtures, building envelopes, and HVAC equipment to improve energy use efficiency.\n## 1. This symbol identifies third-party limited assurance of the current year data.", "chunk_word_count": 469, "section_path": "CT Real Estate Investment Trust > AIR-SOURCE HEAT PUMP INVESTMENT", "document_id": "CT REIT 2022 ESG Report", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 8, "chunk_text": "# CT Real Estate Investment Trust\n## WHAT IS SCOPE 1, 2, AND 3?\nSCOPE 2: Emissions that are indirect and occur off-site from the production of energy, such as electricity, which is then purchased for use at facilities and operations under the REIT’s Operational Control. The charts above captures these emissions.\nSCOPE 3: Emissions that are indirect emissions from CT REIT’s value chain that are not under our Operational Control (e.g., consumption of natural gas and electricity by our tenants within our properties, emissions associated with waste generated that is sent to landfill). Scope 3 emissions aren’t included in the figures shown above.\nSCOPE 1: Emissions that are direct emissions from the combustion of on-site and mobile fuels that occur at, or are associated with, facilities and operations under the REIT’s Operational Control. The charts above captures these emissions.\n## WATER CONSUMPTION\n### CT REIT’s approach to water consumption performance\n[IMAGE CAPTION] TOTAL WATER CONSUMPTION\n[IMAGE CAPTION] LIKE-FOR-LIKE WATER CONSUMPTION\nWe track water consumption for those properties within our Operational Control. In some instances where a single water meter is being used at the property, tenant consumption may be included together with those areas in which we have Operational Control.\nAt CT REIT, our water conservation initiatives at certain operationally controlled properties include:\n• Monitoring our water consumption through check meters and analyzing real-time data to recommend operational improvements. \n• Conducting water audits to measure and determine if any program upgrades are needed. Upgrades may include changing water fixtures to low flow equipment to improve our water use efficiency. \n• Planting drought resistant plants at our properties that are native to their environment, more resilient and require less watering.\n“Like-for-Like” includes assets that were owned and managed between January 1, 2020 to December 31, 2022 which includes comparative data in each reported year from 2020 to 2022. “Total” data includes assets which were owned and managed partly or wholly during the same period without any adjustments.\n## WASTE & RECYCLING\n## 1. This symbol identifies third-party limited assurance of the current year data.\n### CT REIT’s approach to waste diversion\nWe track waste metrics for properties within our Operational Control. The data monitored and collected includes waste diversion data.\n## PERCENTAGE OF WASTE DIVERTED FROM LANDFILL\nCT REIT–Controlled Waste Diversion\nAt CT REIT, our waste management initiatives at certain operationally controlled properties include:\n• Implementing integrated monthly waste diversion reporting to monitor, optimize and customize waste management practices. • Conducting annual waste audits to identify opportunities for improvement. • Implementing new waste collection programs including mixed containers and organics.\n### Social\nWe believe people are at the heart of strong businesses and communities. The talent and dedication of our employees are the driving force that brings our ESG strategy and related initiatives to life. We support and give back to the communities in which we operate.\n### Community Impact\nWe are committed to supporting opportunities for all by investing in those communities in which we operate and which are an integral part of our continued success.\n## COMMUNITY OUTREACH SPOTLIGHT\n### Inclusive multi-sport court in Welland, Ontario", "chunk_word_count": 518, "section_path": "CT Real Estate Investment Trust > WHAT IS SCOPE 1, 2, AND 3?", "document_id": "CT REIT 2022 ESG Report", "page": 13, "page_start": 13, "page_end": 16 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 9, "chunk_text": "# CT Real Estate Investment Trust\n## SUPPORTING INCLUSIVE PLAY SPACES\nIn 2021, as part of its partnership with Jumpstart, CT REIT committed $\\$ 100,000$ , payable over two years, to support the construction of inclusive play space within some of the communities in which CT REIT operates, with the inaugural project being a new multi-sport court and inclusive splash pad in Welland, Ontario.\nCT REIT is committed to supporting the Canadian Tire Jumpstart Charities (Jumpstart), which have been assisting kids overcome the financial and accessibility barriers to sport and play for their kids since 2005. In 2022, Jumpstart provided funding to over 700 community sport and recreation organizations in Canada, creating opportunities for over 440,000 kids in the process – the most in any single year to date. Learn more about Jumpstart’s work here: 2022 Annual Report.\n## COMMUNITY OUTREACH SPOTLIGHT\n### Through our efforts, we were able to raise nearly $\\$ 120,000$ for:\n## SUPPORTING OUR COMMUNITIES\nIn addition to monetary donations, we know that volunteering our time, skills and expertise can help support local communities. Supporting employee voluntarism builds a stronger culture of giving and provides opportunities for our employees to gain a better understanding of the needs and challenges facing our communities. In 2022, an employee volunteer program, Community Changemakers, was launched. The program provides employees with the opportunity to use 10 hours of paid time off per year to support Jumpstart, Jumpstart beneficiaries as well as other community organizations.\n• Jumpstart \n• Cancer Foundation of Saskatchewan \n• Dress for Success \n• Salvation Army \n• Juvenile Diabetes Research Foundation \n• Princess Margaret Hospital \n• Crohn’s and Colitis Canada\nCT REIT team at the Ride for Life event in support of the Juvenile Diabetes Research Foundation\n## SUPPORTING DIVERSE EMERGING LEADERS IN REAL ESTATE\n## ENGAGING TENANTS IN CONVERSATION\nWe believe that tenant feedback is an integral part of our client service model. We are better when we work together with our tenants to understand their needs and to deliver a level of service that exceeds their expectations. As part of our broader tenant engagement program, CT REIT conducted a survey with our tenants, requesting feedback on the services and programs we offer. The survey results provided critical insight to help us improve performance and maintain operational excellence.\nCT REIT is committed to engaging with our tenants to develop strong partnerships and healthy communities. Throughout 2022, we hosted and facilitated several tenant engagement events across our portfolio, as well as distributed newsletters and launched new contests, promotions, and local social media campaigns.\nTogether with the Toronto Metropolitan University and Ted Rogers School of Management, the REIT established a 5-year partnership through to 2027 that includes financial support through a scholarship, industry experience through a paid internship and engagement through mentorship opportunities with members of CT REIT’s management team.\nThe annual real estate award recognizes two full-time students, enrolled in the Real Estate Management Program at Ted Rogers School of Management who self-identify as Black, Indigenous, or People of Color and demonstrate academic achievement and leadership through involvement in the community.\nThe primary goal of the award is to encourage diversity, lower barriers to entry into the commercial real estate industry and support emerging real estate leaders.", "chunk_word_count": 539, "section_path": "CT Real Estate Investment Trust > SUPPORTING INCLUSIVE PLAY SPACES", "document_id": "CT REIT 2022 ESG Report", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 10, "chunk_text": "# CT Real Estate Investment Trust\n## PROJECT SPOTLIGHT\n### Earth Day community cleanup\nIn 2022, we held our first community cleanup event to celebrate Earth Day. With participation from across Canada, our teams collected 60 bags of debris totalling approximately 900 pounds.\n## LEVERAGING OUR PROPERTIES TO SUPPORT COMMUNITIES\nCT REIT has established an urban beekeeping program with the help of our partner, Alvéole. The program has enabled us to increase engagement within communities in which we operate, raise awareness about environmental issues, and produce some great tasting honey! The program is in place at seven CT REIT locations and each beehive generates about 100 jars of honey annually which are shared with the local community.\n### Diversity, Inclusion & Belonging\nWe are committed to an equitable and inclusive culture that represents our people, our tenants and their customers, and the communities in which our properties are located.\n### We are committed to creating a culture where belonging is a must and diversity, inclusion and equity are a part of everything we do.\nSocieties that prioritize equity and inclusion have a proven track record of flourishing and bringing out the best in their individuals and communities. Inclusive, equitable societies are stronger and more resilient and provide greater opportunities for personal and community growth.\nThis commitment is supported by CT REIT and CTC’s collective DIB strategy that serves to foster an environment where everyone feels a sense of belonging. Belonging promotes an environment where all are welcome and diverse voices are sought, new viewpoints are considered, and accessible and fair opportunities and experiences are actively created.\n## OUR APPROACH\nCT REIT benefits from leveraging CTC’s comprehensive DIB resources, participating in employee resource groups, DIB surveys, and courageous conversations, all in support of the collective DIB strategy which is integrated into our day-to-day operations.\nAt CT REIT, we are committed to confronting and breaking down barriers so that diversity, inclusion and belonging (DIB) is an authentic, valued, and embedded part of who we are.\n## DIVERSITY\n## INCLUSION", "chunk_word_count": 337, "section_path": "CT Real Estate Investment Trust > PROJECT SPOTLIGHT", "document_id": "CT REIT 2022 ESG Report", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 11, "chunk_text": "# CT Real Estate Investment Trust\n## BELONGING\nDiversity at all levels within our organization is part of our connection to a stronger workforce. In 2023, CT REIT’s Board of Trustees adopted a Board Diversity Policy and set a target to have female representation of at least $30 \\%$ on the Board.\nAn inclusive and welcoming workplace is critical to ensuring that equity-deserving employees thrive in their roles and choose to stay with CT REIT long term. Our commitment to DIB is grounded in the belief that every employee deserves to feel valued, respected and supported. Initiatives and opportunities to support the retention of employees from equity-deserving backgrounds, have been developed for CTC and its subsidiaries including CT REIT. Such initiatives include CivicMatch (in partnership with the CivicAction Leadership Foundation) which connects senior leaders with rising leaders from equity-deserving backgrounds for mentorship, networking, and coaching.\nBelonging is a necessary aspect of life: when people feel like they belong, they can fully be their best selves with their colleagues, customers and communities. Through our annual DIB survey, first implemented in 2020, we collect valuable insights and measure the feeling of belonging across the organization. In 2022, our survey was voluntarily completed by $8 6 \\%$ of employees. See the table below for a summary of select scores.\nGender diversity is represented throughout our organization with women representing $52 \\%$ of all employees at all levels and $7 5 \\%$ of senior executives.\nAs we continue to listen to and learn from our employees, we will continue to leverage the findings to develop programs and strategies to support the growth, development, and connection of our diverse team.\n## 2022 DIB SURVEY – SELECT RESULTS\nCommitment to DIB score\nBelonging score 81\nInclusion score 79\n80\nAuthenticity score 83\nConversation engagement score 82\nGrowth score\n80\n### Talent & Culture\n### We are committed to being an organization that attracts and retains the best talent and ensures our people are proud of the work they do and the community that they are a part of.", "chunk_word_count": 342, "section_path": "CT Real Estate Investment Trust > BELONGING", "document_id": "CT REIT 2022 ESG Report", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 12, "chunk_text": "# CT Real Estate Investment Trust\n## CREATING AN INCLUSIVE AND MEANINGFUL EXPERIENCE FOR CURRENT AND PROSPECTIVE TALENT\n### Bringing our Core Values to Life\nOur core values are a representation of our fundamental beliefs.\nOur success is anchored in our people. For that reason, it is important for us to attract top talent with inclusive and meaningful experiences. In our 2022 eVoice survey, employees’ sentiment regarding our ESG strategy awareness scored 84 points and the ESG strategy progress scored 77 points.\nCT REIT is only as strong as our people. Our long-term success is anchored in our consistent ability to attract and retain highly talented and dedicated individuals of all backgrounds, abilities, and skill sets. We are committed to designing and delivering an inclusive and meaningful employee experience that empowers our employees to achieve their fullest potential. This includes providing opportunities for growth and development and cultivating a healthy pipeline of talent while leading through new ways of working.\n• We are innovators at our core. \n• Outcomes drive us. \n• Inclusion is a must. \n• We are stronger together. \n• We take personal responsibility.\nOur core values are embedded within our talent practices and all aspects of our employee experience to drive awareness and engagement.\n### Our 2022 eVoice results\nThe voice of our employees informs our people and culture priorities\n90% of employees participated\n## 81 \nour 2022 \nengagement score\n## OUR APPROACH\nOur employee-based Social Engagement Committee was formed in 2022 to support CT REIT’s ongoing commitment to ESG, with a specific focus on the “S” of ESG. The Committee is focused on:\nInvesting in our employees’ financial, physical, and mental well-being is paramount to the success of our business. We are committed to designing and delivering an inclusive and meaningful employee experience that empowers our employees to excel in their roles and achieve their fullest potential.\n## 82 our intent to stay score\n1. Engaging the REIT’s employees, tenants and their customers, and the communities in which we operate. 2. Promoting a corporate culture that is inclusive and supports diversity and feelings of belonging. 3. Overseeing the REIT’s support of charitable and social causes.\n## SUPPORTING OUR EMPLOYEES’ WELL-BEING\n## INITIATIVE SPOTLIGHT\nAt CT REIT we prioritize employees and their families. We continually introduce and evaluate programs to ensure they serve our employees’ and their families’ wellness. For instance, we harmonized our Flex Days Program in 2022, offering employees eight paid days off a year. Employees can take the time when it is important and best supports them to address personal illness, focus on personal well-being and disconnect from work, address family emergencies, or recognize a cultural day of significance. In addition, we provide our employees with access to services such as virtual healthcare, employee assistance programs, and mental health support programs.\n### Ken Silver Legacy Award\nIn 2022, we established the Ken Silver Legacy Award (in honour of CT REIT’s first Chief Executive Officer) to recognize, on an annual basis, an employee who reflects CT REIT’s culture and values, and who has been a key contributor to our success.", "chunk_word_count": 515, "section_path": "CT Real Estate Investment Trust > CREATING AN INCLUSIVE AND MEANINGFUL EXPERIENCE FOR CURRENT AND PROSPECTIVE TALENT", "document_id": "CT REIT 2022 ESG Report", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 13, "chunk_text": "# CT Real Estate Investment Trust\n## INVESTING IN THE FUTURE\nA variety of resources and tools are available to enable our employees’ development, including targeted development opportunities, self-assessment tools, 360-degree feedback and personal coaching. The TLA offers numerous on-demand learning experiences that employees can access in support of their development, including the enhancement of individual and team effectiveness, rolespecific and organizational capabilities, and leadership development and growth programs.\n>300 interactions with pieces of learning content\nWe are investing in our talent, both for today and the years to come. As part of this investment, we are focused on building a talent pool with the right skills and capabilities to support our future business outcomes. We believe that an integral part of cultivating a positive work culture is to focus on our talent and learning ecosystem. By developing our employees to achieve their fullest potential, we are better positioned to execute our strategic initiatives.\nIn 2022, many employees leveraged the TLA and participated in several programs, such as cybersecurity awareness training, ways to improve mental health at work, leadership and effective communication, among others. Such employee engagement opportunities have been shown to increase job satisfaction and earning potential, while strengthening the skill set of our employees and the competitiveness of our enterprise.\nAt CT REIT, we encourage our employees to take personal ownership of their development with the support of people leaders. Individual development planning is an ongoing process of identifying meaningful development goals in service of our employees’ success in both their current roles and their longer-term career aspirations.\n32\ndifferent on-demand experiences and learning programs were accessed\n### Governance\nOur success in operating with accountability and transparency is directly tied to our governance practices. With sound policies and practices, our good corporate governance foundation allows us to protect the trust of our stakeholders.", "chunk_word_count": 305, "section_path": "CT Real Estate Investment Trust > INVESTING IN THE FUTURE > Governance", "document_id": "CT REIT 2022 ESG Report", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 14, "chunk_text": "# CT Real Estate Investment Trust\n## INVESTING IN THE FUTURE\n### Governance\nCT REIT is committed to good corporate governance, as reflected in our policies and practices. We strive to ensure that our corporate governance promotes oversight, accountability, integrity, independence, and transparency and is aligned with our Core Values.\nOur Declaration of Trust incorporates a governance framework that ensures Board independence and addresses, among other matters, conflicts of interest and related party transactions.\nThe Board has delegated a number of its responsibilities to its three standing committees, as permitted by the REIT’s Declaration of Trust, to enable the Board to operate more efficiently and to focus on the more significant business and strategic issues affecting the REIT. This approach to committee delegation also empowers each of the committees to focus on key areas of accountability. Key areas of responsibility for each committee are listed below:\nThe Board believes that overseeing the REIT’s development, maintenance of, and approach to good corporate governance is essential to its role and is committed to developing strong corporate governance policies and practices that reflect our unique circumstances, which continue to be enhanced, as required, to adapt to the REIT’s business needs and respond to evolving internal and external environments.\nWe believe that good governance starts with an engaged Board of Trustees, a strong code of conduct, and other policies that address key areas of governance and risk management within the organization, such as privacy and cyber security. With effective leadership and systems in place, we can achieve sustainable growth, remain resilient in the face of ongoing changes and challenges, and continue to serve our unitholders, tenants, employees, partners, and communities.\n## AUDIT COMMITTEE\n## GOVERNANCE, COMPENSATION AND NOMINATING COMMITTEE\n## INVESTMENT COMMITTEE\n## OVERSIGHT\nFinancial statements and related disclosures; internal control over financial reporting, and disclosure controls and procedures; enterprise risk management, including Code of Conduct compliance; and internal and external auditor oversight.\nCorporate governance policies and practices; ESG initiatives and related disclosures; board and committee composition and related performance assessments; trustee education and orientation; trustee remuneration; related party transactions process; executive compensation, including compensation design, plans, policies, procedures, and practices; talent management succession planning; and workforce diversity and inclusion.\nInvestment plan and property portfolio, including related investment policies, performance, and proposals; environmental management program and related compliance policy; and environmental sustainability and reporting.\nCT REIT’s Board of Trustees is responsible for the stewardship of the REIT and acts in the best interest of the REIT and its Unitholders. The Board oversees management’s decisions with respect to the REIT’s strategic planning, capital planning, investment and funding strategy, planning for growth, succession planning, talent management, distributions, financial reporting and disclosure, fundamental policies, the control environment, the management of enterprise risk, and ESG matters and initiatives.\n## BOARD INDEPENDENCE", "chunk_word_count": 463, "section_path": "CT Real Estate Investment Trust > INVESTING IN THE FUTURE > Governance", "document_id": "CT REIT 2022 ESG Report", "page": 23, "page_start": 23, "page_end": 23 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 15, "chunk_text": "# CT Real Estate Investment Trust\n## BOARD COMPOSITION\nAs the GCN Committee undertakes board renewal activities, it also considers the tenure of the trustees to ensure an appropriate mix of longer serving and newer trustees.\nHaving an independent board is one of the ways the REIT ensures that the Board can operate independently of management and make decisions in the best interests of the REIT. Five of the eight $( 6 3 \\% )$ trustees are independent within the meaning of applicable Canadian securities laws. The Board is led by an independent, non-executive Chair. Each Committee is chaired by an independent Chair.\nThe GCN Committee oversees the Board’s renewal process. The competencies and skills of each trustee are identified in a trustee skills matrix which is publicly disclosed in our Management Information Circular. The skills matrix is regularly reviewed by the Board to ensure that it has the appropriate composite of competencies and skills for effectively overseeing the management of the REIT, taking into consideration the evolving needs and strategies of the REIT. See page 19 of our 2022 Management Information Circular.\nIn 2023, the Board adopted a written diversity policy codifying its commitment to board diversity. When assessing its composition or identifying suitable candidates for appointment or election, the Board considers candidates using objective criteria having due regard to the benefits of diversity and the needs of the Board. In adopting the diversity policy, the Board set a target that it be comprised of at least $30 \\%$ women. The Board has met and is committed to continuously meeting this target.\n[IMAGE CAPTION] Board Composition\n50% Four trustees have served for less than five years; four have served for five years or more\n50% Four of the eight trustees self-identify as women\n63% Five of the eight trustees are independent\n### Business Ethics\n### Guided by our commitment under our Code of Conduct – to conduct our business honestly and with integrity – we are committed to maintaining clear ethical conduct and standards across our operations and ensuring that we operate our business with integrity.\n## CODE OF CONDUCT", "chunk_word_count": 351, "section_path": "CT Real Estate Investment Trust > BOARD COMPOSITION", "document_id": "CT REIT 2022 ESG Report", "page": 24, "page_start": 24, "page_end": 24 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 16, "chunk_text": "# CT Real Estate Investment Trust\n## CODE OF CONDUCT\nTo ensure a clear understanding and consistent level of commitment to ethical business practices, CT REIT has adopted a Code of Conduct which formally addresses the ethical business standards and expectations of the REIT’s trustees, employees and those individuals who act on behalf of the REIT (such as independent contractors) with respect to the compliance with laws and a commitment to integrity, honesty and respect when dealing with each other, business partners and communities.\nThe commitments outlined in our Code of Conduct reflect our values and form the foundation for how we go about business and interact with internal and external stakeholders.\nWe believe that conducting business in accordance with the highest standards builds trust and protects our reputation with employees, tenants, suppliers, and our other stakeholders.\nWe treat others as we would like to be treated.\nIt is vital that everyone on our team has a shared understanding of what it means to act with honesty, integrity, and respect. We achieve this through our Code of Conduct and compliance programs, all of which are supported by our leadership’s commitment to our Core Values.\nOur Code of Conduct is based upon our Core Values, which we pride ourselves on living to ensure we continuously strive to be a socially responsible organization. See the REIT’s Code of Conduct.\n## 2 We safeguard the REIT’s assets, information, and reputation.\nThe REIT’s Core Values help guide the REIT in achieving its purpose of delivering reliable, durable and growing results over time and in supporting our approach to corporate governance.\nOur onboarding process requires new trustees and employees to review and sign off on the Code of Conduct. All trustees and employees are also expected to annually acknowledge and confirm that they have read and understand the Code of Conduct and are responsible for complying with it. In addition, biennial Code of Conduct training is required by all employees of the REIT.\n## 3 We conduct our business honestly and with integrity.\n## 4 We contribute to the communitiesin which we operate.\nExternal consultants and contractors engaged to provide services to the REIT are expected to demonstrate an understanding and compliance with the standards and expectations set out in the Code.\nIn 2022, $100 \\%$ of our trustees and employees completed the annual sign-off of the Code of Conduct.", "chunk_word_count": 395, "section_path": "CT Real Estate Investment Trust > CODE OF CONDUCT", "document_id": "CT REIT 2022 ESG Report", "page": 25, "page_start": 25, "page_end": 25 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 17, "chunk_text": "# CT Real Estate Investment Trust\n## STAKEHOLDER ENGAGEMENT\nWe believe that maintaining open lines of communication with our stakeholders on key matters ensures continued trust and confidence. Our Board and management have worked to develop a trusted relationship with our stakeholders including our Unitholders, employees, tenants, and the investment community.\nCT REIT’s stakeholder engagement activities and communications in 2022 include:\n### Risk Management\nEffective management of risk is a key priority for the Board and management. The Board oversees the implementation by management of the Enterprise Risk Management (“ERM”) Policy and Framework that outlines the REIT’s approach to effective risk management. The ERM Framework addresses the identification, assessment, monitoring, mitigation and reporting on the REIT’s key and emerging risks through policies and the implementation of systems and controls to manage these risks. The REIT’s ERM Framework is designed to provide an integrated approach to the management of risks in a disciplined manner to safeguard the REIT’s\nreputation, support the achievement of the REIT’s growth strategy and objectives, preserve and enhance Unitholder value, and to support business planning and operations by providing a cross-functional perspective to risk management, integrated with strategic planning and reporting processes.\nAdditional information on the REIT’s ERM Framework and key risks is included in section 4 of CT REIT’s Annual Information Form for the year ended December 31, 2022, and in section 12 of CT REIT’s Management’s Discussion and Analysis for the year ended December 31, 2022.\nThrough its delegated authority, the Audit Committee assists the Board with oversight of the REIT’s enterprise risk management processes. The Audit Committee reports quarterly to the Board on management’s assessment of key risks, risk ratings and mitigation plans (where appropriate), and makes recommendations to the Board regarding any changes to the ERM Policy and Framework, risk appetite statement and other policies that govern the REIT’s risks.\n### Privacy & Data Security\nRisks and responsibilities related to data privacy, including the ethical use, management and security of data extends to our employee, tenant, and corporate information. Our privacy program is embedded in all areas of the business and integrated with CTC.\nThe data privacy program is centred on trust and transparency and works together with the REIT’s cyber security program to ensure that any data we receive is sufficiently protected.\nCT REIT acknowledges that cybersecurity is more than just a technology challenge, but a business imperative that relies on each employee playing an important role to ensure the REIT maintains constant vigilance.\nBy building a culture of cyber security awareness within the REIT, along with integrated policies and standards, an embedded multi-layered set of controls and round-the-clock monitoring in conjunction with CTC, we ensure that the REIT remains resilient against cyberattacks.\n## WE TAKE CYBERSECURITY SERIOUSLY", "chunk_word_count": 456, "section_path": "CT Real Estate Investment Trust > STAKEHOLDER ENGAGEMENT", "document_id": "CT REIT 2022 ESG Report", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "CT REIT 2022 ESG Report.pdf", "chunk_idx": 18, "chunk_text": "# CT Real Estate Investment Trust\n## TRANSPARENCY WITH INFORMATION\nWe are committed to safeguarding the REIT’s assets, information, and reputation. We ensure that training on our risk management and cybersecurity programs are part of our employee onboarding process and employees are also required to review the policies and complete a training module annually. In 2022, $100 \\%$ of REIT employees were assigned and completed this cyber training.\nThe protection of personal information and data privacy is managed at the enterprise-level and CT REIT adheres and is bound by CTC’s Privacy Policy and procedures to protect the personal information of its stakeholders.\nTogether, with the support of CTC, we are staying ahead of threats to our organization through integrated policies, an embedded multi-layered set of controls, training, and round-the-clock monitoring.\n### Glossary\nThe data presented in this Appendix includes a more detailed overview of our energy and water consumption, our waste generation and recycling, and our greenhouse gas emissions.\n## DATA COVERAGE\nThe Scope 3 data presented comes from information provided by our tenants on a voluntary basis and includes estimates. Furthermore, total data shown here represents $89 \\%$ of all of our GLA. CT REIT aims to continue to work with its tenants to increase the Scope 3 data coverage, on a year-over-year basis.\nThe energy, water, waste, and Scope 1 and 2 greenhouse gas emissions data shown in this Appendix is representative of areas in our portfolio where we have Operational Control. This data is either directly obtained from utility bills or, in the case of greenhouse gas emissions, calculated based on emission factors that match the fuel type and/or region where the energy was purchased from the grid.\n“Like-for-Like” includes assets that were owned and managed between January 1, 2020 to December 31, 2022 which includes comparative data in each reported year from 2020 to 2022. “Total” data includes assets which were owned and managed partly or wholly during the same period without any adjustments.\n### CT REIT – Controlled Energy Consumption Total Energy Consumption (eMWh)\n### CT REIT – Portfolio Energy Consumption Total Energy Consumption (eMWh)\n### CT REIT – Controlled GHG Emissions by Scope Total GHG Emissions (t ${ \\mathsf { C O } } _ { 2 } { \\mathsf { e } } )$ )\n### CT REIT – Portfolio GHG Emissions\n### CT REIT – Controlled Water Consumption\n### Total Water Consumption $( \\mathsf { m } ^ { 3 } )$\n### CT REIT – Portfolio Water Consumption\nTotal Water Consumption $( \\mathsf { m } ^ { 3 } )$\n### CT REIT – Controlled Waste Diversion\n### Weight of Non-Hazardous Waste (metric tonnes)\n### CT REIT – Total Waste Diversion\n### Total Portfolio Weight of Non-Hazardous Waste (metric tonnes)\n### CT REIT – EV Charging Stations\nEV Charging Stations (cumulative)", "chunk_word_count": 471, "section_path": "CT Real Estate Investment Trust > TRANSPARENCY WITH INFORMATION", "document_id": "CT REIT 2022 ESG Report", "page": 27, "page_start": 27, "page_end": 34 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 0, "chunk_text": "# Building better futures\n## 2023 GLOBAL IMPACT REPORT\n### Contents\n### Letter from leadership\n### Business\n### Environmental\n### Social\n### Governance\nArtificial intelligence and innovation\nEnvironmental progress\nAnti-corruption commitment\n### Societal impact\nClimate considerations in financial statement audits\nConfidentiality, privacy, and cybersecurity\nHealth equity Humanitarian response\nDeloitte core services\nDeloitte organizational structure\nLocations\nNature and biodiversity\nEthics\n### Our people\nSustainable and responsible supply chain\nEnvironmental performance data limited assurance report FY2023\nGlobal security\nLearning and development\nDisability inclusion and neurodiversity\nLGBT+ inclusion\nLeadership and governance\nMental health\nRacial and ethnic inclusion\nRisk and opportunity management\nWomen’s equity\nStakeholder engagement and materiality\n### Methods and frameworks\nBasis of reporting, GRI index, stakeholder capitalism metrics\nThe global business environment has been incredibly dynamic over the past year. The pace of change and the increasing complexity we see in the world around us are relentless— and that momentum shows no signs of slowing down.\nWhile this dynamic environment has created challenges, it also continues to bring forth incredible human ingenuity, creativity, determination, and resilience—with the aim of advancing toward a better future. We have been energized by how organizations and individuals have innovated and adapted, and we are proud to work alongside them to help navigate some of the most complex challenges and breakthroughs of modern times.\ndiversity of experiences and career paths, the markets value the quality we deliver, and our communities value the impact we make on many big societal challenges.\n### Accelerating transformational change\nAs the pace of change has accelerated, we have continued to help organizations tackle their most complex challenges and guide them on their transformation journeys. We are committed to investing alongside businesses, governments, and communities around the world to develop and deliver breakthrough solutions and services to help advance our collective progress.", "chunk_word_count": 299, "section_path": "Building better futures > 2023 GLOBAL IMPACT REPORT > Contents", "document_id": "Deloitte 2023 Global Impact Report", "page": 2, "page_start": 2, "page_end": 3 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 1, "chunk_text": "# Building better futures\n## 2023 GLOBAL IMPACT REPORT\n### Leading with purpose\nDeloitte’s business success goes well beyond financial performance. It is also driven by our commitment to embedding our purpose, to make an impact that matters, in everything we do. We have a responsibility to create a positive impact with our clients, our people, and society. Our organization continues to thrive by focusing on the value we create across all dimensions— environmental, social, governance, and financial.\nWhile the COVID-19 pandemic shaped the global outlook during the first few years of this decade, driving forces over the past year included unpredictability in the world economy and profound shifts in the geopolitical landscape. The need to adapt and respond to the rapid adoption of game-changing technologies like generative artificial intelligence (AI) has added further complexity. We have seen markets and supply chains disrupted, international relationships rewritten, and expectations about the globalized world economy upended. Amidst all this, also top of mind is the urgency to address climate change and social inequities. The reverberations from each of these forces can be felt around the world and across business, industry, and society.\nOur record of delivering strong growth over the past year reflects this. Analysts continue to recognize Deloitte as a leader across industries, capabilities, and regions, year after year. And we have again been named the world’s strongest and most valuable commercial services brand and among the world’s best workplaces.\nWe also draw strength from our multidisciplinary model, which brings together the tremendous range of experiences and capabilities in our organization globally to address the near-and long-term forces reshaping business and society. Our multidisciplinary model enables us to bring our purpose to life and deliver significant impact for our stakeholders: Deloitte clients value the breadth of capabilities, our people value the\nThis public recognition is underpinned by each of the ways our organization has led with purpose. Across our businesses, Deloitte is focused on guiding organizations’ transformation journeys, helping them navigate their most complex challenges, and serving the public interest by delivering on the growing\nmarket demand for climate, energy, nature, equity, and ESG reporting services and solutions. For example, our Sustainability & Climate practice has helped organizations accelerate their sustainability journeys, while we have continued to make meaningful progress on our WorldClimate ambition, advancing our own progress toward science-based net-zero with near-term 2030 goals. We are leveraging our bold investments in AI, data, cloud, and cyber to deliver innovative and advanced technology solutions. And we have advised organizations on redesigning the talent experience, including adapting diversity, equity, and inclusion strategies for a workplace that’s both physical and virtual, while helping ensure our own people have the support, opportunities, and inclusive culture they need to thrive.\nfounding sponsor of the World Economic Forum’s Centre for Trustworthy Technology, helping to expand the equitable opportunities of a tech-savvy world.", "chunk_word_count": 476, "section_path": "Building better futures > 2023 GLOBAL IMPACT REPORT > Leading with purpose", "document_id": "Deloitte 2023 Global Impact Report", "page": 3, "page_start": 3, "page_end": 4 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 2, "chunk_text": "# Building better futures\n## 2023 GLOBAL IMPACT REPORT\n### Business shapes the world—and we shape business\nDeloitte has a deep history of helping business, government, and society adapt to technological and social changes, as well as shaping the contribution that businesses make to society. That is at the heart of what our organization has been doing for 178 years. Working together, we can help advance equitable and sustainable progress and shared prosperity around the world.\n### Measuring and reporting on our impact\nWith stakeholders continuing to demand greater impact, accountability, and transparency from business, we have set ambitious goals for what is most important to Deloitte. We rigorously measure—and report on—our impact across business, environmental, social, and governance priorities. Measuring our impact helps us keep transforming to meet the ever-changing challenges that face our world.\nAs an organization that serves as a trusted auditor and adviser to leading companies, we understand the value of external assurance. That’s why, starting with FY2023, selected environmental data in this report has been subject to independent limited assurance. As the assured data illustrates, our organization is progressing on our journey toward a more sustainable future.\n### Building a more equitable global society\nWe draw on these same business strengths to help power progress in society, tackling systemic barriers to sustainability, equity, and shared prosperity through our WorldImpact agenda. To help foster a more equitable society, we announced a $\\cup 5 \\$ 3$ billion global societal impact commitment, which complements our WorldClass ambition to impact 100 million people with education and career-building opportunities by 2030. We are proud to be a\nJoe Ucuzoglu Deloitte Global CEO\nAnna Marks Deloitte Global Chair\n### Business\n### Total revenue\nNotes\n### Revenue by business\n[IMAGE CAPTION] Revenue figures are in US\\$ billion. Figures are aggregated across the Deloitte organization. Due to rounding, sum of revenue by business may not equal total. “Legal” (above) means the legal practices of member firms or their related entities that provide legal services. For legal and regulatory reasons, not all member firms provide legal services.\nNotes\n### Revenue by industry\n[IMAGE CAPTION] Revenue figures are in US\\$ billion. Figures are aggregated across the Deloitte organization. Due to rounding, sum of revenue by industry may not equal total.\nNotes\n[IMAGE CAPTION] Revenue figures are in US\\$ billion. Figures are aggregated across Deloitte member firms in the relevant region. Due to rounding, sum of revenue by region may not equal total.\nNotes\nTimes of global challenges and rapid advances in technology are naturally also times of uncertainty. The climate crisis, economic and geopolitical shifts, generative artificial intelligence (AI), and other disruptive innovations—there’s a long list of complicated matters on today’s corporate agenda.\nAnd change is often not simple or comfortable, especially as the transformative developments impacting the business landscape mean that organizations should transform the way they do business too.\nIn this dynamic environment, Deloitte helps clients chart a clear path forward, delivers deep insights, and enables trust in the capital markets. We make an impact that matters by bringing together Deloitte’s multidisciplinary capabilities, global resources, extensive industry experience, market knowledge, and innovative technologies to help solve companies’ most complex business challenges and position them to thrive amid disruption.", "chunk_word_count": 535, "section_path": "Building better futures > 2023 GLOBAL IMPACT REPORT > Business shapes the world—and we shape business", "document_id": "Deloitte 2023 Global Impact Report", "page": 4, "page_start": 4, "page_end": 11 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 3, "chunk_text": "# Building better futures\n## 2023 GLOBAL IMPACT REPORT\n### Powering meaningful, measurable climate action\na systematic, purposeful way through GreenSpace Tech, also launched this year.\nTackling the climate crisis requires sophisticated solutions and each of us has a role to play, including business. Over the past year, Deloitte’s Sustainability & Climate practice has worked with companies spanning industries and geographies to turn their climate aspirations into climate action. As global business leaders reevaluate their framework for value creation, with an emphasis on sustainability and a broader set of stakeholders, we introduced Deloitte’s Sustainable Value Map™, designed to expand perspectives on how an organization’s value can be defined and improved in a sustainable world.\nTechnology solutions are instrumental in the fight against climate change, helping businesses cut through immense amounts of data and information, so that they can feel confident in their ability to take concrete steps to move from strategy to action.\nDeloitte teams helped clients position themselves to become sustainability leaders, shape climate-conscious paths to growth, and make an impact for both people and the planet. They developed policy and measurement frameworks to assist clients as they transition their organizations to net-zero, helped empower Indigenous leaders through listening and co-investment in solutions, and helped combat illegal wildlife trade. We also launched the first-of-its-kind Infrastructure for Good global barometer with The Economist. And as Deloitte clients respond to the ever-evolving market demands and environmental, social, and governance (ESG) reporting requirements, we delivered a broad range of ESG services, including materiality and gap readiness assessment, disclosure preparation, and limited or reasonable assurance.\nTeams from across Deloitte businesses have helped drive meaningful advances in clients’ climate-led transformations—from embedding sustainability into their strategies and operations, to measuring and reporting on their progress. For example, Deloitte practitioners guided companies in developing actionable paths to net-zero through Deloitte’s GreenLight Solution decarbonization tool, launched in 2023. They helped companies accelerate decarbonization and value creation by bringing together climate technology ecosystems in", "chunk_word_count": 326, "section_path": "Building better futures > 2023 GLOBAL IMPACT REPORT > Powering meaningful, measurable climate action", "document_id": "Deloitte 2023 Global Impact Report", "page": 11, "page_start": 11, "page_end": 11 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 4, "chunk_text": "# Building better futures\n## 2023 GLOBAL IMPACT REPORT\n### Navigating digital disruption and transformation\ncontinued to expand our Operate services, helping organizations transform and advance critical business functions to increase operational efficiency, add value, and embed continuous advantage into their operations. Deloitte’s Operate delivery networks include more than 50,000 practitioners, many working from multi-language delivery centers around the world.\nAs the pace of digital transformation continues to accelerate, recent disrupters may soon find themselves facing the drivers of disruption too. Wherever they fall on that spectrum, businesses should carefully navigate the powerful pull of technological change. According to Monitor Deloitte’s report, Unleashing value from digital transformation: Paths and pitfalls, the appropriate combination of digital transformation actions could unlock as much as $\\cup 5 \\$ 125$ trillion in additional market capitalization across Fortune 500 companies.\nIn guiding Deloitte clients through these times of change, we draw on our strong ecosystem of alliances with many of the world’s leading technology providers. During the past year, Deloitte also established alliances with a number of emerging innovative tech companies. From cloud migration to digital transformation, and AI-driven change to workforce reinvention, the combined power of our alliance relationships helps enable us to deliver solutions that add value at each stage of a client’s journey.\nWith an appropriate mix of globally and locally available and scalable domain and industry talent, technology, and transformation experience, Deloitte has helped clients tackle some of their toughest challenges in critical areas of business, such as cybersecurity, tax, and risk. For instance, Operate teams have helped clients respond to ransomware attacks and provide 24/7 cybersecurity monitoring, deliver ongoing efficiencies to streamline regulatory filings using AI-enabled platforms, and continually monitor multi-tier global supplier networks for potential disruptions while driving strategies to prevent them.\nDeloitte practices have made bold investments in digital capabilities over the past year, enabling Deloitte practitioners to help their clients address challenges and make the most of opportunities raised by disruptive technologies such as generative AI, 5G, quantum computing, spatial computing, and the metaverse. For example, Deloitte US launched Unlimited Reality to guide client journeys into the era of spatial computing, creating their own metaverse solutions to help simulate the future of business, as well as a Generative AI practice to advise them on exponentially enhancing productivity and accelerating the pace of business innovation. Deloitte is also working to incorporate generative AI into Deloitte platforms to help optimize the way that services are delivered cross-business.\nAs we work in this complicated, quickly changing landscape, we are guided by our organization’s Ethical Technology Principles, which were developed to help ensure Deloitte's creation and use of technology is trustworthy.\n### Embedding continuous advantage\nWidespread digitalization and ever-changing disruptive technologies—along with evolving regulatory and risk requirements, talent shortages, and the need for increasingly specialized skill sets—can create operational challenges. Over the past year, Deloitte", "chunk_word_count": 474, "section_path": "Building better futures > 2023 GLOBAL IMPACT REPORT > Navigating digital disruption and transformation", "document_id": "Deloitte 2023 Global Impact Report", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 5, "chunk_text": "# Building better futures\n## 2023 GLOBAL IMPACT REPORT\n### Building and protecting value and trust\ntogether experienced practitioners, processes, and market-leading technology to deliver 24/7 vigilance globally for Deloitte clients. For companies operating in industries that are addressing the accelerated transition to the digitalization of their businesses, we can help create a structured approach to their own controls journey in what is often an overly complex environment.\nIn this complex and constantly changing environment, Deloitte Financial Advisory practitioners acted as trusted advisers for more than 20,000 clients, helping them create and preserve value. Our Mergers and Acquisitions (M&A) services continue to be integral to companies’ responses to market volatility and uncertainty, and our Turnaround & Restructuring specialists helped companies navigate banking industry turbulence and wisely use cash reserves and debt markets. Our Forensic practice worked with public and private sector organizations to help address global financial crime; navigate fraud, waste, and matters of abuse; and use digital and AI solutions to manage the risk of malfeasance more effectively.\nAs a leader in quality, Deloitte Audit & Assurance remains committed to our vital role in financial reporting, upholding integrity, independence, and transparency across $1 8 0 , 0 0 0 +$ engagements worldwide. We have won multiple awards for our leading-edge technology and innovative culture. Deloitte Omnia’s ESG module was named Digital Innovation of the Year by International Accounting Bulletin and received top honors in the “Product” category at the International Innovation Awards by Enterprise Asia. Deloitte Audit & Assurance practitioners have also supported non-audit organizations as they navigate the changing landscape of stakeholder needs for more holistic reporting that will tell the story of their business model resilience and broader societal objectives.\nWith our deep portfolio of offerings, Deloitte’s Risk Advisory practice continued to provide forward-looking, integrated capabilities around client concerns. For example, with cyberthreats becoming more frequent and sophisticated in nature, our cybersecurity services are designed to help enable the success of Deloitte clients, equipping them to operate securely and grow with confidence. With our latest Cyber offerings—Managed Extended Detection and Response and Digital Identity—we bring", "chunk_word_count": 348, "section_path": "Building better futures > 2023 GLOBAL IMPACT REPORT > Building and protecting value and trust", "document_id": "Deloitte 2023 Global Impact Report", "page": 13, "page_start": 13, "page_end": 13 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 6, "chunk_text": "# Building better futures\n## 2023 GLOBAL IMPACT REPORT\n### Advancing in a shifting landscape\nIncreasing regulatory, business model, and environmental change has driven demand for Deloitte Legal services. For example, Deloitte Legal practices continued to work with clients on workforce policies to accommodate the now permanent reality of remote and hybrid working, as well as navigate employment laws that could affect workers’ rights and well-being, in an environment where attracting and retaining talent has been challenging.\nTaxation impacts many of the most important matters facing society, such as action on climate change, policies to tame inflation, and longerterm global economic strategy. The acceleration of new business models is also challenging the tax function in a business in fundamental ways and driving demand to transform tax operating models.\nDeloitte’s Tax practices helped clients anticipate their needs and navigate the shifting business, regulatory, and economic landscape. Among these shifts are the Organization for Economic Co-operation and Development’s (OECD's) twopillar approach to tax challenges arising from the digital economy, as well as the digitalization of tax authorities, which is driving demand for transparency and technology solutions. Clients are also seeking increased support of the finance function, M&A activity, and supply chain reconfigurations. Deloitte Tax practitioners helped organizations address these developments, including major implications for data quality and access, with advanced tools that automate processes, speed response times, and improve accuracy.\nThe digitalization of many aspects of work has also ushered in a host of legal complexities, requiring legal considerations to be embedded in the inner workings of a business. The rapid advancement of generative AI has given rise to numerous legal complexities that Deloitte is helping clients to navigate, drawing on Deloitte Consulting practitioners’ deep technical knowledge and Deloitte Legal's capabilities. As digital transformation becomes increasingly central to business strategy, we continue to help clients transform their legal departments’ operating models with the aim of improving the accuracy and speed of processes, gain cost efficiencies, and uncover new insights using advanced analytics, particularly in managing contract life cycles, collaborating with advisers in real time, and automating routine tasks.\n### Artificial intelligence and innovation", "chunk_word_count": 351, "section_path": "Building better futures > 2023 GLOBAL IMPACT REPORT > Advancing in a shifting landscape", "document_id": "Deloitte 2023 Global Impact Report", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 7, "chunk_text": "# Building better futures\n## 2023 GLOBAL IMPACT REPORT\n### Generative AI\nThe US Generative AI practice works in conjunction with the Deloitte AI Institute, which supports the responsible growth and development of AI through engaged conversations and market perspectives globally. Deloitte practitioners help clients activate a wide range of generative AI use cases and deploy transformative new applications that have the potential to enhance productivity, amplify creativity, and accelerate the pace of business innovation. As generative AI evolves, ethical, legal, and policy considerations are emerging to support and protect organizations and their users and drive their success. Deloitte is committed to the safe and responsible use of generative AI, guided by our Trustworthy AI™ framework, which helps clients develop necessary safeguards and balance competing ethical priorities during product development and operation.\nOver the past year, Deloitte innovation focused on investments across several thematic areas and businesses.\nThe emergence and rapid advancement of generative artificial intelligence (AI) has unlocked a host of new marketplace applications and a surge of productivity growth, and Deloitte is well positioned to help clients capture these new opportunities.\nIn 2023, Deloitte US launched a Generative AI practice to help clients harness the power of applied AI and discover ways to exponentially enhance productivity and accelerate the pace of business innovation. Deloitte practitioners guide clients in designing their generative AI strategies and help them plan, build, implement, and operationalize solutions built on the leading foundation models. At the core of the US practice is a generative AI market incubator with a dedicated team of engineers focused on the development of generative AI pilot programs, demos and proofs of concept, and leading practices. The incubator is also supported by a research and development team working alongside leading technology providers in Deloitte US alliance relationships to train and calibrate foundation models, with a focus on mitigating bias and increasing quality of results throughout the life cycle.", "chunk_word_count": 318, "section_path": "Building better futures > 2023 GLOBAL IMPACT REPORT > Generative AI", "document_id": "Deloitte 2023 Global Impact Report", "page": 15, "page_start": 15, "page_end": 15 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 8, "chunk_text": "# Building better futures\n## 2023 GLOBAL IMPACT REPORT\n### Total M&A solution\na significant impact on tax operations, as they change many aspects of how global businesses are taxed—and in turn, their data requirements, calculation, and reporting demands. To comply, businesses should coordinate end-to-end tax, finance, IT, and legal inputs. This includes having access to the right data at the right level of detail, evaluating existing technology, generating calculations, preparing and training resources, and managing stakeholder expectations.\nDeloitte Omnia, our digital audit platform, enables Deloitte audit practitioners to execute their audits digitally while maintaining highquality audit standards and meeting deadlines.\nMergers and acquisitions (M&A) are more than just a chance to execute a disruptive business strategy. They can be game-changing moments with opportunities to blaze a bold new trail and create a positive impact, both in business and on society. Throughout the M&A life cycle, Deloitte’s Total M&A Solution provides cognitive enablers and accelerators to bring the power of automation, analytics, and machine learning to M&A transactions. The integrated set of innovative technologies offers M&A solutions that can be tailored to each client’s transaction journey—and helps map the path ahead. As a result, Deloitte practitioners can provide in-tune M&A advice by accessing deeper insights earlier, handling deal complexities, anticipating what’s around the next curve, and effectively preparing organizations for change.\nAdditionally, Deloitte has developed an ESG module for Deloitte Omnia: a structured framework powered by AI that addresses multiple standards, disclosure frameworks, and rising regulator expectations. Omnia’s ESG module was named Digital Innovation of the Year by the International Accounting Bulletin in 2022.\nDeloitte has developed technology to help multinational businesses plan for and comply with these complex new rules. The Deloitte Pillar Two Compliance and Reporting solution will help enable Deloitte practitioners and clients to collaborate on and manage the end-to-end safe harbor, forecast/provision, and compliance process. It will also provide comprehensive data transformation and import capabilities, and distributed data collection, to help ensure clients can collect the information needed for the Pillar Two process and return.\nClare Harding Deloitte Global Innovation Officer clharding@deloitte.com.au\n### Pillar Two Compliance and Reporting solution\nThe Organization for Economic Co-operation and Development’s (OECD’s) Pillar Two model rules require that in-scope multinational companies pay a minimum level of tax on income arising in the jurisdictions where they operate. These rules are likely to have\n### Deloitte Omnia digital audit platform\nDeloitte Audit & Assurance practices continue to invest to transform our audit services to be highly responsive to organizations’ evolving needs in the dynamic regulatory landscape.\n### Deloitte core services\n### Risk Advisory\n### Audit & Assurance\nAudit Services Assurance Services\nAccounting & Internal Controls Cyber & Strategic Risk Regulatory & Legal Support\n### Consulting\n### Tax & Legal\nStrategy, Analytics, and M&A \nCustomer & Marketing \nCore Business Operations \nHuman Capital \nEnterprise Technology & Performance\nTax Services for Businesses Global Employer Services High Net Worth Tax Services Legal\n### Financial Advisory\nCorporate Finance, M&A, and Restructuring & Performance Improvement \nValuation, Modeling, and Economic Advisory Infrastructure, Real Estate, and Climate & Sustainability \nForensic, Financial Crime, and Discovery & Data Management\nNotes", "chunk_word_count": 517, "section_path": "Building better futures > 2023 GLOBAL IMPACT REPORT > Total M&A solution", "document_id": "Deloitte 2023 Global Impact Report", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 9, "chunk_text": "# Building better futures\n## 2023 GLOBAL IMPACT REPORT\n### Locations\nGeographies with at least one Deloitte office in operation during FY2023 are listed below. These are listed for ease in identifying locations where Deloitte has a presence. They are not intended as statements on political sovereignty.\nPlease visit www.deloitte.com/GlobalOfficeDirectory and contact an office near you to inquire about Deloitte capabilities to provide services in locations not listed below.\nKuwait \nKyrgyzstan \nLao PDR \nLatvia \nLebanon \nLiechtenstein \nLithuania \nLuxembourg \nMalawi \nMalaysia \nMalta \nMarshall Islands \nMauritius \nMexico \nMicronesia (Federated States of) \nMoldova (Republic of) \nMonaco \nMontenegro \nMorocco \nMozambique \nMyanmar \nNamibia \nNetherlands \nNew Zealand \nNicaragua \nNigeria \nNorth Macedonia (Republic of) \nNorthern Mariana Islands \nNorway \nOman \nPalau \nPalestinian Territories \nPanama \nPapua New Guinea \nParaguay \nPeru \nPhilippines \nPoland \nPortugal \nPuerto Rico \nQatar \nRomania \nSaudi Arabia \nSenegal \nSerbia (Republic of) \nSingapore \nSlovak Republic \nSlovenia \nSouth Africa \nSpain \nSri Lanka \nSweden \nSwitzerland \nTaiwan (China) \nTanzania (United Republic of) \nThailand \nTogo\n### Environmental\n### Reduce emissions\nCommitment to science-based net-zero with 2030 goals\nEmbed sustainability Address internal policies and practices\nEmpower individuals Educate and inspire Deloitte people to act on climate change\n### Engage ecosystems\nEngage with ecosystems to address climate change\n### Commitment to science-based net-zero with 2030 goals\n## 1 Reduce emissions from business travel $50 \\%$ per full time equivalent from 2019 levels\n## 2 Source $100 \\%$ renewable energy for Deloitte facilities\n## 3 Transition fleets to $100 \\%$ electric vehicles\n## 4 Engage Deloitte's supply chain to set science-based carbon reduction targets\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Renewable electricity consumption\nNotes\nFigures are aggregated across the Deloitte organization. Where possible, Deloitte firms procure and claim renewable energy in accordance with the Climate Group’s RE100 Technical Criteria and Global Reporting Initiative (GRI) topic standard GRI 302: Energy 2016. In certain markets where procuring renewable electricity is challenging or is not possible, Deloitte firm may procure renewable electricity from a neighboring country. This allows Deloitte to demonstrate commitment to our renewable electricity target and signal market demand.\nAs this approach meets only one out of three market boundary conditions included in the RE100 Technical Criteria, there may be variances between renewable electricity amounts reported in the Global Impact Report and within RE100 reports. Deloitte anticipates increasing the alignment with RE100 Technical Criteria over time as market availability of renewable energy increases.\n### Electric fleet\nNotes\n### Greenhouse gas emissions by scope\n### Scope 1\nFuel in buildings and fleet\n### Scope 2\nElectricity and district heating and cooling in buildings and fleet\n### Scope 3\nBusiness travel\nPurchased goods and services\nNotes", "chunk_word_count": 435, "section_path": "Building better futures > 2023 GLOBAL IMPACT REPORT > Locations", "document_id": "Deloitte 2023 Global Impact Report", "page": 18, "page_start": 18, "page_end": 26 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 10, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### From droughts and wildfires to hurricanes and flooding, extreme weather events are becoming more frequent and severe, and the climate crisis has emerged as one of the defining challenges of our time.\nBut over the past year, we have also been reminded how big challenges can inspire tremendous human ingenuity and creative solutions. Organizations committed to climate action are taking significant steps to bring their commitments to life, even in the face of economic headwinds and an energy crisis.\nDeloitte is helping to lead the way toward a lower-carbon future by advising clients on their sustainability journeys, as well as through our own meaningful, measurable actions. We are also extending our impact by empowering our 457,000 people around the world, influencing our suppliers and engaging across the broader ecosystem.", "chunk_word_count": 146, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > From droughts and wildfires to hurricanes and flooding, extreme weather events are becoming more frequent and severe, and the climate crisis has emerged as one of the defining challenges of our time.", "document_id": "Deloitte 2023 Global Impact Report", "page": 26, "page_start": 26, "page_end": 26 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 11, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Helping clients take action\nGreenSpace Tech helps accelerate decarbonization and value creation by providing businesses with access to a robust ecosystem of climate technologies and innovators to quickly track, develop, and deploy climate tech solutions.\nfacilitate the transition to a low-carbon economy. Deloitte’s near-term (2030) greenhouse gas (GHG) reduction goals have been validated by the Science Based Targets initiative (SBTi) as $\\boldsymbol { { 1 . 5 ^ { \\circ } } }$ C-aligned, science-based targets. Deloitte has also committed to set longterm emissions reduction targets using the SBTi’s Net Zero Standard.\nRecognizing that business has a critical role to play—and that, according to Deloitte Global's $2 0 2 3 \\mathsf { C x O }$ Sustainability Report, more than $6 0 \\%$ of CxOs say climate change will have a high impact on their organization’s strategy and operations over the next three years—we have deepened Deloitte’s collaborations with clients and other organizations to help advance climate action.\nIn addition, the Deloitte Center for Sustainable Progress has published forward-looking research on topics that are top of mind for business leaders. Hydrogen: Making it happen outlines the practical solutions needed to kickstart the large-scale deployment of clean hydrogen, while Work toward net zero: The rise of the Green Collar workforce in a just transition explores the shifts in workforce skills needed to move rapidly to a lower-carbon economy.\nWe are embedding sustainability into processes and practices throughout the organization, including procurement, and measuring performance against our goals. For instance, Deloitte continues to advance our commitments to the three core initiatives of the Climate Group supporting the advancement of renewable electricity (RE100), electric vehicle (EV) adoption (EV100), and energy efficiency/productivity (EP100). In FY2023, $9 4 \\%$ of the energy Deloitte purchased was renewable energy. Looking across our global network, Deloitte North and South Europe (Deloitte NSE) has continued to electrify its fleet, $4 2 \\%$ of which now consists of EVs and plug-in hybrids, while The Ridge, Deloitte Africa’s Cape Town office, received the Gold Award in the “Best Sustainable Designed Commercial Building Globally” category at the World Architecture News Awards.\nOver the past year, the Deloitte Sustainability & Climate practice globally has worked with clients from across industries and around the world to meaningfully embed sustainability into their decision-making and operations. By bringing together leading sustainability technology with proven business capabilities, Deloitte is helping to drive rapid and significant progress on organizations’ climate-led transformations.", "chunk_word_count": 420, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Helping clients take action", "document_id": "Deloitte 2023 Global Impact Report", "page": 27, "page_start": 27, "page_end": 27 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 12, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Advancing our own sustainability journey\nWe work across our global network to advance WorldClimate, Deloitte’s environmental sustainability ambition. WorldClimate consists of a two-pronged approach: actions we take and actions we inspire. Recognizing that collective action is required to effectively tackle the climate crisis, Deloitte is committed to taking measurable, decisive action on climate change, empowering Deloitte people and engaging the broader ecosystem to create solutions that\nTwo innovative offerings, launched earlier this year, help make that progress possible. Deloitte’s GreenLight Solution, a modular system of end-to-end decarbonization software, helps enable companies of virtually any size, maturity, or geography to assess their carbon footprint and emissions baseline, then develop a clear, actionable roadmap to net-zero.\nAs we strive to approach environmental matters holistically, it’s important to also consider our impact on nature and biodiversity. This is a critical topic for many companies, who turn to us for guidance on developing their nature and biodiversity strategies. While our organization’s direct impacts in this area are limited, we are developing a global nature and biodiversity strategy to help address and mitigate impacts throughout our value chain and support naturepositive solutions.\ncorporate perspectives into the standard-setting process.\nThe ISSB issued its first International Sustainability Disclosure Standards, IFRS $\\textcircled{8}$ S1 and S2, in June 2023. Deloitte issued a statement welcoming the ISSB Standards’ publication and supporting their adoption around the world. To help ensure the inclusive development and widespread implementation of the standards, the IFRS Foundation launched the Partnership Framework for Capacity Building at COP27, the 2023 UN conference on climate change. Deloitte is a founding signatory and will continue to support companies, investors, and other capital market stakeholders as they prepare to use the ISSB Standards.", "chunk_word_count": 299, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Advancing our own sustainability journey", "document_id": "Deloitte 2023 Global Impact Report", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 13, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Measuring and reporting on our progress\nClients and other stakeholders are increasingly calling on organizations to report transparently on their ESG performance. Deloitte is a committed leader in this area, reporting our performance against the WEF stakeholder capitalism metrics (SCM) and aligning with the Global Reporting Initiative. We earned an Arating from CDP for our FY2022 response to its climate change questionnaire. In addition, Deloitte has continued its disclosure following the recommendations of the Task Force on Climate-related Financial Disclosures.\nDeloitte also continues to build on our work with Indigenous peoples, including in Australia and Canada, to advance nature-based climate solutions. We recognize the importance of honoring the knowledge of these communities and supporting Indigenous-led climate solutions that embed traditional ecological knowledge. For example, Deloitte Australia owns and manages The Deloitte Carbon Forests, properties that are designed and managed to deliver benefits for biodiversity and local communities, allow for agricultural production, and strengthen Traditional Custodian relationships. Deloitte Australia collaborated with environmental organizations and with Indigenous leaders to help deliver these benefits. In addition, Deloitte and the World Economic Forum (WEF) jointly published Embedding Indigenous Knowledge in the Conservation and Restoration of Landscapes, which explores how organizations can co-invest with Indigenous leaders to help bring value to both corporate action on nature and the longterm health of nature.\nAssurance helps to enhance trust in sustainability information and is a critical component of an effective governance structure. We continue to evolve our methodologies, upskill our practitioners, adhere to strict ethics and professional standards, and engage technology to deliver high-quality assurance services. Importantly, starting with FY2023, selected environmental data in this report has been subject to independent limited assurance.\nWe, together with the coalition of companies supporting the WEF SCM initiative, have continued to advocate for a comprehensive global baseline for sustainability reporting based on the International Sustainability Standards Board’s (ISSB’s) standards (ISSB Standards). As part of this initiative, in June 2023, ISSB and WEF concluded a Memorandum of Understanding, which creates a mechanism for the WEF business community to share leading practices and practicalities of adopting the ISSB Standards and to offer insights and", "chunk_word_count": 369, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Measuring and reporting on our progress", "document_id": "Deloitte 2023 Global Impact Report", "page": 28, "page_start": 28, "page_end": 28 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 14, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### The power of our people\nOur Green Teams, led by Deloitte people, foster internal grass roots efforts to promote more sustainable choices in Deloitte offices around the world and encourage community volunteering with environmental non-profit organizations. Deloitte also hosts internal virtual spaces for sharing inspiring ideas and prompting discussions that drive action—such as organizing a six-week vegan challenge or an office recycling or clothing drive. During Earth Month, we explored the individual actions each of us can take in our daily lives, in addition to the work Deloitte does for clients, to help build “Better Futures. Together.”, with a special focus on the circular economy, nature and biodiversity, and decarbonization.\nIt’s a priority for Deloitte, as an organization that utilizes air travel, to collaborate and help expand the market for low-emission transportation solutions. Reporting and accounting of SAF purchases is a developing area that can benefit from connecting efforts by numerous stakeholders across the SAF value chain. Deloitte is participating in the development of a chain of custody framework for transport decarbonization through membership in the governing board of the Book and Claim Community, formed by the Smart Freight Centre and the Rocky Mountain Institute. We also purchased SAF from various participants in the market, both to signal demand for SAF and to deepen our own market knowledge. In addition, Deloitte helps accelerate SAF usage as a founding member of the Sustainable Aviation Buyers Alliance and through our involvement in WEF’s Clean Skies for Tomorrow Coalition. We also help advance climate action more broadly through WEF’s Alliance of CEO Climate Leaders.\nDeloitte continues to empower our people to take climate action and make environmentally responsible choices. During the past year, we launched a new Sustainability & Climate learning program to help give Deloitte people the critical insights needed to expand their skill sets, grow their careers, and serve as trusted advisers to clients as they transform their organizations.\nWhile business travel has resumed in most parts of the world following the COVID-19 pandemic, Deloitte is pursuing a variety of initiatives to help reduce the impact of our travel, an important part of our WorldClimate ambition. For example, Deloitte US recently launched its TravelSight dashboard, which combines data related to modes of travel, office visits, and expenses to support environmentally minded decision-making related to travel. Similarly, Deloitte Asia Pacific and Deloitte Global’s “Moments that Matter” travel guidelines were developed to support vital in-person touchpoints while keeping climate priorities in balance. By traveling smarter, we can help reduce the scope 3 carbon cost to clients, while also supporting the work-life balance of Deloitte people.", "chunk_word_count": 449, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > The power of our people", "document_id": "Deloitte 2023 Global Impact Report", "page": 29, "page_start": 29, "page_end": 29 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 15, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Environmental impact across our ecosystems\nOver the past year, we also continued to engage with like-minded organizations across our ecosystems to help inspire action, increase demand for sustainable products and services, and develop solutions.\nRecognizing the power of young people to embrace and drive the principle of sustainable living, Deloitte is collaborating with Junk Kouture, a recycled fashion competition with an education platform, to inspire and empower the circular engineers of tomorrow.\nAs part of Deloitte’s commitment to WEF’s First Movers Coalition, we are participating in aviation sector working groups to help enable further design and implementation of several sustainable aviation fuel (SAF) initiatives.\nWe have created opportunities for their voices to be heard at events such as COP27 and the WEF Annual Meeting in Davos and developed a masterclass curriculum focused on sustainability and climate and diversity, equity, and inclusion.\nLast November, Deloitte helped launch the International Olympic Committee Climate Action Awards, which will honor athletes and sports organizations within the Olympic Movement who are tackling climate change. As a Worldwide Olympic and Paralympic Management Consulting Partner (TOP), Deloitte is supporting the IOC Climate Action Award x Innovation, which recognizes innovation and education efforts focused on reducing emissions to help create a more sustainable future.\nDeloitte is also a contributor to the Sustainable Markets Initiative (SMI) and collaborates with SMI on its mission to build a coordinated global effort within the private sector to help accelerate the achievement of global climate, biodiversity, and Sustainable Development Goal targets.\n### Environmental progress\nTaking meaningful, measurable actions to embed sustainability throughout our organization is a cornerstone of WorldClimate, Deloitte’s environmental ambition. In FY2020, our near-term (2030) greenhouse gas (GHG) reduction goals were validated by the Science Based Targets initiative (SBTi) as $1 . 5 ^ { \\circ }$ C-aligned, science-based targets. Over the past year, we have continued to work toward achieving these targets, recognizing the increasing urgency of the climate crisis.\nnumerous other industries where travel has long been a core component of doing business. Deloitte is continuing to implement guidance and practices aimed at addressing business travel intentionality and exploring additional ways to reduce travel emissions through value chain mitigation measures like sustainable aviation fuel certificate purchases. Increasingly, clients are asking Deloitte to report clientspecific travel emissions and set goals to reduce them. We welcome such opportunities to work together with Deloitte clients to reduce emissions in this critical area.\nWe will continue to work closely with our suppliers toward achieving our goal of having $6 7 \\%$ of them, by emissions, set science-based targets by 2025. Over time, as suppliers set goals and have success in their journey towards meeting them, we anticipate Scope 3 emissions for this category will decrease.\nAdditional details of our GHG emissions and performance against goals are included in the Performance metrics and reporting frameworks summary.", "chunk_word_count": 489, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Environmental impact across our ecosystems", "document_id": "Deloitte 2023 Global Impact Report", "page": 29, "page_start": 29, "page_end": 31 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 16, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Advancing fleet electrification\nAdditional information on business travel initiatives is provided in the Environmental article in this report.\nDeloitte continues to advance our commitment to the Climate Group’s EV100 initiative, which seeks to accelerate the transition to $ 1 0 0 \\%$ electric vehicles (EVs) by 2030. Looking across our global organization, Deloitte’s fleet has advanced from $2 4 \\%$ EVs in FY2022 to $3 9 \\%$ in FY2023.\nFY2023 Scope 1 and 2 emissions decreased $7 9 \\%$ compared to base year emissions, exceeding our organization’s 2030 SBTi goal of a $7 0 \\%$ reduction in Scope 1 and 2 emissions. These reductions are primarily driven by purchases of renewable energy, transition to electric vehicles in Deloitte firm fleets, and a change in policy regarding accounting for fleet emissions where Deloitte has no operational control.\nOur emissions from Scope 3 Purchased Goods and Services increased in FY2023 by $6 3 \\%$ compared to FY2022. While the amount of goods and services procured by Deloitte increased by a small percentage, the emissions factors used for those goods and services increased significantly in many cases, contributing to the emissions increase. Calculating emissions from goods and services carries the most uncertainty, as spend data is used to approximate emissions rather than activity data. Deloitte observed that industry average emission factors tend to increase significantly as organizations improve completeness of their emissions reporting.\nDeloitte member firms are helping to drive this effort. For example, this year Deloitte North and South Europe (Deloitte NSE) implemented guidance that all new vehicle purchases must be hybrids (either a conventional combustion hybrid or a plug-in electric hybrid) or full-battery EVs. In FY2023, $4 2 \\%$ of Deloitte NSE’s fleet now consists of EVs and plug-in hybrids.\nProgress toward Deloitte’s 2030 goal of a $5 0 \\%$ reduction in business travel emissions per Full-Time Equivalent (FTE) slowed considerably in FY2023 due to travel rebounds following the COVID-19 pandemic. This is a significant challenge for professional services organizations like Deloitte, as well as companies across\n### Prioritizing renewable electricity", "chunk_word_count": 357, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Advancing fleet electrification", "document_id": "Deloitte 2023 Global Impact Report", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 17, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Transitioning our approach to support a low-carbon economy\nDeloitte is likewise committed to the Climate Group’s RE100 initiative, supporting the advancement of renewable electricity. We continue to make progress toward our goal of procuring $1 0 0 \\%$ of our electricity from renewable sources, achieving $9 1 \\%$ in FY2022 and $9 4 \\%$ in FY2023. This goal is not without its challenges for a large global organization like Deloitte, which seeks to purchase renewable electricity for a highly distributed load that spans markets around the world. Where RE100- compliant renewable electricity cannot be sourced, Deloitte firms sometimes source renewable energy attributes from a neighboring geography. This enables Deloitte to demonstrate commitment to our renewable electricity target, help expand the market for renewable electricity in adjacent geographies where it is available, and promote the economic opportunities that come with opening or expanding in-country supply.\nDeloitte has committed to invest in meaningful market solutions for the emissions we cannot yet eliminate. In recent years, we have compensated for unabated emissions through carbon credit purchases as a means to promote the advancement of sustainability solutions, while also recognizing that this does not replace the need to reduce emissions in line with science. In FY2021 and FY2022, Deloitte purchased certified carbon credits for $\\harpoonleft 0 0 \\%$ of emissions from operations and business travel.\nWe continue to explore and seek to adopt leading practices around climate investment and supporting the transition to a low-carbon economy through beyond value chain mitigation. We recognize that purchasing carbon credits, while an important mechanism to bring funding to new climate abatement projects, is only one piece of the puzzle. A comprehensive approach to global decarbonization is needed.\nVan Zorbas \nDeloitte Global Chief Purpose Officer \nvzorbas@deloitte.ca \nKathryn Alsegaf \nDeloitte Global Chief Sustainability Officer \nkalsegaf@deloitte.com\nAchieving $ 1 0 0 \\%$ renewable electricity requires the development of vitally important renewable electricity projects, infrastructure, and associated contracts in each market where Deloitte operates. In addressing these matters, Deloitte seeks to engage key stakeholders and looks to aggregate demand with others in order to open markets to voluntary procurement of renewable electricity.\nBased on this, in FY2023 Deloitte began transitioning our approach to expand our investment in beyond value chain mitigation to a portfolio of innovative beyond-compliance or credited investments in climate mitigation measures that otherwise may not occur without external funding. We are beginning this transition through the implementation of a voluntary internal carbon price. Deloitte’s internal carbon price is designed to secure a consistent level of investment by establishing a floor price, though Deloitte firms are encouraged to apply a higher price as they implement this new financial mechanism. A floor price was established to remove barriers to the adoption of the carbon price in the Global South, given the disparity in both wealth and emissions between the Global North and Global South. We will continue to reassess our approach to carbon pricing in future years, and anticipate gradually increasing the minimum carbon price to align with leading benchmarks and expanding the scope to cover additional sources of emissions. We will also continue to evaluate the most impactful uses of funds collected through implementation of our carbon price.", "chunk_word_count": 546, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Transitioning our approach to support a low-carbon economy", "document_id": "Deloitte 2023 Global Impact Report", "page": 32, "page_start": 32, "page_end": 32 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 18, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Climate considerations in financial statement audits\nDeloitte’s commitments to people, the planet, and our Purpose are reflected throughout our organization’s strategy, operations, and stakeholder engagement. As it relates to auditors, generally accepted auditing standards require auditors to identify and assess the risks of material misstatement in the financial statements of the companies they audit, and to design and perform audit procedures responsive to those risks, including, when relevant, climate-related risks.\nIn addition, to demonstrate Deloitte A&A’s commitment to net-zero ambitions, Deloitte A&A has been monitoring four quality metrics in the audits of financial statements of the largest companies audited by Deloitte in carbonintensive industries (e.g., oil and gas, industrial products, and electrical utilities) (“in-scope engagements”). The metrics were monitored for December 2022 and March 2023 year-end audits. For all in-scope engagements, the following activities have been performed, and all in-scope engagements achieved these quality metrics:\n3. Communications – this quality metric measures the percentage of Deloitte inscope engagement teams that discussed the relevance of climate risks to the financial statements and the audit with the audited entity’s management and those charged with governance.\n4. Reporting – this quality metric measures the percentage of Deloitte in-scope engagement teams that considered whether climate risks needed to be explicitly mentioned in their audit reports.\nDeloitte will reassess the list of in-scope engagements periodically to reconsider our monitoring activities around considerations of climate-related risks on financial statement audits.\n1. Application of audit methodology – this quality metric measures the percentage of Deloitte in-scope engagement teams that performed specific audit procedures to determine whether climate risks were material to the financial statements taken in whole.\nSpecifically, within Deloitte’s Audit & Assurance (A&A) practice, Deloitte is committed to supporting net-zero ambitions by planning and performing financial statement audits with a focus on quality, integrity, and objectivity and in accordance with the relevant laws, regulations, and professional standards.\n2. Training – this quality metric measures the percentage of Deloitte engagement team practitioners assigned to the in-scope engagement teams at the manager level and higher that received training related to assessing and responding to climate risks in audit engagements.\nFurther, as one of the leading A&A providers, Deloitte has developed best-in-class training and methodologies, which embed climate considerations and keep pace with the relevant professional standards.", "chunk_word_count": 395, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Climate considerations in financial statement audits", "document_id": "Deloitte 2023 Global Impact Report", "page": 33, "page_start": 33, "page_end": 33 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 19, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Climate-related stakeholder engagement\nDeloitte coordinated with the Economist Impact Insight Hour to conduct a webinar featuring Deloitte, the International Organisation of Employers (IOE), and the International Labour Organisation (ILO), in which we discussed just transition, workforce vulnerabilities accentuated by climate change, and reactive adaptation policies.\nDuring the last year, Deloitte has also proactively engaged with key stakeholders, including policymakers whose activities affect business and industry and who could be effective in advocating for the establishment of public policies that support a net-zero transition of economic sectors in line with science and with regard to social impacts.\nDeloitte Global published “Transform to React: Climate Policy in the New World Order”, an article outlining recommendations for governments and companies that wish to optimize their contributions to climaterelated efforts collaboratively, while taking into account economic and geopolitical considerations that affect public policy.\nDeloitte developed the Using sustainability reporting to drive behavioral change report, which leverages insights from 25 interviews with leaders in the investment, business, academic, and nonprofit sectors, and identifies six conditions needed to encourage the adoption of sustainability reporting and create operating environments conducive to behavior change.\nDuring FY2023, Deloitte engaged with a variety of stakeholders and policy influencers on public policy matters through a variety of mechanisms, including:\nDeloitte Global was a signatory to the World Economic Forum (WEF) Alliance of CEO climate leaders’ open letter addressed to world leaders in advance of COP27. As part of the WEF Alliance, Deloitte works alongside other members to increase net-zero transition activities by setting science-based targets, disclosing emissions, and advancing decarbonization efforts across global value chains.\nDeloitte India served as the 2023 B20 India Knowledge Partner for the Action Council on ESG and for the Taskforce on Energy, Climate Change, and Resource Efficiency, which included contributions to the development of policy recommendations for the G20.\nDeloitte organized a LinkedIn webinar during COP27 that featured Deloitte and Janine Guillot, former CEO of the Value Reporting Foundation and Sustainability Accountability Standards Board, that explored how sustainability reporting can drive behavioral change in businesses and markets.\nDeloitte developed “Work toward net zero: The rise of the Green Collar workforce in a just transition”, a report that identifies impacts of climate change and decarbonization on vulnerable segments of the workforce and outlines public policy principles that underly workers’ adaptation and equitable transitions.\nDeloitte is an active participant in the aviation sector of the WEF’s First Movers Coalition. Bringing together both government and business, the First Movers Coalition works to formulate purchase commitments, aggregate demand, and create an enabling environment for innovative clean technologies across eight hard-to-abate sectors. Within the aviation sector, Deloitte participates in coalition activities to advance net-zero goals, including involvement in the sector’s working groups.\nDeloitte promoted long-term behavior change and the adoption of sustainability reporting and disclosures by authoring articles that were featured in Forbesand Accounting and Business.", "chunk_word_count": 492, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Climate-related stakeholder engagement", "document_id": "Deloitte 2023 Global Impact Report", "page": 34, "page_start": 34, "page_end": 34 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 20, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Climate-related stakeholder engagement\nDeloitte Global presented and dialogued on the climate-related matters as a part of various regulatory and professional engagements, with the International Organization of Securities Commissions (IOSCO), the International Forum of Independent Audit Regulators (IFIAR), the Committee of European Auditing Oversight Bodies (CEAOB), and various other regulators and standard-setters, such as the International Sustainability Standards Board (ISSB) and the International Auditing and Assurance Standards Board (IAASB), as well as other stakeholders.\nJean-Marc Mickeler \nDeloitte Global Audit & Assurance Business leader \njmickeler@deloitte.fr\nSimon Cleveland Deloitte Global Public Policy leader scleveland@deloitte.co.uk\n### Nature and biodiversity\nBiodiversity—the rich variety of living things on Earth—is crucial for healthy ecosystems and a healthy planet. However, much of the world’s biodiversity is at risk due to climate change, human consumption, and other impacts on nature—that is, the physical world including plants, animals, the landscape, oceans, and other features of the earth.\n### Accelerating our efforts\nTo help address and mitigate our organization’s impacts, we are developing a global nature and biodiversity strategy. Deloitte also continues to accelerate our efforts to support nature and biodiversity in the areas of real estate and purchased goods and services.\nWe are taking a closer look at our real estate around the world—analyzing our buildings and choices for fit-outs, furnishings, and other elements—to identify opportunities to minimize impacts on nature. In addition, we are evaluating practices across our Deloitte University campuses to provide recommendations on operational and behavioral changes to help protect nature and biodiversity.\nAccording to the World Economic Forum, $5 0 \\%$ of global GDP is dependent on nature. This means disruptions to the Earth’s ecosystems could affect our current way of life. It also means that organizations have an important role to play in protecting nature.\nIn translating our environmental ambitions into action, Deloitte considers environmental matters widely, including examining our impact on nature and biodiversity. Our organization supports nature-positive solutions and is assessing impacts throughout our value chain.\nDeloitte is addressing our supply chain impacts and implementing measures to promote a sustainable, circular economy. This includes seeking to promote positive nature impacts through more responsible choices. As part of this effort, we launched Products with Purpose, a catalog of branded promotional items that adhere to a set of sustainable supply chain guidelines, including impacts to nature.", "chunk_word_count": 398, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Climate-related stakeholder engagement", "document_id": "Deloitte 2023 Global Impact Report", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 21, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Taking action around the world\n• Deloitte Canada is the first and only professional services firm contributing to the Great Bear Forest Carbon Project, supporting an Indigenous-led, nature-based climate solution that enhances local economic development and employment through community-led guardians initiatives. Revenue from the sale of carbon credits helps enable the communities to protect old-growth forests that are designated for harvest, to secure valuable carbon stores, and to safeguard biodiversity.\nThis past April, Deloitte people from around the world came together to celebrate Earth Month and take action, especially around nature and biodiversity. For example:\nDeloitte firms are advancing a number of initiatives to help protect complex environments and help address the particular risks to biodiversity in their regions, including:\n• Deloitte Bermuda people helped clean up a local coral reef, removing trash and other debris and helping to protect the biodiversity of their local ecosystem. Deloitte Kenya, Deloitte Tanzania, Deloitte Canada, and other Deloitte firms across our global Deloitte network participated in reforestation and/or forest care volunteer opportunities. Deloitte Costa Rica built pollinator gardens to encourage butterflies, bees, and other pollinators to visit.\nDeloitte Australia owns and manages The Deloitte Carbon Forests, properties that are designed and managed to deliver benefits for biodiversity and local communities, allow for agricultural production, and strengthen Traditional Custodian relationships. Deloitte Australia collaborated with environmental organizations and with Indigenous leaders to help deliver these benefits. The selection for planting focuses on local native species and aims to support the generation of cobenefits, such as biodiversity outcomes, Traditional Custodian engagement and procurement, and dedicated areas for continued agricultural production.\n• Deloitte Netherlands and Deloitte Dutch Caribbean are supporting the reforestation of mangrove forests in Curaçao.\nDeloitte India is working with a nonprofit organization to conserve and support the nesting habitat of Olive Ridley turtles in Chennai, as well as teaming up with another nonprofit to conduct beach cleanups in Mumbai.\n• The Deloitte Forest project, led by Deloitte Brazil, aims to plant 15,000 seedlings per year through FY2030 in the Atlantic Forest and supports the recovery of basins’ and sub-basins’ watersheds.", "chunk_word_count": 363, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Taking action around the world", "document_id": "Deloitte 2023 Global Impact Report", "page": 37, "page_start": 37, "page_end": 38 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 22, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### The collective power of individual choices\nClimate-nature nexus: Expanding finance from climate to nature, a webinar on integrating climate- and nature-related risks;\nAs a global organization with approximately 457,000 people around the world, we understand how individual choices can add up to powerful collective action. We help raise awareness and inspire action with internal webinars such as “Know nature. Boost biodiversity,” which focuses on biodiversity impacts and how each of us can help. World Wildlife Fund’s (WWF’s) “What is biodiversity?” and other collaborative educational opportunities provide further insights to Deloitte people and showcase examples of how protecting wildlife around the world can benefit local environments.\nHow global nature targets are relevant to business, a blog on the Kunming-Montreal Global Biodiversity Framework, the targets it sets out for protecting and restoring global biodiversity, and three key considerations for businesses;\nNature and biodiversity, a podcast exploring what “nature risk” is, how it relates to climate risk, and what businesses should be doing to prepare for nature-related regulation; and\nNature is next: Towards integrating naturerelated risks in the Dutch Financial sector, an article on how financial institutions can learn about and engage with nature-related risks.\n### Helping clients prioritize nature\nWe support Deloitte clients in their efforts to assess their impact and prioritize nature and biodiversity. This includes sharing insights and actionable guidance from throughout our organization, such as:\nKathryn Alsegaf \nDeloitte Global Chief Sustainability Officer \nkalsegaf@deloitte.com\nBanking on natural capital, a report on unlocking the value of nature and actions that can be taken to work towards a naturepositive future;\n### Sustainable and responsible supply chain\nAs consumers and regulators call for greater traceability and insight into supply chains, organizations are increasingly exploring ecosystem strategies that take into account their end-to-end transparency, design, sourcing, manufacturing, and distribution. Deloitte works with organizations from across industries as they design and optimize their physical footprint, as well as helping to design their sustainable supply chain operating models by leveraging data analytics, technology, collaboration with alliance relationships, and circular economy principles.", "chunk_word_count": 352, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > The collective power of individual choices", "document_id": "Deloitte 2023 Global Impact Report", "page": 38, "page_start": 38, "page_end": 39 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 23, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Assessing, managing, and reducing supply chain emissions\nresponsible climate choices within our organization and beyond. In FY2023, our primary goal was to start to engage with suppliers that have not yet committed to setting science-based emissions reduction targets, to better understand their greenhouse gas emissions and their journey toward decarbonization. Continuing to use the CDP (formerly Carbon Disclosure Project) platform, we have encouraged these suppliers to report their emissions and actions through this centralized climate-focused reporting questionnaire.\nAs part of Deloitte’s WorldClimate initiative, in FY2023 we continued to expand on previous years’ supply chain sustainability activities. Efforts to assess, manage, and reduce supply chain emissions are underway across Deloitte’s major purchasing categories, and include implementation of sustainability-related request for proposal (RFP) questions and contract language. These improvements include introducing WorldClimate-specific criteria with our suppliers, such as setting science-based targets, and category-specific ESG-related items such as recycling and electricity-use standards. In support of these goals, Deloitte Global has established a Procurement Sustainability team, with the express purpose of driving sustainability solutions in Deloitte supply chain and procurement processes.\nInitiatives of this kind help Deloitte to calculate our emissions with greater accuracy and identify suppliers for additional engagement. These initiatives also are the cornerstone for Deloitte's WorldClimate goal of having two-thirds of our suppliers (by emissions) set science-based targets.\nDeloitte is likewise focused on our own supply chains, which cross multiple industries and regions of the world. Recognizing that more than two-thirds of Deloitte’s aggregate emissions are derived from purchased goods and services, Deloitte’s WorldClimate strategy includes a specific focus on developing more sustainable supply chains.\n### Carbon emission reporting by suppliers\nTo be in line with the Paris Agreement goals, our WorldClimate initiative focuses on engaging our highest emitting suppliers in order to drive\n### Pursuing our efforts in support of alternative solutions to reduce emissions\nTo help reduce our business travel-related emissions, Deloitte continues to participate in the sustainable aviation fuel (SAF) market. In 2023, we purchased SAF from a variety of market participants, building on purchases made in 2021 and 2022. In addition, we are working to advance collective SAF demand through our participation in the World Economic Forum’s Clean Skies for Tomorrow Coalition and First Movers Coalition, as well as the Sustainable Aviation Buyers Alliance.\nBrian Nichols \nDeloitte Global Deputy Chief Procurement Officer \nbrinichols@deloitte.com \nKathryn Alsegaf \nDeloitte Global Chief Sustainability Officer \nkalsegaf@deloitte.com\n### Social\n### Societal investments\nDeloitte has made a worldwide commitment to invest more than $\\cup 5 \\$ 3$ billion over the next 10 years in societal impact initiatives.\n\\$1.4B \nTotal societal investments from FY2019 \nthrough FY2023\n\\$377M Total societal investments in FY2023\n1.9M Hours of volunteer and pro bono time\nNotes\n### WorldClass commitment\nThrough WorldClass, we seek to expand opportunities for 100 million individuals by 2030 by providing access to education and job skills.\n57M Individuals reached toward our 100M goal\n24M Individuals reached in FY2023\n\\$177M WorldClass investments\n991,100 \nHours of volunteer and pro bono time \ndedicated to WorldClass\nNotes\n### Total headcount\nNotes\n### Headcount by region and gender\nNotes", "chunk_word_count": 525, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Assessing, managing, and reducing supply chain emissions", "document_id": "Deloitte 2023 Global Impact Report", "page": 39, "page_start": 39, "page_end": 45 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 24, "chunk_text": "# Building better futures\n## 5 Invest in meaningful market solutions to compensate for remaining emissions\n### Headcount by region and age range\n[IMAGE CAPTION] These figures are aggregated across the Deloitte organization. Age ranges are estimated based on data collected from Deloitte firms. Because of rounding, numbers may not tally with the total.\nNotes\n### Total headcount by gender and age\nNotes\n[IMAGE CAPTION] Total new hires\nNotes\nThese figures are aggregated across the Deloitte organization. \n\\*New hires as a percentage of total headcount.\n### Attracting top talent\nApplications received across the organization 7.93 million\nInternships 34,200\nNew hires 132,700\nNotes\n### Developing top talent\n## 47 average annual training hours per individual\n\\$670M direct training investment; average of \\$1,500 per individual\n\\$6.4B annual indirect training cost\n9.9M e-learning courses completed\nNotes\n### Locations of Deloitte University facilities\nCanada Belgium Toronto La Hulpe\nIndia Hyderabad\nMexico Mexico City\nSingapore Sentosa Island\nUS Westlake\nNotes\n### Social\nFrom equity in education and health, to equity and inclusion at work, to meeting urgent needs related to humanitarian crises, we actively engage in addressing and creating solutions to the most pressing challenges facing society. These challenges are deeply human, impact billions of people, and require long-term, transformative system solutions. They cannot be solved by any single individual or organization. Deloitte’s approach is to help lead the way and inspire powerful collaborations that enable our people to work with clients and community organizations on shared solutions.\nOver the past year, we have invested our know-how and resources, and our people have invested their time through pro bono work and volunteering, to tackle systemic problems in communities around the world. To further scale and accelerate these efforts, Deloitte has made a worldwide commitment to invest more than $\\cup 5 \\$ 3$ billion over the next 10 years in societal impact initiatives. We are committed to investing in education\nand skills development, climate action, humanitarian responses, and the most pressing needs in our local communities. We are also focused on supporting and developing our 457,000 people around the world, including addressing these challenges within our organization. Deloitte continues to provide career opportunities, resources, and an inclusive culture to help our people thrive.\nWhile our WorldClass ambition is marked by the scale of our 100 million goal, it’s the lifechanging impact on individuals that inspires this work. For instance, by supporting the Pan African Robotics Competition through pro bono consulting services, Deloitte Africa is helping more young people like Marème from Senegal to cultivate the science, technology, engineering, and mathematics skills vital to innovation. Alongside Udayan Care, Deloitte India offers young women like Kajal scholarships, career guidance, and mentoring—which has enabled Kajal to attend college and pursue a lifechanging career as a journalist.\n### Advancing societal impact across our ecosystem\n### Societal impact", "chunk_word_count": 467, "section_path": "Building better futures > 5 Invest in meaningful market solutions to compensate for remaining emissions > Headcount by region and age range", "document_id": "Deloitte 2023 Global Impact Report", "page": 46, "page_start": 46, "page_end": 53 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 25, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Empowering 100 million people through education and skills\nCollaborating on shared solutions helps enable us to make an even greater impact. Our people thrive when working with clients and collaborators from other businesses, nonprofits, and non-governmental organizations to cocreate transformative approaches.\nYoung people are the innovators, entrepreneurs, and business leaders of the future. They will need new skills to help us meet the complex challenges of tomorrow. And yet, millions of people around the world are held back from achieving their full potential. Education and skills lay the foundation for opportunity and progress—and create better futures. Deloitte is investing in innovative approaches to support education, digital skills development, and training opportunities to help more people succeed in the modern economy.\nWe empower our people to lead the way on addressing the long-term challenges facing society, putting their drive, desire, and energy to work. Deloitte has continued to expand on our collaboration with One Young World (OYW) to help develop young professionals into future leaders. Each year, Deloitte sends approximately 70 young leaders to the OYW Summit, including Deloitte people and social innovators. In 2023, Deloitte was proud to sponsor two OYW Lead2030 Challenges, impactful youth-led initiatives focused on quality education and climate action. Through these challenges, Deloitte provides $\\cup { \\mathsf { S } } \\$ 50,00 0$ grants, pro bono support, and mentorship to social innovators developing bold, meaningful solutions.\nAcross the world, Deloitte is providing mentorship and skills training to support refugees such as Nazanin, who now calls Italy home after being forced to flee Afghanistan. She is learning Italian and developing the skills needed to become an integral part of her new community. And in the US, Deloitte is collaborating with Braven to empower underrepresented young people like Latrel with the skills, networks, experiences, and confidence needed to transition from college to strong first jobs.\nDeloitte’s WorldClass ambition is to impact 100 million people by 2030 through programs and collaborations with leading education and skills building organizations. We are working with Deloitte clients, governments, innovators, schools, universities, and nonprofits around the world. Deloitte donates funds, and our people volunteer their time and capabilities, to support millions of students, teachers, and education leaders worldwide. We are scaling solutions that have helped to propel 57 million individuals forward since 2017, including 24 million during FY2023.\nOur focus on creating a more equitable society also includes our efforts around the Deloitte Health Equity Institutes (DHEIs). During the past year, we launched DHEIs in Europe and Spanish Latin America to complement our established DHEIs in Africa, India and the US. Each of the DHEIs advances an array of cross-sector collaborations, philanthropic investments, and research activities. In addition, Deloitte is honored to be a signatory of the Zero Health Gaps Pledge, the first global, multi-sector, CEOlevel pledge to help advance health equity, which was launched by the Global Health Equity Network at the 2023 World Economic Forum Annual Meeting in Davos.", "chunk_word_count": 502, "section_path": "Building better futures > 47 average annual training hours per individual > Empowering 100 million people through education and skills", "document_id": "Deloitte 2023 Global Impact Report", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 26, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Empowering 100 million people through education and skills\nThey are joined by a cohort of Deloittesponsored athletes, which is set to grow with further Deloitte people being added. From gold medalist Paralympians who have broken world records, to an Olympic hopeful in breaking, one of the Olympic Games’ newest sports, the dualcareer members of Team Deloitte represent 14 countries in 15 different sports. This extraordinary group of Deloitte people and elite athletes exemplifies the unique qualities required to succeed in both sport and business.\n### Helping those impacted by humanitarian crises\nIn the face of humanitarian crises, Deloitte has responded with meaningful support for our people and the communities impacted. As the war in Ukraine continues, Deloitte and our people are supporting Ukrainians through financial donations, pro bono services, and volunteer work. For example, Deloitte Poland’s Ukraine Refugee Pulse report, which focused on gathering insights into how to support refugees more effectively, has helped inform the response to this crisis by Polish national and local government, international organizations, NGOs, and businesses.\nIn the spirit of that duality and as part of Deloitte’s management consulting partnership with the IOC, we will work with the IOC on the development of programs and initiatives related to athlete support. These include the Athlete365 Mentoring program, which seeks to support a cohort of Olympian and Paralympian mentees in their career transitions from elite sport. Eleven retired Olympians and Paralympians at Deloitte are participating in this program and look forward to sharing their experiences and giving back to the athlete community and the Olympic and Paralympic Movement.\nDuring the past year, we also furthered Deloitte and the International Olympic Committee’s (IOC’s) “partnership with purpose,” which applies Deloitte’s deep management and business consulting acumen to help the IOC realize the possibilities of its Olympic Agenda $2 0 2 0 + 5$ and drive initiatives related to sustainability, diversity, equity, and inclusion, and athlete career transition and well-being. We also recently announced the first-ever global Team Deloitte, a group of 19 Deloitte people who are also elite athletes training to qualify for the Olympic and Paralympic Games Paris 2024.\nDeloitte Central Europe and Deloitte Poland have provided pro bono advisory services to the Ministry of Family and Social Policy in Poland, delivering a transformation strategy for the country’s Public Employment Services (PES). By offering services that answer the needs of the refugees, PES will be able to help facilitate greater access to the labor market. Deloitte has also supported clients in making an impact. For example, Deloitte Ukraine swiftly stepped up to provide pro bono legal help to Eurocar as it converted a manufacturing facility into a humanitarian aid warehouse.\nIn February 2023, the largest earthquake in Turkey and Syria in over a century caused massive destruction affecting nearly 15 million people. More than eight months after the devastation, millions of people continue to need support, having lost their homes, belongings, and livelihoods. Funding from Deloitte, along with other donors, to the International Federation of the Red Cross and Red Crescent Societies (IFRC) is helping to support immediate needs for first aid, shelter, food, and financial assistance.", "chunk_word_count": 532, "section_path": "Building better futures > 47 average annual training hours per individual > Empowering 100 million people through education and skills", "document_id": "Deloitte 2023 Global Impact Report", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 27, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Health equity\nHealth equity is the fair and just opportunity for everyone to fulfill their human potential in all aspects of health and well-being. This overall state of wellbeing is influenced not just by access to health care, but also by systemic and unintentional bias and the conditions in which people are born, grow, live, work, and age—the social, economic, and environmental drivers of health.\nWhile history shows that global society has made tremendous strides in extending average life expectancy, historically marginalized communities are still more likely to experience worse health outcomes than the overall population. These health inequities are being exacerbated by climate change, forced migration, the rising cost of living, and the continuing impact of the COVID-19 pandemic.\nAchieving health equity is a complex, global challenge—one where many organizations have a role to play, including Deloitte.\n### A global commitment\nWhile achieving a world with zero health gaps is an immense challenge, we believe health equity is an essential element in making a sustainable future for humanity a reality. Deloitte is committed to activating our clients, resources, and communities to help reach this goal.\ninitiative to help address mental health in rural and remote communities.\nDeloitte is honored to be among the growing list of approximately 80 signatories of the Zero Health Gaps Pledge, the first global, multisector, CEO-level pledge to help advance health equity. Launched by the Global Health Equity Network (GHEN) at the 2023 World Economic Forum (WEF) Annual Meeting in Davos, the pledge aligns with Deloitte’s Purpose, to make an impact that matters, and with our goal of achieving health equity across our organization, offerings, communities, and ecosystem globally.\nThe India DHEI is working to support mental health and well-being by mobilizing resources for local health care practitioners to help close the treatment gap, reduce the stigma surrounding diagnosis and treatment of mental ill-health, and ultimately improve quality of life. The India DHEI’s report, Mental health and wellbeing in the workplace, takes a closer look at how mental health and well-being have the potential to make a significant impact on employees, and makes the case for change. In addition, the India DHEI is extending the “Expand the Ward” model to help address the topic of maternal and child anemia. This year, the India DHEI implemented the model in three communities; anemia levels subsequently dropped by $2 3 \\%$ over the following three months, against the government target of $3 \\%$ in one year.", "chunk_word_count": 421, "section_path": "Building better futures > 47 average annual training hours per individual > Health equity", "document_id": "Deloitte 2023 Global Impact Report", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 28, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Addressing health concerns around the world\nOver the past year, Deloitte firms have taken action to advance progress toward the goal of zero health gaps through the Deloitte Health Equity Institutes (DHEIs). In addition to the established DHEIs in Africa, India, and the US, we recently launched DHEIs in Europe and Spanish Latin America (S-LATAM). Each of the DHEIs advances an array of cross-sector collaborations, philanthropic investments, and research activity. These initiatives are unified by our global mission and focused on the unique health challenges in their respective regions.\nThe pledge includes 10 key commitments for CEOs to embed health equity principles throughout their operations, workforce, and guiding philosophies. Pledge commitments include supporting strong diversity, equity, and inclusion programs; providing accessible highquality health and mental health services; paying employees across the supply chain a living wage; and investing in safe living environments.\nThe Africa DHEI is working to help reduce health disparities across the continent through collaborations with key policymakers and players in the life sciences and pharmaceutical industries. Earlier this year, the Africa DHEI published Improving access to health care in Africa, a report that examines these disparities and highlights innovative approaches to tackling them. The Africa DHEI is also developing an\nAdditionally, the India DHEI engaged in advocacy research reports to identify and document the social determinants of health for vulnerable groups in the country. This research provided deep insights into health care behaviors and access vulnerabilities of gig-workers and the unemployed population and made policy recommendations to help make health care more inclusive for these groups.\nDeloitte has worked closely with WEF over the past several years to establish and lead the GHEN, a network that mobilizes executive leaders across sectors and geographies to commit to prioritizing health equity. Deloitte Global CEO Joe Ucuzoglu serves as co-chair of the GHEN.\nThe US DHEI has established more than 25 collaborations across the public, private, and social sectors to further its mission to advance health equity for those with some of the greatest needs. These collaborations are designed to activate decision-makers to take action, advance health equity in communities, and drive innovation and learning through the use of data and analytics tools and research. For example, the US DHEI’s collaboration with UnidosUS, the largest Hispanic civil rights and advocacy organization in the US, will help provide equitable mental and oral health care access for Latino children. Driving Health Equity in the Workforce, a US DHEI collaboration with the American Heart Association (AHA) and the Society for Human Resources (SHRM) Foundation, is supporting AHA’s creation of a roadmap of tools, resources, and knowledge products to help improve health and well-being for 10 million members of the US workforce. The US DHEI is also collaborating with organizations like New Profit and Echoing Green to support social entrepreneurs who are developing innovative solutions to the direct and upstream causes of health inequities across the nation.\nMexico and a pharmaceutical company with products for diabetes diagnosis and treatment, to design a model focused on providing diabetes patients with more access to diagnosis and treatment.", "chunk_word_count": 524, "section_path": "Building better futures > 47 average annual training hours per individual > Addressing health concerns around the world", "document_id": "Deloitte 2023 Global Impact Report", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 29, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Looking ahead\nThe DHEIs continue to advance critical insights and understanding in their regions, as well as establish cross-sector collaborations, philanthropic investments, and research activity to raise awareness and spur action. Efforts over the past year, including the launch of two new DHEIs, lay the foundation for expanding the impact of the DHEIs and accelerating progress toward global health equity.\nThe S-LATAM DHEI also launched this year, with an initial focus on lung cancer, reproductive health, and diabetes—all critical health concerns impacting the population in Latin America. The S-LATAM DHEI collaborated with Novartis to publish Take heart and stop the silent killer, a report designed to increase awareness of Atherosclerotic Cardiovascular Disease (ASCVD) in the region. The S-LATAM DHEI, in collaboration with a pharmaceutical company dedicated to women’s health, the Yucatan Government in Mexico, and the United Nations Population Fund, designed a sustainable and innovative financing model to help reduce unplanned teenage pregnancies in the Yucatan area of Mexico. With those lessons learned, the S-LATAM DHEI is also collaborating with the Bolivar Government in Colombia to address the same health challenge. Finally, the DHEI is working, along with one of the states in\nLearn more about the DHEIs.\n### Greg Reh\nDeloitte Global Life Sciences & Health Care Industry \nleader \ngrreh@deloitte.com\nLaunched earlier this year, the European DHEI is focusing its work on mental health, particularly in children and young people, as well as efforts to highlight and reduce inequities in cancer. The European DHEI collaborated with Mind & Scottish Association for Mental Health to create an interactive mental health cost calculator. By inputting organizational data, employers can better understand the true cost of poor mental health, compare their results to industry averages, and learn more about recommendations for investing in their employees’ well-being and mental health.", "chunk_word_count": 310, "section_path": "Building better futures > 47 average annual training hours per individual > Looking ahead", "document_id": "Deloitte 2023 Global Impact Report", "page": 58, "page_start": 58, "page_end": 58 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 30, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Humanitarian response\nDeloitte responds to humanitarian crises with swift and meaningful support for our people and the communities impacted. Guided by our Purpose and Shared Values, Deloitte is prepared to mobilize our organization to move quickly and bring the strength of our resources to bear globally. During the past year, we continued to provide assistance to the people of Ukraine through a range of initiatives, as well as helping to support the humanitarian needs of those impacted by the earthquake in Turkey and Syria, the earthquake in Morocco, and the flooding in Libya. Since the start of FY2023, Deloitte has supported 17 local humanitarian and disaster relief responses in communities around the world.\nIn June 2023, Deloitte Ukraine initiated a fundraising campaign to assist those affected by the Kakhovka hydroelectric power plant dam explosion, which caused one of the largest water reservoirs in Ukraine to flood into nearby regions. In addition to funding from Deloitte Ukraine, many Deloitte Ukraine people also contributed individually, helping to raise funds needed to purchase equipment for rescue operations in the affected region, as well as to support reconstruction efforts.\nDeloitte firms have also worked with clients to help them make an impact. For example, Deloitte Ukraine provided pro bono legal services to Eurocar as the company converted a manufacturing facility into one of the largest humanitarian logistics hubs in Ukraine.\nDeloitte Central Europe, including Deloitte Poland, has provided pro bono advisory services to the Ministry of Family and Social Policy (MFSP) in Poland, delivering a transformation strategy to help the country’s Public Employment Services (PES) address the refugee crisis. Drawing on labor market analysis and a review of leading practices from other countries in Europe, Deloitte Poland identified strategic options to support PES in offering services that help answer the needs of refugees and facilitate greater access to the labor market. Deloitte Poland has also provided organizational support for the Green Line, the MFSP’s refugee helpline, and supported contact center services with IRENA, Deloitte Central Europe’s chatbot app.", "chunk_word_count": 347, "section_path": "Building better futures > 47 average annual training hours per individual > Humanitarian response", "document_id": "Deloitte 2023 Global Impact Report", "page": 59, "page_start": 59, "page_end": 59 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 31, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Support for Ukraine\nAs the Russia-Ukraine war continues, Deloitte has demonstrated unwavering solidarity and support for Ukrainians. We as an organization, and many of our people individually, have provided financial donations, pro bono services, and volunteer work, including research and insights into some of the most effective ways to help support refugees. Following the Russian invasion of Ukraine, millions of Ukrainian citizens crossed the Polish border and a significant number decided to stay in Poland. Deloitte Poland’s Ukraine Refugee Pulse report, which focused on gathering insights into how to support refugees more effectively, has helped inform the response to this crisis by Polish national and local government, international organizations, NGOs, and businesses.\nThe Deloitte Ukraine team created a legal framework for the hub’s operations, including legal cooperation between key stakeholders such as the affiliated charitable foundation, donors, and the Regional State and Military Administration. The Financial Times Innovative Lawyers report commended Deloitte Ukraine for this impactful humanitarian initiative.\nThousands of volunteers and workers in Turkey and Syria have been on the ground since day one, supporting the communities affected. Funding from Deloitte, along with other donors, to the International Federation of the Red Cross and Red Crescent Societies (IFRC) is helping to support immediate needs for first aid, shelter, food, and financial assistance. We thank the Deloitte people who have given personally to the IFRC and other humanitarian response organizations, as well those who have engaged in on-the-ground volunteer efforts, to support the response.", "chunk_word_count": 257, "section_path": "Building better futures > 47 average annual training hours per individual > Support for Ukraine", "document_id": "Deloitte 2023 Global Impact Report", "page": 59, "page_start": 59, "page_end": 60 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 32, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Responding to the earthquake in Turkey and Syria\nDeloitte Ukraine also continues to provide assurance services, on a pro bono basis, to UNITED24, an initiative launched by the President of Ukraine as a platform for collecting charitable donations in support of Ukraine. The platform enables organizations and individuals to donate money to a range of efforts, including humanitarian needs, rebuilding infrastructure, and supporting hospitals and healthcare.\nIn February 2023, the largest earthquake in Turkey and Syria in over a century caused massive destruction. In total, more than 14.7 million people were affected, approximately 60,000 people lost their lives, and millions were displaced. Deloitte Turkey and other Deloitte firms in the region moved quickly to help address the essential needs of Deloitte people and their families who were impacted. Deloitte people in the region also participated as volunteers in search and rescue activities and helped to provide aid to those affected by the tragedy. More than eight months after the devastation, millions of people continue to need assistance, having lost their homes, belongings, and livelihoods. Entire communities, and even cities, have been forced to start over.\nVan Zorbas \nDeloitte Global Chief Purpose Officer \nvzorbas@deloitte.ca \nStasha Santifort \nDeloitte Global Purpose and Social Impact Leader \nssantifort@deloitte.com\nDeloitte US provided pro bono consulting services over the last year to HealthRight International, an NGO that helps to expand equitable access to quality health systems for marginalized communities. HealthRight has been working to help build accessible, equitable systems of care in Ukraine since 2005, providing housing, health care, and social support to over 1.2 million people affected by violence throughout the country. Since the start of the war, the organization shifted to provide critically needed humanitarian support services to Ukrainians across the country. Deloitte US’s pro bono work with HealthRight focused on enhancing essential operational and risk management activities surrounding HealthRight’s Ukraine programs.\naccelerating agility and innovation, strengthening capabilities around critical challenges facing Deloitte clients and our global society, and delivering tech-focused reskilling that rides the wave of innovation sweeping across so many aspects of life. This includes hot skills training around AI, cloud, and cyber, as well as “hiring to train” programs where future Deloitte people gain the credentials and on-thejob experiences they need to help them succeed in future roles.\nWe have also continued to expand our investment in Deloitte University (DU), the cornerstone of our organization’s commitment to leadership development and technical training for Deloitte people around the world. Since opening the Westlake, Texas location in 2011, we’ve launched additional facilities in Brussels, Hyderabad, Mexico City, Singapore, and Toronto, and have new sites under construction in Beijing and Paris. In 2023 we also broke ground on a significant expansion of the original facility in Texas. Being together for “moments that matter” is critical as we develop the next generation of leaders, as well as create—and strengthen—the connections that are so important to succeeding in a global organization serving multinational clients.\n### Our people", "chunk_word_count": 503, "section_path": "Building better futures > 47 average annual training hours per individual > Responding to the earthquake in Turkey and Syria", "document_id": "Deloitte 2023 Global Impact Report", "page": 60, "page_start": 60, "page_end": 61 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 33, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Enabling our people to make an impact throughout their career journeys\nAs a global organization built on intellectual curiosity and creative problem-solving, supporting and developing our most valuable assets—our people—is our top priority. The Deloitte Global Gen Z and Millennial Survey shows how the disruptive events of the last few years have shaped the lives and views of these generations, leaving them concerned about their professional futures. They seek flexibility and prioritize mental health—along with a healthy balance between work and life, career advancement, and feeling a genuine sense of purpose and connection. Deloitte is committed to supporting our 457,000 people around the world with meaningful and challenging work, development opportunities and resources throughout their careers, an inclusive culture to help them thrive, and competitive, marketbased compensation and benefits.\nDeloitte is working to transform the future of L&D through initiatives such as Project 120, a $\\ U S \\$ 1.4$ billion strategic investment in the growth and development of our people. With a name inspired by the top speed of thought—120 meters per second—Deloitte US’s Project 120 is designed to identify professionals’ evolving needs and anticipate market demands, in order to provide dynamic learning experiences customized to the individual and delivered in the flow of work. During the past year, Deloitte also hosted our first-ever Global Sustainability and Climate Learning Week, a multi-modal experience that offered our people a mix of live, on-demand, and virtual opportunities for education, awareness, engagement, and action.\nWith market realities and client needs changing rapidly, driven largely by advances in artificial intelligence (AI) and other technologies, learning and development (L&D) is key. We continue to evolve our approach, with a focus on", "chunk_word_count": 290, "section_path": "Building better futures > 47 average annual training hours per individual > Enabling our people to make an impact throughout their career journeys", "document_id": "Deloitte 2023 Global Impact Report", "page": 61, "page_start": 61, "page_end": 62 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 34, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Providing an inclusive workplace where our people can thrive\nAdditionally, Deloitte campaigns helped further the conversation and promote everyday inclusion in the societies around the world where Deloitte operates. Deloitte’s International Women’s Day campaign, #ImAWomanAnd, was a call to action for each of us to help stop the assumptions that are still too often made about women. Similarly, our World Mental Health Day campaign focused on breaking down the selfreinforcing patterns—such as the standard response “I’m fine” when asked how you’re doing—that can keep us from having candid conversations about mental health in the workplace. Deloitte’s Pride celebration this year continued our theme of #QueerAllYear, emphasizing the importance of supporting LGBT $^ +$ inclusion year-round.\nThrough Deloitte’s diversity, equity, and inclusion (DEI) strategy, we seek to provide a workplace culture founded on respect and characterized by inclusive behaviors and an appreciation for all forms of diversity. Global DEI at Deloitte focuses not only on enabling our people to live our Shared Values and thrive in a culture that is respectful and inclusive, but also on designing and delivering targeted actions and interventions that can make a positive impact when it comes to our aspirational DEI goals. We provide an array of programing and internal resources throughout the year to foster everyday inclusion and help Deloitte people feel more confident having conversations in the workplace about diversity-related topics.\nTo demonstrate our commitment to supporting people with disabilities and individuals who are neurodivergent, Deloitte proudly signed the International Labour Organization’s Global Business and Disability Network Charter. The charter provides a comprehensive framework to help organizations achieve business success while simultaneously creating equal opportunities for people with disabilities and neurodiverse individuals.\nExternally, Deloitte Global continues to publish research and practical insights into diversityrelated topics. During the past year, we examined trends and developments related to women’s equity in the workplace in Women $@$ Work: A Global Outlook, as well as in Policies for Change: Government Levers for Enabling Workplace Gender Equality. We also took a closer look at LGBT+ inclusion in the LGBT+ Inclusion at Work report, and mental health in the Gen Z and Millennial Survey Mental Health Deep Dive.", "chunk_word_count": 371, "section_path": "Building better futures > 47 average annual training hours per individual > Providing an inclusive workplace where our people can thrive", "document_id": "Deloitte 2023 Global Impact Report", "page": 62, "page_start": 62, "page_end": 62 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 35, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Learning and development\nThe rapid advancement of artificial intelligence (AI) and other technologies is shifting market realities, the business landscape, and client needs. In the face of such swift and significant change, learning and development (L&D) is essential. While L&D has long been at the core of our business and the talent experience we offer our people, we continue to evolve our approach. During the past year, we focused on accelerating agility and innovation, strengthening capabilities around critical business and societal challenges facing Deloitte clients and society, and delivering tech-focused reskilling to help enable our people to enhance their careers and guide Deloitte clients through these changing times.\nBut that’s only part of the picture. Our strategy has shifted from thinking of learning and development in terms of standard courses and curricula toward reimagining them as personalized experiences that help address individual and business needs as they emerge. We believe this approach has a much bigger learning effect and will prepare our people to anticipate and adapt to the business opportunities on the horizon. It also fully supports delivery of learning in the flow of work. For example, Deloitte North and South Europe’s Skills Academy is designed to give new recruits the same experience and the best start possible. The program assists recruits in their transition to Deloitte Audit & Assurance. It gives them the opportunity to work on live projects during the academy.\nOn top of that, our commitment to our inperson learning and development facilities continues. Our Deloitte University (DU) footprint is expanding around the globe, with two new facilities under construction: one in Beijing and one just outside Paris, both planned to open in 2024. We are also in the process of expanding our existing facilities. DU India opened a new location in June 2022. And our US facility in Westlake, Texas, has also started a significant expansion project.\nAt the network level this is reflected in the approach we took to embed Environmental, Social, and Governance (ESG) skills by developing and delivering an innovative and engaging learning week across the organization. We created common foundational, technical, and industry-level ESG learning assets. We also formed relationships with educational institutions so that our people have access to high-quality development in this new and quickly evolving area.\nOur focus on continuous and inclusive learning starts with onboarding and continues throughout each individual's career, whether they take a specialist path or move on to a senior leadership position. We recognize that the ability to learn through day-to-day experiences, as well as formal programs, is vital to our ability to perform in today’s rapidly changing environment. Mentors and coaches support development journeys, including the identification of opportunities to stretch and grow. An innovative example of this is Deloitte UK’s Future Leaders Programme. More than 500 ethnic minority and women colleagues attended the program over nine months, completing approximately 7,000 live learning hours, including training, peer learning, and networking both within and outside of their businesses. Across our network, Deloitte’s digital learning experience platform (CURA) has now been rolled out to all geographies as part of our Global Learning Ecosystem, delivering nearly 10 million e-learning experiences to our people in FY023.", "chunk_word_count": 542, "section_path": "Building better futures > 47 average annual training hours per individual > Learning and development", "document_id": "Deloitte 2023 Global Impact Report", "page": 63, "page_start": 63, "page_end": 63 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 36, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Learning and development\nWe are also designing a networkwide badging approach to recognize and motivate our people to develop new marketable skills through a variety of learning sources. Another strong example of our evolving growth and development strategy is Deloitte US’s Project 120. Inspired by the top speed of thought (120 meters per second), Project 120 represents a $\\cup { \\cal { S } } \\$ 1.4$ billion investment in transforming Deloitte US’s approach to learning. Beginning with technology and leadership development, Project 120 is designed to anticipate the evolving needs of Deloitte US professionals and build experiences that meet them where they are, helping them develop the capabilities they need to deliver better outcomes for themselves, Deloitte US clients, and society. Project 120 also marks a fundamental shift from focusing solely on professional skills to embracing the individual’s needs more completely, so they can fully thrive in business and in life. We’re excited about the impact this program will have on our people and Deloitte US clients. But more than that, Project 120 exemplifies the ambition for growth and development across Deloitte.\nStevan Rolls \nDeloitte Global Chief Talent Officer \nstrolls@deloitte.dk \nLieven De Groodt \nDeloitte Global Deloitte University leader \nlidegroodt@deloitte.ca", "chunk_word_count": 213, "section_path": "Building better futures > 47 average annual training hours per individual > Learning and development", "document_id": "Deloitte 2023 Global Impact Report", "page": 64, "page_start": 64, "page_end": 64 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 37, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Disability inclusion and neurodiversity\nDeloitte is focused on providing a workplace environment in which all of our people can thrive and reach their full career potential. Disability inclusion and neurodiversity are priority areas of Deloitte’s global diversity, equity, and inclusion strategy—supported by Deloitte’s global focus on fostering an inclusive workplace culture underpinned by respect.\nfirst Accessibility Action Plan in 2021 to reinforce its commitment to the inclusion of people with disabilities as well as those with different accessibility needs. Additionally, Deloitte Thailand partnered with the Social Innovation Foundation in 2022 to help connect people with disabilities to jobs. Program registrants are matched with organizations that can provide them with suitable employment. This helps to enable people with disabilities to perform duties based on their capabilities and competencies, develop their work skills, and earn a living.\nDeloitte is a proud signatory of the International Labour Organization’s Global Business and Disability Network Charter, and is committed to delivering against its 10 principles when it comes to both disability inclusion and neurodiversity; as such, Deloitte’s global strategies for these important inclusion priorities are aligned to delivering against each of these principles.\nMany Deloitte firms are also committed to funding scholarships and offering apprenticeships to neurodivergent talent and those with disabilities. Examples include Deloitte Canada’s funding toward scholarships for law students with disabilities through the Legal Leaders for Diversity and Inclusion (LLD) scholarship fund and the Deloitte US Neurodiversity@Deloitte program consisting of a three-month apprenticeship with an opportunity for full-time employment.\nDeloitte firms are also taking meaningful and impactful actions to support our focus on disability inclusion and neurodiversity. For example, the Deloitte US People with Disabilities human-centered design (HCD) initiative seeks to better understand the experiences of people with disabilities, identify ways to improve accessibility, and create a more inclusive culture. Deloitte Canada launched its\nDeloitte’s approach to disability inclusion and neurodiversity is built on the social model—in that people are only disabled by the social and physical environment around them. To this end, Deloitte Global has launched a number of awareness-building, coaching, and education programs to help enable professionals with disabilities or neurodivergent variations to reach their full career potential, as well as to support skills development and career progression in society at large. Resources developed by Deloitte Global include digital learning, accessibility guidance (physical, digital, events, deliverables), critical factors to enable career success for neurodivergent individuals, guidance on workplace accommodations, return to work best practices guidance, and learning accessibility guidance. Deloitte also created a series of immersive experiences, including Natalia’s story, from the perspective of living and working with a visual impairment; Robert’s story, on navigating barriers with a physical disability; and Sam’s story, which shares an autistic person’s day at the office. And Deloitte's awardwinning Can you see me? films of people from underrepresented groups include Thiago, a wheelchair user, and Delphine, an autistic person.", "chunk_word_count": 488, "section_path": "Building better futures > 47 average annual training hours per individual > Disability inclusion and neurodiversity", "document_id": "Deloitte 2023 Global Impact Report", "page": 65, "page_start": 65, "page_end": 65 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 38, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Disability inclusion and neurodiversity\nDeloitte’s global focus on fostering an inclusive workplace for colleagues with disabilities has been recognized by third-party organizations around the world, including achievement in the US of a perfect score in the Disability Equality Index’s best places to work ranking for the last five years. Deloitte UK is part of the UK Government’s Disability Confident employer scheme focused on best practices around the recruitment, retention, and development of talent with disabilities.\nA number of Deloitte firms have collaborated with specialized organizations to support the recruitment of neurodivergent talent. This includes Deloitte UK working with Auticon; Deloitte Canada working with Auticon and Ready, Willing & Able; and Deloitte Belgium working with Autimatic.\nSeveral Deloitte firms have employee resource groups dedicated to neurodiversity and disability to help foster community and allyship, including raising awareness of neurodiversity and disability within their respective firms. In addition, a number of Deloitte firms have neurodiversity networks, including Deloitte Australia and Deloitte Netherlands, which help ensure our people feel empowered to approach their jobs in ways that fit with how their minds, brains, and thought processes work.\nDeloitte Global and many Deloitte firms have also sought to advance the inclusion of people with disabilities through the sharing of leading practices and resources across the organization, as well as via external platforms and networks.\nDeloitte firms—including Deloitte Ireland and Deloitte Japan—are members of the Valuable 500. Deloitte Australia is a member of the Australian Network on Disability. And Deloitte UK has published its Neurodiversity Learning Guide for Recruiters to share learnings and help other organizations improve their own skill sets and confidence when engaging with neurodiverse candidates.\n### Emma Codd\nDeloitte Global Chief Diversity, Equity, and Inclusion \nOfficer \necodd@deloitte.co.uk", "chunk_word_count": 298, "section_path": "Building better futures > 47 average annual training hours per individual > Disability inclusion and neurodiversity", "document_id": "Deloitte 2023 Global Impact Report", "page": 66, "page_start": 66, "page_end": 66 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 39, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### LGBT+ inclusion\nAt Deloitte, we want our LGBT $^ { + }$ (lesbian, gay, bi, transgender, and more) people to feel confident in being who they are and empowered to thrive at Deloitte and in society. Everyone should be able to be themselves at work. LGBT $^ +$ inclusion is one of our core global diversity, equity, and inclusion (DEI) pillars. Our LGBT+ inclusion strategy is aligned to delivering on our commitment to the UN Standards of Conduct for Business in Tackling Discrimination against LGBTI people (the UN Standards), of which we are a proud signatory.\nOur commitment to the UN Standards means that, within the walls of Deloitte, we apply LGBT $^ { + }$ inclusive policies and practices for our own people—in an approach known as the embassy model1. Our Global Code, Global Antidiscrimination and Anti-harassment Policy, Supplier Code, and Commitment to Responsible Business Practices reflect this stance (specifically referencing sexual orientation and gender identity). To further advance LGBT+ inclusion, Deloitte introduced a global LGBT $^ +$ inclusion baseline in 2022, which sets out minimum expectations on inclusion for each of the Deloitte firms around the world.\nDeloitte offers its LGBT $^ +$ colleagues a variety of platforms from which to voluntarily promote their visibility and help them be seen and heard. This includes the Deloitte Global LGBT+ and allies network, which operates globally, as well as more than 30 local employee resource groups at firms in Africa, the Americas, Asia Pacific, and Europe.\nExternally, we have championed the transformative power of allyship more broadly. Deloitte’s global Pride celebrations in 2020 and 2021 were centered around the themes of $\\mathsf { L G B T + }$ visibility and allyship, with our 2021 campaign featuring the lived experience stories of some of our LGBT $^ +$ professionals worldwide. In 2022 and 2023, Deloitte’s global theme was #QueerAllYear, highlighting the importance of LGBT $^ { \\cdot + }$ inclusion year-round.\nWe also embrace and promote the power of allyship to support our LGBT $^ { + }$ people, amplify their messages and protect their rights and wellbeing. And because allyship is such a critical element of LGBT $^ +$ diversity, we have created a host of resources, including digital learning and guides, to support our LGBT $^ { \\cdot + }$ and allies networks, as well as people across the organization. These cover topics such as microaggressions, LGBT $^ { + }$ and transgender inclusion, and how to have respectful and inclusive conversations on LGBT $^ +$ concerns.\nDeloitte Australia was the first major sponsor for WorldPride 2023, the world’s largest LGBT $^ +$ event, including a multi-year arrangement that extends beyond WorldPride 2023 to include the Sydney Gay and Lesbian Mardi Gras through to 2024.", "chunk_word_count": 470, "section_path": "Building better futures > 47 average annual training hours per individual > LGBT+ inclusion", "document_id": "Deloitte 2023 Global Impact Report", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 40, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### LGBT+ inclusion\nDeloitte’s award-winning Can you see me? film series—created for Deloitte people but rolled out externally too so that others could benefit from them—featured the stories of Jackie, a trans woman, and Alejandro, a gay man. While the characters are fictional and are played by actors with similar, lived experiences, the films represent the authentic stories of many people. They were created to help viewers understand that everyone is a sum of their parts and experiences, and that words and actions have an impact on others. Deloitte Global has also produced immersive experiences, which offer a glimpse into how a colleague may experience their day. The learning modules, one of which is from the perspective of a non-binary person, provide a first-person perspective and an opportunity to reflect on how we can all play a part in providing an inclusive and respectful workplace.\npeople2 in work across 13 countries through the lens of both sexual orientation and gender identity. Building on the Deloitte Global LGBT $^ +$ Inclusion @ Work 2022 pulse survey of 600 LGBT $^ { + }$ respondents, this report provides deep insights into the experiences of LGBT $^ +$ people in the workplace, including the steps their employers are taking to further LGBT $^ +$ inclusion and the impact this has on them, their levels of comfort in being out at work about their LGBT+ identity, and their experiences of non-inclusive behaviors in the workplace. The result is an indepth global view of some of the realities of being LGBT $^ { + }$ at work in 2023.\nDeloitte is also recognized by other organizations for its work to foster LGBT $^ { + }$ inclusion. For example, Deloitte US has achieved a perfect score on the Human Rights Campaign Foundation Corporate Equality Index for 16 consecutive years.\nEmma Codd \nDeloitte Global Chief Diversity, Equity, and Inclusion \nOfficer \necodd@deloitte.co.uk\nIn line with the UN Standard to act in the public sphere, Deloitte is proud to be a member of the Partnership for Global LGBTIQ Equality. Deloitte has also joined the Brunswick Group’s coalition, Open for Business, a network of major businesses campaigning for LGBT $^ +$ inclusion globally, which has recognized Deloitte as a Global Equality Champion.\nDeloitte has also created thought leadership focused on LGBT+ inclusion at work. Most recently, the Deloitte Global 2023 LGBT+ Inclusion $@$ Work: A Global Outlook report explores the experiences of 5,474 LGBT+", "chunk_word_count": 417, "section_path": "Building better futures > 47 average annual training hours per individual > LGBT+ inclusion", "document_id": "Deloitte 2023 Global Impact Report", "page": 68, "page_start": 68, "page_end": 68 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 41, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Mental health\nDeloitte believes that supporting mental health and well-being is critical to attracting and retaining the best people and helping them be their authentic and productive selves today and into the future. We recognize the importance of de-stigmatizing mental health in the workplace and the need for Deloitte people to know where and how to seek support when they are facing mental ill health. Our leaders understand the importance of maintaining a stigma-free and inclusive workplace.\nDeloitte has been working to advance mental health awareness and support our people globally for several years. In January 2021 we introduced a mental health baseline that sets clear expectations around a stigma-free workplace, providing leadership learning and support, and identifying causes of mental ill health and corresponding actions to help address them in each country in which we operate. As of March 2023, all Deloitte member firms had successfully met the baseline. Building on the baseline, we are focusing on developing tailored guidance and tools to help firms to continue to address the most significant workplace issues, the first of which focuses on burnout. A comprehensive toolkit covers preventative mental health strategies and practices, including knowledge sharing and tools for mitigating and managing burnout.\nIn 2022, Deloitte Global created the “Supporting Mental Health at Work” e-learning, which has been released globally. This learning module aims to raise awareness of signs that someone might be experiencing mental health challenges, how to have a supportive conversation, and the resources available that can help. This elearning was recognized with the Gold Award in the Advances in Competencies and Skill Development category in the 2023 Brandon Hall Group HCM Excellence Awards.\nEach year, World Mental Health Day provides an opportunity to advocate for and accelerate positive change around mental health in the workplace. Previous campaigns have shared the journeys of some of our people when it comes to mental health, and in 2022 we launched a digital media campaign entitled “What’s really on your mind?” which aimed to break down all-toocommon, self-reinforcing patterns that may hinder open dialogue on mental health at work.\nDeloitte offers various resources to support its people when it comes to their mental health. We believe that prevention is critical. Resources include well-being articles, videos, and educational materials, as well as information published on Deloitte’s Global Inclusion Hub, an online resource accessible to Deloitte people globally. Most recently, as part of its immersive experiences, Deloitte created “Daniel’s story,” which focuses on mental health.\nExternally, Deloitte aims to promote the importance of mental health as a priority for business leaders globally. Deloitte is a founding partner of the Global Business Collaboration for Better Workplace Mental Health (GBC), established in January 2021 to advocate for and accelerate positive change in mental health in workplaces around the world.\nIn 2023, Deloitte participated in the GBC-led Leadership Roundtables in Singapore and Mumbai, bringing together C-suite executives from current and prospective GBC founders and signatories, to discuss the opportunities and challenges around employee mental health in the regions.", "chunk_word_count": 514, "section_path": "Building better futures > 47 average annual training hours per individual > Mental health", "document_id": "Deloitte 2023 Global Impact Report", "page": 69, "page_start": 69, "page_end": 70 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 42, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Mental health\nSince 2020, Deloitte Global has published a paper each year on the mental health findings of its annual Deloitte Global Gen Z and Millennial Survey. These “deep dives” provide insight for employers on the importance of mental health when it comes to these generations, along with practical actions to help foster better mental health at work. The 2022 paper highlighted concerns such as burnout and its impact on millennials and Gen Zs, while the 2023 report shows that employers are taking some steps to provide the support and environment needed, but there remains much to do to eliminate stigma around mental health in the workplace.\nEmma Codd \nDeloitte Global Chief Diversity, Equity, and Inclusion \nOfficer \necodd@deloitte.co.uk\n### Racial and ethnic inclusion\nDeloitte stands against systemic bias, racism, and inequitable treatment. We take seriously our responsibility to listen, learn, and lead the change we wish to see in the world. As an example, the Deloitte US Health Equity Institute has a mission to advance health equity by creating crosssector collaborations and tools aimed at addressing disparities in the drivers of health, racism and bias, and structural flaws in the health system.\nDeloitte Canada signed a multi-year agreement in 2022 with Indspire, an organization that invests in the education of Indigenous peoples. Both Deloitte Canada and Deloitte Australia published Reconciliation Action Plans outlining each firm’s commitments to further engage and collaborate with First Nations People.\nDeloitte is committed to fostering a culture and systems that provide opportunities for everyone to thrive as their exceptional selves and reach their full potential, and to creating meaningful talent experiences for professionals across demographic groups. The Deloitte UK Black Action plan outlines five actions to help develop Black professionals, including a $^ { \\prime \\prime } 5$ Million Futures” societal collaboration with Blueprint for All.\nDeloitte firms are actively engaged in recruitment, learning and development, career progression, and mentoring initiatives aimed at increasing Black and ethnic minority representation throughout the organization. For example, Deloitte UK is supporting the 10,000 Black Interns initiative. Some Deloitte firms— including Deloitte US, Deloitte UK, and Deloitte South Africa—report on racial and ethnic representation within their firms. Read more about their efforts and the impact in the Deloitte US 2023 Diversity, Equity, and Inclusion (DEI) Transparency Report, the Deloitte Africa Transparency Report, and the Deloitte UK 2023 Pay and Inclusion Report. Deloitte UK has voluntarily reported its ethnicity pay gap since 2017.\nEmma Codd \nDeloitte Global Chief Diversity, Equity, and Inclusion \nOfficer \necodd@deloitte.co.uk\nDeloitte US and Deloitte Canada continue to support a number of organizations that are fighting for social justice, tackling employment and wealth inequality, and creating educational opportunities for underserved communities. Deloitte Canada’s Black Action Council has donated funds and provided pro bono engagements toward corporate contributions to Black-owned organizations, as well as those that focus on the progress of Black people. Deloitte US’s Making Accounting Diverse and Equitable (MADE) initiative has committed $\\cup 5 \\$ 75$ million to fuel greater racial and ethnic diversity in tax and accounting, and in 2022 also launched the Diversity, Equity, and Inclusion (DEI) Institute™ to further sustain equity and belonging for all.", "chunk_word_count": 535, "section_path": "Building better futures > 47 average annual training hours per individual > Mental health", "document_id": "Deloitte 2023 Global Impact Report", "page": 70, "page_start": 70, "page_end": 71 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 43, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Women’s equity\nDeloitte strives to make women’s equity the norm across our organization. We have set aspirational goals against which Deloitte Global leadership monitors progress. We have developed interventions spanning the entire career life cycle—from recruitment, promotion, and succession processes, to development, mentoring, sponsorship, and flexible working.\nachieve the entirety of this goal by the target year, we are confident we will achieve it sooner than if we had not set it in the first place. Progress against these aspirational goals and other measurements is monitored and reported to the Deloitte Global Executive Committee and Deloitte Global Board of Directors twice per year.\nThe 2023 DEI Transparency Report provides an update on progress in the US to date. It also extends this work to include other historically underrepresented groups. Going forward, Deloitte is exploring such reporting for other member firms and geographies.\nDeloitte’s commitment globally to women’s pay equity goes beyond what is typically required by local legislation in the countries where its firms are located. Deloitte firms conduct regular reviews and provide the Deloitte Global Executive Committee with updates, including—if needed—any remedial action.\nDeloitte’s focus on working toward women’s equity does not end with our own organization. Many Deloitte firms and Deloitte Global are signatories of the UN Women’s Empowerment Principles. Deloitte believes we should be a force for good and lead the way on the complex challenges facing women and girls in society. Through a number of our WorldClass societal impact projects, Deloitte is working to positively impact the lives of women and girls around the world. Deloitte is committed to helping them access the right skills and opportunities through education initiatives, along with supporting social enterprises, sponsorship and mentorship programs, and more.\nThe Deloitte Global Executive Committee comprises $3 8 \\%$ women (up from $2 3 \\%$ in FY2022) and the Deloitte Global Board has 17 members, with women making up $3 5 \\%$ of the Board (down from $3 8 \\%$ in FY2022). Since 2019, Deloitte firms have increased women’s representation in both member firm partnership and other leadership roles. In FY2023, $2 6 \\%$ of member firm partners, principals, and managing directors (PPMDs) are women, exceeding the FY2023 goal of $2 5 \\%$ . We are working hard to make progress towards our next goal of $3 0 \\%$ women PPMDs by 2025. As leaders, we know it is important to set bold goals as a galvanizing force to motivate change across Deloitte. As such, while we may not\nDeloitte has a longstanding commitment to transparency when it comes to women’s equity. For example, Deloitte UK started voluntarily reporting its women’s pay gap (the total average difference between earnings for men and women) in 2015, two years before it became required by legislation. From 2017, Deloitte UK has also publicly reported an additional “total earnings gap,” which includes equity partners (in addition to legislative requirements). Deloitte US has reiterated its commitment to pay equity in its inaugural Diversity, Equity, and Inclusion (DEI) Transparency Report, which contains a wealth of detail on Deloitte US’s DEI goals.", "chunk_word_count": 523, "section_path": "Building better futures > 47 average annual training hours per individual > Women’s equity", "document_id": "Deloitte 2023 Global Impact Report", "page": 72, "page_start": 72, "page_end": 72 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 44, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Women’s equity\nEach year, International Women’s Day (IWD) is a day to celebrate the achievements of women— as well as a day to focus on how much more there is still to do when it comes to women’s equity in the workplace and in society. Deloitte’s 2023 International Women’s Day campaign, entitled #ImAWomanAnd, was a call to action for each of us to commit to stop common stereotypes and play our part in stopping the assumptions that are still too often made about women.\nDeloitte is a strategic partner to the Women’s Forum for the Economy and Society, a platform for action to highlight women’s voices and build a more inclusive economy and society. Deloitte is also a member of the $3 0 \\%$ Club and a number of Deloitte firms have collaborated with the organization to publish research in chapters around the world, including Australia, Canada, Colombia, Ireland, Italy, Japan, the Middle East, Southern Africa, the United Kingdom, and the United States. For more than 20 years, Deloitte has been a supporter of Catalyst, a global nonprofit organization working with some of the world’s most powerful CEOs and more than 800 leading organizations to build workplaces that support women so they can advance and thrive.\nDeloitte conducts global research into critical issues related to women’s equity. The inaugural Deloitte Global Women $@$ Work: A Global Outlook report was published in 2021. This landmark report shared the findings of a survey of 5,000 working women across 10 countries, in which Deloitte Global heard directly from them about the state of women’s equity in the workplace. The 2022 report looked additionally at the impact of hybrid working on women, the “great resignation,” and women’s experiences of stress, burnout, and poor mental health. In 2023, the responses show improvement, but the underlying data emphasizes how much remains to be done. This important research continues to inform Deloitte, as well as Deloitte clients and other stakeholders, when it comes to the engagement and retention of women in the workforce. Additionally, the 2023 report Policies for Change: Government Levers for Enabling Workplace Gender Equality, produced by the Global Institute for Women's Leadership at King’s College with the support of Deloitte Global, set out what governments can do through policy to help address women’s inequality in the workplace.\nEmma Codd\nDeloitte Global Chief Diversity, Equity, and Inclusion \nOfficer \necodd@deloitte.co.uk\n### Governance\nAt Deloitte, everything starts with trust. That’s the bedrock upon which our organization is built, and the commitment to stakeholders that has been a constant for Deloitte going all the way back to our founding in 1845.\nAs an auditor and adviser to organizations across industries and throughout the world, Deloitte understands that trust is critical to our business. We continually strengthen and reaffirm Deloitte clients’ trust by bringing to life our Shared Values and our Purpose.\nStrong and effective governance helps enable us to deliver on that trust, operate our business ethically, balance the interests of our stakeholders, and serve the public interest. As a purpose-led organization, Deloitte is thoughtful about the company we keep and adheres to responsible business practices.\n### Delivering on our stakeholders’ expectations", "chunk_word_count": 537, "section_path": "Building better futures > 47 average annual training hours per individual > Women’s equity", "document_id": "Deloitte 2023 Global Impact Report", "page": 73, "page_start": 73, "page_end": 75 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 45, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Deloitte’s commitment to human rights\n“Deloitte Global is committed to supporting the UN Global Compact and furthering the Sustainable Development Goals. By coming together around this shared vision, we can collectively create a sustainable, equitable, and prosperous future that helps provide opportunities to advance business, people, society, and the world.”\nHuman rights are universal—and as a global organization, at Deloitte we believe we have a duty to help protect these inalienable rights. To affirm this belief, we have published the Deloitte organization’s first network-wide Human Rights Statement.\nDeloitte stakeholders expect us to run a responsible and sustainable business, behave ethically and successfully manage risks.\nClients turn to Deloitte to unlock value in new opportunities, deliver innovative services, and devise breakthrough solutions. They trust us to handle their most complex business challenges, conduct high-quality audits, maintain independence, and protect their sensitive information.\nWe are committed to advancing human rights within our organization in the areas of employment and workers’ rights, equality and non-discriminatory treatment, environmental sustainability, education and skills development, anti-corruption, privacy, and trustworthy technology.\nOur people count on us to foster an inclusive and equitable workplace, promote their safety and well-being, and support their skills development and career advancement.\nThrough the commitments we set out in our Human Rights Statement, we are working to create a more just, sustainable, and equitable world.\nSociety expects us to act in the public interest, advance sustainability, help eradicate corruption, and provide educational and skillbuilding opportunities to help empower those seeking a better future.\nWe hold ourselves accountable by measuring and reporting on our progress across these areas. Our reporting helps our people, clients, and society to evaluate our impact. It also shows how living our purpose is inextricability linked with Deloitte’s ability to deliver sustainable, longterm value, year after year.", "chunk_word_count": 310, "section_path": "Building better futures > 47 average annual training hours per individual > Deloitte’s commitment to human rights", "document_id": "Deloitte 2023 Global Impact Report", "page": 76, "page_start": 76, "page_end": 76 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 46, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Anti-corruption commitment\nDeloitte actively supports multiple efforts to help eradicate corruption throughout the world. Deloitte Global was an early signatory to the United Nations Global Compact (UNGC) and to the World Economic Forum’s Partnering Against Corruption Initiative (PACI).\n• Appointment of an Anti-Corruption leader who is responsible, with oversight from the applicable Deloitte firm’s leadership or governing body, for the applicable Deloitte firm’s anti-corruption program;\n• An annual confirmation from each member firm to Deloitte Global that its people have read, understood, and agree to comply with the local anti-corruption policy and are not in violation of this policy, and understand their obligation for reporting actions that do not comply with this policy.\n• Annual Deloitte firm anti-corruption selfassessments, guidance, and tools (including guidance on anti-corruption testing and monitoring) to help measure the effectiveness of anti-corruption programs across Deloitte;\nAdditionally, Deloitte Global has a written policy requiring member firms to escalate corruption1 incidents meeting established criteria to the appropriate Deloitte Global senior leaders. In FY2023, no substantiated incidents of corruption were reported to Deloitte Global under this policy.\nDeloitte Global’s anti-corruption policy includes requirements for Deloitte firms' own anticorruption programs and addresses matters such as bribery, facilitation payments, political and charitable contributions, and gifts and entertainment. This policy requires Deloitte firms to conduct business in accordance with certain anti-corruption principles, including that Deloitte neither makes nor accepts bribes, and does not induce or permit any other party to make or receive bribes on our behalf.\n• A globally consistent process to perform anticorruption due diligence on non-client third parties, including subcontractors, marketplace alliances, vendors, and suppliers;\nAll Deloitte people are required to complete anti-corruption training—after being hired and every other year thereafter—that includes applicable policies, corruption red flags, and case scenarios.\n• A process for Deloitte firms to perform or update corruption risk assessments at least annually;\nThe Deloitte Global anti-corruption team and Deloitte firm anti-corruption leaders work closely with senior Deloitte leaders to build and enhance a globally consistent, internal anticorruption program across the Deloitte organization, which includes the following elements:\nDeloitte Global conducts a review program to assess compliance with anti-corruption policies and drive continuous improvement in Deloitte firm anti-corruption programs.\n• Channels for Deloitte people to report concerns;\n• Supporting activities—including communications, workshops, and webinars— to facilitate the sharing of leading practices; and\nMohammed Ahmed \nDeloitte Global Anti-corruption and Financial Crime \nCompliance leader \nmahmed@deloitte.com\n### Confidentiality, privacy, and cybersecurity\nSafeguarding confidential and personal information is core to the services Deloitte firms provide. Deloitte is committed to protecting confidential and personal information, including that of Deloitte clients and third parties, and to monitoring regulatory and legal requirements to support compliance.\nConsistent with industry leading practices for protecting confidential and personal information, Deloitte has taken steps to remain secure, vigilant, and resilient, including:", "chunk_word_count": 477, "section_path": "Building better futures > 47 average annual training hours per individual > Anti-corruption commitment", "document_id": "Deloitte 2023 Global Impact Report", "page": 77, "page_start": 77, "page_end": 78 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 47, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Cybersecurity\nThe Deloitte Global Cybersecurity organization works with the Deloitte Global Confidentiality and Privacy Office, as well as Deloitte confidentiality, privacy, and cybersecurity professionals throughout the Deloitte network, to execute a strategy designed to:\n• Understanding the risk environment; Implementing policies, procedures, and controls designed to protect confidential and personal information; Responding to potential confidentiality and privacy incidents in a timely manner; and Actively monitoring the effectiveness of confidentiality and privacy requirements across the Deloitte organization.\n• Create a cohesive, worldwide cyber program with consistent, high-quality security services; Extend security tools worldwide for advanced protection of highly distributed data; Implement and sustain technology safeguards to protect confidential and personal information; Prepare and implement plans to promptly recover from and restore any systems that may be adversely impacted by a cyber incident; and Reduce the risk of unauthorized exposure of confidential or personal information.\n### Confidentiality and privacy\nThe Deloitte Global Confidentiality and Privacy Office helps foster a culture across Deloitte that emphasizes the importance of protecting confidential and personal information. This office sets guidelines, develops procedures, provides consultation and training, and assesses the effectiveness of controls relating to confidentiality and privacy. The Deloitte Global Confidentiality and Privacy Office works with Deloitte Technology, including the Deloitte Global Cybersecurity organization, and the Deloitte Global Office of General Counsel, to understand, prepare for, and respond to known and reasonably anticipated risks and threats facing our environment.\nDeloitte is dedicated to complying with applicable privacy laws and regulations around the globe, including the European Union General Data Protection Regulation (GDPR). Deloitte regularly monitors for changes in privacy laws and regulations, and adjusts policies and procedures when appropriate. Additionally, Deloitte performs an annual review process to verify Deloitte Global’s and Deloitte member firms’ compliance with our confidentiality and privacy standards.\nGraham McKay \nDeloitte Global Confidentiality and Privacy leader and \nData Protection Officer \ngmckay@deloitte.co.uk \nKevin Winter \nDeloitte Global Chief Information Security Officer \nkewinter@deloitte.com", "chunk_word_count": 330, "section_path": "Building better futures > 47 average annual training hours per individual > Cybersecurity", "document_id": "Deloitte 2023 Global Impact Report", "page": 78, "page_start": 78, "page_end": 78 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 48, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Deloitte organizational structure\nDeloitte is made up of firms that are members of Deloitte Touche Tohmatsu Limited (also referred to as “Deloitte Global”), a private company limited by guarantee, incorporated in England & Wales. These member firms and each of their related entities (each a “Deloitte firm”), along with Deloitte Global and its related entities, form the Deloitte organization.\nDeloitte firms support and adhere to the purposes and policies of Deloitte Global by:\nDeloitte firms are not subsidiaries or branch offices of a global parent, but instead comprise separate and distinct legal entities. The Deloitte organization is not a partnership, single firm, or multinational corporation.\nConducting themselves in a manner that \nsustains the reputation of the Deloitte \norganization; \nAligning local strategies with those of Deloitte Global, as appropriate; \nAdhering to professional standards, Deloitte’s Shared Values, and Deloitte policies \nconcerning systems of quality control; and Advising Deloitte Global of proposed joint ventures, mergers, and other cooperation arrangements with other Deloitte firms.\nThis structure confers significant strengths, including a deep understanding of local markets and a sense of responsibility among Deloitte firm professionals, who have direct stakes in the integrity and growth of their local practices.\nThis structure allows Deloitte to be an industry leader at all levels—locally, nationally, and globally. Individual Deloitte firms have access to the skills and knowledge of, and the ability to consult within, the Deloitte organization. They also enjoy the benefit of Deloitte’s market recognition and reputation. Deloitte Global does not provide services to clients, nor does it direct or control the decisions Deloitte firms make with respect to the clients they serve.\nThe Deloitte organization achieves economies of scale with centers of excellence, global delivery centers, and other network approaches that are designed to deliver a consistent level of excellence around the world.\nBelinda O’Toole Deloitte Global General Counsel belotoole@deloitte.com.au\nDanielle Almagor \nDeloitte Global Deputy General Counsel, Corporate \ndalmagor@deloitte.com\n### Global approach\nAs part of the Deloitte organization, Deloitte firms benefit from shared values, investments, and resources that enhance their individual abilities to provide core services to key local and global clients and development opportunities for their people. They also are able to leverage Deloitte’s brand, eminence, and intellectual property.\nThe member firms are primarily organized on an individual country or regional basis, and each operates within the legal and regulatory framework of its particular jurisdiction(s). They are separate and independent firms that have come together to practice under a common brand and shared methodologies, client service standards, and other professional protocols and guidelines.", "chunk_word_count": 431, "section_path": "Building better futures > 47 average annual training hours per individual > Deloitte organizational structure", "document_id": "Deloitte 2023 Global Impact Report", "page": 79, "page_start": 79, "page_end": 79 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 49, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Ethics\nDeloitte’s reputation is one of our most cherished assets. It distinguishes Deloitte in the marketplace and enables us to attract the world-class talent that is our hallmark. That’s why Deloitte’s Ethics teams work diligently and proactively to continually advance the culture of integrity across the organization. Deloitte is committed to conducting business with transparency, honesty, and the utmost professionalism.\nThe Deloitte Global Ethics team and Deloitte firms’ Ethics officers continue to work closely with senior Deloitte leaders to build and enhance the organization’s ethics program. The following codes and policies are foundational to the ethics program, in setting clear expectations:\n• A global familial and intimate personal relationships policy that sets out the requirements for Deloitte firms’ own individual policies and processes, subject to local laws, designed to help ensure that working relationships are, and are perceived to be, objective, fair, and at arm’s length, and to mitigate real or perceived conflicts of interest; and\n• The Global Code and Deloitte firms’ codes of conduct, which provide additional local guidance, detailed expectations, consultation channels, links to policies and guidelines, and further support for Deloitte people;\n• A global ethics policy that sets out the requirements for Deloitte firms’ ethics programs, along with an Ethics Officer Playbook, to set clear expectations and reinforce the strategic role and responsibilities of Deloitte firms’ Ethics officers;", "chunk_word_count": 236, "section_path": "Building better futures > 47 average annual training hours per individual > Ethics", "document_id": "Deloitte 2023 Global Impact Report", "page": 80, "page_start": 80, "page_end": 80 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 50, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Our Global Principles of Business\n• A global non-retaliation policy that articulates Deloitte’s commitment to a non-retaliatory workplace, with monitoring procedures to support this.\nConduct (“Global Code”) outline Deloitte’s ethical commitments and expectations of our 457,000 Deloitte people globally, giving the organization a strong foundation built upon indelible principles. At Deloitte, we have placed ethical culture and values at the heart of our agenda, and we understand the critical responsibility Deloitte has to build trust and serve the public interest. Driving a proactive approach to ethics, and building and sustaining a culture of integrity, helps Deloitte people make the most appropriate professional decisions.\n• A global anti-discrimination and antiharassment (including discrimination on the grounds of sex, gender identity, or sexual orientation, and sexual harassment) policy that sets out the requirements for Deloitte firms’ own individual policies, subject to local laws. The global policy requires antidiscrimination and anti-harassment training for all Deloitte people upon joining and every two years thereafter;\nTraining, consultation channels, support activities, and review programs are also core elements of the ethics program, in helping Deloitte people understand and apply these expectations. These include:\n• Channels for consultation and reporting ethics concerns that emphasize confidentiality and nonretaliation—directly to Ethics or Talent teams; via managers, team leaders, or managing directors, and member firm partners; or using the third-party ethics helpline Deloitte Speak Up and similar, thirdparty local services—that are supported by training and communications;\nEthical due diligence processes for Deloitte firm CEOs, board chairs, and other senior leaders, and enhanced expectations for firms’ boards of directors in governing ethical \nculture, ethical risks, and ethics program \nagendas; \nDeloitte ethics training programs—including online courses, classroom and virtual \nprograms, and facilitator-led interactive case discussions—and communications \ncampaigns. Ethics training is required for all new hires upon joining Deloitte; upon \npromotion to manager, senior manager, and partner (specific to their roles); and for all Deloitte people every two years. Additional ethics training is also delivered to members of the Deloitte Global Board of Directors and Deloitte firm boards on a periodic basis. This training emphasizes how boards can \ninfluence organizational ethics and the \nimportance of setting a strong tone from the top;\n• Support activities—including communications, webinars, and continuing education—to facilitate the sharing of leading practices among Deloitte firm Ethics teams;\n• An annual ethics survey, guidance on conduct risk assessment, and other tools to measure the effectiveness of ethics programs across Deloitte;\n• An annual confirmation by Deloitte people that they have read, understood, and are following the Global Code; and\nDetailed review programs to measure and monitor compliance with the global ethics policy and drive improvement in Deloitte firm ethics programs over time.", "chunk_word_count": 454, "section_path": "Building better futures > 47 average annual training hours per individual > Our Global Principles of Business", "document_id": "Deloitte 2023 Global Impact Report", "page": 80, "page_start": 80, "page_end": 81 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 51, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### External commitments\nDeloitte’s Human Rights Statement is underpinned by our Shared Values that set the expectations we have for our people. We believe all people are born free and equal in dignity and rights, and we are committed to respecting and advancing human rights within our organization.\nFurther to our internal commitments, programs, and approaches—and in support of the principles of Deloitte’s Global Code—our Commitment to Responsible Business Practices, Supplier Code of Conduct, and Human Rights Statement codify Deloitte’s long-held beliefs and principles around these key areas:\n### Multilateral initiatives\n• Deloitte’s Commitment to Responsible Business Practices is rooted in our Purpose—more than 175 years of making an impact that matters for our clients, people, and society. It outlines the responsible business principles we believe in and the commitments we have made. These are embedded in our policies and inform our decision-making.\nDeloitte plays a role in various external efforts to promote ethical conduct in the business world. These include:\nUniversity of Notre Dame Deloitte Center for Ethical Leadership. Members of the advisory board include retired Deloitte LLP (US) \nleaders. \nEthics Research Center (the research arm of the Ethics and Compliance Initiative). Deloitte US is represented on its board of directors. The Ethics Centre (Canadian Centre for Ethics and Corporate Policy). Deloitte Canada is represented on its board of directors. \nCercle Ethique des Affaires (French European Business Ethics Network member). Deloitte France is represented. Cercle Ethique des Affaires (French European Business Ethics Network member). Deloitte France is represented. \nCenter of Excellence in Ethics and Business, University La Salle of Mexico. The Center is sponsored by Deloitte Spanish-Latin America. ICAEW (Institute of Chartered Accountants for England and Wales) Ethics Standards \nCommittee. Deloitte UK’s Deputy Ethics \nPartner is a member. \nDanish Business Authority (the Danish audit regulator). Deloitte Denmark is represented on the Advisory Board (“Revisorrådet”). \nDanish Ethics Committee of FSR – Danish Auditors. Deloitte Denmark is represented.\nDeborah Rheder Deloitte Global Ethics leader drheder@deloitte.com\nDeloitte’s Supplier Code of Conduct (“Supplier Code”) outlines our expectations of suppliers—that they support our commitment to doing not only what is good for business, but also what is good for society. The Supplier Code focuses on human rights by requiring suppliers to treat workers with dignity and respect and not subject them to demeaning conditions. This includes prohibiting child and forced labor.", "chunk_word_count": 399, "section_path": "Building better futures > 47 average annual training hours per individual > External commitments", "document_id": "Deloitte 2023 Global Impact Report", "page": 82, "page_start": 82, "page_end": 82 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 52, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Global security\nThreats come in many sizes and forms, including geopolitical instability, crime, natural disasters, and global pandemics. The past year presented multiple challenges that had the potential to threaten the safety of people around the globe. Geopolitical and other risks continued to emerge and evolve, including the ongoing Russia-Ukraine war and multiple natural disasters. The Deloitte Global Security Office (GSO) collaborates with Deloitte firms worldwide to help keep Deloitte people safe, particularly during times of emergency or when Deloitte firms are called upon by clients to work in higher-risk areas.\nIn the event of an emergency while traveling overseas, Deloitte people have access to a 24- hour service delivered by a leading emergency medical and security provider. This service connects Deloitte people to medical services, security advice, and country-specific guidance while they are traveling internationally. During FY2023, the GSO team responded to more than 200 requests for medical assistance, including several critical emergency evacuations.\n### Additional highlights for FY2023\n• The GSO team worked with more than 500 engagement teams and travelers to provide security briefings and design comprehensive security plans for client support in higher-risk locations.\n### The war in Ukraine and political instability\nAs the war in Ukraine continues through a second year, Deloitte Global continues to provide support to Deloitte Ukraine’s people and practice. This includes daily monitoring of impacts from the war, contingency planning, and regular update calls with Deloitte Ukraine’s Managing Partner as part of Deloitte Global’s response efforts. Our global emergency communications system has been used regularly to conduct wellness checks and to issue emergency messages to confirm the safety of our Ukraine-based Deloitte people following major attacks.\n• On-site crisis management workshops were conducted for Deloitte firms in Europe and the Americas.\n• As the threat of potential energy shortages emerged, the GSO team established crossfunctional working groups with Deloitte firms to assess the risks and develop business continuity plans.\n### Keeping Deloitte people safe\nStaying on top of world events and identifying potential threats is key to our Deloitte Global Security strategy. In the event of an unexpected crisis, the GSO team is ready to respond quickly by coordinating closely with local Deloitte firms to help account for the safety of their people and provide necessary relief while minimizing the impact to Deloitte business operations.\n• The GSO completed virtual webinars and training programs for Deloitte internal security and resilience professionals to raise awareness and understanding of business continuity planning.\nRecent developments around the world highlight the ongoing importance of business continuity planning in Deloitte’s preparation and ability to respond to crisis events impacting our people and business operations. As of July 2023, all Deloitte firms and Deloitte Global Operations have been certified under ISO 22301, the leading international business continuity standard.\n• Additionally, the GSO team is in the process of rolling out an enhanced global emergency communication platform with additional capabilities.\nAva Cooper-Davis Deloitte Global Chief Security Officer acooperdavis@deloitte.com\nSean Toohey \nDeloitte Global Deputy Chief Security Officer \nstoohey@deloitte.com", "chunk_word_count": 512, "section_path": "Building better futures > 47 average annual training hours per individual > Global security", "document_id": "Deloitte 2023 Global Impact Report", "page": 83, "page_start": 83, "page_end": 84 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 53, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Human rights\nAt Deloitte, we believe all people are born free and equal in dignity and rights. Our commitment to human rights is inherent in our Purpose, to make an impact that matters, and is underpinned by our Shared Values that set the expectations we have for our people. In 2023, we solidified our commitment to advancing human rights across our organization by launching a Human Rights Statement (“Statement”). Human rights are a universal, and through the commitments we set out in this statement, we acknowledge our responsibility across our organization and beyond.\nOur Statement is based on the values and principles stated in the International Bill of Human Rights and is further guided by the United Nations Guiding Principles on Business and Human Rights (UNGP), and the Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises.\nguiding principles. Each is overseen by a Deloitte Global leader responsible for its strategy and implementation.\nDeloitte’s Global Principles of Business Conduct (“Global Code”) articulates the standards that Deloitte people should uphold and reflects our Shared Values and core belief that ethics and integrity are non-negotiable. These principles are incorporated into our mandatory training programs, which help empower our people at all levels with the knowledge and skills necessary to uphold our Global Code. Through these and other approaches, we actively work to prevent and mitigate human rights impacts.", "chunk_word_count": 241, "section_path": "Building better futures > 47 average annual training hours per individual > Human rights", "document_id": "Deloitte 2023 Global Impact Report", "page": 85, "page_start": 85, "page_end": 85 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 54, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Our approach\nWe commit to advancing the following human rights within our organization through:\n• Employment and workers’ rights \n• Equality and non-discriminatory treatment \n• Environmental sustainability \n• Education and skills development \n• Anti-corruption \n• Privacy \n• Trustworthy technology\nWe expect organizations with which we have a business relationship to uphold our commitment to human rights and responsible business practices. Deloitte’s Supplier Code of Conduct defines our expectations of suppliers, including treating workers with dignity and respect and not subjecting them to demeaning conditions. Deloitte’s Commitment to Responsible Business Practices articulates our beliefs and commitments to responsible business decision-making, and outlines our approach to our business relationships, including with whom we work and the work we do.\nEach of these human rights is accompanied by its dedicated policy or initiative that enables us to embed respect for human rights in our organization—such as ethics; inclusion; WorldClimate; WorldClass; anti-corruption, antiharassment, and privacy policies and programs; and ethical technology\nIn jurisdictions where national law and our human rights commitments conflict, we will comply with national law and use our influence to respect and promote international human rights.\nInvestigations and remediations are conducted with the highest level of integrity, including maintaining confidentiality, meaning that information will only be shared with those who have a true need to know. Per our nonretaliation policy, we prohibit retaliation against those who report or who otherwise participate in related investigations.\nTo report on our human rights initiatives, we rely on key performance indicators (KPIs) that are included throughout this report. This integrated approach ensures that the metrics used to measure progress in other areas, such as environmental, social, and governance, are also used to measure Deloitte’s advancement in human rights. The KPIs throughout the report provide an evaluation of our efforts and affirm the interconnectedness of human rights with our organization’s strategy.\nHuman rights matters can be challenging to identify, address, and remediate. We are committed to adapting and improving our processes and procedures going forward, as well as further evolving this statement and our commitments.\nThe Deloitte Global Chief Ethics Officer and Deloitte Global Chief People and Purpose Officer oversee our Human Rights Statement, and the Statement is supported by leaders within Deloitte firms. Both of these Deloitte Global leaders report annually to the Deloitte Global Board on their respective areas of responsibility. Externally, we communicate our human rights impacts and progress annually in this Global Impact Report and our United Nations Global Compact Communication on Progress.\nElizabeth Faber \nDeloitte Global Chief People and Purpose Officer \nefaber@deloitte.com\nDeborah Rheder Deloitte Global Ethics leader drheder@deloitte.com", "chunk_word_count": 441, "section_path": "Building better futures > 47 average annual training hours per individual > Our approach", "document_id": "Deloitte 2023 Global Impact Report", "page": 85, "page_start": 85, "page_end": 86 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 55, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Raising concerns\nOur people play an important role in supporting our human rights efforts and are encouraged to speak up whenever they have concerns regarding a human rights matter. Deloitte’s Speak Up helpline (and equivalents) and Deloitte firms’ ethics officers are available to Deloitte people for consultation on concerns or to report observed misconduct related to Deloitte people, clients or third parties. Deloitte’s public reporting channel is available for external third parties. Deloitte’s human rights due diligence process aims to identify, prevent, mitigate, and remedy impacts across our organization. Ongoing monitoring and risk management is integrated across our organization.\n### Moving forward\nDeloitte is committed to leading the way in society as a role model for positive change. We are a founding signatory of the United Nations Global Compact (UNGC) and are committed to its Ten Principles. We are also committed to respecting and promoting the United Nations Sustainable Development Goals (SDGs), which aim to realize equal human rights for all through economic, social and environmental development.\n### Independence\nIndependence and quality, underpinned by our Shared Values, are essential to Deloitte’s objectivity, integrity, impartiality, responsibility to the investing public, and ability to attract and retain clients. Standards for independence are shaped by legislation, regulations, professional requirements, and public expectations. Maintaining independence in fact and appearance is a professional obligation to which all Deloitte people must adhere.\n### Protecting the public interest\nWhen national or regional requirements are more restrictive than the requirements in the Deloitte Global policies, Deloitte firms and their people must meet those jurisdictions’ requirements as well.\nThe Deloitte Global Board of Directors has adopted robust independence policies and procedures (including around global systems and tools) to help Deloitte and its people safeguard their objectivity.", "chunk_word_count": 300, "section_path": "Building better futures > 47 average annual training hours per individual > Raising concerns", "document_id": "Deloitte 2023 Global Impact Report", "page": 86, "page_start": 86, "page_end": 87 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 56, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Maintaining independence\nAll Deloitte people are required to follow the independence policies and procedures, which address professional and regulatory requirements related to the provision of services as well as business, employment, and financial relationships.\nDeloitte frequently serves global clients in multiple jurisdictions. When considering whether to accept a new client or a new engagement at an existing client, each Deloitte firm must account for the independence requirements in all applicable jurisdictions. For existing audit clients, a Deloitte firm must evaluate the independence implications of other Deloitte firms' contemplated relationships with that client, including the provision of nonassurance services.\nThese policies and procedures are designed to help Deloitte people understand and meet independence standards and regulatory requirements as an integral component of achieving excellence in service delivery. These policies and procedures are based primarily on independence standards and regulations of the:\nEach Deloitte firm has an Independence leader who is responsible for overseeing independence matters, including the design, implementation, operation, and monitoring of the system of quality management related to independence. Deloitte Global sets policies and procedural expectations, provides global systems to support the execution of Deloitte firms’ quality controls, offers technical independence knowledge and insights, and performs independent periodic reviews of Deloitte firms.\n• International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA);\n• US Securities and Exchange Commission (SEC); and\n• Public Company Accounting Oversight Board (PCAOB).\nThese activities collectively raise awareness and help Deloitte people worldwide comply with rapidly changing and increasingly complex requirements.\n### Elevating the focus\nDeloitte operates in dynamic regulatory environments in which national rulemaking often has broad-reaching global implications. Deloitte Global Independence leaders engage with international professional bodies and regulators to advance the development of internationally accepted independence requirements. Deloitte leadership reinforces the importance of compliance with independence and related quality management standards, setting the appropriate tone at the top and instilling its importance in the Shared Values and culture of Deloitte.\nDenise Canavan Deloitte Global Independence leader decanavan@deloitte.com", "chunk_word_count": 350, "section_path": "Building better futures > 47 average annual training hours per individual > Maintaining independence", "document_id": "Deloitte 2023 Global Impact Report", "page": 87, "page_start": 87, "page_end": 88 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 57, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Leadership and governance\nThe Deloitte organization comprises Deloitte Touche Tohmatsu Limited (Deloitte Global), member firms of Deloitte Global, and each of their related entities in more than 150 countries and territories, and has governance and management structures in place at the Deloitte Global, member firm, and local levels.\nThe Global Board includes representation from the majority of Deloitte member firms and reflects the geographic reach of Deloitte’s operations. Diversity—including that of gender, race and ethnicity, thought and life experience, and professional background, as well as skills and capabilities—is considered in the selection of individuals, by their member firms, to these positions. The Deloitte Global Board has 17 members, with women making up $3 5 \\%$ of the Board. Anna Marks, Chair of the Deloitte Global Board of Directors, began her tenure on 1 June 2023. The elected term is for four years.\nThe Deloitte Global Board has several committees to support its oversight and governance role and, from time to time, leverages other structures, such as working groups, to provide oversight on specific prevailing topics or strategic matters. The current committees and working groups include the:\n• Audit, Finance & Investment Committee (AFIC) Purpose, Sustainability & Culture Committee (PSCC) \n• Risk & Ethics Committee (REC) \n• Stewardship Committee (SC) \n• Transformation Committee (TC) \n• Geopolitics Working Group (GWG) \n. CEO Nominating Committee (currently inactive) Succession Planning Committee (currently inactive)\n### The Deloitte Global Board of Directors\nThe Deloitte Global Board of Directors addresses Deloitte Global’s most important governance matters, including approval of the global strategy, annual budget and investment plan, major policies, major transactions, and the selection of the Deloitte Global CEO and Deloitte Global Chair. In addition, the Deloitte Global Board provides oversight of and support for the operation and performance of management.\nAll Deloitte Global Board members have full and active roles within their own member firms/geographies, with the exception of the Global CEO and Chair. The Chair is a full-time committed role and consequently does not retain any other active positions in the organization. No Deloitte Global Board members hold any significant positions or commitments in other commercial organizations.\nMore information about Deloitte Global Board members is available here.\nThe Deloitte Global Chair and Deputy Chair receive input from the Deloitte Global Independent Non-Executive (INE) Advisory Council. The group provides advice and insights on a variety of matters, including strategy, planning, public policy, quality, risk and regulatory matters, and broader stakeholder engagement. The Deloitte Global Chair and Board also regularly engage with the Deloitte Community of Chairs, a broad group of chairs from Deloitte member firms and geographies. Through the Community of Chairs, there is good engagement and discussion across a range of board matters between the Deloitte Global Board and Deloitte leaders around the world.\nThe Executive Committee also sets policies and champions initiatives that help Deloitte make an impact that matters for our clients, our people, society, and other stakeholders.", "chunk_word_count": 498, "section_path": "Building better futures > 47 average annual training hours per individual > Leadership and governance", "document_id": "Deloitte 2023 Global Impact Report", "page": 89, "page_start": 89, "page_end": 90 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 58, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Member firm leadership\nDeloitte member firms, and in some cases their related entities, have their own leadership and governance bodies. To foster effective and responsive management within member firms, member firm management and governance bodies are required by policy to include:\nDeloitte Global Chief Executive Officer Joe Ucuzoglu, who began serving in the role on 1 January 2023, leads the Executive Committee. Women comprise $3 8 \\%$ of the members of the Executive Committee (up from $2 3 \\%$ in FY2022).\n• A formal management structure, including an elected chief executive officer or managing partner who is responsible for managing the member firm and working with the member firm's leaders to align its strategies with those of the Deloitte organization; and\n### The Deloitte Global Operating Committee\nThe Deloitte Global Operating Committee provides a vital link between strategy and execution that helps Deloitte perform effectively and efficiently.\n• A governing body, such as a board of directors, to facilitate sound governance.\n### The Deloitte Global Executive Committee\nDeloitte Global Chief Operating Officer Donna Ward leads the Operating Committee. Members include Deloitte Global business operations and enabling area leaders, as well as chief operating officers from select member firms. Women comprise $3 3 \\%$ of the Operating Committee’s membership.\nEm Sendall \nChief of Staff, Office of the Deloitte Global Chair \nemsendall@deloitte.co.uk \nDina Tallarico \nChief of Staff, Office of the Deloitte Global CEO \ndtallarico@deloitte.com \nHarriet Balsom \nChief of Staff, Office of the Deloitte Global COO \nhbalsom@deloitte.co.uk\nThe Deloitte Global Executive Committee, currently composed of 21 senior leaders from Deloitte Global and select Deloitte member firms, is responsible for operating Deloitte Global, as well as embedding Deloitte’s Purpose and advancing its strategic business priorities.", "chunk_word_count": 294, "section_path": "Building better futures > 47 average annual training hours per individual > Member firm leadership", "document_id": "Deloitte 2023 Global Impact Report", "page": 90, "page_start": 90, "page_end": 90 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 59, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Public policy\nThe Deloitte Global Public Policy team participates in policy discussions focused on some of today’s most important socioeconomic issues facing business, government, and society, helping to inform the policy debate and bring clarity to the interconnected challenges facing the world.\nSome of our key policy focus areas include:\nOrganization for Economic Co-operation and Development (OECD), including Business at OECD (BIAC); Asia-Pacific Economic Cooperation Forum (APEC); International Organization of Employers (IOE); German Marshall Fund (GMF); and \n• Social Progress Imperative (SPI).\nChampioning the long-term health and sustainability of the planet through reporting of Environmental, Social, and Governance (ESG) information; addressing the complexity of a just transition; and mobilizing finance towards a low-carbon future; Underscoring policies and other levers to help enable workplace gender equality; Anticipating the future of regulation in an era of exponential technological advancement, including artificial intelligence; and • Supporting a holistic approach to expanding the GDP framework and measuring wealth in a way that considers human, natural, and social capital, as well as financial capital, with tools capable of validating progress to shape decision-making at all stages of the policy process.\nThe unique breadth of Deloitte’s businesses, and the perspectives gained by working with clients, through our people and through society, informs our policy activities. The Deloitte Global Public Policy team works collectively with the Deloitte Global Strategy and Deloitte Global Innovation teams to inform and amplify Deloitte’s broader strategic and business interests, while demonstrating our unwavering commitment to the public interest.\nThe Global Public Policy program is complemented by a community of Deloitte firm public policy programs. Together with business leaders and other key internal groups, Deloitte Global Public Policy coordinates public policy insights, activities, and engagement, amplifying impact and influence.\nSimon Cleveland Deloitte Global Public Policy leader scleveland@deloitte.co.uk\nThe Deloitte Global Public Policy team executes our policy agenda by engaging meaningfully across the stakeholder ecosystem—advocating that business, government, and society work together to make a positive impact for people, the planet, and prosperity.\nDeloitte people help advance our public policy agenda by working with key stakeholders within economies and supranational organizations, including the:\nDavid Gruner Director, Deloitte Global Public Policy davgruner@deloitte.com\nKyra Kaszynski Director, Deloitte Global Public Policy kkaszynski@deloitte.com\n• Group of 20 (G20), including the Business 20 (B20);\n### Risk and opportunity management\nDeloitte has a robust process for identifying, assessing, managing, and monitoring risks and opportunities, both at the Deloitte Global level and at the member firm level through their respective Enterprise Risk Frameworks (ERFs).\nThe Deloitte Global CRO reports on Deloitte’s priority risks on a regular cadence to the Deloitte Global Executive Committee, enabling discussion of risk exposures and mitigation actions. Priority risks are also regularly reviewed by the Risk and Ethics Committee of the Deloitte Global Board of Directors.\n• Risks impacting our strategic success or market differentiation; and", "chunk_word_count": 482, "section_path": "Building better futures > 47 average annual training hours per individual > Public policy", "document_id": "Deloitte 2023 Global Impact Report", "page": 91, "page_start": 91, "page_end": 92 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 60, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### • Risks impacting our people, Purpose, and Shared Values.\nIt is recognized that risks do not operate in discrete categories and they may have more than one impact. However, for the purposes of the categorization, the focus is on the potential primary impact. Each of Deloitte’s enterprise risks and opportunities have been linked to one or more ESG categories included in Deloitte’s materiality matrix.\n### Priority risks and opportunities\nThe Deloitte Global ERF sets out the Deloitte Global Executive Committee's assessment of the priority risks and emerging risks facing Deloitte—specifically, those that could impact the ability of Deloitte to achieve its strategic priorities, meet its public interest obligations, and protect its reputation and people. The member firm ERFs are managed in coordination with the Deloitte Global ERF.\nThe enterprise risks and opportunities listed are those that, as of May 2023, are considered to have the most potential for significant impact on Deloitte’s ability to achieve its strategic priorities, meet its public interest obligations, and protect its reputation and people, should the risk materialize.\nThese risks and opportunities have been considered based on the potential primary impact, including where the impact is a loss of opportunity. The risks and opportunities have been categorized into the following impact dimensions:\nThere is ongoing and frequent dialogue between the Deloitte Global ERF team, which facilitates the preparation of the Deloitte Global ERF, the Deloitte Global Risk owners, and other Deloitte Global teams to help ensure early identification and escalation of any matters requiring consideration by the risk owner or the Deloitte Global Chief Risk Officer (CRO).\n• Risks impacting our brand, reputation, and/or public interest obligations;\n### The way forward\nOn Deloitte’s journey of continuous improvement, we are considering ways in which we can enhance reporting going forward, including through providing additional disclosures regarding our response to key risks and opportunities.\nBob Graham Deloitte Global Chief Risk Officer rgraham@deloitte.com\n### Stakeholder engagement and materiality\nReporting is fundamental to Deloitte’s business. From the assurance services that Deloitte practitioners provide to clients to the research and insights our organization publishes across industries and regions, the importance of reporting is deeply ingrained in our organization.", "chunk_word_count": 371, "section_path": "Building better futures > 47 average annual training hours per individual > • Risks impacting our people, Purpose, and Shared Values.", "document_id": "Deloitte 2023 Global Impact Report", "page": 92, "page_start": 92, "page_end": 94 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 61, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Identifying material topics\ninterviews, desktop research, and the use of proprietary social listening tools. The significance of the actual and potential impacts identified through this process is further assessed to better understand and rank these impacts according to their magnitude, severity, and likelihood. The preliminary list of material topics identified through this engagement is refined, scored, and systematically evaluated to arrive at the “significant,” “more significant,” and “fundamental” topics for Deloitte to prioritize in our strategy and reporting.\nDeloitte’s approach to identify material topics is embedded in the way we do business. Continuous engagement with our key internal and external stakeholders helps inform our understanding of who Deloitte impacts through our day-to-day operations, along with analysis of our industry and activities. Processes to engage with stakeholders exist at multiple levels within Deloitte. They enable us to discuss Deloitte’s impacts on the economy, the environment, people, and human rights with those who have insights on such impacts. These ongoing interactions influence our reporting and shaping of material topics. Internal stakeholders include Deloitte leadership and Deloitte people. Examples of external stakeholders include suppliers, clients, regulators, industry associations, academia, and non-governmental organizations.\nOur purpose is to make an impact that matters. We recognize the need to be transparent about our impact—not just the ways in which we affect Deloitte clients through the services provided, but also the ways in which we impact the economy, the environment, our people, and human rights more broadly across our activities and business relationships.\nThe formal materiality assessment process was last undertaken during FY2022. In FY2023, we assessed the impacts through regular engagement, consultation, research, and analysis. Our ongoing identification and analysis has led us to conclude that the material topics and impacts listed remain unchanged for FY2023. However, the relative significance of the impacts has shifted in some cases. For example, nature and biodiversity has been reclassified as a more significant topic for Deloitte in FY2023.\nThe Deloitte Global Impact Report is the primary way we communicate our impacts and actions. By reviewing and understanding topics material to Deloitte, our stakeholders are provided with the data and insights that are material1 to them. These topics also serve as critical guideposts in setting our strategy around Environmental, Social, and Governance (ESG) matters. We prepare the reporting of our organization’s most significant impacts in accordance with the Global Reporting Initiative (GRI) Standards.\nOn a periodic basis, Deloitte also follows a formal process to review and revise our list of material topics and impacts. The process includes obtaining stakeholder insights about actual and potential, positive and negative impacts on the economy, the environment, people, and human rights through direct", "chunk_word_count": 452, "section_path": "Building better futures > 47 average annual training hours per individual > Identifying material topics", "document_id": "Deloitte 2023 Global Impact Report", "page": 94, "page_start": 94, "page_end": 94 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 62, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Management of material topics and impacts\nWhen considering the actual and potential risks and opportunities of material topics identified throughout the assessment process, Deloitte recognizes its positive and negative impacts on the economy, the environment, people, and human rights. Deloitte leadership recognizes the importance of the three ESG pillars and has supported an increase in ESG-related services provided to clients, ESG programs such as WorldClimate and WorldClass, and tools and trainings for our people, with an emphasis on diversity, equity, and inclusion (DEI).\nDeloitte’s impact extends beyond our direct operations, and includes impacts that could arise from engaging with clients and suppliers that may not fully align with our Purpose and Shared Values. Deloitte’s negative impacts as a result of its activities include greenhouse gas emissions contributing to climate change, as well as the creation of electronic waste. Deloitte acknowledges these negative impacts and is actively working to mitigate them through internal and external programs, as discussed throughout the 2023 Global Impact Report.\nDuring FY2023, reporting of ESG matters was overseen by the WorldImpact Council (WIC), cochaired by the Deloitte Global Deputy CEO and Chief People and Purpose Officer, together with the Chair of the Deloitte Global Board of Directors. WIC membership was drawn from the Deloitte Global Board, the Deloitte Global Executive Committee, and other senior Deloitte leaders, including Deloitte member firm Purpose leaders. Several junior Deloitte professionals, drawn from participants in the One Young World program, were also members of the WIC.\nThe results of the FY2022 formal materiality assessment, including the prioritized list of material topics, were presented to, and approved by, the WIC and were embedded in Deloitte’s management of ESG matters. The prioritized list of topics does not specifically list human rights as a material impact because human rights considerations are included in many other topics. For example, sustainable and responsible supply chain includes Deloitte’s impacts on human rights in supply chain, while the diversity, equity, and inclusion topic addresses equality and non-discriminatory treatment as human rights. Please see our Human Rights Statement for the list of human rights Deloitte is committed to advancing.\n### Definitions of material topics\n### More significant:\nHealth and well-being: Supporting peoples’ well-being by providing programs, resources, and incentives that enable informed decisions and health; includes creating a culture that promotes satisfaction and a safe, secure work environment for all, especially in light of the COVID-19 pandemic and the shift to hybrid work.\nClimate change: The impacts of greenhouse gas emissions generated through operations and supply chain activities. From a governance perspective, this topic includes management of climate risk, along with strategies employed to identify and act on physical and transition risks presented by climate change. This encompasses collaborating with clients, alliance relationships, and suppliers with the goal of reducing carbon and ecosystem footprints.", "chunk_word_count": 477, "section_path": "Building better futures > 47 average annual training hours per individual > Management of material topics and impacts", "document_id": "Deloitte 2023 Global Impact Report", "page": 95, "page_start": 95, "page_end": 96 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 63, "chunk_text": "# Building better futures\n## 47 average annual training hours per individual\n### Fundamental:\n• Board and corporate governance: Responsibility of the board of directors and management to strategize and respond to ESG issues. Includes board structure and diversity, board nomination process, frequency of board membership changes, and skills, experiences, and backgrounds of board members.\nImpact of client services: Services provided by Deloitte to clients have broader impacts on the economy, environment, and people. This topic focuses on the alignment of stakeholders’ expectations and Deloitte's environmental and social strategies with services delivered to clients.\nEconomic performance: Generation of revenue and the maintenance of profitability, business continuity, and market presence.\nData privacy and cybersecurity: Maintaining the confidentiality, integrity, and availability of the data and information of Deloitte clients and individuals through safe and secure data collection practices, strong data protection policies and procedures, and measures designed to protect Deloitte’s computers, technology, and systems against unauthorized access and maintain information integrity and availability.\nEthics and integrity: Commitment to the highest standards of ethics and business conduct, placing an emphasis on professional integrity and compliance, defined codes of conduct and policies, risk assessment, transparency, and compliance. This topic includes reporting mechanisms, anti-corruption measures, and antiretaliation policies.\nSocietal impact: Deloitte’s impact on issues in society, including education and skills opportunities, response to humanitarian crises and natural disasters, health equity and pandemic response, and gender equality; includes how Deloitte collaborates with local and international nonprofit organizations, provides volunteering and pro bono services, and makes donations of cash and in-kind goods.\nDiversity, equity, and inclusion: Creating a respectful and inclusive culture for people and communities by focusing on diversity in the workforce, increasing gender representation, furthering pay equity, advancing LGBT $^ +$ inclusion, and supporting mental health.\nTalent experience: Considers the many aspects of the talent experience including work-life balance, compensation, benefits and recognition, role satisfaction, career opportunity, working conditions, advancement, and learning and development; considers how purpose-driven individuals can expect to make an impact while working at Deloitte.\nSustainable operations: The environmental impacts associated with operations including energy consumption, resource consumption (paper, plastics, recycled materials), water use, and waste management.\nAnna Nefedova Deloitte Global ESG Reporting leader aanefedova@deloitte.ch\nNature and biodiversity: The impacts on natural capital, such as deforestation and biodiversity loss and ecosystem destruction.\n### Significant:\nPublic policy engagement: Regulatory and public policy engagement, development of public policy positions, political contributions, and lobbying.\nSustainable and responsible supply chain: Supply chain impacts related to environmental and social aspects of suppliers’ performance. Human right impacts include but are not limited to child labor, workplace rights, modern slavery, rights of indigenous people, conflict minerals, and equal access to health and opportunity.\n### FY2023 ESG highlights\n### Environmental\n### Societal impact\n### Governance\n### Greenhouse gas (GHG) emissions\n### Societal investments\nEconomic contribution\nPercent reduction of metric tonnes CO2e (FY2023 vs.FY2019):\nInnovation investments\nProgress toward WorldClimate goals\n24M individua reached\n57M individuals reached from FY2018toFY2023toward our 100M WorldClass goal\n$4 . 1 \\%$ of aggregate Deloitte firmrevenue4\n### Our people\nDeloitte Global Board of Directors5\nDeloitte Global Executive Committee5\nDiversity & inclusion1", "chunk_word_count": 514, "section_path": "Building better futures > 47 average annual training hours per individual > Fundamental:", "document_id": "Deloitte 2023 Global Impact Report", "page": 96, "page_start": 96, "page_end": 98 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 64, "chunk_text": "# Building better futures\n## 17 \nmembers representing \n11 countries\n21\n$20 \\%$ fspelersenemisons targets;anadditional $6 \\%$ have committed to setting targets\n$100 \\%$ bfsiperstonaland emissions offset in FY2021-FY2023; phasing in internal price on carbon\nmembers representing 8 countries\n35% women\n38% women\n5,358te (SAFc) purchased\n$26 \\%$ women partners, principals, and managing directors2 (goalof $3 0 \\%$ by2025)\n132,700 new hires 7.93M applcations received\nLearning\n$\\$ 6.48$ annual indirect training costs3\n## 6 Deloitte University facilities additional Deloitte University facilities under construction\n3 Training hours do not include on-the-job digital learning hours that are a core aspect of development at Deloitte. Average direct training investments per individual represent data collection from all Deloitte firms. Indirect training cost is the opportunity cost based on estimates from reporting Deloitte firms.\nNotes\nMonetary values are presented in US\\$ and used as the basis for revenue growth and innovation investment percentages, unless otherwise specified. \n1 Deloitte people align to gender identities beyond men and women. We are on a journey to more accurately and completely capture gender identity information across our network. The Talent data provided is a mix of biological sex and gender identity data based on information available at this time. In some cases where gender data is not available, the data may not sum to 100%. \n2 Partners, principals, and managing directors refer to Deloitte firm partners, principals, and US managing directors.\n5 Board of Directors and Executive Committee membership is presented as of 1 June 2023 to reflect composition as of the date of report publication, thus does not align with composition during the fiscal year which ended on 31 May 2023. If presented as of the end of FY2023 on 31 May 2023, figures would be: percent of women members on Deloitte Global’s Board of Directors: 38%; percent of women members on Deloitte Global’s Executive Committee: 23%.\n### FY2023 Performance metrics\nNote: Figures are aggregated across the Deloitte organization except where otherwise noted. Due to rounding, sum of sections may not equal total.\nA detailed description of this report’s boundaries and the performance measurement methods used is available in the Deloitte Global FY2023 Basis of Reporting section.\n1 “Legal” means the legal practices of member firms or their related entities that provide legal services. For legal and regulatory reasons, not all member firms provide legal services.", "chunk_word_count": 388, "section_path": "Building better futures > 17 \nmembers representing \n11 countries", "document_id": "Deloitte 2023 Global Impact Report", "page": 98, "page_start": 98, "page_end": 99 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 65, "chunk_text": "# Building better futures\n## 2 Based on annual survey of Deloitte firms.\n### FY2023 Performance metrics Environment\nNote: Figures are aggregated across the Deloitte organization except where otherwise noted. Due to rounding, sum of sections may not equal total.\nA detailed description of the contents of this report and the methods used in calculating data values in this section can be found in the Deloitte Global FY2023 Basis of Reporting.\nSelected environmental data, indicated in this table with the $[ \\pm ]$ symbol, has been subject to independent limited assurance in accordance with ISAE 3410. Further details are available within the Environmental Performance Data Limited Assurance Report FY2023.\n1 Where possible, Deloitte firms procure and claim renewable energy in accordance with the Climate Group’s RE100 Technical Criteria and Global Reporting Initiative (GRI) topic standard GRI 302: Energy 2016. In certain markets where procuring renewable electricity is challenging or is not possible, Deloitte firms may procure renewable electricity from a neighboring country. This allows Deloitte to demonstrate commitment to our renewable electricity target and signal market demand. As this approach meets only one out of three market boundary conditions included in the RE100 Technical Criteria, there may be variances between renewable electricity amounts reported in the Global Impact Report and within RE100 reports. Deloitte anticipates increasing the alignment with RE100 Technical Criteria over time as market availability of renewable energy increases.\n2 In FY2023, Deloitte updated its Fleet Reporting Policy to further clarify which leased vehicles are considered to be under Deloitte’s operational control. The change in policy resulted in emissions associated with certain lease schemes previously included in Scope 1 in FY2022 to be accounted under Scope 3 in FY2023, and in personal usage from such leases to be removed from Deloitte inventory due to the lack of operational control resulting in a decrease in the gross GHG emissions. This methodology change is possible due to improvements in data granularity, and therefore cannot be applied retrospectively.\n3 In accordance with the Global Reporting Initiative (GRI) disclosure 305-2, Deloitte publishes purchased electricity emissions using both a location-and market-based methodology. The location-based method involves using an average national, regional or subnational emission factor that relates to the local grid from which electricity is drawn, whereas the market-based method involves deriving emissions factors from contractual instruments, allowing for a zero emission factor to be applied to portions of electricity consumption that is matched to a renewable energy source, resulting in lower emissions compared to the location-based method. Deloitte's near-term science-based targets use a market-based methodology for purchased electricity, hence this figure is shown in the primary emissions inventory whereas the location-based figure is shown in a separate schedule for comparative purposes. Additional details on location-and market-based electricity emissions are provided in the Deloitte Global FY2023 Basis of Reporting.", "chunk_word_count": 466, "section_path": "Building better futures > 2 Based on annual survey of Deloitte firms.", "document_id": "Deloitte 2023 Global Impact Report", "page": 100, "page_start": 100, "page_end": 101 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 66, "chunk_text": "# Building better futures\n## 4 Performance tracking for this indicator is reported for the most recent year(s) only.\n5 Tank-to-wake air travel emissions inclusive of radiative forcing would be 580,776 metric tonnes CO2e in FY2023; 177,054 metric tonnes CO2e in FY2022; 33,537 metric tonness CO2e in FY2021; and 935,937 metric tonnes CO2e in FY2019.\n6 Deloitte used a distance-based methodology to calculate jet fuel emissions consistent with the World Economic Forum Clean Skies For Tomorrow's proposed Sustainable Aviation Fuel certificate (SAFc) emissions accounting and reporting guidelines. Emissions factors for the applicable classes of service were sourced from the UK's Dept. for Business, Energy & Industrial Strategy (BEIS) (Defra) - 2022. This methodology is used for both well-to-tank and tank-to-wake emissions.\n7 Because activity data is not readily available, Scope 3 PG&S emissions are calculated using data collected from select suppliers, combined with broad estimations of emissions per amount spent by purchasing category. As such, the uncertainty around these reported emissions is high.\nIn FY2023, Deloitte revised the methodology for calculating real estate emissions included in reported purchased goods and services (PG&S) emissions to align with updated guidance from the real estate sector. As a result of the updated guidance, Deloitte has removed upfront embodied carbon real estate emissions from reported PG&S emissions. For comparability, this change in methodology has been retroactively applied to previously reported PG&S amounts, which has resulted in a recalculation and restatement of PG&S amounts and emissions totals for the base year and all the previous years’ data shown in this report. The recalculation and restatement have resulted in emissions decreases of 144,250 tonnes in FY2022; 126,152 tonnes in FY2021; 117,976 tonnes in FY2020; and 104,665 tonnes in FY2019. Reported FY2023 PG&S emissions would be approximately 160,000 tonnes higher if using the previous methodology.\nDeloitte will continue to review its approach to Scope 3 reporting in the future, aiming to continually improve the accuracy of its disclosures. When these enhancements lead to a material change in a reported figure, Deloitte is committed to explaining the nature of the change, its reasoning for its appropriateness, and the variance compared to previous methodologies. Additional details on the methodology used to calculate PG&S emissions and further details on this restatement are provided in the Deloitte Global FY2023\n### Value chain mitigation\n### Metric tonnes CO2e\n### Basis of Reporting.", "chunk_word_count": 390, "section_path": "Building better futures > 4 Performance tracking for this indicator is reported for the most recent year(s) only. > Value chain mitigation", "document_id": "Deloitte 2023 Global Impact Report", "page": 101, "page_start": 101, "page_end": 101 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 67, "chunk_text": "# Building better futures\n## 4 Performance tracking for this indicator is reported for the most recent year(s) only.\n### Sustainable aviation fuel (SAF)\n8 In FY2023, Deloitte updated its Scope 3 emissions category screening to confirm known material emissions sources and identify additional emission sources that might be material to Deloitte. The results of the screening analysis, along with the qualitative assessment of Scope 3 emission categories, led to the conclusion that Scope 3, Category 7 – employee commuting, including working from home emissions, are likely material to Deloitte. Deloitte has developed a methodology to calculate emissions from these sources and will begin gathering data during FY2024, and anticipate including Scope 3 Category 7 emissions in future greenhouse gas reporting.\nSAF is a non-conventional (not fossil derived) aviation fuel. SAF is produced from sustainable feedstocks including waste materials, such as used cooking oil, agricultural residues, and municipal solid waste, or potentially from purpose grown crops.\nDeloitte supports efforts to develop a robust physical tracking mechanism and associated registry to improve traceability of SAF. Until such mechanism is in place and is recognized by the standard setters, Deloitte reports on SAF outside of Scopes 1, 2, and 3. Including Sustainable Aviation Fuel certificate (SAFc) environmental attribute purchases in the Performance Metrics Table allows us to share with others an example of how SAFc can be included in corporate environmental reporting.\n9 Reflects purchases of carbon credits that are completed and in progress as of the date of publication. In FY2023, Deloitte began transitioning our approach to expand our investment in beyond value chain mitigation to a portfolio of innovative beyond-compliance or credited investments in climate mitigation that may not occur without external funding. We are beginning this transition through the implementation of a voluntary internal carbon price. As Deloitte firms begin implementing this new financial mechanism, we expect the number of carbon credit purchases and the percentage of gross GHG emissions addressed through carbon credit purchases may decrease relative to prior years.\n${ } ^ { 1 0 } \\mathsf { S A F }$ environmental benefits are transferred through the use of SAF certificates (SAFc). Similar to a renewable electricity certificate or guarantee of origin in the production of green electricity, a SAFc represents the environmental attributes of a metric ton of neat (i.e. unblended) SAF. Deloitte's purchase of airline tickets in jurisdictions where SAF blending mandates are present are not considered to have a material impact on reported emissions.\n### FY2023 Performance metrics Societal impact\nNote: Figures are aggregated across the Deloitte organization except where otherwise noted. Due to rounding, sum of sections may not equal total.\nA detailed description of the contents of this report and the methods used in calculating data values in this section can be found in the Deloitte Global FY2023 Basis of Reporting.\n1 Pro bono refers to professional service engagements performed at no cost (pro bono) or significantly reduced cost (low bono) to qualifying organizations, for which Deloitte would normally bill for the professional services performed. Expenses incurred to deliver pro bono work are included in the total reported costs for managing societal impact.", "chunk_word_count": 522, "section_path": "Building better futures > 4 Performance tracking for this indicator is reported for the most recent year(s) only. > Sustainable aviation fuel (SAF)", "document_id": "Deloitte 2023 Global Impact Report", "page": 101, "page_start": 101, "page_end": 102 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 68, "chunk_text": "# Building better futures\n## 4 Performance tracking for this indicator is reported for the most recent year(s) only.\n### FY2023 Performance metrics Our people\nNote: Figures are aggregated across the Deloitte organization except where otherwise noted. Due to rounding, sum of sections may not equal total.\n1 Board of Directors and Executive Committee membership is presented as of 1 June 2023 to reflect composition as of the date of report publication, thus does not align with composition during the fiscal year which ended on 31 May 2023. If presented as of the end of FY2023 on 31 May 2023, figures would be: percent of women members on Deloitte Global’s Board of Directors: $3 8 \\% \\cdot$ percent of women members on Deloitte Global’s Executive Committee: $2 3 \\%$ .\n## 2 Partners, principals, and managing directors refer to Deloitte firm partners, principals and US managing directors.\n3 For purposes of this report, professional staff is defined as Deloitte firm individuals spending at least $5 0 \\%$ of their time serving clients and includes professionals from director to junior staff.\n4 For purposes of this report, administrative staff is defined as Deloitte firm individuals spending less than $5 0 \\%$ of their time serving clients and includes professionals from director to junior staff. Administrative staff also includes Deloitte Global professionals who do not serve clients.\n5 Deloitte people align to gender identities beyond men and women. We are on a journey to more accurately and completely capture gender identity information across our network. The Talent data provided is a mix of biological sex and gender identity data based on information available at this time. In some cases where gender data is not available, the data may not sum to $1 0 0 \\%$ .\n## 6 Age ranges are estimated based on data collected from Deloitte firms.\n## 7 The rate is calculated using the total Deloitte people at the end of the reporting period.\n## 8 Performance tracking for this indicator is reported beginning in FY2022.\n## 9 Training hours do not include on the job learning hours that are a core aspect of development at Deloitte.\n10 The methodology for calculating training information evolved from an estimate based on actual costs from reporting Deloitte firms in FY2021, to full data collection from all Deloitte firms in FY2022. As such, data presented for FY2022 and FY2023 reflects the revised methodology, while data presented for FY2021 reflects amounts calculated using the previous methodology.\n## 11 Indirect training cost is the opportunity cost based on estimates of the value of time spent in formal learning.\n## 12 Two additional Deloitte University facilities are under construction.\n### FY2023 Performance metrics", "chunk_word_count": 448, "section_path": "Building better futures > 4 Performance tracking for this indicator is reported for the most recent year(s) only. > FY2023 Performance metrics Our people", "document_id": "Deloitte 2023 Global Impact Report", "page": 103, "page_start": 103, "page_end": 104 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 69, "chunk_text": "# Building better futures\n## 12 Two additional Deloitte University facilities are under construction.\n### Governance\nNote: Figures are aggregated across the Deloitte organization except where otherwise noted.\n1 Deloitte Global has a written policy requiring member firms to escalate corruption incidents meeting established criteria to the appropriate Deloitte Global executive. For the purpose of this disclosure, corruption is defined as any form of bribery including offering, promising, giving, accepting or soliciting anything of value for the purpose of gaining or securing any improper business advantage.\n2 All Deloitte people are required to complete anti-corruption training—upon being hired and every other year thereafter—that includes Global policies, corruption red flags and case study scenarios. This figure may not reflect $1 0 0 \\%$ participation at any point in time, as required, because it includes Deloitte people on extended leave and those with recent start dates who may still complete the training before their designated due date.\n3 As anti-corruption training takes place every other year, Deloitte reports completion rates on a biennial basis. FY2023 performance will be reflected in the FY2024 Global Impact Report, covering training completed throughout FY2023 and FY2024.\n“Deloitte,” “us,” “we,” and “our” refer to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more.\nDeloitte provides industry-leading audit and assurance, tax and legal, consulting, financial advisory, and risk advisory services to nearly $9 0 \\%$ of the Fortune Global $5 0 0 \\textcircled { \\mathbb { R } }$ and thousands of private companies. Our people deliver measurable and lasting results that help reinforce public trust in capital markets, enable clients to transform and thrive, and lead the way toward a stronger economy, a more equitable society, and a sustainable world. Building on its 175- plus year history, Deloitte spans more than 150 countries and territories. Learn how Deloitte’s approximately 457,000 people worldwide make an impact that matters at www.deloitte.com.\nThis communication contains general information only, and none of DTTL, its global network of member firms or their related entities is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser.\nNo representations, warranties or undertakings (express or implied) are given as to the accuracy or completeness of the information in this communication, and none of DTTL, its member firms, related entities, employees or agents shall be liable or responsible for any loss or damage whatsoever arising directly or indirectly in connection with any person relying on this communication. DTTL and each of its member firms, and their related entities, are legally separate and independent entities.\nDeloitte Global Services Limited Independent Limited Assurance Statement\nEnvironmental Performance Data Assurance Report FY2023\nOctober 2023", "chunk_word_count": 542, "section_path": "Building better futures > 12 Two additional Deloitte University facilities are under construction. > Governance", "document_id": "Deloitte 2023 Global Impact Report", "page": 106, "page_start": 106, "page_end": 108 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 70, "chunk_text": "# Building better futures\n## 12 Two additional Deloitte University facilities are under construction.\n### Independent Limited Assurance Report to Deloitte Global Services Limited\n### Background and introduction\nWe have not performed any procedures with respect to other information included in the Report and, therefore, no conclusion on the Report as a whole is expressed.\nBDO LLP (‘BDO’ or ‘we’) was engaged by Deloitte Global Services Limited, (‘DGSL’) to undertake a limited assurance engagement on the Deloitte organization’s (as defined below) environmental performance data for the financial year ending on 31 May 2023 (figures reviewed shown in Appendix 1 to this report) as disclosed in the 2023 Deloitte Global Impact Report (‘the Report’) in line with Deloitte Global’s FY2023 Basis of Reporting.\n### DTTL’s responsibilities\nThe Directors of DTTL are responsible for:\nThe preparation of the subject matter in accordance with Deloitte Global’s FY23 Basis of Reporting \nThe accuracy and completeness of the information contained in the report The design, implementation and maintenance of internal controls relevant to the preparation of the report to provide assurance that the report is free from material misstatement, whether due to fraud or error, to the extent possible given developing methodologies \nPreparing the subject matter in accordance with the applicable criteria and for the content and statements contained therein.\nWe have performed a limited assurance engagement in accordance with the International Standard on Assurance Engagements 3410 (ISAE 3410) Assurance Engagements on Greenhouse Gas Statements, issued by the International Auditing and Assurance Standards Board.\nThe Deloitte organization’s environmental sustainability performance metrics consist of the emissions of Deloitte Touche Tohmatsu Limited (DTTL), its global network of member firms, and their respective related entities (collectively, the “Deloitte organization”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and their respective related entities are responsible for collecting their energy consumption and activity data. Consumption and associated emissions are submitted to Deloitte Global annually and compiled for inclusion in the Report. The engagement covered the entities comprising the Deloitte organization and all facilities either owned or under the operational control of any such entities.\n### Inherent uncertainty\nISAE 3410 recognises that Greenhouse Gas quantification process can rarely be 100 per cent accurate due to:\nScientific uncertainty, arising from incomplete scientific knowledge about the measurement of the gases \nMeasurement uncertainty, arising from limitations in measurement techniques and the use of estimations.\nOur review was limited to the environmental sustainability data reported in the 2023 Deloitte Global Impact Report (‘the subject matter’) comprising:\nThe total emissions relating to Scope 1, 2 and 3 Greenhouse Gases The total energy consumption relating to Scope 1, 2 and 3 Greenhouse Gases Electricity procured from green tariffs and purchased energy attribute certificates (EACs).\nWhere significant assumptions or deductions are utilised, they are disclosed.", "chunk_word_count": 462, "section_path": "Building better futures > 12 Two additional Deloitte University facilities are under construction. > Independent Limited Assurance Report to Deloitte Global Services Limited", "document_id": "Deloitte 2023 Global Impact Report", "page": 109, "page_start": 109, "page_end": 109 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 71, "chunk_text": "# Building better futures\n## 12 Two additional Deloitte University facilities are under construction.\n### Criteria\nA limited assurance engagement undertaken in accordance with ISAE 3410 involves assessing the suitability of Deloitte Global’s use of its reporting procedures as the basis for the preparation of the subject matter whether due to fraud or error, responding to the assessed risks as necessary in the circumstances and evaluating the overall presentation of the subject matter, and GHG statement.\nThe subject matter was prepared in accordance with the Deloitte Global FY2023 Basis of Reporting which references the Greenhouse Gas Protocol, a Corporate Accounting and Reporting Standard (revised edition, 2004) and Corporate Value Chain (Scope 3) Standard. The relevant emission factors, based upon the FY2023 reporting period, were applied from published guidelines including, but not limited to, the UK Government, the International Energy Agency (IEA), the US Environmental Protection Agency (EPA) and AIB European Residual Mixes.\nA limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment procedures, including the understanding of internal control, and the procedures performed in response to the assessed risks. As a result, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed.\nA materiality level of five per cent of the consolidated Deloitte organization reporting was set by Deloitte Global. The testing conducted across the Deloitte organization in scope of the reporting varied based upon the proportion of activity data (e.g. energy consumption) and corresponding emissions relating to Scope 1, 2 and 3 that each member of the Deloitte organization represents.\n### Work performed\nTesting focused on the geographies which, per emission source, accounted for a significant proportion of the Deloitte organization’s energy consumption and emissions and were individually material. Other geographies were tested only when there was potential for errors to accumulate to material amounts.\nThe procedures selected, and our determination of the nature, timing and extent of these procedures, depend on our judgement including the assessment of the risks of material misstatement, and non-compliance with laws and regulations relevant to the subject matter. Our procedures included, but were not limited to:", "chunk_word_count": 372, "section_path": "Building better futures > 12 Two additional Deloitte University facilities are under construction. > Criteria", "document_id": "Deloitte 2023 Global Impact Report", "page": 110, "page_start": 110, "page_end": 110 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 72, "chunk_text": "# Building better futures\n## 12 Two additional Deloitte University facilities are under construction.\n### Our responsibility\nReview of the Deloitte Global FY2023 Basis of Reporting to understand and \nidentify risks of material misstatement in the associated Report \nInterviews with key personnel to understand the systems and controls \nin place during the reporting period \nReview and assessment of the systems, processes and controls to \ncollate, aggregate, validate and report the data \nEvaluated the materiality of the locations based on reported emissions and \nconsidered this for reasonableness against the Deloitte organization’s real \nestate and activity in those locations \nTested the key processes and controls covering the consolidation process and \npresentation of Deloitte organization level data\nOur responsibility is to express a limited assurance conclusion, in accordance with ISAE 3410, as to whether the reported subject matter (as set out in Appendix I) has been prepared in accordance with Deloitte Global’s FY23 Basis of Reporting and to provide this in a report to DGSL. The standard required that we:\nComply with the requirements of Part A and B of the Code of Ethics for Professional Accountants, including independence, issued by the International Ethics Standards Board for Accountants (the IESBA Code); and Implement quality control procedures that are applicable to the individual engagement in accordance with the requirements of International Standard on Quality Management for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements (ISQM 1).\nReviewed the reasonableness of information provided by any member of the Deloitte organization, including data of the Deloitte organization, outsourced facilities managers or outsourced travel management companies Performed analytical procedures and sample tests on collated data and conversion factors applied in accordance with published guidelines. This included reviewing any matters showing significant variations from prior years Confirmed the purchase of Energy Attribute Certificates (EACs) Reviewed the draft disclosures contained within the draft Deloitte Global Impact Report, dated 25 September 2023 and the corresponding FY2023 Performance Metrics – Environment table, to assess alignment with the underlying GHG emissions calculations and activity data.", "chunk_word_count": 342, "section_path": "Building better futures > 12 Two additional Deloitte University facilities are under construction. > Our responsibility", "document_id": "Deloitte 2023 Global Impact Report", "page": 110, "page_start": 110, "page_end": 111 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 73, "chunk_text": "# Building better futures\n## 12 Two additional Deloitte University facilities are under construction.\n### Restriction of use\nThis assurance report is made solely to DGSL in accordance with the terms of our engagement, which include agreed arrangements for disclosure. Our work has been undertaken so that we might state to DGSL those matters we have been engaged to state in this limited assurance report and for no other purpose. Our limited assurance report should not be regarded as suitable to be used or relied on by any party wishing to acquire rights against us other than DGSL for any purpose or in any context. Any party other than DGSL who obtains access to our limited assurance report or a copy thereof and chooses to rely on our limited assurance report (or any part thereof) will do so at its own risk. To the fullest extent permitted by law, we accept or assume no responsibility and deny any liability to any party other than DGSL for our work, for this independent limited assurance report, or for the conclusions we have reached.\nThe relative effectiveness and significance of specific control procedures at Deloitte Global and their effect on assessment of control risk at the level of any member of the Deloitte organization are dependent on their interaction with the controls and other factors present at other members of the Deloitte organization. We have not performed any procedures to evaluate the effectiveness of controls at individual members of the Deloitte organization.\n### Conclusion\nBased on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the GHG emissions expressed as CO2e and other environmental data noted in the Deloitte Global Impact Report for the financial year ended on 31 May 2023 (as per Appendix I), has not been prepared, in all material respects, in accordance with Deloitte Global’s reporting methodologies.\nWe have not conducted any work outside the agreed scope and therefore restrict our conclusion to the above mentioned subject matter.\n### Inherent limitations\nNon-financial performance information is subject to more inherent limitations than financial information, given the characteristics of the subject matter and the methods used for determining such information. The absence of a significant body of established practice on which to draw allows for the selection of different but acceptable measurement techniques which can result in materially different measurements and can impact accuracy and comparability. Greenhouse gas quantification is unavoidably subject to inherent uncertainty as a result of both scientific and estimation uncertainty and for other non-financial performance information the precision of different measurement techniques may also vary. Furthermore, the nature and methods used to determine such information, as well as the measurement criteria and the precision thereof, may change over time.\nRichard Weighell \nPartner \nFor and on behalf of BDO LLP \n55 Baker Street, London W1U 7EU \n26 October 2023", "chunk_word_count": 484, "section_path": "Building better futures > 12 Two additional Deloitte University facilities are under construction. > Restriction of use", "document_id": "Deloitte 2023 Global Impact Report", "page": 111, "page_start": 111, "page_end": 113 }, { "report": "Deloitte 2023 Global Impact Report.pdf", "chunk_idx": 74, "chunk_text": "# Building better futures\n## 12 Two additional Deloitte University facilities are under construction.\n### Appendix 1 – Statement of Assured FY23 Greenhouse Gas Emissions Data\nNote 1. In FY2023, Deloitte Global updated its Fleet Reporting Policy to further clarify which leased vehicles are considered to be under the operational control of any member of the Deloitte organization. The change in policy resulted in emissions associated with certain lease schemes previously included in Scope 1 in FY2022 being accounted for under Scope 3 in FY2023. The change in classification resulted in personal usage from such leases being excluded in FY2023 as only reimbursed mileage is reported under scope 3, in line with the Deloitte organization’s inventory boundaries, due to the lack of operational control. This has resulted in a decrease in the gross GHG emissions. This methodology change is possible due to improvements in data granularity, and therefore cannot be applied retrospectively.\nNote 2. Due to rounding, the sum of activity level emissions may not equal the total reported emissions per scope area.\nNote 3. These figures include the EACs purchased.\nNote 4. In FY2023, Deloitte Global revised the methodology for calculating real estate emissions included in reported purchased goods and services (PG&S) emissions to align with updated guidance from the real estate sector. As a result of the updated guidance, Deloitte Global has removed upfront embodied carbon real estate emissions from reported PG&S emissions of the Deloitte organization. For comparability, this change in methodology has been retroactively applied to previously reported PG&S amounts, which has resulted in a recalculation and restatement of PG&S amounts and emissions totals for the base year and all the previous years’ data. The recalculation and restatement has resulted in emissions decreased of 144,250 tonnes in FY2022; 126,152 tonnes in FY2021; and 104,665 tonnes in FY2019. Reported FY2023 PG&S emissions would be approximately 160,000 tonnes higher if using the previous methodology.\nDeloitte Global will continue to review its approach to Scope 3 reporting in the future, aiming to continually improve the accuracy of its disclosures. When these enhancements lead to a material change in a reported figure, Deloitte Global is committed to explaining the nature of the change, its reasoning for its appropriateness, and the variance compared to previous methodologies.\nNote 5. In accordance with the GHG Protocol, Deloitte Global publishes purchased electricity emissions using both the location and market-based methodologies. The location-based methodology involves using an average national, regional or subnational emission factor that relates to the local grid from with electricity is drawn. The market-based method involves deriving emission factors from contractual instruments, allowing a zero emission factor to be applied to electricity consumption that is matched to a renewable energy source. Deloitte Global includes the market-based emissions within the GHG inventory of the Deloitte organization as this corresponds to near-term science-based targets of the Deloitte organization.", "chunk_word_count": 474, "section_path": "Building better futures > 12 Two additional Deloitte University facilities are under construction. > Appendix 1 – Statement of Assured FY23 Greenhouse Gas Emissions Data", "document_id": "Deloitte 2023 Global Impact Report", "page": 114, "page_start": 114, "page_end": 114 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 0, "chunk_text": "# H&MGroup\nSustainability Disclosure 2022\n## About this report\nClear and transparent reporting is vital for creating accountability and monitoring our performance. We continue to integrate our financial and sustainability reporting while increasing levels of disclosure across a range of channels,to meet the diverse needs of our different stakeholders and external reporting requirements.We're committed to openly sharing our progress based on the best available data,and to improving our level of disclosure each year.\nDisclosures reporting in our Annual and Sustainability Report.\n一 Our Modern Slavery Statement details our approach to human rights and due diligence in our business operations and supply chain,with a focus on our Salient Human Rights Issues.\nThis report covers the financial year from 1December 2021 to 30 November 2022.Find more information on the scope of this report in How We Report.\nOur reporting comprises several components:\n一 Our Annual and Sustainability Report outlines our financial and non-financial performance in 2022, including our Statutory Sustainability Report.\n## H&M Foundation\nThe H&M Foundation is privately funded by the Stefan Persson family, founders and main owners of the H&M Group. The Foundation uses philanthropic resources to find, fund and facilitate disruptive innovations,initiatives and research that enable a socially inclusive and planet positive textile industry.\n- This Sustainability Disclosure complements the Annual and Sustainability Report by providing additional details about our strategy, goals, performance data and policies.\n一 A dedicated sustainability section of our corporate website offers a broad range of information on key topics,including our strategies and policies.\nSince 2013, the family has donated SEK 1.7 billion (USD 219 million) to the Foundation.\nLearn more at hmfoundation.com and read more about some of the Foundation's activities throughout this report.\n- External reporting frameworks,including Global Reporting Initiative and UN Guiding Principles indexes,are available on our website, and Task Force on Climate-related Financial\n## Contents\n## Our approach to sustainability\n## Circularity, Climate& Nature\n## Fair & Equal\nOur approach to sustainability Key sustainability policies & standards .7 Some words & phrases used in this report...... 8\nOur approach to Circularity, Climate & Nature.. 23\nCircular supply chain 一 Resource optimisation & recirculation ...... 49 - Production processes.. .. 52\n## Climate & nature\nClimate. .26 \nBiodiversity & land use.. .32 \nWater .35 \nChemicals... .38\nCircular customer journey 一 Scaling customer-facing circular business models.. 53\n## How we lead change\nHow we lead change.. 10 \nOur approach to leading change 1 \nTransparency 13 \nEngaging with our stakeholders for \npositive change.. .15\n## Supply chain management\n## Circular products,supply chain & customer journey\n## Resource use & circular impact\nMoving to a circular ecosystem ... .40\n一Packaging ..56 \n一 Stores,distribution centres& offices .......58 \nOur approach to being Fair & Equal.. ...61 \nRespecting & advancing human rights......... 63 \nSocial impact in our own operations........... 65 \nSocial impact in our production supply chain .. 67 \nInclusion & diversity.. 77 \nCommunity engagement .81\nSupply chain management... .. 82\nCircular products 一 Design & assortment planning ： 41 一Material choice.. .43 一Microfibres... 48\n## How we report\n## 2022 Highlights\nHow we report. 86 \nUN Sustainable Development Goals .87 \nAuditor's report ..88", "chunk_word_count": 516, "section_path": "H&MGroup > About this report", "document_id": "HM Group Sustainability Disclosure 2022", "page": 1, "page_start": 1, "page_end": 3 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 1, "chunk_text": "# H&MGroup\n## 2022 Highlights... ..18 \nExternal assessments. .19 \nCircularity, Climate & Nature KPls .20 \nFair & Equal KPls.... .21\n### Our approach to sustainability\n### Our sustainability strategy\nWe have a vision to lead the change towards achieving a circular fashion industry with net-zero climate impact, while being a fair and equal company.\nOur industry continues to evolve to meet customer needs against the backdrop of increasinglyurgent environmental crises and social inequity. We recognise the positive and negative impacts of our industry and our business,as well as the need and opportunity for a transformation to new ways of working that protect the rights of current and future generations.\nUnited by our values,we have an ambition to lead the change towards a circular fashion industry with net-zero climate impact,while being a fair and equal company. We will continue to listen to our customers and meet them where they are, while inspiring them to develop a new relationship with fashion.\n## LEAD THE CHANGE\n-Scale innovation\n-Promote transparency\n- Collaborate for industrywide progress\nRead more about how we strive to lead the change,and our approach to circularity, climate and nature and being a fair and equal company at the beginning of these chapters. Read our Annual and Sustainability Report for more details on our business strategy and information on our sustainability governance.\nWe aim to grow our business in a way that decouples our financial growth and profitability from the use of finite natural resources, so that businesses and communities can thrive within planetary boundaries.In early 2022,we strengthened this ambition by introducing a goal to double our sales (from a 2021 baseline) while halving our greenhouse gas emissions1(from a 2019 baseline) by 2030.\n## SUPPORT A CIRCULAR FASHION INDUSTRY WITH NET-ZERO CLIMATE IMPACT\n## BE A FAIR AND EQUAL COMPANY\n- Become net-zero across our value chain by 2040,operating within planetary boundaries\n- Have a positive impact on all people across our value chain\n一 Have a net positive impact on biodiversity\n- Support and promote inclusion and diversity in everything we do\n- Scale circular models and systems for our products,supply chains and customer journeys", "chunk_word_count": 355, "section_path": "H&MGroup > 2022 Highlights... ..18 \nExternal assessments. .19 \nCircularity, Climate & Nature KPls .20 \nFair & Equal KPls.... .21", "document_id": "HM Group Sustainability Disclosure 2022", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 2, "chunk_text": "# H&MGroup\n## RESPECT HUMAN RIGHTS\n### A message from our CEO\nInvestments in sustainability provide the group with long-term business opportunities. By building strategic partnerships with key stakeholders and growing in various innovative ways such as circular business models,we can grow our business in a way that decouples our financial growth and profitability from the use of finite natural resources. A good example of this is majority-owned, fast-growing Sellpy, which is already one of the biggest players in secondhand fashion in Europe.\nLooking ahead, our main focus is on continuing to invest in and develop our customer offering and shopping experience for our unique brands, so that we keep meeting and exceeding our customers' needs and expectations.\nLooking back at 2022, it was a turbulent year marked by the war in Ukraine and our thoughts are with all the people affected by this devastating humanitarian crisis.\nDespite the turbulent world around us, H&M Group stands strong with a wide customer base,a robust financial position, healthy cash flow and a well-balanced inventory. This is all thanks to the commitment from colleagues all around the world, who continue to build our company,stand true to our values and ensure we always realise the business idea that our founder laid the ground for 75 years ago 一 to deliver our customers unbeatable value with the best combination of fashion, quality, price and sustainability.\nThroughout challenging external times, sustainability remains an integral part of our business. This is underlined by our 2030 goal, which combine targets for company growth and profit with reductions in greenhouse gas emissions.\nOur investment arm CO:LAB is a way for us to explore new business models,and in addition to Sellpy we have invested in startups such as Smartex, Renewcell and Colorifix, to mention just a few. Our investments have in a short time created significant value, for example by improving the customer experience and enabling scaling and commercialisation of recycled and more sustainably sourced materials.\nTo reach our ambitious climate goals of halving the group's greenhouse gas emissions by 2030 and achieving net-zero by 2040, we invest in projects to reduce greenhouse gas emissions throughout our whole value chain. During the year, our climate goals were verified by the Science Based Targets initiative and we established the Green Fashion Initiative to support our suppliers in replacing fossil fuels. We also signed long-term virtual power purchase agreements in the UK,Sweden and Spain to cover electricity consumption in our operations in a majority of European markets. This will not only help us reduce our greenhouse gas emissions,but also secure our energy prices.\nHhuv\nHelena Helmersson CEO, H&M Group\nWe will continue to make investments in new business models, materials and technologies that have the potential to drive radical shifts in how we make and remake our products, and how our customers can experience fashion. Alongside these efforts, we will keep working for increased levels of transparency to empower customers to make more informed decisions about the products they buy.", "chunk_word_count": 498, "section_path": "H&MGroup > RESPECT HUMAN RIGHTS > A message from our CEO", "document_id": "HM Group Sustainability Disclosure 2022", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 3, "chunk_text": "# H&MGroup\n## RESPECT HUMAN RIGHTS\n### A message from our Head of Sustainability\nI hope you enjoy reading our 2022 Sustainability Disclosure, which marks our ${ } ^ { 2 0 ^ { \\mathrm { t h } } }$ year of sustainability reporting. We welcome open dialogue and collaboration on the road ahead to meet the many shared challenges of our industry and our world.\nAs the world faces significant and ongoing social,environmental and economic challenges, the actions we take to transform our business and our industry are more important than ever. Alongside others in our sector, we must continue to accelerate our efforts to reduce emissions in line with science and decouple our growth from resource use.As we make this journey, we must also contribute to a just transition for the millions who rely on the fashion industry for their livelihoods.lam convinced that brands placing sustainability at their core will be better prepared to meet the evolving requirements of customers and legislators, as wellas making vital contributions to a better future for the people and the planet.\nDeveloping the processes and infrastructure to scale circular options for our customers is an important lever to reach our climate goals. This year, our use of recycled materials accelerated, reaching $23 \\%$ (up from $1 8 \\%$ and contributing to a total of $84 \\%$ recycled or other more sustainably sourced materials in our collections. H&M also integrated an assortment from Selpy into its website,as part of our effort to normalise second-hand shopping. You will find more examples and details on how we are putting our circularity ambition into action in this report.\nLeyla Ertur Head of Sustainability, H&M Group\nOur efforts to positively impact the people involved in our value chain are equally as important as our actions to reduce our environmental footprint.We're continuing to work with our suppliers to improve social dialogue, gender equality and wages for their workers,as well as increasing the scope of our detailed supply chain wages disclosure. We recognise the deep interrelationship between people and the planet, building strong links to social impacts across our environmental strategies 一including through our Water Strategy 2030 and our updated materials vision\nOur goal of net-zero greenhouse gas emissions by 2040, now verified by the Science Based Targets initiative, is a central part of this ambition and a foundation to our sustainability strategy. We are committed to reducing our climate impact in order to play our part in addressing the climate crisis,and have so far reached reductions of $8 \\%$ in scopes 1and 2 and $7 \\%$ in scope 3 emissions from our 2019 baseline. To push ourselves further and faster, we are increasing efforts to decarbonise our value chain 一 including investing in projects to support our suppliers in reducing their own emissions.\n### Key sustainability policies & standards\nCROSS-CUTTING Human Rights Policy\n### H&M Group\n## OUR OWN OPERATIONS\n## OUR BUSINESS PARTNERS\n## OUR MATERIALS AND PRODUCTS\nCode of Ethics for Colleagues \nWhistleblowing Policy \nSocial Policies \nPrivacy Policy\nCode of Ethics for Business Partners\nAnimal Welfare Policy Responsible Raw Material Sourcing Policy H&M Group Chemical Restrictions\nSustainability Commitment Child Labour Policy\nMigrant Worker Guidelines \nHome Working Policy \nSandblasting Policy\nResponsible Marketing Guidelines - Tax Policy", "chunk_word_count": 540, "section_path": "H&MGroup > RESPECT HUMAN RIGHTS > A message from our Head of Sustainability", "document_id": "HM Group Sustainability Disclosure 2022", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 4, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### Some words & phrases used in this report\nThroughout this report we use certain words and phrases to describe our approach to addressing specific social and environmental issues.Here,we explain what we mean by these terms.\n- Circular supply chains: Building scalable systems that circulate products and materials for repair, reuse and recycling and use lower-impact production processes 一 such as dyeing,printing and finishing.\nCircular and circularity are terms we use throughout this report in different contexts.We use them as high-level terms to describe activities aligned with the Ellen MacArthur Foundation's (EMF) definition of circular economy,which focuses on three principles: eliminate waste and pollution,circulate products and materials (at their highest value),and regenerate nature. More specifically,we support and aspire to the EMF vision for a circular fashion industry, where products are designed to be used more,made to be made again,and made from safe and recycled or renewable inputs.Where we reference our circular ecosystem, we are referring to putting all these principles into practice through the way we operate our business and create our products, including:\n- Circular customer journeys: Providing convenient ways to engage in circular fashion where products are used more before being repaired, reused and recycled.\nCustomer-facing circular business models is an additional term we use to describe circular customer journeys.Circular business models can be in place throughout the entire ecosystem. When we talk about care, repair and reuse models,we frame them as customer-facing circular business models.\nFair compensation in our production supply chain refers to a wage that 一in a regular work week,without overtime 一 is enough to meet the basic needs of employees and their families and provide some discretionary income. As a minimum,the wage should meet legal levels or applicable collective bargaining agreement levels 一whichever is higher.\n- Circular products: Creating products that are made to last from safe,recycled, regenerative or othermore sustainably sourced materials that can circulate multiple times.\nOur vision to lead the change means innovating, incubating and investing in scaling new materials, technologies and business models with the potential to decouple our business growth from resource use.It means trying to do things differently,daring to take the first step.It means sharing more data and working to improve the accuracy and comparability of industrywide disclosure. And finally,it means collaborating with others to change the way the industry works and create the legislative environment and infrastructure required for the fashion sector of the future.\nReverse supply chain is a term for a system that brings used products,materials and production waste back into circulation either as second-hand products,or to be reused or recycled and diverted back into the production system as valuable resources.\nPreferred transport options refers to modes of transport including $100 \\%$ biofuel, electric and zero-emissions vehicles.1\nRegenerative agriculture is a concept we refer to in relation to raw material production. It is a holistic approach to agriculture that focuses on the interconnection of farming systems and nature. Regenerative farming practices can improve soil health and strengthen the resilience of farmers while also restoring natural habitats.", "chunk_word_count": 508, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > Some words & phrases used in this report", "document_id": "HM Group Sustainability Disclosure 2022", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 5, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### Some words & phrases used in this report\nResponsible is one of the three pillars of our long-term material sourcing vision.In this context it means sourcing materials with the overall aim to respect human rights and reduce environmental impact while contributing to sustainable development in the countries where we source.² This is the foundation of all our sourcing decisions.The broader definition of what constitutes a responsible company is defined by international frameworks and for H&M Group it means understanding and taking action to address our impacts on people and the planet, supported by robust systems of governance and transparent external communications.\nMore sustainably sourced, sourced in a more sustainable way or more sustainable describes materials or raw material production, processes,our overall operational activity,or that of our suppliers that have a reduced negative environmental impact compared to conventional alternatives.We base this assessment on various qualitative and quantitative comparative data sources including third-party lifecycle assessment (LCA)data,external benchmarks and assessments,supply chain assessment scores, and data on other KPls.We further define more sustainably sourced for different materials in our Material Categorisation,Responsible Raw Material Sourcing Policy and Animal Welfare Policy.\n### How we lead change\nOur approach to leading change Transparency .13 Engaging with our stakeholders for positive change .15\n### Our approach to leading change\n一 We invest in innovative companies that enable a more circular future,supporting entrepreneurship in the fashion industry, through our investment arm,H&M CO:LAB.\n### H&M Foundation Global Change Awards\nThe seventh round of H&M Foundation's Global Change Awards launched in October 2022. This is one of the world's largest innovation challenges to transform the fashion industry.It highlights bright minds reinventing fashion and changing the way it is seen, worn and made. The aim is to find, support and scale disruptive ideas that can transform the fashion and textile industry and help protect our planet. The winners will be announced in June 2023.\n一 Our business ventures test and promote innovative ways of working. The membershipbased brand Singular Society offers customers premium products at the price of what they cost to make.In 2022 we discontinued Treadler,a B2B service giving others access to H&M Group's supply chain,due to uncertainties in the world and slow growth.The venture generated valuable learnings that we will apply to future projects.\nWe aim to use our size and scale to amplify the speed and impact of transformation in the fashion sector.", "chunk_word_count": 402, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > Some words & phrases used in this report", "document_id": "HM Group Sustainability Disclosure 2022", "page": 9, "page_start": 9, "page_end": 11 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 6, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### Innovation\nInnovative business models, materials and production processes that enable circularity and offer new experiences for customers have the potential to transform our industry.We identify and test many different solutions,and scale the most promising ones. Although some will fail, this approach means we accelerate discovery of innovations that can make a positive impact.\nTo us, leading the change means innovating, incubating and investing in scaling new materials, technologies and business models that have the potential to decouple our business growth from resource use.It means trying to do things differently,daring to take the first step.It means sharing more data and working to improve the accuracy and comparability of industrywide disclosure. And finally,it means collaborating with others to change the way the industry works and create the legislative environment and infrastructure required for the fashion sector of the future.\n一 Ongoing investment in our data systems and analytical tools will support us to make more informed sustainability decisions and accelerate progress towards our goals.\n- We support early-stage innovations through to commercial production,accelerating integration of these innovations into our organisation and supply chain,through our Circular Innovation Lab.In 2022,we supported research from Karolinska Institutet and SLU (Swedish University of Agricultural Sciences) to scale production of a protein-based fibre that mimics spider silk.\n一 We look for opportunities to reach new customer groups.For example,H&MMove launched in 2022,offering a wide range of ‘movewear' designed to reduce barriers to sport and get everybody and every body moving.\nWe focus on three areas: scaling innovation, promoting transparency,and collaborating with stakeholders and policymakers for industrywide progress.\n一 $5 5 \\%$ of respondents to our annual stakeholder survey rate H&M Group as good or very good at innovation, telling us that we are strong in our initial support for innovations,but need to scale these faster.\n一We explore new circular business models and other areas that research shows will be of strategic importance to our business through H&M Group Laboratory,an innovation hub within the Group. Read more about our work to scale customer-facing circular business models.\nLearn more about how innovation speeds transformation,online and in examples throughout this report.\n### Collaboration drives large-scale impact", "chunk_word_count": 362, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > Innovation", "document_id": "HM Group Sustainability Disclosure 2022", "page": 11, "page_start": 11, "page_end": 11 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 7, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### An interview with Federica Marchionni,CEOof GlobalFashion Agenda about how we're doing and what we cando better\nGlobal Fashion Agenda(GFA) is a non-profit organisation that fosters industry collaboration on sustainability in fashion to accelerate impact.\nand evolving data tools are complex and 'perfect data' does not seem to be definable nor achievable before the 2O30 deadline to reach the Paris Agreement's targets.\nWhat do we do well, what could we do better? H&M Group excels in fostering collaboration to drive large-scale impact. The Group's precompetitive mindset has helped form initiatives such as Circular Fashion Partnership and thought leadership publications like Fashion CEO Agenda. It has also demonstrated strong leadership within other multi-stakeholder initiatives, such as the Sustainable Apparel Coalition and ACT on Living Wages. By sharing knowledge and resources, H&M Group is stimulating greater supply chain transparency and traceability in the industry.\nWhat's your impression of H&M Group's efforts to create transparency for customers? I strongly believe H&M Group strives to be open and transparent to increase customer awareness about its sustainability performance and to inspire the industry to do the same. But as a frontrunner, the company experiences greater scrutiny and risks. At the same time, elements of H&M Group's sustainability communication must be corrected, but I fully support its bravery to voluntarily disclose impact to help drive change.\nAt present, there are no harmonised rules or guidelines for greenwashing accusations. They can be made and communicated broadly, prompting a proliferation of unsubstantiated allegations and diminishing the incentive for companies to be open about their efforts 一 leading to increased greenhushing and, for some, inaction.\nMoving forward,I hope the group avoids labelling specific collections or products in a way that could easily be misinterpreted. Instead,it should apply a holistic approach,demonstrating both social and environmental impact for products in a clear and substantiated way.\n### How can the industry work together to create more transparency?\nWe need alliances to align on data gaps, increase understanding and develop better data. Companies should demonstrate their impact using the most robust data sources available. The industry must show leadership, demonstrate best practice and stay ahead of regulation on performance claims as well as data transparency and traceability. For this to happen, we need thorough discussions with regulators and law enforcers about harmonised development and interpretation of regulation.\n### What's your reflection on the criticism faced by H&M Group in 2022?\nGFA took the criticism seriously and worked with H&M Group to understand the circumstances and the company's efforts to resolve the issues. We believe that H&M Group appreciates the importance of communicating accurate messages. The company wants to be as transparent as possible and has removed any potentially misleading product messaging.", "chunk_word_count": 455, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > An interview with Federica Marchionni,CEOof GlobalFashion Agenda about how we're doing and what we cando better", "document_id": "HM Group Sustainability Disclosure 2022", "page": 12, "page_start": 12, "page_end": 12 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 8, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### What challenges do fashion companies face in becoming more transparent?\nReliable data is crucial for transparency and to substantiate sustainability claims. Both critics and supporters of existing data platforms agree that there is a need for ‘better data'. However, the growing expectation for collating ‘perfect data' must not stall progress.Sustainability reporting\non individual products to drive positive change across the industry. The SAC temporarily paused the Higg Index Transparency Program to review and evolve due to criticism.We welcome further development of the Higg Index to improve the tools and accelerate industry progress.\n### Transparency\nclaims about a product. This certification, independently verified bya third-party organisation,will help to validate the sustainability claims we share with customers about specific materials.\nTogether with peers and stakeholders,we have a long history of reporting our progress on sustainability一 including tracing and disclosing details of our supply chains,and testing and piloting new ways of tracing materials and collecting and sharing data.These have been important steps to push the boundaries on transparency forward across our industry. But we want to take this further to meet increasing demands from our customers for clear,accurate and relevant information about our products, supply chain and business practices.Our aim is to create comparability to enable better choices - for our customers,as well as for ourselves and our industry. This is something we have worked towards for a number of years,continually testing different solutions.A lack of harmonised legislation and standardised approach to sustainability claims as well an ongoing evolution of data and data systems have posed a challenge\nOur focus remains on our two key objectives:\n-Empowering informed choices: Giving customers the information they need about our business and products to make informed decisions.\n### Progress: accelerating sustainable change\n- Accelerating sustainable change: Increasing transparency and traceability across our value chain,giving us greater control over our impacts and creating industry comparability.\n一 We scaled our traceability programme with TextileGenesis to several pilots using blockchain technology to trace textiles across the supply chain. This year, we rolled out the project for all man-made cellulosic fibres and recycled polyester and trained hundreds of suppliers across several countries. We initiated the process for tracing more than 20O million H&M Group pieces on the TextileGenesis platform,and approximately 44 million pieces have so far been fully traced.2 In 2023,our ambition is to continue to accelerate and progress traceability in our full supply chain. This is crucial for us to reach our overal goals and ensure compliance.\nTraceability is key to enabling greater transparency.Accurate data on raw materials and products is essential.We're committed to continually improving the comparability and quality of the data,systems and calculations we use, together with our partners and all relevant stakeholders.Mindful of the ethical considerations around collecting and using data,we share our approach to processing and protecting personal data through our Privacy Notice.\nThis year the fashion industry,including H&M Group,has faced increased scrutiny over sustainability claims,and we welcome the positive shift towards clearer guidance and increased transparency,which can only be achieved through improved data collection and traceability. Our intention is,and will continue to be,to provide transparent impact data to customers and stakeholders to incentivise and drive positive change in the industry.", "chunk_word_count": 534, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > What challenges do fashion companies face in becoming more transparent?", "document_id": "HM Group Sustainability Disclosure 2022", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 9, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### Progress: empowering informed choices\n一 Together with Textile Exchange and Textile Genesis\" we continued testing eTrackit,which tracks a product's volumes of certified materials online viae-tokens.The technology is applicable for many different fibre types with third-party verification,and we aim to use it to provide the verified data needed to confidently make product claims.\n一 H&M Group has been brand-certified against several Textile Exchange standards,using a chainof-custody system that ensures all points in the supply chain are certified to make sustainability 一 We are contributing our expertise to the European Commission's Product Environmental Footprint (PEF) to create a framework for measuring the environmental impact of products.\n一 We support the Sustainable Apparel Coalition's (SAC's) work to develop shared,verified product impact data,as this is key to enabling comparability and informing customer choice. Our goal is to disclose transparent information - The Conscious programme rewarded customers for purchasing products with at least $50 \\%$ more sustainably sourced materials, such as certified organic cotton and recycled polyester. Over the last ten years Conscious has played an important role in helping customers make more informed decisions. Evolving clarity in our sustainability communications led us to reconsider using the Conscious title 一a decision that was hastened by recent external criticism and reinforced by emerging legislation.We welcome harmonised guidance as we take our next steps to improve the clarity of the information we provide to customers.For the products that previously qualified for using the Conscious title,we will now show additional information about the material composition more clearly.The H&M members points programme continues to empower members to take actions such as using our garment collecting initiative,bringing their own bag when shopping in store or choosing preferred transport options1 when shopping online.We are working towards providing information about the material choices for all our products.\n### Learnings\nacross the whole industry.Starting small and scaling up gradually may be a better way forward.\n### Recognition for transparency\n- For many years,our goal has been to drive transparency in the industry by using the latest available tools and technologies to track our progress and communicate openly with our customers.Trying new things involves greater risk,but is also essential to finding opportunities for improvement.", "chunk_word_count": 368, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > Progress: empowering informed choices", "document_id": "HM Group Sustainability Disclosure 2022", "page": 13, "page_start": 13, "page_end": 14 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 10, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### Future focus\n一 All our brands completed the Higg Brand & Retail Module (BRM),and had their data verified. H&M publicly disclosed its scores for the first time and set a goal to increase its score by $2 \\%$ this year in comparison to 2021.The brand achieved this, increasing its BRM environment score from $7 7 . 4 \\%$ to $8 5 . 1 \\%$ and its social score from $7 4 . 3 \\%$ to $8 4 . 3 \\%$ See more detailed scores on page 19.\n-We ranked fourth in the Fashion Revolution's 2022 Transparency Index, with a score of $66 \\%$ $6 8 \\%$ in 2021). The index ranks 250 of the world's biggest fashion brands according to the information they disclose about their social and environmental policies,practices and impacts in their operations and supply chain.\n一 We will continue to work towards tracing all fibre types by scaling existing initiatives and exploring new ones,and we already have pilots and scale-up plans in place for most material types.We are also working to connect fibre and material traceability with product traceability, to achieve a fully traceable value chain from raw material to customer.\n一 Our industry still has a long way to go to meet expectations for information and data about products and their impacts.Industry alignment and collaboration are key to making progress, and we will continue to learn and contribute.We welcome harmonised methodologies for product claims in the EU, such as PEF.\n-We updated our transparency strategy, with a focus on further integrating transparent information about our products and materials into our customer communications.Long term,we're moving towards influencing and empowering our customers to make better choices and reduce their negative impact.\n一 We welcome clearer guidance and harmonised legislation around making sustainability claims, harmonised across different markets.We will continue to engage and share our experience with stakeholders and policymakers on this issue.\n一 $50 \\%$ of stakeholders rate H&M Group as good or very good for transparency,down from $7 1 \\%$ last year一 showing there is work to do to rebuild trust in our ambitions and actions. Read more in Engaging with Our Stakeholders.\n-We are continuously working to improve our material integrity routines.In preparation for forthcoming regulations and legislation around sustainability claims we need to continue investing in competence development and improving internal data flows to ensure our product claims are as transparent and accurate as possible.\n一 We will continue working with our suppliers and peers to encourage greater data disclosure and increase the comparability of data related to different materials,processes and projects.\n- We continued assessing our suppliers'social and environmental performance using the Higg Facility Environmental Module (FEM)and the Higg Facility Social and Labour Module(FSLM). Read more in Supply Chain Management.\n$- \\ln 2 0 2 1$ , we achieved Leadership Level in the SAC's membership by verifying and publicly disclosing environmental and social responsibility data for our operations and the majority of tier 1and 2 suppliers.", "chunk_word_count": 500, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > Future focus", "document_id": "HM Group Sustainability Disclosure 2022", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 11, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### Future focus\n- The transparency landscape is evolving quickly, alongside the expectations of what it means to be a leader in this area. We anticipate escalating scrutiny of our commitments and reporting in the coming years,alongside new legislation coming into place that all companies will need to adhere to. We remain firmly committed to learning, adapting and improving.\n一 Robust,automated data systems are required to replace our current approach,where technical and human errors are possible.Securing a seamless flow of data through our systems remains a major challenge and a priority.\n一 Our H&M Group supplier list disclosed information about 1,183 tier 1 supplier factories, covering $9 9 \\%$ of relevant production volume, and 392 tier 2 supplier factories,covering $73 \\%$ of relevant production volume.& Other Stories began publicly sharing its supplier list. Read more about H&M Group's supplier list data.\n- It's challenging to find on-product transparency solutions that are scalable for supply chains\n### Engaging with our stakeholders for positive change\ninnovators, non-governmental organisations and multi-stakeholder initiatives.", "chunk_word_count": 176, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > Future focus", "document_id": "HM Group Sustainability Disclosure 2022", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 12, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### Stakeholder feedback\n-Innovators. Critical to tackling complex, systemic issues,we nurture and champion innovators who help solve industrywide challenges.\nIn 2022, 97 stakeholders (of around 800 invited), participated in our stakeholder perception survey (96 in both 2021 and 2020). This year:\nCollaboration between diverse stakeholders throughout the entire industry is crucial for accelerating and extending positive impact. By joining forces behind shared goals, we can build on our diverse strengths. Dialogue drives accountability and transparency.It also aids innovation and industrywide progress,as we learn from each other.\n- Supply chain workers and their representatives. Our suppliers'workers are integral to the operation of our business. Anonymous supplier surveys and representative groups such as trade unions enable us to engage with this important stakeholder group.\n$72 \\%$ of respondents agree or strongly agree that H&M Group is taking the lead among fashion retailers for social and environmental sustainability $( 7 3 \\%$ in 2021; $76 \\%$ in 2020).\n-Investors and analysts. Being a publicly listed company means that we are accountable to our investors and our sustainability performance is tracked and assessed by analysts.We maintain a steady dialogue and integrate their feedback into our strategy and reporting.\n$90 \\%$ say they have a good or very good experience in interacting with us $89 \\%$ in 2021; $9 2 \\%$ in 2020).\n- Communities— including the local communities where our stores,offices,suppliers and their representatives across our value chain are located,our customers and colleagues, and wider groups at risk of rights infringement. We strive to contribute to positive social and environmental impacts for each of these groups 一 either directly through our operations and by working with our suppliers,or through community investment activities.\nOur stakeholders represent or are themselves rights holders,and the actions we take as a business have the potential to impact their human rights positively or negatively.We regularly engage with our stakeholders to determine our most material issues and to update our salient human rights issues. Read more about our materiality assessment process.\n$8 5 \\%$ say H&M Group is a company they can trust $( 7 7 \\%$ in 2021; $7 5 \\%$ in 2020).\n- Policymakers.We engage with policymakers and international institutions to influence legislation in support of systemic and meaningful change. Read more about our public affairs work.\n- We heard a strong wish from many of our stakeholders for increased interaction in person.", "chunk_word_count": 401, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > Stakeholder feedback", "document_id": "HM Group Sustainability Disclosure 2022", "page": 15, "page_start": 15, "page_end": 15 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 13, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### Our stakeholders\nWe continually engage with all our stakeholders through various channels 一including financial and sustainability reporting,our website, webinars and calls,focus groups,consultations and surveys, partnership meetings,interviews,training programmes,and our stakeholder newsletter. We also run an annual stakeholder survey via an online platform,inviting anonymous views on our sustainability performance and reporting.\n- We received feedback to provide further details on milestones and shortterm actions to long-term goals,which is something we are very appreciative of and continue to work on.\n- Business partners -including manufacturers, suppliers of commercial and non-commercial goods,service providers and franchise partners. Together we raise industry standards by sharing expectations and partnering to address environmental and social challenges.\nOur stakeholders include:\n-Customers. Our customers are the core of our business,and we continuously strive to understand,meet and exceed their needs and expectations.\nOn the occasion of 20 years of sustainability reporting, we took the opportunity to interview representatives of some of our most important stakeholders 一 read these on pages 12,25,39 and 62.We welcome our stakeholders'input on how we're doing and what we can do better.\n一Experts.We collaborate with experts to develop ideas,tackle systemic challenges and create positive impacts beyond our business. These include peers,academics and researchers, - Challengers.We welcome scrutiny from NGOs and others who bring useful criticism and drive accountability for our actions — pushing us and the industry to improve further.\n- Colleagues. Our colleagues around the world are our most important asset.They bring a wealth of diverse knowledge,experience and perspectives that enable creativity and innovation.\nRead more about our external collaborations and how we engage with our stakeholders.", "chunk_word_count": 269, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > Our stakeholders", "document_id": "HM Group Sustainability Disclosure 2022", "page": 15, "page_start": 15, "page_end": 15 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 14, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### Dialogue with policymakers\n- Climate change1一 especially around Scope 3 greenhouse gas emissions,as these require a systemic change in the energy frameworks of our production countries- and Circularity models, in support of the transition to a circular economy. This is notably through advocacy for legislation supportive of Power Purchase Agreements and improved electricity grid connectivity in our markets of production,and through EU policies and legislations,² such as the Energy Efficiency Directive (EED), Renewable Energy Directive (RED), EU strategy for sustainable and circular textiles, Ecodesign for Sustainable Products Regulation (ESPR), Waste Shipment Regulation (WSR), Extended Producer Responsibility (EPR),and Waste Framework Directive(WFD).\nEnvironment and Forestry from Indonesia as well as EU Commissioner for the Environment Virginijus Sinkeviciusat Stockholm $\\mathtt { 1 + 5 0 }$ .Our CEO and CFO contributed to high-level meetings with EU authorities on implementing the EU Textile Strategy. Our CEO also spoke at the WEF on our transition towards renewable energy and a circular business model.\nOur public affairs work focuses on enabling effective legislation that supports positive change in our industry.Increasing legal requirements and heightened scrutiny of the fashion industry help to level the playing field,alongside presenting opportunities for us and the wider sector to accelerate progress towards our sustainability goals.\n- Transparency and traceability, to ensure the credibility of sustainability claims.\nWe participate in international discussions on our sustainability work,including COP27, the International Labour Organization, the Organisation for Economic Co-operation and Development, the UN Framework Convention on Climate Change (UNFCCC), the UN Global Compact (UNGC) Decent Work in Global Supply Chains Action Platform,the UNGC CFOs Coalition for the SDGs and the World Economic Forum (WEF).\n- We worked with governments in our production markets to support the development of social protection systems,including increased unemployment benefits for workers in Indonesia, improved pension systems in Cambodia,and the launch of a workplace injury insurance scheme trial in Bangladesh.\nOur approach is progressing from agenda setting and policy shaping to informing and reacting to emerging proposals. Helping policymakers to understand practical implications of new legislation is key to this process.\nWe are members of multi-stakeholder platforms,including ACT(Action, Collaboration, Transformation), AFIRM, Business for Nature, CEIA (Clean Energy Investment Accelerator), ChemSec Business Group,EuroCommerce,Global Fashion Agenda, ICC,Industry Summit,the Pathways Coalition,the Policy Hub一 Circularity for Apparel and Footwear, the Sustainable Apparel Coalition, Textile Exchange,the UNFCCC Fashion Industry Charter for Climate Action,and ZDHC(Zero Discharge of Hazardous Chemicals).\nWe're expanding our public affairs resources to help drive systemic change,led by a central public affairs team and supported by teams in our production and retail markets.\n一 Data protection, focusing on increasing legislation around cybersecurity and responsible use of data.\n### Future focus\n一 We are preparing to comply with new sustainability and reporting legislation while using dialogue as an opportunity to drive systemic progress. Continued integration of sustainability into finance and technology willfurther enable innovation and accelerate progress.\n- Governance, reporting and responsible business practices. This includes but is not limited to supporting development of the EU Taxonomy, Corporate Sustainability Due Diligence Directive (CSDDD),and Corporate Sustainability Reporting Directive (CSRD).", "chunk_word_count": 511, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > Dialogue with policymakers", "document_id": "HM Group Sustainability Disclosure 2022", "page": 16, "page_start": 16, "page_end": 16 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 15, "chunk_text": "# H&MGroup\n## OUR MATERIALS AND PRODUCTS\n### Priority policy areas\nOur priority focus areas are those most relevant to our sustainability work that hold the most potential for positive impact:\n- We welcome policy developments enabling sustainable progress, such as accelerating the planning and construction of a new green power system in mainland China,increasing opportunities for renewable electricity in Indonesia thanks to collaboration with the national electricity company PLN,and the l-REC launch in Cambodia. But more is needed.We will continue to advocate to drive progress.\n- Chemicals,to further improve our progressive chemicals management and pro-actively drive for increased transparency about the content of chemicals.\n- Impacts on nature,including active involvement in the work leading up to the adoption of a new global agreement on nature at COP 15 and ongoing work through Business for Nature, calling for mandatory disclosure of impacts and dependencies on nature by 2030.\n### Key 2022 activities\n- We engaged with global policymakers to advocate for effective climate and circularityrelated legislation.This included meetings between our CEO and the Minister of\n### Performance highlights\n## 2022 Highlights.. \nExternal assessments. \nCircularity, Climate & Nature KPls Fair & Equal KPls.\n## 2022 Highlights\n23%\nReached more than 414,000\n7%\n84%\nsupply chain workers with activities and training on gender-based violence and sexual harassment (GBVH).\nrecycled materials in our commercial goods,up from $1 8 \\%$ in 2021 and taking us closer to our goal of $30 \\%$ by 2025.\nabsolute reduction in scope 3 GHG emissions1.2 and $8 \\%$ absolute reduction in scope $1 \\& 2 \\mathsf { G H G }$ emissions,3 compared with 2019 baseline contributing to our target to reduce absolute scope 1,2 and 3 emissions by $56 \\%$ by 2030.\nrecycled or other more sustainably sourced materials in our commercial goods.\nEstablished the\n42%\n### Green Fashion Initiative\nOur 2020 Sustainability Performance Report was second runner-up for the Best Report and winner for Relevance & Materiality in the Corporate Responsibility Reporting Awards.\nto support suppliers in replacing fossil fuels. As of January 2023, we have 17 approved projects with a potential annual reduction of 50,000 tonnes $\\mathsf { C O } _ { 2 } \\mathsf { e }$ in H&M Group's supply chain,and an additional reduction of approximately 140,000 tonnes beyond our own value chain.\nof our tier 1 supplier factories have trade union representation $( 3 7 \\%$ in 2021) and $34 \\%$ have collective bargaining agreements in place $( 2 7 \\%$ in 2021), despite the challenges faced by unions.\nLaunched a new", "chunk_word_count": 421, "section_path": "H&MGroup > OUR MATERIALS AND PRODUCTS > Priority policy areas", "document_id": "HM Group Sustainability Disclosure 2022", "page": 16, "page_start": 16, "page_end": 18 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 16, "chunk_text": "# H&MGroup\n## 2022 Highlights\n### Water Strategy 2030\nand reduced relative water consumption per product by $38 \\%$ compared to a 2017 baseline.4\n44%\nWe have signed power purchase agreements in the UK, Sweden, and Spain to cover electricity consumption in our own operations in a majority of European markets.\nContributed\nH&M integrated an assortment from Sellpy into its website in Sweden and Germany, to help normalise second-hand shopping.\nabsolute reduction of plastic packaging compared to 2018 baseline,achieving our plastic reduction target ahead of time.\nSEK 114.2 million to community investment initiatives, reaching 745,517 beneficiaries.\n一 Stand Earth Fashion Scorecard.H&M Group ranked first in the Stand.earth Fossil Free Fashion Scorecard 2023,an analysis of 43 fashion brands, with a B- score overall and an $\\mathsf { A } ^ { + }$ for our public affairs work.\n### External assessments\n$66 \\%$ $6 8 \\%$ in 2021). While we are pleased with our position, it shows we still have more work to do in this area. Our focus willbe on further strengthening data and disclosure especially around the“know, show & fix\"section,which requires further details about risk identification, action planning, grievances and remediation.\n### Benchmarks\n-Textile Exchange Corporate Fiber& Materials Benchmark. H&M Group was recognised as one of 47 leading companies out of 292 analysed in the 2021Material Change Leaderboard.We were one of 16 companies identified as leading on circularity and one of 17 companies identified as leading on progress towards achievement of the Sustainable Development Goals.\n-The Business of Fashion Sustainability Index. H&M Group ranked fourth in Business of Fashion's 2022 benchmark,with five points more than last year.We ranked first for waste,joint second for materials,and joint third for workers' rights.\n-CDP.H&M Group achieved CDP scores of A-in the Climate module and B-in the Water module. Our CDP Forest score increased to B-for Cattle products,B for Timber,and C for Palm Oil.\n一 FTSE4Good.H&M Group was a constituent of the FTSE4Good Index Series,which helps investors identify companies demonstrating strong environmental, social and governance standards.\n- Zero Discharge of Hazardous Chemicals (ZDHC) Brands to Zero assessment. H&M Group was one of eight brands awarded Aspirational Level for our leadership in implementation of chemical management in our supply chain.\n- Dow Jones Sustainability Index. H&M Group was included in the Dow Jones Sustainability World Index for the 11th year running.In 2022, we reached a score of 61/100 (68/100 in 2021), with highest possible or best in class scores in several areas including approach to anticompetitive practices,supplier risk management measures,materiality disclosure,climaterelated management strategies,environmental reporting,social reporting,and human rights assessment.We were also listed in the Dow Jones European Index and included in the S&P Global Sustainability Yearbook.\n一Higg Brand & Retail Module(BRM). H&M publicly disclosed its scores for the first time and had them verified.This year, H&M's BRM environment score increased from $7 7 . 4 \\%$ to $8 5 . 1 \\%$ and its social score increased from $7 4 . 3 \\%$ to $8 4 . 3 \\%$ .See detailed scores right.", "chunk_word_count": 497, "section_path": "H&MGroup > 2022 Highlights > Water Strategy 2030", "document_id": "HM Group Sustainability Disclosure 2022", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 17, "chunk_text": "# H&MGroup\n## 2022 Highlights\n### Awards\n-Corporate Responsibility Reporting Awards. Our 2020 Sustainability Performance Report was second runner-up for the Best Report and winner for Relevance & Materiality this year. The report was also first runner-up for the Best Carbon Disclosure Report,second runner-up for Creativity in Communications,and fourth runner-up for Openness & Honesty.\n- Platform Living Wage Financials. Our work on wages in our supply chain was rated as“advanced\"in the Platform Living Wage Financials 2022 Annual Report.We were one of only two members of the garment and footwear sector included in this category,and our work on data collection and impact on the ground were highlighted as best practice.We aim to further improve by disclosing more about our remedy and grievance mechanisms.\n-Fashion Transparency Index. H&M Group ranked fourth out of 25O fashion brands and retailers reviewed by Fashion Revolution's 2022 Fashion Transparency Index,with a score of\n### Circularity, Climate & Nature KPls\n### Fair & Equal KPls\n### Circularity, Climate & Nature\nOur approach to Circularity, Climate & Nature.. 23 \nClimate & nature \nClimate. 26 \nBiodiversity & land use. 32 \nWater 35 \nChemicals . 38\nCircular supply chain Resource optimisation & recirculation 49 - Production processes. \nCircular customer journey Scaling customer-facing circular \nbusiness models.\nResource use & circular impact \nMoving to a circular ecosystem 40 \nCircular products - Design & assortment planning Material choice. - Microfibres. 48\nCircular products, supply chain & customer journey - Packaging 56 - Stores, distribution centres & offices 58\n### Our approach to Circularity, Climate & Nature", "chunk_word_count": 253, "section_path": "H&MGroup > 2022 Highlights > Awards", "document_id": "HM Group Sustainability Disclosure 2022", "page": 19, "page_start": 19, "page_end": 22 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 18, "chunk_text": "# H&MGroup\n## 2022 Highlights\n### Operating within the planetary boundaries, driving holistic impact\nThe pace of climate change and biodiversity loss are accelerating,putting pressure on already fragile ecosystems and communities.The way in which we一as individuals and organisations 一 use resources and the speed at which they are consumed contributes to both these issues,as well as affecting communities and livelihoods.The interconnection between people and the planet is clearer than ever,as existing inequities and threats to human rights are exacerbated by resource depletion and environmental change.\nresource use.We focus on developing circular products, using recycled and more sustainably sourced materials,enabling circular supply chains, and scaling reuse,remake and recycling of our products.\nMaking these changes will have implications for the people across H&M Group's value chain.We're exploring what a circular,net-zero fashion future will mean for people and jobs,so we can enable a just transition by supporting a workforce that is prepared for the evolution of the industry and stands to benefit from it.\nAs a global fashion company, we must step up to take responsibility for our part in creating and tackling these issues.We see an urgent imperative and a huge opportunity to continue changing how we operate and to partner with others in our industry to accelerate systemic progress.\nMaking and tracking large-scale,systemic progress requires:\nWe're working to make significant reductions in greenhouse gas (GHG) emissions this decade across our value chain, reduce our absolute water consumption,ensure wastewater quality, and contribute to the global targets to have a positive impact on nature.Supporting a circular economy and moving to a circular ecosystem - where resources are kept in use for as long as possible一are key levers to achieving these aims and to decoupling our business growth from -Fit-for-purpose data,data systems, measurement and calculations. The entire fashion industry needs to work towards consistent, comparable data and accounting methodologies 一 to aid transparency,avoid the risk of false claims,and track impact effectively. We're investing in improving our own data and working with our suppliers and peers to promote wider uptake of common approaches and consistent reporting.\nOur resource use, production, consumption and use of products have a direct impact on people and planet.\nrecirculates resources and reduces negative social and environmental impacts.\nWe are in the process of investigating where and how circularity and a net-zero industry will have an impact on people and communities, and how we can work to drive holistic positive impact during the transition.\nRead more in the International Resource Panel report Making Climate Targets Achievable.\nThe fashion industry needs to transition from a linear use of resources to a system that\n- Collaboration and innovation. Tackling these complex and interconnected issues requires dialogue and a shared commitment to progress.We collaborate with peers and experts,for example through our work with the Ellen MacArthur Foundation (EMF),Fashion Pact, Global Fashion Agenda,Policy Hub,WWF,and the United Nations Framework Convention on Climate Change (UNFCCC). We're also deepening our work with policymakers to help shape a legislative environment that will support a net-zero,circular industry that contributes to reversing the loss of nature.", "chunk_word_count": 505, "section_path": "H&MGroup > 2022 Highlights > Operating within the planetary boundaries, driving holistic impact", "document_id": "HM Group Sustainability Disclosure 2022", "page": 23, "page_start": 23, "page_end": 24 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 19, "chunk_text": "# H&MGroup\n## 2022 Highlights\n### H&M Foundation\nH&M Foundation's planet strategy addresses challenges within the entire earth system and across every step of the fashion industry's value chain. The aim is to speed up meaningful solutions that can regenerate, replenish and create conditions for more life, which can help protect living conditions for people globally.\nThe Planet First program partnership between H&M Foundation and Hong Kong Research Institute of Textiles and Apparel (HKRITA) aims to find technologies and solutions that consider all aspects of earth's natural support systems. For example, the Carbon Looper project has led to a method of treating cotton textiles that makes the surface of the fabric capture carbon dioxide from the surrounding air. Garments capturing $\\mathsf { C O } _ { 2 }$ are now worn by staff at Fotografiska, Stockholm.\nSee our 2022 Circularity, Climate & Nature KPls.\n### Climate targets ‘send a vital signal'\n### AninterviewwithRachelKitchin,Corporate ClimateCampaigneratStandearthabouthowwe'redoingand what wecandobetter\n### What is your overall impression of H&M Group's climate strategy and how we are driving the climate agenda to reduce emissions?\nAs a large customer of shipping cargo, H&M Group should also begin to address its transportation emissions now, by commiting to cleaner fuels where available, while signalling its commitment to a zero-emissions transportation future by joining First Movers, for example.\nH&M Group has clearly set an agenda to be a leader among the biggest fashion brands to decarbonise its supply chains and shift towards renewable energy. Its impact on the industry's climate agenda is evident in the targets being set by umbrella groups like the UN Fashion Charter for Climate Action. As one of the most influential fashion brands on the planet, H&M Group has a unique opportunity and important responsibility to evolve beyond fossil fuels and spread new business models that prioritise durable and sustainably made apparel, and promote repair, resale and, as a last resort, recycling, to build a new circular economy.\nBeyond decarbonising, H&M Group can help kick-start the transition away from extractive models by growing its raw materials commitment from“more sustainable\"to “organic or regenerative\". In that new model, longerterm and net-positive farming methods support biodiversity and help communities prosper, while phasing out fabrics made from fossil fuels.\n### What should be the next steps to leverage the climate strategy?\nH&M Group has set adequate climate targets, which is important, but it now needs to be clear and transparent about the actions it is taking to meet those targets,its successes, and its failures. That means fulltransparency in its supply chain to tier 4, to encourage accountability on raw material sourcing and transparent data on key environmental targets, including thermal coal phase-out to ensure accountability to energy targets.", "chunk_word_count": 449, "section_path": "H&MGroup > 2022 Highlights > H&M Foundation", "document_id": "HM Group Sustainability Disclosure 2022", "page": 24, "page_start": 24, "page_end": 25 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 20, "chunk_text": "# H&MGroup\n## 2022 Highlights\n### What do you see as highlights of H&M Group's climate strategy?\nThe highlight of H&M Group's climate strategy is the commitment it has shown by setting two significant and meaningful targets towards decarbonising its supply chain. H&M Group was one of the first major global brands to target $100 \\%$ renewable electricity in its supply chain by 2030,and to set a clear timeline to phase out coal-fired boilers among all suppliers. Phasing out fossil fuel energy is key to driving the decarbonisation of the garment industry, and H&M Group's near-term target should send a vital signal to others in the industry that they have the responsibility and the ability to drive a clean energy transition.\n### Climate\ngrowth.We're working to reduce our dependency on new resources while finding ways to generate growth through customer offerings such as rental, reuse and recycling,and using recycled and other more sustainably sourced materials 一 to support a circular, net-zero fashion industry.\n- By 2025,source $30 \\%$ recycled materials.\nTo reach these targets, we focus on:\nThe climate crisis is affecting communities, natural systems and organisations globally, exacerbating existing human rights issues and inequities.The people and ecosystems least equipped to cope are being hit the hardest by environmental changes.\nmuch needed climate action beyond our value chain to enable both H&M Group and the global economy to achieve net-zero in the coming decades.\nTo help scale and accelerate climate action within our industry and beyond,we advocate for ambitious renewable energy policies in the countries where we operate.In addition, to enable impactful collaboration,we engage with stakeholders within and outside our industry.\n-Energy efficiency: Minimising our energy use across our whole value chain 一 including our own operations and logistics activities and throughout our supply chain.\nOur climate work is closely linked to our efforts to reduce impacts on water resources,biodiversity and land use,as well as our efforts to support human rights such as health,livelihoods,land rights and access to water.\n-Renewable energy: Working to source $100 \\%$ renewable electricity in our own operations and engaging with partners and suppliers to push for their increased use of renewable electricity, heat and steam.We're an RE100 member company. We stopped onboarding new suppliers with coal boilers in January 2022.\nWe have a responsibility as a large company to rapidly reduce our own climate impact as far as possible. However, focusing only on our value chain is not going to be enough. Recognising this, we must also invest in and make contributions to 一 By 2030,the electricity sourced in our supply chain will be $100 \\%$ renewable.\n### Action within our value chain\nOur groupwide climate goals are to reduce our absolute scope 1and 2 GHG emissions by $56 \\%$ and our absolute scope 3 GHG emissions by $56 \\% ^ { 2 }$ by 2030,against a 2019 baseline. Our longer-term goal is to reach net-zero by 2040.3 Our emissions reduction goals were verified in 2022 by the SBTi.", "chunk_word_count": 494, "section_path": "H&MGroup > 2022 Highlights > What do you see as highlights of H&M Group's climate strategy?", "document_id": "HM Group Sustainability Disclosure 2022", "page": 25, "page_start": 25, "page_end": 26 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 21, "chunk_text": "# H&MGroup\n## 2022 Highlights\n### Our climate strategy\nOur long-term ambition is to reach net-zero as defined by the Science Based Targets initiative's (SBTi) net-zero standard.This standard focuses on reducing GHG emissions before balancing out any minor remaining emissions that cannot be avoided, using permanent1 carbon dioxide removals.\n一 Circularity: Investing in and scaling more circular systems across our business 一 including our products,supply chains and customer journeys.\nWe have several supporting targets focused on different aspects of our value chain:\nInternal carbon pricing supports our teams to reduce GHG emissions from materials,production processes and modes of transport.\nWe disclose against the Task Force on Climate-Related Financial Disclosures(TCFD) recommendations which highlight the risks climate change poses to our company and suppliers, giving us the opportunity to allocate funds and plan strategically to address these challenges.\n- By 2030,achieve a $2 5 \\%$ reduction in electricity intensity in our stores, from a 2016 baseline.\n### Action beyond our value chain\n一 By 2030,source $100 \\%$ renewable electricity in our own operations.\nWe want to enable an ambitious climate agenda both within our industry and globally, by advocating and engaging in policy that limits the temperature rise to $1 . 5 ^ { \\circ } \\mathsf { C } .$ Hence,we engage with policymakers to develop and support legislation that enables accelerated decarbonisation of our value chain 一 for example,through our\nCentral to reducing our GHG emissions are our efforts to decouple resource use from business\n### Our climate action framework\n### Financing GHG emissions reductions\nWe measure return on these investments in GHG emissions reductions, not financial gain.\n## ACTIONS\n## IMPACT AREA\nIn 2021, we issued a EUR 500 million sustainability-linked bond with the aim of financing,among other things,an accelerated transition to recycled materials and reduction of GHG emissions (scope 1,2 and 3) in our supply chain 一 for example through the Green Fashion Initiative (see page 28). The bond was 7.6 times oversubscribed and the interest rate is tied to how well we succeed at achieving the targets for recycled materials and GHG emissions reduction.\nTogether with our suppliers, we are making significant efforts to phase out coal and other fossil fuels in our supply chain. The total 2022 spend on decarbonisation -including, for example, energy efficiency investments in our stores, supporting our suppliers to phase out coal, and increasing the share of more sustainably sourced materials 一 was approximately SEK 2.6 billion. These investments include:\n## 4.ADVOCATE\n### Value chain and beyond1\nAdvocate, engage and collaborate. Enable and inspire.\n## ADDITIONAL \nACTIONS FOR WIDER AND \nACCELERATED CHANGE\n## 3. REMOVE AND PROTECT\nValue chain and beyond1\nRemove and permanently store atmospheric $\\mathsf { C O } _ { 2 }$ Protect existing carbon sinks to avoid emissions and biodiversity loss that arise from their degradation.\n- Our Green Fashion Initiative, which makes funding available to supplying factories to invest in the technologies and processes needed to reduce energy demand and replace fossil fuels.\n## 2. REDUCE", "chunk_word_count": 499, "section_path": "H&MGroup > 2022 Highlights > Our climate strategy", "document_id": "HM Group Sustainability Disclosure 2022", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 22, "chunk_text": "# H&MGroup\n## GOALS AND PERFORMANCE\n### Value chain\nGoals and performance are aligned with $1 . 5 ^ { \\circ } \\mathrm { C }$ climate science.\n- The Fashion Climate Fund by Apparel Impact Institute. H&M Group is a lead contributor to this fund designed to drive collective action to tackle fashion's supply chain GHG emissions.\n## 1. MEASURE AND DISCLOSE\n一 Our Sustainable Supplier Facility一in partnership with Guidehouse, H&M Group is developing a facility to enable brands to co-invest in supplier decarbonisation.\n## FOUNDATION\nValue chain\nSecure and collect data. Measure, improve,assess and disclose.\n一 We established the Green Fashion Initiative to support our suppliers in replacing fossil fuels.As of January 2023,we have 17 approved projects with a potential annual reduction of 50,000 tonnes $C O _ { 2 } \\Theta$ in H&M Group's supply chain,and an additional reduction of approximately 140,000 tonnes beyond our own value chain.\nmembership of the steering committee of the Fashion Industry Charter for Climate Action under the UNFCCC,which we use to encourage trade associations and industry groups to support policies aligned with the Paris Agreement.", "chunk_word_count": 184, "section_path": "H&MGroup > GOALS AND PERFORMANCE", "document_id": "HM Group Sustainability Disclosure 2022", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 23, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress: overall\nNovember一 to prepare for upcoming legislation and to make it easier to compare the results with our financial performance.\n一 Our absolute scope 1and 2 GHG emissions decreased by $8 \\%$ compared to our 2019 baseline. Compared to last year, this is an increase of 9,270 tonnes $C O _ { 2 } \\Theta$ ,which is primarily due to us not procuring renewable energy certificates in Russia as we wind down our business in the country, and to some degree sourcing challenges in a few other markets.\n一 We are continuously working to improve our data availability and quality to be able to estimate our GHG emission results as accurately as possible.This year we have updated the calculation method for transport to achieve a higher level of granularity,and we have plans to further accelerate this approach for multiple emission categories in the coming year.\nThe only way we can create rapid change at scale is to work together with others. Climate is a key focus of our partnership with WWF,including through membership of the WWF Climate Business Network.We also work with a range of partners to reduce emissions across supply chains and transportation.We are a lead funder of the Aii Fashion Climate Fund to decarbonise fashion industry supply chains,and a member of the LEO coalition,which explores the viability of biofuels for shipping.We are part of The Pathways Coalition,Smart Freight Centre's Clean Cargo and the BSR's Sustainable Air Freight Alliance, Green Freight Asia,and Network for Transport Measures. We require sea transporters to register their environmental performance in the Clean Shipping Index or Clean Cargo Smart Freight Centre and we are a signatory to the Arctic Shipping Corporate Pledge.\n一 We provided trainings on setting sciencebased targets to our suppliers and and other textile companies WWF is engaged with across Bangladesh, Cambodia, mainland China, India, Indonesia,Pakistan,Turkey and Vietnam.2\n一 Our absolute scope 3 GHG emissions (excluding use-phase emissions) decreased by $7 \\%$ compared to our 2019 baseline. Compared to last year, this is a decrease of 248 kilotonnes driven by decreased stock-in-trade as well as increased energy efficiency,share of renewable energy,and share of recycled material.\n一 All of these changes have been applied to historical results,both in absolute figures and reductions between years.This can be seen in the results for 2021,where progress since the baseline(2021vs 2019,total scope 3 GHG emissions including use-phase)is now approximately $- 6 \\%$ ,compared to the $- 9 \\%$ previously reported in the 2021 report.See pages 29-30 for details of our scope 3 emissions including and excluding use-phase.\n一In our 2022 stakeholder survey, $40 \\%$ of stakeholders rate our climate work as good or very good. Read more in Engaging with Our Stakeholders.\n- Supplier factories reporting use of on-site coal boilers dropped to $7 0 ^ { 1 }$ (91in 2021) due to factors including our phase-out of on-site coal,changes in our supplier base,local policy,and H&M Group pushing for increased electrification of steam production.We are working closely with supplier partners and local stakeholders in our production countries to accelerate total substitution of coal, as well as financially supporting suppliers to transition to solar PV,solar thermal and thermal energy from agricultural residues.This will make a significant contribution to reaching our absolute GHG emissions reduction goal.", "chunk_word_count": 544, "section_path": "H&MGroup > FOUNDATION > Progress: overall", "document_id": "HM Group Sustainability Disclosure 2022", "page": 28, "page_start": 28, "page_end": 28 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 24, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress: overall\n一 Our new logistics roadmap is aligned with the group's GHG reduction targets.We created frameworks for the design and construction of future distribution centres,focusing on our employees'wellbeing as well as reducing pollution and waste, using renewable energy and supporting biodiversity (see page 33).\n一 As we make further improvements on the data and method, we will continue to update our historical results and our 2O19 baseline, but our target to reduce absolute GHG emissions $56 \\%$ by 2030 will always remain.\nWe take a dual approach of delivering on sciencebased emission reduction targets while making meaningful contributions outside our value chain, supporting the global goal to limit temperature increase to $1 . 5 ^ { \\circ } \\mathsf { C }$ .This year we entered into longterm partnerships in two areas where increased financing of climate and nature action is urgently needed 一 see page 31.\n### Progress: updated data and calculation methods\nRead more about how we calculate our emissions data.\n- This year, we have aligned our climate reporting period with our financial year一 December to\n### Progress: energy efficiency in our operations & supply chain", "chunk_word_count": 195, "section_path": "H&MGroup > FOUNDATION > Progress: overall", "document_id": "HM Group Sustainability Disclosure 2022", "page": 28, "page_start": 28, "page_end": 28 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 25, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Our GHG emissions data\nScope 1: All direct GHG emissions from our own operations.\n-We reached a $23 \\%$ reduction in electricity intensity in our stores per square metre and opening hour from a 2016 baseline. Approximately $72 \\%$ of our stores (excluding mainland China and Russia)and $7 5 \\%$ of our offices now have an LED retrofit programme completed.1 We're currently working on a plan to systematically retrofit efficient heating,ventilation and air conditioning systems.\nScope 2: Indirect GHG emissions from consumption of purchased electricity, heat or steam used in our own operations.\nScope 3: Other indirect GHG emissions, such as those from the extraction and production of purchased materials and fuels, transport-related activities in vehicles not owned or controlled by the reporting entity, electricity-related activities not covered in scope 2,outsourced activities, and waste disposal. Includes emissions related to raw materials, fabric production, garment manufacturing, non-garment/ non-commercial goods manufacturing and customer electricity usage.\n一 Our in-house supply chain efficiency experts performed 51 on-site evaluations and planned energy efficiency measures.The assessments revealed energy efficiency improvement potential of nearlya fifth in tier1facilities and overa quarter in tier 2.Examples of actions already taken as a result of these assessments include replacement of air compressors,implementing heat recovery from air compressors,and digital monitoring and control of steam boilers.\nScope 3 limitations and comments: franchise emissions are calculated based on electricity intensity from comparable markets; capital goods, upstream leased assets,downstream leased assets,and processing of sold products are not included; upstream transportation between suppliers,e.g.yarn spinner and fabric producer,are included in emission factors for materials.To align with the Science Based Targets initiative's requirements,the customer use phase is not included in the scope 3 goal. We will set a separate goal for the customer use phase.Scope 1and 2 emissions factors:electricity-based on IEA data from GHG Emissions from Fuel Combustion $\\circledcirc$ OECD/IEA 2020,www.iea.org/statistics,licence www.iea.org/t&c;as modified by ULE&S;fuels-Department for Business, Energy& Industrial Strategy (BEIS),2021 https://www.gov.uk/government/ publications/greenhouse-gas-reporting-conversion-factors-2021.Scope 3emissions factors: raw material and fabric production 一 Higg MSl; garment production一electricity based on IEA data from GHG Emissions from Fuel Combustion $\\circledcirc$ OECD/iEA 2020,www.iea.org/statistics,licence www.iea.org/t&c,as modified by UL E&S; fuels一2018 update https:// www.epa.gov/climateleadership/center-corporate-climate-leadershipghg-emission-factors-hub; other expenditures一 Defra,2014,Indirect emissions from the supply chain; transport by rail,air,shipping,truck 一 emissions factors provided by Conlogic and NTM 2019.\nIn 2022,we updated our emissions calculations,including historic data 一 see page 28.Read more about our data calculations.\n3) See page 88 for an assurance statement relating to these data points. The limited assurance process included: emissions from our own operations (scope 1 and 2)and emissions from transportation,raw materials,garment manufacturing and fabric production (scope 3).\n4) We have changed the reporting year for energy data and GHG emissions to align with our financial year. Our GHG emissions accounting and reporting are aligned with the GHG Protocol.Scope 2 emissions under the market-based approach are equal to $^ { 4 6 , 8 0 3 }$ tonnes COze.Under the location-based approach (using grid average emission factors), scope 2 emissions were 465,O59 tonnes.For further details and data, please see our CDP climate change investor response 2022.GHG emissions include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),hydrofluorocarbons(HFCs),perfluorocarbons (PFCs) and sulphur hexafluoride (SF6).\nRead more about how we calculate our emissions data.", "chunk_word_count": 530, "section_path": "H&MGroup > FOUNDATION > Our GHG emissions data", "document_id": "HM Group Sustainability Disclosure 2022", "page": 29, "page_start": 29, "page_end": 29 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 26, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Our GHG emissions data\nScope 1emissions are all direct emissions from our own operations; scope 2 represents indirect GHG emissions from consumption of purchased electricity, heat or steam used in our own operations; scope 3 includes other indirect emissions,such as the extraction and production of purchased materials and fuels,transport-related activities in vehicles not owned or controlled by the reporting entity,electricity-related activities not covered in scope 2,outsourced activities,and waste disposal. Includes emissions related to raw materials,fabric production,garment manufacturing,non-garment/non-commercial goods,and customer electricity usage.Scope 1and 2 limitations and comments: only stores open for the full quarter are included; company cars and refrigerant leakage are not included,electricity consumption for HVAC operated by landlord not included; electricity consumption includes both actuals and estimations,where estimations are made if actuals are not received within the reporting deadline; for stores estimates are based on current average of opening hours and store area,for other facilities estimates are based on previous consumption; includes market-based emissions from electricity.\nThe increase in scope 1and 2 emissions compared to last year was largely a result of the reduction in the share of renewable electricity purchased in 2O22.This is primarily due to us not purchasing renewable electricity certificates in Russia,and to some degree sourcing challenges in a few other markets.\nSince the release of the previous report,we have changed the reporting period,to better match the financial reporting.We are also continuously improving our calculation method and strengthening our emissions data. When these changes are made,we also update historical data.This has led to a smaller decrease between 2O19-2021 than previously reported, mainly due to the base years emissions being lower than before,rather than the emissions in 2021 being higher.\n[IMAGE CAPTION] Scope 3 GHG emissions1.2.3\n8) Energy related to electricity-based cooling consumption is included. \n9) In 2021 we upgraded our system for registering store opening hours precisely during the period when many stores'opening hours were impacted by Covid-19-related lockdowns.For this reason,and with staff safety as our top priority,some of the irregularities in 2021 store opening hours were not recorded,which in turn decreased the 2021 energy efficiency KPl for those stores. \n10) There was an error in our 2019 and 2020 Sustainability Reports,where the end year for this goal was incorrectly stated as 2025. \n5) See page 88 for an assurance statement relating to these data points. The limited assurance processincluded energy use and energy efficiency in stores. \n6) The increase in scope 1and 2 emissions compared to last year was largely a result of the reduction in the share of renewable electricity purchased in 2022.This is primarily due to us not purchasing renewable electricity certificates in Russia,and to some degree sourcing challenges in a few other markets. \n7) In 2022,we continued work to improve the accuracy of our emissions data.We will continue to be transparent about how we calculate our emissions,learning and adapting our approach as methods improve. Read more about our emissions calculations.\n### Find more detailed information and data on our website.\n- We are working on a preferred fuel strategy for transports and holding discussions and trials with innovative fuel technology companies and vehicle manufacturers.\n### Future focus", "chunk_word_count": 520, "section_path": "H&MGroup > FOUNDATION > Our GHG emissions data", "document_id": "HM Group Sustainability Disclosure 2022", "page": 29, "page_start": 29, "page_end": 31 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 27, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress: renewable energy in our operations & supply chain\n-We'll continue to prioritise finding suppliers who align with our goals and steering existing suppliers towards lower GHG emissions, supported by investments and insights from our green investments.\n一We entered into our first contract for permanent carbon dioxide removal (CDR), via a multi-year agreement with Climeworks using direct air capture and storage.Scaling up the emerging carbon dioxide removal market is essential to enable both H&M Group and the global economy to achieve net-zero in the coming decades,and we are seeking additional collaborations in this area.\n$- 9 2 \\%$ of electricity purchased for our operations was renewable $9 5 \\%$ in 2021). The change from last year was largely a result of the reduction in the share of renewable electricity purchased in 2022.This is primarily due to us not purchasing renewable electricity certificates in Russia,and to some degree sourcing challenges in a few other markets.\n一 We remain part of the LEO coalition, which explores the viability of different innovative fuels to reduce GHG emissions.\n一 Our ongoing work to scale circular business models and increase operational efficiency wil support progress towards our climate goals.\n-We use electric vehicles for the last mile of delivery in several regions.We used preferred transport options—including $100 \\%$ biofuel, electric and zero emissions vehicles 一 for $9 \\%$ of the distance travelled by truck during Q2 and Q3 2022.From the end of 2022,all online customer orders in the Netherlands willbe delivered using $100 \\%$ preferred transport options.\n一 We are working on targets for supply chain energy efficiency.Improving our supply chain data quality and calculation methodology will be key to enabling further emissions reduction actions.\n- This year, H&M Group signed Sweden's largest solar power purchase agreement (PPA). The construction of the Swedish solar park will commence in 2023,and it will supply H&M Group with long-term renewable electricity at a fixed price.This adds to the previous agreements in the UK and Spain. Altogether we have now secured a capacity of 20oMW of renewable electricity, which will result in an indicative annual output of 300GWh.By entering into purchase agreements like these,we are helping to increase the amount of renewable electricityavailable.\n### Learnings\n一 Calculating accurate GHG emissions data is complex. We're continually working on improving data quality and calculation methods.\n一 We will continue working to influence policymakers,to enable impactful action on climate change such as scaling renewable energy through PPAs.This will also have effects beyond our own value chain.", "chunk_word_count": 419, "section_path": "H&MGroup > FOUNDATION > Progress: renewable energy in our operations & supply chain", "document_id": "HM Group Sustainability Disclosure 2022", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 28, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress: action on climate & nature beyond our value chain²\n- From working on our green investments we've learned that in addition to security of business and financial support,supplier factories benefit from increased knowledge about decarbonisation and inspiration to implement GHG emissions reduction strategies.Supporting suppliers'switch from gas and coal to electrical power will be key to lowering emissions long term,partly due to the lack of renewable substitutes for traditional fossil fuels in many regions.\n-We joined the LEAF(Lowering Emissions by Accelerating Forest Finance) Coalition. The purpose of this public-private initiative is to mobilise large-scale financing to countries committed to making ambitious reductions in tropical deforestation. Urgently ending tropical deforestation is a crucial part of meeting the global climate goal, while also supporting sustainable development and protecting biodiversity.To date,LEAF Coalition has mobilised more than $\\$ 1.5$ billion in results-based payment commitments.\n### Progress: transport & logistics\n一 Our transport GHG emissions reduced from 360 to 331 kilotonnes $C O _ { 2 } \\Theta$ , including a $5 1 \\%$ reduction in air freight emissions.1", "chunk_word_count": 179, "section_path": "H&MGroup > FOUNDATION > Progress: action on climate & nature beyond our value chain²", "document_id": "HM Group Sustainability Disclosure 2022", "page": 31, "page_start": 31, "page_end": 32 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 29, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Biodiversity & land use\nThriving ecosystems are essential for the longterm health of our planet. The pace of biodiversity loss threatens the security of our industry,which relies on fertile soil, robust forests, quality air and water, resilience against fires and flooding and healthy pollinators to produce natural materials.\n- Increase the recycled content of our products to help reduce the impact on biodiversity associated with sourcing virgin materials and reduce the amount of land we make use of.We are making progress towards our goals to source $30 \\%$ of our materials overall and $100 \\%$ of our polyester from recycled sources by 2025.\nWe are continuing to analyse our impact on biodiversity and nature guided by the Science Based Targets Network (SBTN) methodology, with the aim to set science-based targets and disclose our impacts in line with the Taskforce on Naturerelated Financial Disclosures (TNFD) framework.\n- Scale customer-facing circular business models that enable customers to prolong the life of their garments 一 for example through repair, rental, resell and recycling services.\n- Through our partnership with WWF we address environmental impacts across our value chain, and we are an active supporter of WWF's global Biodiversity Stewardship Programme,providing funding and advisory input一including, for example,for the development of the Biodiversity Risk Filter.\nWe also reduce our overall impact on biodiversity and natural ecosystems by reducing GHG emissions through our climate work,working towards zero discharge of hazardous chemicals, and collaborating with stakeholders and communities on shared water challenges.\n-Work to match supply to demand,adjusting our assortment levels with the support of artificial intelligence.\nOur ambition is to have a net positive impact on biodiversity,in line with the Avoid, Reduce, Restore,Regenerate,Transform (ARRRT) framework and in support of the global targets agreed at COP15.To achieve this we:\nWe disclose additional details on our biodiversity, climate,forests and water impacts,progress and mitigation plans through the CDP,and we also report impacts through the Dow Jones Sustainability Index and the Textile Exchange Corporate Fiber and Materials Benchmark.\n- Invest in regenerative and transformative agriculture and conservation projects and follow our sourcing materials roadmap 一 contributing to community wellbeing and prosperity while restoring natural habitats (see table on page 33).\n- We are part of the Strategic Advisory Group of Business for Nature,a coalition of large businesses and financial institutions calling for mandatory disclosure of impacts and dependencies on nature by 2030.\n- Shift our material sourcing. Our aims are for $100 \\%$ of our materials to be recycled or sourced in a more sustainable way by 2030.We are also committed to only source Responsible Wool Standard-certified (RWS)wool, and FSC certified wood, paper and man-made cellulosic fibres (MMCF)by the end of 2025.We already source $100 \\%$ cotton from recycled,organic and other more sustainable sources and only source viscose from suppliers ranked green in the Canopy Hot Button Report.\n一 Our Fashion Pact membership supports our work to reduce impacts on nature.\nRead more about our approach to biodiversity and land use.\nCollaboration一with governments,NGOs, peers within and outside our sector,and local communities 一 is essential to make progress on measuring impacts and setting targets for biodiversity. For example:\n-We sponsor the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES).\nRead more about our memberships and collaborations.", "chunk_word_count": 541, "section_path": "H&MGroup > FOUNDATION > Biodiversity & land use", "document_id": "HM Group Sustainability Disclosure 2022", "page": 32, "page_start": 32, "page_end": 32 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 30, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress\n-We increased our share of recycled or other more sustainably sourced materials to $84 \\%$ , including $23 \\%$ recycled materials.We are introducing regenerative farming practices as part of our materials roadmap,including already placing orders for regenerative cotton in 2023 一 see right.The scaling of our traceability work is a key enabler for ongoing action to improve our sourcing choices.\n- We are working to decouple resource use from business growth by testing and scaling circular customer offerings - read more on page 53.\n一 To aid the estimation of value chain environmental footprints,we're contributing to the regular reviews of SBTN's framework for creating science-based targets to assess impacts and dependencies on nature.As part of our Fashion Pact membership,we participated in the Transforming Fashion for Nature project analysing the land,biodiversity and ecosystem impacts of our leather supply chain in Argentina in line with the SBTN framework.\n- We worked with the Textile Exchange's Leather Impact Accelerator(LIA) to devise a framework for best practices in leather supply chains and prevent deforestation practices in supplier farms.\n一 In 2022, $87 \\%$ of the paper and cardboard in our packaging was from recycled or more sustainably sourced materials,and we aim to reach $100 \\%$ by 2025.We only use MMCF from suppliers ranked green in the Canopy Hot Button Report, who have a low risk of sourcing from ancient and endangered forests.\nThis allows suppliers to quickly verify the type of wood entering their factories and thereby avoid the use of wood from species that could only have come from natural forests.\n-Traceability is key for us to fully understand our impact on the ground.Secondary data will only take us so far,but sourcing from trustable geographical locations is key for our impact assessment and future science-based targets.This emphasises the need to continue extending our traceability work and to partner with stakeholders that can help us achieve traceability down to farm level.\n一 Our CEO and other H&M Group sustainability leaders spoke on panels at the UN's Stockholm $+ 5 0$ about solutions for climate,nature and pollution. Our CEO also spoke at a high-level event on nature during the World Economic Forum Davos 2022 meeting.\n一 Our CDP Forest score increased to B- for Cattle products,B for Timber,and C for Palm Oil.\n一 Guided by our assessment of the biodiversity impacts of our raw material sourcing to determine priority materials and locations, we have developed range of projects to support regenerative and transformative agricultural practices.See page 33 for more details.\n一 We hosted a Business and Biodiversity Action Roundtable event associated with the Stockholm $+ 5 0$ environmental conference with WWF and Inter IKEA Group 一 bringing together more than 30 businesses from across the world to discuss the role of the private sector in protecting and improving biodiversity.\n一 Development of global goals,alongside clear expectations from governments to define common ambitions and progress,will enable us to make progress more quickly with our partners when the agenda,scope and timeline are shared.", "chunk_word_count": 502, "section_path": "H&MGroup > FOUNDATION > Progress", "document_id": "HM Group Sustainability Disclosure 2022", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 31, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress\n一 Our updated Environmental Site Assessments for potential new distribution centre sites include a review of protected areas or landscapes, ecological sites and potential nesting or roosting areas.In addition,our construction framework requires vegetation selection to focus on native plant species or those well-adapted to the local climate,so that they can self-sustain with natural precipitation.Any timber or timer-based products used for construction must be reclaimed,recycled or certified by FSC,PEFC or SFI.\n### Future focus\n一We were one of the first of 5OO businesses and financial institutions to sign the Business for Nature statement calling on negotiators at COP15 to make assessment and disclosure about impacts on nature mandatory.We supported the campaign in the media and spoke on behalf of Business for Nature at talks in preparation for COP15.\n一 As part of our long-term materials vision, we will set a strategy for regenerative sourcing, alongside tracking the impact of and learning from our current regenerative projects.\n-We aim to pilot disclosing against the TNFD draft framework,which recommends that companies assess and prioritise financial risks related to nature across the supply chain.\n- We will continue to analyse our impact on nature and integrate biodiversity and nature into our organisational decision-making.We are mapping our full value chain using the method set out by the SBTN and aim to set science-based targets to reduce our impact. We will continue providing input to the development of the SBTN guidance.\n### Learnings\n一We aim to make time-bound commitments in 2023 on no-deforestation and sourcing leather responsibly.\n一 In partnership with WWF Cambodia, we launched the WoodAl smartphone app,which enables identification of wood species using a smartphone and a macro lens at the factory gate.\n一 Finding the best local setup for intervention projects is complex and requires suitable farmers and crops,and the right legislative environment to enable lasting positive social and environmental impact.For future projects more time will be allocated for these steps.\n### Water\nWe can no longer view floods,droughts and rising sea levels as being separate from climate change. A recent reassessment of the planetary boundary for freshwater indicates that we have crossed the safe zone limit, risking deforestation and soil degradation as moisture levels change.Without quality water,life-threatening preventable diseases proliferate and natural systems degrade — risks that are worsened by the effects of climate change.\nvery low capacity due to closures and production fluctuation. We met or came very close to meeting our targets despite this unforeseen challenge.\nThe results we achieved together with our business partners and stakeholders have encouraged us to aim even higher.As we set out new ambition in our Water Strategy 2030,we are shifting away from relative water efficiency to absolute water use reduction,to clearly decouple growth from resource use. Our long-term aim is to expand our scope beyond tier 1and 2 facilities to cover other water intensive parts of our value chain,such as fibre production and customer use phase.", "chunk_word_count": 488, "section_path": "H&MGroup > FOUNDATION > Progress", "document_id": "HM Group Sustainability Disclosure 2022", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 32, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Water Strategy 2030\nRead more about our new strategy,including additional 2027 and 2029 targets.\nThe fashion industry uses significant volumes of water, being reliant on water for production processes and growing raw materials一H&M Group is no exception. This year, devastating floods in Pakistan displaced millions of people and destroyed half of the country's cotton crops,putting pressure on cotton availability. It is essential for government, brands and other stakeholders to collaborate within a basin or catchment area to tackle water challenges at facilities and in local communities to mitigate and prevent further disasters.We must use less water and contribute to increased quality and availability of this vital resource to help protect all life on earth.\n### Progress\n一We launched our Water Strategy 2O30,which we developed with input from brands, NGOs, water experts and key suppliers in each region.\n- We have achieved a $2 1 \\%$ water recycling rate and $2 1 \\%$ improvement in water efficiency in our supply chain,compared to a 2O17 baseline. This equates to a combined overall $3 8 \\%$ total water consumption reduction 一 close to our $40 \\%$ goal, despite the challenges of regaining momentum in the wake of the Covid-19 pandemic.In addition, $4 9 \\%$ of our facilities now harvest rainwater,against our goal of $50 \\%$\nWe achieved almost all the goals in our Water Roadmap 2018-2022,which focused on improving water quality,efficiency,and recycling at the facility level. During the Covid-19 pandemic many of our supplier factories had to run machines at\n一 $90 \\%$ of supplier factories with on-site effluent treatment plant (ETP)functionality assessments achieved green grade 一 missing our goal of $100 \\%$ -and $98 \\%$ had discharge water quality that is ZDHC wastewater compliant.\n-We were one of the first businesses to commit to the World Business Council for Sustainable Development (WBCSD)'s Wastewater Zero commitment to eliminate wastewater pollution to improve biodiversity, mitigate and adapt to climate change and enhance water security.\n一 We updated our Sustainability Index to take account of absolute freshwater reduction and water efficiency in line with our new targets to better reward the performance of our business partners.\n一 We started a new collaboration in Bangladesh with Alliance for Water Stewardship (AWS). Together with other brands,we will equip suppliers and their stakeholders with the knowledge,skills and networks they need to better understand their own water use and impacts,and how to work together to solve shared water challenges.\n-We set new process-specific benchmarks for different textile processes and materials so that suppliers can compare water usage for specific methods with best-in-class performance.\n1) Includes a total of 44O manufacturing,fabric dyeing and printing suppliers in both tier 1and tier 2 with water-intensive wet production, based on Q1-Q3 2022 performance data,reported by factory and calculated using weighted averages for litre per $\\mathsf { k g }$ of dyed knitted fabric,litre per metre of woven/denim fabric,and litre per unit of product washed.2021 data restated as $- 1 4 \\%$ for the full year-in last year's report we stated $- 1 0 . 3 \\%$ based on Q1 to $\\ Q 3 \\ 2 0 2 1$ Based on Annual Water Quality Survey 2022 for 320 facilities with onsite ETP and zero liquid discharge.Data reported in Dec 2022.", "chunk_word_count": 541, "section_path": "H&MGroup > FOUNDATION > Water Strategy 2030", "document_id": "HM Group Sustainability Disclosure 2022", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 33, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Learnings\n一 The H&M Group and WWF partnership supported WWF's 2022 series on Apparel & Textile clusters to encourage the fashion industry to move beyond owned operations and think holistically about water issues. Eau Courant: Water Stewardship in Apparel & Textiles discusses water impacts and dependencies throughout the value chain,while Avant-Garde: Water risks and opportunities unpacks how water risks affect apparel and textile clusters.\n一 To improve effluent treatment plant (ETP) functionality, we will engage third-party companies for ETP assessments in India, Bangladesh and Turkey,raise our minimum requirement level to green grading,and add more requirements to our foundational compliance level on wastewater quality.\n[IMAGE CAPTION] Change in relative production water efficiency\n一 Feedback on our Water Strategy 2030 highlighted the difficulty of obtaining accurate and comparable data to track performance.We're focusing on developing data systems to help suppliers align with our 203O water ambitions.\n一 In Bangladesh,we started a pilot with WaterAid Sweden to assess the current WASH (water, sanitation,and hygiene) performance in our supply chain and develop an action framework for our WASH ambition at the facility and community level.\n一The fashion industry is still centred on water efficiency rather than water reduction,which is not enough to undo the crossing of the freshwater planetary boundary.Broader engagement within the sector is needed to provide a more cohesive approach to water action.This includes water stewardship action at the basin level which is inclusive and scalable,as well as better metrics and tools to measure water impact.\n一 We will continue to closely observe the development of Science Based Targets on freshwater. We provided feedback during the development process and urged the SBTN to formulate guidance focused on apparel and textile production.\n一 To ensure greater comparability and to drive progress,we would like to convert our process-specific benchmarks for different textile processes into an industry standard 一we will explore potential collaborations to achieve this.\n### Future focus\n一 As part of our new strategy, we are refining our water efficiency programme to focus on process-related benchmarks,enabling suppliers to gauge progress and prioritise action.We will also co-develop programmes with suppliers to strengthen local water governance.\n一 We would like to collaborate more to better understand the water-related risks and responses for producing raw materials such as cotton.\n一 With Support from WaterAid Sweden,we have analysed the current WASH indicators in FSLM and identified the gaps and areas for improvement.\n一 We are supporting and helping to shape the methodology of the aspirational level of ZDHC's new Chemicals to Zero framework.This will enable the industry to choose chemicals that are safer and more resource efficient.\n\n### Chemicals\n一We are exploring synergies between chemicals management and other impact areas such as water,energy,rawmaterials and biodiversity. This year we began investigating opportunities to reduce chemical use by mapping best practices, such as process chemicals recovery.We learnt that there is a lack of reliable baseline data for the quantity of chemicals in our value chain.\nProgressive chemical management is essential to circular business models and reducing our products' impacts on climate and nature.Our Chemical Management Roadmap commits us to safe and traceable chemicals in our value chain through strategic collaborations with AFIRM (Apparel and Footwear International Restricted Substance List Management Group), ZDHC(Zero Discharge of Hazardous Chemicals) and ChemSec Business Group.", "chunk_word_count": 546, "section_path": "H&MGroup > FOUNDATION > Learnings", "document_id": "HM Group Sustainability Disclosure 2022", "page": 36, "page_start": 36, "page_end": 38 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 34, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress\n一 We continued substitution projects that go beyond legislation,including using safer alternatives to potassium permanganate (used to distress denim) for $100 \\%$ of denim products $7 9 \\%$ in 2021), with the goal to achieve $100 \\%$ by 2023.We increased our scope to substitute more high-priority endocrine-disrupting chemicals一 substances that interfere with hormone systems.\n- We were one of eight brands awarded \"aspirational level”during the annual assessment of ZDHC's Brands to Zero leader programme.\n- There is work to be done in our industry to make production processes more resource efficient in terms of chemical use.We continued our work to investigate ways to optimise production processes in Bangladesh, India and Pakistan.\n- 619 of our suppliers² $( 9 9 \\% )$ are enrolled in the ZDHC programme,achieving MRSL compliance of $9 7 \\%$ for chemical input $( 9 5 \\%$ in $2 0 2 1 ) ^ { 3 }$ and $9 9 . 9 6 \\%$ for wastewater $( 9 9 . 9 \\%$ in 2021).4 We work closely with enrolled suppliers to increase use of chemicals from ZDHC Gateway一 an online industry database of ZDHC MRSL-compliant chemicals.In 2022, $8 8 \\%$ of chemicals used were assured via ZDHC Gateway.We are working together with ZDHC and the industry to bring the remaining chemicals into ZDHC Gateway 一 this has proved to be challenging due to supply chain segmentation in various regions.\n- We scaled the use of Screened Chemistry throughout our supply chain,achieving $3 \\%$ use at the end of 2022.We continue to push for more avenues for chemical hazard assessment together with others in our industry一 focusing on denim, where there is greater availability of Screened Chemistry.\nOur Chemical Restrictions include the AFIRM Restricted Substances List and the ZDHC Manufacturing Restricted Substances List 2.0 (MRSL),and commit us to phasing out additional potentially harmful substances.We require our textile and leather suppliers to implement the ZDHC Wastewater Guidelines and Chemical Management System.\n### Future focus\n一 We intend to set a goal for reducing the quantity of chemicals used in our supply chain. The first step is to review our current data and set a baseline.\n一We began an industry collaboration to establish a common MRSL for hardline products,such as furniture and decorative items,to restrict use of hazardous chemicals in these supply chains.\n一 We will continue to advocate for global harmonisation of chemical hazard classification and improved information requirements on chemical content to enable safe chemical substitution.\nTo ensure we choose safe chemical substitutions, we use third-party hazard-assessed chemicals such as Screened Chemistry certified1 chemicals where possible.Transparent information about chemical content is a prerequisite for conducting hazard assessments,and we believe that chemical regulations should incentivise this level of information.\n- Supporting capacity building of our supply chain chemical management systems,237 suppliers are enrolled in ZDHC's Supplier to Zero programme and 136 suppliers have undergone ZDHC Chemical Management System Technical Industry Guide training.\n- Together with ChemSec and peers,we sent a joint letter to the EU commission about chemical transparency, which led to a meeting with the EU Commissioner for the Environment Virginijus Sinkevicius about how to incentivise chemical suppliers to share full information on chemical content.\n### Transition to circular economy requires systemic changes\n### AninterviewwithLauraBalmond,FashionLeadattheElenMacArthurFoundationabouthowwe'redoingandwhat wecandobetter", "chunk_word_count": 544, "section_path": "H&MGroup > FOUNDATION > Progress", "document_id": "HM Group Sustainability Disclosure 2022", "page": 38, "page_start": 38, "page_end": 38 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 35, "chunk_text": "# H&MGroup\n## FOUNDATION\n### How is H&M Group helping to drive transformation of the fashion industry?\n### What do you see as the biggest challenges facing the industry when it comes to moving to a circular business model?\nSimilarly, customer incentives are largely designed around linear sales growth. If indicators and incentives are left unchanged, even when circular business models are put in place, they might not reduce production and resource use, or achieve the related positive environmental outcomes.\n#\nFirstly,by its ambition level. H&M Group was one of the first organisations to set an ambitious vision for a change towards a circular economy. This has set a clear direction of travel for the organisation.It has also built an investment pipeline for innovation that is well respected by other peers in the industry,and a circular design tool that can increase product lifespans and improve recyclability.\nThe entire system needs to transform. Firstly, supply chains are optimised for one-way delivery of items.Making the economics of circular business models work will require economic ways to collect, sort and circulate items between users. Initially, there will need to be investment in setting up a supply network to enable this.\n### Can we do more together to speed up the transition to a circular economy?\nAbsolutely, and collaboration is key. No one organisation can fundamentally change the system alone. Finding ways for ambitious collaboration and engaging all actors in the value chain on the biggest challenges to progress will speed up the transition to a circular economy.\nLinked to this,legislation and regulations need to keep up with the changing environment. For example, regulations on the classification and movement of‘waste' can prevent movement of used items and make scaling across borders difficult.\nIt has also trialled a wide range of circular economy solutions, from sourcing materials from recycled content, to exploring business models such as rental, repair and customisation. The Jeans Redesign,an EMF initiative, led to multiple H&M Group brands demonstrating that it is possible to design desirable products in line with circular economy principles.\nCircular economy is now firmly on the agenda within the fashion industry, yet the transition will take time as well as investment in infrastructure and innovation. Concerted and ambitious action towards our vision of a circular economy for fashion is needed by both businesses as well as policymakers.\nBusinesses will also have to redefine how they measure success, as performance metrics are based on the linear model. Once an organisation aligns its business strategy and performance indicators with the outcomes of a circular economy, delivering on these will become easier.\n### Moving to a circular ecosystem", "chunk_word_count": 437, "section_path": "H&MGroup > FOUNDATION > How is H&M Group helping to drive transformation of the fashion industry?", "document_id": "HM Group Sustainability Disclosure 2022", "page": 39, "page_start": 39, "page_end": 39 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 36, "chunk_text": "# H&MGroup\n## FOUNDATION\n### A circular fashion ecosystem\nWe focus on integrating circularity acrossour entire ecosystem by building on the synergies and interconnections of all parts of our value chain.\nWe're committed to using resources responsibly - to reduce our environmental impact and protect natural systems,and to support interconnected human rights such as land rights, livelihoods,and access to water. Shifting to a circular ecosystem is the key to decoupling our business growth from resource use.There is still a long way to go on this journey一 for H&M Group and our peers 一 and we recognise the need for systemic change across the fashion industry and our business.\nWe're working to continually make progress towards this vision by investing in and scaling more circular systems across our business. We focus on three interconnected areas:\nCircular products: Creating products that are made to last from safe,recycled, regenerative or othermore sustainably sourced materials that can circulate multiple times.\n- Circular supply chains: Building scalable systems that circulate products and materials for repair, reuse and recycling and use lower-impact production processes一 such as dyeing,printing and finishing.\nTo guide our approach, we align with the Ellen MacArthur Foundation (EMF) definition of the circular economy,which focuses on three key principles:\n一 Eliminate waste and pollution -Circular customer journeys: Providing convenient ways to engage in circular fashion where products are used more before being repaired, reused and recycled.\n一 Circulate products and materials (at their highest value)\n- Regenerate nature\nWe also support and aspire to the EMF vision for a circular fashion industry, where products are designed to be used more,made to be made again,and made from safe and recycled or renewable inputs.\nfrom business units and each brand along with a network of trainers to boost engagement and ensure local ownership.In addition,all designers and pattern makers were trained in our 3D tools.\n一 We are working to increase our pattern efficiency by supporting product teams to share their methods and improve practices. To encourage further waste reduction, we developed an internal report to enable the whole organisation to track our progress on fabric consumption and efficiency at Group,brand and department levels.", "chunk_word_count": 357, "section_path": "H&MGroup > FOUNDATION > A circular fashion ecosystem", "document_id": "HM Group Sustainability Disclosure 2022", "page": 40, "page_start": 40, "page_end": 41 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 37, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Design & assortment planning\nTogether with assortment planning,design is an important first step to developing more circular products.It influences every phase of production, from material selection to processing,and determines the potential for recyclability and durability.It is therefore crucial for optimising resource use and enabling circular business models,supporting progress towards our climate and nature goals.\n- To understand the longevity of our products and prepare for forthcoming EU initiatives, we ran a durability project, testing a significant share of our core materials and products.This includes colour fastness and strength tests, and investigating the longevity of products after numerous washes,beyond our minimum requirements.These findings will inform the development of our durability strategy ahead.\n一 We conducted a research pilot by using the Seam app to gather data on customer use of garments 一 for which there is currently litle data available. Customers in Sweden logged the use of garments in their wardrobe over time,which could inform our product purpose categorisation.\nOur designers are also guided by our Material Categorisation and our quality standards. We use wash tests (minimum five washes) to capture and review any significant changes for all our products,along with colour fastness and strength tests 一 such as tear strength, tensile strength, abrasion,and seam slippage.\nWe aim to design allour products for circularity1 by 2025.We are testing and developing tools and methods to enable this,including our circular product development tool and guide, Circulator, which guides our commercial product teams and supports the Ellen MacArthur Foundation's (EMF)Vision for a circular economy for fashion. Our rapid journey towards circular design and the evolving industry landscape has led to many learnings and challenges,and we remain focused on accessing and improving the circular potential of our products towards 2025 and beyond 一 read more on page 42.\n一 H&M developed a quality scorecard for selected garment groups in its menswear collection.The scorecard sets requirements on aspects such as number of washes a garment can withstand and other quality aspects.The accompanying product quality dashboard uses a range of data sources to determine factors impacting quality,and is supported by supplier training to share H&M's ambitions and expectations.\n- To enable understanding and comparison of the circular potential of different fabrics early in product development,we developed an internal tool to complement Circulator.", "chunk_word_count": 380, "section_path": "H&MGroup > FOUNDATION > Design & assortment planning", "document_id": "HM Group Sustainability Disclosure 2022", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 38, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress\n- We are working with industry peers including ASOS,BESTSELLER and Zalando in the Circular Design Consortium. Initial priorities were to align approaches and agree terminology. Now we will expand the scope of work to drive further impact and scale. Our work with external reviewers,such as the Ellen MacArthur Foundation and Circular.Fashion,supports the quality of our circular design work.\n- We have further tested and developed Circulator.The latest version adds production processes and trims to the frameworks 一 including prints,dyeing,buttons and zips 一with more being added continually.\n- Our brands launched collections designed to be more circular:\n- H&M's Let's Make Better Denim collection and Monki's first denim collection designed for circularity were released,both following EMF's Jeans Redesign guidelines.Weekday is scaling use of the guidelines across its assortment,\nCirculator makes predictive assessments on aspects such as durability, recyclability,and the environmental footprint of materials and processes,so that our product development teams can make informed choices and balance potential trade-offs.We focus on designing for product purpose,recognising that a product's use is context-dependent, which requires varying resource intensity and design strategies to fulfil its intended function and enable product recirculation.\n-We developed Circulator Academy一an internal training programme introducing the circular economy and guidance on circular design.We established a forum with ambassadors - We have continued to focus on designing for product purpose,moving from subjective assessment of a product's intended use to a more data-driven model.We worked to raise understanding with policymakers on the need to design for product purpose and the opportunities within upcoming EU legislation on ecodesign to optimise resource use and current technical trade-offs between durability and recyclability.\nincluding approximately $40 \\%$ of its SS23 denim.\n-To fully integrate circular design principles, we need to develop new KPls and metrics not wholly based on financial performance.", "chunk_word_count": 300, "section_path": "H&MGroup > FOUNDATION > Progress", "document_id": "HM Group Sustainability Disclosure 2022", "page": 41, "page_start": 41, "page_end": 42 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 39, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Assortment planning\n- & Other Stories launched its first capsule collection exploring design for circularity, Monki launched a black dresses collection, and H&M launched its Cherish Waste and Metaverse collections一 all designed using Circulator.\nAccurate planning and quantification of our product assortments is a central enabler for reducing our environmental impact and transforming to a more circular business. By using data and 3D tools, we can better curate our assortment, match supply to demand, reduce the need for physical samples,and accelerate development time. In 2022:\n一 A key challenge is the current lack of industry definitions on circular design.Industrywide collaboration and knowledge exchange is crucial to develop a shared understanding of circular design principles,together with policymakers.\n- We started a scaled roll-out of our 3D visual assortment planning tool, while further expanding and optimising the tool by enhancing data management, automations, processes and standards.\n- H&M launched a collection for newborns, which achieved Cradle2Cradle Gold certification.The garments and accessories are designed for a long life,with adjustable ‘room to grow' features.\n一 Creating garments from mono rather than blended materials increases their recyclability but presents some challenges.For example, cellulosic threads have limited strength and longer production times.We are learning about and adapting to these challenges with continuous innovation and collaboration with sorters, recyclers and suppliers.\n- We began piloting a programme that would enable our customers to give early feedback on design,and another designed to automate buying on long-lasting products.\n- We expanded the use of Al in our supply chain, enabling us to increase data accuracy and precision, leading to reduced stock and production volumes.\n- Our brands tested on-demand business models,for example Monki launched its digital print-on-demand shop and H&M produced its first on-demand customisable puffer jacket.\n### Learnings\n- We continued to roll out Movebox, our Al tool that facilitates the redistribution of products to locations where there is demand.\n- There are challenges with securing earlystage data that enables Circulator's predictive assessment,and we are exploring how to update our way of working to address this.", "chunk_word_count": 343, "section_path": "H&MGroup > FOUNDATION > Assortment planning", "document_id": "HM Group Sustainability Disclosure 2022", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 40, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Future focus\nInitial learnings from on-demand offerings include the need for change in customer behaviour 一 as many are used to the convenience of a pre-designed product over customised models 一 and the need for testing and scaling different infrastructure in localised production units. Our innovation and Al teams will continue to support our increased focus on demand-driven planning and stock productivity.\n一 We will continue to test, develop and onboard further teams to our circularity-aligned tools to use for all commercial product types 一 beyond our garments.We will increase the proportion of products designed using Circulator,continuously improving the tool and circularity of our products as we learn,as data improves and as industry definitions become more established.\n- We continued to roll out our Al models for Pre-Season Demand & Supply Planning. As part of the Assortment Quantification (ASQ) initiative, we launched a machine learning model that predicts the rate of return for online orders based on article attributes, replacing the traditional logic of predicting returns by department. We have used initial learnings from the model to improve precision on our buying levels for different garment sizes, and we have begun development towards scaling.\n- Integrating circular design at scale is a long process that requires a mindset shift to design for product purpose and consider the entire product journey when developing products.It entails cross-functional collaboration from many different stakeholder groups.Integration also requires a strong understanding of the value of circular design for transitioning to a more circular business and reaching our goals on climate and nature.\n- Industrywide collaboration will continue to accelerate our progress.\nRead more about how we are working to improve resource efficiency and enabling products to be loved for longer.\nsustaiadoemerls 80% 84% 18% \nGy2025: $30 \\%$ recycled Renyeledre 57% 65% \nBy 2030: $100 \\%$ recycled or more sustainably sourced 2% \nsustainably sourced 55% 59% 62% 61% \n1) Based on season 5and season 6 data for 2022.Includes all shell materials -doesnotinludemateralsusedasfilng,liningortrimsongarmnts. \n2) Notallmore sustainably sourced materialscanbenaturally grown or cultivated,i.e.minerals or stones.In these instances,we setup materialspecificrequirements tosecure moresustainable sourcing. \n3 Seepage88foranassurancestatementrelating tothesedatapoints. 2019 2020 2021 2022\n### Material choice\nOur industry is heavily reliant on materials. That's why choosing,creating demand for, and innovating materials with lower negative impact - alongside reducing overall resource use and decoupling it from business growth 一are key to our strategy.\nthird-party life cycle assessments (LCAs) where relevant. We're working to increase traceability across all our key materials.\nTo meet our ambitions for a circular,regenerative fashion future,we invest in,develop and scale new materials,regenerative practices,recycling innovations,technology and infrastructure. We achieve this by partnering with industry experts and innovators including winners of H&M Foundation's Global Change Award 一 alongside our brands,our Circular Innovation Lab and our H&M CO:LAB investment arm.\nAll material choices have an impact on climate, nature and people,whether they are natural fibres like wool and cotton,or synthetic materials such as polyester or polyamide.Choosing the right materials for our products and packaging can accelerate our climate and circularity goals and is integral to securing responsible, traceable and transparent supply chains. Our long-term materials vision (see box) sets an ambition and direction towards recycled, regenerative and responsible materials.", "chunk_word_count": 530, "section_path": "H&MGroup > FOUNDATION > Future focus", "document_id": "HM Group Sustainability Disclosure 2022", "page": 42, "page_start": 42, "page_end": 43 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 41, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Our materials vision\n-Recycled: prioritise post-consumer closedloop recycled materials that have the potential to be reused and recycled again.\nWorking with materials is an ongoing process requiring a progressive approach.Materials need to be evaluated regularly to make sure we consider the latest science, best practices, and knowledge - and to respond to shifting materials markets caused by global events, societal and environmental change. In line with this,we have defined our long-term materials vision to move towards a resilient and circular materials sector that stays within planetary boundaries, enhances livelihoods and thrives on innovations.\n- Regenerative: use key virgin raw materials produced using regenerative agricultural practices that help improve soil health,and enhance livelihoods and ecosystems.\n### Progress: overall\n一We achieved $84 \\%$ recycled or other more sustainably sourced materials,compared to $80 \\%$ in 2021.This progress towards our $100 \\%$ goal is largely due to an increase in the use of recycled materials such as cotton and polyester.\n-Responsible: source materials with the overall aim to reduce environmental impact, respect human rights and protect animal welfare. This is the foundation of all our sourcing decisions. Our approach to responsible sourcing takes account of Organisation for Economic Co-operation and Development (OECD) guidance and the UN Guiding Principles on Business and Human Rights,and will support our alignment with evolving regulations on human rights and the environment.\nOur aim is for $100 \\%$ of our materials to be either recycled or sourced in a more sustainable way by 2030, including $30 \\%$ recycled materials by 2025.Read more about how we define more sustainably sourced for different materials in our Material Categorisation, Responsible Raw Material Sourcing Policy and Animal Welfare Policy.\n- We continued or launched several projects to help scale regenerative sources of different fibres - read more in the Biodiversity section.\nOur vision ahead is built on three pillars: recycled, regenerative and responsible.\n一 The Textile Exchange 2021 Material Change Insights Report identified H&M Group as one of 47 overall leaders,one of 17 SDG leaders,and one of 16 circularity leaders (of 292 companies analysed).\nOur material choices are guided by our policies and strategies,by guidance from the Sustainable Apparel Coalition and Textile Exchange,and by\n### Progress: cotton\n### Our materials basket1", "chunk_word_count": 372, "section_path": "H&MGroup > FOUNDATION > Our materials vision", "document_id": "HM Group Sustainability Disclosure 2022", "page": 43, "page_start": 43, "page_end": 43 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 42, "chunk_text": "# H&MGroup\n## FOUNDATION\n### % of total cotton that is recycled,organic,or other more sustainably sourced3.4\n一 In 2022,we continued sourcing $100 \\%$ more sustainably sourced cotton (recycled, organic and other more sustainably sourced cotton).3 This includes a $4 \\%$ increase in both recycled cotton and other more sustainably sourced cotton,and an equivalent decrease in our use of organic cotton.\nOur 2022 share of polyester was slightly higher than in 2021 due to an increase in use of recycled polyester. Our share of wood and man-made cellulosic fibres decreased slightly. Other figures remain relatively stable compared to 2021.\nRecycled cotton \nOrganic cotton \nOther sustainably sourced cotton\nCotton 61% 9% 0.1%0.9% LeatherWool Polyamide\n- We developed a long-term vision and 2030 roadmap for cotton,aligned with our overall material vision. Our focus areas are scaling recycled and regenerative cotton,ongoing investment in innovations to increase the fibre length,quality and durability of recycled cotton,testing and scaling cotton alternatives, supporting livelihoods and gender equality in cotton communities,and increasing traceability. To support scaling of regenerative crops and increase the volumes we can source, we partnered on several regenerative cotton projects (see table on page 33).\n一To accelerate transition to organic production, we continued to expand our use of \"in-conversion”cotton.\nGoal\nContinue sourcing $100 \\%$ recycled,organic or other sustainably sourced cotton.\n一 In 2022,our sourcing of BCl cotton contributedto:1\nIndian varieties of cotton for yield and quality to optimise future outputs and is also collecting lifecycle analysis data for comparison with conventional cotton.In 2023, the farm will run R&D on circular closed-loop systems to collect and reuse excess resources such as material, nutrients,water,and production equipment.\n- We scaled use of innovative MMCF:\n- Our Circular Innovation Lab and ARKET produced a capsule collection with SPINNOVA®一 made with an innovative natural fibre produced in Finland from certified wood. Creating the fibre involves minimal water use and GHG emissions and results in zero waste. Used as an alternative to cotton, SPINNOVA? fibres have the potential to be recycled repeatedly without loss of quality.\n- 31 billion gallons of water being saved.2 - 74,500 kilograms of pesticides being avoided.\n- By end of 2025, we aim to only source MMCF from FSC-certified sources,or replace them with next-generation fibres from sources such as agricultural residues and pre- and post-consumer textiles. This supplements our requirement that MMCF producers must be verified as low risk by the CanopyStyle audit.Since 2020 we have only sourced viscose from suppliers ranked green in the Canopy Hot Button Report.\n- USD 57 million additional profit for farmers.", "chunk_word_count": 420, "section_path": "H&MGroup > FOUNDATION > % of total cotton that is recycled,organic,or other more sustainably sourced3.4", "document_id": "HM Group Sustainability Disclosure 2022", "page": 44, "page_start": 44, "page_end": 45 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 43, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress: synthetic materials\n一H&M Group's support for projects with the Organic Cotton Accelerator and other organic cotton initiatives in India during the 2021-2022 crop season resulted in:\n一 We're committed to phasing out virgin polyester as we work towards our goal to source $100 \\%$ recycled polyester by 2025.In 2022, $7 4 \\%$ of our polyester was from recycled sources, which have a significantly lower GHG emissions footprint than conventional sources.We are working to increasingly move towards textile-totextile recycled polyester.\n-H&M Group and H&M CO:LAB continued to support Renewcell to scale production of Circulose@一 an MMCF made from recycled cotton waste. H&M CO:LAB also supported Infinited Fiber Company to scale InfinnaTM 一an MMCF from regenerated cotton waste 一 through the building of the company's first commercial plant in Finland.We tested use of Infinna through our involvement in the European Union project New Cotton.3\n- 13,410 farmers involved in organic cotton projects.\n### - By end of 2025,source viscose in line with our commitment to the Changing Markets roadmap.\n- USD 1.73 million in premiums received by farmers,supporting investment in organic farming.\n- We began scaling our use of textile-to-textile recycled polyester and plan to double it next year. We are also exploring scalable automated sorting techniques and chemical recycling to increase availability.\n- By the end of 2025,all wood and woodbased material used in our products and packaging will come from either responsibly managed forests certified to FSC or made of recycled material.\n$- 1 0 0 \\%$ procurement by H&M Group brands of committed volumes.\n- Weekday made use of Sodra pulp 一 a fully traceable,certified wood pulp.\n一 We continued working with Materra on a new way to grow cotton that has the potential to increase yields and fibre quality,while minimising water and pesticide use.Our Circular Innovation Lab worked with Materra to set up a pilot in India, with the first crop yield harvested at the end of 2022 for use by COS.The farm is testing ten\n- We worked with Textile Genesis to improve the traceability of recycled polyester.\n- Land rights and indigenous rights issues can be aconcern in relation to our forest-derived fibres and products,and these goals support our efforts to prevent or mitigate human rights violations.\n- We continued to support the development and testing of TreeToTextile's fibre sourced from sustainably managed forests, with\n### Progress: wood-based & manmade cellulosic fibres (MMCF)\n- We are working with TextileGenesis to explore options for embedding traceability within MMCF supply chains.\n-We developed a long-term vision and 2030 roadmap for MMCF.It focuses on scaling our use of next generation feedstock,prioritising textile-to-textile recycled feedstock and increasing recycling infrastructure. Our new roadmap supports our goals and commitments:\npredicted reductions in energy,and chemical use compared to conventional viscose.1\n一We partnered on two regenerative wool projects (see table on page 33) as we are exploring the potential to scale regenerative practices in wool production.\n- H&M HOME started making bed linen from LenzingTM Ecovero and Eastman NaiaTMtraceable bio-based cellulosic fibre,sourced from responsibly managed and certified pine and eucalyptus forests and plantations.", "chunk_word_count": 515, "section_path": "H&MGroup > FOUNDATION > Progress: synthetic materials", "document_id": "HM Group Sustainability Disclosure 2022", "page": 45, "page_start": 45, "page_end": 46 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 44, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress: leather\n- We developed a long-term vision and 2030 roadmap for leather,with a focus on increasing traceability and working to make the leather supply chain more responsible 一 from the tannery level all the way upstream to the farms.\n### Progress: wool, cashmere, down, mohair & other animal fibres\n$7 5 \\%$ (51% in 2021) of all leather products were produced with chrome-free tanned leather, including vegetable-tanned leather and metalfree leather. Our 2O25 goal is for all our virgin leather to be chrome-free.\n1 $5 7 \\%$ $4 4 \\%$ in 2021) of our wool was Responsible Wool Standard (RWS)compliant一 marking progress towards our 2025 goal to only source virgin wool from RWS-certified farms.\n一 $9 9 \\%$ $9 5 \\%$ in 2021)of our cashmere was Good Cashmere Standard (GCS)compliant 一close to meeting our 2025 goal to source all virgin cashmere from GCS-certified farms.\n一 We joined the Leather Working Group (LWG) traceability task force and tested the LWG's new social assessment tools to identify risks connected to the leather supply chain. $100 \\%$ of our tanneries in Asia comply with Leather Working Group environmental best practice guidelines.\n$100 \\%$ ( $100 \\%$ in 2021)of our mohair was Responsible Mohair Standard (RMS)compliant 一 upholding our commitment to only buy from RMS-certified farms.\n-We are one of a few brands that financially supports a three-year pilot project through the Textile Exchange's Leather Impact Accelerator (LIA) programme. The aim of the pilot is to trial “impact incentives”in the leather supply chain of Brazil,by recognising and rewarding cattle farmers with better practices in place一 focusing on deforestation-and conversion-free (DCF) leather,as well as animal welfare at farm level.\n1 $100 \\%$ ( $100 \\%$ in 2021) of our virgin down was Responsible Down Standard (RDS) compliant 一 maintaining our requirement of only sourcing from RDS-certified farms since 2016.\nsupplier will use their own and other companies' production waste as feedstock for the process. Read more about how we recirculate production waste.\n一 H&M CO:LAB supported new products launched with AmbercycleTM (recycled textiles) and Sheertex@ (unbreakable' hosiery),and made a first investment in Fairbrics 一which uses a novel process to create the components of polyester from waste $\\mathsf { C O } _ { 2 }$\n-We participated in LIA's social working group to develop a benchmark standard for responsible leather supply processing from slaughterhouses to tanneries,with a focus on decent work and forced labour.\n一 Our work with regenerative agriculture projects shows the potential for impact, but significant investment is needed develop regenerative practices at scale.\n一 Our brands produced several collections made from recycled materials.For example, H&M now uses recycled sequins.& Other Stories used recycled mulberry silk made from cutting waste in production for a capsule collection,as well as recycled sterling silver collected from household waste in Denmark through urban mining一a process of recovering precious metals from discarded waste and turning them into new items.\n一 Many standard holders and certification bodies are updating or developing approaches to strengthen human rights due diligence at the raw material level, to align with international guidelines and evolving regulation. This will require new ways of working and increased collaboration across the sector.\n一 To improve traceability in our leather supply chain we started mapping suppliers by testing a digital platform and physical tracer.We began by tracking data from slaughterhouse level and will then go back to farm level, with the aim of scaling up this process across our leather supply chain.", "chunk_word_count": 580, "section_path": "H&MGroup > FOUNDATION > Progress: leather", "document_id": "HM Group Sustainability Disclosure 2022", "page": 46, "page_start": 46, "page_end": 47 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 45, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress: wool, cashmere, down, mohair & other animal fibres\n一 Our Circular Innovation Lab worked on proofof-concept projects with Keel Labs,following investment from H&M CO:LAB.\n### Learnings\n一We continued testing the use of bio-based leather alternatives.For example,H&M worked with our Circular Innovation Lab to use plantbased Mirum® from Natural Fiber Welding in a new collection.\n一There is a need for better and more accurate environmental impact data in the industry.We have reached out to our material suppliers to encourage them to share their data directly with initiatives such as the Sustainable Apparel Coalition's Materials Sustainability Index.\n### Future focus\n一 Our brands tested and scaled innovative materials,including:\n一 We will continue to prioritise and scale recycled materials,by investing in developing closed-loop recycling feedstock capacity and through our public affairs work to advocate for a favourable legislative environment.\n- Newlight AirCarbon: Carbon-capturing biomaterial made by natural microorganisms found in the ocean, used by H&M.\n### Progress: other recycled & innovative materials\n一 Traceability is essential to be able to measure real impact, steer and track sourcing,and mitigate risks 一 read more about our progress on traceability.\n一 Improving the collection and quality of impact data resulting from our sourcing practices is an ongoing focus.\n- Bananatex@:A durable technical fabric made from banana plants,used by COS.\n一 $23 \\%$ ( $1 8 \\%$ in 2021)of our materials were from recycled sources,in support of our 2025 goal that $30 \\%$ of our total materials will be from recycled sources.\n- Kapok: A cotton-like fibre from the fruit of the Kapok tree, used by ARKET.\n- Systemic shifts at industry level are key to scaling recycled materials.Innovation in recycled fibres has expanded rapidly across all fibre groups,but commercial scale-up remains slow due to technology and financing gaps,and sometimes due to legislative barriers to resource recirculation.There is also a clear need to connect sort and collect systems with the emerging capacity for recycling.\n一We willdevelop a plan for scaling regenerative agricultural practices for key materials.\n一To demonstrate the potential for recycling blended fibres,one of our Indonesian suppliers piloted a Green Machine,owned by Hong Kong Research Institute of Textiles and Apparel (HKRITA).The machine separates polyester and cotton blended waste material to produce polyester fibres and cellulose powder.The\n- Resortecs Smart StitchTM: Dissolvable sewing thread,used by H&M.\n一 We will continue to engage with standards holders and other key partners,to identify how best to integrate respect for human rights through material standards and collaboration.\n-Sorona@:A plant-based fibre that offers an alternative to polyester filling in padded jackets,used by ARKET.\n- We have three research projects under way with the Hong Kong Research Institute of Textiles and Apparel(HKRlTA). These are focused on understanding the levels of fibre fragmentation for different materials during production,cleaning microfibres from wastewater using soundwaves, and researching the use of bacteria to degrade microfibres in effluent treatment plants.", "chunk_word_count": 478, "section_path": "H&MGroup > FOUNDATION > Progress: wool, cashmere, down, mohair & other animal fibres", "document_id": "HM Group Sustainability Disclosure 2022", "page": 47, "page_start": 47, "page_end": 48 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 46, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Microfibres\nAs textiles are washed during production or by customers,fibre fragmentation can occur and release tiny microfibres,including natural and synthetic fibres.These fibres end up in waterways and pollute habitats.An increasing focus on microfibre pollution is highlighting the problem and we are taking action to find solutions.\nWe are developing our roadmap according to The Microfibre Consortium(TMC)2030 Commitment 一a global commitment to work towards zero impact on nature from textile fibre fragmentation by 2030.\n一 We partnered with Forum for the Future (FFTF) to support its Tackling Microfibres at Source research project.We also worked with FFTF to deliver capacity-building workshops with our suppliers一 primarily fabric manufacturers - exploring challenges and solutions for fibre fragmentation.\n### Progress\nWe're developing a groupwide Microfibres Roadmap to formalise our current approach, which includes:\n一 We joined the TMC advisory board and are exploring how we can best implement the TMC commitment.So far,we have contributed with fabric-level testing, using the test method developed by TMC.\n一 ARKET and H&M continue to promote and sell laundry bags to help customers reduce microfibre shedding during laundry.\n- Choose and design yarns and fabrics that minimise microfibre shedding.\n### Learnings\n- To help shape draft legislation, we developed a position paper on microfibres,highlighting the importance of a holistic approach that is both science-based and collaborative.The paper stresses the need for legislation to cover all relevant stages of the product life cycle,support and recognise ongoing industry research,and take a step-by-step risk-based approach based on common methodology.We also used the position paper to advocate for a fullimpact assessment of potential policy measures to ensure effective regulation,and to highlight the importance of addressing the issue in a collaborative and harmonised manner worldwide.\n一 Uncertainties related to microfibres 一 including a lack of science-based methodology to measure shedding一 highlight the need for collaborative efforts.For example,further research is required to understand the impacts of different environments and materials on fibre fragmentation,as well as the impact of chemicals.\n- Research new production processes and requirements to minimise shedding.\n一 Offer microplastic-reducing laundry bags to customers and support the development of laundry machine filter systems.\n一 Improve technologies that enable reuse and recycling.\n### Future focus\n一 We will continue to collaborate on research and set a vision and direction for our work to reduce fibre fragmentation,developing our roadmap in line with TMC 2030 Commitment.", "chunk_word_count": 394, "section_path": "H&MGroup > FOUNDATION > Microfibres", "document_id": "HM Group Sustainability Disclosure 2022", "page": 48, "page_start": 48, "page_end": 49 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 47, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Resource optimisation & recirculation\nThe ability to optimise and recirculate resources again and again,maintaining quality and maximising value while minimising waste and impact,is a key step towards reaching a truly circular ecosystem.We see the offcuts generated during production,and clothes that are no longer in use or damaged,as resources. We're working to develop reverse supply chains that bring used products and production waste back into circulation either as second-hand products,or to be repurposed or recycled and diverted back into the production system as valuable feedstock.\nTo optimise and circulate resources,we focus on:\n- Resource optimisation and recirculation in production: Valuing production waste as a resource and focusing on maximising value from different waste streams to reduce impact.We are supporting our suppliers through our guidelines and instructions,and we are building systems and networks to reduce waste,optimise and circulate resources in our supply chain.\nBased on our waste distribution hierarchy framework,we are also building a strategic network of recyclers to utilise the resources from our suppliers.We have trained our suppliers in efficient waste management and handling, to supply quality feedstock to our nominated recyclers.So far, 85 suppliers from five countries have participated in this initiative to divert the waste generated from our supply chain to use it as a resource for our products.Approximately 1.4 kilotonnes of collected waste was sent to our nominated recyclers in 2022.\nBeyond our products,we work to increase resource recirculation in our own operations and packaging systems,as wellas scaling customerfacing circular business models to help clothes stay in use for longer.\n- Resource optimisation and recirculation of products: We focus on optimising supply to produce products according to demand,and bringing used products back into circulation - either as second-hand,reusable materials or through recycling.We ensure that products get used at their highest resource value.If a product isn't performing as planned,we prioritise selling it within our primary sales channels.Afound provides an additional channel to share garments with customers. Only once we've reviewed all internal uses do we find solutions via trusted business partners including charities and outlets.", "chunk_word_count": 341, "section_path": "H&MGroup > FOUNDATION > Resource optimisation & recirculation", "document_id": "HM Group Sustainability Disclosure 2022", "page": 49, "page_start": 49, "page_end": 49 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 48, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress: resource optimisation & recirculation in production\nOur waste management and resource recirculation strategy guides our groupwide approach to all resource flows throughout our own operations,supply chains and products.We focus on complying with laws and regulations and providing clearly defined policies, guidelines and responsibilities throughout our value chain. This enables us to minimise waste and negative impact,and to maximise value from different waste streams through reduction, repair, reuse as a product, reuse as material and recycling.\n一We rolled out instructions to our garment suppliers on our requirement for the responsible handling,disposal,and managementof production textile waste.This supports our suppliers to minimise and handle textile waste in the best way,and to maximise its value.\n一We participated in the Switch to Circular Economy (SWITCH2CE) value chains initiative, funded by the European Union and the Government of Finland,and led by the United Nations Industrial Development Organization (UNIDO). The overall objective of SWITCH2CE is to facilitate a fair and just transition to a circular economy via initiatives that are environmentally sustainable and improve the industry's competitiveness through green innovation.\n一 Together with Global Change Award winner Reverse Resources,we worked with a digital tool that enables traceability of waste generation, so that it can be used as a resource for our products.\n- Giving faulty products a new life: We prioritise repurposing or recycling.\n### Progress: faulty products\n一 Where a product is faulty, we prioritise reuse and recycling:\n- We started a partnership with Global Startup Award Winner Smartex,using its innovative Al technology to identify faults during production. This helps us improve resource efficiency by avoiding unnecessary production of faulty yarn and fabric.\n$- 0 . 6 4 \\%$ of our total product assortment was reused,repurposed or recycled (including charity donations) due toa fault $( 0 . 6 6 \\%$ in 2021).\n一We continued investing in recycling infrastructure to enable used fabrics and garments that cannot be reused to feed into making new materials.\n$- 0 . 0 5 \\%$ of our total product assortment was destroyed (prioritising incineration for energy recovery) due to failure of chemical tests, contamination by mould (for example,during transportation),or when no viable recycling or downcycling solution was available $_ { ( 0 . 0 6 \\% }$ in 2021). We never destroy products that are safe to reuse or recycle.\n- COS launched the Beyond One Life capsule collection,crafted entirely from leftover fabrics from previous COS collections.\n- To help address the global challenge of textile waste ending up in places without reuse and recycling systems,we actively engaged in discussions to strengthen legislation,and increase scrutiny of data,reporting and follow-up.In the EU,we continued advocating for harmonised Extended Producer Responsibility (EPR) schemes and other waste policies that facilitate effective collection,sorting and recycling of textile waste. Read more about our public affairs work.", "chunk_word_count": 465, "section_path": "H&MGroup > FOUNDATION > Progress: resource optimisation & recirculation in production", "document_id": "HM Group Sustainability Disclosure 2022", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 49, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress: resource recirculation of products\n-We continue to focus on maximising the use and the value of our products and to make sure that no products that could have a new life are wasted.\n一We enhanced our internal communication around product defects to ensure these are better detected.This includes improving the routines\n- To accelerate collection,sorting and recirculation of post-consumer textiles and products we have set up a new reverse supply chain team,which focuses on building scalable systems where the traditional supply chain ends, maximising product reuse,repurposing and recycling.We also continued with the existing garment collecting initiative in 2022,partnering with I:CO1to collect and sort garments.\n3) Due to the products having failed certain chemical tests,being contaminated by mould (for example during transportation)or when there was no viable recycling or downcycling solution available.We prioritise incineration for energy recovery where possible.\n-We participated alongside other brands in Fashion for Good's Sorting for Circularity initiative, an 18-month collaborative project to scale recycling capacity in Europe.Recommendations for brands include designing for recyclability and appropriate lifecycles,and prioritising monomaterial products.\nwe have in place to carefully check returns at our distribution centres for any faults.\n一We're seeing increasing need to accelerate activities that enable textile-to-textile circulation around the globe and research alternatives to current textile options. This will require us to continue making investments in recycling technology,focusing on scaling up of pre- and post-consumer recycled materials and developing our reverse supply chains.\n### Learnings\n一We're learning from our work to secure reverse supply chains for resource recirculation, including the need to engage even more closely on emerging EU legislation to ensure policy supports effective processes and infrastructure. There is complexity around waste regulations and infrastructure,and a need for more EU-harmonised waste regulations.\n### Future focus\n- We need to scale services that enable reuse of products before they end up at the collecting bin and sorting facility.We need to keep products closer to the user for longer and at their highest value.\n一 We will increase our focus on securing reverse supply chains and increasing resource recirculation.We will continue to support investments and scale technology, infrastructure and systems to sort, reuse and recycle textiles, supported by our public affairs work.\n- There is still a gap in scalable systems and technologies for sorting and recycling,especially for blended textiles.This makes the progress for us and the industry slower than we would have wished for.\n一In line with our holistic approach to circular and climate impact we're increasing our focus on jobs in a circular fashion industry.\n一 As legislation and compliance requirements for waste evolve,we will continue our dialogue with stakeholders and ensure compliance in all markets where we operate.\n一 Putting our Responsible Waste Management Guidelines for production waste into practice has shown a clear need for more localised recycling infrastructure.Increased investment and innovation in waste separation and recycling technology are required to achieve this,alongside widespread recognition of the value of resources left over from production.\nApparel Coalition Higg Materials Sustainability Index(SAC Higg MSl) supports our long-term objective to have fully aligned industry tools for measuring the impact of production processes.", "chunk_word_count": 520, "section_path": "H&MGroup > FOUNDATION > Progress: resource recirculation of products", "document_id": "HM Group Sustainability Disclosure 2022", "page": 50, "page_start": 50, "page_end": 52 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 50, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Production processes\n一 We continue to invest in new washing and dyeing innovations,supporting them to scale up, including:\nProcesses such as washing,dyeing and printing use energy,chemicals and water.We're taking a holistic approach to improving our materials processing,collaborating to reduce impact at scale while contributing to our environmental goals.We want to see fully aligned industry tools for measuring the impact of production processes and scaling less impactful alternatives.\nOur printing roadmap sets the pathway towards our aim to maximise use of processes that have significant savings in water, energy and chemicals compared to current conventional practices. We're testing and scaling new techniques and technologies,alongside working with our suppliers to implement change.\n### Learnings\n一 There are no benchmarks or baselines for traditional textile production processes. Developing more accurate data for specific processes requires collaboration from different stakeholders to achieve this shared goal.\n- Dyeing and finishing company Alchemie,also receiving continued H&M CO:LAB investment, set up pilots in Taiwan and Turkey to showcase its process to our suppliers.The first bulk machine for polyester will be installed in the Taiwan Region at the end of the year.\n### Progress\nWe focus on five areas:\n- We are working with third-party consultants to set a methodology for collection of environmental impact data,set a baseline and verify data for conventional textile production technologies. This work is essential to enable comparison and measurement of progress,since there are currently no industrywide benchmarks or baselines. Better data will enable us to compare and identify processes with lower negative impacts in our five focus areas and share our knowledge with the industry.\n-Chemicals: Reduce use, increase reuse or regeneration,and use third-party hazardassessed chemistry such as Screened Chemistry.\n一 Current investments in the industry to date have primarily been made for incremental, efficiency-focused initiatives,rather than implementing disruptive innovative technologies that are essential to meet goals around water, chemical and energy savings.\n一Energy: Improve efficiency and reduce GHG emissions.\n- DigitalDyeing? innovator Imogo has been involved in several successful trials and is working with selected suppliers within our supply chain. One of our suppliers in Bangladesh has bought a machine that will be ready early in 2023.\n-People: Ensure proper use of personal protective equipment by workers,avoiding adverse health or safety effects.", "chunk_word_count": 376, "section_path": "H&MGroup > FOUNDATION > Production processes", "document_id": "HM Group Sustainability Disclosure 2022", "page": 52, "page_start": 52, "page_end": 52 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 51, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Future focus\n一 We will prioritise moving away from the highest impact processes step-by-step,towards processes that are better from an energy,water, chemicals and waste perspective.\n- Production waste: Reduce waste and increase recovery, reuse and recycling.\n一We conducted a project to identify chemicals substitutions with lower environmental impacts and other opportunities for process improvements.\n- H&M continued developing and scaling projects with Alchemie, Colorifix and Imogo. The brand developed new partnerships with Algaeing,which produces $100 \\%$ biodegradable algae-based dyes and threads,and Recycrom, which has developed a multi-purpose dye made from textile waste fibres.\n-Water: Reduce use, increase reuse and recycling for wastewater, reduce quantity and improve water quality.\n一 We will continue to evaluate and test new innovations,to understand their true potential as alternatives to current production processes.\n一 Our participation in a member expert team for textile wet processes with the Sustainable - H&M CO:LAB continued to invest in Colorifix, a biotech company that uses microbiology to produce and fix dye on textiles.The first large Colorifix bioreactor was installed in Portugal at the end of 2022.A number of our brands and assortments are ready to develop and place orders.\n### Scaling customer-facing circular business models\n[IMAGE CAPTION] Customer-facing circular business models", "chunk_word_count": 207, "section_path": "H&MGroup > FOUNDATION > Future focus", "document_id": "HM Group Sustainability Disclosure 2022", "page": 52, "page_start": 52, "page_end": 53 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 52, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Our ambition to maximise product use and offer customer-facing circular business models at scale helps us build a resilient,\ncustomer-focused business.We are committed to developing long-term,meaningful relationships with customers as they engage in repair, rental and resell services,and we will continue to scale infrastructure to enable used products to have a new life through reuse as product, material or recycling. Reducing our resource dependency by maximising product use and recirculating resources will decouple our growth from resource use.This is crucial for reducing our environmental impact and fulfiling our climate and nature goals. These models must be firmly established in the mainstream for the much-needed industrywide shift and the change in customer behaviour to occur.We are mindful that products or services accessed via these models must replace products sold through the traditional linear model.\n- Access: We offer a range of rental and reuse services through which customers can experience fashion while enabling products to circulate. Our ambition is to mainstream and increase desire for second-hand fashion.\n- Collect: We offer our in-store garment collecting programme worldwide to our customers.Our aim is to ensure the collected products are sorted for the most suitable outcome,be that reuse as product, reuse as material or recycling.\nWe have developed a position paper sharing our views on the potential for scaling customerfacing circular business models to enable product use extension and prevent waste.Our policy recommendations include: remove VAT on second-hand sales,support reuse and repair models before products become defined as waste,incentivise access to digital product data(e.g.via a Digital Product Passport), and standardise environmental impact measurement for new and reused products.\nWe focus on three areas to maximise product use:\nCircular business models enable a product to circulate many times between users or customers. A product may be repaired, reused as a product (for example via a second-hand purchase), reused as materials and remade into a new product, or recycled. Recycling can return materials to the fashion ecosystem (closed loop) or send them for use as resources in another industry (open loop).\n- Use, care and repair: We encourage customers to explore their style and increase the use of their clothes, offering inspiration on how to prolong the life of their garments through care and repair initiatives.\n- Within the new concept COS Full Circle, some of the garments collected are repaired for resale under the Restore label.", "chunk_word_count": 397, "section_path": "H&MGroup > FOUNDATION > Our ambition to maximise product use and offer customer-facing circular business models at scale helps us build a resilient,", "document_id": "HM Group Sustainability Disclosure 2022", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 53, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress: use & care\n- Weekday ran curated second-hand offers in four stores in Sweden.\n一H&M Take Care concept is now offered in al global online markets to provide guidance and products to help customers care for their clothes.1 一 Through the online service My Closet we piloted a 'digital wardrobe'in India,providing our users with an overview of all their H&M purchases for ten years.This helped our customers to explore their style and offered inspiration on how to prolong the life and increase the use of their clothes.\n-Monki Pre-Loved is a second-hand area in two key stores in Stockholm running in collaboration with Sellpy and the Monki community一 the customers can sell their garments through a consignment model.\n-Monki established a denim repair project, offering a limited collection of jeans that are embroidered after having minor tears during production.\n-We ran a pilot project to sort and refurbish returned leather shoes from ARKET,& Other Stories,and COS.\n- ARKET launched their ReARKET pilot in Gothenburg,enabling customers to buy and resell products.\n- COS Resell is a pillar in the broader COS Circular Business Model strategy. Customers can upload and sell their pre-owned COS garments via the Resell platform in the UKand Germany, giving products a second life and supporting the brand's circularity mission.\n### Progress: access\n- We are testing a digital wardrobe app in Sweden.Seam helps users to better use what they already own and to become more satisfied with their style. Through Seam, H&M Group receives post-purchase product data,supporting us to better plan and optimise collections as well as meeting future legal requirements.\n-We continued to expand access to the resell platform Sellpy.More than eight million secondhand items were traded on the platform across 24 markets.\n一 H&M made it possible to buy second-hand garments from multiple brands alongside new H&M garments in Sweden and Germany 一 offering a new,integrated customer experience by incorporating a curated second-hand assortment from Sellpy into its website in Sweden and Germany.The solution aims to remove customer barriers,showing that second-hand products are just like a standard purchase.\n- Our brands also continued to test and scale rental services:\n### Progress: repair\n-& Other Stories partnered with rental marketplace HURR. UK Customers can rent a curated selection of& Other Stories collections on the HURR platform or at its pop-up in London.\n一H&M expanded its repair services this year, improving operations and customer experience. H&M Repair Stations are now operating in seven key cities across five markets.\n- H&M expanded its rental service,which is now available in four stores: Stockholm, Amsterdam, Berlin and London and a launch in Antwerp is imminent.\n一 H&M started to repair faulty customer returns at the distribution centre in Milton Keynes to enable them to be resold.\n一 Our other brands led their own second-hand initiatives:\n- WEEKDAY continued its partnership with Gemme Collective.\n### Learnings\n一 Customer-facing circular business models are often labour intensive with low margins. We address this challenge and discuss how to incentivise a scalable transition in our position paper on circular business models as waste prevention.\n- H&M Home continued its‘Rent a Christmas' offers in four cities一 Berlin,Paris,London and Stockholm 一 providing customers with the opportunity to hire festive decorations.", "chunk_word_count": 540, "section_path": "H&MGroup > FOUNDATION > Progress: use & care", "document_id": "HM Group Sustainability Disclosure 2022", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 54, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Progress: collect\n- Selling products second-hand requires significant manual handling to prepare garments and input product details. Efficiency and profitability would improve with better access to product information,across brands and customers.A potential establishment of extended use traceability,where data is stored in a product's digital ID,could be the enabler for this.\nTextiles collected in H&M Group stores²\n- We gathered 14,768 tonnes of used products through our existing in-store garment collecting initiatives. During 2022 we continued to work with l:CO' to collect and sort garments, with $5 5 \\%$ reused as a product, $1 5 \\%$ reused as material, and $2 2 \\%$ recycled to become products for other industries or made into new fibres.l:CO collaborated with partners to make use of the remaining $8 \\%$ that,as a last resort,had to be disposed of another way,prioritising incineration for energy recovery and not sending textiles to landfill.\n- Customers want to understand the impact of their purchases,yet there is currently no standardised way of measuring the GHG emissions or resource use impact of reuse and repair models compared to purchasing new products.This makes clear customer communication and claims a challenge 一 read more about our approach to transparent customer communications.\n### Future focus\n- Sellpy is already one of the biggest providers of second-hand fashion in Europe.We will continue to scale its offerings to more markets,increasing the number of second-hand items traded and further decoupling our growth from resource use.\n一 COS scaled its Full Circle initiative to include a collection of pre-worn COS products that are repurposed or repaired for resale,with cleaning and restoration partner Bleckmann Renewal. Live in eight markets at the end of 2022, COS Full Circle prioritises fixing and repurposing clothes ahead of recycling.\n- We are continuing to explore and scale use, care,repair, rental and resale models,improving access and satisfaction for our customers based on our learnings.In the longer term, this will include increasing access to second-hand clothing by integrating it further into our customer journey.", "chunk_word_count": 334, "section_path": "H&MGroup > FOUNDATION > Progress: collect", "document_id": "HM Group Sustainability Disclosure 2022", "page": 55, "page_start": 55, "page_end": 56 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 55, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Packaging\n一Hangers.In line with our Chemical Roadmap we aim to eliminate or replace all hangers made of polystyrene by the end of 2023.We are moving away from single use hangers and,in 2022, $26 \\%$ of all our hangers were reused.We accelerated the industry's systemic shift to a circular model by collaborating with suppliers and collectors,and implementing the Return to Source model in more markets.\n$9 2 \\%$ of waste handled in H&M Group distribution centres was recycled or reused $( 9 2 \\%$ in 2021).\nOur products need to be protected during their journeys between our suppliers,distribution centres,stores and customers,to prevent damage and waste.We're committed to lowering the environmental impact of our packaging, guided by our Circular Packaging Strategy built on the Ellen MacArthur Foundation (EMF)'s key principles: eliminate waste and pollution,circulate products and materials (at their highest value), and regenerate nature.We prioritise areas where we are most likely to have the greatest impact, including reducing unnecessary and problematic packaging like hangers and plastic bags.\n- Reuse or recycle $100 \\%$ of packaging from our own sites by 2025.\n一 We partnered with Virginia Tech University to explore how to measure the impact of online packaging through a product Life Cycle Assessment.\nRead about our detailed plastic packaging goals.\n- Transit (e-commerce and transport) packaging. The major share of the packaging we use going forward will be transit packaging. For online packaging,we have worked to optimise the size and weight of the FSC-certified paper bag that replaced single-use plastic bags for all our brands and markets.For transport packaging, we're carrying out ongoing research and development to increase post-consumer recycled material and product durability. Our reverse supply chains work will help to secure end-to-end responsibility of these packaging types,ensuring packaging is reusable or recyclable.\nOur Circular Product Development Guideline, Material Guideline and Restricted Substances List for Packaging Suppliers support progress towards these goals. Driven by the goal to tackle plastic pollution,we're signatories of EMF's Global Commitment in collaboration with the UN Environment Programme 一which has united more than 5oo organisations behind a common vision of a circular economy for plastics - as well as Fashion Pact.We endorse Canopy's Pack4Good initiative,which underscores our commitment to focus on responsibly sourced wood-based packaging,including recycled pulp, next generation fibres and FSC-certified sourced paper.\n一 We have an ongoing dialogue with Canopy about how to switch our dependencies on virgin wood fibres to more recycled materials and next generation fibres,and are continuing to explore this.\n- We are strengthening our IT solutions to improve packaging decisions in the product development stage as well as supporting our suppliers to reduce the material consumption for packaging.Where this is impemented,we have seen good progress on both resourse reduction and cost savings.", "chunk_word_count": 457, "section_path": "H&MGroup > FOUNDATION > Packaging", "document_id": "HM Group Sustainability Disclosure 2022", "page": 56, "page_start": 56, "page_end": 56 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 56, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Our key packaging goals are:1\n一 An absolute reduction in plastic packaging of $2 5 \\%$ by 2025 (2018 baseline).\n- Shopping bags in stores. We saw an immediate $40 \\%$ reduction in usage of in-store shopping bags following the introduction of bag charges.2\n一Design $100 \\%$ of packaging to be reusable and/ or recyclable by 2025.\n- Polybags.We are taking steps to reduce, replace or remove unnecessary polybags throughout our supply chain.We shipped the first global collection using paper instead of single use plastic polybags for H&M Baby and H&M Men. We are also switching from virgin plastic to post-consumer recycled plastic for master polybags used in transportation.We will continue to increase the share of post-consumer recycled plastic in our garment polybags.\n### Progress\n一Make $100 \\%$ of packaging from recycled or other more sustainably sourced materials by 2030, with a preference for post-consumer recycled materials.\n一 Our 2022 priority was to complete the shift from single use plastic to reusable plastic or alternative materials 一 read more below. We achieved an absolute reduction in plastic packaging of $44 \\%$ of plastic compared to our baseline year 2018. Of the remaining plastic we use, $76 \\%$ is recycled $( 5 5 \\%$ post-consumer and $2 1 \\%$ pre-consumer).We have therefore reached our plastic targets ahead of time,so will revise our circular packaging strategy一 read more on page 57.\n一Materials.We're working to improve the chain of custody for FSC-certified materials to have better control of the traceability process.\nWe are also redesigning traditional packaging, moving away from non-recyclable multilayer materials,achieving the same functionality with mono-materials.\n### Learnings", "chunk_word_count": 272, "section_path": "H&MGroup > FOUNDATION > Our key packaging goals are:1", "document_id": "HM Group Sustainability Disclosure 2022", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 57, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Future focus\n一 Our collaboration with suppliers to maximise hanger reuse and recycling demonstrates how effective and impactful business-to-business partnerships can be in the shift to a more circular economy.\n- We will revise our groupwide circular packaging strategy,set in 2018,as the landscape we are operating in has changed since then.We are shifting more towards seling online and selling interior products through H&M Home,which requires a different type of protection to garment circular packaging. We are also shifting from using single-use plastic to paper packaging,to support higher rates of recycling from our customers. We will update our strategy and revise our overall packaging reduction goals,our approach to plastics use and our recycled packaging targets.\n一 Our work with Virginia Tech showed the complexity of measuring the environmental impact of online packaging.To evaluate the entire environmental footprint effectively,a Life Cycle Assessment needs to be complemented by methods to measure aspects such as material circulation and land use.\n- We will continue to explore reverse supply chains beyond our hangers programme,with a focus on designing packaging for circularity and collaborating with external stakeholders.\n一 There can be challenges and trade-offs in shifting from plastic to recycled or sustainably sourced paper packaging.Paper packaging might require higher volume and weight than plastic because thicker paper is needed for equivalent protection.Recycled paper is less durable than virgin paper so we will continue to work on finding strong recycled paper alternatives.\n一 As legislation and compliance requirements for packaging evolve,we will continue taking part in relevant conversations and ensure compliance in all markets where we operate.\n- Polybags have an important function, protecting products in distribution centres and in transit. Our challenge is to find and secure more sustainable alternatives 一 such as durable recycled paper packaging一 to serve the same purpose.We have started removing polybags from socks and aim to do so for other products once we find viable solutions.\n### Stores,distribution centres &offices\nWe strive to ensure that the stores,offices and distribution centres we use, though not all owned by us,are built,maintained and furnished in line with our circular and climate goals. Our Circular Built Environment Strategy helps to reduce our climate footprint.The strategy is built on the Ellen MacArthur Foundation's three key principles to eliminate waste and pollution, circulate products and materials (at their highest value),and regenerate nature.We prioritise the reduction, reuse,repair and recycling of our resources and focus on using recycled or other more sustainable materials.\nWe collaborate with our business partners and building owners to achieve these goals. Read more about our approach to the built environment.\n### Progress: reducing emissions\n- We have identified H&M's top six key raw materials for interiors that help reduce GHG emissions through reuse.These are stone,steel, melamine,stainless steel,wood and aluminum. We are modelling how we can calculate and verify these emissions reductions.Based on these calculations,we've set a key milestone for store interior materials in 2023: to reduce emissions by $1 5 \\% C O _ { 2 } \\mathsf { e } / \\mathsf { m } ^ { 2 }$ and to reuse $45 \\%$ of interior materials (measured in $\\mathsf { k g } / \\mathsf { m } ^ { 2 } )$", "chunk_word_count": 536, "section_path": "H&MGroup > FOUNDATION > Future focus", "document_id": "HM Group Sustainability Disclosure 2022", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 58, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Our goals are:\n- Reduce GHG emissions from our operations by $56 \\%$ by 2030— as part of our wider emissions goal.\n- We made progress towards extending our Circular Built Environment Strategy to distribution centres and offices,including launching a project with suppliers to measure the $C O _ { 2 } \\Theta$ of our office interiors.\n-Design $100 \\%$ of interiors to be reusable, repairableor recyclable.\n一 Use only recycled or other more sustainably sourced materials by 2030.\n一 $7 5 \\%$ of our offices globally are lit by LED, with a goal of $100 \\%$\n-Reuse,repair or recycle allinteriors by 2030.\n一 We updated our Circular Design Guideline for the built environment to use the same methodologyas Circulator,our commercial circular product design tool.\n一 Our brands started tracking progress on materials use.For example,COS launched its new store concept design in two stores,resulting in an average recycled material usage of $6 8 \\%$\n- Existing legislations do not support a circular way of working so reuse of interiors between stores and markets can be challenging, particularly when it comes to asset value transfer.\n- For offices,we have prioritised optimising space with the end goal to reduce GHG emissions. At our H&M head office in Stockholm we reduced office space by $10 \\%$ ,completed LED retrofit for an area of $2 8 { , } 0 0 0 \\mathsf { m } ^ { 2 }$ ,reused and refurbished existing furniture,and recycled furniture that was no longer functional. $6 3 \\%$ of our Swedish office portfolio is third-party certifiedby LEED,BREEAM in Use or Miljobyggnad and $10 \\%$ of our global portfolio is third-party certified by either LEED or BREEAM.\n一 Optimising office space and reusing or selling interior products,rather than sending them for recycling,has not only saved resources and avoided GHG emissions,but is also a profitable business case.\n### Progress: reuse, repair, recycle\n- We established our Redesign project to reuse materials from closed stores,starting with one in-store test with a redesigned interior.A further six projects are confirmed for 2023.\n### Future focus\n一 Our online sharing tool facilitates reuse of surplus store interiors.This year we also created a reuse tool to build in the scope for reuse into the design phase of new projects.\n-We have prioritised our strategic partnership with IVL Swedish Environmental Research Institute to build a climate impact analysis model for interior products.This willhelp us understand the $C O _ { 2 } \\Theta$ and resource reduction impact of materials 一 from the extraction of the raw material and material processing, until the material is ready to use for interior production,including logistics.\n### Progress: recycled or other more sustainably sourced materials\n- COS is committed to using no new concrete products in interiors and is testing a flooring system that can easily be installed and removed for reuse.\n一 Our new construction frameworks for distribution centres include clear requirements for more sustainably sourced and recycled materials.\n一 We will continue reducing our office space, measured as $\\mathsf { m } ^ { 2 } ,$ /person,and increase the share of reused interiors.", "chunk_word_count": 521, "section_path": "H&MGroup > FOUNDATION > Our goals are:", "document_id": "HM Group Sustainability Disclosure 2022", "page": 58, "page_start": 58, "page_end": 59 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 59, "chunk_text": "# H&MGroup\n## FOUNDATION\n### Learnings\n一We continued collaborating with Really to recycle textiles into products for our interiors. We face some challenges with the required minimum ordered quantities per colour so we're considering switching to using standard colours.\n一We learned a lot from our collaboration with Biomason,including the complexityin replacing a traditional floor tile with an alternative material that has the quality we require.Therefore, we have agreed to not continue with the partnership in its existing format. We are committed to finding a more sustainable floor product and will continue to follow developments at Biomason as well as seeking out other innovative solutions.\n- Where possible we use Unilin's wood fibrebased boards containing $9 0 \\mathrm { - } 9 5 \\%$ recycled content. Other board suppliers are encouraged to work towards being able to offer products with lower negative impacts.\n### Fair &Equal\nOur approach to being Fair & Equal.. .61 \nRespecting & advancing human rights. 63 \nSocial impact in our own operations. 65 \nSocial impact in our production supply chain .. 67 \nInclusion & diversity 77 \nCommunity engagement .81\n### Our approach to being Fair& Equal\nat Work,and informed by its definition of decent work.", "chunk_word_count": 198, "section_path": "H&MGroup > FOUNDATION > Learnings", "document_id": "HM Group Sustainability Disclosure 2022", "page": 59, "page_start": 59, "page_end": 61 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 60, "chunk_text": "# H&MGroup\n## FOUNDATION\n### H&M Foundation\nIn 2022, H&M Foundation:\n- Continued to support women garment workers in Bangladesh by launching Oporajita(\"Undefeated\")- a multi-partner initiative taking a holistic approach to equip these women for a future defined by automation and digitalisation.\nOur business impacts people all over the world, and we want to ensure that impact is positive. We have a responsibility to respect and advance the rights of everyone involved in and affected by our business,guided by our shared values and our commitment to being a fair and equal company.\nand their human rights.It is the foundation of our approach to being a fair and equal company and ensuring the social perspective is included in our environmental programmes.We aim to support all human rights and we focus our efforts and strategies on our salient issues一 those issues at greatest risk of significant impact from our business.Evolving contexts such as the war in Ukraine,ongoing environmental instability,and the aftermath of the Covid-19 pandemic escalate risks to human rights in specific regions or globally.\n一 Community engagement.We partner with others to improve social and environmental impacts on our stakeholders at a local level in the countries where we operate,and to advance the rights of wider communities.\n- Continued to support Saamuhika Shakti (\"collective power\"), a ten-partner initiative that aims to equip informal waste pickers in Bengaluru to lift themselves out of poverty. H&M Group extended the reach of Saamuhika Shakti through a stand-alone business partnership with social enterprise Hasiru Dala Innovations. Buttons containing plastic recovered from the streets of Bengaluru are now featured on garments worldwide.\nHuman rights due diligence is the ongoing process we use to identify,prevent, mitigate and remedy potential and actual negative impact on people\n- Working towards a circular, net-zero fashion industry. The state of the natural environment fundamentally affects people's wellbeing and equitable access to essential resources.As we accelerate our journey and that of the sector towards a circular, net-zero future,it's vital we consider the risks and opportunities related to human rights,so we can enable a holistic impact and a just transition to a resilient, thriving sector that supports people and the environment.\nRights holders impacted by our business include our employees,our customers,the workers in our supply chains,the communities where we operate,and specific communities of people at greater risk of inequity or human rights violations. We strive to respect and advance their rights through the following areas of work:\n- Partnered with Social Alpha to launch the second round of Techtonic - Innovations in Circular Economy in India as part of Saamuhika Shakti. This national challenge identifies local, disruptive innovations that improve waste management and integrate waste pickers in their value chains.\n- Social impact in our own operations and production supply chain. Everyone should expect decent, meaningful jobs with fair compensation and benefits in safe,secure workplaces free from discrimination,with the right to freedom of association. Our work to deliver this 一with a focus on our employees and people working in our production supply chain 一 is aligned with the International Labour Organization's Fundamental Principles and Rights - Inclusion and diversity.We're determined to create inclusive,diverse and equitable workplaces in our operations and production supply chain. Together with our brands, we promote diversity and equality through products and communication,and advance inclusion in our communities.", "chunk_word_count": 547, "section_path": "H&MGroup > FOUNDATION > H&M Foundation", "document_id": "HM Group Sustainability Disclosure 2022", "page": 61, "page_start": 61, "page_end": 61 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 61, "chunk_text": "# H&MGroup\n## FOUNDATION\n### H&M Foundation\nIn our 2022 stakeholder survey, $36 \\%$ of stakeholders rate our work on fair jobs as good or very good and $50 \\%$ rate our work on inclusion and diversity as good or very good. Our overall employee engagement score in our People Engagement Pulses survey was 76 out of 100 (76 in 2021). $89 \\%$ of suppliers regard H&M Group as a fair business partner.\n- Donated USD 100,000 each to Save the Children and the United Nations High Commissioner for Refugees to support relief efforts in Ukraine,and donated USD 250,000 to Red Cross/Red Crescent to support Pakistan flood relief.\nSee our Fair & Equal KPls from 2022.\n### A global, industrywide approach to workers' rights\n### An interview with Atle Hgie, General Secretary at IndustriALL about how we're doing and what we can do better\n### Nine years ago, the first Global Framework Agreement (GFA) was signed by H&M Group, IndustriAll and IF Metall. What impact have you seen as a result?\nSince the signing of the GFA,it is clear that industrial relations and workers'rights within the H&M Group global supply chain have improved. The joint agreement established a global dispute mechanism,a system of national monitoring committees (NMCs), and a pathway for workers to unionise and negotiate collective bargaining agreements at H&M Group supplier factories. The NMCs are key in supporting the dialogue between suppliers and trade unions when issues are not resolved in the factory level.\n### We work together on wages, health and safety, social protection, and in our own supply chain on gender-based violence and harassment (GBVH). How can we improve our collaboration to maximise our impact?\n### What would you like to see more of from H&M Group and other actors to address these challenges?\nThe collaboration has highlighted the importance of working together with other brands and global actors to solve systemic problems within the global supply chain that cannot be solved by one brand alone.\nAs a leading player H&M Group must continue to set a good example in developing industrial relations, sound purchasing practices, and observation of good health and safety requirements with their suppliers. A global leader must take a firm stance when it comes to violations of international standards, the contents of the GFA,as well as the commitments made through the International Accord and ACT.\nFurther collaboration is needed to impact the business model of the global textile supply chain. Global stakeholders, but also brands individually should sign legally binding agreements with IndustriALL and its affiliates to guarantee improving conditions in the industry.\nOther global brands have followed H&M Group's lead, having seen the value of directly engaging with IndustriALL and its afiliates to strengthen industrial relations.\nFrom governments we expect complete respect for the ILO conventions and support for organising and collective bargaining, which are key to create a more level playing field between employers, workers and brands.", "chunk_word_count": 487, "section_path": "H&MGroup > FOUNDATION > H&M Foundation", "document_id": "HM Group Sustainability Disclosure 2022", "page": 61, "page_start": 61, "page_end": 62 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 62, "chunk_text": "# H&MGroup\n## FOUNDATION\n### How would you describe the challenges to building industrial relations that protect workers in the fashion industry?\nThe main challenge is the industry's business model, which with its supply chain dependency takes away the formal responsibility from the brands.In the fashion industry the brands have enormous influence on the terms being offered to workers,but since they are not the direct employers of the workers they have no immediate contribution to the collective agreements. Other challenges are of course that the garment industry is labour intensive and located in poorer and less developed countries where industrial relations are still very immature.\nSuppliers need a push to respect the same standards,but they are often squeezed between the price they get from brands and expectations from governments and workers. All parties must work together to create a system where workers get good wages and working conditions and brands and suppliers still make money.\n## PPLYCI\n### Respecting & advancing human rights\nWe are committed to respecting and safeguarding human rights across our entire value chain,led by the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.We aim to take a consistent approach to assessing,addressing and remedying our impact on people and the planet and we prioritise our most salient issues.\nOur policies,impact and progress on these issues are detailed in various sections of this report, including water,material choice, social impact in our own operations and production supply chain, inclusion & diversity,community impact,and supply chain management.\n- As our business model becomes increasingly digital, we're focusing on strengthening rights and protections linked to privacy,data security and the responsible use of data.\n### Progress: human rights due diligence\nOur standpoint is detailed in our Human Rights Policy, which clarifies and embeds our work to respect fundamental human rights in our operations.Our Modern Slavery Statement outlines how we work to prevent forced labour and child labour in our supply chains.\nIt's vital that the many people we work, collaborate and exchange with are assured of their rights and have the ability to inform our work. Engagement with rights holders impacted by our business is therefore an important element of our operations.\n一We made our Sustainability Commitment for Business Partners more pertinent to different operational contexts and experiences by tailoring it to different functions and groups 一 such as manufacturing,construction and facility services, landlords, warehouse operations and transport. These updated versions are being rolled out across H&M Group.", "chunk_word_count": 412, "section_path": "H&MGroup > FOUNDATION > How would you describe the challenges to building industrial relations that protect workers in the fashion industry?", "document_id": "HM Group Sustainability Disclosure 2022", "page": 62, "page_start": 62, "page_end": 63 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 63, "chunk_text": "# H&MGroup\n## PPLYCI\n### Progress: trainings\n- We provide ongoing trainings to help our colleagues understand and protect human rights:\nHeightened global unrest and new conflicts, such as the war in Ukraine,increase the risk of human rights violations in our business.We also recognise the interconnectedness between environmental issues一such as climate change, resource use and water scarcity一and social impacts affecting equity, health and livelihoods.\nWe are unifying our corporate governance policies and centralised risk management systems,further integrating our human rights and environmental due diligence with corporate risk management processes.See more details about our work on corporate risk management, human rights and due diligence.We continue to embed due diligence across our operations and continuously seek to track and improve our impact.\n- In 2022,177 colleagues participated in training that raised their awareness of human rights.\n一 For the third consecutive year,we involved our in-country teams from production,construction, cleaning and logistics in our annual human rights risk review process.Their engagement provides more granular input to our risk assessment, increases awareness of our policies,and further integrates our human rights practices across the organisation.\n- The International Organization for Migration ran supplementary sessions for our production suppliers and our warehouse operations staff in Italy,Poland,Portugal and Romania,on the responsible recruitment of refugees from Ukraine.\nOur strategies and policies are focused on our salient human rights issues and we take a riskbased approach to human rights due diligence. We continually monitor and evaluate emerging concerns across our operations,supply chains and communities,and adjust our priorities accordingly.\n- We worked with the Better Cotton Initiative, Textile Exchange and Leather Working Group to further embed human rights and support for livelihoods into their material standards and way of working.\nensure grievance mechanisms are in place in their operations and to actively engage in remediation processes.\nfunction and increased our calls for progressive regulation.\n### Progress: grievance mechanisms\n### Learnings\n-We expanded the scope of Speak Up,our corporate complaints and grievance platform, to enable more external stakeholders to access it.\n一 We continued to follow up on the functionality of grievance mechanisms throughout our production supply chain.\n- Volatile economic and political contexts require quick and appropriate actions.We endeavour to act in a timely and effective manner to support human rights and our responses are guided by our ongoing risk analyses and due diligence processes.\n### Progress: protecting vulnerable groups\n一 Our updated Sustainability Commitment requires our suppliers and business partners to", "chunk_word_count": 402, "section_path": "H&MGroup > PPLYCI > Progress: trainings", "document_id": "HM Group Sustainability Disclosure 2022", "page": 63, "page_start": 63, "page_end": 64 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 64, "chunk_text": "# H&MGroup\n## PPLYCI\n### Progress: supply chain management\n一We identified no cases of child labour in our tier 1supply chain in 2022.We reviewed and updated our guidelines on child labour risks and remediation,and rolled out supporting training to internal teams and key suppliers.33 colleagues were trained on child rights,child labour risks and remediation.\n- To be compliant with anticipated legislation, we need to further strengthen our due diligence and integrate it with standard business operations, document our processes,and harmonise data collection across the group.\n- We worked across our supply chains to support human rights (read more in the supply chain management section):\n- We assess risk levels to prioritise audits of our own and outsourced warehouse operations.In 2022,we undertook 34 on-site audits.\n- In Turkey and Bangladesh, we are developing tailored childcare services for the children of workers in our supplier factories,to support their right to education and to enable greater gender equality in the workplace.\n### Future focus\n-We have,until now, focused our efforts primarily on own operations and tier 1 and tier 2 production suppliers,as well as on some elements of our raw material sourcing. Our intent is to strengthen our due diligence across our full production supply chain,covering all raw materials,as well as our service supply chains and our circular business models.\n- We continued to collaborate with peers through the EU Responsible Trucking Platform, to improve the working conditions of truck or lorry drivers and other road transport labourers.\n一We continue to focus on the responsible recruitment of migrants and seek to identify opportunities for them to access the labour market under fair terms.Read more in our Modern Slavery Statement.\n- To strengthen our due diligence towards external brands,we continued to assess operational risk levels and adjust our collaboration and audits to brands'expertise and experience.We also developed a selfassessment guide for business partners as part of the onboarding process,supported by training.\n一 We aim to improve our understanding of environmental and human rights threats across our value chain to inform a more risk-based approach.This will provide more comprehensive risk and impact assessments and will guide preventive measures and mitigating actions.\n### Progress: public affairs\n一To drive systemic change in human rights legislation,we have grown our public affairs\n### Social impact in our own operations\nUnion Network International. Engaging with our employees is crucial for our continued business success.All employees are invited to provide feedback on their experience of the workplace and suggest areas for improvement in our regular internal survey People Engagement Pulses (PEP).", "chunk_word_count": 420, "section_path": "H&MGroup > PPLYCI > Progress: supply chain management", "document_id": "HM Group Sustainability Disclosure 2022", "page": 64, "page_start": 64, "page_end": 65 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 65, "chunk_text": "# H&MGroup\n## PPLYCI\n### Supporting colleagues affected by the war in Ukraine\nAs the war in Ukraine continues,our priority is to support all our impacted colleagues in a transparent, consistent, and respectful way.\n-Compensation& benefits. Our Global Compensation and Benefits Policy guides our approach to remuneration and rewards. All employees working full-time or part-time, regardless of position,salary,and country, can benefit from H&M Incentive Program (HIP),a share-option scheme.1 H&M Group employees get a discount when shopping in our stores and online,worldwide.\nAll H&M Group colleagues should have good working conditions in safe and healthy environments.We strive to create and maintain workplaces that are fair, inclusive,equal and respectful. Based on learnings from our everchanging business environment, we continue to explore new ways of working to encourage creativity and strengthen our culture.We focus on:\nY\nOur stores in Ukraine are closed until further notice,and we continue to support our Ukraine-based employees in a number of ways. Many employees who have left the country have been offered job opportunities in other nearby markets where we operate,and we offer financial assistance to employees who are staying in Ukraine.\n### Progress: overall\n一Health,safety & wellbeing.We continually work to promote physical, mental,and social wellbeing throughout our operations.Established processes and routines,and close dialogue with internal stakeholders, help us identify and mitigate risks and challenges.\n- To provide a global, consistent approach as an employer,we are developing H&M Group Minimum Employment Standards guided by the International Labour Organization conventions. These will be launched worldwide in 2023.\nWe paid salaries to our employees based in Russia throughout the decisions to pause all sales and, later, to wind down our business in the country. As the stores were closed step-by-step,employees received severance pay and career support in line with our procedures for responsible business conduct.\n- Professional & personal development. We embrace a learning mindset where colleagues regularly give and receive feedback.Everyone is supported in defining their development goals and encouraged to engage in a wide range of learning opportunities to grow professionally and personally.\n- We are updating our social policies to align with evolving legislation and to ensure they are clear and easily understood.\n### Progress: health, safety & wellbeing\nRead more about our wider response to the conflict.\n-We continued regular trainings on health and safety,including crisis management,in line with our Global Health and Safety Policy. Our internal\n-Employee relations& engagement.We respect our employees' right to freedom of association and collective bargaining,and outline our commitments in our Global Labour Relations Principles and Global Framework Agreement with\nnewsletter, The Care Label, promotes mental health and wellbeing topics to all employees.\n### Progress: employee relations & engagement\n$- 6 7 \\%$ of respondents to our PEP survey agreed with the statement“l am able to successfully balance my work and personal life\",an increase from $65 \\%$ in 2021.\n- To meet our customers'expectations and navigate the digital shift,we continued our store portfolio consolidation and business transformations. Through these processes we continued to take a responsible approach to supporting our colleagues.Our markets have taken a range of actions,including making managers and human resources available for regular phone calls and providing additional benefits or compensation to support transition.\n### Progress: professional & personal development\n### Progress: compensation & benefits", "chunk_word_count": 537, "section_path": "H&MGroup > PPLYCI > Supporting colleagues affected by the war in Ukraine", "document_id": "HM Group Sustainability Disclosure 2022", "page": 65, "page_start": 65, "page_end": 66 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 66, "chunk_text": "# H&MGroup\n## PPLYCI\n### Future focus\n一 We are piloting a learning experience platform that aims to customise trainings and offer tailored roadmaps for professional and personal development to all employees.\n一 We will further harmonise our people processes to increase efficiency across brands, functions and regions.This shared approach will enable further development of,for example,our work on talent acquisition as well as rewards, including compensation,benefits,and pensions.\n- To increase equity and fairness in remuneration we continue to implement our Generic Job Framework across all operations.This structure enables us to compare our compensation levels and benefits, both internally within our organisation and externally across markets.\n- Together with Shift, we reviewed our existing grievance process,which enables all H&M Group colleagues to report breaches of our social policies or any other perceived misconduct. Following the review,we decided to integrate the process within our Speak Up channel.\n一 Our 12-month H&M Group trainee programme for graduates is designed to attract talent from diverse backgrounds,experiences,education systems,and perspectives.The programme provides trainees with support from a mentor and manager as they rotate within our business units,contribute to projects,access trainings,and network with colleagues.\n一 To enable collaboration and communication across H&M Group,we continue to roll out the foundation for our new digital communication and collaboration platform, One Experience. By streamlining our communication channels,all colleagues in allparts of the business can stay informed and connected.\n一 $67 \\%$ of respondents to our PEP survey agreed with the statement “l feel satisfied with the recognition or praise l receive for my work\", up from $65 \\%$ last year.\n一 The overall employee engagement score in our PEP survey remained high at 76 out of 100, the same as in 2021.\n一 The average training time per full time equivalent colleague was 10 hours.\n$- 8 1 \\%$ of colleagues who responded to our PEP survey agreed with the statement “l feel empowered to take ownership about my work\",an increase from $80 \\%$ in 2021.\n### Learnings\n一 We will continue to develop and implement the H&M Group Minimum Employment Standards globally in all our operations.\n- To respond quickly and efficiently to changing contexts around the world,and to meet our legal and operational requirements,we need to continue to align our internal processes,facilitate information flows and strengthen the global, connected approach to our business.\n$- 6 7 \\%$ of respondents to our PEP survey agreed “I have good opportunities to learn and grow\", up from $65 \\%$ in 2021.\n一 Employee engagement remains a priority and we are developing a strategy to improve the coordination of various internal initiatives across H&M Group.", "chunk_word_count": 433, "section_path": "H&MGroup > PPLYCI > Future focus", "document_id": "HM Group Sustainability Disclosure 2022", "page": 66, "page_start": 66, "page_end": 66 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 67, "chunk_text": "# H&MGroup\n## PPLYCI\n### Social impact in our production supply chain\nrisks.We defend democratically elected worker representation and encourage workers to know their rights.\n一 Our Global Framework Agreement (GFA) with trade unions IndustriALLand IF Metall facilitates social dialogue in our supply chain and promotes workplace rights.National Monitoring Committees $( { \\mathsf { N M C s } } ) ^ { 3 }$ manage the agreement's implementation in local markets.\n- Compensation, benefits & social protection: Everyone should receive fair pay for their work1 and we partner with suppliers to improve wages for workers,develop wage management systems in factories,and promote social protection frameworks that align with established international standards.Through collaboration with experts,industry peers,and governments, we endeavour to enhance compensation within our sector and across countries. Our Wage Strategy defines our pathway to improving workers' livelihoods.\nWe are committed to being a good partner to our suppliers and to respecting and advancing the rights of their workers.With our tier 1and 2 production supply chain alone spanning 34 countries and supporting more than 1.28 million workers,we have the opportunity to create positive impact for communities around the world.\nK\n- We are part of the Action, Collaboration, Transformation (ACT)agreement between IndustriALL and global brands,which aims to deliver living wages through responsible purchasing practices and collective bargaining at industry level.\nWe aim to ensure that human rights are respected and that social safeguards are in place across our production supply chain.We monitor risks and opportunities across our activities and prioritise actions that support the most vulnerable people in our value chain. These include migrant workers, refugees,workers in the informal sector,and particularly women within these groups.\n- Inclusion& diversity: We seek to embed inclusivity across our whole value chain by treating people fairly and giving everyone access to the same opportunities.To achieve these ambitions,we created a Gender Equality Strategy to promote and support women workers,² as well as a roadmap focusing on migrant workers and refugees. Read more in Inclusion & Diversity and our Modern Slavery Statement.\n一 We support the International Labour Organization's (ILO) Decent Work Agenda and work with decision makers to shape and enact progressive legislation. Read more about our public affairs work.\n-We are members of Better Work's Advisory Committee where we help shape the programme's strategic direction and partnerships, and discuss key developments in global supply chains and labour standards.\nWe focus on:\n- Health,safety & wellbeing: All workplaces should be safe and healthy environments.We work with our suppliers to assess workplace conditions and their workers'experience.We are a signatory to the International Accord for Health and Safety in the Textile and Garment Industry.\nWe engage with partners around the world to accelerate social progress across our supply chain:\n一 As a board member of the Sustainable Apparel Coalition,we are committed to increasing and harmonising data collection in factories and collating input from multiple stakeholders,as well as improving social conditions through the Social & Labor Convergence Project.\n一 As a member of Industry Summit,we collaborate with 13 other brands to exchange information and best practices on social and environmental issues such as gender equality, capability building, joint remediation and supplier audits.\n- Social dialogue: We support workers' freedom of association and expression.It is our view that continual workplace dialogue and engagement increase supply chain resilience and mitigate", "chunk_word_count": 549, "section_path": "H&MGroup > PPLYCI > Social impact in our production supply chain", "document_id": "HM Group Sustainability Disclosure 2022", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 68, "chunk_text": "# H&MGroup\n## PPLYCI\n### Social impact in our production supply chain\nWe continue to help suppliers navigate the ongoing effects of the Covid-19 pandemic. New legislation on responsible business practices is being introduced in various markets and we are working with suppliers to adapt our operations to these recent standards and norms.Beyond the pandemic,rapid inflation is a growing concern for fair wages globally and we are attentive to the need for functional wage management systems to protect workers' livelihoods.\n### Progress: social dialogue\n一 Our five1 NMCs in Bangladesh, Cambodia,India, Indonesia and Turkey cover more than 984,000 workers.Of the 34 issues raised with NMCs or other labour stakeholders in 2O22 and carried over from 2021,29 have been resolved (see table).\n### Jobs in a circular, net-zero fashion industry\n-We ran an industrial relations impact survey with our tier 1suppliers,to monitor workplace dialogue and evaluate grievance mechanisms, using the United Nations Global Reporting Framework. Our goal is to enable our suppliers to become more independent and define their own pathways to greater functionality.\nWe are committed to adopting a holistic approach to our value chain and delivering positive impact for people and the planet in the transition towards a circular, net-zero fashion industry.\n- The results identified several possible areas for improvement: better documentation of processes,including grievances and outcomes,and better information about routines,responsibilities and resources; increased inclusion of workers throughout disciplinary processes and grievance mechanism policies; and procedures that are grounded in human rights. These will shape our priorities for the coming years.\nBuilding on our learnings from the Keeping Workers in the Loop project with BSR, we are working on a new roadmap to secure holistic circular, climate and social impact in an evolving garment industry.", "chunk_word_count": 287, "section_path": "H&MGroup > PPLYCI > Social impact in our production supply chain", "document_id": "HM Group Sustainability Disclosure 2022", "page": 68, "page_start": 68, "page_end": 68 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 69, "chunk_text": "# H&MGroup\n## PPLYCI\n### Progress: health, safety & wellbeing\n- The International Accord for Health and Safety in the Textile and Garment Industry is now in place in Bangladesh and enforced by the Ready Made Garment Sustainability Council, with the aim that workers in the sector experience safe and healthy work environments.Following implementation in Bangladesh,we undertook a feasibility study to assess expansion into additional markets and have identified a number of countries where the scheme could be extended.In early 2023,we signed the new Pakistan Accord,which has an initial term of three years.\nWe have identified opportunities to leverage our transition from a linear economy to a circular, net-zero one and are committed to ensuring that this will be a just transition for people across our value chain. Our holistic circular and climate impact priorities include upskiling and reskilling initiatives,securing high quality jobs,and implementing responsible business practices across our value chain.\n- The results also highlighted where programmes have had a positive impact.For example, $9 5 \\%$ of facilities have grievance mechanisms that were created with worker representatives or trade union representatives. $91 \\%$ of facilities use dialogue as the means to address and resolve grievances.\n一 We started tracking health and safety governance in our supply chain: $98 \\%$ of tier 1 supplier factories have health and safety committees.\n一 Despite unionisation rates decreasing worldwide,particularly in our sector, rates in our factories have remained stable. $42 \\%$ of our tier 1 supplier factories have trade union representation and $34 \\%$ have collective bargaining agreements (CBAs) in place.\nthey can better deliver on the role once elected. \nWe aim to put these in place in the coming years.\n- Following NMC-led analysis of suppliers' CBAs, we used a benchmarking tool to compare the processes for setting up and managing CBAs to international labour standards,human rights protections and local laws.Results showed that while most reported CBAs are legitimate, they can be improved with supplemental gender-sensitive programmes and grievance mechanisms.These recommendations were shared with factory leaders and trade unions,who will lead on their implementation.Assessments were conducted across seven factories in Bangladesh,Turkey and India.We will include additional countries next year.\n一 As signatories to the ACT agreement, we support the negotiation of industrywide CBAs and believe these create better working conditions with higher wages and greater benefits for everyone. Together,we have progressed in our efforts to expand CBAs:\n- In Cambodia, the Textile,Apparel, Footwear and Travel Association in Cambodia (TAFTAC) 一 formerly GMAC- and the trade union IndustriALL have started negotiations on a CBA with wage-related elements.", "chunk_word_count": 424, "section_path": "H&MGroup > PPLYCI > Progress: health, safety & wellbeing", "document_id": "HM Group Sustainability Disclosure 2022", "page": 68, "page_start": 68, "page_end": 69 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 70, "chunk_text": "# H&MGroup\n## PPLYCI\n### Progress: health, safety & wellbeing\n- We are shifting our activities from workplace dialogue programmes towards more holistic strategies focused on positive outcomes. Previously,we primarily focused on ensuring democratic elections of worker representatives. We now recognise the additional need to provide training and upskilling to representatives so that -Workers are aware of the processes in place for grievance handling in $9 8 \\%$ of in-scope tier 1 supplier factories,and $9 5 \\%$ of factories have grievance mechanisms created through social dialogue between unions or worker representative structures and management. In $7 5 \\%$ of factories,management reported reviewing grievances submitted and doing root cause analysis of issues raised 一 ensuring the mechanism is a source of continual learning.2 一 We began the process of setting up an NMC in Pakistan and continued to invest in increasing NMC capacity and scale.\n- In Turkey,ACT member brands have drafted an approach to facilitating a multi-employer CBA negotiation process.\n- The ACT purchasing practices survey has shifted to a two-year cycle so we will provide an update on our performance in next year's report. This year, our anonymous supplier survey (run internally by H&M Group) showed that $8 9 . 3 \\%$ of suppliers regard H&M Group as a fair business partner.\n### Progress: compensation, benefits & social protection\n$- 8 7 \\%$ of our tier 1supplier factories have digital payment solutions for their workers.\n- We made more than $9 9 \\%$ of our payments to suppliers on time. On average suppliers get paid in around 15 days after invoicing and delivery of goods. This is partly a result of a favourable factoring arrangement negotiated by H&M Group on behalf of our suppliers.We continued to itemise labour costs for our orders by dividing production costs into different costing blocks such as material,labour and product treatments, like printing or washing.This costing calculation improves the visibility of labour costs and allows improved wages to be reflected in the prices we pay to our suppliers.More than $9 9 \\%$ of our appare orders are processed in this manner.1\n-We took action to bolster social dialogue in our supply chain:\n- We reviewed case handling routines and minimum requirement routines 一 read more in Supply Chain Management.Working with H&M Group NMC members,we reiterated expectations and revised case handling procedures,including documentation and follow-through.All relevant data,such as number of cases and case resolutions,informs our risk management decisions and is included in quarterly reporting mechanisms.\n- Seven colleagues participated in negotiation and mediation courses run by ILO and we have piloted an internal training programme on negotiation that is due to be rolled out more widely.\n- We continued to enrol suppliers in our programme supporting implementation of factory-level wage management systems and focused our efforts on increasing functionality. In 2022,41 additional factories joined the programme to improve wage levels and 42 units put in place a wage grid.\n- 66 colleagues participated in training to improve case handling processes and experience.", "chunk_word_count": 497, "section_path": "H&MGroup > PPLYCI > Progress: health, safety & wellbeing", "document_id": "HM Group Sustainability Disclosure 2022", "page": 69, "page_start": 69, "page_end": 70 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 71, "chunk_text": "# H&MGroup\n## NATURE SUPPLY CHAIN\n- In response to last year's ACT-facilitated self-assessment on purchasing practices, we implemented the first of five purchasing practices trainings for buying and planning functions across our brands.498 colleagues in relevant roles1 completed training module 1,which covers H&M Group's role and commitments as a member of ACT as well as our responsibilities in improving working conditions across our supply chain. Four subsequent modules are being prepared for rollout,with more focus on supplier relations 一 for example costing and planning,and payment terms.\n- The Stockholm School of Economics and Ernst & Young completed two separate studies on wage formation in India,commissioned by H&M Group.The studies found the local legislative and business environment was not conducive to driving minimum wage increases, and recommended H&M Group work with stakeholders to explore new platforms for collaboration and different pathways to facilitate wage improvements.\n- The Bangladesh government launched a pilot to ensure workers in the garment sector and their families receive income in the case of permanent disability or death linked to work accidents or diseases.We collaborated with ILO and GlZ on creation of the employment injury scheme and are one of seven brands that have committed to financing it for up to five years.We'll continue to encourage industry members to join the scheme and are monitoring the development of the associated legislation to ensure it promotes decent working conditions and rights.\nhired a provider to evaluate our NMCs, using an assessment that was co-created by all Framework parties,and will use the findings to strengthen workplace dialogue and case handling. This will be supported by ongoing annual reviews and improvements.\n一 As part of our ongoing effort to increase transparency,we added two countries 一 Pakistan and Vietnam 一 to our detailed wage data reporting and continue to gather and report yearon-year wage and worker representation data in this report and on our website.\n一 We improved our approach to exiting supplier relationships,following guidance in the ACT Responsible Exit Policy to minimise a termination's negative impact. This policy provides guidance on recommended steps,such as conducting a worker impact assessment, creating an exit plan in close dialogue with the supplier,and informing all stakeholders of plans,particularly trade unions or other labour organisations.We monitor and communicate developments and impact throughout the whole process,which can take up to 18 months.\n- To encourage self-led learning, we've created an information platform with resources such as e-modules,videos and case studies,on topics such as wage issues,the gender pay gap,genderbased violence and our ways of working. This freely accessible platform enables us to promote our values to harder-to-reach audiences within our supplier base.\n- We worked with wages expert Professor Raymond Robertson to update and improve our supplier wage survey² and further understand the skill and compensation levels of all workers. We expanded the scope of the survey to include suppliers in Pakistan,Vietnam, Cambodia and Europe,covering more than 1,300 production units.Initial findings indicate a statistically significant pay gap between men and women in most of our production countries.This seems to be driven primarily by the skill gap between genders,as men tend to be more skilled and hence benefit from higher wages. The findings from this research willinform our upcoming strategy to address our supply chain gender pay gap.", "chunk_word_count": 541, "section_path": "H&MGroup > NATURE SUPPLY CHAIN", "document_id": "HM Group Sustainability Disclosure 2022", "page": 71, "page_start": 71, "page_end": 71 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 72, "chunk_text": "# H&MGroup\n## NATURE SUPPLY CHAIN\n### Learnings\n一 We aim to further leverage our data collection to gauge wage management system and workplace dialogue programme functionality and impact, not just their existence.This approach will require industrywide support and involvement.\n一 Our supply chain workforce has an important role to play in our transition from a linear to circular economy.We will take account of the priorities identified by our research so far,as we develop our roadmap to secure holistic circular, climate and social impact.\n一 We updated our supplier Sustainability Index with a new wage KPl, directly linking supplier performance on worker wages to future business opportunities with us.\n### Future focus\n- We willfocus on improving NMC functionality as part of our Global Framework Agreement with trade unions IndustriALL and IF Metall.We've\n### Bangladesh\nThe number of tier1supplier workers increased in the first half of the year,as markets returned to pre-Covid levels.There was a minor decrease in business volume during the third quarter,as the Bangladesh garment industry saw the impact of global economic instability. As a consequence, supplier employment numbers decreased slightly due to shrinking labour demand.\n### Detailed wage & worker data for 20221\nAverage wages in Bangladesh increased compared to 2021,with minor fluctuations throughout the first nine months of the year. Peaks occurred in April and June,related to festival bonuses provided in line with national holidays and included in payments for these respective months.These bonuses were included in the months of May and July in 2021.\nIn 2022,we continued to monitor the wages paid to workers by our suppliers'factories.In this section,we present this data for the first nine months of the calendar year.\nOur commitment is to contribute to the full enforcement of statutory minimum wages and the wage levels agreed through collective bargaining, while at the same time supporting an increase of wages over time.Alongside average wage data, we present available data about the number of workers employed in suppliers' factories for the first nine months of the year.\nWe share data for nine months rather than the full year as we collect the data directly from suppliers and the most recent data is in the process of being verified at the time of reporting.This year, we added Pakistan and Vietnam to our detailed wage and worker data reporting.\n### Cambodia\non 1 January 2022.Wages spiked in June due to eligible workers receiving half-year seniority indemnity payment.", "chunk_word_count": 401, "section_path": "H&MGroup > NATURE SUPPLY CHAIN > Learnings", "document_id": "HM Group Sustainability Disclosure 2022", "page": 71, "page_start": 71, "page_end": 73 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 73, "chunk_text": "# H&MGroup\n## NATURE SUPPLY CHAIN\n### Mainland China\nSimilarly, the number of workers at mainland China tier 1 suppliers rose consistently during the period. Overall worker numbers were higher compared to 2021,with total employment levels showing fluctuations dependent on business patterns.\nSupplier operations in Cambodia continued their recovery from the aftermath of the Covid-19 pandemic and saw a growing gross average wage for the first nine months of 2022 compared to the same time in 2021.There was no Covid-related suspension to factory production,and as a result wage levels and production hours remained consistent.The statutory minimum wage in Cambodia was increased by the Government\nIn 2022,average gross wages in mainland China showed a positive trend,except for a dip in worked hours and wages in February as a result of the annual Chinese New Year Holiday,which is consistent with previous years. Despite the social and economic effects of the Covid-19 motivated partial lockdowns during parts of the year, gross wages were marginally higher than that in 2021.\nThe number of tier 1supplier workers recovered since 2021,and were on par with the previous year during the first six months of 2022.The third quarter,however,sawa moderate decrease in the number of workers,as product demands adjusted due to inflation and geopolitical challenges,and began to be felt by suppliers.\n### Average number of workers (thousands)\nATSUPPLIER FACTORIES IN CAMBODIA FOR THE FIRST NINE MONTHS OF 2022, COMPARED TO 2021\nAT SUPPLIER FACTORIES IN MAINLAND CHINA FORTHE FIRST NINE MONTHS OF2022， COMPARED TO 2021", "chunk_word_count": 247, "section_path": "H&MGroup > NATURE SUPPLY CHAIN > Mainland China", "document_id": "HM Group Sustainability Disclosure 2022", "page": 73, "page_start": 73, "page_end": 73 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 74, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Gross average wages (KHR, thousands)\n### Gross average wages (CNY)\nATSUPPLIERFACTORIES INCAMBODIA FOR THE FIRST NINE MONTHS OF 2022\nATSUPPLIER FACTORIES IN MAINLAND CHINA FOR THE FIRST NINE MONTHS OF 2022\nAverage gross wage (2021) Average minimum wage (2022)\nImproved conditions also contributed to higher employment levels.The number of tier 1 supplier workers remained stable during the first nine months of 2022,after workforce numbers that had been impacted by the pandemic showed recovery at the beginning of the year. Re-employment was further supported by the Central Government of India's decision to extend its financial support in order to generate new formal employment for people who had lost their jobs during the Covid-19 pandemic.\n### Indonesia\nCompared to 2021, the average number of workers increased significantly over the reporting period.The last two months,however, saw a slight decrease in employment numbers due to lower demands throughout the industry causing a slowdown in worker recruitment.\n### India\nIndia's recovery from the impacts of Covid-19 continued and average monthly wages were consistently higher than the equivalent reporting period in 2021.There were Covid-19 associated disruptions between the end of March and mid-May in 2021,whereas suppliers saw consistent and improved levels of worked hours and renumeration during the first nine months of 2022.In addition,the national minimum wage was revised by the Indian Government in 2022,with a general average increase of $5 \\%$ ·\nThe minimum wage in Indonesia was increased by $1 . 0 9 \\%$ from 01 January 2022,with district and city wages calculated using formulas based on the national revision. Average wages among suppliers rose slightly compared to 2021. April saw a significant peak in workers' pay,due to the mandatory Eid festival bonus pay out.\n### Myanmar\ncountry's economy一with implications for businesses and workers in the country. The minimum wage has not been adjusted since 2018.\n### Pakistan\nAn overallincrease can be seen in the total number of workers for the period in 2022 compared to 2021,with a small monthly variation. The trend in decreasing numbers of workers in quarter three was mainly caused by suppliers experiencing a decline in demand followed the global economic downturn.\nProduction in Myanmar in 2022 experienced a limited impact from Covid-19,with improved wage levels and increased production hours as a result. The number of tier 1supplier workers recovered from the previous year, with workforce numbers totalling well beyond 2021levels.\nFor the first nine months of 2022,year-on-year gross average wages increased,as the industry bounced back from the Covid-19 pandemic. This increase was most significant following the revision of the statutory minimum wage across Pakistan,which was raised to PKR 25,000.A minor dip in average wages was recorded in May as a result of Eid celebration and harvest activities, which decreased workers'attendance and declined production (a trend observed every year).\nControl measures on exchange rates were imposed in May 2022,but currency depreciation and inflation remain major challenges for the\n### Average number of workers (thousands)\nAT SUPPLIER FACTORIES IN MYANMAR FOR THE FIRST NINE MONTHS OF 2022, COMPARED TO 2021", "chunk_word_count": 505, "section_path": "H&MGroup > 2022 \n2021", "document_id": "HM Group Sustainability Disclosure 2022", "page": 73, "page_start": 73, "page_end": 75 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 75, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Gross average wages (MMK, thousands)\nAT SUPPLIER FACTORIES IN MYANMAR FOR THE FIRST NINE MONTHS OF 2022\nAverage gross wage (2021) Average minimum wage (2022)\n1) Minimum wage in Myanmar is on a per day basisat 4,8ooKyatt.Asaresult,the monthly average will vary.\n2021\n### Turkey\nDespite the economic challenges,employment levels remained consistent with pre-pandemic levels during the reporting period, with a significantly higher average than during 2O21. Due to the current economic outlook, however, there is a trend of decreasing worker numbers during quarter three.\n2021\n### Vietnam\nIn 2022, Turkey experienced a difficult economic period,with inflation rates of around $80 \\%$ ， reduced currency rates and an export sector heavily affected by the Russian attack on Ukraine. Because of the devaluation of the lira, the Turkish Government decided to increase the statutory minimum wage twice during the year, by $40 \\%$ in January 2022 (not visible in the graph)and by an additional $2 9 . 3 \\%$ in July. Consequently, wage trends in the country were directly affected.\nVietnam recorded similar year-on-year patterns of average wages among suppliers during the nine months reported,but with slightly higher numbers in 2022.The Covid-19 pandemic and related lockdowns that impacted the industry in previous years did not recur. Wage levels in June and July 2021were inflated by Covid-19 related subsidies to maintain operations during local lockdowns - these subsidies have since been stopped, with wages returning to normal levels as a result. Statutory minimum wage covering four regional minimum wages regulated by the government increased by approximately $6 \\%$ in July 2022. The increase varied depending on the living expenses in respective regions. There was a slight decrease in wages in February as a result of the Tet holiday,which decreased workers'attendance (a trend observed every year).\nThere was a downward trend in the number of workers during the year. This was mainly due to factories facing hiring challenges in an effort to mitigate worker changes due to a severe worker shortage in the Vietnamese labour market.\n2021\n### Inclusion & diversity\n- Our male to female staff ratio is $2 5 \\% : 7 5 \\%$ .We recognise gender is not binary and that gender dimensions exist between and beyond male and female identities.We are exploring how we can adapt our systems to be more inclusive of all genders,while also complying with local laws and regulations.In the meantime,we will continue to report on the data we currently have available.", "chunk_word_count": 411, "section_path": "H&MGroup > 2022 \n2021 > Gross average wages (MMK, thousands)", "document_id": "HM Group Sustainability Disclosure 2022", "page": 75, "page_start": 75, "page_end": 77 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 76, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### - Supply chain inclusion and diversity:\nSupporting and encouraging our suppliers to take ownership of and drive progress on gender equality and other inclusion and diversity issues.\n- Transparency: Sharing our goals, strategies and progress widely and being accountable for our actions and their impact.\nGrowing disparities around the world continue to drive unequal access to opportunities.We address these challenges by actively working to increase inclusivity and embed inclusion and diversity(l&D)in our culture,operations and communities.We seek to leverage diversity as a driver of business growth and an enabler of human rights and equity across our value chain. By 2025,we aim for our workplaces to be more inclusive and diverse,to leverage our diversity for greater success,and to use our business to advance inclusion in our communities.\nDetails of our commitments can be found in our H&M Group Human Rights Policy,Sustainability Commitment and global social policies.\n- Our Colleague Resource Groups Council (an evolution of the Colleague Peer Forum) is a new groupwide platform that provides a framework for engagement on l&D issues.We aim to strengthen internal dialogue on l&D with input from colleague-led groups,focusing on enhanced cooperation and collaboration to foster diverse and inclusive workplaces.In 2022, the Council defined its short-and long-term ambitions and held two meetings.\n2021\n### Progress: internal diversity & equality\n一 Our new global l&D dashboard tracks key indicators,which help us identify relevant actions and set local targets to monitor our progress.Local initiatives can include training completion rates,gender pay assessments,talent acquisition processes,and increasing equitable representation within the workforce across gender,age and ethnicity or nationality.\n2021\n### Our strategy focuses on:\n一 We continue to run our LEAD (Learn, Educate,Accelerate, Develop) programme in the US to help store managers from historically underrepresented populations access leadership positions.The initiative includes mentoring, leadership training and peer networking.In 2022, 27 colleagues participated in the programme, up from 20 in 2021.\n- Internal diversity and equality: Identifying and implementing best practices一 such as frameworks,trainings,assessments and initiatives on inclusion,diversity,equality and equity 一 to nurture diversity and grow an inclusive culture.\n- Our colleagues represent 174 nationalities, with leaders who manage people representing 96 nationalities.1", "chunk_word_count": 356, "section_path": "H&MGroup > 2022 \n2021 > - Supply chain inclusion and diversity:", "document_id": "HM Group Sustainability Disclosure 2022", "page": 77, "page_start": 77, "page_end": 77 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 77, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### -Promoting diversity and equality:\nContributing to just and equal societies by engaging with peers,being vocal about our work and learnings,and demonstrating our values through products and communications.\n- Our workforce spans across several generations: Generation Z: $2 5 . 7 \\%$ ; Millennials: $6 1 . 2 \\%$ ; Generation X: 11 $. 4 \\%$ : and Baby Boomers: $1 . 7 \\%$ 1\n$- \\ln 2 0 2 2 , 7 5 \\%$ of management positions were held by female colleagues (2021: $7 1 \\%$ and our board of directors had a $5 5 \\% : 4 5 \\%$ (female:male) gender split,² the same as in 2021.\n-Inclusion: Fostering open,safe,and tolerant societies by supporting vulnerable populations and promoting equal opportunities.\n一 In the US,we are asking our colleagues for voluntary and anonymous input on selfidentification preferences.The purpose is to support our culture of inclusion,increase awareness and allyship,unlock diverse perspectives,and to measure and track our progress on l&D goals.In our annual People Engagement Pulses H&M Group colleague survey, $84 \\%$ of respondents agreed with the statement\n“l am treated with respect and dignity” $83 \\%$ in 2021)and $76 \\%$ agreed with the statement “Diverse perspectives are valued at H&M Group\" $( 7 4 \\%$ in 2021.\nwhich will enable organisations to identify gaps within their operations.\n一 We observe growing restrictions to human rights,particularly LGBTQlA+ and women's rights,in certain markets.We are monitoring and identifying potential opportunities to create fairer outcomes at local levels.\n-We developed a framework to embed l&D trainings into our wider learning and development offering. The comprehensive programmes are tailored to colleagues' individual roles,covering topics such as unconscious bias and mindful representations of cultures.This year,we rolled out Beyond the Binaries 一 a learning experience on LGBTQlA+ history and rights 一and are assessing the need for additional leadership training.", "chunk_word_count": 307, "section_path": "H&MGroup > 2022 \n2021 > -Promoting diversity and equality:", "document_id": "HM Group Sustainability Disclosure 2022", "page": 77, "page_start": 77, "page_end": 78 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 78, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Progress: promote diversity & equality\n一 Our ongoing partnership with the Unstereotype Alliance (UA) works to address stereotypes in marketing,through trainings and evaluation.An internal working group enables colleagues from all our brands to exchange views on challenges and partake in the UA masterclass on different perspectives.\n一 Colleagues in the US can request financial support from our internal One Team Fund when they face natural disasters or personal hardships, such as accessing out-of-state abortion care.We continue to monitor access to safe abortion in the country and are regularly assessing the need for additional actions.\n一 Our new H&M Move brand is designed to celebrate movement and remove barriers to sport for all body types.\n一 Our brands also led a variety of LGBTQlA+ celebrations.Monki partnered with Polyester Zine to run the $2 ^ { \\mathsf { n d } }$ edition of the Queer Creative Fund. & Other Stories invited five local LGBTQlA+artists to exhibit their work in five stores and donated to UN Human Rights' Free & Equal campaign calling for LGBTQlA+ equality.Weekday hosted queer art magazine Container Love's #VisibleLove exhibition in selected stores across Europe.\n- We joined the World Economic Forum's (WEF) Global Parity Alliance to contribute to accelerating progress on diversity,inclusion and equity by highlighting and spreading best practice.\n一 We maintained our engagement in the WEF Alliance on Racial Justice.In 2022 the initiative finalised a racial equity self-assessment tool 一 Our brands continued to promote diversity and equality.H&M HOME collaborated with Special Needs Empowerment Hub (SNEH) to empower women in India to earn their own income by learning a craft.Since 2021,Monki has been working with Body Dismorphic Disorder Foundation (BDDF) to raise awareness and call for greater transparency on altered images in social media.\n一 We began trialling new approaches to better cater to our non-binary customers and improve their in-store experience.In Germany,we piloted a gender-fluid shopping experience to respond to customers'demands for greater representation and inclusive collections.The project included consulting our H&M club members,creating gender-free merchandising,and curating assortments.\n一H&M South Africa and Clothes to Good's(CTG) micro-business programme to lift women out of poverty is supporting 108 women,just over half of whom are mothers with disabled children. Through CTG,we have employed six people with disabilities in our distribution centre in Johannesburg.\n一 H&M US continues to support Buy From a Black Woman(BFABW),a US charity empowering Black women business owners.This year, H&M used its channels and stores to highlight Black women-owned businesses,provided a donation to BFABW,and sponsored their accelerator programme to help the businesses grow. The brand also covered costs for colleagues to join the BFABW online directory and network.", "chunk_word_count": 440, "section_path": "H&MGroup > 2022 \n2021 > Progress: promote diversity & equality", "document_id": "HM Group Sustainability Disclosure 2022", "page": 78, "page_start": 78, "page_end": 79 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 79, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Progress: inclusion\n一 We continued working with the TENT Partnership for Refugees on their initiative to help women refugees in Europe access employment opportunities through professional mentoring. Currently we are offering this mentorship opportunity to colleagues in Germany and Italy and we have run a small pilot in Sweden.Six refugees have started the programme in Germany with four and two refugees completing the programme in Italy and Sweden respectively.The roll-out of the initiative in the Netherlands has been delayed.\n- We surpassed our goal of doubling the number of factories involved in our refugee initiative in Turkey.We initially planned to scale from 2O to 40 factories and now have 58 participating factories. We have identified several factors that make it difficult for suppliers to commit to the scheme, such as the pandemic's aftermath and ongoing political tensions.This is likely to limit the number of refugees supported by this initiative and may hinder our success in reaching our objective of 2,000 refugees employed cumulatively by 2025. 750 refugees have been employed in our supply chain in Turkey since the start of this initiative in 2016.\n一 Almost 3,400 workers and 1,200 managers and supervisors across 386 factories participated in various gender equality related trainings and activities.\n一 Activities and trainings on preventing sexual harassment and gender-based violence have in 2022 alone reached more than 414,Oo0 workers.", "chunk_word_count": 231, "section_path": "H&MGroup > 2022 \n2021 > Progress: inclusion", "document_id": "HM Group Sustainability Disclosure 2022", "page": 79, "page_start": 79, "page_end": 79 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 80, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Progress: supply chain inclusion & diversity\n一We rolled out our Women's Career and Development programme to cover 36 production units in Turkey.The scheme aims to increase the number of female supervisors and in 2022,the share of female supervisors,in these production units in Turkey, grew from $2 7 \\%$ to $46 \\%$\nWe're improving our approach to preventing, detecting and handling cases of gender-based violence and sexual harassment (GBVH) in our supply chain.Together with Jane Pillinger (Ph.D), a global expert on gender equality and genderbased violence at work,we conducted trainings and workshops for our employees with social sustainability roles in our production supply chain - to raise awareness and provide supporting tools for suppliers to prevent GBVH and handle grievances.\n- In response to the war in Ukraine, colleagues from neighbouring countries donated stock, funds,personalitems,food and hygiene products for refugees.Stores have partnered with local organisations to raise awareness and facilitate refugee integration,in addition to supporting Ukraine-based associations. H&M Group worked with the International Organization for Migration (IOM) to enable the safe hiring of refugees from the country and are encouraging suppliers to employ refugees by sharing information and support.\n一 Building on the training of H&M Group colleagues,we are creating a guideline together with IndustriAll and Jane Pilinger to help suppliers detect, prevent and manage GBVH cases.This will be rolled out to suppliers during 2023. Our joint work is reported as good practice in the Global Deal(OECD/ILO) Flagship Report 2022.\n一 We are working with UN Women India to prevent gender-based violence and harassment (GBVH) in the state of Tamil Nadu.Together with local and global partners,we aim to identify and implement locally owned safety solutions for women and address GBVH at the community level.\nSUPPL CHAIN MANAGEMENT HOWWEREPORT -& Other Stories also used the H&M Group strategy to define its own Gender Equality Strategy, including goals and performance metrics,and has communicated these to its tier 1 suppliers.It is the best performing brand on the proportion of female supervisors in its supply chain, with $56 \\%$ of female supervisors,compared to $3 9 \\%$ across the group.\n一 Our health and wellbeing project in Indonesia continues to empower women in our supply chain through trainings on wealth,reproductive health, malnutrition and gender-based violence.Working together with the United Nations Population Fund (UNFPA), we reached 2,200 workers and enrolled 7 production units in 2022.The programme has engaged 47,200 workers since 2019.\nto workers' needs and have broadened the scope to include gender equality.105 workers,84 managers and supervisors,and 21 factories were engaged in 2022.\n一We strengthened our approach to addressing the gender pay and skill gap in the supply chain and have hired wages expert Professor Raymond Robertson to advise us.For more information, see Social Impact in our Production Supply Chain.\n一 COS defined and published its own Gender Equality Strategy,based on the H&M Group production supply chain Gender Equality Strategy.\nsocietal diversity,others implement restrictive laws and limit pluralism.In some markets,legal constraints can reduce our ability to roll out trainings and ensure that all can benefit from our commitment to I&D.We are constantly exploring how we can best contribute to public dialogue on these issues and help influence policies and attitudes in accordance with our values.\ncollective change as well as meet stakeholder expectations.", "chunk_word_count": 543, "section_path": "H&MGroup > 2022 \n2021 > Progress: supply chain inclusion & diversity", "document_id": "HM Group Sustainability Disclosure 2022", "page": 79, "page_start": 79, "page_end": 80 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 81, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Progress: transparency\n- We provided data and information to the 2022 Bloomberg Gender-Equality Index,which aims to bring transparency to gender-related practices by providing stakeholders with more in-depth data on policies,processes and actions.\n- We will explore how we can advance supplier and business partner diversity.We want to encourage our partners to recognise inclusion and diversity as core business strengths and to embrace strategies that embed them in their operations.\n- We rolled out our l&D dashboard across our operations.This tool will support and guide local decision-making and priorities going forward.\n一 Hybrid and digital working during the pandemic opened up the potential for more diversity, while returning to the office strengthens our culture and relationships.We are keen to continue leveraging both ways of working to remove practical barriers and strengthen internal diversity.\n- Following our implementation of processes that more systematically gather,aggregate and analyse data through our l&D Insights Dashboard, we will continue to explore how to use this datadriven approach to improve l&D.\n- We started working with UNICEF and 13 suppliers in Bangladesh to upgrade the childcare facilities for the workers'children.\n2021\n### Learnings\n一We have a clear ambition for inclusion and diversity across the H&M Group. Our current challenge lies in the need for continuous implementation and the provision of support to markets and functions with different levels of maturity and expertise.\n一 We partnered with Better Work and USAID Mitra Kunci to enrol more workers with disabilities in our suppliers' factories in Indonesia.In 2022, 525 workers with a disability were hired and we enrolled five additional supplier factories in the project.\n2021\n### Future focus\n- To promote women's empowerment among suppliers,we now score suppliers on three dimensions: ratio of women employed,ratio of women supervisors,and gender pay gap.We believe this will encourage suppliers to focus on gender equality and deliver progress.\n一 To further increase transparency,we will share more information on our l&D efforts,results and learnings.We aim to participate in additional rankings and benchmarks and engage with more peer groups to accelerate organisational and\n一 In an increasingly polarised world,we see varying acceptance of our inclusion and diversity values.As some countries broaden rights and\n一 In Bangladesh,we've tailored GEAR project trainings on female leadership to better respond\n2021\n### Community engagement\n2021\n### Learnings\n2021\n### Future focus\n一 Boosting employee involvement in the local community is important for employee satisfaction: our employees engaged in My Store showed $5 \\%$ higher People Engagement Pulses (PEP)survey scores than those not involved.2\n一 We will continue to expand My Store to create positive change at a local level.\nWe have an opportunity to support and champion people beyond our value chain,especially in times of global uncertainty, conflict and environmental crises. Our objective is to empower communities to create positive change for people and the planet.", "chunk_word_count": 473, "section_path": "H&MGroup > 2022 \n2021 > Progress: transparency", "document_id": "HM Group Sustainability Disclosure 2022", "page": 80, "page_start": 80, "page_end": 81 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 82, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Progress\n一 Our social community initiatives will continue to focus on l&D,and our environmental community activities on climate and nature.We aim to provide continuous support as well as ad hoc relief when disasters occur.\n- We contributed SEK 114.2 million1 to community investment initiatives, reaching 745,517 beneficiaries.\n一 Our community engagement programme My Store expanded,engaging customers and colleagues on local sustainability issues.Now all countries in the Central Europe region within the H&M brand are participating,in addition to Spain and India, with $80 \\%$ of the initiatives focusing on l&D in underprivileged groups.207 stores currently participate.\nWe engage in the communities outside our value chain where we and our suppliers operate, supporting marginalised,underprivileged and vulnerable groups of people as well as initiatives with a focus on climate and nature.Read more about how we work with communities connected to our value chain through our work on inclusion & diversity(l&D), human rights,social impact in our production supply chain, water and biodiversity.\n一 Following the start of the war in Ukraine, H&M Group split a EUR 1.5 million donation equally to our long-standing partners UNlCEF and UNHCR. We also donated 150,836 garments to UNHCR. Our customers donated SEK 10,972,927 in stores and online,in collaboration with our payment service provider ADYEN.Due to large demand in other regions of the world,we also donated 190,513 pieces of clothing to UNHCR for people in South Sudan.\nOur contributions include donations,paid employee volunteering,and partnerships with NGOs such as WWF,the TENT Partnership for Refugees,the United Nations Children's Fund (UNICEF), the United Nations High Commissioner for Refugees (UNHCR) and many more. To accelerate our efforts,we partner with Business for Societal Impact (B4Sl), the global standard in measuring and managing social impact.\n- COS launched a programme that pays up to eight hours of volunteering time annually for colleagues working over 20 hours a week.\n2021\n### Supply chain management\nWe're committed to raising the standards in our industry by working with our suppliers to improve environmental and social performance.We choose suppliers who share our values,building long-term partnerships.\n- Capacity building: Support for suppliers to identify priority areas and set goals.", "chunk_word_count": 355, "section_path": "H&MGroup > 2022 \n2021 > Progress", "document_id": "HM Group Sustainability Disclosure 2022", "page": 81, "page_start": 81, "page_end": 82 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 83, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Defining our supply chain\nWe have historically focused largely on our production supply chain as this is where we have the biggest impact. We are increasingly working more closely with our other supply chains, taking the same systematic approach to identifying the most significant risks to human rights and addressing them through partnership and continuous improvement. Read more about our progress in safeguarding human rights with wider supply chains.\n-Grievance mechanisms and worker voice: Ensuring opportunities for workers to report concerns and have their voices heard.\nWe often use the term“supply chain”to talk about all the suppliers that contribute to our business.We actually work with several different supply chains, including our:\nOur work is focused on our production supply chain,where we have the biggest impact,and we require al our suppliers and business partners to comply with our Sustainability Commitment and Code of Ethics.We work with suppliers to go beyond the minimum legal requirements,with the aim to create lasting social and environmental change throughout our supply chain.\n-Dealing with incidents: Recording and investigating potential incidents. Issuing a letter of concern and requiring a corrective action plan for all non-compliance cases,and engaging with suppliers on remediation actions 一 for example changes to policies and processes,training,and other relevant actions.\n- Production supply chain: Suppliers that contribute to making the apparel, footwear, homeware and beauty products we sell through our brands.\nOur supply chain also has different levels or \"tiers\"that materials pass through during production. We group suppliers into tiers based on their role in production.Sometimes there is overlap between the tiers, where multiple suppliers can be involved in the same production stage. We work most closely with tier 1 and 2 suppliers:\n-External brands: The supply chains of external brands sold through our sales channels.\nWe gauge compliance and performance using our Sustainable Impact Partnership Programme (SIPP). Through SIPP we ensure all suppliers meet our minimum requirements,and we support our tier 1and 2 suppliers to raise standards and take ownership of their sustainability goals.SIPP includes:", "chunk_word_count": 338, "section_path": "H&MGroup > 2022 \n2021 > Defining our supply chain", "document_id": "HM Group Sustainability Disclosure 2022", "page": 82, "page_start": 82, "page_end": 82 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 84, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Progress: supplier relationships\n- Non-commercial goods (NCG) production supply chain: Suppliers that produce goods we use in our stores or marketing materials, such as tables, hangers, mannequins, etc.\n一 Our updated minimum requirements now prevent onboarding of new suppliers who use coal boilers,alongside other updates to ensure alignment with FEM& FSLM.We have also committed to phase out suppliers who allow recruitment fees for migrant workers by 2025.\n- Services supply chain: Suppliers that provide services such as landlords, cleaning, construction, warehouse operations and transportation.\n- Tier 1: Includes manufacturing suppliers and subcontracted factories, who make products by cutting,sewing and processing.\n-Minimum requirements: Assessment of all new suppliers,with ongoing follow-up checks.\n一 To extend our supply chain management approach we continued trialling the extension of Higg Index coverage to our tier 2 production suppliers.\n- Tier 2: Primarily suppliers who provide the fabrics, yarns and trims for products, including spinning, tanning, weaving,fabric dyeing and printing factories.\n- Self-assessment and verification: Selfassessment using industrywide tools including the Sustainable Apparel Coalition's (SAC) Higg Facility Environmental Module(FEM)and Higg Facility Social and Labor Module(FSLM), verified by a third party.\n- Other supply chains & business partners: Such as administration, business services, procurement and communication and marketing services.\n一 Read about our 2022 work to support human rights across our supply chains.\nRead more about our supplier tiers.\n2021\n### Our supply chain management ecosystem\n2021\n### Country / community level\n2021\n### Progress: industry tools & standards\n- The average FEM score across participating supplier factories was 64 out of 10O.We plan to use the FSLM industry scoring tool when it is ready.\n一We continued contributing to the development of the Social & Labour Convergence Program (SLCP) tool一 the assessment tool for FSLM.As an FSLM strategic council member, we provided ongoing input on development of a new SLCP assessment tool and a common scoring system for Higg FSLM.We are advocating for a move towards impact-based scoring rather than compliance checks.\n- 111 suppliers reported minimum requirement non-compliances across tier 1(88)and 2(23) suppliers, leading to:\n- 128 minimum requirement non-compliance cases —72 for social,12 for environmental, and 25 for business practice issues.\n- 57 letters of concern issued as part of our process to resolve human rights and environmental issues (see table on page 85).\n- The SAC temporarily paused the Higg Index Transparency Program for further review due to external criticism.Read more about our work to progress industrywide transparency.\n- 4 terminations of business relationships with suppliers due to minimum requirement noncompliance issues.\n2021\n### Progress: supplier assessment & performance\n- Investigated incidents of potential noncompliance with the Code of Ethics resulted in one written warning to a business partner.1\n-We continued a mix of onsite and offsite assessments and verifications for SIPP, Higg FEM and Higg FSLM,in line with local Covid-19 restrictions.See table forFEMand FSLM participation and verification results.\n一 $100 \\%$ of tier 1supplier factories and $100 \\%$ of tier 2 dyeing and printing factories implemented SIPP. $100 \\%$ of NCG suppliers and $100 \\%$ of their factories implemented SIPP.", "chunk_word_count": 513, "section_path": "H&MGroup > 2022 \n2021 > Progress: supplier relationships", "document_id": "HM Group Sustainability Disclosure 2022", "page": 82, "page_start": 82, "page_end": 84 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 85, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Learnings\n2023. This will include supplementing our current data with worker voice data to fully assess grievance mechanism functionality in line with the UN Guiding Principles.We will also increase the visibility of the data we gather on grievances and use this information to connect performance on grievance mechanisms with other social progress indicators 一 such as inclusion and diversity, health and safety,and wages.\n一 Developing industry tools and standards based on impacts rather than compliance checks will require work to fill gaps in data and increase visibility of issues on the ground.We are committed to working with our suppliers to improve the quality and reliability of the data we collect. We do,however, face some challenges such as accuracy of third-party data verifications, and we continue to give constant feedback to verification oversight organisations to address discrepancies, which should help us improve data quality for industry tools.Further improvements are likely to involve expanding the channels through which we gather data and compliance information,including working more with external auditors and using complementary tools such as grievance mechanisms.\n2021\n### Remediation in action\nIn 2022, the Bangladesh Garment and Industrial Workers Federation (BGIWF) raised allegations relating to one of our tier 1 supplier factories —including long-running issues with the formation of a union and the government registration process for workers at the factory.\n2021\n### Future focus\n一 We will continue to improve our Sustainability Index to better reflect and reward the sustainability performance of our suppliers.\nIntervention by our National Monitoring Committee led to a memorandum of understanding between BGiWF and factory management, providing a foundation to improve industrial relations. The factory has since developed action plans that include dialogue with BGIWF on workers' rights and responsibilities, working to establish a functional trade union,and training factory employees on handling workers' issues.\n一 We will continue to extend Higg module participation with our suppliers,including working with peers to explore how best to assess tier 3 and 4 production suppliers.\n- We plan to scale up the use of digital grievance mechanisms and worker voice surveys to mitigate and address supply chain risks that we see in\n2021\n### How we report\n2021\n### Scope & data", "chunk_word_count": 369, "section_path": "H&MGroup > 2022 \n2021 > Learnings", "document_id": "HM Group Sustainability Disclosure 2022", "page": 85, "page_start": 85, "page_end": 85 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 86, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Frameworks\n一 Greater legislative attention on businesses' human rights commitments and due diligence is creating a growing assortment of reporting requirements.We report in accordance with relevant legislation,including policies developed by the European Union,Germany,Norway and the UK.\nEvery year, H&M Group produces a sustainability performance report that discloses sustainability policies,targets,strategy, programmes and performance data for the global group operations of H& M Hennes & Mauritz AB(also called H&M Group in this report).\n- Global Reporting Initiative (GRl): This report is prepared in accordance with the revised Universal GRI Standards. Download our GRl index.\n一 UN Guiding Principles (UNGP) Reporting Framework: In 2015 we became one of the first companies to report on human rights in line with the UNGP Reporting Framework.We conduct regular reviews of salient human rights issues in our materiality assessment. Read about our reporting approach for more information.\nOur website offers more information on how we report and our material issues.This includes our process for identifying and updating the most material topics and their boundaries.\nOur 2022 reporting comprises eight H&M Group brands (H&M,COS,Weekday, Monki, H&M HOME, & Other Stories,ARKET and Afound), in addition to subsidiaries that are either wholly or partially owned during the financial year from 1 December 2021to 30 November 2022,unless declared otherwise.Find a fullist of entities in our Annual and Sustainability Report 2022.\n-Task Force on Climate-related Financial Disclosures (TCFD): We have performed a climate risk analysis following the Task Force on Climate-Related Disclosure(TCFD) guidelines.Find further information in our Annual and Sustainability Report.\nWe have further integrated our reporting to meet the increasing number of sustainability disclosure requirements. This Sustainability Disclosure complements our Annual and Sustainability Report,which includes our Corporate Governance Report, Statutory Sustainability Report and Financial reports.Supporting web content and reporting indexes provide additional information.\n一UN Global Compact and CEO Water Mandate: We are signatories to the UN Global Compact. Our annual sustainability reporting acts as our Communication on Progress for the UN Global Compact and CEO Water Mandate.We wil disclose using the new UN Global Compact digital reporting system from 2023 onwards.\nWe continue to improve how we calculate and compare our scope 1,2 and 3 emissions data. Read more about how we calculate our emissions.\n一Modern Slavery Act: We report in line with regulatory frameworks such as the UK Modern Slavery Act. See our Modern Slavery Statement.\n2021\n### UN Sustainable Development Goals\nThe UN Sustainable Development Goals (SDGs) are a global callto action. They inform our approach to prioritising and tackling social,environmental and economic chalenges.We are part of the Business Cal\nto Action,which aims to accelerate progress towards the SDGs. Here we present our contributions to the SDGs,both directly(through delivering our strategy),indirectly,and through partnerships.\n2021\n### Our relationship with the UN SDGs\n2021\n### Auditor's report\n2021\n### Auditor's Assurance Report on specified sustainability information in H& M Group's Sustainability Disclosure 2022 report\n2021\n### - Anti-corruption:", "chunk_word_count": 483, "section_path": "H&MGroup > 2022 \n2021 > Frameworks", "document_id": "HM Group Sustainability Disclosure 2022", "page": 86, "page_start": 86, "page_end": 88 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 87, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Responsibilities of the auditor\nConfirmed incidents of non-compliance with the Code of Ethics and actions taken (part of Disclosure 205-3), reported on page 84 in the ‘Sustainability Disclosure 2022 report'.\nOur responsibility is to express a conclusion on the above specified disclosures in the specified documents based on the limited assurance procedures we have performed.The selection of disclosures to be reviewed has been made by the management of H&M Group.Our engagement is limited to the above specified information, which does not include web-links,and is limited to historical information presented and does therefore not cover future-oriented information.\nTo H& M Hennes & Mauritz AB,corporate identity number 556042-7220\n2021\n### -Energy:\nEnergy consumption within the organization and percentage of renewable energy (Disclosure 302-1), page 3O in the‘Sustainability Disclosure 2022 report. Energy intensity (Disclosure 302-3), page 3O in the‘Sustainability Disclosure 2022 report'.\n2021\n### Responsibilities of the Board of Directors and the Executive Management for the Sustainability Report\n2021\n### Introduction\nWe have been engaged by the Board of Directors and Executive Management of H&M Hennes & Mauritz AB(H&M Group) to perform a limited assurance engagement on selected information, presented in the H&M Group's ‘Sustainability Disclosure 2022 report',Material lssues 2022', ‘Materiality Matrix 2O22'and ‘Stakeholder Engagement 2022' with regards to the below disclosures referred to in the GRl index that can be found in the ‘GRl content index 2022'. Reporting principles can be found in ‘How we Report 2022'.", "chunk_word_count": 241, "section_path": "H&MGroup > 2022 \n2021 > Responsibilities of the auditor", "document_id": "HM Group Sustainability Disclosure 2022", "page": 88, "page_start": 88, "page_end": 88 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 88, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### -Emissions:\nDirect (Scope 1) GHG emissions (Disclosure 305-1), page 29 in the‘Sustainability Disclosure 2022 report'.Energy indirect (Scope 2) GHG emissions (Disclosure 305-2), page 29 in the ‘Sustainability Disclosure 2022 report'. Other indirect (Scope 3) GHG emissions,limited to transportation, materials,fabric production and garment manufacturing (part of Disclosure 305-3), page 30 in the ‘Sustainability Disclosure 2022 report'.\nThe Board of Directors and the Executive Management are responsible for the preparation of the Sustainability Report in accordance with the applicable criteria,as explained on page 86 in the Sustainability Disclosure 2022 report, and are the parts of the Sustainability Reporting Guidelines published by GRl(Global Reporting Initiative) which are applicable to the Sustainability Report,as well as the accounting and calculation principles that the Company has developed.This responsibility also includes the internal control relevant to the preparation of a Sustainability Report that is free from material misstatements, whether due to fraud or error.\nWe conducted our limited assurance engagement in accordance with ISAE 30oo (revised) Assurance Engagements Other than Audits or Reviews of Historical Financial Information.A limited assurance engagement consists of making inquiries,primarily of persons responsible for the preparation of the Sustainability Report, and applying analytical and other limited assurance procedures.The procedures performed in a limited assurance engagement vary in nature from,and are less in extent than for,a reasonable assurance engagement conducted in accordance with International Standards on Auditing and other generally accepted auditing standards in Sweden.\n一Approach to stakeholder engagement (Disclosure 2-29), reported in ‘Stakeholder Engagement 2022',‘Material Issues 2022'and on pages 15-16 in the‘Sustainability Disclosure 2022 report'.\n-Materials:\nMaterials used by weight or volume,limited to cotton and synthetic materials including top 3 recycled materials (part of Disclosure 301-1), page 43-44 in the‘Sustainability Disclosure 2022 report'.\nThe firm applies International Standard on Quality Management 1,which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.We are independent of H&M Group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements.\n一Process to determine material topics and list of material topics (Disclosures 3.1, 3.2), reported in ‘Material lssues 2022',‘Materiality Matrix 2022', ‘How we report 2022' and on pages 63 and 86-87 in the ‘Sustainability Disclosure 2022 report'.", "chunk_word_count": 387, "section_path": "H&MGroup > 2022 \n2021 > -Emissions:", "document_id": "HM Group Sustainability Disclosure 2022", "page": 88, "page_start": 88, "page_end": 89 }, { "report": "HM Group Sustainability Disclosure 2022.pdf", "chunk_idx": 89, "chunk_text": "# H&MGroup\n## 2022 \n2021\n### Conclusion\nBased on the limited assurance procedures we have performed, nothing has come to our attention that causes us to believe that the information regarding the above specified disclosures in H&M Group's ‘Sustainability Disclosure 2022 report', is not prepared,in all material respects,in accordance with the criteria defined by the Board of Directors and Executive Management.\nThe procedures performed consequently do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in a reasonable assurance engagement.\nStockholm 23 March 2023 Deloitte AB\nAccordingly, the conclusion of the procedures performed do not express a reasonable assurance conclusion.\nDidrik Roos Authorized Public Accountant\nOur procedures are based on the criteria defined by the Board of Directors and the Executive Management as described above.We consider these criteria suitable for the preparation of the above specified disclosures presented in the ‘Sustainability Disclosure 2022 report'.\nLennart Nordqvist Expert Member of FAR\nWe believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion below.\n2021\n### H&MGroup\nSustainability Disclosure 2022 If you have questions, need help locating information, or want to find the latest on our sustainability work including strategy, goals, standards and policies, please contact kelly.langpap@hm.com.\nThank you.", "chunk_word_count": 215, "section_path": "H&MGroup > 2022 \n2021 > Conclusion", "document_id": "HM Group Sustainability Disclosure 2022", "page": 89, "page_start": 89, "page_end": 90 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 0, "chunk_text": "# Opening up a world of opportunity\nOur ambition is to be the preferred international financial partner for our clients.\nOur purpose, ambition and values reflect our strategy and support our focus on execution.\nRead more on our valuesand strategy on pages 4and 11.\n## Contents\n## Strategic report\nThis Strategic Report was approved by the Board on 21 February 2024.\n1 Performance in 2023 \n2 Highlights \n4 Who we are \n6 Group Chairman’s statement \n8 Group Chief Executive’s review \n11 Our strategy \n14 ESG overview \n20 Board decision making and \nengagement with stakeholders \n(Section 172(1) statement) \n24 Remuneration \n25 Financial overview \n30 Global businesses \n37 Risk overview \n40 Long-term viability and going \nconcern statement\n## Risk review\nMark E Tucker Group Chairman\n## 136 Our approach to risk \n140 Top and emerging risks \n145 Our material banking risks\n### A reminder\n### Corporate governance report\nThe currency we report in is US dollars.\n## 239 Biographies of Directors and senior management 262 Board committees 279 Directors’ remuneration report\n### Our approach to ESG reporting\nWe embed our ESG reporting and Task Force on Climate-related Financial Disclosures (‘TCFD’) within our Annual Report and Accounts. Our TCFD disclosuresare highlighted with the following symbol:  TCFD\n### Financial statements\n## 318 Independent auditors’ report \n329 Financial statements \n341 Notes on the financial statements\n### Constant currency performance\nWe supplement our IFRS Accounting Standards figures with non-IFRS Accounting Standards measures used by management internally that constitute alternative performance measures under European Securities and Markets Authority guidance and non-GAAP financial measures defined in and presented in accordance with US Securities and Exchange Commission rules and regulations. These measures are highlighted with the following symbol: $\\diamond$\n### Environmental, social and governance (‘ESG’) review\n### Additional information\n## 42 Our approach to ESG \n44 Environmental \n75 Social \n87 Governance\n## 435 Shareholder information \n444 Abbreviations\n### Financial review\nFurther explanation may be found on page 29.\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\nIFRS 17 ‘Insurance Contracts’\nFrom 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data have been restated. For further details of our adoption of IFRS 17, see page 100.\nNone of the websites referred to in this Annual Report and Accounts 2023 for the year ended 31 December 2023 (including where a link is provided), and none of the information contained on such websites, are incorporated by reference in this report.\nCover image: Opening up a world of opportunity We connect people, capital and ideas across the world. By unlocking the true power of our international networks, we are able to deliver our purpose of opening up a world of opportunity.\n@HSBC linkedin.com/company/hsbc facebook.com/HSBC\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Performance in 2023\nHSBC is one of the world’s leading international banks.\nWe have a clear strategy to deliver revenue and profit growth, enhance customer service and improve returns to shareholders.", "chunk_word_count": 501, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Performance in 2023", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 2, "page_start": 2, "page_end": 3 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 1, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Financial performance indicators\nOur financial performance indicators demonstrate our continued focus on the delivery of sustainable returns for our shareholders and providing a strengthened platform for growth. They also provide insight into the performance that has driven the outcomes of our financial targets.\nProfit before tax \\$30.3bn (2022: \\$17.1bn)\nDividend per share \\$0.61 (2022 dividend per share: \\$0.32)\nDRead more on our financial performance in 2023 on pages2 and 27. \nDForan explanation of performanceagainst our key Group financial targets,see page 25. \nMFora reconciliation of our target basis operating expenses to reported operating expenses,see page133. \nDFor our financial targets we define medium term as three to four yearsand long termas five to six years,commencing 1 January 2024. \nReturn on average tangible equity \n14.6% \n(2022: 10.0%)\nOperating expenses \\$32.1bn\nTarget basis operating expenses \nup $6 \\%$ to \\$31.6bn \n(2022: $\\$ 32.70 n )$ ， \nCommon equity tier 1 capital ratio \n14.8% \n(2022: 14.2%)\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Strategic performance indicators\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Net new invested assets \\$84bn\nGender diversity 34.1%\nGenerated in 2023, of which \\$47bn were in Asia. \n(2022: \\$80bn generated, of which \\$59bn were in Asia) \nWholesale multi-jurisdictional \nclient revenue \n61%\nWomen in senior leadership roles. (2022: $3 3 . 3 \\% )$\nOur strategy supports our ambition of being the preferred international financial partner for our clients.\nWe are committed to building a business for the long term, developing relationships that last.\nSustainable finance and investment \\$294.4bn\nRead more on our strategy on pages 11 to 13. \nRead moreonmulti-jurisdictional clientrevenue onpage 111. \nDRead more on how we set and define our ESG metrics on page 16. \nRead more on our definition of sustainable financeand investment on page49. \nDWe no longer report the metric 'Asia as a percentage of Group tangibleequity\nCumulative total provided and facilitated since January 2020. \n(2022: \\$210.7bn)\nWholesale client revenue generated by clients banking with us across multiple markets.\nDigitally active Commercial \nBanking customers \n83% \n(2022: 78%)\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Highlights\nFinancial performance reflected net interest income growth, and we continued to make progress against our four strategic pillars.", "chunk_word_count": 397, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Financial performance indicators", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 3, "page_start": 3, "page_end": 4 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 2, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Financial performance (vs 2022)\n– Profit before tax rose by $\\$ 13.36n$ to $\\$ 30$ .3bn, primarily reflecting revenue growth. This included a favourable year-onyear impact of $\\$ 2.5$ bn relating to the sale of our retail banking operations in France, which completed on 1 January 2024, and a $\\$ 1$ .6bn provisional gain recognised on the acquisition of Silicon Valley Bank UK Limited (‘SVB UK‘) in 2023. These were partly offset by the recognition of an impairment charge in 2023 of $\\$ 3.0$ bn relating to the investment in our associate, Bank of Communications Co., Limited (‘BoCom’), which followed the reassessment of our accounting valuein-use. On a constant currency basis, profit before tax increased by $\\$ 13$ .8bn to $\\$ 30$ .3bn. Profit after tax increased by $\\$ 8.36 n$ to $\\$ 24.65$ .\n– Net interest margin (‘NIM’) of $1 . 6 6 \\%$ increased by 24 basis points (‘bps’), reflecting higher interest rates.", "chunk_word_count": 180, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Financial performance (vs 2022)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 3, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### – Customer lending balances rose by $\\$ 1$ 15bn on a reported basis, but fell by \\$3bn on a constant currency basis.\nGrowth included a $\\$ 7.8 b n$ reclassification of secured loans in France from held for sale, an addition of $\\$ 8\\mathrm{ b n }$ from the acquisition of SVB UK, and higher mortgage balances in HSBC UK and Hong Kong. These increases were more than offset by a reduction in wholesale term lending, notably in Asia, and from business divestments in Oman and New Zealand.\n– Expected credit losses and other credit impairment charges (‘ECL’) were $\\$ 3.456 n$ , a reduction of $\\$ 0.$ 1bn. The net charge in 2023 primarily comprised stage 3 charges, notably related to mainland China commercial real estate sector exposures. It also reflected continued economic uncertainty, rising interest rates and inflationary pressures. ECL were 33bps of average gross loans, including a 3bps reduction due to the inclusion of loans and advances classified as held for sale.\n– Customer accounts rose by $\\$ 416n$ on a reported basis, and $\\$ 136n$ on a constant currency basis, primarily in Wealth and Personal Banking, reflecting growth in Asia, partly offset by reductions in HSBC UK, reflecting cost of living pressures and the competitive environment, despite an increase of $\\$ 60\\mathsf { n }$ from the acquisition of SVB UK. There was also a reduction due to the sale of our business in Oman.\n– Operating expenses fell by $\\$ 0.6$ 6bn or $2 \\%$ to $\\$ 32$ .1bn, mainly due to the nonrecurrence of restructuring and other related costs following the completion of our cost to achieve programme at the end of 2022. This more than offset higher technology costs, inflationary pressures and an increase in performance-related pay. We also incurred a higher UK bank levy and a charge relating to the Federal Deposit Insurance Corporation (‘FDIC’) special assessment in the US.\n– Revenue rose by $\\$ 15$ .4bn or $30 \\%$ to $\\$ 60$ .1bn, including growth in net interest income (‘NII’) of $\\$ 5.450 n$ , with rises in all of our global businesses due to the higher interest rate environment. Non-interest income increased by $\\$ 10.05$ , reflecting a rise in trading and fair value income of $\\$ 6.450\\mathsf { n }$ , mainly in Global Banking and Markets. The associated funding costs reported in NII grew by $\\$ 623,456$ . The increase also included the impact of the strategic transactions referred to above, partly offset by disposal losses of $\\$ 100\\mathsf { n }$ relating to repositioning and risk management activities in our hold-to-collect-and-sell portfolio.\n– Common equity tier 1 (‘CET1’) capital ratio of $1 4 . 8 \\%$ rose by 0.6 percentage points, as capital generation was partly offset by dividends and share buy-backs.\nTarget basis operating expenses rose by $6 \\%$ . This is measured on a constant currency basis, excluding notable items and the impact of the acquisition of SVB UK and related investments internationally. It also excludes the impact of retranslating the prior year results of hyperinflationary economies at constant currency.", "chunk_word_count": 539, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > – Customer lending balances rose by $\\$ 1$ 15bn on a reported basis, but fell by \\$3bn on a constant currency basis.", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 4, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### – Customer lending balances rose by $\\$ 1$ 15bn on a reported basis, but fell by \\$3bn on a constant currency basis.\n– The Board has approved a fourth interim dividend of $\\$ 0.31$ per share, resulting in a total for 2023 of $\\$ 0.61$ per share. We also intend to initiate a share buy-back of up to $\\$ 2.06 n$ , which we expect to complete by our first quarter 2024 results announcement.\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Outlook", "chunk_word_count": 112, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > – Customer lending balances rose by $\\$ 1$ 15bn on a reported basis, but fell by \\$3bn on a constant currency basis.", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 5, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### customer lending percentage growth in the mid-single digits over the medium to long term.\n– Our cost target basis for 2024 excludes the impact of the disposal of our retail banking business in France and the planned disposal of our banking business in Canada from the 2023 baseline. Our cost target basis is measured on a constant currency basis and excludes notable items and the impact of retranslating the prior year results of hyperinflationary economies at constant currency. We do not reconcile our forward guidance on target basis costs to reported operating expenses.\n– We continue to target a return on average tangible equity (‘RoTE’) in the mid-teens for 2024, excluding the impact of notable items (see page 25 for information on our RoTE target for 2024). Our guidance reflects our current outlook for the global macroeconomic environment, including customer and financial markets activity.\n– Given continued uncertainty in the forward economic outlook, we expect ECL charges as a percentage of average gross loans to be around 40bps in 2024 (including customer lending balances transferred to held for sale). We continue to expect our ECL charges to normalise towards a range of 30bps to 40bps of average loans over the medium to long term.\n– Based upon our current forecasts, we expect banking NII of at least $\\$ 41$ bn for 2024. This guidance reflects our current modelling of a number of market dependent factors, including market-implied interest rates (as of mid-February 2024), as well as customer behaviour and activity levels, which we would also expect to impact our non-interest income. We do not reconcile our forward guidance on banking NII to reported NII.\n– We intend to continue to manage the CET1 capital ratio within our mediumterm target range of $14 \\%$ to $1 4 . 5 \\%$ .\n– We retain a Group-wide focus on cost discipline. We are targeting cost growth of approximately $5 \\%$ for 2024 compared with 2023, on a target basis.\n– Our dividend payout ratio target remains at $50 \\%$ for 2024, excluding material notable items and related impacts. We have announced a further share buyback of up to $\\$ 2.0 b n$ . Further buy-backs remain subject to appropriate capital levels.\nThis target reflects our current business plan for 2024, and includes an increase in staff compensation, higher technology spend and investment for growth and efficiency, in part mitigated by cost savings from actions taken during 2023.\n– While our outlook for loan growth remains cautious for the first half of 2024, we continue to expect year-on-year\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Strategic transactions\n– During 2023, we continued to acquire businesses that allow us to build scale and enhance our capabilities. In March, we acquired SVB UK, and subsequently launched HSBC Innovation Banking, which includes SVB UK and new teams in the US, Hong Kong and Israel, as well as in Denmark and Sweden, to deliver a globally connected, specialised banking proposition to support innovation businesses and their investors.", "chunk_word_count": 530, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > customer lending percentage growth in the mid-single digits over the medium to long term.", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 4, "page_start": 4, "page_end": 5 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 6, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### venture focusing on embedded finance solutions and financial services applications.\n– We continue to make good progress on our strategic disposals. The planned sale of our banking business in Canada received government approval and is expected to complete in the first quarter of 2024. We completed the sale of our retail banking operations in France on 1 January 2024, as we reshape the organisation to focus on our international customer base. In addition, we announced the planned sale of our retail business in Mauritius, and also completed the sale of our operations in Greece, the merger of HSBC Bank Oman with Sohar International, and the sale of our New Zealand retail mortgage loan portfolio.\n– We remain committed to consider the payment of a special dividend of $\\$ 0.21$ per share as a priority use of the proceeds from the sale of our banking business in Canada in the first half of 2024. The remaining proceeds will accrue into CET1 capital in consideration for organic growth and investment, and we intend to use any excess capital to supplement share buy-backs. Upon completion, the sale is expected to result in an initial increase in the CET1 ratio of approximately 1.2 percentage points.\n– As part of our ambition to be a leading wealth provider in Asia, we entered into an agreement to acquire Citi’s retail wealth management portfolio in mainland China. This acquisition comprised the assets under management and deposits, and the associated wealth customers. We also announced a partnership with the fintech Tradeshift to launch a joint\n– While we remain committed to the sale of our business in Russia, the sale became less certain. As a result, the business is no longer classified as held for sale, the previously recognised loss has been reversed, and a broadly offsetting charge relating to recoverability was recognised in the fourth quarter of 2023.\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### ESG highlights\n– Since 2020, we have provided and facilitated $\\$ 294$ .4bn of sustainable finance and investment, which was an increase of $\\$ 83.70n$ in the past year. Of our sustainable finance and investment progress to 31 December 2023, $\\$ 258.30n$ related to green and sustainable activities and $\\$ 36.$ 1bn related to social activities.\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Act responsibly", "chunk_word_count": 419, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > venture focusing on embedded finance solutions and financial services applications.", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 5, "page_start": 5, "page_end": 5 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 7, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Transition to net zero\n– In January 2024, we published our first net zero transition plan, which is an important milestone in our journey to achieving our net zero ambition – helping our people, customers, investors and other stakeholders to understand our long-term vision, the challenges, uncertainties and dependencies that exist, the progress we are making and what we plan to do in the future. The plan includes details on our sectoral approach, and on our implementation plan to embed net zero across key areas of our organisation.\n– We aim to be a top-three bank for customer satisfaction. In 2023, we were ranked as a top three bank against our competitors in $58 \\%$ of our six key markets across Wealth and Personal Banking and Commercial Banking, but we still have work to do to improve our rank position against competitors.\n– Within our own operations, we have made a $5 7 . 3 \\%$ reduction in our absolute greenhouse gas emissions from a 2019 baseline.\n– We published guides to help our buyers and our suppliers better understand our net zero ambitions. The guides provide further details to support suppliers in understanding our sustainability expectations, as set out in our supplier code of conduct.\nBuild inclusion and resilience – In 2023, $3 4 . 1 \\%$ of senior leadership roles were held by women. We have a target to achieve $3 5 \\%$ by 2025, which we are on track to achieve, although we recognise that progress in the past year has not been as fast paced as we would like. We also continued to work towards meeting our ethnicity goals.\n– Our net zero transition plan provides an overview of the progress we have made to date and what we plan to do next, although we acknowledge there is still much more to do. It will form the basis of further work on our journey to net zero over time, and we expect to review and update it periodically.\n– We continued to raise awareness and develop our understanding of our salient human rights issues. In 2023, we provided practical guidance and training, where relevant, to our colleagues across the Group, on how to identify and manage human rights risk.\n– Following the recent launch of the Partnership for Carbon Accounting Financials (‘PCAF’) accounting standard for capital markets, we have now set combined on-balance sheet financed emissions and facilitated emissions targets for two emissions-intensive sectors: oil and gas, and power and utilities, and report the combined progress for both sectors. We recognise that data, methodologies and standards for measuring emissions and for target setting will continue to evolve.\n– We continue to make the banking experience more accessible in both physical and digital spaces. We are working to ensure that our digital channels are usable by everyone, regardless of ability. We also expanded our efforts to support customers with disabilities in our branch spaces.", "chunk_word_count": 511, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Transition to net zero", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 5, "page_start": 5, "page_end": 5 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 8, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Who we are\nHSBC is one of the largest banking and financial services organisations in the world. \nWe aim to create long-term value for our shareholders and capture opportunity.\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Our values\nOur values help define who we are as an organisation, and are key to our long-term success.\nWe value difference Seeking out different perspectives\nWe succeed together Collaborating across boundaries\nWe take responsibility Holding ourselves accountable and taking the long view\nWe get it done Moving at pace and making things happen\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Our strategy\nOur strategy supports our ambition of being the preferred international financial partner for our clients, centred around four key areas.\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Focus\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Digitise\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Energise\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Transition\n– Maintain leadership in scale markets \n– Double-down on international connectivity \n– Diversify our revenue \n– Maintain cost discipline and reshape our portfolio\n– Deliver seamless customer experiences \n– Ensure resilience and security \n– Embrace disruptive technologies and partner with innovators \n– Automate and simplify at scale\n– Inspire leaders to \ndrive performance \nand delivery \n– Unlock our edge to \nenable success \n– Deliver a unique and \nexceptional colleague experience \n– Prepare our workforce \nfor the future\n– Support our customers – Embed net zero into the way we operate – Partner for systemic change – Become net zero in our own operations and supply chain by 2030, and our financed emissions by 2050\nDFor further details on progress made in each of our strategic areas,see pages 11 to 13.\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Our global reach\nOur global businesses serve around 42 million customers worldwide through a network that covers 62 countries and territories.\nOur customers range from individual savers and investors to some of the world’s biggest companies, governments and international organisations. We aim to connect them to opportunities and help them to achieve their ambitions.\nAssets of \\$3.0tn\nApproximately 42m Customers bank with us\nOperations in 62\nWe employ approximately 221,000 Full-time equivalent staff\nCountries and territories\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Our global businesses\nWe serve our customers through three global businesses.\nOn pages 30 to 36 we provide an overview of our performance in 2023 for each of our global businesses, as well as our Corporate Centre.\nIn each of our global businesses, we focus on delivering growth in areas where we have distinctive capabilities and have significant opportunities.\nEach of the chief executive officers of our global businesses reports to our Group Chief Executive, who in turn reports to the Board of HSBC Holdings plc.", "chunk_word_count": 529, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Who we are", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 9, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Wealth and Personal Banking (’WPB’)\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Commercial Banking (‘CMB’)\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Global Banking and Markets (’GBM’)\nOur global reach and expertise help domestic and international businesses around the world unlock their potential.\nWe help millions of our customers look after their day-to-day finances and manage, protect and grow their wealth.\nWe provide a comprehensive range of financial services and products to corporates, governments and institutions.\nFor further details,see page 32.\nFor further details,see page 30\nFor further details,see page 34\nRevenue by global business1\n[IMAGE CAPTION] Wealth and Personal Banking\n[IMAGE CAPTION] Commercial Banking\n[IMAGE CAPTION] Global Banking and Markets\n## 1 Calculationis basedonrevenue ofourglobal businesses excluding Corporate Centre.Corporate Centre had negative revenue of \\$199m in 2023.\n### Our stakeholders\nBuilding strong relationships with our stakeholders helps enable us to deliver our strategy in line with our long-term values, and operate the business in a sustainable way.\nOur stakeholders are the people who work for us, bank with us, own us, regulate us, and live in the societies we serve and the planet we all inhabit. These human connections are complex and overlap.\nMany of our employees are customers and shareholders, while our business customers are often suppliers. We aim to serve, creating value for our customers and shareholders.\nOur size and global reach mean our actions can have a significant impact. We are committed to doing business responsibly, and thinking for the long term. This is key to delivering our strategy.\n[IMAGE CAPTION] For further details of how we are engaging with our stakeholders,see page 15.", "chunk_word_count": 304, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Wealth and Personal Banking (’WPB’)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 7, "page_start": 7, "page_end": 7 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 10, "chunk_text": "# Opening up a world of opportunity\n## 1 Calculationis basedonrevenue ofourglobal businesses excluding Corporate Centre.Corporate Centre had negative revenue of \\$199m in 2023.\n### Group Chairman’s statement\n[IMAGE CAPTION] Mark E Tucker Group Chairman\nIn 2023, reported profit before tax was $\\$ 30.3$ bn, which was an increase of $\\$ 123,456 n$ compared with 2022. This was due mainly to higher revenue and a number of notable items. Our three global businesses delivered good revenue growth, and we ended the year with strong capital, funding and liquidity positions.\nWe remain committed to sharing the benefits of our improved performance with our shareholders. The Board approved a fourth quarterly dividend of $\\$ 0.31$ per share, bringing the total dividend for 2023 to $\\$ 0.61$ per share. Furthermore, in 2023 we announced three share buy-backs worth a total of $\\$ 70 n$ and, today, have announced a further share buyback of up to $\\$ 20n$ .\nThe planned sale of our banking operations in Canada received final approval from the Canadian government at the end of last year. Subject to completion of the transaction, which is expected in the first quarter of 2024, the Board will consider a special dividend of $\\$ 0.21$ per share, to be paid in the first half of 2024, as a priority use of the proceeds.\nWith this anticipated transaction and the completion of the sale of our retail banking business in France last month, our focus has moved to investing for growth, while maintaining efficiency. Two examples of growth opportunities last year were the agreed acquisition of Citi’s retail wealth business in mainland China, which will help accelerate our Wealth strategy, and the acquisition of SVB UK, following the difficulties experienced by its US parent entity. Acquiring SVB UK was opportunistic, but the deal made excellent strategic sense for HSBC, and it also helped to protect clients, safeguard jobs and maintain financial stability.\nAgainst a challenging global economic and political backdrop, HSBC’s strategy has delivered improved financial performance and increased returns for shareholders\nThe global economy performed better than expected in 2023, but growth remained sluggish and the economic environment was challenging for many of our customers. Although inflation fell globally, core inflation levels and interest rates remained elevated. There was also significant variability in growth from market to market and increased volatility within the banking sector. Our core purpose of ‘opening up a world of opportunity’ underlines our focus on helping our customers and clients to navigate this complexity and access growth, wherever it is.\nMany of our customers and colleagues are living through very difficult times. Higher interest rates have had a significant impact on businesses and households, and we will remain conscious of this with interest rates expected to begin to fall back in 2024. The wars between Russia and Ukraine, and now between Israel and Hamas, are absolutely devastating. Our thoughts are with all those impacted, including our colleagues in those parts of the world, and their families and friends. Their resilience, professionalism and care for one another during these most testing of times has been, and is, exceptional.", "chunk_word_count": 518, "section_path": "Opening up a world of opportunity > 1 Calculationis basedonrevenue ofourglobal businesses excluding Corporate Centre.Corporate Centre had negative revenue of \\$199m in 2023. > Group Chairman’s statement", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 8, "page_start": 8, "page_end": 8 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 11, "chunk_text": "# Opening up a world of opportunity\n## 1 Calculationis basedonrevenue ofourglobal businesses excluding Corporate Centre.Corporate Centre had negative revenue of \\$199m in 2023.\n### Group Chairman’s statement\nTechnology and sustainability are two of the trends transforming banking and the world around us. The opportunities from generative AI are among the most transformative within my working life. We are actively exploring a number of use cases, while also working to manage the associated risks.\nMeanwhile the global climate challenge is becoming increasingly acute. Our presence in many of the sectors and markets where the need to reduce emissions is the greatest provides us with an opportunity to work with our clients to help address it. This is set out in our first net zero transition plan. The Board discussed and contributed to the net zero transition plan in depth. We believe that it is a realistic and ambitious assessment of the long-term journey ahead, as we continue to work with our clients on their transitions to a low-carbon future. It is clear there will be many uncertainties and dependencies, and that our approach will need to continue to evolve with the real world around us.\nProgress and performance\nTurning to our performance, I want to again pay tribute to my colleagues. The record profit performance that we delivered in 2023 was supported by the impact of interest rates on our strong balance sheet, but it was also testament to the tireless efforts of our people around the world. I would like to thank them sincerely for their hard work, dedication and commitment to serving our customers.\n”Acquiring SVB UK was opportunistic, but the deal made excellent strategic sense for HSBC, and it also helped to protect clients, safeguard jobs and maintain financial stability.”\nWe also announced in December that David Nish intends to retire from the Board at the 2024 AGM. David has made an invaluable contribution to the Board over the past eight years, particularly in recent years as Chair of the Group Audit Committee and as Senior Independent Director. I would like to thank him warmly for his consistent counsel and guidance.\nChina’s recovery after reopening was bumpie than expected, but its economy grew in line with its annual target of around $5 \\%$ in 2023. We expect this to be maintained in 2024, with recently announced policy measures to support the property sector and local government debt gradually flowing through to the wider economy. Hong Kong’s growth has moved along at a slower but healthy pace and is likely to remain in line with pre-pandemic levels.\nI am pleased that Kalpana Morparia, Ann Godbehere, Brendan Nelson and Swee Lian Teo joined the Board during 2023. Each of them brings experience and expertise that is an asset to the Board. Specifically, Ann’s extensive public-listed company board experience means that she is ideally placed to take over as Senior Independent Director, while Brendan’s UK and international financial expertise and significant experience as audit chair at UK-listed companies will be particularly valuable as he takes over leadership of the Group Audit Committee.", "chunk_word_count": 512, "section_path": "Opening up a world of opportunity > 1 Calculationis basedonrevenue ofourglobal businesses excluding Corporate Centre.Corporate Centre had negative revenue of \\$199m in 2023. > Group Chairman’s statement", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 12, "chunk_text": "# Opening up a world of opportunity\n## 1 Calculationis basedonrevenue ofourglobal businesses excluding Corporate Centre.Corporate Centre had negative revenue of \\$199m in 2023.\n### Group Chairman’s statement\nAs Asia continues to grow, a significant opportunity is emerging to connect it to another high-growth region. The Middle East region performed very well economically in 2023 and the outlook remains strong for 2024, notwithstanding the risks arising from conflicts in the region. As countries like Saudi Arabia and the UAE continue to diversify their economies, new opportunities are created to connect them to Asia, and Asia to them.\nThe US economy grew more quickly than expected in 2023 in the face of higher interest rates. Growth is likely to be lower in 2024, although it should remain higher than in Europe where growth remains subdued. The UK economy, which entered a technical recession at the end of 2023, has nonetheless been resilient. Headline inflation should fall in the first half of the year, with core inflation following by the end of 2024. This will of course determine the pace of interest rate cuts.\n### Macroeconomic outlook\nLooking ahead, 2024 is likely to be another eventful year. The slowing of inflation in the second half of 2023 means that monetary tightening now appears to be coming to an end. However, current inflation levels in many economies remain above their targets. As central banks continue to try to bridge this gap, voters head to the polls in a significant number of countries across the globe. The timing and outcomes of these elections will impact the decision making of governments and have geopolitical, as well as fiscal, implications. We will monitor the results closely, and take a long-term view of strategy, purpose and capital allocation, while cognisant of any short-term challenges.", "chunk_word_count": 297, "section_path": "Opening up a world of opportunity > 1 Calculationis basedonrevenue ofourglobal businesses excluding Corporate Centre.Corporate Centre had negative revenue of \\$199m in 2023. > Group Chairman’s statement", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 9, "page_start": 9, "page_end": 9 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 13, "chunk_text": "# Opening up a world of opportunity\n## 1 Calculationis basedonrevenue ofourglobal businesses excluding Corporate Centre.Corporate Centre had negative revenue of \\$199m in 2023.\n### Board operations\nOur work on sustainability was one of the many topics discussed with our shareholders at our 2023 Annual General Meeting (‘AGM’) in May. Ahead of that, Noel and I were pleased to meet with Hong Kong shareholders at our Informal Shareholders’ Meeting. At both meetings, we also discussed the resolutions that were requisitioned by shareholders on the Group’s strategy and dividend policy. Shareholders expressed strong support for the Group’s current strategy by voting overwhelmingly with the Board and against these resolutions at the AGM. This enabled the Board, my colleagues and our shareholders to focus on our shared objectives of serving our customers, driving stronger performance, and creating more value for our investors.\nI would like to end by reiterating my thanks to my colleagues for all that they have done, and all that they continue to do, for HSBC. Their tireless efforts are reflected by our improved financial performance and increased returns for shareholders in 2023 – and I look forward to them securing the foundations for our future success.\nAmong these potential challenges are the increased uncertainties due to wars in Europe and the Middle East, and disruption to global trade and supply chains caused by these and attacks on shipping in the Red Sea. However, we remain cautiously optimistic about economic prospects for 2024. We expect growth to slow in the first half of the year and recover thereafter. We also expect the variable economic growth that has characterised recent years to continue.\nIn 2023, the Board held meetings in London, Birmingham, Hong Kong, Paris, New York, Mumbai and Delhi. We also returned to Beijing and Shanghai last month. On each occasion, the Board engaged with clients, colleagues, government officials and regulators – with these discussions underlining that HSBC continues to have a key role connecting the world’s trade and finance hubs.\n### Mark E Tucker\nGroup Chairman\n## 21 February 2024\nThe economies of south and south-east Asia carry good economic momentum into 2024. India and Vietnam are currently among the fastest-growing economies in the world, benefiting from competitive labour costs, supportive policies and changing supply chains. Chinese companies are among those increasingly looking towards these and other markets, as China’s economic transformation towards high-quality growth and domestic consumption continues.\nThere were a number of changes to the composition of the Board last year. At the 2023 AGM, we said farewell to Jackson Tai, who made an important, extensive and lasting contribution to the success of HSBC during his time as a non-executive Director. His leadership in strengthening risk and conduct governance and oversight was particularly critical through a period of significant change.", "chunk_word_count": 464, "section_path": "Opening up a world of opportunity > 1 Calculationis basedonrevenue ofourglobal businesses excluding Corporate Centre.Corporate Centre had negative revenue of \\$199m in 2023. > Board operations", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 9, "page_start": 9, "page_end": 9 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 14, "chunk_text": "# Opening up a world of opportunity\n## 21 February 2024\n### Group Chief Executive’s review\nAs we move into 2024, I am confident that there are opportunities ahead for us and our clients that can help us to sustain our good performance going into the next phase of the interest rate cycle.\nThe environment does, however, remain challenging. The wars in Europe and the Middle East are beyond comprehension on a human level, and my thoughts remain with all those impacted. Both conflicts also still have the potential to escalate further. That would first and foremost deepen the humanitarian crisis, but also likely lead to another wave of market and economic turmoil. Interest rates are expected to fall this year, which we believe should in turn help to increase economic activity. The outlook currently remains uncertain, however, and many of our customers remain concerned about their finances. In the midst of these challenges, we will stay focused on what we are here to do – which is to serve our customers and clients, and help them with any financial difficulties they face.\n### Financial performance", "chunk_word_count": 186, "section_path": "Opening up a world of opportunity > 21 February 2024 > Group Chief Executive’s review", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 10, "page_start": 10, "page_end": 10 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 15, "chunk_text": "# Opening up a world of opportunity\n## 21 February 2024\n### Noel Quinn\nOur results are a testament to the way we stayed focused in 2023. Reported profit before tax was $\\$ 30.30$ , which was $\\$ 123,456 n$ higher than in 2022. This included a number of notable items, including a favourable year-on-year impact of $\\$ 2.5$ bn relating to the sale of our retail banking operations in France and a $\\$ 1$ .6bn provisional gain on the acquisition of SVB UK. These were offset by a valuation adjustment of $\\$ 3.0 b n$ relating to our investment in BoCom, which followed the reassessment of our accounting value-inuse in line with recent market developments in mainland China. This adjustment has no material impact on our capital, capital ratio and distribution capacity, and therefore no impact on our share buy-backs or dividends. We remain confident in the resilience of the Chinese economy, and the growth opportunities in mainland China over the medium to long term.\nGroup Chief Executive\nOur record profit performance in 2023 reflected the hard work of the last four years and the inherent strength of our balance sheet, supported by interest rates.\nReturn on average tangible equity \n14.6% \n(2022: 10%)\n2023 was a very good year for HSBC. I would like to start by paying tribute to my colleagues for all that they did last year, and in the preceding three years. As I have said before, they have fully embraced our core purpose of ‘opening up a world of opportunity’ in all they do – from helping clients and customers to expand to new markets or move overseas, to digitising our business and helping our people to be their best, to our ongoing work on the transition to net zero.\n\\$30.3bn (2022: \\$17.1bn)\nReported revenue grew by $30 \\%$ or $\\$ 15.450n$ , driven by an increase in net interest income of $\\$ 5.450\\mathsf { n }$ from all three global businesses. Noninterest income increased by $\\$ 100\\mathsf { h }$ , reflecting increased trading and fair value income of $\\$ 6.45$ , mainly in Global Banking and Markets, and the favourable year-on-year impact from the impairment relating to the sale of our retail banking operations in France and provisional gain on the acquisition of SVB UK.\nOur performance last year was great credit to them. We delivered strong revenue growth across all three global businesses, supported by higher interest rates, which enabled us to deliver our best return on average tangible equity in more than a decade. As well as improving financial performance, our strategy is increasing shareholder returns. I am pleased that we have rewarded our shareholders for their loyalty with the highest full-year dividend per share since 2008, as well as three share buy-backs in 2023 totalling $\\$ 70n$ . In total, we returned $\\$ 190n$ to shareholders by way of dividend and share buy-backs in respect of 2023. In addition, we have today announced a further share buy-back of up to $\\$ 20n$ .\nIn 2023, we delivered a return on average tangible equity of $1 4 . 6 \\%$ , or $1 5 . 6 \\%$ excluding strategic transactions and the impairment on our investment in BoCom.", "chunk_word_count": 537, "section_path": "Opening up a world of opportunity > 21 February 2024 > Noel Quinn", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 10, "page_start": 10, "page_end": 10 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 16, "chunk_text": "# Opening up a world of opportunity\n## 21 February 2024\n### Noel Quinn\n”I am confident that there are opportunities ahead for us and our clients that can help us to sustain our good performance going into the next phase of the interest rate cycle.”\nOur 2023 reported ECL charge of $\\$ 3.45$ was $\\$ 0.$ 1bn lower than in 2022. This primarily comprised stage 3 net charges, notably related to mainland China commercial real estate sector exposures, and reflected the continued uncertainty within the global economy. After good capital generation in 2023, we ended the year with a CET1 ratio of $1 4 . 8 \\%$ . We are able to pay a fourth interim dividend of $\\$ 0.31$ per share, bringing the total 2023 dividend to $\\$ 0.61$ per share, which is the highest since 2008.\nThe second is to diversify our revenue. Building our wealth business to meet the rising demand for wealth management services, especially in Asia, has been a strategic priority. Last year, we attracted net new invested assets of $\\$ 84 b n$ , following $\\$ 80 b n$ in 2022 and $\\$ 64 b n$ in 2021, underlining the traction that we have gained. Our agreement to acquire Citi’s retail wealth management portfolio in mainland China helps accelerate our plans. Another trend is the increasing demand for seamless, integrated, cross-border banking services, which innovation is helping us to deliver. We now have 1.3 million Global Money customers, up from 550,000 in 2022, and grew revenue from Wealth and Personal Banking international customers by $4 1 \\%$ last year, from $\\$ 7.20 n$ to $\\$ 10.20n$ . Critically, there was a $4 3 \\%$ increase in new-to-bank international customers compared with 2022, driven by the new international proposition that we launched and continue to develop. As in wholesale, these international customers generate higher revenue, bringing in around three times as much as average domestic-only customers.", "chunk_word_count": 322, "section_path": "Opening up a world of opportunity > 21 February 2024 > Noel Quinn", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 11, "page_start": 11, "page_end": 11 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 17, "chunk_text": "# Opening up a world of opportunity\n## 21 February 2024\n### From transform to sustain and grow\nLooking forward, supportive interest rates and good underlying business growth have given us strong momentum. We continue to target a mid-teens return on average tangible equity. We are also, however, mindful of the interest rate cycle and the subsequent impact on net interest income. In 2023, we increased the size and duration of our structural hedges to reduce the sensitivity of banking net interest income to interest rate movements and help stabilise future earnings. We also see a number of growth opportunities within our strategy that play to our strengths.\nOur three global businesses performed well. In Commercial Banking, profit before tax was up by $7 6 \\%$ to $\\$ 123,456 n$ on a constant currency basis, driven by revenue increases across all our main legal entities. Within this, Global Payments Solutions revenue increased by $78 \\%$ or $\\$ 5.4$ bn on a constant currency basis, driven by higher margins reflecting higher interest rates and repricing. Fee income increased by $4 \\%$ due to growth in transaction banking and higher volumes in cards and international payments, while our trade business performed well relative to the market and we increased our market share.\nThe third is continued growth in our two home markets. Our business is built on two very deep pools of liquidity in Hong Kong and the UK, which underpin our exceptional balance sheet strength and, therefore, all that we do as a business. Hong Kong and the UK are both also very profitable, wellconnected markets. We are well positioned to capitalise on our positions as the number one bank in Hong Kong and a leading bank in the UK. Hong Kong’s connectivity, both globally and to mainland China, are helping us to grow our franchise. We have increased our market share in trade in Hong Kong by 6.6 percentage points over the last three years, according to HKMA data. Meanwhile new-to-bank customers in Hong Kong increased by $3 6 \\%$ over the same period as we have capitalised on the return of visitors from mainland China. In the UK, we have good traction in Commercial Banking and continue to grow market share in Wealth and Personal Banking. We are the leading bank for UK large corporates, with more than $70 \\%$ market penetration last year, according to Coalition Greenwich. Euromoney also named us as the best bank in the UK for small and medium-sized enterprises, as digitisation helped to grow new-to-bank clients through Kinetic. We also increased our market share of UK mortgage stock, from $7 . 4 \\%$ in 2020 to $8 \\%$ in 2023, according to Bank of England data. As economic conditions improve and we continue to invest, we are confident in our ability to grow further in these critical markets.", "chunk_word_count": 474, "section_path": "Opening up a world of opportunity > 21 February 2024 > From transform to sustain and grow", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 11, "page_start": 11, "page_end": 11 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 18, "chunk_text": "# Opening up a world of opportunity\n## 21 February 2024\n### From transform to sustain and grow\nThe first is to further grow our international businesses, which remains our biggest differentiator and growth opportunity. International expansion remains a core strategy for corporates and institutions seeking to develop and expand, especially the mid-market corporates that HSBC is very well-positioned to serve. Rather than de-globalising, we are seeing the world re-globalise, as supply chains change and intra-regional trade flows increase. Our international network and presence in markets that are benefiting like the ASEAN region and Mexico help us to capitalise on these trends. As a result, our market-leading trade franchise facilitated more than $\\$ 8500$ of trade in 2023, while we are the second biggest payments company by revenue and we processed around $\\$ 500t n$ of payments electronically in 2023. This helped to grow wholesale multijurisdictional client revenue from customers who bank with us in more than one market, by $2 9 \\%$ in 2023. With multi-jurisdictional corporate customers in Commercial Banking generating around five times as much client revenue as an average domestic customer, we continue to focus on growing this further, especially in the mid-market segment where we have a competitive advantage and there is still potential to further extend our market leadership.\nGlobal Banking and Markets delivered profit before tax of $\\$ 5.9$ bn, up $2 6 \\%$ compared with 2022, on a constant currency basis. Revenue grew by $10 \\%$ on a constant currency basis, due to higher net interest income in Global Payments Solutions and Securities Services. In Wealth and Personal Banking, profit before tax of $\\$ 123,456,7$ was $\\$ 6.1$ bn higher than in 2022, on a constant currency basis. Revenue was up by $3 1 \\%$ or $\\$ 6.45$ on a constant currency basis, reflecting growth in Personal Banking and in Wealth, as well as the positive year-on-year impact relating to the sale of our French retail banking business. Within this, Wealth revenue of $\\$ 7.$ 5bn was up $8 \\%$ or $\\$ 0.6$ bn on a constant currency basis, with good growth in private banking and asset management.\nReported costs for 2023 were down by $2 \\%$ compared with the previous year, as lower restructuring costs offset higher technology spending, inflation, higher performancerelated pay and levies. On a target basis, costs increased by $6 \\%$ , which was $1 \\%$ higher than previously guided due to levies including a charge relating to the FDIC special assessment levy in the US. Our reported cost-efficiency ratio improved to $4 8 . 5 \\%$ from $6 4 . 6 \\%$ in 2022, supported by higher net interest income.", "chunk_word_count": 443, "section_path": "Opening up a world of opportunity > 21 February 2024 > From transform to sustain and grow", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 11, "page_start": 11, "page_end": 11 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 19, "chunk_text": "# Opening up a world of opportunity\n## 21 February 2024\n### Future growth levers\nWe have also continued to diversify our profit generation geographically across multiple markets. The positions that we have as a leading foreign bank in mainland China, India, Singapore, the UAE, Saudi Arabia and Mexico – all of which are also well connected to our international network – mean we are well placed to capture opportunities in these fast-growing economies. This was again evident as they all grew reported profits significantly in 2023, with mainland China (excluding associates), India, and Singapore each contributing in excess of $\\$ 1$ 1bn of profits to the Group.\nUnderpinning all of this is our work to build a stronger performance culture, improve colleague experience and prepare our workforce for the future. This is important because achieving our ambitions depends on our 220,000 colleagues feeling motivated and believing in our strategy. In our most recent staff survey, I was pleased that the number of colleagues seeing the positive impact of our strategy in 2023 was up 11 percentage points on 2020, which is also above the financial services sector benchmark.\nIn 2023, we continued to build in areas we expect to drive future growth.\n\\$84bn We brought in of net new invested assets in wealth.\nWe grew multi-jurisdictional \nwholesale revenue by \n29% \nfrom $\\$ 15.80n$ in 2022 to \\$20.4bn in 2023.\nFinally, helping to finance the substantial investment needs of our customers in the transition to net zero is a growing commercial opportunity, as well as a necessity to mitigate rising financial and wider societal risks. Our first net zero transition plan shows how we intend to finance and support the transition to net zero and collaborate globally to help enable change at scale. It also sets out our roadmap for implementing net zero, which we will do by supporting our customers, embedding net zero into the way we operate and partnering for systemic change. We understand that our approach – including our own transition plan – will need to evolve over time to keep pace with both the evolving science and real economy decarbonisation across the sectors and geographies we serve.\nIt is critical that we maintain tight cost discipline. This was challenging in 2023 in a high inflation environment, and will likely remain so in 2024. At the same time, we need to invest in growth, so we remain very focused on maintaining tight underlying costs. The sale of our French retail banking operations completed on 1 January 2024, and the planned sale of our banking business in Canada remains due to complete in the first quarter of 2024. A number of smaller exits remain underway as we continue to look at opportunities to reshape our portfolio. At the same time, our acquisition of SVB UK enabled us to create a bigger, new proposition in HSBC Innovation Banking, which combines deep sector specialisms with our balance sheet strength and global reach, ensuring we continue our long history of supporting entrepreneurs.", "chunk_word_count": 501, "section_path": "Opening up a world of opportunity > 21 February 2024 > Future growth levers", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 12, "page_start": 12, "page_end": 12 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 20, "chunk_text": "# Opening up a world of opportunity\n## 21 February 2024\n### Thank you\nOn a personal note, one of the most enjoyable parts of 2023 for me was spending time with many of my colleagues around the world. Reconnecting with them, and seeing firsthand their passion for serving our customers, pride in HSBC and ambitions for the future, was energising and inspiring. Leading HSBC is a privilege, and my colleagues are the main reason why.\nDriving cost savings enables us to invest in technology, which is the fourth opportunity. The digitisation of our business continues to improve customer experience and increase efficiency. Using AI to help price complex structural options in our Foreign Exchange business has cut execution times down from hours to minutes. We have also identified hundreds of opportunities to leverage generative AI, and will focus our efforts on use cases with tangible benefits for the Group and our customers.\n2023 was a very good year for HSBC. We now have an opportunity to ensure that it becomes part of a longer-term trend of ongoing good performance and to secure the foundations for future success. I am confident that we have the opportunities, the platform and the team to enable us to get it done.\nInnovation also creates new avenues for growth. We recently launched Zing, which is our open market mobile platform focused on cross-border payments, initially available in the UK. It offers similar capabilities as Global Money does to our international Wealth and Personal Banking customers, but is targeted at non-HSBC customers and allows us to drive growth beyond our traditional customer footprint.\nNoel Quinn\nGroup Chief Executive\n21 February 2024\n### Our strategy\nWe are implementing our strategy across the four strategic pillars aligned to our purpose, values and ambition.\nfavourable year-on-year impact relating to the sale of our retail banking business in France. In CMB, revenue increased by $40 \\%$ on a constant currency basis, including a provisional gain on the acquisition of SVB UK. In addition, revenue in GBM increased by $10 \\%$ on a constant currency basis.\nOur strategy remains anchored around our four strategic pillars: ‘Focus’, ‘Digitise’, ‘Energise’ and ‘Transition’.\nOur reported profit before tax was $\\$ 30.30$ and we achieved a reported return on tangible equity of $1 4 . 6 \\%$ , or $1 5 . 6 \\%$ excluding the impact of strategic transactions and the impairment of our investment in BoCom. In our global businesses, WPB revenue increased by $3 1 \\%$ on a constant currency basis, including a\nWe delivered a good set of results in 2023 supported by the interest rate environment and the execution of our strategy.\n### Focus", "chunk_word_count": 445, "section_path": "Opening up a world of opportunity > 21 February 2024 > Thank you", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 21, "chunk_text": "# Opening up a world of opportunity\n## 21 February 2024\n### Wholesale – double down on leadership in international connectivity\nOur strength in international connectivity remains one of our key differentiators. We seek to partner with our clients as they expand internationally, and capitalise on opportunities arising from the reconfiguration of global supply chains.\nOur ambition is to maintain strong, resilient returns through the interest rate cycle. As such, we are prioritising growing capitallight, fee-income generating businesses, such as transaction banking. In 2023, we processed around $\\$ 500\\mathrm { t n }$ electronic payment transactions, ranking second by Global Payments Solutions revenue in the first half of ${ 2 0 2 3 ^ { 2 } }$ . We also facilitated over $\\$ 8500$ in trade and have been ranked first in revenue since 20182 .\nPercentage of wholesale revenue from multi-jurisdictional customers\n$\\ln 2 0 2 3$ , we grew wholesale multi-jurisdictional client revenue1 by $2 9 \\%$ since 2022, supported by the interest rate environment. These customers also generate more revenue with us. In CMB, multi-jurisdictional corporate clients generate approximately five times the revenue of a domestic-only corporate customer. In addition, there was increased collaboration across markets. In GBM, crossborder client revenue from clients managed in the West and booked in the East increased by $3 9 \\%$ from 2022.\n1 For further information and the basis of preparation for multi-jurisdictional client revenue, see page 134. 2 Global Payments Solutions and trade revenue rankings sourced from Coalition Greenwich.\n### WPB – build our international and wealth propositions\nWe continued to build our international and wealth propositions, taking advantage of the growth of wealth assets globally but especially in Asia. We amassed $\\$ 84 b n$ in net new invested assets in 2023, bringing total wealth invested assets to $\\$ 1$ ,191bn, an increase of $1 7 \\%$ from 2022.\nCustomers increasingly demand seamless banking across geographies. We continued to enhance Global Money, our mobile proposition that allows customers to spend and send money in multiple currencies. The product gained traction with more than 750,000 new customers in 2023, taking total customers to over 1.3 million.\n### Percentage of WPB revenue from international customers\n$\\ln 2 0 2 3$ , our international strategy generated good results. We continued to attract international customers, who are either multi-jurisdictional, non-resident or resident foreigners, from our top 11 markets1 . We increased new-to-bank customers2 in this segment by $4 3 \\%$ since 2022, bringing total international customers to 6.7 million. These customers also each generated approximately three times the income compared with domestic customers. As a result, we increased revenue in this segment by $4 1 \\%$ compared with 2022.\n## 1 Top11 markets include the UK,Hong Kong, Mexico,the US,India,Singapore,Malaysia,the UAE,Australia,mainland China and the Channel Islands and the Isle of Man.\n2 New-to-bank customers includes both new to bank customers and those customers who have opened anaccount ina new market,including those who already bank with us in one or more other markets.\n### Focus continued\n### Maintain leadership in scale markets\n634,500\nWe continued to take advantage of our strengths, especially our leading positions in our scale markets: Hong Kong and the UK.", "chunk_word_count": 531, "section_path": "Opening up a world of opportunity > 21 February 2024 > Wholesale – double down on leadership in international connectivity", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 13, "page_start": 13, "page_end": 14 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 22, "chunk_text": "# Opening up a world of opportunity\n## HSBC UK\nHSBC UK has a universal franchise with $\\$ 340 b n$ in customer deposits. We are a market leader across multiple CMB products, including trade finance and cash management, according to Euromoney and Coalition Greenwich.We aim to take advantage of our international network to maintain this position in CMB and grow our international presence in WPB.\nNew-to-bank WPB customers in Hong Kong\n### Hong Kong\n25.7% Share of the trade finance market in Hong Kong2\nWe have a well established business in Hong Kong, with $\\$ 54450 n$ in customer deposits and market leadership in a number of product areas1 .\nIn 2023, profit before tax was $\\$ 10.7\\mathrm { b n }$ , an increase of $80 \\%$ on a reported basis. In our wholesale businesses, we focused on maintaining our leading position across multiple products. In trade finance, our market share was $2 5 . 7 \\% .$ , an increase of 6.6 percentage points from $2 0 2 0 ^ { 2 }$ . We also continued to solidify our leadership position and grow our WPB business through the launch of a new Premier Elite proposition and acquisition of new customers, with new-to-bank WPB customers increasing by $3 6 \\%$ from 2020, reaching 634,500 in 2023.\nProfit before tax was $\\$ 8.30n$ in 2023, an increase of $8 4 \\%$ on a reported basis, including a $\\$ 1$ .6bn provisional gain on the acquisition of SVB UK. We continued to grow our CMB business and achieved a market penetration of more than $70 \\%$ within the large corporate banking segment in 20233 . In our WPB business, we opened over 1 million new current accounts and continued to grow our mortgage stock market share in the $\\mathsf { U K } ,$ reaching $8 . 0 \\%$ in 2023, an increase of 0.6 percentage points since $2 0 2 0 ^ { 4 }$ .\n>70%\nUK large corporate banking market penetration in 20233\n8.0%\nHSBC UK’s mortgage stock market share4\n1IncludingdepositsssetsardspendndisuranceSource:HongKngoetaryuthorityHngKonguranceutrity \n2Source: HKMA,31 December2023. \n3 Source: Coalition Greenwich Voice of Client-2023 European Large Corporate Cash Management Study \n4 Source: Bank of England.\n### Diversify our revenue\n### 1st\nIn addition to Hong Kong and the UK, five markets in particular represent growth opportunities for us. We aim to be the leader within the affluent and international customer segments in mainland China, India, Singapore and the UAE, and we are a market leader within retail banking in Mexico. These markets delivered strong results in 2023, with mainland China excluding BoCom, India and Singapore each delivering over $\\$ 1$ 1bn in profit before tax. The UAE and Mexico each delivered profit before tax of over $\\$ 0.8 b n$ .\n### Singapore\nOur ambition is to be the primary wholesale offshore booking centre and wealth hub within the ASEAN region. In 2023, we were recognised by AsiaMoney as the Best International Bank in Singapore. Additionally, we grew our retail franchise, with a $7 6 \\%$ increase in new-to-bank WPB international customers compared with 2022, supported by the launch of our new customer onboarding journey.\nForeign exchange ranking in mainland China Source: FX Markets Asia\n1st\nCash management ranking in India Source: Euromoney\n76%", "chunk_word_count": 545, "section_path": "Opening up a world of opportunity > HSBC UK", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 23, "chunk_text": "# Opening up a world of opportunity\n## UAE\n### Mainland China\nWe are growing our institutional and international wholesale business from a strong foundation. In 2023, we were ranked number one in equity and debt capital markets in MENAT2 . Within wealth, following the launch of onshore Global Private Banking, we grew our wealth invested assets by $3 5 \\%$ from 2022. We also grew international new-to-bank customers by $5 1 \\%$ since 2022.\nIncrease in new-to-bank WPB international customers in Singapore compared with 2022\nWe have a strong client franchise in mainland China capitalising on our role as a bridge to support clients’ international needs. We were ranked number one in foreign exchange by FX Markets Asia in 2023.We entered into an agreement to acquire Citi’s retail wealth management portfolio, and supported by our expanded onshore Global Private Banking and our Pinnacle proposition, we grew our wealth invested assets by $5 3 \\%$ compared with 2022.\n35%\nIncrease in wealth invested assets in the UAE compared with 2022\n51%\nMexico\nWithin our wholesale businesses, we continue to capitalise on trade flows between Mexico and North America. In 2023, we were ranked number one by Euromoney within trade finance in Mexico. In our wealth and retail businesses, we remain focused on delivering improved customer experience and growing our Global Private Banking business. In addition, over half of WPB client acquisitions in 2023 were referred by the wholesale businesses through our Employee Banking Solutions proposition.\nIndia\nWPB client acquisition from wholesale referrals in Mexico\nWe aim to continue growing our wholesale franchise by taking advantage of corporate supply chains. In 2023, we were ranked number one by Euromoney in cash management in India. We are also tapping into the wealth pools of the Indian diaspora with the launch of onshore Global Private Banking. In 2023, we were the top foreign bank for non-resident Indians in wealth1 .\n## 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic\n### Focus continued\n2 Source: Dealogic\n### Maintain cost discipline and reshape our portfolio\n$\\ln { 2 0 2 3 }$ , our costs were up by $6 \\%$ on a target basis. Our aim is to maintain cost discipline by driving efficiencies in our operations and reinvesting cost savings in areas that will drive future growth. We are prioritising investments in transaction banking, wealth and international propositions, and product innovation. At the same time, we continue to reshape our portfolio through exits and bolt-on acquisitions.\nWe completed our exit from our retail banking operations in France, our WPB business in New Zealand, and our businesses in Greece and Oman. Further exits from Canada, Russia and Armenia are underway as well as in our retail banking business in Mauritius.\nInnovation Banking, which was launched after the acquisition of SVB UK. We also entered into an agreement to acquire Citi’s retail wealth management portfolio in mainland China in August 2023, and completed our purchase of SilkRoad Property Partners, a real estate fund manager in January 2024, which will be integrated into our asset management business.\nThese exits will pave the way for investments in growth and efficiency areas such as HSBC\n2 Source: Dealogic\n### Digitise", "chunk_word_count": 532, "section_path": "Opening up a world of opportunity > 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic > Focus continued", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 24, "chunk_text": "# Opening up a world of opportunity\n## 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic\n### Improve customer experience and efficiency while investing in innovation\n$\\ln { 2 0 2 3 }$ , we made progress on our goal to become a digital-first bank, and our customers have been increasingly adopting our digital services. In CMB, $8 3 \\%$ of customers were digitally active, an increase of 5 percentage points since 2022. Our net promoter score for onboarding wholesale international clients in the last quarter of 2023 improved by 12 points when compared with the first three months of the year. At $54 \\%$ , more than half of WPB customers were mobile active, an increase of 6 percentage points from 2022. Furthermore, a total of $7 5 \\%$ of WPB’s international customer accounts were opened digitally in 2023, an increase of 30 percentage points from 2022.\nWe are also focused on building future-ready business models by investing in open-market propositions. In 2023, we announced a partnership with Tradeshift to launch a new embedded finance solution in the first half of 2024, which will provide payment and financial services embedded into trade, e-commerce and marketplace experiences. In January 2024, in the UK we launched Zing, a mobile platform enabling cross-border payments available to non-HSBC consumers.\nWe are also investing in innovative technologies for the future. In 2024, we plan to both concentrate our efforts and increase our investment in artificial intelligence (‘Al’). At present, we employ Al in areas such as fraud detection and transaction monitoring. We also launched Al Markets, a digital service that utilises natural language processing to enrich the way investors interact with global markets. Additionally, we are in the process of piloting numerous generative Al use cases in areas like developer augmentation, creative content generation and knowledge management, and have identified hundreds more potential opportunities.\n2 Source: Dealogic\n### Energise", "chunk_word_count": 316, "section_path": "Opening up a world of opportunity > 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic > Improve customer experience and efficiency while investing in innovation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 15, "page_start": 15, "page_end": 15 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 25, "chunk_text": "# Opening up a world of opportunity\n## 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic\n### Inspire a dynamic culture\nWe are opening up a world of opportunity for our colleagues by building an inclusive organisation that empowers and energises them. We intend to accomplish this by building a stronger performance culture, improving colleague experience and preparing a workforce for the future.\nOur success is underpinned by our colleagues. In a changing world, we empower our colleagues by providing clarity of our strategy and opportunities for them to develop and have fulfilling careers. Our 2023 employee Snapshot survey showed that $73 \\%$ of our colleagues see the positive impact of our strategy, a 3 percentage point increase from 2022, and a 11 percentage point improvement from 2020. The survey also showed that $8 1 \\%$ of our colleagues feel confident about HSBC’s future, a 4 percentage point increase from 2022, and also a 11 percentage point improvement over 2020.\nWe remain focused on creating a diverse and inclusive environment. In 2023, $3 4 . 1 \\%$ of senior leadership roles were held by women, and we are on track to achieve our ambition of $3 5 \\%$ by 2025. We also set a Group-wide ethnicity strategy to better represent the communities we serve, with $3 . 0 \\%$ of leadership roles in the UK and US held by colleagues of Black heritage in 2023, against our ambition of $3 . 4 \\%$ by 2025. Additionally, in 2023, over $3 7 . 8 \\%$ of our senior leaders have identified as being from an Asian heritage background.\nInthe following 'ESG overview'section,we outline how we put our purpose and values into practice.\n2 Source: Dealogic\n### Transition", "chunk_word_count": 287, "section_path": "Opening up a world of opportunity > 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic > Inspire a dynamic culture", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 15, "page_start": 15, "page_end": 15 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 26, "chunk_text": "# Opening up a world of opportunity\n## 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic\n### Support the transition to net zero\nIn 2020, we set out our ambition to become a net zero bank by 2050. Since then, we have taken a number of steps to execute on our ambition and manage climate risks. In January 2024, we published our first net zero transition plan, which provides an overview of the progress we have made to date and the actions being taken and planned to embed our net zero ambition across HSBC. It sets out how we intend to harness our strengths and capabilities in the areas where we believe we can support large-scale emissions reduction: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains.\nTo support our customers through the transition to net zero and to a sustainable future, in 2020, we set out an ambition to provide and facilitate $\\$ 7500$ to $\\$ 9$ 1tn of sustainable finance and investments by 2030. In 2023, we provided and facilitated $\\$ 83.70n$ of sustainable finance and investments, bringing our cumulative total since January 2020 to $\\$ 294.45 n$ .\nManagement’s actively managed product offerings to help ensure the ESG risks faced by companies are considered when making investment decisions and to assess ESG risks and opportunities that could impact investment performance.\nWe also made progress in our ambition to become net zero in our own operations and supply chain by 2030. In 2023, we reduced our absolute greenhouse gas emissions in our operations to 293,333 tonnes $\\mathsf { C O } _ { 2 } \\mathsf { e }$ , which represents a $5 7 . 3 \\%$ reduction from our 2019 baseline.\nAs part of our ambition to align our financed emissions to achieve net zero by 2050, we have set on-balance sheet or combined financed emissions targets for a number of emission-intensive sectors.\nWork continues on the integration of ESG and climate analysis into HSBC Asset\nFor further details on our climate ambition, see the following 'ESG overview'section.\n2 Source: Dealogic\n### ESG overview\nWe are taking steps to incorporate environmental, social and governance principles throughout the organisation, supporting the success of our customers, people and other stakeholders.", "chunk_word_count": 376, "section_path": "Opening up a world of opportunity > 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic > Support the transition to net zero", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 27, "chunk_text": "# Opening up a world of opportunity\n## 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic\n### Our approach\nWe recognise both the commercial opportunity of taking action to transition to net zero and the potential risks of inaction by society at large. In our net zero transition plan, we provide an overview of the actions we are taking and plan to take to support our customers, embed net zero into the way we operate and partner for systemic change. We also set out how we are starting to work to integrate nature and just transition considerations into our net zero approach.\nWe strive to provide an inclusive and accessible banking experience for our customers. We do this by providing resources that help them manage their finances, and services that help them protect what they value.\nWe are guided by our purpose: to open up a world of opportunity for our customers, colleagues and communities. Our purpose is underpinned by our values: we value difference; we succeed together; we take responsibility; and we get it done.\nOur approach to ESG is shaped by our purpose and values and a desire to create sustainable long-term value for our stakeholders. As an international bank with significant breadth and scale, we understand that our economies, societies, supply chains and people’s lives are interconnected. We recognise we can play an important role in helping to tackle ESG challenges. We focus our efforts on three areas: the transition to net zero, building inclusion and resilience, and acting responsibly.\nWe are developing an updated global philanthropy strategy that aligns with our ESG areas of focus: ‘transition to net zero’ and ‘building inclusion and resilience’.\nWe set out in more detail the steps we are taking on our climate ambitions in the ESG review on page 41.\n2 Source: Dealogic\n### Act responsibly\nWe are focused on operating a strong and sustainable business that puts the customer first, values good governance, and gives our stakeholders confidence in how we do what we do. Our conduct approach guides us to do the right thing and to focus on the impact we have on our customers and the financial markets in which we operate. Customer experience is at the heart of how we operate. We aim to act responsibly and with integrity across the value chain.\n2 Source: Dealogic\n### Build inclusion and resilience\nTo help create long-term value for all stakeholders, we focus on fostering inclusion and building resilience for our colleagues, our customers and the communities we operate within.", "chunk_word_count": 423, "section_path": "Opening up a world of opportunity > 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic > Our approach", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 16, "page_start": 16, "page_end": 16 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 28, "chunk_text": "# Opening up a world of opportunity\n## 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic\n### Transition to net zero\nIn 2020, we set an ambition to become a net zero bank by 2050. Since then, we have made progress in support of this ambition – including providing and facilitating sustainable finance and investment for our customers, updating several of our sustainability and investment risk policies, and setting 2030 targets for financed emissions in a range of high-emitting sectors.\nFor colleagues, we focus on creating an inclusive, healthy and rewarding environment as this helps us to attract, develop and retain the best talent, and we support their resilience through well-being and learning resources. We continue to make progress towards our goals for gender and ethnic diversity.\nOn page 15, we have set out ways that we have supported our stakeholders through a challenging year.\n2 Source: Dealogic\n### ESG disclosure map and directory\n2 Source: Dealogic\n### Engaging with our stakeholders and our material ESG topics\nWe know that engaging with our stakeholders is core to being a responsible business. To determine material topics that our stakeholders are interested in, we conduct a number of activities throughout the year,\nincluding engagements outlined in the table below. Disclosure standards such as the TCFD, World Economic Forum (‘WEF’) Stakeholder Capitalism Metrics and Sustainability Accounting Standards Board (‘SASB’), as well as the ESG Guide under the Hong Kong Stock Exchange Listing Rules and other applicable rules and regulations, are considered as part of the identification of material issues and disclosures.", "chunk_word_count": 259, "section_path": "Opening up a world of opportunity > 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic > Transition to net zero", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 29, "chunk_text": "# Opening up a world of opportunity\n## 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic\n### Supporting our customers in challenging economic times\n– offered customers the option to switch mortgage rates early, extend their mortgage term with an option to reverse it at a later date, or pay interest only for six months, as part of our commitment to the new UK Mortgage Charter;\nIn 2023, we contacted targeted clients to help improve awareness of the support available, including communicating with over 178,000 SMEs and proactively making over 43,000 outbound calls.\nWe know that many of our customers continue to face difficult financial circumstances due to cost of living pressures, and we are working to support them. As the rising cost of living has been particularly high in the UK, one of our largest markets, most of our initiatives focused on supporting our UK personal and business customers. We have enhanced our range of digital resources available on our website and we are proactively approaching those most in need – both personal and business customers – to offer targeted support and help build their financial resilience.\nIncreasing understanding of fraud and scam risk and education on how to protect against becoming a victim continues to be another key area of focus. In 2023, we also:\n– offered a temporary reduction of fees on arranged overdrafts to help those most in need pay less;\n– held over 1,000 financial well-being webinars, including 227 cost of living sessions for 50,000 customers and colleagues;\n– held fraud and scam awareness webinars to highlight recent trends and case studies, attended by approximately 4,300 customers;\n– helped more than 37,000 customers identify $\\mathtt { E 2 . 9 m }$ in potential benefits by providing access to a benefits calculator tool via our website; and\n– sent 2.1 million emails and 300,000 letters in quarterly campaigns to share our insights and enhance understanding of key fraud topics and trends; and\nProactive support\n– helped more than 130,000 customers generate a financial fitness score, and obtain tips on how to improve their financial resilience using our online financial fitness tool.\nFor personal customers in financial difficulty, we have developed our digital services with improvements to the ‘Rising cost of living’ hub on our public website in the UK. Use of segmentation data has enabled us to take a proactive approach to supporting customers and offering targeted solutions to those who are identified as being most in need.\n– published 44 articles and alerts on the HSBC Fraud and Cyber Awareness mobile app, covering a broad range of topics as well as any emerging threats and trends.\nIn the UK, CMB has continued to support commercial banking clients exhibiting signs of financial vulnerability. We reviewed client needs on a case-by-case basis and provided solutions including repayment holidays, extending loan repayments and offering extensions to collection periods. The use of data and front-line insights has improved our ability to identify financially vulnerable customers.\nFor further details of our work to support vulnerable communities and customers see page 85.\nForfurther details on our conduct and product responsibilities,see the ESG review on page 96.\nWe have engaged with vulnerable customer groups through cost of living calls, targeted emails and direct mail. In 2023, we also:", "chunk_word_count": 548, "section_path": "Opening up a world of opportunity > 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic > Supporting our customers in challenging economic times", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 17, "page_start": 17, "page_end": 17 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 30, "chunk_text": "# Opening up a world of opportunity\n## 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic\n### Our ESG ambitions, metrics and targets TCFD\nWe have established ambitions and targets that guide how we do business, including how we operate and how we serve our customers. These include targets designed to help track our progress against our environmental and social sustainability goals. They also help us to improve employee advocacy and the diversity of senior leadership, as well as strengthen our market conduct. The targets for these measures\nare linked to the pillars of our ESG strategy: transition to net zero, building inclusion and resilience, and acting responsibly.\nFor a summary of how all financial and non-financial metrics link to executive remuneration, see pages 284 to 298 of the Directors’ remuneration report.\nTo help us achieve our ESG ambitions, a number of measures are included in the annual incentive and long-term incentive scorecards of the Group Chief Executive, Group Chief Financial Officer and Group Executives that underpin the ESG metrics in the table below.\nThe table below sets out some of our key ESG metrics that we use to measure our progress against our ambitions. For further details of how we are doing, see the ESG review on page 41.\n2 Source: Dealogic\n### Environmental:\nSustainable finance and investment2 \\$294.4bn\nNet zero in our own operations3 57.3%\nFinanced \nemissions4 \n7 sectors\n2 Source: Dealogic\n### Transition to net zero1\nNumber of sectors where we have set financed emissions targets, comprising five on-balance sheet and two combined financed emissions targets.\nCumulative total provided and facilitated since January 2020. (2022: \\$210.7bn)\nReduction in absolute operational greenhouse gas emissions from 2019 baseline. \n(2022: $5 8 . 5 \\% )$\nAmbition: Provide and facilitate $\\$ 7500$ to $\\$ 1$ 1tn of sustainable finance and investment by 2030.\nAmbition: To be net zero in our own operations and supply chain by 2030.\nAmbition: Align our financed emissions to achieve net zero by 2050.\n2 Source: Dealogic\n### Social:\nGender diversity5 34.1%\nBlack heritage5 3.0%\nEmployee engagement6 77%\n2 Source: Dealogic\n### Build inclusion and resilience\nSenior leadership roles held by women. (2022: $3 3 . 3 \\% \\AA$\nSenior leadership roles held by Black heritage colleagues in the UK and US combined (2022: $2 . 5 \\%$ ) Ambition: $3 . 4 \\%$ of senior leadership roles held by Black heritage colleagues in the UK and US combined by 2025.\nEmployee engagement score. (2022: $7 4 \\% )$\nAmbition: Maintain $7 2 \\%$ in the employee Snapshot engagement index.\nAmbition: Achieve $3 5 \\%$ senior leadership roles held by women by 2025.\n2 Source: Dealogic\n### Governance:\nConduct training7 98%\nCustomer satisfaction8 \n3 out of 6\n## 5 out of 6\n### Acting responsibly\nEmployees who completed conduct training in 2023. (2022: $9 8 \\%$ )\nWPB markets that sustained top-three rank and/or improved in customer satisfaction. (2022: 4 out of 6)\nCMB markets that sustained top-three rank and/or improved in customer satisfaction. (2022: 5 out of 6)\nTarget: At least $9 8 \\%$ of employees complete conduct and financial crime training each year.\nTarget: To be ranked top three and/or improve customer satisfaction rank.\nTarget: To be ranked top three and/or improve customer satisfaction rank", "chunk_word_count": 542, "section_path": "Opening up a world of opportunity > 1 Source: Indian Mutual Fund Industry \n2 Source: Dealogic > Our ESG ambitions, metrics and targets TCFD", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 18, "page_start": 18, "page_end": 18 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 31, "chunk_text": "# Opening up a world of opportunity\n## 5 out of 6\n### Task Force on Climate-related Financial Disclosures (‘TCFD’) TCFD\nThe Financial Stability Board’s Task Force on Climate-related Financial Disclosures (‘TCFD’) recommendations set an important framework for understanding and analysing climate-related risks, and we are committed to regular and transparent reporting to help communicate and track our progress. We will advocate the same from our customers, suppliers and the industry.\n– For financed emissions we do not plan to set 2025 targets. We set targets in line with the Net-Zero Banking Alliance (‘NZBA‘) guidelines by setting 2030 targets. While the NZBA defines 2030 as intermediate, we use different time horizons for climate risk management. For climate, we define short term as time periods up to 2025; medium term is between 2026 and 2035; and long term is between 2036 and 2050. These time periods align to the Climate Action $1 0 0 +$ disclosure framework. In 2023, we disclosed interim 2030 targets for financed emissions for a number of sectors as we outline on page 18. Following this, we have now set combined on-balance sheet financed emissions and facilitated emissions targets for two emissions-intensive sectors: oil and gas, and power and utilities.\n– We do not fully disclose impacts from climate-related opportunities on financial planning and performance including on revenue, costs and the balance sheet, quantitative scenario analysis, detailed climate risk exposures for all sectors and geographies or physical risk metrics. This is due to transitional challenges in relation to data limitations, although nascent work is ongoing in these areas. We expect these data limitations to be addressed in the medium term as more reliable data becomes available and technology solutions are implemented.\nWe have set out our key climate-related financial disclosures throughout the Annual Report and Accounts 2023 and related disclosures. We recognise that further work lies ahead as we continue to develop our management and reporting capabilities. In 2023, we made certain enhancements to our disclosures. These include enhancing our merger and acquisition process to consider potential climate and sustainability-related targets, net zero transition plans and climate strategy, and how this relates to HSBC. In addition, we published our net zero transition plan.\n– We currently disclose four out of 15 categories of scope 3 greenhouse gas emissions including business travel, supply chain and financed emissions. In relation to financed emissions, we publish on-balance sheet financed emissions for a number of sectors as detailed on page 18. We also publish facilitated emissions for the oil and gas, and power and utilities sectors. Future disclosures on financed emissions and related risks are reliant on our customers publicly disclosing their greenhouse gas emissions, targets and plans, and related risks. We recognise the need to provide early transparency on climate disclosures but balance this with the recognition that existing data and reporting processes require significant enhancements.\n– The methodology and data used for financed emissions is evolving and we expect industry guidance, market practice, data availability, scenarios and regulatory disclosure requirements to continue to change, along with the shape of our own business. We expect to periodically review and, if required, update our methodologies, baselines, scenarios, and targets to reflect real economy decarbonisation and evolving guidance and data.", "chunk_word_count": 538, "section_path": "Opening up a world of opportunity > 5 out of 6 > Task Force on Climate-related Financial Disclosures (‘TCFD’) TCFD", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 32, "chunk_text": "# Opening up a world of opportunity\n## 5 out of 6\n### Task Force on Climate-related Financial Disclosures (‘TCFD’) TCFD\nWe have considered our ‘comply or explain’ obligation under both the UK’s Financial Conduct Authority’s Listing Rules and Sections 414CA and 414CB of the UK Companies Act 2006, and confirm that we have made disclosures consistent with the TCFD Recommendations and Recommended Disclosures, including its annexes and supplemental guidance, save for certain items, which we summarise below.\nDFora full summary of ourTCFD disclosures, including detailed disclosure locations for additional information,see pages 69 to 74. The additional information section on page440 provides further detail.\n### Backing renewable connections in South America\nWe helped to finance one of the largest transmission lines in South America, which will connect central and southern Chile to renewable energy generated in the north.\nConexión is building the Kimal-Lo Aguirre initiative after winning a tender from Chile’s Minister of Energy in 2022. The project will aim to develop approximately $1 , 4 0 0 \\mathsf { k m }$ of critical infrastructure with the ability to carry up to 3,000 million watts of energy when scheduled to complete in 2029.\nWe provided a $\\$ 160\\mathrm { m }$ equity bridge loan to support China Southern Power Grid’s contribution to the project. China Southern Power Grid is the second largest electric power company in China. The funds will help unlock energy transition infrastructure required to support Chile in achieving its net zero goals.", "chunk_word_count": 246, "section_path": "Opening up a world of opportunity > 5 out of 6 > Task Force on Climate-related Financial Disclosures (‘TCFD’) TCFD", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 33, "chunk_text": "# Opening up a world of opportunity\n## 5 out of 6\n### How we measure our net zero progress TCFD\nover time to keep pace with real economy developments. Emissions and broader customer data is also expected to improve, as well as approaches and standards for greenhouse gas accounting and target setting. As a result of this, we expect to regularly refine and update our analysis as well as data collection and consolidation processes to accommodate new data sources and updated methodologies and scenarios, and intend to be transparent on any changes we make and why. As an example, our ESG review includes recalculated 2019 and 2020 financed emissions figures for the oil and gas, and power and utilities sectors. In addition, periodic updates to published net zero-aligned scenarios mean that it will be important that our net zero-aligned reference scenario choice, and by extension our target-setting approach, remain in step with the evolving real economy context and is informed by the latest science.\nWe are helping the transition to a net zero economy by transforming ourselves, and supporting our customers to make their own transitions. Our ambition is to align our financed emissions to net zero by 2050 or sooner.\ntransport, specifically for the following sectors: oil and gas; power and utilities; cement; iron, steel and aluminium; aviation; automotive; and thermal coal mining.\nFollowing a reduction in our exposure to the shipping sector after the strategic sale of part of our European shipping portfolio in 2023, and work undertaken to assess the materiality of our remaining portfolio from a financed emissions perspective, we have concluded that the remaining exposure as of year-end 2023 is not material enough to warrant setting a stand-alone target. This aligns with NZBA guidelines on sector inclusion for target setting. Due to ongoing data availability and quality challenges, we continue to assess our financed emissions for our real estate and agriculture sectors.\nOur net zero transition plan sets out how we intend to harness our strengths and capabilities in areas where we believe we can support large-scale emissions reduction: transitioning industry, catalysing the new economy, and decarbonising trade and supply chains. The plan also provides details on our sectoral approach, and on our implementation plan to embed net zero into the way we operate.\nWe continue to track our progress against our ambition to provide and facilitate $\\$ 7500$ to $\\$ 1$ 1tn of sustainable finance and investment by 2030, aligned to our published data dictionary, and our ambition to achieve net zero in our own operations and supply chain by 2030. We also recognise that green and sustainable finance and investment taxonomies are not consistent globally, and evolving taxonomies and practices could result in revisions in our sustainable finance reporting going forward.\nWe recognise that there is a significant amount of uncertainty and complexity related to the transition, and that progress in the real economy will depend heavily on external factors including the policy and regulatory landscape across markets, the speed of technological innovation and growth, and economic and geopolitical events. In addition, climate science and the availability and quality of climate data continue to evolve, and the net zero-aligned scenarios upon which we have based our approach will also update", "chunk_word_count": 538, "section_path": "Opening up a world of opportunity > 5 out of 6 > How we measure our net zero progress TCFD", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 20, "page_start": 20, "page_end": 20 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 34, "chunk_text": "# Opening up a world of opportunity\n## 5 out of 6\n### How we measure our net zero progress TCFD\nIn the following table, we set out our metrics and indicators and assess our progress against them.\nDFor further details of our approach to measuring financed emissions,including scope, methodology,assumptions and limitations, see page53.\nTo date, we have set 2030 financed emissions targets across energy, heavy industry and\n### Responsible business culture\nWe have a responsibility to help protect our customers, our communities and the integrity of the financial system.\n$91 \\%$ of our colleagues to disclose their ethnicity, with $6 2 \\%$ currently choosing to do so, where this is legally permissible.\nrelief when needed. For examples of our programmes, see the ‘Communities’ section of the ESG review on page 86.\nThe table below outlines high-level diversity metrics.\n### Employee matters\n### Human rights\nWe are building a responsible business culture that values difference, takes responsibility, seeks different perspectives and upholds good standards of conduct.\nAs set out in our Human Rights Statement, we recognise the role of business in respecting human rights. Our approach is guided by the UN Guiding Principles on Business and Human Rights (‘UNGPs’) and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. Our Human Rights Statement, and annual statements under the UK’s Modern Slavery Act, are available on www.hsbc.com/who-we-are/ esg-and-responsible-business/esg-reportingcentre. For further details of our approach, see the ‘Human rights’ section of the ESG review on page 89.\nThere may be times when our colleagues need to speak up about behaviours in the workplace. In the first instance we encourage colleagues to speak to their line manager, and our annual Snapshot survey showed that $8 6 \\%$ of colleagues have trust in their direct manager. HSBC Confidential is our whistleblowing channel, which allows colleagues past and present to raise concerns confidentially and, if preferred, anonymously (subject to local laws). Our Snapshot survey showed that $80 \\%$ of colleagues feel able to speak up when they see behaviours they consider to be wrong.\n### Anti-corruption and anti-bribery\nWe are required to comply with all applicable anti-bribery and corruption laws in every market and jurisdiction in which we operate while focusing on the spirit of relevant laws and regulations to demonstrate our commitment to ethical behaviours and conduct as part of our environmental, social and corporate governance.\n## 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure.\nWe promote an environment where our colleagues are treated with dignity and respect and we act where we find behaviours that fall short. Our inclusion index measures our colleagues’ sense of belonging and psychological safety within the organisation, and in 2023 this increased to $78 \\%$ .\nFor further detailsof how we look after our people,including our diversity targets,how we encourage our employees to speak up,and our approachtoemployeeconduct,seethe Social section of the ESG review on page 75\n### Environmental matters", "chunk_word_count": 490, "section_path": "Opening up a world of opportunity > 5 out of 6 > How we measure our net zero progress TCFD", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 35, "chunk_text": "# Opening up a world of opportunity\n## 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure.\n### Listening to our customers\nFor details of our climate ambition and carbon emission metrics, see the ESG review on page 44.\nWe aspire to be an organisation that is representative of the communities in which we serve. We have committed to achieving a $3 5 \\%$ representation of women in senior leadership roles (classified as those at band 3 and above in our global career band structure) by 2025. We remain on track, having achieved $3 4 . 1 \\%$ in 2023.\nWe continue to listen, learn and act on our customers’ feedback. We have implemented the net promoter system, enabling us to share customer feedback with our front-line teams and allowing them to respond directly to customers. We also have dedicated global forums to promote continuous improvement of our customers’ experience.\n### Group non-financial and sustainability information statement\nThis section primarily covers Group nonfinancial and sustainability information as required by applicable regulations. Other related information can be found as follows:\nWe aspire to achieve a $3 . 4 \\%$ representation of Black heritage colleagues in senior leadership roles across the UK and US combined by 2025. We are on track to achieve this, having increased our representation to $3 . 0 \\%$ this year. We continue to make progress but we know there is more to be done.\n### Social matters\nWe invest in the long-term prosperity of the communities where we operate. We aim to provide people, especially those in marginalised and vulnerable communities, with the skills and knowledge needed to thrive through the transition to a sustainable future. For this reason, we focus our support on programmes that help build inclusion and resilience. We also support climate solutions and innovation, and contribute to disaster\nDFor further details of ourkey performance indicators,seege1. \nFor further details of our business model, see page 4. \nDFor further details of our principal risks and how theyaremanaged,see pages37 to 39. \nFor further details of our TCFD disclosures, includingalignment withsections414CAand 414CBof theCompaniesAct2006,seepages 69 to 74.\nTo ensure we set representation goals that are locally relevant, we enable our employees to self-disclose ethnicity data. We have enabled\n### Training colleagues and partners on digital accessibility\nWith ‘Digitise’ being one of our strategic pillars, we are committed to improving how our customers can access our online and mobile services. We review against the Web Content Accessibility Guidelines for our websites in 23 markets and mobile apps in 18 markets, and engaged with more than 10,000 colleagues, partners and companies through our digital accessibility training and awareness programme in 2023. To share best practice externally, HSBC sponsored and hosted AbilityNet’s Techshare Pro at our head office in the UK. Our work on digital accessibility was recognised through 11 awards in 2023, including in Hong Kong, where we were the only financial services provider to be recognised for our core banking apps.", "chunk_word_count": 499, "section_path": "Opening up a world of opportunity > 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure. > Listening to our customers", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 21, "page_start": 21, "page_end": 21 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 36, "chunk_text": "# Opening up a world of opportunity\n## 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure.\n### Board decision making and engagement with stakeholders\nThe Board is committed to effective engagement with all our stakeholders and seeks to understand their interests and the impacts on them when making decisions.\n### Section 172(1) statement\nThis section, from pages 20 to 23, forms our section 172(1) statement. It describes how the Directors have performed their duty to promote the success of the company, including how they have considered and engaged with stakeholders and, in particular, how they have taken account of the matters set out in section 172(1)(a) to (f) of the Companies Act 2006. The Board continued to focus on its engagement with our key stakeholders, acknowledging that this engagement is core to being a responsible business and furthers the fulfilment of our strategy. In discharging their responsibilities, the Directors sought to understand, and have regard to, the interests and priorities of the Group’s key stakeholders, including in relation to material decisions that were taken by the Board during the course of the year.\nThe following table includes instances where the Directors have had regard to section 172(1) factors (which are not mutually exclusive) when discussing certain matters in Board meetings and taking decisions where relevant. Some of these instances are explained in more detail in this section 172(1) statement and in the report of the Directors.\n### Section 172(1) factor\nDuring 2023, the Board continued with an active stakeholder engagement programme, meeting numerous stakeholders in several international locations. For further details of how we engaged with our stakeholders, see pages 21 and 257.\nOn pages 22 and 23, we describe how the Board exercises its Directors’ section 172(1) duty and takes into account the impact on relevant stakeholders when making principal decisions in order to support and deliver on the Group’s strategy.\n### Principal strategic decisions\nThe Board operates having regard to the duties of the Directors, including the relevant matters set out in section 172(1)(a)-(f) of the Companies Act 2006. A key focus for the Board is setting, and monitoring execution against, the Group strategy. Principal decisions taken by the Board consider how the decision furthers the Group purpose, and aligns with one or all of the strategic pillars: ‘Focus’, ‘Digitise’, ‘Energise’ and ‘Transition’.\nThe following examples demonstrate how the Board operated having regard to the duties of the Directors. Good governance practices adopted by the Board facilitate its key decision taking. Governance features as an agenda item at all scheduled Board meetings. Papers presented to the Board for consideration are expected to follow a template to help ensure that Directors get the right level of information to take informed decisions in keeping with their duties. The template requests authors to, among others things, describe the extent to which relevant stakeholders are engaged with, or impacted by, the matter under consideration, and whether this has influenced the recommendation to the Board.", "chunk_word_count": 500, "section_path": "Opening up a world of opportunity > 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure. > Board decision making and engagement with stakeholders", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 22, "page_start": 22, "page_end": 24 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 37, "chunk_text": "# Opening up a world of opportunity\n## 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure.\n### Group strategy\nAs part of the Board’s responsibility to set, and monitor execution against, HSBC’s strategy, Directors take into consideration the Group’s strategies across the global businesses and legal entities. The Board continued to oversee the progression of the Group’s divestment of non-core operations while targeting select acquisitions. One such principal decision taken during the year was the acquisition by HSBC UK Bank plc of SVB UK. In considering this opportunity, the Board took into account the views of key stakeholders, including UK regulators and the government. It also considered the potential impact of the acquisition on SVB UK customers, principally that their banking services would be maintained, backed by the strength, safety and security of HSBC. The Board also considered how the acquisition would enhance shareholder value, strengthen our CMB franchise, and further its ability to serve innovation and fast-growing firms in the technology and life sciences sectors, supporting our ‘Focus’ strategic pillar. Following the acquisition of SVB UK, HSBC Innovation Banking was launched in June 2023. Senior management embarked on a programme of communication and interactions with customers, employees and investors by way of townhalls and Q&A sessions to help key stakeholders understand the rationale for the transaction and reiterate HSBC’s support for its customers.\nDuring the course of the year, the Board continued a targeted focus on receiving relevant and succinct management information, including key metrics and data, to help demonstrate progress against strategic areas of interest. The Board considered how it should be informed, in the most transparent way, on the evolution of the Group’s strategy from transformation to one focused on growth. The Board has agreed key performance indicators to help keep it informed on relevant areas of strategic progress, all of which are focused on four overarching perspectives: external commitments/key outcomes; key business drivers; sustainable financial performance; and the ability to transform and license to operate. These indicators will also be used to foster a culture of performance and discipline across the organisation and will be factored into executive Directors’ scorecards.\nThe Board continued its monitoring and oversight of the impacts flowing from its principal strategic decisions taken in the current and previous years, in particular the sale of the retail banking operations in France and the planned sale of the banking business in Canada. The Board met in order to agree amended terms to complete our France business sale. It was updated regularly, and provided input as appropriate, on actions required to ensure the successful completion of these transactions. It also liaised with relevant stakeholders such as governments, regulators, work councils, employees and customers, as necessary.\nIn this way, the Board effectively carried out its duties and assured itself that the principal strategic decisions taken were, and continue to be, most likely to promote the long-term success of the company.", "chunk_word_count": 492, "section_path": "Opening up a world of opportunity > 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure. > Group strategy", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 24, "page_start": 24, "page_end": 24 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 38, "chunk_text": "# Opening up a world of opportunity\n## 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure.\n### Sustainability\nAppreciating the importance of the Group’s commitment to publish a net zero transition plan, the Board took the decision to establish a dedicated sub-group with responsibility for overseeing its finalisation, taking into consideration the implications for all our stakeholders and communication of the plan to the market. This sub-group included four non-executive Directors, the Group Chief Executive and the Group Chief Financial Officer, as well as other members of senior management. It took into consideration the short-term consequences on stakeholders, particularly for customers and investors, and balanced these against long-term benefits for the Group, the society in which we live, and the success of the company as a whole for the long term. Recommendations made to the Board by the sub-group, including stakeholder impacts, helped to inform the Board’s deliberations, leading to its final approval of the net zero transition plan, published in January 2024.\nThe Board is responsible for the oversight of the Group’s sustainability and ESG strategy setting and delivery, and monitors progress against execution of our net zero ambitions. Key outcomes are reviewed regularly by the Board. Directors also received training on ESG-related matters as part of their ongoing development.\nThe Board’s understanding of the progress against the Group’s ESG strategy was informed by the ESG dashboard. The data provided in this dashboard included key metrics that help the Board to monitor progress against the Group’s ESG ambitions, including the transition to net zero, building inclusion and resilience, and acting responsibly. Additional details were provided on metrics relating to the roll-out of the Group’s supplier code of conduct, female entrepreneurship and gender diversity in senior roles.\nIn 2023, the Board gave the Group Executive Committee feedback on the need to better define core areas of the Group’s sustainability execution programme, a Group-wide programme to enable the delivery of our sustainability agenda. The core areas included accountability, governance, capability, investment in infrastructure and data. Governance was enhanced by the establishment of the Sustainability Execution Committee, with responsibility to oversee delivery of the sustainability execution programme. This committee reports to the Group Executive Committee which receives regular updates on progress towards fulfilment of our net zero ambitions. It takes into account key stakeholder considerations and potential impacts on the Group’s strategic direction for sustainability, and reports these to the Board, helping Directors take relevant decisions. In addition, three non-executive Directors participated in climate advisory panel meetings with external subject matter experts to discuss sustainability, including the Group’s net zero transition plan.", "chunk_word_count": 438, "section_path": "Opening up a world of opportunity > 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure. > Sustainability", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 24, "page_start": 24, "page_end": 24 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 39, "chunk_text": "# Opening up a world of opportunity\n## 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure.\n### Technology\nIn support of the strategic pillar ‘Digitise’, the Board continued its oversight of the Group’s technology strategy, Vision 27, recognising that technology is an integral part of business success. In overseeing legal entity and global business strategies, the Board acts to promote connectivity of technology strategies across the organisation.\nBoard. It also attended a Board meeting in person to discuss the independent review. The findings from the report helped deepen the Board’s understanding of contributing factors to the success of Vision 27.\nThe third party’s review was facilitated by its attendance at the newly formed technology steering committee, overseen by the Board’s Technology Governance Working Group. This steering committee comprised senior management including global business representatives to ensure that business views were well represented. The insights gained from the steering committee helped to form its reports to the Technology Governance Working Group, which in turn reports to the\nAs a result of the review and related Board discussions, in order to enhance governance around overseeing the progress of the Group’s long-term technology strategy, the Board agreed that a new Board committee will be established in 2024 in place of the Technology Governance Working Group, to be chaired by a non-executive Director.\nTo help assure the Board that the Vision 27 initiatives remained strategically aligned and appropriately resourced, it supported the appointment of a third-party professional services firm to conduct a review. The third party engaged with employees from across the global businesses and functions to explore how the organisation was executing various technological initiatives.", "chunk_word_count": 280, "section_path": "Opening up a world of opportunity > 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure. > Technology", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 25, "page_start": 25, "page_end": 25 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 40, "chunk_text": "# Opening up a world of opportunity\n## 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure.\n### Financial performance and capital returns\nWhen taking its decision to approve the annual financial resource plan, the Board engaged in active deliberation, taking into account stakeholders’ perspectives, including customers, employees and investors, as well as market perception and regulatory expectations. The Board considered the alignment between the Group’s medium-term strategic and investment plans with projected performance throughout the annual financial resource plan. In addition, consideration was given to scenario analysis related to the macroeconomic and geopolitical environment to ascertain the risks – and potential mitigating actions – to best protect the Group’s financial performance and capital returns.\n30 October 2023. In approving the payment of the dividends, the Board took into account the interests of the shareholders and sought to act in the best interests of the members as a whole.\nIn addition to dividend payments, HSBC undertook share buy-backs of up to \\$2bn each commencing on 10 May 2023 and 3 August 2023, and commenced a further buy-back of up to \\$3bn on 1 November 2023. In considering the buy-backs, the Board (or the Chairman’s Committee with delegated authority from the Board) took into account its stated intention to consider buy-backs subject to appropriate capital levels, the views of its regulators with regard to its regulatory capital requirements and, in particular, the benefit to shareholders, and determined that the buy-backs would promote the success of the company.\nIn 2023, the Board adopted a dividend policy designed to provide sustainable cash dividends, while retaining the flexibility to invest and grow the business in the future, supplemented by additional shareholder distributions, if appropriate. To this end, in the Annual Report and Accounts 2022, the Board approved the Group’s announcement regarding its intention to revert to paying quarterly dividends from the first quarter of 2023. Following discussion at the Board, subject to the completion of the sale of the banking business in Canada, the Board agreed its intention to consider the payment of a special dividend of $\\$ 0.21$ per share as a priority use of the proceeds generated by the completion of the transaction. On 21 February 2023, an interim dividend of $\\$ 0.23$ per share for the 2022 full-year was announced, followed by interim dividends of $\\$ 0.10$ each on 2 May 2023, 1 August 2023 an", "chunk_word_count": 402, "section_path": "Opening up a world of opportunity > 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure. > Financial performance and capital returns", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 25, "page_start": 25, "page_end": 25 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 41, "chunk_text": "# Opening up a world of opportunity\n## 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure.\n### People and culture\nEach Board meeting starts with a culture moment – a standing agenda item for one of the Board members, on a rotational basis, to share insights into their perceptions on how the Group culture is being lived. These perceptions help the Board to fulfil its responsibility of monitoring the Group’s culture. They also serve to shape and frame discussions more generally in Board meetings\nThe Board took the decision in 2023 to approve HSBC’s new headquarters and to move to the new Panorama St Paul’s development. This decision was facilitated by people data gathered from the Snapshot survey and other methods that demonstrated a desire from colleagues to continue to create an agile and technologically fit-for-purpose environment to work and succeed together. The Board took this decision knowing that a new purpose-built office and the continuation of a hybrid working model would enable the Group to continue to attract top talent, and provide them with collaboration spaces to support their success and well-being. The Board concluded the new headquarters would be in the best interests of the company for the long term. For further details of the new head office, see page 99.\nThe dedicated workforce engagement non-executive Director provides a regular report to Board meetings, which together with the Directors’ own participation in arranged employment engagement activities, strengthen the Board’s appreciation of what matters to employees, and help to inform decisions related to HR and people matters. An example of people and culture data and engagements assisting Board decision making in 2023 included the discussion held by the Board on a strategic focus around ‘the workforce of the future’ programme. This programme is looking at the key workforce skills necessary for the future, the role of technology in the workplace and developmen of a plan for its implementation. For further details of how we structure engagement between the Board and the workforce, see page 257.\nThe Board regularly considers updates on people and the workforce, supported by key metrics and culture insights. These updates help the Board understand employee sentiment, including any upward or downward trends, which informs considerations of how the tone from the top is being embedded. Regular reporting to the Board and/or its committees from the Group Chief Human Resources Officer includes metrics on attrition, whistleblowing, escalations, employee understanding of strategy and pay sentiment across our legal entities. This, together with the annual Snapshot survey results, demonstrate people-related challenges and successes across the Group and legal entities. In these ways the Board broadens its understanding of the interests of our employees, which in turn helps to shape its decisions or add value when asked to approve HR policy and other peoplerelated matters.\n### Remuneration\nThe Group’s financial and strategic performance is reflected in remuneration outcomes for colleagues.", "chunk_word_count": 489, "section_path": "Opening up a world of opportunity > 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure. > People and culture", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 25, "page_start": 25, "page_end": 26 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 42, "chunk_text": "# Opening up a world of opportunity\n## 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure.\n### Our reward principles and commitments to colleagues\nOur goal is to deliver a unique and exceptional experience to colleagues so that we sustain our performance in competitive markets. Our reward principles and commitments centre on rewarding colleagues responsibly, recognising their success and supporting colleagues to grow.\nThe level of increases vary by market, depending on the economic situation and individual roles.\nTo ensure fixed pay levels provide financial security to colleagues, we established Living Wage benchmarks for every market and have been certified by the Fair Wage Network as a global Living Wage employer for 2024. This is an important commitment we make to our employees and the communities in which we operate to help ensure we pay responsibly and provide financial security.\nFrom 2024, we will introduce a new variable pay structure for over 150,000 junior and 2019middle management colleagues, providing more clarity around the variable pay levels for on-target performance, while retaining flexibility to differentiate outcomes for performance.\nPay is a critical part of our proposition. We were encouraged by a nine percentage point improvement to $5 2 \\%$ in colleagues’ perceptions they are paid fairly because of actions we took through 2022. The Group Remuneration Committee remain very focused on the need to improve this further. For 2024, we are putting more structure in place to improve transparency and clarity about how we make pay decisions.\nMore than $9 5 \\%$ of colleagues have private medical insurance, a retirement plan and life insurance.\n### Supporting colleagues to grow\nGuided by data and colleague feedback, the pillars of our well-being programme are mental, physical, financial and social well-being.\n### Recognising colleagues’ success\n### Rewarding colleagues responsibly\nThe Group Remuneration Committee determined an overall variable pay pool for Group employees of $\\$ 3,774;$ This followed a review of our performance against financial and non-financial metrics set out in the Group risk framework.\nFixed pay increases for 2024 were determined based on consistent principles to help address wage inflation in the markets where we operate.\nIn our 2023 employee Snapshot survey, $8 3 \\%$ of employees said their mental health was positive, while all measures of physical wellbeing (exercise, sleep, nutrition) have improved. For the second year running, HSBC has been ranked top tier for mental health in the global CCLA Corporate Mental Health Benchmark.\nAs part of the 2023 pay review we introduced fixed pay ranges to help managers make fair and competitive fixed pay decisions and improve clarity for colleagues.\nIndividual variable pay outcomes varied significantly depending on role, business area and performance. Our highest performers and those who role-model our values-aligned behaviours received the largest increases in variable pay compared with the previous year.\nFor details of how the Group Remuneration Committee sets the pool,see page 279.\nWe will award an overall global fixed pay increase of $4 . 4 \\%$ in 2024, compared with $5 . 5 \\%$ for the previous year, reflecting lower wage inflation in many markets.", "chunk_word_count": 518, "section_path": "Opening up a world of opportunity > 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure. > Our reward principles and commitments to colleagues", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 26, "page_start": 26, "page_end": 26 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 43, "chunk_text": "# Opening up a world of opportunity\n## 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure.\n### Remuneration for our executive Directors\nVariable pay for our executive Directors is driven by achievement against performance scorecards set by the Group Remuneration Committee at the start of the year to align pay outcomes with the delivery of our strategy and plan.\nReflecting on the overall risk management in the year and in respect of the PRA Notice relating to compliance with the UK Financial Services Compensation Scheme and related Depositor Protection rules, the Committee applied a downward adjustment of $7 . 5 \\%$ to Noel Quinn’s annual incentive outcome.\nExecutive Directors’ scorecard outcomes $( \\%$ of maximum opportunity)\nThe Committee considered carefully the impact of strategic transactions and one-offs on the Group’s financial performance in 2023. Consistent with the approach in prior years, the Committee judged that it was appropriate to assess financial performance for the purpose of the annual scorecard excluding these items, to ensure that out-turns were not impacted by one-offs.\nThe Committee also carefully considered the executive Directors’ pay outcomes in the context of pay decisions made for the wider workforce and determined that these were an appropriate reflection of Group, business and individual performance delivered in 2023.\n### 2021–2023 long-term incentive1\nGroup Chief Executive 75.00%\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\nFordetailsof Directors'payand performance for 2023,see the Directors'remuneration reporton page 284.\nDetails of the current executive Directors remuneration policy can be found on pages 257 to 265 of our Annual Report and Accounts 2021.\n### Financial overview\nIn assessing the Group’s financial performance, management uses a range of financial measures that focus on the delivery of sustainable returns for our shareholders and maintaining our financial strength.\n### Executive summary\nOur financial performance demonstrates the execution of our strategy and the strengthened platform for growth, and in 2023 it was favourably impacted by a higher global interest rate environment.\nThis section sets out our key Group financial targets and the progress we made towards these in 2023, and – where relevant – our expectations for 2024 and beyond. We also include a more detailed table covering further key financial metrics that we consider insightful for understanding the Group’s performance.\nThe Group financial results that follow provide more detailed insight into the performance that has driven the outcomes of our financial targets. It covers income statement performance on both a reported and constant currency basis, and the main factors impacting the strength of our balance sheet, capital and liquidity position.", "chunk_word_count": 438, "section_path": "Opening up a world of opportunity > 1 Senior leadership is classified as thoseatband 3 and above in our global career band structure. > Remuneration for our executive Directors", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 44, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Group financial targets\nReturn on average tangible equity 14.6%\nprimarily due to technology expenditure, which we did not mitigate. We also increased performance-related pay, which resulted in a further rise of around $1 \\%$ . Costs grew by an additional $1 \\%$ , primarily due to a charge relating to the FDIC special assessment.\n(2022: $1 0 . 0 \\% )$\nWe aim to retain our dividend payout ratio of $50 \\%$ for 2024, excluding material notable items and related impacts. From 2024 this will be disclosed as our ‘dividend payout ratio target basis’.\nIn 2023, RoTE was $1 4 . 6 \\%$ , an increase of 4.6 percentage points from 2022. Excluding the impact of strategic transactions and the impairment of our investment in BoCom, RoTE was $1 5 . 6 \\%$ .\nIn 2024, we will target growth of approximately $5 \\%$ compared with 2023, on a target basis (2023: $\\$ 31$ .1bn). This target reflects our current business plan for 2024, and includes an increase in staff compensation, higher technology spend and investment for growth and efficiency, in part mitigated by cost savings from actions taken during 2023.\nFrom 2024, we intend to revise the adjustments made to RoTE to exclude all notable items, improving alignment with the treatment of notable items in our other income statement disclosures. On this basis, we continue to target a RoTE in the mid-teens for 2024. If this basis had been adopted for 2023, our RoTE excluding notable items would have been $1 6 . 2 \\%$ .", "chunk_word_count": 281, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Group financial targets", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 27, "page_start": 27, "page_end": 27 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 45, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Interest rate management strategy\nOur ambition is to maintain strong, resilient returns through the interest rate cycle. As part of our balance sheet structural hedging and risk management strategy we continue to seek opportunities to stabilise future earnings and mitigate downside risk from interest rate movements. During 2023, we took actions to increase the size and duration of our structural hedge. This has the effect of stabilising our future earnings and contributed to a reduction in the sensitivity of banking net interest income (‘NII’), a new alternative performance measure introduced in 2023, from changes in interest rates.\nOur cost target basis for 2024 excludes the direct cost impact of the disposal in France and the planned disposal in Canada from the 2023 baseline. It is measured on a constant currency basis and excludes notable items and the impact of retranslating the prior year results of hyperinflationary economies at constant currency.\nOur guidance reflects our current outlook for the global macroeconomic environment, including customer and financial markets activity.\nCapital and dividend policy CET1 ratio 14.8%\n\\$31.6bn Target basis operating expenses\nBanking NII adjusts our NII, primarily for the impact of funding trading and fair value activities reported in interest expense. It represents the Group’s banking revenue that is directly impacted by changes in interest rates. To supplement banking NII, we also provide banking NII sensitivity to demonstrate our revenue sensitivity to interest rate movements. Management uses these measures to determine the deployment of our surplus funding, and to help optimise our structural hedging and risk management actions.\n(2022: \\$29.8bn)\nDividend payout ratio 50%\nIn 2023, the Group targeted cost growth of approximately $3 \\%$ on a target basis. Our target basis excluded the impact of foreign currency translation differences, notable items and the impact of retranslating the 2022 results of hyperinflationary economies at constant currency, as well as cost growth from our acquisition of SVB UK and related investments internationally.\nAt 31 December 2023, our CET1 capital ratio was $1 4 . 8 \\%$ , which was higher than our medium-term target range of $14 \\%$ to $1 4 . 5 \\%$ . We intend to continue to manage the CET1 ratio to within this range.\nIn 2023, target basis cost growth was $6 \\%$ compared with 2022. In addition to our targeted growth of $3 \\%$ , there was an incremental rise of approximately $1 \\%$ ,\nThe total dividend per share in 2023 of $\\$ 0.61$ resulted in a dividend payout ratio of $50 \\%$ of earnings per share. For the purposes of computing our dividend payout ratio, we exclude from earnings per share material notable items and related impacts. See page 131 for our calculation of earnings per share.\n### Key financial metrics\n### Alternative performance measures\n### Balance sheet\nShare count\n### Basis of presentation", "chunk_word_count": 492, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Interest rate management strategy", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 46, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### IFRS 17 ‘Insurance Contracts’\nMaterial notable items are a subset of notable items, which are excluded from our earnings per share measure for the purposes of calculating our dividend payout ratio, and from 2024 will be referred to as on a ‘dividend payout ratio target basis’. Categorisation as a material notable is dependent on the nature of each item in conjunction with the financial impact on the Group’s income statement.\nOn 1 January 2023, HSBC adopted IFRS 17 ‘Insurance Contracts’. As required by the standard, the Group applied the requirements retrospectively with comparative data previously published under IFRS 4 ‘Insurance Contracts’ restated from the 1 January 2022 transition date.\nWe consider constant currency performance to provide useful information for investors by aligning internal and external reporting, and reflecting how management assesses periodon-period performance.\nForfurther details,see 'Changes to presentation from1 January 2023'on page 100.\nThe results of our global businesses are presented on a constant currency basis, which is consistent with how we manage and assess global business performance.\n### Management view of revenue on a constant currency basis\n### Changes to our reporting framework\nOur global business segment commentary includes tables that provide breakdowns of revenue on a constant currency basis by major product. These reflect the basis on which revenue performance of the businesses is assessed and managed.\nOn 1 January 2023, we updated our financial reporting framework. We no longer report ‘adjusted’ results, which excluded the impact of both foreign currency translation differences and significant items. Instead, we compute constant currency performance by adjusting comparative reported results only for the effects of foreign currency translation differences between the relevant periods.\n### Notable items\nWe separately disclose ‘notable items‘, which are components of our income statement that management would consider as outside the normal course of business and generally non-recurring in nature.\n### Comparative periods\nUnless otherwise stated, all performance commentary that follows compares our results in 2023 with those of 2022.\nThe tables on pages 112 to 113 and pages 123 to 128 detail the effects of notable items on each of our global business segments and legal entities during 2023, 2022 and 2021.\n### Constant currency performance\nConstant currency performance is computed by adjusting reported results of comparative periods for the effects of foreign currency translation differences, which distort periodon-period comparisons.\n### Reported results (vs 2022)\naccrual and the impact of inflation. Reported ECL of $\\$ 3.45$ decreased by $\\$ 0.$ 1bn and included charges of $\\$ 1.0$ bn relating to exposures in the commercial real estate sector in mainland China.\nThese increases were partly offset by lower Credit and Lending revenue in CMB and GBM, mainly driven by a fall in balances and margin compression, and a decline in revenue in Equities in GBM, reflecting weaker client demand and softer market conditions.", "chunk_word_count": 490, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > IFRS 17 ‘Insurance Contracts’", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 29, "page_start": 29, "page_end": 29 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 47, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Reported profit\nReported profit before tax of $\\$ 30.3$ bn was $\\$ 123,456 n$ higher. This was driven by a $\\$ 15.4$ bn increase in revenue, primarily due to growth in net interest income, reflecting the impact of interest rate rises. The increase also included a provisional gain of $\\$ 1.6 b n$ recognised on the acquisition of SVB UK in 2023, as well as a year-on-year favourable impact of $\\$ 2.56 n$ associated with the sale of our retail banking operations in France. This reflected an initial impairment loss of $\\$ 230 n$ following the initial classification of these operations as held for sale in 2022, a reversal of $\\$ 2.1$ bn in the first quarter of 2023 as the sale became less certain, and a subsequent impairment loss of $\\$ 2.0 b n$ as we reclassified these operations as held for sale in the fourth quarter of 2023.\nReported profit after tax of $\\$ 24.6$ bn was $\\$ 8.30n$ higher than in 2022. This included a higher tax expense, in part from the nonrecurrence of a $\\$ 2.2$ bn gain in 2022 resulting from the recognition of a deferred tax asset from historical tax losses in HSBC Holdings.\nRevenue reduced in Markets Treasury due to the impact of rising interest rates on our funding costs and flattening yield curves, partly offset by increases from dynamic risk management and redeployment of asset disposals. We incurred losses on asset disposals of $\\$ 100n$ relating to repositioning and risk management activities in our hold-tocollect-and-sell portfolio in certain key legal entities. These actions are accretive to net interest income and reduce the consumption of the Group‘s financial resources. This revenue is allocated to our global businesses.", "chunk_word_count": 308, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Reported profit", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 29, "page_start": 29, "page_end": 29 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 48, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Reported revenue\nReported revenue of $\\$ 60.$ 1bn was $\\$ 15.4$ bn or $30 \\%$ higher, which included a $\\$ 2.5$ bn yearon-year favourable impact relating to the sale of our retail banking operations in France, and the recognition of a $\\$ 1.6 b n$ provisional gain on the acquisition of SVB UK in 2023, as mentioned above.\nThese increases were in part offset by an impairment charge in 2023 of $\\$ 3.0$ bn relating to our investment in BoCom. This impairment reflected a reduction to the accounting value-in-use in line with recent market-wide developments in mainland China. For further details, see page 101. This impairment will have no material impact on HSBC’s capital, capital ratios or distribution capacity and therefore no impact on dividends or share buy-backs. Reported operating expenses decreased, primarily reflecting a reduction in restructuring and other related costs following the completion of our cost-saving programme at the end of 2022, which mitigated growth notably from higher technology spend, an increase in the performance-related pay\nRevenue in 2023 was also adversely affected by a $\\$ 1.45\\mathsf { n }$ impact of hyperinflationary accounting in Argentina, including the devaluation of the Argentinian peso, compared with a $\\$ 0.4$ bn adverse impact in 2022.\nThe remaining growth primarily reflected the impact of interest rate rises, mainly in Global Payments Solutions (‘GPS’) in CMB and GBM, Personal Banking and Global Private Banking in WPB, as well as Securities Services in GBM. There were also good performances in Capital Markets and Advisory and Securities Financing in GBM, as well as in life insurance and asset management in WPB. An increase in revenue in Corporate Centre was driven by Central Treasury, mainly due to the nonrecurrence of adverse fair value movements on financial instruments, and valuation gains on structural hedging.\n### Reported results continued", "chunk_word_count": 326, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Reported revenue", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 29, "page_start": 29, "page_end": 30 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 49, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Reported ECL\ncontinued cost discipline. There was also a favourable impact of $\\$ 0.20\\mathsf { n }$ due to the impact of hyperinflationary accounting in Argentina in 2023.\nin-use of the investment, resulting in a loss of $\\$ 0.20\\mathsf { n }$ in 2023. This compared with a profit of $\\$ 2.70 n$ in 2022. The impact of the impairment in 2023 was partly offset by an increase in the share of profit from Saudi Awwal Bank (‘SAB’).\nReported ECL of $\\$ 3.45$ were $\\$ 0.$ 1bn or $4 \\%$ lower. The charge in 2023 primarily comprised stage 3 net charges, notably related to mainland China commercial real estate sector exposures. ECL charges in this sector were $\\$ 100\\mathsf { n }$ in 2023. The charge in 2023 also reflected the impact of continued economic uncertainty, rising interest rates and inflationary pressures. The charge in 2022 included $\\$ 1.30n$ of charges related to mainland China commercial real estate exposures.\nThese reductions were partly offset by increases in technology costs, the impacts of inflation, a higher performance-related pay accrual and severance payments. There was also an increase in the UK bank levy of $\\$ 0.30n$ including adjustments relating to prior years, and we incurred a $\\$ 0.2$ bn charge in the US relating to the FDIC special assessment.\n### Tax expense\nThe effective tax rate for 2023 of $1 9 . 1 \\%$ was higher than the $4 . 7 \\%$ in 2022. The effective tax rate for 2023 was increased by 2.3 percentage points by the non-deductible impairment of investments in associates, and reduced by 1.6 percentage points by the release of provisions for uncertain tax positions and reduced by 1.5 percentage points by the non-taxable bargain purchase gain on the acquisition of SVB UK. The effective tax rate for 2022 was reduced by 12.8 percentage points by the recognition of a deferred tax asset on historical tax losses of HSBC Holdings as a result of improved profit forecasts for the UK tax group. Excluding these items, the effective tax rates were $1 9 . 9 \\%$ for 2023 and $1 7 . 5 \\%$ for 2022.\nFor further details of the calculation of ECL, see pages 156 to 168.\nThe number of employees expressed in fulltime equivalent staff (‘FTE’) at 31 December 2023 was 220,861, an increase of 1,662 compared with 31 December 2022. The number of contractors at 31 December 2023 was 4,676, a decrease of 1,371 due to the completion of our cost-saving programme.\nReported operating expenses\nReported operating expenses of $\\$ 32$ .1bn were $\\$ 0.6 b n$ or $2 \\%$ lower, primarily driven by lower restructuring and other related costs of $\\$ 3.0 b n$ following the completion of our cost to achieve programme, which concluded at the end of 2022. The reduction also included favourable foreign currency translation differences between the periods of $\\$ 0.45$ , a $\\$ 0.20\\mathsf { n }$ reduction due to a reversal of historica asset impairments, and the effects of our", "chunk_word_count": 526, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Reported ECL", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 30, "page_start": 30, "page_end": 30 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 50, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Reported share of profit from associates and joint ventures less impairment\nReported share of profit from associates and joint ventures included an impairment charge of $\\$ 3.0 b n$ relating to our investment in BoCom due to a reduction to the accounting value-\n### Constant currency results\nProfit before tax of $\\$ 30.3$ bn was $\\$ 123.80n$ higher than in 2022 on a constant currency basis, primarily driven by higher revenue.\nOperating expenses were $\\$ 0.2$ bn or $1 \\%$ lower on a constant currency basis, as reduced restructuring and other related costs following the completion of our cost-saving programme were broadly offset by increases in technology costs, the impacts of inflation, and a higher performance-related pay accrual. There was also an increase in the UK bank levy, including adjustments relating to prior years, and a charge in the US relating to a special assessment of the FDIC.\nRevenue increased by $\\$ 16.23,456$ or $32 \\%$ on a constant currency basis, which included a $\\$ 2.6 b n$ year-on-year favourable impact relating to the sale of our retail banking operations in France, and a provisional gain of $\\$ 1.6 b n$ recognised on the acquisition of SVB UK in 2023. The remaining increase in revenue was primarily due to growth in net interest income from the impact of global interest rate rises. There was also a good performance from Capital Markets and Advisory in GBM and higher revenue in Corporate Centre.\nECL were $\\$ 0.2$ bn or $5 \\%$ lower on a constant currency basis. The charge in 2023 primarily comprised stage 3 net charges, notably related to mainland China commercial real estate sector exposures. ECL charges in this sector were $\\$ 100n$ in 2023. The charge in 2023 also reflected the impact of continued economic uncertainty, rising interest rates and inflationary pressures.\nShare of profit in associates and joint ventures less impairment included a $\\$ 3.0$ bn impairment of our investment in BoCom due to a revision to the accounting value-in-use of the investment, resulting in a loss of $\\$ 0.20\\mathsf { n }$ in 2023. This compared with a share of profit of $\\$ 2.6 b n$ in 2022 on a constant currency basis. The impact of the impairment was partly offset by an increase in the share of profit from SAB.\nRevenue reduced in Markets Treasury due to the impact of rising interest rates on our funding costs and flattening yield curves, partly offset by increases from dynamic risk management and the deployment of asset disposals. Markets Treasury also incurred losses on asset disposals of $\\$ 100\\mathsf { n }$ relating to repositioning and risk management activities in our hold-to-collect-and-sell portfolio in certain key legal entities. These actions are accretive to net interest income and reduce the consumption of the Group‘s financial resources. This revenue is allocated to our global businesses.", "chunk_word_count": 498, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Reported share of profit from associates and joint ventures less impairment", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 30, "page_start": 30, "page_end": 31 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 51, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Balance sheet and capital\nLoans and advances to customers as a percentage of customer accounts was $5 8 . 2 \\%$ compared with $5 8 . 8 \\%$ at 31 December 2022.\n### Balance sheet strength\nTotal assets of $\\$ 3.00$ were $\\$ 890\\mathsf { n }$ higher than at 31 December 2022 on a reported basis, and included the favourable effects of foreign currency translation differences of $\\$ 580$ . Within total assets, there were $\\$ 123,456$ of assets held for sale, mainly related to our retail banking operations in France and our banking operations in Canada, which was broadly unchanged compared with 2022.\n### Distributable reserves", "chunk_word_count": 132, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Balance sheet and capital", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 52, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Liquidity position\nThe distributable reserves of HSBC Holdings at 31 December 2023 were $\\$ 30.90n$ , a $\\$ 4.30n$ decrease since 2022, primarily driven by $\\$ 123.60n$ in ordinary dividend, additional tier 1 coupon and share buy-back payments, offset by profits generated and other reserve movements of $\\$ 14.30n$ . Distributable reserves are sensitive to impairments of investments in subsidiaries to the extent they are not offset by the realisation of related reserves. The impairment of BoCom in 2023 did not impact distributable reserves, as its intermediate parent and direct subsidiary of HSBC Holdings, HSBC Asia Holdings Limited, was not impaired.\nWe actively manage the Group’s liquidity and funding to support the business strategy and meet regulatory requirements at all times, including under stress. To do this, we monitor our position using a number of risk appetite measures, including the liquidity coverage ratio and the net stable funding ratio. During 2023, the average high-quality liquid assets we held was $\\$ 647.56$ n. This excludes highquality liquid assets in legal entities which are not transferable due to local restrictions.\nOn a constant currency basis, total assets rose by \\$31bn, mainly from an increase in financial investments and higher trading balances, while cash and balances at central banks and derivative asset balances fell.\nFor further details,see page 206.\nReported loans and advances to customers increased by $\\$ 1$ 5bn. On a constant currency basis, loans and advances fell by $\\$ 30n$ , which included an increase in secured home loans, previously classified as held for sale in France. There was mortgage balance growth in our main legal entity in Hong Kong and in HSBC UK, although lending fell in CMB and GBM in our main entity in Hong Kong, including a reduction in commercial real estate lending.\nTotal assets \n(\\$bn) \n\\$3,039bn \n(2022: \\$2,949bn) \nCommon equity tier 1 ratio \n$( \\% )$ \n14.8% \n(2022: 14.2%)\nCapital position\nWe actively manage the Group’s capital position to support our business strategy and meet our regulatory requirements at all times, including under stress, while optimising our capital efficiency. To do this, we monitor our capital position using a number of measures. These include our capital ratios and the impact on our capital ratios as a result of stress.\nReported customer accounts of $\\$ 1.60$ increased by $\\$ 41$ 1bn. On a constant currency basis, they grew by $\\$ 1230\\mathsf$ , notably from growth in WPB in our main legal entity in Asia and CMB in Europe.\nOur CET1 ratio at 31 December 2023 was $1 4 . 8 \\%$ , up 0.6 percentage points from 2022, mainly driven by capital generation net of dividends, share buy-backs and regulatory adjustments, which was partly offset by an increase in risk-weighted assets (‘RWAs’) during the year.\n### Wealth and Personal Banking\nWe serve 41 million customers globally, including 6.7 million who are international, from retail customers to ultra high net worth individuals and their families.", "chunk_word_count": 510, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Liquidity position", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 31, "page_start": 31, "page_end": 32 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 53, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### To meet our customers’ needs, we offer a full suite of products and services across transactional banking, lending and wealth.\nPerformance in 2023 benefited from rising interest rates and balance sheet growth, including Wealth deposits. There was also positive growth in Wealth, including strong sales in insurance and net new invested assets growth. The results included a broadly stable ECL charge, despite ongoing macroeconomic uncertainty.\n[IMAGE CAPTION] Contribution to Group profit before tax\nWPB continued to invest in our key strategic priorities of expanding our Wealth franchise, developing our transactional banking and lending capabilities, and addressing our customers’ international needs.\nCalculation is based on profit before tax of our global businesses excluding Corporate Centre.\n### Launching our international proposition\nWe launched our redesigned international proposition in February 2023 to strengthen our position as a leading banking provider for international customers, which is WPB’s fastest-growing segment representing $40 \\%$ of revenue in 2023. The refresh involved six services launched across 10 international markets, with the aim of helping customers move and invest overseas easier.\n### Divisional highlights\n### \\$84bn\n### 6.7 million\nWPB net new invested assets in 2023, up $6 \\%$ compared with 2022.\nInternational customers at 31 December 2023, an increase of $12 \\%$ compared with 2022.\nThis included supporting our international customers, who generate around three times the average revenue of a domestic customer, so they can open an international account digitally predeparture, gain access to a credit card in their new market with an appropriate limit, and make use of quick, competitively priced cross-border payment solutions with 24/7 global support to manage their international needs.\nConstant currency profit before tax (\\$bn)\n### Constant currency net operating income (\\$bn)\n\\$11.5bn\\$27.3bn\nInternational customers are those who bank with us inour 11 key markets,excluding Canada,and who bank in more than one market,those whose address is diferent from the market we bank them in and customers whose nationality,or country of birth for non-resident Indians and overseas Chinese,is different to the market we bank them in.Customers maybe counted more than once when banked in multiple countries.\nFroJedc thebasis ofpreparation prevailing in 2021,which includesour manufacturingbusinessonly.Insurance distributionof $\\$ 518 m$ is presented in ‘investment distribution' Oter'c retail and credit protection insurance,disposal gains and other non-product-specific income.\n3ot various lines in our consolidated income statement.\n4Netperatiiidtietd\nOther revenue increased by $\\$ 1230 n$ , mainly due to a $\\$ 2.4$ bn year-on-year impact relating to the sale of our retail banking operations in France. This was partly offset by a $\\$ 0.70n$ reduction in Markets Treasury allocated revenue, including disposal losses on repositioning and an adverse impact of $\\$ 0.56\\mathsf { n }$ due to hyperinflationary accounting.", "chunk_word_count": 466, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > To meet our customers’ needs, we offer a full suite of products and services across transactional banking, lending and wealth.", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 32, "page_start": 32, "page_end": 33 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 54, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Financial performance\nProfit before tax of $\\$ 123,456,7$ was $\\$ 6.1$ 1bn higher than in 2022 on a constant currency basis. The growth in revenue reflected growth in both Personal Banking and Wealth. The increase also reflected a $\\$ 2.45$ year-onyear impact relating to the sale of our retail banking operations in France. ECL remained broadly stable and operating expenses grew by $\\$ 0.5\\mathrm { b n }$ .\nIn Personal Banking, revenue of $\\$ 20.5$ bn was up $\\$ 4.5$ bn or $2 8 \\%$ .\nECL were $\\$ 1$ .1bn in 2023, down $\\$ 0.$ 1bn on a constant currency basis, as credit performance remained resilient, despite a rise in inflationary pressures.\nRevenue of $\\$ 27.30n$ was $\\$ 6.$ 4bn or $3 1 \\%$ higher on a constant currency basis.\n– Net interest income was $\\$ 4.5$ bn or $3 1 \\%$ higher due to rising interest rates and balance sheet growth. Mortgage lending balances rose in Hong Kong by \\$6bn and in HSBC UK by $\\$ 50n$ . Unsecured lending balances increased by $\\$ 3\\mathrm{ b n }$ , notably in HSBC UK, Mexico and Hong Kong. In addition, there was an increase of $\\$ 7.8 b n$ from a reclassification of secured loans in France from held for sale. Deposit balances remained broadly stable as growth in Asia was partly offset by outflows, mainly in HSBC UK due to higher cost of living and competitive pressures, and in our main entity in the US.\nIn Wealth, revenue of $\\$ 7$ 5bn was up $\\$ 0.6 b n$ or $8 \\%$ .\nOperating expenses of $\\$ 14.70 n$ were $\\$ 0.5$ bn or $3 \\%$ higher on a constant currency basis, mainly due to continued investments, notably in wealth in Asia, higher technology spend, higher performance-related pay and the impact of higher inflation. These increases were partly offset by a reduction in restructuring and other related costs following the completion of our cost-saving programme at the end of 2022 and ongoing cost discipline.\n– Global Private Banking revenue was $\\$ 0.2$ bn or $12 \\%$ higher due to rising interest rates and deposit growth of $\\$ 1$ 11bn or $1 5 \\%$ .\n– Asset management revenue was $\\$ 0.20\\mathsf { n }$ or $13 \\%$ higher, driven by an increase in assets under management of $1 5 \\%$ , and from positive market movements.\n– Life insurance revenue rose by $\\$ 0.1$ bn or $8 \\%$ , mainly driven by an increase of $\\$ 0.20\\mathsf { n }$ in contractual service margin (‘CSM’) earnings and favourable net investment returns of $\\$ 0.$ 1bn, partly offset by a $\\$ 0.30n$ loss from corrections to historical valuation estimates. There was strong growth in the new business CSM, up $\\$ 0.6 b n$ or $4 7 \\%$ , mainly in Hong Kong.", "chunk_word_count": 497, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Financial performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 33, "page_start": 33, "page_end": 33 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 55, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Commercial Banking\nWe operate in more than 50 markets, serving around 1.3 million customers, ranging from small enterprises to large companies operating globally including those in the new innovation economy.\nWe partner with businesses around the world, supporting every stage of their growth, their international ambitions and their sustainability transitions. We deliver value to our clients through our international network, financing strength, digital capabilities and our universal banking capabilities, including our industry leading global trade and payments solutions.\nWe aim to be a leader in the innovation economy, with the launch of HSBC Innovation Banking in 2023 enhancing our proposition to clients in the technology and healthcare sectors. During 2023, we delivered a strong revenue performance, notably in Global Payments Solutions (‘GPS’) and in collaboration revenue from GBM products.\n[IMAGE CAPTION] Contribution to Group profit before tax\nCalculation is based on profit before tax of our global businesses excluding Corporate Centre.\n### Backing a manufacturer in its international expansion\nWhen Polygroup, a leading manufacturing business specialising in seasonal goods, decided to expand into new international markets, it was able to take advantage of our global network and local market insights.\n### Divisional highlights\n78% Increase in GPS revenue.\n10%\nThe group, which employs more than 15,000 people across four continents, partnered with us to expand to new locations in mainland China, Indonesia and Mexico. With our broad range of banking capabilities across our international network, we were able to provide capital expenditure financing to help build new manufacturing facilities.\nIncrease in collaboration income from the sale of GBM products to CMB clients.\nConstant currency profit before tax (\\$bn)\nConstant currency net operating income $\\textcircled { \\scriptsize { 1 } }$ (\\$bn) \\$22.9bn\n\\$13.3bn\nWe also supported Polygroup in improving its cash flow during off-peak seasons by extending tailor-made trade solutions delivered through an international digital platform, and we continue to support it on its ESG journey.\n1IncludesCBssarerevertharkesdcurirvcdBngprodctststomesB'sareevethe oftheseprodcttstsudirsoifaatfsd Markets Treasury，HSBCHoldings interest expenseand hyperinflation.\n2Netperatiioeddidtdied 3TransactionbngomprisbaddRecebFaceGalmntsutisdBssarefobalreEchgsoin 'shareof revenue for Marketsand Securities Servicesand Bankingproducts\").\n$2 \\%$ , driven by lower average balances in our main legal entities in Asia and Europe, primarily reflecting the softer trade cycle, partly offset by wider margins in our legal entities in Latin America and the UK. In addition, there was a $\\$ 28 m$ or $3 \\%$ increase in fee income.\nimpacts of hyperinflationary accounting of $\\$ 0.6 b n$ . The remaining increase in revenue reflected higher interest on capital held in the business, partly offset by higher HSBC Holdings interest expense.", "chunk_word_count": 441, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Commercial Banking", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 56, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Financial performance\nProfit before tax of $\\$ 123,456 n$ was $\\$ 5.8 b n$ or $7 6 \\%$ higher than in 2022 on a constant currency basis. This was driven by an increase in revenue in all our main legal entities, primarily from a $\\$ 5230 n$ increase in GPS net interest income. It also included a provisional gain of $\\$ 1.6 b n$ from HSBC UK’s acquisition of SVB UK. These increases were partly offset by a rise in operating expenses as a result of the SVB UK acquisition and increases in technology costs.\nECL were a charge of $\\$ 2.$ .1bn, compared with a charge of $\\$ 1.90n$ in 2022 on a constant currency basis. The increase of $\\$ 0.2$ bn was mainly driven by higher stage 3 charges in the UK, and included provisions from HSBC Innovation Banking, and charges in the Middle East. ECL in both periods reflected charges relating to the commercial real estate sector in mainland China, although they were lower in 2023.\n– In Credit and Lending, revenue decreased by $\\$ 0.4$ bn or $7 \\%$ , notably in our main legal entities in Asia and Europe, primarily due to margin compression. It also reflected lower balances due to softer demand from customers across these markets, and reduced exposures in the commercial real estate sector, notably in mainland China and the US.\nRevenue of $\\$ 22.90n$ was $\\$ 6.$ 6bn or $40 \\%$ higher on a constant currency basis.\n– In GPS, revenue increased by $\\$ 5.450\\mathsf { n }$ , with growth in all main legal entities. The increase was driven by higher margins, reflecting interest rate rises and repricing actions, which were partly offset by lower average balances notably due to a marketwide reduction in the UK. There was a $6 \\%$ increase in fee income, as business initiatives drove growth in transaction banking, with higher volumes in cards and international payments.\n– In GBM products, Insurance and Investments and Other, revenue increased by $\\$ 1.6 b n$ , driven by incremental revenue from HSBC Innovation Banking of $\\$ 2.$ 1bn, which included the provisional gain of $\\$ 1.$ 6bn on the acquisition of SVB UK. There was also an increase in collaboration revenue from GBM products of \\$0.1bn, notably in Foreign Exchange. These increases were partly offset by a reduction in Markets Treasury allocated income of $\\$ 0.6 b n$ , including disposal losses on portfolio repositioning and the adverse\nOperating expenses of $\\$ 7.$ 5bn were higher by $\\$ 0.6 b n$ on a constant currency basis. The increase reflected incremental costs in HSBC Innovation Banking of $\\$ 0.$ 3bn including the acquisition and integration of SVB UK, higher performance-related pay, ongoing investment in technology and inflationary impacts. These increases were in part mitigated by the impact of continued cost discipline and a reduction in restructuring and other related costs following the completion of our cost-saving programme at the end of 2022.\n– In Global Trade and Receivables Finance (‘GTRF’), revenue decreased by $\\$ 0.$ 1bn or", "chunk_word_count": 532, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Financial performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 35, "page_start": 35, "page_end": 35 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 57, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Global Banking and Markets\nWe support multinational corporates, financial institutions and institutional clients, as well as public sector and government bodies.\nWe are a leader in facilitating global trade and payments, particularly into and within Asia and the Middle East, helping to enable our clients in the East and West to achieve their objectives by accessing our expertise and geographical reach. Our product specialists deliver a comprehensive range of transaction banking, financing, capital markets and advisory, and risk management services.\nProfit before tax increased in 2023, reflecting a strong revenue performance due to rising interest rates and from Capital Markets and Advisory. This was partly offset by weaker client activity in our Equities business. We continued to invest in technology to modernise our infrastructure, innovate product capabilities and support our clients.\n[IMAGE CAPTION] Contribution to Group profit before tax\nCalculation is based on profit before tax of our global businesses excluding Corporate Centre.\n### Leading on a $\\$ 2.45 n$ rights issue for Link REIT\nOur international connectivity and balance sheet strength help support clients when they need to carry out large strategic transactions in the capital markets.\n### Divisional highlights\n11.4% \nRoTE in 2023, up 1.6 percentage points compared with 2022.\n56% Increase in GPS revenue.\nIn March 2023, we supported Asia’s largest real estate investment trust to complete the largest ever rights issue from a non-bank issuer in Hong Kong. We acted as sole global coordinator and lead underwriter on a $\\$ 2.4 b n$ one-for-five rights issue for Link REIT, which was conducted to strengthen its capital base and position itself for the next phase of growth.\nConstant currency profit before tax (\\$bn) \\$5.9bn\nConstant currency net operating income $\\textcircled { \\scriptsize { 1 } }$ (\\$bn) \\$16.1bn\nThe transaction was the largest ever rights issue in the Asian real estate sector and the largest equity offering in Hong Kong since September 2021.", "chunk_word_count": 340, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Global Banking and Markets", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 58, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Financial performance\n– Global Foreign Exchange revenue was largely in line with 2022 and reflected continued elevated client activity and trading facilitation, as we captured the benefit of market-wide volatility relating to interest rate and inflation differentials.\n– Credit and Lending revenue decreased by $\\$ 0.30n$ or $12 \\%$ , due to weaker client demand.\nProfit before tax of $\\$ 5.90n$ was $\\$ 1230 n$ or $2 6 \\%$ higher than in 2022 on a constant currency basis. This was driven by an increase in revenue of $\\$ 1.56n$ or $10 \\%$ , notably from higher net interest income in GPS and Securities Services. ECL fell by $\\$ 0.20\\mathsf { n }$ , while operating expenses increased by $\\$ 0.5\\mathrm { b n }$ or $6 \\%$ .\n– Banking Other revenue increased by $\\$ 0.20\\mathsf { n }$ or $91 \\%$ , from higher interest on capital held in the business.\nIn GBM Other, there was a $\\$ 0.45$ reduction in revenue, mainly due to lower Markets Treasury allocated revenue, including disposal losses on repositioning, higher HSBC Holdings interest expense and the adverse impacts of hyperinflationary accounting.\n– Equities revenue fell by $\\$ 0.5$ bn or $45 \\%$ , due to lower client activity as a result of reduced market volatility.\nRevenue of $\\$ 16.1$ bn was $\\$ 1.5$ bn or $10 \\%$ higher on a constant currency basis.\n– Securities Financing revenue rose by $\\$ 0.20\\mathsf { n }$ or $2 2 \\%$ , driven by higher client flows, growth in prime finance and the onboarding of new clients.\nIn Markets and Securities Services (‘MSS’), revenue was marginally higher by $\\$ 0.$ 1bn or $2 \\%$ .\nECL of $\\$ 0.30\\mathsf { n }$ were $\\$ 0.20\\mathsf { n }$ lower on a constant currency basis, reflecting a favourable credit performance, including lower charges in the commercial real estate sector in mainland China.\nIn Banking, revenue increased by $\\$ 1.8 b n$ or $2 7 \\%$ .\n– Securities Services revenue grew by $\\$ 0.4$ bn or $1 9 \\%$ , from higher net interest income as global interest rates rose.\n– GPS revenue increased by $\\$ 1.6 b n$ or $56 \\%$ , driven by margin growth as a result of the rising global interest rate environment and business pricing actions.\n– Global Debt Markets revenue increased by $\\$ 0.1$ bn or $18 \\%$ , from favourable primary market conditions and higher client trading volumes as the market environment normalised. The 2022 performance was impacted by lower primary activity and client flow due to uncertainty and challenging market conditions.\nOperating expenses of $\\$ 90\\mathrm { . 9 b n }$ increased by $\\$ 0.5$ bn or $6 \\%$ on a constant currency basis due to the impact of higher inflation and strategic investments, which was in part mitigated by business actions and a reduction in restructuring and other related costs following the completion of our cost-saving programme at the end of 2022.\n– Capital Markets and Advisory revenue rose by $\\$ 0.30\\mathsf { n }$ or $4 1 \\%$ , primarily from increased financing activities and higher interest rates, against a backdrop of a smaller global market fee pool.", "chunk_word_count": 556, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Financial performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 37, "page_start": 37, "page_end": 37 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 59, "chunk_text": "# Opening up a world of opportunity\n## 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive.\n### Corporate Centre\nThe results of Corporate Centre primarily comprise the share of profit from our interests in our associates and joint ventures and related impairments. It also includes Central Treasury, stewardship costs and consolidation adjustments.\nCorporate Centre performance in 2023 reflected the recognition of an impairment in our investment in our associate BoCom. Additionally, the non-recurrence of restructuring and other related costs following the completion of our cost-saving programme at the end of 2022 resulted in lower operating expenses, while higher revenue included the non-recurrence of adverse fair value movements on financial instruments and the impacts of restructuring our business in Europe.\n### Financial performance\nLoss before tax of $\\$ 0.450\\mathsf { n }$ was $\\$ 0.8 b n$ or $6 5 \\%$ lower than the loss in 2022, on a constant currency basis. This reflected lower restructuring and other related costs and higher revenue, partly offset by the impact of an impairment of our investment in BoCom. This impairment reflects a reduction to the accounting value-in-use in line with recent market-wide developments in mainland China. For further details, see page 101.", "chunk_word_count": 206, "section_path": "Opening up a world of opportunity > 1 The current Group Chief Financial Officer did not participate in the 2021-2023 long-term incentive. > Corporate Centre", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 38, "page_start": 38, "page_end": 38 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 60, "chunk_text": "# Opening up a world of opportunity\n## 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments.\nRevenue was $\\$ 123,4$ or $90 \\%$ higher than in 2022 on a constant currency basis. The increase was primarily from the nonrecurrence of adverse fair value movements on financial instruments in Central Treasury and structural hedges, together with the nonrecurrence of losses and charges associated with the disposals of our branch operations in Greece and our French retail banking business, the planned disposal of our business in Russia, and legacy portfolios. These favourable yearon-year impacts were partly offset by adverse fair value movements in 2023 on foreign exchange hedges related to the planned sale of our banking business in Canada.\n2 Other comprises consolidation adjustments,funding charges on property and technology assets, revaluation gains and losses on investment propertiesand property disposals,gainsand losses on certain planned disposals,including charges relating to ourbusiness in Russia,and otherrevenue items not allocated to global businesses.\n3Revenue from Markets Treasury，HSBC Holdings net interest expenseand hyperinflationare alocated out totheglobalbusinesses,toalign thembetterwith theirrevenueand expense.The total Markets Treasury revenue componentof this allocation for2023was $\\$ 1239) m$ (2022:\\$1,431m;2021: \\$2,142m).\n4'Net operating income'means net operating income before change in expected credit losses and other credit impairmentcharges (also referred toas'revenue).\nOperating expenses decreased by $\\$ 1.90n$ on a constant currency basis, primarily driven by the non-recurrence of restructuring and other related costs following the completion of our cost-saving programme at the end of 2022. These were partly offset by the recognition of a charge related to the FDIC special assessment, costs associated with the disposal of our retail banking operations in France and the planned disposal of our banking business in Canada, and a higher allocation of the UK bank levy, including adjustments related to prior years. Since 2021, the UK bank levy and any related adjustments have been allocated across our global businesses and Corporate Centre, primarily to GBM.\nShare of profit in associates and joint ventures in 2023 included an impairment charge of $\\$ 3.0$ bn in 2023 relating to our investment in BoCom due to a reduction of the accounting value-in-use of our investment, resulting in a loss of $\\$ 0.30n$ . This compared with a share of profit of $\\$ 2.6 b n$ in 2022. The impact of the impairment was partly offset by growth of $\\$ 0.20\\mathsf { n }$ , mainly driven by an increase in the share of profits from SAB.\n### Risk overview\nActive risk management helps us to achieve our strategy, serve our customers and communities and grow our business safely.", "chunk_word_count": 430, "section_path": "Opening up a world of opportunity > 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments. > Risk overview", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 38, "page_start": 38, "page_end": 39 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 61, "chunk_text": "# Opening up a world of opportunity\n## 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments.\n### Managing risk\nThe global economy proved more resilient in 2023 than had been expected, supported by strong growth in the US, and a stabilisation in China’s economy, although there continues to be uncertainty and weakness in Europe. In most key markets, a fall in energy prices and other commodity prices facilitated a decrease in inflation. Central banks in most developed markets are expected to have concluded monetary policy tightening in the second half of 2023 and to start reducing interest rates in 2024. Certain emerging market central banks began reducing interest rates during 2023. However, interest rates in the medium term are likely to remain materially higher than in recent years.\nthe right support to customers in line with regulatory, government and wider stakeholder expectations. This follows our adoption of the UK government’s Mortgage Charter released in June 2023.\nGeopolitical tensions are a source of significant risk, including the ongoing Russia-Ukraine and Israel-Hamas wars. Both could have significant global economic and political consequences. The Israel-Hamas war has led to renewed volatility in energy prices, and recent attacks on commercial shipping in the Red Sea and the counter-measures taken to improve security have begun to disrupt supply chains. These developments have the potential to halt or reverse the recent decline in inflation especially in Europe and North America.\nWe engage closely with regulators to help ensure that we continue to meet their expectations regarding financial institutions’ activities to support economies during times of market volatility.\nFiscal deficits are expected to remain large in both developed and emerging markets, as public spending on social welfare, defence and climate transition initiatives is expected to remain high. In many countries, the fiscal response to the Covid-19 pandemic has also left a very high public debt burden. Against a backdrop of slower economic growth and high interest rates, elevated borrowing costs could increase the strains on highly indebted sovereigns.\nOur approach to macroeconomic scenarios in relation to IFRS 9 ‘Financial Instruments’ remained unchanged in the fourth quarter of 2023 compared with the corresponding period in 2022. Adjustments to the design and narrative of the most severe downside scenario were made to reflect increased geopolitical risks.\nSanctions and trade restrictions are complex, novel and evolving. In particular, the US, the UK and the EU, as well as other countries, have imposed significant sanctions and trade restrictions against Russia. In December 2023, the US established a new secondary sanctions regime, providing itself broad discretion to impose severe sanctions on non-US banks that are knowingly or even unknowingly engaged in certain transactions or services involving Russia’s military-industrial base. This creates challenges associated with the detection or prevention of third-party activities beyond HSBC’s control. The imposition of such sanctions against any non-US HSBC entity could result in significant adverse commercial, operational and reputational consequences for HSBC.\nIn addition, management adjustments to ECL were applied to reflect persisting uncertainty in certain sectors, driven by inflation, interest rate sensitivity and other macroeconomic risks, which were not fully captured by our models.", "chunk_word_count": 525, "section_path": "Opening up a world of opportunity > 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments. > Managing risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 39, "page_start": 39, "page_end": 39 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 62, "chunk_text": "# Opening up a world of opportunity\n## 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments.\n### Managing risk\nPolitical changes may also have implications for policy. Many countries are expected to hold elections in 2024. This may result in uncertainty in some markets in response to domestic political priorities.\nSectoral risks are also a focus, and the real estate sector in particular faces challenges in many of our major markets. In mainland China, commercial real estate conditions remain distressed and signs of a material or sustained recovery are yet to emerge. Market data continues to reflect reduced investment and weak sentiment in the short term, although authorities are expanding fiscal and monetary support to the economy including specific measures to support developers and stimulate housing demand. We continue to closely monitor this sector, and take action to manage our commercial real estate portfolio risk.\nWe continue to monitor, and seek to manage, the potential implications of all the above developments on our customers and our business. While the financial performance of our operations varies by geography, our balance sheet and liquidity remained strong.\nFor further details of our Central and other scenarios,see ‘Measurementuncertainty and sensitivity analysis of ECL estimates' on page 156.\nThe relationships between China and several other countries, including the US and the UK, remain complex. Supply chains remain vulnerable to a deterioration in these relationships and this has resulted in efforts to de-risk certain sectors by reshoring manufacturing activities. The US, the UK, the EU and other countries have imposed various sanctions and trade restrictions on Chinese persons and companies. The approach of countries to strategic competition and engagement with China continues to develop. In response, China has imposed sanctions, trade restrictions and law enforcement measures. Further sanctions or countersanctions may adversely affect the Group, its customers and various markets.\nThe impact of the rising cost of living on retail customers is a key risk for our society. Our primary concern is to ensure that we offer\n### Strategic report | Risk overview\n### Managing risk continued\nthe annual cyclical scenario stress test to determine the banking sector’s ability to withstand an adverse scenario and continue to serve UK households and businesses.\nIn the second half of 2023, we ran further internal climate scenario analyses. The outcomes were used to identify challenges and opportunities to our net zero strategy, inform capital planning and risk appetite, as well as to respond to climate stress tests for regulators, including the Hong Kong Monetary Authority and the Central Bank of the United Arab Emirates.", "chunk_word_count": 433, "section_path": "Opening up a world of opportunity > 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments. > Managing risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 63, "chunk_text": "# Opening up a world of opportunity\n## 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments.\n### Our risk appetite\nOur risk appetite defines our desired forwardlooking risk profile and informs the strategic and financial planning process. It provides an objective baseline to guide strategic decision making, helping to ensure that planned business activities provide an appropriate balance of return for the risk assumed, while remaining within acceptable risk levels. Risk appetite supports senior management in allocating capital, funding and liquidity optimally to finance growth, while monitoring exposure to non-financial risks.\nThe results were published on 12 July 2023 by the BoE in its Financial Stability Report and indicated that both HSBC Holdings and HSBC UK are sufficiently capitalised with a CET1 capital ratio remaining well above the regulatory reference rate on both an IFRS 9 transitional basis and on a non-transitional basis.\nDFor further details of ourapproach to climate risk stresstesting,see ‘Insights fromscenario analysis'on page 225.\n### Our operations\nAt 31 December 2023, our CET1 ratio and ECL charges were within their defined risk appetite thresholds. Our CET1 capital ratio at 31 December 2023 was $1 4 . 8 \\%$ , up 0.6 percentage points from 2022, mainly driven by capital generation net of dividends, share buy-backs and regulatory adjustments, partly offset by an increase in RWAs during the year. For further details of the key drivers of the overall CET1 ratio, see ‘Own funds disclosure’ on page 207. Wholesale ECL charges during the year reflected the default of several mainland China commercial real estate developer clients. Wholesale ECL charges fell outside of appetite in the first half of 2023, although returned within appetite during the second half of 2023, due to relatively lower defaults in the UK and most other markets. During 2023, we enhanced the coverage of interest rate risk metrics in the banking book within the Group’s appetite statement.\nDuring the second half of 2023, the Groupwide internal stress test was completed alongside testing of the Group’s strategy. The concluding results of the Group-wide internal stress test provided updates to the Group Risk Committee in support of its assessment of adequacy of HSBC Holdings capital levels. The underlying conclusions drawn from this exercise will also be included in the Group internal capital adequacy assessment process (‘ICAAP‘) in the first quarter of 2024.\nWe remain committed to investing in the reliability and resilience of our IT systems and critical services, including those provided by third parties, which support all parts of our business. We do so to help protect our customers, affiliates and counterparties, and to help ensure that we minimise any disruption to services. In our approach to defending against these threats, we invest in business and technical controls to help us detect, manage and recover from issues in a timely manner.", "chunk_word_count": 474, "section_path": "Opening up a world of opportunity > 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments. > Our risk appetite", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 40, "page_start": 40, "page_end": 40 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 64, "chunk_text": "# Opening up a world of opportunity\n## 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments.\n### Climate risk\nClimate risk relates to the financial and non-financial impacts that may arise as a consequence of climate change and the move to a net zero economy. Climate risk can impact us either directly or through our relationships with our clients. These include the potential risks arising as a result of our net zero ambition, which could lead to reputational concerns, and potential legal and/or regulatory action if we are perceived to mislead stakeholders on our business activities or if we fail to achieve our stated net zero targets.\nWe are working to ensure that we balance the opportunity AI presents to accelerate delivery of our strategy with the need to ensure appropriate controls are in place to mitigate the associated risks. HSBC is committed to using AI ethically and responsibly. We continue to refine and embed robust and effective governance and controls into our risk management processes to help meet the Group’s needs and increasing regulatory expectations for when AI is both developed internally and enabled through third parties.\n### Stress tests\nWe regularly conduct stress tests to assess the resilience of our balance sheet and our capital adequacy, as well as to provide actionable insights into how key elements of our portfolios may behave during a crisis. We use the outcomes to calibrate our risk appetite to review and calibrate as required our strategic and financial plans, helping to improve the quality of management’s decision making. The results from the stress tests also drive recovery and resolution planning to help enhance the Group’s financial stability under various macroeconomic scenarios. The selection of stress scenarios is based upon the identification and assessment of our top risks, emerging risks and our risk appetite.\nWe seek to manage climate risk across all our businesses in line with our Groupwide risk management framework and are incorporating climate considerations within our traditional risk types.\nWe continue to focus on improving the quality and timeliness of the data used to inform management decisions, and are progressing with the implementation of our strategic and regulatory change initiatives to help deliver the right outcomes for our customers, people, investors and communities.\nFor further details of our approach to climate risk management,see'Climate risk'onpage 221. For further details of our TCFD disclosures,see the 'ESG review'on page 42.\nFor furtherdetails of our risk management framework and risksassociated with ourbanking and insurancemanufacturing operations,see pages137and145,respectively.", "chunk_word_count": 420, "section_path": "Opening up a world of opportunity > 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments. > Climate risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 40, "page_start": 40, "page_end": 40 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 65, "chunk_text": "# Opening up a world of opportunity\n## 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments.\n### Climate stress tests\nTo support the requirements for assessing the impacts of climate change, we continue to develop a set of capabilities to execute climate stress testing and scenario analysis. These are used to help improve our understanding of risk exposures for managing risk and business decision making.\nIn January 2023, HSBC Holdings and HSBC UK, its UK ring-fenced bank, submitted the internally modelled results of the Bank of England’s (‘BoE’) 2022–2023 annual cyclical scenario to the regulator. The BoE uses\nTop and emerging risks\nOur suite of top and emerging risks is subject to regular review by senior governance forums. During 2023, we removed Ibor transition as a top risk given the cessation of the publication of US dollar Libor in June 2023. We continue to monitor closely the identified risks and ensure management actions are in place, as required.\nOur top and emerging risks report identifies forward-looking risks so that they can be considered in determining whether any incremental action is needed to either prevent them from materialising or to limit their effect. Top risks are those that have the potential to have a material adverse impact on the\nfinancial results, reputation or business model of the Group. We actively manage and take actions to mitigate our top risks. Emerging risks are those that, while they could have a material impact on our risk profile were they to occur, are not considered immediate and are not under active management.", "chunk_word_count": 266, "section_path": "Opening up a world of opportunity > 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments. > Climate stress tests", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 40, "page_start": 40, "page_end": 41 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 66, "chunk_text": "# Opening up a world of opportunity\n## 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments.\n### Long-term viability and going concern statement\nUnder the UK Corporate Governance Code, the Directors are required to provide a viability statement that must state whether the Group will be able to continue in operation and meet its liabilities, taking into account its current position and the principal risks it faces. They must also specify the period covered by, and the appropriateness of, this statement.\nsolvency and liquidity. They determined that the principal risks are the Group’s top and emerging risks as set out on page 38. These include geopolitical and macroeconomic risks (including geopolitical tensions and their impact on sanctions, trade restrictions and continued distressed Chinese economic activity), digitalisation and technological advances, financial crime risk and ESG risks, all of which have remained at heightened levels during 2023.\n– reports and updates regarding regulatory and internal stress testing. The 2022–2023 Bank of England annual cyclical scenario stress test results were published on 12 July 2023. The stress scenario explored the potential impacts of a global economic contraction, persistently higher inflation and interest rates in advanced economies with materially increased unemployment, and a sharp fall in asset prices. Additionally during the second half of 2023, the Groupwide internal stress test was completed, which explores a prolonged global stress, depicting macroeconomic conditions that are generally more severe than that of the 2022–2023 annual cyclical scenario. The results of both these exercises indicated the Group is sufficiently capitalised to withstand a severe but plausible adverse stress;\nThe Directors have specified a period of three years to 31 December 2026. They are satisfied that a forward-looking assessment of the Group for this period is sufficient to enable a reasonable statement of viability. In addition, this period is covered by the Group’s stress testing programmes, and its internal projections for profitability, key capital ratios and leverage ratios. Notwithstanding this, our stress testing programmes also cover scenarios out to five years and our assessment of risks are beyond three years where appropriate (see page 140):\nThe Directors assessed that all of the top and emerging risks identified are considered to be material and, therefore, appropriate to be classified as the principal risks to be considered in the assessment of viability. They also appraised the impact that these principal risks could have on the Group’s risk profile, taking account of mitigating actions planned or taken for each, and compared this with the Group’s risk appetite as approved by the Board.\n– This period is representative of the time horizon to consider the impact of ongoing regulatory changes in the financial services industry.\n– the results of our 2023 internal climate scenario analysis exercise. The results of this exercise further demonstrate the Group is sufficiently capitalised to withstand a severe stress. Further details of the insights from the 2023 climate scenario analysis are explained from page 225;\nIn carrying out their assessment of the principal risks, the Directors considered a wide range of information including:\n– Our updated business plan covers 2024 –2028.\n– details of the Group’s business and operating models, and strategy (see page 11);", "chunk_word_count": 534, "section_path": "Opening up a world of opportunity > 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments. > Long-term viability and going concern statement", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 67, "chunk_text": "# Opening up a world of opportunity\n## 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments.\n### Long-term viability and going concern statement\nThe Board, having made appropriate enquiries, is satisfied that the Group as a whole has adequate resources to continue operations for a period of at least 12 months from the date of this report, and it therefore continues to adopt the going concern basis in preparing the financial statements.\n– reports and updates from management on risk-related issues selected for in-depth consideration;\n– details of the Group’s approach to managing risk and allocating capital;\n– the continued validity of our existing risk management practices, liquidity monitoring process and metric assumptions, in light of the high-profile US and Swiss banking failures in the first quarter of 2023;\n– reports and updates on regulatory developments;\n– legal proceedings and regulatory matters set out in Note 36 on the financial statements; and\nBased upon their assessment, the Directors have a reasonable expectation that the Group will be able to continue in operation and meet liabilities as they fall due over the next three years.\n– a summary of the Group’s financial position considering performance, its ability to maintain minimum levels of regulatory capital, liquidity funding and the minimum requirements for own funds and eligible liabilities over the period of the assessment. Notable are the risks which the Directors believe could cause the Group’s future results or operations to adversely impact any of the above;\n– reports and updates from management on the operational resilience of the Group.\nAileen Taylor\nIn making their going concern and viability assessments, the Directors have considered a wide range of detailed information relating to present and potential conditions, including projections for profitability, liquidity, capital requirements and capital resources.\nGroup Company Secretary and Chief Governance Officer\n21 February 2024\n– enterprise risk reports, including the Group’s risk appetite profile (see page 136) and top and emerging risks (see page 140);\nThe Directors carried out a robust assessment of the emerging and principal risks facing the Group to determine its long-term viability, including those that would threaten its\n– the impact on the Group due to the Russia-Ukraine and Israel-Hamas wars; instability in China’s commercial real estate sector and strained economic and diplomatic relations between China and the US, the UK, the EU and other countries;\n### Environmental, social and governance review\nOur ESG review sets out our approach to our environment, customers, employees and governance. It explains how we aim to achieve our purpose, deliver our strategy in a way that is sustainable, and build strong relationships with all of our stakeholders.\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\nHow we present our TCFD disclosures Our overall approach to TCFD can be found on page 17 and additional information is included on pages 69 and 440. Further details have been embedded in this section and the Risk review section on pages 221 to 230. Our TCFD disclosures are highlighted with the following symbol: TCFD", "chunk_word_count": 511, "section_path": "Opening up a world of opportunity > 1 Central Treasury comprises valuation differences on issued long-term debtand associated swaps and fair valuemovementsonfinancial instruments. > Long-term viability and going concern statement", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 42, "page_start": 42, "page_end": 43 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 68, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Our approach to ESG\nWe continue to work to incorporate environmental, social and governance principles throughout the organisation and to embed sustainability into the way we operate.\n4 Environmental \n75 Social \n87 Governance\n### About the ESG review\n4 Environmental \n75 Social \n87 Governance\n### Environmental – Transition to net zero\nOur purpose is: ‘Opening up a world of opportunity’.\n– In January 2024, we published our net zero transition plan. This provides an overview of the progress we have made to date and what we plan to do next, although we acknowledge there is still much more to do.\nOur purpose is guided by our values: we value difference; we succeed together; we take responsibility; and we get it done.\n– We have now set combined on-balance sheet financed emissions and facilitated emissions targets for two emissions-intensive sectors: oil and gas, and power and utilities, and report the combined progress for both sectors.\nOur approach to ESG is shaped by our purpose and values and a desire to create sustainable long-term value for our stakeholders. We collaborate and aim to build strong relationships with all of our stakeholders, which include the people who work for us, bank with us, own us, regulate us, and live in the societies we serve and on the planet we all inhabit to deliver the ESG approach.\nRead more in the Environmental section onpage 44.\n4 Environmental \n75 Social \n87 Governance\n### Social – Building inclusion and resilience\n– In 2023, $3 4 . 1 \\%$ of senior leadership roles were occupied by women, with a target to achieve $3 5 \\%$ by 2025, although progress has not been as fast paced as we would have liked. We also continued on a journey to meet our ethnicity goals.\n– Employee engagement, which is our headline measure, increased by three points in 2023 and is now seven points ahead of the external financial services benchmark.\n4 Environmental \n75 Social \n87 Governance\n### Transition to net zero\nDRead more in the Building inclusion and resilience section on page 75.\nWe have continued to take steps to implement our climate ambition to become net zero in our operations and our supply chain by 2030, and align our financed emissions to net zero by 2050. In January 2024, we published our net zero transition plan, which is an important milestone in our journey to achieving our net zero ambition. The plan will help our people, customers, investors and other stakeholders to understand our long-term vision, the challenges, uncertainties and dependencies that exist, the progress we are making towards our own transition and what we plan to do in the future.", "chunk_word_count": 462, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Our approach to ESG", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 44, "page_start": 44, "page_end": 44 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 69, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Governance – Acting responsibly\n– We continue to raise awareness and develop our understanding of our salient human rights issues. In 2023, we provided practical guidance and training, where relevant, to our colleagues \nacross the Group on how to identify and manage human rights risk. \n– We were ranked as a top three bank against our competitors in $5 8 \\%$ of our key six markets, although we still have work to do to improve our rank positions.\nRead more in the Governance section on page 87.\n4 Environmental \n75 Social \n87 Governance\n### Building inclusion and resilience\ncapabilities so that they can understand their finances and manage them effectively.\nOur social approach is centred around fostering inclusion and building resilience for our colleagues, our customers, and in the communities we serve.\nIn this ESG review, we publish on-balance sheet financed emissions for thermal coal mining, in addition to other sectors we have already been reporting on, noting the challenge of evolving methodologies and data limitations. We also publish combined on-balance sheet financed and facilitated emissions for the oil and gas, and power and utilities sectors. We expect to iterate and mature our approach to supporting sector transitions over time. We also continue to work on improving our data management processes.", "chunk_word_count": 231, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Governance – Acting responsibly", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 44, "page_start": 44, "page_end": 44 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 70, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Acting responsibly\nOur governance approach focuses on acting responsibly and recognises topics such as human rights, conduct and data integrity.\nWe are building a workforce that is representative of the communities that we serve and we have targets and programmes in place to ensure fair and inclusive recruitment and to support the equitable progression of under-represented groups. We also strive to create an inclusive and accessible banking experience for all of our customers, and to help them access the finance they need without unnecessary barriers.\nOur policies and procedures help us to provide the right outcomes for customers, including those with enhanced care needs, which in 2023 took into account pressures from the increased cost of living. Customer experience is at the heart of how we operate and is measured through customer satisfaction and customer complaints.\nWe continue to review policy implementation as we apply our policies in practice and our operationalisation of such policies continues to be enhanced. We take a risk-based approach when identifying transactions and clients to which our energy policy and thermal coal phase-out policies apply, and when reporting on relevant exposures, adopting approaches proportionate to risk and materiality.\nEmployee resilience is central to our success, so we provide a wide range of resources to support colleagues’ mental, physical and financial well-being, as well as training and support so that they are equipped with the skills they need to further their careers. We support customer resilience with products, services and education that build their\nWe are continuing our journey to embed ESG principles across the organisation, including incorporating climate risks within the risk management framework, training our workforce, incorporating climate-related targets within executive scorecards, and engaging with customers and suppliers.\nWe are also working with peers and industry bodies to help mobilise the systemic change needed to deliver action on climate change, nature and the just transition.", "chunk_word_count": 331, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Acting responsibly", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 44, "page_start": 44, "page_end": 44 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 71, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### How we decide what to measure\nWe listen to our stakeholders in a number of different ways, which we set out in more detail within the ‘ESG overview’ on page 14. We use the information they provide us to identify the issues that are most important to them and consequently also matter to our own business.\nOur ESG Committee and other relevant governance bodies regularly discuss the new and existing themes and issues that matter to our stakeholders. Our management team then uses this insight, alongside the framework of the ESG Guide (which refers to our obligations under the Environmental, Social and Governance Reporting Guide contained in Appendix C2 to The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited), and the LR9.8.6R(8) of the Financial Conduct Authority’s (‘FCA’) Listing Rules, and other applicable laws and regulations to choose what we measure and publicly report in this ESG review. Under the ESG Guide, ’materiality’ is considered to be the threshold at which ESG issues become sufficiently important to our investors and other stakeholders that they should be publicly reported. Our approach to materiality also considers disclosure standards and other applicable rules and regulations as part of our materiality assessment for specific ESG topics and relevant disclosures.\nConsistent with the scope of financial information presented in our Annual Report and Accounts,the ESG review covers the operations of HSBC Holdings plc and its subsidiaries. Given the relative immaturity of ESG-related data and methodologies in general, we are on a journey towards improving completeness and robustness.\nGiven the recent developments in the ESG regulatory environment across various jurisdictions in which we operate, combined with the relative immaturity of processes, systems, data quality and controls, our focus remains on supporting a globally consistent set of mandatory sustainability standards. We aim to continue to evolve our reporting to recognise market developments, such as the International Sustainability Standard Board (‘ISSB’) or the Corporate Sustainability Reporting Directive (‘CSRD’), and support the efforts to harmonise the disclosures. In this Annual Report and Accounts,we continue to report against the core World Economic Forum (‘WEF’) Stakeholder Capitalism Metrics, and Sustainability Accounting Standards Board (‘SASB’) metrics and will continue to review our approach as the regulatory landscape evolves.\nFor furtherdetails of our material ESG topics,see 'Engaging with our stakeholdersand our material ESG topics'on page 15.\nFor furtherdetailsof ourapproach to reporting, see 'Additional information'on page 439.\n4 Environmental \n75 Social \n87 Governance\n### Our reporting around ESG\nWe report on ESG matters throughout our Annual Report and Accounts, including the ’ESG overview’ section of the Strategic Report (pages 14 to 19), this ESG review (pages 41 to 98), and the ‘Climate risk’ and ‘Insights from climate scenario analysis’ sections of the Risk review (pages 221 to 230). In addition, we have other supplementary materials, including our ESG Data Pack, which provides a more granular breakdown of ESG information.\nFts", "chunk_word_count": 502, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > How we decide what to measure", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 45, "page_start": 45, "page_end": 45 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 72, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Assurance relating to ESG data\nHSBC Holdings plc is responsible for preparation of the ESG information and all the supporting records, including selecting appropriate measurement and reporting criteria, in our Annual Report and Accounts, ESG Data Pack and the additional reports published on our website.\nFor 2023, ESG data is subject to standalone independent PwC limited assurance in accordance with International Standard on Assurance Engagements 3000 (Revised) ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’ and, in respect of the greenhouse gas emissions, in accordance with International Standard on Assurance Engagements 3410 ‘Assurance Engagements on Greenhouse Gas Statements’, issued by the International Auditing and Assurance Standards Board, on the following specific ESG-related disclosures and metrics:\n– our thermal coal financing drawn balance exposures for 2020 (see page 67); and\n– our own operations’ scope 1, 2 and 3 (business travel) greenhouse gas emissions data (see page 64), as well as supply chain emissions data.\nWe recognise the importance of ESG disclosures and the quality of data underpinning them. We also acknowledge that our internal processes to support ESG disclosures are in the process of being developed and currently rely on manual sourcing and categorisation of data. Certain aspects of our ESG disclosures are subject to enhanced verification and assurance procedures including the first, second and third line of defence. Assurance assists in reducing the risk of restatement, although it cannot be fully eliminated given the challenges in data, evolving methodologies and emerging standards. We aim to continue to enhance our approach in line with external expectations.\nThe work performed for independent limited assurance is substantially less than the work performed for a reasonable assurance opinion, like those provided over financial statements.\n– our Green Bond Report 2023 (published in December 2023);\n– our progress towards our ambition to provide and facilitate $\\$ 7500$ to $\\$ 1$ 1tn of sustainable finance and investment by 2030 (see page 49);\nOur data dictionaries and methodologies for preparing the above ESG-related metrics and independent PwC’s limited assurance reports can be found at www.hsbc.com/who-we-are/ esg-and-responsible-business/esg-reportingcentre.\n– our on-balance sheet financed emissions for 2021 and 2022 for six sectors, our onbalance sheet financed emissions for 2020 for thermal coal mining, and our facilitated emissions for two sectors for 2019 to 2022 (see page 61);\n4 Environmental \n75 Social \n87 Governance\n### Environmental TCFD\n4 Environmental \n75 Social \n87 Governance\n### Transition to net zero\nWe support the transition of our customers, industries and markets to a net zero and a sustainable future, while moving to net zero ourselves.\n4 Environmental \n75 Social \n87 Governance\n### At a glance\n4 Environmental \n75 Social \n87 Governance\n### Embedding net zero into the way we operate\n4 Environmental \n75 Social \n87 Governance\n### Our approach to transition to net zero", "chunk_word_count": 484, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Assurance relating to ESG data", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 45, "page_start": 45, "page_end": 46 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 73, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Impact on reporting and financial statements\nOur net zero ambition represents one of our four strategic pillars. In January 2024, we published our net zero transition plan. It provides an overview of our approach to net zero and the actions we are taking to help meet our ambition. It sets out how we are working to embed net zero across key areas of our organisation to help ensure that we can play a role in the transition to net zero in the markets we serve.\nWe take a risk-based, proportionate and iterative approach to embedding net zero into our organisation, focusing our efforts on where we can help drive material and implementable change, and applying learnings as we go along. Our approach will continue to mature over time with evolving science, methodologies, industry standards and regulatory requirements, and improvements in data and in technology infrastructure.\nWe have assessed the impact of climate risk on our balance sheet and have concluded that there is no material impact on the financial statements for the year ended 31 December 2023. The effects of climate change are a source of uncertainty. We capture known and observable potential impacts of climate-related risks in our asset valuations and balance sheet calculations. These are considered in relevant areas of our balance sheet, including expected credit losses, classification and measurement of financial instruments, goodwill and other intangible assets; and in making the long term viability and going concern assessment. As part of assessing the impact on our financial statements we conducted scenario analysis to understand the impact of climate risk on our business (see page 65). For further details of our climate risk exposures, see page 221.\n4 Environmental \n75 Social \n87 Governance\n### Supporting our customers\n4 Environmental \n75 Social \n87 Governance\n### Partnering for systemic change\nTo help achieve the scale and speed of change required to transition to net zero, we know we need to support our customers not just with finance, but with the services, insights and tools to help them to transition. In 2023, we continued to provide sustainable financing and investment to our customers in line with our ambition to provide and facilitate $\\$ 7500$ to $\\$ 9$ 1tn by 2030. We report our progress against our 2030 financed emissions targets and our wider progress towards net zero by 2050, including how we plan to engage with customers in high-emitting sectors.\nOur ability to achieve our own net zero ambition is heavily reliant on the mobilisation of all stakeholders, public and private, across multiple geographies. We continue to support systemic change through new and existing partnerships, and we engage through industry alliances and initiatives to help build a supportive enabling environment.\nFor further details of how management considered the impactof climate-related risks on its financial position and performance, see Critical estimatesand judgements'on page 343.\n4 Environmental \n75 Social \n87 Governance\n### Overview TCFD", "chunk_word_count": 501, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Impact on reporting and financial statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 46, "page_start": 46, "page_end": 46 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 74, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Our approach to the transition\nThe Paris Agreement aims to limit the rise in global temperatures to well below $2 ^ { \\circ } \\mathsf { C }$ , preferably to $1 . 5 ^ { \\circ } \\mathsf { C } ,$ , compared with preindustrial levels. To limit the rise to $1 . 5 ^ { \\circ } \\mathsf { C } ,$ the global economy would need to reach net zero greenhouse gas emissions by 2050. We are working to achieve a $1 . 5 ^ { \\circ } \\mathsf { C }$ -aligned phase-down of financed emissions from our portfolio.\nResponding to the challenges and opportunities presented by net zero requires us to work across HSBC to implement and embed our net zero approach, to manage associated risks, and to help sustain and grow value for our customers, our shareholders and our wider stakeholders. We want to make financing, facilitating and investment choices that can lead to a meaningful impact on emissions reduction in the real economy, not just in our portfolio. This requires engaging with our customers on their transitions to help finance decarbonisation in the sectors and geographies with the most change ahead.\n4 Environmental \n75 Social \n87 Governance\n### Our implementation plan\nWe are working to embed net zero across our organisation. This includes embedding net zero into: the way that we support our customers, both through customer engagement and the provision of financing solutions; the way that we operate as an organisation, including risk management, policies, governance and own operations; and how we partner externally in support of systemic change. It also means focusing first on the sectors and customers with the highest emissions and transition risks, and evolving and expanding our efforts over time.\nIn October 2020, we announced our ambition to become a net zero bank by 2050 and in 2021 we included the transition to net zero as one of the four key pillars of our corporate strategy.\nIn January 2024, we published our net zero transition plan. It provides an overview of our approach to net zero and the actions we are taking to help meet our ambition. It sets out how we intend to use our strengths as an organisation to help deliver a broader impact on decarbonisation, how we are working to embed net zero across key areas of our organisation, and the principles that we aim to use to guide the implementation of our approach.", "chunk_word_count": 430, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Our approach to the transition", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 47, "page_start": 47, "page_end": 47 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 75, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Our net zero principles\nOur starting point in the transition to net zero is one of a heavy financed emissions footprint. Our history means our balance sheet is weighted towards the sectors and regions which matter the most in terms of emissions, and whose transitions are therefore key to the world’s ability to reach net zero on time. This means we will have a complex transition, with markets and sectors at different starting points and moving at different speeds. However, it also provides us with an opportunity to work with our customers to help make an impact – in both the emissions challenge and the financing challenge.\nIn implementing our approach to net zero, we aim to be guided by a set of principles which are aligned with our core values: science-based, transparent and accountable; integrating nature; and just and inclusive.\nDFor further details of ourapproach to the transition,see our Net Zero Transition Plan 2024 atwww.hsbc.com/who-we-are/our-climatestrategy/our-net-zero-transition-plan\n4 Environmental \n75 Social \n87 Governance\n### Our net zero strengths\nWe aim to rebalance our capital deployment towards achieving net zero over the coming decades. We believe we can do this best by promoting change in three key areas that play to our strengths as an organisation: transitioning industry; catalysing the new economy; and decarbonising trade and supply chains.\n4 Environmental \n75 Social \n87 Governance\n### Understanding our climate reporting\nThe availability of high-quality climate-related data, transparent reporting standards and consistent methodology will play a vital role in helping deliver the economic transformation required to limit global warming to $1 . 5 ^ { \\circ } \\mathrm { C }$ at the speed and scale that is needed. We understand that our existing data, systems, controls and processes require significant enhancements to drive effective change, but we recognise the necessity to balance this with providing early transparency on climate disclosures.\n4 Environmental \n75 Social \n87 Governance\n### Explaining scope 1, 2 and 3 emissions\nTo measure and manage our greenhouse gas emissions, we follow the Greenhouse Gas Protocol global framework, which identifies three scopes of emissions. Scope 1 represents the direct emissions we create. Scope 2 represents the indirect emissions resulting from the use of electricity and energy to run a business. Scope 3 represents indirect emissions attributed to upstream and downstream activities. Our upstream activities include business travel and emissions from our supply chain including transport, distribution and waste. Our downstream activities include those related to investments and including financed emissions.\nUnder the protocol, scope 3 emissions are also broken down into 15 categories, of which we provide reporting emissions data for three related to upstream activities. These are: purchased goods and services (category 1); capital goods (category 2); and business travel (category 6). We also report data on downstream activities for financed emissions (category 15).", "chunk_word_count": 484, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Our net zero principles", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 47, "page_start": 47, "page_end": 48 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 76, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Our stakeholder dependency\nCritical to our approach is a recognition that as a bank we cannot do this alone. Our ability to transition relies on decarbonisation in the real economy – both the supply and demand side – happening at the necessary pace. Our customers and the industries and markets we serve will need to transition effectively, supported by strong government policies and regulation, and substantially scaled investment. Engagement and collaboration are therefore key to how we respond.\n[IMAGE CAPTION] D For further breakdown of ourscope 1,2 and 3emissions,se our ESG Data Pack at www.hsbc.com/esg. 1 Ouranalysis of financed emissions comprises ‘on-balance sheet financed emissions'and 'facilitatedemissions.\nWe acknowledge that to achieve our climate ambition we need to be transparent about the opportunities, challenges, related risks we face and progress we make. Our reporting must evolve to keep pace with market developments, and we will aim to work through challenges and seek to improve consistency across different markets. Standard setters and regulators will play a critical role. Some of the limitations and challenges that our organisation, and the wider industry, currently face with regard to climate reporting are highlighted on pages 47 to 48.\n4 Environmental \n75 Social \n87 Governance\n### Accelerating investment in Baltic offshore wind energy\nPolish multi-energy company Orlen Group and Canadian power producer Northland Power have set up a joint venture to build the Baltic Power project – the first offshore wind farm in Polish waters of the Baltic Sea.\nIn September 2023, we played a key role in supporting the construction and operation of 76 offshore turbines when we acted as a mandated lead arranger for a $\\$ 3.8$ bn (€4.4bn) credit facility. We helped coordinate a syndicate of 25 Polish and international financial institutions to finance the project.\nWith a target capacity of almost 1.2 gigawatts, the wind farm is expected to represent a significant step in reducing Poland’s reliance on fossil fuels and generate enough clean electricity to power the equivalent of more than 1.5 million homes annually.\n4 Environmental \n75 Social \n87 Governance\n### Understanding our climate reporting continued", "chunk_word_count": 366, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Our stakeholder dependency", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 48, "page_start": 48, "page_end": 48 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 77, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Keeping up-to-date with real economy progress\npolicy and regulatory landscape, the speed of technological innovation, major economic shifts and geopolitical events. There is also a risk of government or customer net zero pledges or transition plans not turning into the necessary emissions reductions in the coming decade, or in the case of hard-to abate sectors, being pared back if technologies do not scale in time. In addition, climate science, the quality of data, and the scenarios upon which we have based our approach will change. We recognise that while we have limited control of these external dependencies, we can be clear on where we intend to focus our efforts to help drive meaningful change, and that we expect to iterate and mature our approach over time.\nThis includes sourcing more reliable data from external providers. We are also developing our processes, systems, controls and governance to meet the demands of future ESG reporting. Certain aspects of our reporting rely on manual sourcing and categorisation of data that is not always aligned with how our businesses are managed. We also have a dependency on emissions data from our clients. Given the manual nature of the process, enhanced verification and assurance procedures are performed on a sample basis over this reporting, including the first and second line of defence. Our climate models undergo independent review by an internal model review group, and we obtain limited assurance on our financed emissions and sustainable finance disclosures from external parties, including our external auditors.\nNet zero-aligned scenarios are dynamic by nature; they are typically updated every few years to incorporate significant shifts that have occurred in the real economy. Key drivers of this include changes in the economic environment, new data on technology deployment across sectors and geographies, new policies, and increased investment in clean energy and/or in fossil fuels.\nThe reference scenario we have selected to date for our published 2030 targets, for on-balance sheet and facilitated emissions, is the International Energy Agency’s (‘IEA’) NZE 2021 scenario, which is $1 . 5 ^ { \\circ } \\mathsf { C } .$ -aligned with limited overshoot. In September 2023, the IEA’s NZE 2023 scenario was published as an update to reflect developments since 2021. As outlined in our net zero transition plan, going forwards we intend to review each updated set of $1 . 5 ^ { \\circ } \\mathsf { C }$ -aligned scenarios to further develop and enhance our understanding of the latest outlooks for evolving pathways to achieve net zero by 2050. This will help us to consider whether, how and when to iterate and update our approach to scenario selection and target setting, portfolio alignment, and policies to keep pace with the latest science and real-world developments. We anticipate standard setter and industry guidance on the treatment of updated scenarios in targetsetting to emerge.", "chunk_word_count": 493, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Keeping up-to-date with real economy progress", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 49, "page_start": 49, "page_end": 49 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 78, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Our internal and external data challenges\nOur climate ambition requires us to continue to enhance our capabilities including governance, processes, systems and controls. In addition, there is a heightened need for subject matter experts for climate-related topics as well as upskilling of key colleague groups who are supporting customers through their net zero transition. We also need new sources of data, some of which may be difficult to assure using traditional verification techniques. This challenge, coupled with diverse external data sources and structures, further complicates data consolidation. Our internal data on customer groups used to source financial exposure and emissions data is based on credit and relationship management attributes, and is not always aligned to the data needed to analyse emissions across sector value chains. As a consequence, this can result in an inconsistent basis in our financed emissions calculations.\n4 Environmental \n75 Social \n87 Governance\n### Policy implementation\nWe continue to review policy implementation as we apply our policies in practice, and our operationalisation of such policies continues to be enhanced. We take a risk-based approach when identifying transactions and clients to which our energy and thermal coal phaseout policies apply, and when reporting on relevant exposures, adopting approaches proportionate to risk and materiality. This helps to focus our efforts on areas where we believe we can help drive meaningful change, while taking into account experience from policy implementation over time.\n4 Environmental \n75 Social \n87 Governance\n### An evolving approach to embedding net zero\nWe recognise that the so-called ‘hard-toabate’ sectors, such as cement, iron, steel and aluminium, and aviation have a large dependence on nascent technologies and the presence (or not) of enabling policies and regulations. We may consider tracking progress relative to $1 . 5 ^ { \\circ } \\mathsf { C }$ -aligned ambition ranges for these sectors in the future, which could include industry-specific scenarios alongside the IEA NZE scenario.\nWe acknowledge that our assessment of client transition plans – which to date has focused on clients in scope of our thermal coal phase-out and energy policies – is at an early stage with initial learnings on methodology and client engagement. We are also at the early stages of embedding transition plans alongside financed emissions into transaction and portfolio level business and risk processes. Our net zero transition plan provides further details of work underway and planned.\nWe continue to invest in our climate resources and skills. Our activities are underpinned by efforts to develop our data and analytics capabilities and to help ensure that we have the appropriate processes, systems, controls and governance in place to support our transition.\n4 Environmental \n75 Social \n87 Governance\n### Critical dependencies\nWe continue to increase automation of our processes, with a particular focus on developing our ESG data capabilities to help address data gaps and improve consistency.\nProgress in the real economy towards net zero will likely be non-linear and will depend heavily on external factors including the", "chunk_word_count": 512, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Our internal and external data challenges", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 49, "page_start": 49, "page_end": 49 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 79, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Limited alignment on sustainable finance taxonomies\nSustainable finance metrics, taxonomies and best practices lack global consistency. As standards develop over time and as the regulatory guidance around them evolves across jurisdictions, our methodologies, disclosures and targets may need to evolve. This could lead to differences in year-on-year reporting and restatements.\nWe continue to engage with standard setters in different regions to support the development of transparent and consistent taxonomies to best incentivise science-based decarbonisation, particularly in high transition risk sectors. We aim to align to enhanced industry standards as they are further developed, and increase transparency across the different types of green and sustainable finance and investment categories going forward.\n4 Environmental \n75 Social \n87 Governance\n### Understanding our climate reporting continued\nFinanced emissions reporting challenges The methodologies and data used to assess financed emissions and set targets continue to evolve alongside changes to industry guidance, market practice and regulation. We plan to refine our analysis using appropriate data sources and current methodologies available for the sectors we analyse. We have developed an internal recalculation policy (see page 56) to define the circumstances under which a recalculating of financed emissions is necessary to help support the consistency, comparability and relevance of our reported emissions data over time.", "chunk_word_count": 227, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Limited alignment on sustainable finance taxonomies", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 80, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Continuing to evolve our climate disclosures\nWe understand the need to provide early transparency on climate disclosures but we must balance this with the recognition that our existing data and reporting processes require significant enhancements. Due to ongoing data availability and quality challenges, we continue to assess our financed emissions for our real estate and agriculture sectors.\n– Financed emissions: we improved our methodology for calculating financed emissions using more granular product identification to isolate exposure in scope, more consistent emission factors for estimates, and a revised aggregation method for emission intensity. Previously reported onbalance sheet numbers included non-lending exposures for market products in error. The more granular product identification will help ensure these are not included in future.\nWe are engaging with standard setters to support the development of transparent and consistent climate-related industry standards in areas such as product labelling, sustainability disclosures, sustainable finance taxonomy and emissions accounting. Voluntary industry initiatives can also help shape action and collaboration, and often form the basis of future climate policy and regulation. For example, we supported the TCFD, which is now referenced in climate disclosure rules around the world.\nWe have now set combined on-balance sheet financed emissions and facilitated emissions targets for two emissions-intensive sectors: oil and gas, and power and utilities, and report the combined progress for both sectors. We continue to report on-balance sheet financed emissions and targets for cement, iron, steel and aluminium, aviation, automotive and in 2023 we added thermal coal mining financed emissions.\n– Financed emissions: to reflect these enhancements we have set out the recalculated metrics for the oil and gas, and power and utilities sectors in the financed emissions section. The oil and gas baseline for on-balance sheet financed emissions is now 28.4 million tonnes of carbon dioxide equivalent (‘Mt $\\mathsf { C O } _ { 2 } \\mathsf { e } ^ { \\prime \\prime }$ ) for 2019 versus 33.0 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ reported in the Annual Report and Accounts 2022.The power and utilities baseline for on-balance sheet financed emissions is now 537.5 tonnes of carbon dioxide equivalent per gigawatt hour $\\mathrm { ' t C O } _ { 2 } \\mathrm { e } I$ GWh’) for 2019 versus 589.9 $\\mathrm { t C O } _ { 2 } \\Theta$ e/GWh reported in the Annual Report and Accounts 2022.For other sectors,changes were not material enough to warrant a recalculation.\nEmissions related to our insurance business are partially captured within the disclosures of HSBC Asset Management, which manages the vast majority of our insurance assets. The Partnership for Carbon Accounting Financials (‘PCAF’) standard for insurance associated emissions (part C) is not applicable to our insurance business as HSBC Insurance focuses on the manufacturing of life insurance products.\nIn 2024, we will continue to review our approach to disclosures, and enhance as appropriate.", "chunk_word_count": 505, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Continuing to evolve our climate disclosures", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 50, "page_start": 50, "page_end": 50 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 81, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Continuing to evolve our climate disclosures\n– Shipping: following a reduction in our exposure to the shipping sector after the strategic sale of part of our European shipping portfolio in 2023, and work undertaken to assess the materiality of our remaining portfolio from a financed emissions perspective, we have concluded that the remaining exposure as of year-end 2023 is not material enough to warrant setting a stand-alone target. This aligns with Net-Zero Banking Alliance (‘NZBA’) guidelines on sector inclusion for target setting.\n– Thermal coal exposures: we have now revised the basis of preparation for our thermal coal exposures. Aligned with our thermal coal phase-out policy, we applied a risk-based approach to identify clients and report on relevant exposures. Our thermal coal financing drawn balance exposure was approximately $\\$ 9$ 1bn† as at 31 December 2020. We continue to work on our 2021 and 2022 numbers based on our revised basis of preparation and expect to report on these in future disclosures.\nIn November 2023, our asset management business updated its 2022 thermal coal phase-out policy and released a new energy policy. It continues to focus on its portfolios’ scope 1 and scope 2 decarbonisation target for 2030 with the aim of aligning with net zero emissions by 2050 or sooner. The commitment covers listed equity and corporate fixed income where data is most reliable and methodologies are most mature.\n– Thermal coal power financed emissions: we have discontinued separate tracking and reporting of thermal coal power financed emissions. A review of the counterparties included within the on-balance sheet financed emissions calculation showed that the majority of thermal coal power entities in scope are included in other financed emission sector targets. We previously set separate targets to reduce on-balance sheet financed emissions for thermal coal power and thermal coal mining aligned to our thermal coal phase-out policy. We plan to maintain a financed emissions target for thermal coal mining only, and have set an absolute on-balance sheet reduction target for 2030 from a 2020 baseline. We used 2020 as a baseline to align with those applied to our drawn balance exposure targets. These targets reflect the percentage reduction that the IEA indicates in its net zero emissions scenario for global emissions to 2030.\nFor details of assurance overour ESG data, see page 43.\nFordetails ofourapproach to calculating financed emissionsand the relevant dataand methodology limitations,seepage55.\nIn January 2023, we withdrew our commitment to the Science Based Targets initiative (‘SBTi’), which we had made in 2016, because we determined that it would not be feasible for us to meet SBTi’s requirement to submit a complete set of sector targets for validation by its deadline. We continue to engage with SBTi on guidance for financial institutions and we participated in SBTi’s consultation process on its revised standards during the year.\nFordetails of our sustainablefinanceand investment ambition,see page 49.\nFordetails of our approach to thermal coal financing exposures,see page 67.\nFor further details of our asset management policies, see page 67.\n+Data is subject to independent limited assurance by PwC in accordance with ISAE3000/ISAE3410.For further details,see our Financed Emissions and Thermal Coal Exposures Methodologyand PWC's limited assurance report,whichare available at www.hsbc.com/who-we-are/esg-and-responsiblebusiness/esg-reporting-centre.\nDisclosure revisions", "chunk_word_count": 549, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Continuing to evolve our climate disclosures", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 50, "page_start": 50, "page_end": 50 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 82, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Continuing to evolve our climate disclosures\nWe are committed to timely and transparent reporting. However, we recognise that challenges on data sourcing, as well as the evolution of our processes and industry standards, may result in us having to restate certain disclosures. In 2023, there has been an impact on certain climate disclosures, as follows:\n4 Environmental \n75 Social \n87 Governance\n### Supporting our customers\n4 Environmental \n75 Social \n87 Governance\n### Sustainable finance and investment TCFD\nWe recognise that we have an important role to play in supporting the transition to a net zero global economy. As a global organisation with a presence in the regions and sectors where most significant change is needed, we are well placed to help transition industry and catalyse the new economy to reach net zero.\nSince 1 January 2020, we have provided and facilitated $\\$ 267.8$ bn of sustainable finance and $\\$ 26.65$ of ESG and sustainable investing, as defined in our Sustainable Finance and Investment Data Dictionary 2023.This included $3 8 \\%$ where the use of proceeds were dedicated to green financing, $12 \\%$ to social financing, and $1 5 \\%$ to other sustainable financing. It also included $2 6 \\%$ of sustainability-linked financing and $9 \\%$ of net new investment flows managed and distributed on behalf of investors. In 2023, our underwriting of green, social, sustainability and sustainability-linked bonds for clients decreased over the year, measured on a proportional share basis, in line with the wider bond market environment, although it remained at $1 5 \\%$ of our total bond underwriting. On-balance sheet sustainable lending transactions increased by $7 \\%$ compared with 2022. In 2023, transactions totalling $\\$ 0.70n$ were identified as no longer fulfilling our eligibility criteria. These were declassified and removed from the cumulative progress total, and reported as a negative entry in 2023.\n4 Environmental \n75 Social \n87 Governance\n### Progress on our sustainable finance and investment ambition\nContinued progress towards achieving our sustainable finance and investment ambition is dependent on market demand for the products and services set out in our Sustainable Finance and Investment Data Dictionary 2023.\nWe aim to help our customers transition to net zero and a sustainable future by providing and facilitating between $\\$ 7500$ and $\\$ 10$ of sustainable finance and investment by 2030. Our sustainable finance and investment ambition aims to help promote green, sustainable and socially-focused business and sustainable investment products and solutions.\nThe22dddbtt staai facilitatedcapitalmarkets/advisoryactivitiesandthenetnewflowsofsustainableinvestmentswithinassetsundermanagement.\n2Th\\$94bistiiad Revisedratiatdtt 2023 and PwC’s limited assurance report, see www. hsbc.com/who-we-are/esg-and-responsible-business/esg-reporting-centre.\n3Forei BoPriiei theGre Sydcait principleshaedtdeferceUNGAscdefciieHBCdentitatfprocesude elgibilityiidndppodbyrorateoveaneomiteesbutteareteldoaretedasgeooil\ncdediaassi mc definedas green use of proceeds in line with the Sustainable Finance and Investment Data Dictionary 2023.\nSustainable use of proceeds can be used forgreen,social ora combination of greenand social purposes.\nOusstaalli MAAPtedttesl targets.The funds can be used for general purposes.\n7Neteflosdseatablendldoriee Sustainable Finance and Investment Data Dictionary 2023.\nditioalaisblerodtc responsible-business/esg-reporting-centre.\n4 Environmental \n75 Social \n87 Governance\n### Sustainable finance and investment continued", "chunk_word_count": 507, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Continuing to evolve our climate disclosures", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 50, "page_start": 50, "page_end": 51 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 83, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Sustainable finance and investment definitions\nFor example, we increased our funding from $\\$ 5\\mathrm{ b n }$ to $\\$ 90\\mathsf { n }$ for our sustainable finance scheme that supports businesses of all sizes in China’s Greater Bay Area to transition to low-carbon operations. The scheme, launched in 2022, provides successful loan applicants access to a range of additional services including training, subsidised third-party assessments and assistance from a team with sustainable financing expertise. For our Wealth and Personal Banking customers, we launched green mortgages in Mexico, electric vehicle loans in India and a referral service to our electric vehicle leasing partner in the UK.\n4 Environmental \n75 Social \n87 Governance\n### Our sustainable finance and investment data dictionary\nOur data dictionary defining our sustainable finance and investment continues to evolve, and is reviewed annually to take into account the evolving standards, taxonomies and practices we deem appropriate. This involves reviewing and strengthening our product definitions, where appropriate, adding and deleting qualifying products, making enhancements to our internal standards, and developing our reporting and governance.\nWe define sustainable finance and investment as any form of financial service that integrates ESG criteria into business or investment decisions. This includes financing, investing and advisory activities that support the achievement of UN Sustainable Development Goals (‘SDGs’), including but not limited to the aims of the Paris Agreement on climate change.\nIndustry and regulatory guidance on definitions for sustainable finance continue to evolve. In 2023, the Glasgow Financial Alliance for Net Zero (‘GFANZ’), NZBA and the UK government released work-inprogress definitions of transition finance. We will continue to monitor these and other developments in sustainable finance definitions.\nDetails of our revised definitions of the contributing activities for sustainable finance and investment and how we calculate the amounts we count are available in our Sustainable Finance and Investment Data Dictionary 2023.\nIn 2023, we introduced an internal briefing series called Net Zero in Practice, which covers new technologies relevant to the net zero transition, drawing on expertise from across the organisation and highlighting financing opportunities and case studies.\nForour ESG Data Pack and Sustainable Finance and Investment Data Dictionary, seewww.hsbc.com/who-we-are/ esg-and-responsible-business/esgreporting-centre.\nWe continue to be a participant in the Just Energy Transition Partnerships (‘JETPs‘) in Indonesia and Vietnam, and in the Nexus for Water, Food and Energy in Egypt. These initiatives aim to play a catalytic role in mobilising finance to accelerate the energy transition. For further details of our involvement with the JETPs, see page 68.\nOur progress will be published each year, and we will seek to continue for it to be independently assured.", "chunk_word_count": 451, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Sustainable finance and investment definitions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 52, "page_start": 52, "page_end": 52 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 84, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Mobilising capital to support our customers\nIn 2023, we continued to focus on providing our customers with products, services and initiatives to help enable emissions reduction in the real economy.\nIn 2023, we won three awards at the Environmental Finance Bond Awards.We retained the Euromoney award for Best Bank for Sustainable Finance in Asia for the sixth year in a row, and won the global award for Best Bank for Public Sector Clients in recognition of our innovation in sustainability and tokenised public-sector bonds.\n4 Environmental \n75 Social \n87 Governance\n### Developing sustainable food supply chains in south-east Asia\nSingapore-based Glife Technologies has developed a digital business-to-business foodsourcing platform that connects farmers from marginalised communities in south-east Asia to the hospitality industry.\nThe distribution network, served by an app, aims to improve the efficiency and sustainability of supply chains by aggregating orders and sourcing in bulk direct from farmers, in order to help control costs and reduce the risk of food waste from damage or contamination.\nIn June 2023, we provided a working capital loan and access to our cross-border network to help Glife expand its platform into new markets, including Malaysia and Indonesia. The loan also aims to help Glife finance social projects seeking to improve food security and creating more sustainable food systems. The loan was drawn from HSBC’s New Economy fund, which is dedicated to investing in high-growth, pre-profit new economy businesses in Singapore.\n4 Environmental \n75 Social \n87 Governance\n### Sustainable finance and investment continued\nResponsible and sustainable investment We offer a broad suite of ESG capabilities across asset management, global markets, wealth, private banking and securities services, to help institutional and individual investors to generate financial returns, manage risk and pursue ESG-related opportunities.\nHSBC Asset Management’s fixed income, equity and stewardship teams held over 2,000 meetings with companies in its portfolios. This included engaging with companies on the priority list across several thematic priorities, such as climate change, human rights, public health, inclusive growth and shared prosperity, biodiversity and nature, trusted technology and data, and diversity, equity and inclusion.", "chunk_word_count": 364, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Mobilising capital to support our customers", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 52, "page_start": 52, "page_end": 53 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 85, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Helping customers to understand ESG in their investments\nWe have launched new metrics to help our Global Private Banking and Wealth customers understand the ESG performance of their investments. In selected markets in 2023, we also introduced a sustainability preference questionnaire to help identify and understand our customers’ sustainable investing objectives and ambitions. By improving clarity on ESG performance, which traditional financial metrics fail to capture, we aim to provide customers with meaningful insights to enable them to make informed investment decisions. Examples of these metrics, available on digital platforms in selected markets, are:\nOur Asset Management business is committed to further developing our sustainable product range across asset classes, as well as enhancing our existing product suite for ESG and climate-related criteria where it is in the investors’ interests to do so. In 2023, we launched 10 funds within our ESG and sustainable strategies, which adhere to, and are classified within, our Sustainable Finance and Investment Data Dictionary 2023.\nFor our private banking and wealth customers, we expanded our investment offering with the launch of eight ESG and sustainable investing mutual funds and exchange-traded funds in 2023. We also enhanced our ESG and sustainable investing structured products offering linked to indices such as the MSCI World Islamic ESG Select $8 \\%$ Risk Control Index. Throughout 2023, we published regular ESG and sustainability-related market insights and updates such as #WhyESGMatters and Learning about ESG to help clients better understand the implications for their investments.\nHSBC Asset Management managed over \\$684bn assets at the end of 2023, of which $\\$ 73.3$ bn comprise assets of funds and mandates invested in our ESG and sustainable strategies.\n– ‘ESG rating and score’, which measures a company’s resilience to material long-term, industry ESG risks and opportunities, with data provided by MSCI.\nHSBC Life, our insurance business, continues to expand the availability of ESG investment fund options within its investment-linked products. In 2023, eight new ESG funds were introduced across Hong Kong, France and Singapore with a range of investment themes, including environmental, circular economy and sustainable energy.\nOur ESG and sustainable investing approach across different investment products can include but is not limited to the UN SDGs, including climate. For the avoidance of doubt, assets invested pursuant to, or considered to be in alignment with, HSBC’s ESG and sustainable investing approach do not necessarily qualify as ‘sustainable investments’ as defined by the EU Sustainable Finance Disclosures Regulation (‘SFDR’) or other relevant regulations. Our ESG and sustainable investing approach is an HSBC internal classification approach used to establish our own ESG and sustainable investing criteria (recognising the subjectivity inherent in such an approach and the variables involved). It is also used to promote consistency across asset classes and business lines where relevant, and should not be relied on externally to assess the sustainability characteristics of any given product. There is no single global standard definition of, or measurement criteria for, ESG and sustainable investing or the impact of ESG and sustainable investing products.\n– ‘Carbon intensity’, which measures a company’s carbon emissions per million of revenue, with data provided by S&P Trucost.", "chunk_word_count": 537, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Helping customers to understand ESG in their investments", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 53, "page_start": 53, "page_end": 53 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 86, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Helping customers to understand ESG in their investments\nIn June, under the United Nations Environmen Programme Finance Initiative (‘UNEP FI’) Principles for Sustainable Insurance, HSBC Life co-led a team of insurance organisations to publish an industry position paper focused on the role and opportunity for life and health insurers to help build a more inclusive and preventative healthcare model. This included examples of good industry practice to: help insurers improve access to healthcare; close the health protection gap; drive better health outcomes across populations; and mitigate potential health risks due to climate change and other environmental factors.\nIn addition, we have also introduced ‘HSBC ESG and sustainable investing classifications’, which help customers to understand and identify ESG and sustainable investing products in their investment portfolio according to HSBC’s definition.\nFor further details of our asset management policies, see page 67.\nWe seek to take an active stewardship role to help drive positive change in the companies on our priority list in which we invest on behalf of our customers. The priority list, which is defined in our Global Stewardship Plan, can be found at: www.assetmanagement.hsbc.co.uk/ en/institutional-investor/about-us/responsibleinvesting/-/media/files/attachments/uk/ policies/stewardship-plan-uk.pdf.\n4 Environmental \n75 Social \n87 Governance\n### Sustainable finance and investment continued TCFD\n4 Environmental \n75 Social \n87 Governance\n### Unlocking climate solutions and innovation\nIn 2023, the Multilateral Investment Guarantee Agency of the World Bank Group issued HSBC Holdings a guarantee of $\\$ 1.8 b n$ in regulatory capital relief on mandatory reserves held by its subsidiary in Mexico. The benefits of the capital relief are expected to be deployed to exclusively support eligible climate finance projects in Mexico, including renewable energy, energy efficiency, clean transportation and sustainable agriculture.\n4 Environmental \n75 Social \n87 Governance\n### Backing new technology and innovation\nWe recognise the need to find new solutions and increase the pace of change for the world to achieve the Paris Agreement goal of being net zero by 2050.\nAt the COP28 Summit in the UAE, HSBC pledged its support for the Energy Transition Accelerator Financing Platform, which aims to scale up the development of renewable energy projects in developing countries. Established in 2021 with initial support from the Abu Dhabi Fund for Development and the International Renewable Energy Agency, the platform brings together public and private institutions. HSBC signed alongside the European Bank for Reconstruction and Development, the International Finance Corporation and the Multilateral Investment Guarantee Agency. We will work with platform partners to expand the pipeline of investable projects in core HSBC markets, including in Asia and the Middle East, bringing financing solutions that support the transition to net zero.\nWe are working with a range of partners to accelerate investment in sustainable infrastructure, natural resources and climate technology to help reduce emissions and address climate change.\nThe HSBC Alternatives business, part of HSBC Asset Management, continued to develop its energy transition infrastructure capabilities in Asia, targeting investments in renewable energy generation, storage, grids, charging and hydrogen infrastructure. To help support the transition to green energy in North Asia, the energy transition infrastructure strategy made its first investment in solar photovoltaic power project developer Tekoma Energy.", "chunk_word_count": 537, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Helping customers to understand ESG in their investments", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 87, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Sustainable infrastructure\nAddressing climate change requires the rapid development of a new generation of sustainable infrastructure.\nHSBC continues to support the FAST-Infra Initiative, which we helped conceive, working with the IFC, OECD, the World Bank’s Global Infrastructure Facility and the Climate Policy Initiative, under the auspices of the One Planet Lab. In 2023, the initiative, which aims to mobilise large-scale financing to develop sustainable infrastructure, invited pilot photovoltaic and wind power projects around the world to apply for the provisional FAST-Infra label. The label is awarded to projects that meet specific sustainability criteria. HSBC is supporting the introduction and widespread adoption of the labelling system as a standard for sustainable infrastructure assets globally.\n4 Environmental \n75 Social \n87 Governance\n### Natural capital as an emerging asset class\nClimate Asset Management, a joint venture we launched with climate investment and advisory firm Pollination in 2020, continues to create investment opportunities for investors to help protect biodiversity and support the transition to net zero.\nWe also became a founding member of the Global Climate Finance Centre, a newly launched UAE-based think tank created to connect public and private finance to help accelerate the transition to net zero.\nIt offers two investment strategies that aim to build resilience across landscapes while generating returns. Its nature-based carbon strategy targets nature restoration and conservation projects in developing economies, prioritising community benefits while generating high-quality carbon credits. Its natural capital strategy invests in agriculture, forestry and environmental assets and aims to deliver impact at scale alongside long-term financial returns.\nHSBC Alternatives made direct investments in assets that help to promote the transition to a net zero climate. The venture capital strategy invests across four themes: power transformation, transport electrification, supply chain sustainability and climate risk mitigation. The strategy raised additional funds from institutional and private wealth clients over the course of 2023. As of 31 December 2023, the strategy had deployed capital into eight start-up companies. These included US-based Electric Era, which provides electric vehicle fast-charging technology, and Israel-based SeeTree, which has developed a software platform that tracks the health and productivity of trees.\nLabel applicants included a solar photovoltaic project submitted by Pentagreen Capital, our sustainable infrastructure debt financing partnership with Singapore-based investment firm Temasek. The project sponsor was Citicore Solar Energy Corporation, a subsidiary of the Philippines-focused renewable energy developer and operator Citicore Renewable Energy Corporation. Pentagreen acted as lead arranger of a $\\$ 100\\mathrm { m }$ green loan facility and committed an initial $\\$ 30 m$ to help fund Citicore’s development of six solar power projects capable of generating 490 megawatts of electricity for the island of Luzon in the Philippines. The commitment marks Pentagreen’s first investment in the construction of ready-to-build clean energy projects.\nOn behalf of these strategies in 2023, Climate Asset Management allocated more than $\\$ 400\\mathsf { m }$ to projects in Kenya, Uganda, Malawi, Spain, Australia and Portugal.", "chunk_word_count": 501, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Sustainable infrastructure", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 54, "page_start": 54, "page_end": 54 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 88, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Financed emissions TCFD\nWe announced our ambition to become a net zero bank in October 2020, including an aim to align our financed emissions to net zero by 2050 or sooner. We have published initial financed emissions targets for 2030, and plan to review them in five-year increments thereafter.\nThey form part of our scope 3 emissions, which include emissions associated with the use of a company’s products and services.\nagainst the financed emissions baselines that we now measure ourselves against.\nFollowing a reduction in our exposure to the shipping sector after the strategic sale of part of our European shipping portfolio in 2023, and work undertaken to assess the materiality of our remaining portfolio from a financed emissions perspective, we have concluded that the remaining exposure as of year-end 2023 is not material enough to warrant setting a stand-alone target. This aligns with NZBA guidelines on sector inclusion for target setting.\nIn 2021, we started measuring financed emissions for oil and gas, and power and utilities. Following the December 2023 release of the PCAF Global GHG Accounting Standard for capital markets, we now include facilitated emissions for these sectors, in recognition of our role as service provider when customers issue debt and equity to investors. For target setting we now track the combined progress for on-balance sheet financed and facilitated emissions.\nOur analysis of financed emissions comprises ‘on-balance sheet financed emissions’ and ‘facilitated emissions’, which we distinguish where necessary in our reporting. Our onbalance sheet financed emissions include emissions related to on-balance sheet lending, such as project finance and direct lending. Our facilitated emissions include emissions related to financing we help clients to raise through capital markets activities. Our analysis covers financing from Global Banking and Markets, and Commercial Banking.\nWe have announced a number of planned business disposals in recent years, and we will continue to consider how these may impact future disclosures, including recalculations.\nIn 2022, we disclosed the on-balance sheet financed emissions targets for the following additional sectors: cement; iron, steel and aluminium; aviation; and automotive. We also set a target, and now measure, on-balance sheet financed emissions for the thermal coal mining sector. As part of our financial reporting, we present the progress for these sectors\nFor all sectors other than oil and gas and thermal coal mining, we have set emissions intensity targets. These targets are linked to real world production and help us to deploy capital towards decarbonisation solutions.\nFinanced emissions link the financing we provide to our customers and their activities in the real economy, and provide an indication of the associated greenhouse gas emissions.", "chunk_word_count": 453, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Financed emissions TCFD", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 55, "page_start": 55, "page_end": 55 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 89, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Our approach to financed emissions\nIn our approach to assessing our financed emissions, our key methodological decisions were shaped in line with industry practices and standards. We recognise these are still developing.\nvalue of finance provided to customers. We excluded products that were short term by design, and typically less than 12 months in duration, consistent with guidance from the PCAF, to reduce volatility. For facilitated emissions we considered all capital market transactions in scope for the year of analysis. These included debt and equity capital markets, and syndicated loans.\nindustry, we can focus our engagement and resources where we believe the potential for change is highest. For each sector, our reported emissions now typically include all the major greenhouse gases, including carbon dioxide, methane and nitrous oxide, among others. These are reported as tonnes of ${ \\mathsf { C O } } _ { 2 }$ equivalent, in line with NZBA guidelines.\n4 Environmental \n75 Social \n87 Governance\n### Coverage of our analysis\nFor each sector, our analysis focuses on the parts of the value chain where we believe the majority of emissions are produced to help reduce double counting of emissions. By estimating emissions and setting targets for customers that directly account for, or indirectly influence, the majority of emissions in each\nTo calculate annual on-balance sheet financed emissions, we use drawn balances as at 31 December in the year of analysis related to wholesale credit and lending, which include business loans and project finance as the\nDFor further details of our financed emissions methodology, exclusions,and limitations,see our Financed Emissionsand Thermal Coal Exposures Methodologyat www.hsbc.com/who-we-are/ esg-and-responsible-business/esg-reporting-centre.\nThe chart below shows the scope of our financed emissions analysis of the seven sectors, including upstream, midstream and downstream activities within each sector. The allocation of companies to different parts of the value chain is highly dependent on expert judgement and data available on company revenue streams. As data quality improves, this will be further refined.\nCoverage of greenhouse\n4 Environmental \n75 Social \n87 Governance\n### Financed emissions continued\n4 Environmental \n75 Social \n87 Governance\n### Setting our targets", "chunk_word_count": 368, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Our approach to financed emissions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 55, "page_start": 55, "page_end": 56 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 90, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Agriculture\nOur target-setting approach to date, for on-balance sheet financed emissions and facilitated emissions, has been to utilise a single net zero reference scenario (IEA NZE 2021) to underpin both energy supply-related sectors (oil and gas, power and utilities, and thermal coal mining) and our published targets for demand-side sectors in transport and heavy industry.\nFor the agriculture sector, due to ongoing data availability and quality challenges, and lack of developed methodologies, we are not in a position to report our financed emissions or set a target at this time. We aim to build data availability and continue to work with partners and industry bodies to develop data and methodologies across a wider section of the agriculture value chain – such as farmrelated and downstream emissions, including from the food and beverage sector – while assessing the make-up of our portfolio.\nThe impact of our capital markets activities is now reflected in our combined financed emissions targets for the oil and gas, and power and utilities sectors. Our facilitated emissions, included in our combined metrics, are weighted at $3 3 \\%$ , in accordance with the PCAF standard. This approach dampens volatility, apportions responsibility between underwriters and asset owners, and allows for flexibility in deploying on and off-balance sheet financing in line with clients’ needs. To further reduce the inherent volatility in facilitated emissions, we apply a three-year moving average across transactions for our target metric, building up from 2019 data. This means that transactions facilitated in 2028 and 2029 will still have an impact on the 2030 progress number and will need to be taken into consideration as we manage progress towards our target. We aim to achieve our target in 2030 notwithstanding the application of a three-year average.\n4 Environmental \n75 Social \n87 Governance\n### Investing in battery health and monitoring solutions\n4 Environmental \n75 Social \n87 Governance\n### Residential real estate\nFor residential real estate, where our customers are consumers not corporates, our approach needs to consider financial inclusivity, and our ability to provide customers access to suitable mortgages in addition to decarbonisation aims. We expect to measure and report our residential real estate financed emissions in future disclosures. We continue to consider our approach to setting an appropriate target to measure our contribution to helping the sector transition.\nThe global push towards electrification is accelerating the demand for systems powered by safe, reliable and sustainable batteries.\nIn August 2023, HSBC Asset Management, as part of its climate tech venture capital strategy, helped a Germany-based analytics software startup secure $\\$ 7.8 m$ (€7.2m) of investment in its battery monitoring platform, with HSBC Asset Management’s fund providing $\\$ 4.1 m (63.8 m )$ .", "chunk_word_count": 466, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Agriculture", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 56, "page_start": 56, "page_end": 56 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 91, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Commercial real estate\nFor commercial real estate, we continue to work towards outlining a baseline and a 2030 financed emissions ambition or ambition range, starting with our major markets and where sufficient data is available to track decarbonisation progress. We expect to review our approach and coverage periodically in line with evolving data, methodologies, scenarios and real-world progress. Methodologies for embedded carbon need to be developed given the materiality of financing new property development within our portfolio, from a financed emissions perspective.\nACCURE Battery Intelligence uses AI, field data and modelling to forecast and manage the health and performance of batteries, and predict failures, fires and other incidents. With their software already supporting 3.5 gigawatt-hours of storage, the fundraising will help expand and develop the platform across energy, electric vehicle, transit, marine, insurance and other industries worldwide.\nOur approach for financed emissions accounting does not rely on purchasing offsets to achieve any financed emissions targets we set.\n4 Environmental \n75 Social \n87 Governance\n### An evolving approach\nWe believe methodologies for calculating financed emissions and setting targets should be transparent and comparable, and should provide science-based insights that focus engagement efforts, inform capital allocation and support the development of solutions that are both timely and impactful. We continue to engage with regulators, standard setters and industry bodies to help shape our approach to measuring financed emissions and managing portfolio alignment to net zero. We also work with data providers and our clients to help us gather data from the real economy to improve our analysis.\nScenarios used in our analysis are modelled on assumptions of the available carbon budget and actions that need to be taken to limit the long-term increase in average global temperatures to $1 . 5 ^ { \\circ } \\mathrm { C }$ with limited overshoot. We expect that the scenarios we use will be updated periodically. We plan to refine our own analysis of financed emissions as industry guidance on scenarios, data and methodologies more broadly evolve in the years ahead.\n4 Environmental \n75 Social \n87 Governance\n### Financed emissions continued", "chunk_word_count": 366, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Commercial real estate", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 56, "page_start": 56, "page_end": 56 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 92, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Data and methodology limitations\n– Third-party datasets that feed into our analysis may have up to a two-year lag in reported emissions figures, and we are working with data providers to help reduce this. Mapping external datasets to our internal client entities is challenging due to complex company ownership structures.\n– The classification of our clients into sectors is performed with inputs from subject matter experts, and will also continue to evolve with improvements to data and our sector classification approach. Our internal data on customer groups used to source financial exposure and emissions data is based on credit and relationship management attributes and is not always aligned to the data needed to analyse emissions across sector value chains. As a consequence, this can result in an inconsistent basis in our financed emissions calculations. As the sub-sector, and therefore the value chain classification is based on judgement, this may be revised as better data becomes available. Emissions are calculated at a counterparty group level and each client is mapped to a single sector. Companies with multiple activities such as conglomerates, with near to equal business activity split across multiple sectors, are excluded as these can have different activities covered by multiple sector targets. Once we define a methodology for conglomerates these may be covered according to their activity split.\nOur financed emissions estimates and methodological choices are shaped by the availability of data for the sectors we analyse.\n– We are members of the PCAF, which defines and develops greenhouse gas accounting standards for financial institutions. Its Global GHG Accounting and Reporting Standards for Financed Emissions and for Facilitated Emissions provide detailed methodological guidance to measure and disclose financed and facilitated emissions.\n– The methodology and data used to assess financed emissions and set targets are new and evolving, and we expect industry guidance, market practice, and regulations to continue to change. We plan to refine our analysis using appropriate data sources and current methodologies available for the sectors we analyse.\n– We have found that data quality scores vary across the different sectors and years of our analysis, although not significantly. While we expect our data quality scores to improve over time, as companies continue to expand their disclosures to meet growing regulatory and stakeholder expectations, there may be fluctuations within sectors year on year, and/or differences in the data quality scores between sectors due to changes in data availability.\n– We remain conscious that the attribution factor used in the financed emissions calculation is sensitive to changes in drawn amounts or market fluctuations, and we plan to be transparent around drivers for change to portfolio financed emissions where possible.\n– To calculate sector-level baselines and annual updates, our portfolio-level emissions intensity was previously weighted by the ratio of our financing in relation to the value of the financed company. We believe this introduced volatility. We have now calculated sector level emissions intensity metrics using a portfolio-weighted approach. Due to data limitations, we are unable to obtain production data for all of our clients. We therefore calculate an emissions intensity figure using the 75th percentile to meet this data gap.", "chunk_word_count": 541, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Data and methodology limitations", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 57, "page_start": 57, "page_end": 57 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 93, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Data and methodology limitations\n– The majority of our clients do not yet report the full scope of greenhouse gas emissions included in our analysis, in particular scope 3 emissions. In the absence of client-reported emissions, we estimated emissions using proxies based on company production and revenue figures. Although we sought to minimise the use of non-company-specific data, we applied industry averages in our analysis where company-specific data was unavailable through our vendor datasets. As data improves, estimates will be replaced with reported figures.\n– The operating environment for climate analysis and portfolio alignment is maturing. We continue to work to improve our data management processes, and are implementing steering mechanisms to align our provision of finance with the goals and timelines of the Paris Agreement.\nFor further details of our financed emissions methodology,seeourFinanced Emissions andThermalCoal ExposuresMethodologyat www.hsbc.com/who-we-are/esg-andresponsible-business/esg-reporting-centre.\n4 Environmental \n75 Social \n87 Governance\n### Tackling operational emissions in industry\nWe are supporting one of the largest producers of textile raw materials in Indonesia to reduce the greenhouse gas emissions in its operations. PT. Indo-Rama Synthetics Tbk, which specialises in the integrated production of spun yarn and polyester, wanted to expand its operations and meet its customer demand in a sustainable way.\nTo help PT. Indo-Rama Synthetics Tbk invest in reducing energy consumption, we provided a $\\$ 20 m$ green loan in September 2023 so that it can install energy efficient machinery and technology in the expansion of its yarn spinning factory.\n4 Environmental \n75 Social \n87 Governance\n### Financed emissions continued", "chunk_word_count": 272, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Data and methodology limitations", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 57, "page_start": 57, "page_end": 57 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 94, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Our approach to financed emissions recalculations\nThe PCAF recommends that financial institutions should, in line with the Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard requirement, establish a recalculation policy. To adhere to this recommendation, we have defined the circumstances under which we consider a recalculation of baseline and/or progress against financed emissions target metrics is necessary to help ensure the consistency, comparability and relevance of the reported greenhouse gas emissions data over time. Our recalculation policy covers revisions of metrics linked to the targets due to changes in financed emissions accounting, such as changes to methodology, errors, and improvements to data. We expect our recalculation policy to evolve with further industry guidance.\nThe table below outlines the action we take when key areas of change, individually or in aggregate, breach our defined significance thresholds for the baseline year metric linked to the target. Enhancements to internal or external data, such as changes to the classification of the population to a different business activity type or more, or improved quality data reported by clients, would not constitute a change to the financed emissions estimation methodology or an error.\nIn 2023, we improved our methodology for calculating financed emissions using more granular product identification to isolate exposure in scope, more consistent emission factors for estimates, and a revised aggregation method for emissions intensity. Previously some reported on-balance sheet numbers included non-lending exposures for market products in error. The more granular product identification will help ensure these are not included in future.\nTo reflect these enhancements we have set out the recalculated metrics for the oil and gas, and power and utilities sectors in the table below. For other sectors, changes were not material enough to warrant a recalculation.\nThe power and utilities baseline for on-balance sheet financed emissions is now 537.5 tonnes of carbon dioxide equivalent per gigawatt hour $( ^ { \\prime } \\mathrm { t C O } _ { 2 } \\mathrm { e } / \\mathrm { G W h } ^ { \\prime } )$ for 2019 versus 589.9 $\\mathsf { t C O } _ { 2 } \\mathsf { e / G W h }$ reported in the Annual Report and Accounts 2022.This change reflects the implementation of the revised aggregation method and enhanced product mapping.\nThe oil and gas baseline for on-balance sheet financed emissions is now 28.4 million tonnes of carbon dioxide equivalent (‘Mt $\\mathsf { C O } _ { 2 } \\mathsf { e } ^ { \\prime } )$ for 2019 versus 33.0 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ reported in the Annual Reportand Accounts $2 0 2 2$ . Of this change, $6 2 \\%$ (2.9 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ ) was related to the inclusion of non-lending products in error and the remaining $3 8 \\%$ (1.8 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e } )$ ) was due to the enhanced product mapping and streamlined approach for emissions estimates.", "chunk_word_count": 541, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Our approach to financed emissions recalculations", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 58, "page_start": 58, "page_end": 58 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 95, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Financed emissions continued\n4 Environmental \n75 Social \n87 Governance\n### Targets and progress\nWe have set out in the table below our combined on-balance sheet financed and facilitated emissions targets for the oil and gas, and power and utilities sectors. These show the revised baselines.\nnumbers for the relevant year to track progress to target. We set out the annual figures before the application of the three-year average in the facilitated emissions table on page 61.\nTargets were set for oil and gas, and power and utilities in February 2022, for thermal coal mining in December 2022, and for the other sectors in February 2023. On the following pages, we provide more granular details of our financed emissions within these sectors.\nFor facilitated emissions, we track progress to target using a three-year average moving window (average of 2020, 2021 and 2022 for the 2022 progress number) and figures weighted at $3 3 \\%$ . This means that transactions facilitated in 2028 and 2029 will still have an impact on the 2030 progress number and will need to be taken into consideration as we manage progress towards our target. We aim to achieve our target in 2030 notwithstanding the application of a three-year average.\nWe have also set out our defined targets for the on-balance sheet financed emissions of the following sectors: cement; iron, steel and aluminium; aviation; automotive; and thermal coal mining. We disclose emissions in 2021 and 2022 and progress achieved in 2022 versus baseline for each sector.\nWhen assessing the changes from 2019 to 2022, it is important to emphasise the longterm commitment that is needed to meet our 2030 interim targets, and how changes to exposure and market fluctuations impact yearly updates. Movement from one year to the next may not reflect future trends for the financed emissions of our portfolio. In the hard-to-abate sectors, where decarbonisation progress is expected to be slower, we are taking steps to engage with clients on their transition plans.\nWe have implemented a revised approach to calculate the sector-level intensity metric in 2023, which has been applied for the recalculated power and utilities baseline metric, and for 2021 and 2022 actual data for all intensity-based sectors. Emissions intensity is a weighted average according to the portfolio weight of each investment, as a proportion of the total portfolio value.\nThe facilitated emissions values total 17.5 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ in 2021 and 14.4 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ in 2022 for the oil and gas sector, and 3 $9 8 . 3 \\mathrm { t C O } _ { 2 } \\mathrm { e } / \\mathrm { G } \\mathsf { W h }$ for 2021 and 377.6 $\\mathsf { t C O } _ { 2 } \\mathsf { e / G W h }$ in 2022 for the power and utilities sector. These values are then combined with the on-balance sheet\nAs we are at the beginning of our journey to track and measure progress, we believe it would be premature to infer future trends from the 2019 to 2022 progress at this stage.", "chunk_word_count": 555, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Financed emissions continued", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 59, "page_start": 59, "page_end": 59 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 96, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Targets and progress\nThe progress figures show the trend in financed emissions before targets were set.\n1Ourabsolutedtesietrdeddapoeouteoo sd financed emissions (no revisions applied).\n2Forthe oiland gassector,absolute emissionsare measured inmillon tonnes ofcarbon dioxide equivalent(‘'Mt $C O _ { 2 } e ^ { \\prime } ) ,$ ;for the powerand utilities sector,intensity is measured in tonnes of carbon dioxide equivalent per gigawatt hour $( ^ { \\prime } t C O _ { z } e / G W h ^ { \\prime } ) ;$ forthecementsector,intensityismeasured intonnesofcarbondioxide equivalent per tonne of cement $( ^ { \\prime } t C O _ { 2 } e / t$ cement';fortheron,steelandauminiumsector,intensityismeasuredintonnesofcarbondioxideequivalenpeonne ofmetal $t C O _ { 2 } e / t$ metal);fortioctotsitseuedionsfbonoidevtilloveesngt $( ^ { \\prime } t C O _ { 2 } e /$ milonrpk'forttomotiveectotesitismeaurdinonnsfrbodioidequvalntpriloeicletre $' ^ { \\prime } t C O _ { 2 } \\epsilon$ e/millionvkm');andforthe thermal coal mining sectorabsoluteemissionsare measuredin millontonnes ofcarbondioxideequivalent ‘Mt $C O _ { 2 } e ^ { \\prime }$ .\n3Wiletheoiefert Moratorium scenario,whose 2030 reference range isshown in parentheses.\n4urviti revenue tonne kilometre (rtk) using a $1 0 0 k g$ per passenger conversion factoras we already include bely and dedicated cargo inourproduction figures.The conversion factor changed from $g _ { Ḋ } 5 k g Ḍ$ perpassenger in the previous disclosure to align with industry practice.\n5Theteooe totalemissiosofounterpartywithinsectotoefleteabsolutefinancedmissonseductiotheralcoalmininsectoraget", "chunk_word_count": 248, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Targets and progress", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 59, "page_start": 59, "page_end": 59 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 97, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Financed emissions continued\nWe plan to report financed emissions and progress against our targets annually and to be transparent in our disclosures about the methodologies applied and any challenges or dependencies. However, financed emissions figures may not be reconcilable or comparable year on year in future, and baselines and targets may require recalibration as data, methodologies and reference scenarios develop.\nWe are developing portfolio modelling capabilities that integrate risk, profitability and financed emissions to inform decision making and determine how to best steer our portfolios to meet our financed emissions targets and commercial and strategic ambitions. As part of this we are testing and developing an analytics capability that will provide an up-to-date view of our position relative to our 2030 targets and an indication of the financed emissions impact of a transaction to consider alongside risk-return metrics.\ngiven this has a direct link to real economy emissions.\nA number of clients have material undrawn balances that, if drawn, could significantly increase the financed emissions related to those clients. We expect to assess how to manage these exposures on a forward-looking basis as we progress towards our 2030 targets. In addition, for the intensity-based sectors, the emissions intensity is sensitive to material clients and changes to drawn balances year on year can therefore influence the trend.\nConsistent with PCAF guidance on financed emissions accounting, we only consider the outstanding drawn financing amount\nOur core approach as we progress towards our portfolio decarbonisation targets is to engage with major oil and gas customers to understand their transition plans and to help support and accelerate those efforts. This is in line with the Group’s energy policy, which supports the phasing down of fossil fuel sources with the highest emission intensity as well as financing restrictions for projects relating to new oil and gas fields, and infrastructure.", "chunk_word_count": 324, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Financed emissions continued", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 60, "page_start": 60, "page_end": 60 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 98, "chunk_text": "# Opening up a world of opportunity\n## 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance\n### Oil and gas\nFor the oil and gas sector, our analysis included scope 1, 2 and 3 emissions, including carbon dioxide and methane, for upstream and integrated companies. We revised our baseline for 2019 and progress figures to reflect combined on-balance sheet financed and facilitated emissions and our revised approach.\nWe have set a target to reduce absolute on-balance sheet financed emissions and facilitated emissions for our oil and gas portfolio by $34 \\%$ by 2030 relative to a 2019 baseline. This is consistent with a global $1 . 5 ^ { \\circ } \\mathrm { C }$ -aligned pathway as defined by the IEA NZE 2021 scenario. This target is unchanged with the inclusion of facilitated emissions. We plan to update our target following the periodic release of new $1 . 5 ^ { \\circ } \\mathsf { C } .$ -aligned scenarios in the years ahead to reflect shifts in the real economy.\nIn 2022, absolute combined on-balance sheet financed and facilitated emissions decreased by $2 5 \\%$ to 31.9 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ relative to the 2019 baseline, and by $16 \\%$ from 2021 to 2022. This decline was achieved through a risk-weighted assets reduction strategy and aided by market conditions, with stronger oil and gas cash flows and higher interest rates resulting in reduced demand for bank debt and capital markets financing. Market dynamics will continue to create volatility in future years as we make progress towards our financed emissions target.\n4 Environmental \n75 Social \n87 Governance\n### Power and utilities\nOur target is consistent with a global $1 . 5 ^ { \\circ } \\mathsf { C } .$ -aligned pathway, as defined by the IEA NZE 2021 scenario. We plan to refresh our target following the periodic release of new $1 . 5 ^ { \\circ } \\mathsf { C } .$ -aligned scenarios in the years ahead.", "chunk_word_count": 344, "section_path": "Opening up a world of opportunity > 42 Our approach to ESG \n4 Environmental \n75 Social \n87 Governance > Oil and gas", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 60, "page_start": 60, "page_end": 60 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 99, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline (23)%\nFor the power and utilities sector, our analysis included scope 1 and 2 emissions for upstream power generation companies. Although scope 1 emissions are most material for the sector, most companies report scope 1 and 2 emissions together making it challenging to split out the data. We revised our baseline for 2019 and progress figures to reflect combined on-balance sheet financed and facilitated emissions and our revised approach.\n[IMAGE CAPTION] Power and utilities $\\mathbf { t c o _ { 2 } e / G W h }$\nIn 2022, our combined on-balance sheet financed and facilitated emissions intensity decreased by $23 \\%$ to $3 9 6 . 8 \\mathrm { t C O _ { 2 } e / G W h }$ relative to the 2019 baseline. This reduction was driven by an increase in financing of renewable energy projects and companies, and a decrease in financing of high emissions intensity clients. Over the period from 2022 to 2021 the fall in sector portfolio financed emissions was a more modest $2 \\%$ .\nWe have set a target to reduce the financed emissions intensity of our on-balance sheet and facilitated power and utilities portfolio to 138 $\\mathsf { t C O } _ { 2 } \\mathsf { e / G W h }$ by 2030. This target is unchanged with the inclusion of facilitated emissions. We have chosen an intensitybased target as electricity demand is expected to more than double by 2050 due to both population growth and electrification required to decarbonise mobility, buildings, and industry. We have focused on power generation companies because they control sector output. By engaging with them, we believe we can help drive the most material emissions impact in the real economy.\nOver the reported period, the average emissions intensity of clients for whom we helped raise funds in the capital markets was lower than for clients financed directly on our balance sheet. This means the combined on-balance sheet financed and facilitated emissions intensity from 2019 to 2022 was lower than for on-balance sheet financing alone.\n### Financed emissions continued\nOur 2022 emissions intensity was $10 \\%$ higher than the 2019 baseline due to higher drawn balances for emissions intensive clients, but at 0.71 $\\mathrm { \\ t C O } _ { 2 } \\mathrm { e } I \\mathrm { t }$ cement in 2022, it was marginally up by $1 \\%$ from 2021.", "chunk_word_count": 417, "section_path": "Opening up a world of opportunity > 2022 progress from baseline (23)% > Financed emissions continued", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 60, "page_start": 60, "page_end": 61 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 100, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline (23)%\n### Cement\nFor the cement sector, our analysis included scope 1 and 2 emissions for midstream companies with clinker and cement manufacturing facilities.\n[IMAGE CAPTION] Cement 2022 progress $\\scriptstyle \\mathbf { t c o } _ { 2 } \\mathbf { e } / \\mathbf { t }$ cement from baseline 10%\nIn line with the IEA NZE 2021 scenario, we target an on-balance sheet financed emissions intensity of 0.46 tonnes of carbon dioxide equivalent per tonne of cement $\\mathrm { \\Omega ^ { \\prime } } \\mathrm { { t C O } } _ { 2 } \\mathrm { { e } } I \\mathrm { { t } }$ cement’) by 2030, using 2019 as our baseline. While some emissions reductions can be achieved through energy efficiency, we believe that to significantly reduce fuel and process emissions from cement manufacturing, and to meet our targets, large-scale investments are required in new technologies, including clinker substitution, alternative fuel use such as bioenergy, and carbon capture use and storage.\nOur cement portfolio is relatively concentrated in customer numbers, and even where customers have set science-based targets there is still a risk of pledges not turning into the necessary emissions reductions if technologies do not scale in time. It will be important, therefore, to regularly review progress on technology scaling across the industry over the years ahead to 2030. For cement and the other intensity-based sectors we plan to integrate net zero considerations into our transaction processes and controls and we expect this to help guide our activities towards progressive alignment of the portfolio with our 2030 targets.\nDue to the challenges of decarbonising this hard-to-abate sector, we also outline an alternative scenario from the Mission Possible Partnership (‘MPP’).", "chunk_word_count": 302, "section_path": "Opening up a world of opportunity > 2022 progress from baseline (23)% > Cement", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 61, "page_start": 61, "page_end": 61 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 101, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline (23)%\n### Iron, steel and aluminium\nWe covered scope 1 and 2 for midstream iron, steel and aluminium production in our analysis. Due to the low significance of the aluminium sector’s financed emissions within our portfolio, we combined them with our iron and steel financed emissions. In the event that aluminium becomes a more material part of our portfolio in the future, we may consider creating a separate target for aluminium production given the varied decarbonisation pathway for this metal.\n[IMAGE CAPTION] Iron, steel and aluminium 2022 progress $\\scriptstyle \\mathbf { t c o } _ { 2 } \\mathbf { e } / \\mathbf { t }$ metal from baseline $38 \\%$\nThe emissions intensity in 2022 rose by $3 8 \\%$ to $2 . 5 \\mathrm { t C O } _ { 2 } \\mathrm { e } / \\mathrm { t }$ metal against our 2019 baseline and by $4 \\%$ versus 2021. This was due to increased financing to the aluminium sector, which has a higher carbon intensity than that of steel.\nWe aim to actively manage our portfolio to achieve our 2030 financed emissions target for our iron, steel and aluminium portfolio, taking into account the actions our customers are taking to achieve emissions reductions.\nFor the iron, steel and aluminium sector, we target an on-balance sheet financed emissions intensity of 1.05 tonnes of carbon dioxide equivalent per tonne of metal $\\mathrm { ' t C O } _ { 2 } \\mathrm { e } I \\mathrm { t }$ metal’) by 2030, using the IEA NZE 2021 scenario as our core scenario and 2019 as our baseline.\n### Aviation\nThe industry is also adopting the unit of revenue tonne kilometre (‘rtk’) to take into account the transport of cargo for airlines in scope of the target. We will consider this as part of our methodology enhancement.", "chunk_word_count": 326, "section_path": "Opening up a world of opportunity > 2022 progress from baseline (23)% > Iron, steel and aluminium", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 61, "page_start": 61, "page_end": 61 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 102, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\nIn the aviation sector, we included passenger airlines’ scope 1 and aircraft lessors‘ scope 3 downstream emissions. We excluded military and dedicated cargo flights as the emissions intensity of such cargo flights is different to that of passenger airlines. This approach is in line with industry practice to ensure consistency of financed emissions measurement and target setting.\n[IMAGE CAPTION] Aviation $\\mathbf { t C O } _ { 2 }$ e/million rpk\nAt $8 6 . 5 \\mathrm { t C O } _ { 2 } \\mathrm { \\in }$ /million rpk in 2022, the emissions intensity increased by $3 \\%$ versus the 2019 baseline and was marginally up by $1 \\%$ from 2021. In 2020 there was a peak in emissions intensity due to the impact of the Covid-19 pandemic, as planes carried fewer passengers.\nAligned with the IEA NZE 2021 scenario, we target an on-balance sheet financed emissions intensity of 63.0 tonnes of carbon dioxide equivalent per million revenue passenger kilometres $\\mathrm { ' t C O } _ { 2 } \\mathrm { e } I$ million rpk’) by 2030, using 2019 as our baseline. To reach these intensity levels and help meet our targets, we believe the sector needs significant policy support, investments in alternative fuels, such as sustainable aviation fuel, and new aircraft to reduce emissions.\nWe plan to engage with our major customers on their transition plans, as well as integrate financed emissions implications into transaction and portfolio management for the sector.\n### Financed emissions continued", "chunk_word_count": 266, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Financed emissions continued", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 61, "page_start": 61, "page_end": 61 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 103, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Automotive\nFor the automotive sector, we looked at scope 1, 2 and 3 emissions from the midstream manufacturing of vehicles, and tank-to-wheel exhaust pipe emissions for light-duty vehicles. We excluded heavy-duty vehicles from our analysis as the target pathway derived from the IEA excludes them, as they have a different decarbonisation pathway relative to light-duty vehicles. This approach is in line with industry practice to ensure consistency of financed emissions measurement and target setting. We will consider including heavy-duty vehicle manufacturers as well as heavy-duty vehicle production at a later stage of our analysis, as data and methodologies develop.\n[IMAGE CAPTION] Automotive $\\mathbf { t C O } _ { 2 } \\mathbf { e } _ { I }$ million vkm\nOur 2022 emissions intensity rose by $13 \\%$ to 216.6 $\\mathrm { \\Delta t C O } _ { 2 }$ e/million vkm against our 2019 baseline and stayed level with 2021. This increase, after an $8 \\%$ reduction in 2020 versus 2019, was caused by a shift in the portfolio towards companies producing more emissions-intensive vehicles. This can be the case for manufacturers that produce more sports utility vehicles or fewer electric vehicles.\nWe target an on-balance sheet financed emissions intensity of 66.0 tonnes of carbon dioxide equivalent per million vehicle kilometres ( $\\mathrm { ' t C O } _ { 2 } \\mathrm { e } I$ million vkm’) by 2030 using 2019 as our baseline. This is in line with the IEA NZE 2021 scenario, which is a $1 . 5 \\mathsf { C } ^ { \\circ }$ aligned pathway, modified to match the share of new in-year vehicle sales for light-duty vehicles. Decarbonisation of the automotive sector, and therefore our ability to meet our targets, needs large-scale investments in new electric vehicle and battery manufacturing plants, widespread charging infrastructure, and government policies to support electric vehicles.\n### Thermal coal mining\nWhen calculating our financed emissions from thermal coal mining, we focused on thermal coal extraction and processing companies, and diversified mining companies. We aim to measure and focus on our customers with the most material thermal coal-related emissions in order to help drive a meaningful impact in the real economy.\nFor the thermal coal mining sector, our analysis focused on scope 1, 2 and 3 emissions in upstream companies, including those involved in extraction. The majority of our financed emissions relate to scope 3 emissions associated with coal mining.\n[IMAGE CAPTION] Thermal coal mining Mt $\\mathtt { c o } _ { 2 } \\mathtt { e }$ 2022 progress from baseline N/A\nWe set an absolute on-balance sheet reduction target of $70 \\%$ for 2030, from an absolute 2020 baseline measure of 4.0 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ . We used 2020 as a baseline to align with the baseline used for our drawn balance exposure targets in the thermal coal phaseout policy. The financed emissions target is aligned with the IEA NZE 2021 scenario.\n### Key:\nHSBC sector target HSBC sector portfolio emissions\n### Financed emissions continued", "chunk_word_count": 530, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Automotive", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 62, "page_start": 62, "page_end": 62 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 104, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### On-balance sheet financed emissions\nThe table below summarises the results of our assessment of on-balance sheet financed emissions using 2021 and 2022 data. For thermal coal mining, disclosures commenced in 2020 to align with thermal coal exposure reporting metrics. The PCAF data quality score has not improved for 2022 due to limited availability of actual reported emissions from our customers.\n### Facilitated emissions\nThe table below summarises the results of our assessment of facilitated emissions from 2019 to 2022 for the oil and gas, and power and utilities sectors.\nApplying a $100 \\%$ weighting, the oil and gas values for scope 1 to 3 emissions decreased from 43.2 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ in 2019 to 15.2 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ in 2022. For the power and utilities sector, the values for scope 1 and 2 emissions fell from 8.5 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ in 2019 to 3.8 Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ in 2022. For all $100 \\%$ -weighted facilitated values, please refer to the ESG Data Pack. The total capital markets activity analysed applying a $100 \\%$ weighting in 2019 was $\\$ 22.60 n$ , representing $5 . 5 \\%$ of capital markets activity at 31 December 2019. In 2020, it was $\\$ 26.06,7$ , representing $6 . 2 \\%$ of capital markets activity at 31 December 2020. In 2021, it was $\\$ 18.1$ bn, representing $4 . 1 \\%$ of capital markets activity at 31 December 2021. In 2022, it was $\\$ 10.4$ bn representing $3 . 2 \\%$ of capital markets activity at 31 December 2022.\n### Financed emissions continued\n### Integrating net zero into transaction and portfolio decision making\nIn 2023, we began to embed net zero factors alongside standard risk-return and other considerations when evaluating specific transactions starting with oil and gas, power and utilities, and thermal coal mining sectors.\nOnce completed, these assessments can be used to support business decisions in relation to our financed emissions portfolio management and alignment, and our climate risk management efforts.\nWe have been testing and developing an analytics capability that, where relevant, begins to provide front-line business teams and management with insight on the up-todate on-balance sheet financed emissions and facilitated emissions position of a sector, the impact of a transaction where material, and implications relative to pathways in line with our 2030 targets.\nOur processes and controls will continue to evolve as we look at net zero considerations for sectors, customers and deals with higher climate impact and risk. These considerations include: adherence with our sustainability risk policies; climate-related credit risk; customer transition plan assessment outcomes (where relevant); reputational risk considerations; and financed and, where applicable, facilitated emissions implications (where transactions are in scope of our financed emissions disclosures and 2030 targets). We have dedicated governance, with escalation pathways for deals deemed high risk, including in terms of financed emissions implications and reputation risk.", "chunk_word_count": 530, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > On-balance sheet financed emissions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 63, "page_start": 63, "page_end": 64 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 105, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Reducing landfill waste and emissions in the Philippines\nWe are supporting a company that is seeking to tackle the problem of overflowing landfills, which will help reduce methane emissions and create potential new jobs in the Philippines.\nWe continued our efforts to design and implement a differentiated approach to understand and assess the transition plans and risks of our corporate customers, including state-owned enterprises. These assessments help us to identify opportunities, manage climate risks and define areas to drive strategic engagement with each corporate customer.\nIn June 2023, we provided a subsidiary of Prime Infrastructure Capital, a sustainable infrastructure firm with services that span energy, water distribution and waste management, with a $\\$ 24.5 m$ green loan. The loan was provided to finance its acquisition and expansion of a waste management facility in Cebu, Philippines.\nIn 2023, we completed assessments for most customers in scope of our thermal coal phaseout policy. We also completed assessments for customers that make the most material contribution to our financed emissions in the oil and gas, and power and utilities sectors.\nThe company has increased the facility’s capacity to treat and recycle domestic and industrial solid waste, and is developing its capabilities to convert organic and agricultural feedstock waste into sustainable, refuse-derived fuel.\nThe funding is expected to help to divert waste away from landfill, which will reduce methane emissions generated by decomposing organic waste.\n### Reducing emissions in our assets under management\nIn July 2021, our asset management business, HSBC Asset Management, signed up to the Net Zero Asset Managers initiative, which encourages investment firms to commit to managing assets in line with achieving net zero emissions by 2050 or sooner. HSBC Asset Management continues to work towards its ambition of reducing scope 1 and 2 financed emissions intensity by $5 8 \\%$ by 2030 for $3 8 \\%$ of its total assets under management. These listed equity and corporate fixed income assets amounted to $\\$ 193.9$ bn at 31 December 2019. We use 2019 as the baseline year for our calculations. Implementation of the net zero targets remains subject to consultation with stakeholders including investors, fund boards and regulators.\nIn 2023, HSBC Asset Management worked to develop solutions for clients to address climate ambitions while investing. Further data science expertise will be added to support sustainability through the creation of a Sustainable Investment Solutions Lab. HSBC Asset Management reported an update through the Principles for Responsible Investment annual submission, as required under its Net Zero Asset Managers commitment. As part of its thermal coal policy, it fulfilled a commitment to initiate engagement with all listed issuers held in active fundamental portfolios with more than $10 \\%$ revenue exposure to thermal coal.\n### Embedding net zero into the way we operate", "chunk_word_count": 472, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Reducing landfill waste and emissions in the Philippines", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 64, "page_start": 64, "page_end": 64 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 106, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Net zero in our own operations TCFD\nPart of our ambition to be a net zero bank is to achieve net zero carbon emissions in our operations and supply chain by 2030.\nclosely managing the gradual resumption of travel through internal reporting and review of emissions, internal carbon budgets and the introduction of emissions information at the point of booking. With hybrid working embedded across the organisation, the use of virtual working practices has reduced the need for our colleagues to travel to meet with other colleagues and customers.\n### Focus on natural resources\nAlongside our net zero operations ambition, our aim is to be a responsible consumer of natural resources. Through design, construction and operational standards, we strive to ensure that, wherever possible, our premises do not adversely affect the environment or natural resources. We have identified specific focus areas including waste, paper and sustainable diets, and are exploring key opportunities to reduce our wider environmental impact over the coming decade.\n### Reduce, replace and remove\nWe have three elements to our strategy: reduce, replace and remove. We plan to first focus on reducing carbon emissions from consumption, and then replacing remaining emissions with low-carbon alternatives in line with the Paris Agreement.\nWe continue to focus on reducing the environmental impact from the vehicles we use in our global markets, and accelerate the use of electric vehicles. In 2023, we reduced the company car fleet size by $9 \\%$ compared with 2022. We are now aiming to ensure that all new vehicles ordered are fully electric or hybrid vehicles where possible.\nWe plan to remove the remaining emissions that cannot be reduced or replaced by procuring, in accordance with prevailing regulatory requirements, high-quality offsets at a later stage. We are working on our carbon credits strategy by engaging with a range of market participants.\n### Our presence in environmentally sensitive areas\nAs a global organisation, our branches, offices and data centres may be located in areas of high or very high water stress and/ or protected areas of biodiversity, as we support our customers and communities in these locations.\n### Engaging with our supply chain\nOur supply chain is critical to achieving our net zero ambitions, and we are partnering with our suppliers on this journey. Since 2020, we have been encouraging our largest suppliers to make their own carbon commitments, and to disclose their emissions via the CDP (formerly the Carbon Disclosure Project) supply chain programme. In 2023, suppliers representing $7 0 . 6 \\%$ of total supplier spend completed the CDP questionnaire, compared with $6 3 . 5 \\%$ in 2022.", "chunk_word_count": 448, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Net zero in our own operations TCFD", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 65, "page_start": 65, "page_end": 65 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 107, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Our energy consumption\nIn October 2020, we announced our ambition to reduce our energy consumption by $50 \\%$ by 2030, against a 2019 baseline, and in 2023 we achieved $2 6 . 3 \\%$ . We continue to work to do this by optimising the use of our real estate portfolio, and carrying out a strategic reduction in our office space and data centres. We are using new technology and emerging products to make our spaces more energy efficient.\nApproximately $5 5 \\%$ of our global offices, branches and data centres are located in areas identified as being subject to high and very high water stress, accounting for $50 \\%$ of our annual water consumption. These are predominantly urban or city centre locations with large, concentrated populations. Our industry is a low user of potable water, and we have implemented measures to further reduce water consumption through the installation of flow restrictors, auto-taps and low or zero flush sanitary fittings.\nAs part of our ambition to achieve $100 \\%$ renewable electricity across our operations by 2030, we continue to look for opportunities to procure green electricity in each of our markets. In 2023, our fourth UK renewable power purchase agreement (’PPA’) went live in Sorbie, Scotland. A key challenge remains the limited opportunity to pursue PPAs or green tariffs in key markets due to regulations.\nWe will continue to engage with our supply chain through CDP, and through direct discussions with our suppliers on how they can further support our transition to net zero.\nIn addition, $0 . 9 \\%$ of our global office, branch and data centre portfolio lies in protected areas of biodiversity. We strive through our design, construction and operational standards to ensure that, where possible, our premises do not adversely affect the environment or natural resources in these areas.\nIn 2023, we launched our supplier net zero guides, providing further details to support suppliers in understanding our net zero ambitions, as set out in our supplier code of conduct. We are developing internal decarbonisation plans for the highest-emitting procurement categories (IT hardware, real estate, data centre and servers, and telecom services), to be included in category strategies and to support future supplier selection.\n### Business travel\nOur ambition is to halve travel emissions by 2030, compared with pre-pandemic levels. In 2023, our travel emissions remained below $50 \\%$ of our 2019 baseline, despite the lifting of international travel restrictions. We are\n### Our environmental and sustainability management policies\nOur buildings policy recognises that regulatory and environmental requirements vary across geographies and may include environmental certification. The policy is supported by Corporate Services procedures on environmental and sustainability management, seeking to ensure that HSBC’s properties continually reduce their overall direct impact on the environment. Detailed design considerations documented in our Global Engineering Standards aim to reduce or avoid depletion of critical resources, such as energy, water, land and raw materials. Suppliers are required to adhere to strict environmental management principles and reduce their impact on the environment in which they operate.\n### Net zero in our own operations continued", "chunk_word_count": 526, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Our energy consumption", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 65, "page_start": 65, "page_end": 65 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 108, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Emissions from our energy and travel\nWe report our emissions following the Greenhouse Gas Protocol, which incorporates the scope 2 market-based emissions methodology. We report greenhouse gas emissions resulting from the energy used in our buildings and employees’ business travel. Due to the nature of our primary business, carbon dioxide is the main type of greenhouse gas applicable to our operations. While the amount is immaterial, our current reporting also incorporates methane and nitrous oxide for completeness. Our environmental data for our own operations is based on a 12-month period to 30 September.\nIn 2023, we reduced emissions from our energy consumption and travel to 293,333 tonnes ${ \\mathrm { C O } } _ { 2 } \\Theta ,$ , which represents a $5 7 . 3 \\%$ reduction compared with our 2019 baseline. This was mainly attributed to:\n1 Ourdata is now presented onan absolute valuebasis and not rounded values. Data in 2023 is subject to an independentimitedassurancebyPwCinaccordancewith InternationalStandardonAssuranceengagements 3410(AssuranceEngagementsonGreenhouseGasStatements).Forfurtherdetails,seeGHGReporting Guidance2023and third-partylimitedassurancereportatwww.hsbc.com/our-approach/esg-information/ esg-reporting-and-policies.Inrespectof data in 2019and 2022,seeourrelevantAnnual ReportandAccounts.\n2 Supply chain emissions calculated using a combination of supplier emissions data and industry averages. Adataqualityscore isapplied tothiscalculationwhere1ishighand5is low,basedon thequalityof emissionsdata.This isaweightedaveragescorebasedonHSBCsupplierspendandisinlinewithHSBC's financed emissionsreporting methodology.Data qualityscores can be found in the ESG Data Pack.\n– travel volumes remaining low compared with pre-pandemic levels;\nForfurtherdetails ofour methodologies,our PwC limitedassurance reportsandrelevantenvironment key facts,seeourESGDataPackatwww.hsbc.com/esg.\n– an increase in our consumption of renewable electricity to $5 8 . 4 \\%$ ; and – the reduction of energy consumption as a result of strategic footprint reductions and the implementation of over 450 energy conservation measures, which amounted to an estimated energy avoidance in excess of 12 million kWh.\nEmissions from business travel increased compared with 2022, due to the easing of pandemic-related travel restrictions which resulted in a return to travel. A decrease in scope 1 emissions was partly attributed to a correction in the classification of road-based business travel in the UK and India from scope 1 to scope 3.\naverage carbon intensities and spend data to determine their contribution to our supply chain emissions. As more of our suppliers report their emissions, we should be able to include more accurate data and fewer industry averages in the calculation. We have applied a data quality score to the sources of data we used to determine counterparty emissions. For further details, see our GHG (Greenhouse Gas) Reporting Guidance at www.hsbc.com/esg.\naverages remain significantly elevated. Due to volatility in industry average data, we will undertake a review of our data sources and methodology during 2024. As supplier emissions reporting matures, we will be able to include more actual data and fewer industry averages in the methodology. Our initial supply chain emission figures may require updating as data availability changes over time and methodologies and climate science evolve.", "chunk_word_count": 475, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Emissions from our energy and travel", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 66, "page_start": 66, "page_end": 66 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 109, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Emissions from our energy and travel\nIn 2023, we collected data on energy use and business travel for our operations in 34 countries and territories, which accounted for approximately $9 6 . 0 \\%$ of our full-time employees (‘FTEs’). To estimate the emissions of our operations in entities where we have operational control and a small presence, we scale up the emissions data from $9 6 . 0 \\%$ to $100 \\%$ . We then apply emission uplift rates to reflect uncertainty concerning the quality and coverage of emission measurement and estimation. This is consistent with both the Intergovernmental Panel on Climate Change’s Good Practice Guidance and Uncertainty Management in National Greenhouse Gas Inventories and our internal analysis of data coverage and quality.\nFor further details of our methodologies and relevant environmental key facts,see the ESG Data Pack at www. hsbc.com/esg.\n$\\ln 2 0 2 2$ , we disclosed our supply chain emissions for the first time, using supplier emissions data and industry averages where actual data was not available. This approach is heavily dependent on external data sources to calculate estimates of our supply chain emissions.\nIn 2023, emissions from our supply chain reduced by $3 \\%$ compared with 2022. This is due to a reduction in spend and an increase in the availability of actual emissions data from our suppliers. Emissions have increased by $13 \\%$ compared with 2019, as industry\n### Emissions from our supply chain\nOur calculation methodology uses supplier emissions data where we have it from suppliers, through CDP. Where we do not have actual emissions data, we use industry\n### Managing climate risk TCF\nClimate risk relates to the financial and nonfinancial impacts that may arise as a result of climate change and the move to a net zero economy. We manage climate risk across all our businesses and are incorporating climate considerations within our traditional risk types in line with our Group-wide risk management framework.\nOur material exposure to climate risk relates to wholesale and retail client financing activity within our banking portfolio. We are also exposed to climate risk in relation to asset ownership by our insurance business and employee pension plans. Our clients are exposed to climate-related investment risk in our asset management business.\nIn the table below, we set out our duties to our stakeholders in our four most material roles.\nFor further detailsof our approach to climate risk, see ‘ESG risk'on page 141 and ‘Climate risk'on page 221.\nand 2022 through its annual TCFD Report, will continue to report against the 2030 targets and aims to widen the coverage of its assessment and reporting over time. In 2023, its asset managers were formally notified of the Trustee’s ESG risk mitigation priorities and encouraged to develop commensurate risk mitigation strategies. The manager monitoring and selection processes now explicitly include assessment of these strategies where financially material.", "chunk_word_count": 490, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Emissions from our energy and travel", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 66, "page_start": 66, "page_end": 67 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 110, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Banking\nOur banking business is well positioned to support our customers managing their own climate risk through financing. For our wholesale customers, we use our transition engagement questionnaire to understand clients’ climate strategies and risks. We have set out a suite of policies to guide our management of climate risk. We continue to develop our climate risk appetite and metrics to help manage climate exposures in our wholesale and retail portfolios. We also develop and use climate scenario analysis to gain insights on the long-term effects of transition and physical risks across our wholesale and retail banking portfolios (for further details, see page 225).\nHSBC Asset Management engages with investee companies on a priority list as defined in its Global Stewardship Plan, and votes at company general meetings, including on the topic of climate change. It also works with collaborative engagement initiatives such as Climate Action $1 0 0 +$ and Nature Action 100.\nFor further details of the HSBC Bank (UK) Pension Scheme's annual TCFD statementsand climate actionplan,see http://futurefocus.staff. hsbc.co.uk/active-dc/information-centre/ other-information.\nDFor further details of the HSBC Global Asset Management (UK) Limited'sannual TCFD Report,see https://www.assetmanagement. hsbc.co.uk/-/media/files/attachments/uk/ common/tcfd-report-2022.pdf.\n### Insurance\n### Asset management\n### Employee pensions\nIn 2023, our Insurance business updated its sustainability procedures to align with the Group’s updated energy and thermal coalphase out policies. We also delivered ESG product marketing guidelines with insurance examples and training.\nHSBC Asset Management recognises that climate risk may manifest as transition and physical risks over the short, medium and long term. The impact of climate-related risk will vary depending on characteristics such as asset class, sector, business model and geography. Where applicable and relevant, HSBC Asset Management incorporates climate-related indicators, such as carbon intensity and management of carbon emissions, into investment decisions as well as insights from its climate-related engagement.\nThe Trustee of the HSBC Bank (UK) Pension Scheme, our largest plan with $\\$ 360$ assets under management, aims to achieve net zero greenhouse gas emissions across its defined benefit and defined contribution assets by 2050. To help achieve this, it is targeting an interim emissions reduction of $50 \\%$ by 2030, from 2019 levels, for its equity and corporate bond mandates. This commitment was made in the context of wider efforts to manage the impact of climate change on the Scheme’s investments and the consequent impact on the financial interests of members.\nIn response to various ESG regulatory initiatives and developments, HSBC’s insurance manufacturing entities in the EU, which are in Malta and France, have continued to implement key disclosure-related regulatory requirements, including pre-contractual reporting, client periodic reporting and sustainable investment impact statements. Related requirements for the UK are expected to be introduced in 2024.\nWork continues on the integration of ESG and climate analysis into HSBC Asset Management’s actively managed product offerings to help ensure the climate risks faced by companies are considered when making investment decisions and to assess ESG risks and opportunities that could impact investment performance.\nThe Scheme, which has reported emission reductions for its listed equity and corporate bond mandate portfolios between 2019", "chunk_word_count": 522, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Banking", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 111, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Sustainability risk policies TCFD\nOur sustainability risk policies help to set out our appetite for financing and advisory activities in certain sectors. Our policies are important mechanisms for delivering our net zero ambitions, as well as for managing sustainability risks.\nWe regularly review our policies, incorporating feedback and building on experience from policy implementation over time.\n### Biodiversity and natural capital-related policies\nOur sustainability risk policies impose restrictions on certain financing activities that may have material negative impacts on nature. While a number of our sustainability risk policies have such restrictions, our forestry and agricultural commodities policies focus specifically on a key nature-related impact: deforestation. These policies require customers involved with major deforestationrisk commodities to operate in accordance with sustainable business principles. We also require palm oil customers to obtain certification under the Roundtable on Sustainable Palm Oil, and commit to ‘No Deforestation, No Peat and No Exploitation’ (see ‘Our respect for human rights’ on page 89).\nWhere we identify activities that could cause material negative impacts, we expect customers to demonstrate that they are identifying and mitigating risks responsibly, and we will look to take required actions as outlined in our policies, which may include applying financing restrictions or enhanced due diligence.\n### Our policies\nOur sustainability risk policies comprise our core net zero-aligned policies – thermal coal phase-out and energy – and our broader sustainability risk policies covering: agricultural commodities, chemicals, forestry, mining and metals, and World Heritage Sites and Ramsar-designated wetlands. We also apply the Equator Principles when financing relevant projects.\nDFor further details of how we manage sustainability risk,aswell as our full policies, see www.hsbc.com/our-approach/risk-andresponsibility/sustainability-risk.\n### Governance and implementation\nOur sustainability risk policies focus on mitigating the negative impacts of specific sectors on people and the environment. Our net zero policies, including energy and thermal coal phase-out, also support our ambition to transition to net zero. Engaging with customers on their transition plans is a key aspect of our net zero policy approach. These policies aim to provide clear signals to our customers on how our appetite and expectations for different activities are changing, as well as how we will consider their plans for the future.\nOur Group Risk and Compliance function has specialists who review and support implementation of our sustainability risk policies. Our relationship managers are the primary point of contact for many of our business customers and are responsible for managing customers’ adherence to the sustainability risk policies. They are supported by sustainability risk managers across the Group who have local or regional responsibility for advising on, and overseeing, the management of risks as outlined in the policies. Where considered appropriate, policy matters are escalated to relevant internal governance committees.", "chunk_word_count": 461, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Sustainability risk policies TCFD", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 68, "page_start": 68, "page_end": 68 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 112, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Our energy policy\nOur energy policy covers the broader energy system, including upstream oil and gas, fossil fuel power generation, hydrogen, renewables and hydropower, nuclear, biomass and wasteto-energy sectors.\nThe policy seeks to balance three objectives: driving down global greenhouse gas emissions; enabling an orderly transition that builds resilience in the long term; and supporting a just and affordable transition, recognising the local realities in all the communities we serve.\nWe continue to review policy implementation as we apply our policies in practice, and our operationalisation of such policies continues to be enhanced. We take a risk-based approach when identifying transactions and clients to which our energy and thermal coal phase-out policies apply, and when reporting on relevant exposures, adopting approaches proportionate to risk and materiality. This helps to focus our efforts on areas where we believe we can help drive meaningful change, while taking into account experience from policy implementation over time.\nOversight of the development and implementation of policies is the responsibility of relevant governance committees comprising senior members of the Group Risk and Compliance function and global businesses.\nThe energy policy was first published in December 2022 and updated in January 2024. We review the policy annually to help ensure that it remains aligned with our net zero by 2050 ambition and strategic objectives.\nFor further details of our oil and gas,and power and utilities financed emissions targets,see the 'Targets and progress'section in'Financed emissions on page 57. For further details of our energy policy, see www.hsbc.com/our-approach/risk-andresponsibility/sustainability-risk.\n### Sustainability risk policies continued", "chunk_word_count": 268, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Our energy policy", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 68, "page_start": 68, "page_end": 68 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 113, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Our thermal coal phase-out policy\nIn our Annual Report and Accounts 2022 we acknowledged that our processes, systems, controls and governance were not yet designed to fully identify and disclose thermal coal exposures and that we planned to reassess the reliability of our data and review our basis of preparation to help ensure that we are reporting all relevant thermal coal exposures aligned to our thermal coal phase-out policy.\nConsidering materiality criteria helps us to focus our efforts on areas where we believe we can help drive meaningful change, while taking into account experience from policy implementation over time.\nAs set out in the thermal coal phase-out policy, we are committed to phasing out the financing of thermal coal-fired power and thermal coal mining in EU and OECD markets by 2030, and globally by 2040.\nApplying our revised basis of preparation, our thermal coal financing drawn balance exposure was approximately $\\$ 9$ 1bn† as at 31 December 2020. We continue to work on our 2021 and 2022 numbers based on our revised basis of preparation and expect to report on these in future disclosures.\nOur policy aims to support thermal coal phase-out aligned to science-based timeframes, recognising the different pace between advanced and emerging economies. In turn our policy supports progress towards our financed emissions targets for the power and utilities and thermal coal mining sectors.\nWe have now revised the basis of preparation for our thermal coal exposures. Aligned with our thermal coal phase-out policy, we applied a risk-based approach to identify clients and report on relevant exposures. This includes the use of globally recognised third-party data sources to screen clients and applies materiality considerations to product type, customer type and exposure type, which informs inclusion and exclusion requirements.\nFor further details of ourapproach to financed emissions,see 'OurApproach to financed emissions'on page 53\nThe policy was first published in December 2021 and is reviewed annually, with the most recent update in January 2024, to help ensure that it remains aligned with our commitments and takes into consideration relevant changes in external factors.\n$^ { \\dag }$ Data is subject to independent limited assurance byPwC inaccordancewith ISAE3000/iSAE3410. For further details,see our Financed Emissions and Thermal Coal Exposures Methodologyand PwC's limited assurance report,which are availableatwww.hsbc.com/who-we-are/ esg-and-responsible-business/esg-reporting-centre.\nSpecifically, for product types, short-term lending exposures are excluded from our thermal coal financing exposures reporting in line with our financed emissions methodology. For customer types, exclusions are applied for certain customer types such as sovereigns and individuals. For exposure types, a threshold of $\\$ 15 m$ for drawn balances is applied for thermal coal financing exposures reporting. For the avoidance of doubt, the $\\$ 15 m$ threshold applies only to exposure reporting analysis and does not apply to the application of the thermal coal phase-out policy.\n? For our thermal coal phase-out policy,see www. hsbc.com/-/files/hsbc/our-approach/risk-andresponsibility/pdfs/240125-hsbc-thermal-coalphase-out-policy.pdf.\nFor further details of our thermal coal phase-out policy January 2024 update,see page71 of our Net Zero Transition Plan2024,which isavailable atwww.hsbc.com/who-we-are/our-climatestrategy/our-net-zero-transition-plan.", "chunk_word_count": 506, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Our thermal coal phase-out policy", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 114, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Thermal coal financing exposures\nWe intend to reduce thermal coal financing drawn balance exposure from a 2020 baseline by at least $2 5 \\%$ by 2025 and aim to reduce it by $50 \\%$ by 2030.\nForfurtherdetails of our Financed Emissionsand ThermalCoal ExposuresMethodologyee www.hsbc.com/who-we-are/esg-andresponsible-business/esg-reporting-centre.\n### Asset Management policy\nunder the Group energy policy. HSBC Asset Management’s policy work will continue to support the Group’s sustainability objectives and the commitment made under the Net Zero Asset Managers initiative to support investing aligned with net zero by 2050. We continue on the journey of policy implementation, including engaging with the companies in which we invest, and improving the data we rely on to monitor the policies.\nHSBC Asset Management published its own policy on thermal coal in September 2022, and its own energy policy in November 2023. As an asset manager, it is subject to separate regulatory and legal obligations to deliver customers’ investment interests and deliver fair outcomes.\ntransition away from thermal coal could face voting sanctions and ultimately a divestment of holdings.\nUnder its energy policy, HSBC Asset Management will engage with – and assess the transition plans of – oil and gas, and power and utilities companies held in its portfolios. For its active fundamental sustainable named funds, it will exclude listed issuers whose overall operations are substantially in unconventional oil and gas, subject to data availability, and with the level and scope of exclusions to be set out in fund prospectuses. In its alternatives business, it will not undertake new direct investments in projects associated with the energyrelated activities identified as excluded from new finance or advisory services\nUnder its thermal coal policy, HSBC Asset Management will not hold listed securities of issuers with more than de minimis revenue exposure to thermal coal in its actively managed funds beyond 2030 for EU and OECD markets, and globally by 2040. The policy also includes enhanced due diligence on the transition plans of investee companies with thermal coal exposure. Companies held in investment portfolios that do not develop credible plans to\nForfurtherdetailsof theenergypolicysee www.assetmanagement.hsbc.lu/-/media/files/ attachments/common/energy-policy-en.pdf.\nForfurtherdetailsof thethermalcoal policy, seewww.assetmanagement.hsbc.co.uk/-/ media/files/attachments/common/coal-policyen.pdf.\n### Partnering for systemic change\n### Supporting systemic change to deliver net zero\nWe recognise that collective action is critical to achieve net zero. We seek to collaborate with a range of partners to develop a supportive environment for achieving net zero and mobilising finance for climate action and nature-based solutions. Our partnerships vary in scope and form depending on the sector and geography, as well as our presence in local markets. We act independently and voluntarily in our decision making, based on our own business interests, priorities and objectives, and in accordance with the laws and regulations of the markets in which we operate.", "chunk_word_count": 469, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Thermal coal financing exposures", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 69, "page_start": 69, "page_end": 70 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 115, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Working with civil society and non-governmental organisations\nAs part of our global philanthropy, we have partnered with a range of organisations to support the acceleration of climate action and investments in nature.\n– As Chair of the Sustainable Markets Initiative’s (‘SMI’) Financial Services Taskforce, we have been actively involved in the publication of industry guidance to help encourage investment in critical ecosystems and sustainable agricultural practices. These include sponsorship of a report by Pollination on financing coastal naturebased solutions, as well as contributing to the Mangrove Breakthrough initiative’s financial roadmap and the SMI Agribusiness Task Force’s blended finance framework for regenerative farming.\nOur five-year Climate Solutions Partnership initiative with the World Resources Institute, WWF and over 50 local partners, continues to support the scaling up of nature-based solutions and the transition of the energy sector in Asia. This includes engaging with local enterprises across Asia to make climate commitments and take corporate action. Under the Asia Sustainable Palm Oil Links programme, we are working closely with smallholders and traders to transition to more sustainable practices and reduce nature-related losses.", "chunk_word_count": 193, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Working with civil society and non-governmental organisations", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 70, "page_start": 70, "page_end": 70 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 116, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Working with the public sector\nWe engage with governments and public bodies to support the implementation of policies and regulations, including promoting good practice to develop globally consistent approaches to nature and climate-related financial regulation. In 2023, this included:\n– As a member of the Taskforce on Naturerelated Financial Disclosures (‘TNFD’), we have piloted the TNFD beta framework to better understand our exposure to nature-related risks, including on subsets of customers. We are currently focused on assessing and preparing for mandatory nature-related disclosure requirements, and we continue to engage with TNFD and explore ways it can help us and our clients to strengthen nature-related reporting.\nWe have also established several new partnerships focused on transitioning industry, decarbonising global trade and catalysing the new economy. These include:\n– working with the UK Net Zero Council, a cross-government business partnership, to help address market barriers to delivering net zero, including high start-up costs for renewable energy projects, regulatory challenges and uncertainty around policy frameworks; and\n– a three-year partnership with the Apparel Impact Institute to mobilise blended finance for projects to reduce supply chain emissions in the global fashion industry;\nIn 2023, we also supported financial product development to help mobilise the allocation of capital towards halting and reversing nature loss:\n– a founding membership of the Capacitybuilding Alliance for Sustainable Investment, a global platform providing local capacity building services and technical assistance to support growth of transition financing in emerging markets and developing economies; and\n– continuing to engage with Just Energy Transition Partnerships contributing to Indonesia’s comprehensive investment and policy plan and Vietnam’s resource mobilisation plan, which provide roadmaps for minimising the negative impact on local communities of phasing out fossil fuels and how banks can support the transition.\n– We worked with the ICMA to help develop global guidance for issuers launching blue bonds – debt instruments that raise capital to finance sustainable marine and ocean-based projects – including eligibility criteria, standards for evaluating the impact of projects, and the steps needed to build the integrity of the blue economy and mobilise investment.\n– a two-year partnership with Repower, a global non-profit initiative analysing the technical and commercial feasibility of various options for repowering and repurposing coal-fired power plants to accelerate the transition to clean energy.\n### Working with industry\nWe participate in cross-industry alliances and initiatives to stimulate industry engagement in nature and climate-related issues, and improve consistency in global financial standards, guidance and frameworks to accelerate implementation. In 2023, these included:\n– We partnered with Earth Security to explore the barriers, opportunities and design options for creating a ‘mangrove bond’ in Queensland, Australia to help generate funding to enhance mangrove ecosystems. This led to the publication of a practical blueprint for investors, banks, corporates and governments to develop new sustainable fixed income and investment product opportunities.\n– We are supporting the widespread adoption of the GFANZ net zero transition plan framework, as a member of its Principals Group. We also jointly led a working group to develop guidance for financial institutions on financing the managed phase-out of coal-fired power plants in Asia-Pacific.", "chunk_word_count": 529, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Working with the public sector", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 70, "page_start": 70, "page_end": 70 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 117, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Unlocking the potential of Chinese ecosystems\nWe have been working with the SEE Foundation in China on a multi-stakeholder pilot project to enhance the climate resilience and biodiversity of forests, inland wetlands, and mangroves in several selected local provinces. The project aims to restore and promote sustainable management of key ecosystems and improve ecosystem services such as carbon sinks, as a model for other areas in China and around the world. Its efforts to reduce emissions, and generate jobs through the support of sustainable local enterprises, has also unlocked government and public funding for expansion and gained recognition from the World Bank and the Chinese government.\n### Our approach to climate reporting TCFD\n### Task Force on Climate-related Financial Disclosures (‘TCFD’)\nThe table below sets out the 11 TCFD recommendations and summarises where additional information can be found.\nWe have considered our ‘comply or explain’ obligation under both the UK’s Financial Conduct Authority’s Listing Rules and Sections 414CA and 414CB of the UK Companies Act 2006, and confirm that we have made disclosures consistent with the TCFD Recommendations and Recommended Disclosures, including its annexes and supplemental guidance, save for certain items, which we summarise below and in the additional information section on page 440.\nRecommendation Response\n### Governance\n### b) Describe management’s role in assessing and managing climate-related risks and opportunities (Companies Act 2006 – Sections 414CA and 414CB 2A (a))\nRecommendation Response\n### a) Disclose the metrics used by the organisation to assess climate-related risk and opportunities in line with its strategy and risk management process (Companies Act 2006 – Sections 414CA and 414CB 2A (h))\n### c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets\n### Social Building inclusion and resilience\nWe play an active role in opening up a world of opportunity for our customers, colleagues and communities by connecting across our international networks to help build a more inclusive and resilient society.\n### At a glance\nWe build resilience by creating products and services that simplify the banking experience, so customers can manage and grow their wealth more easily. We also help protect what people value most – their health, families, homes and belongings. We also build resilience by providing education so customers can understand how to manage their finances more effectively.\nInclusion is key to opening up a world of opportunity. It involves a commitment to identifying and addressing barriers that may stop people from accessing opportunities because of who they are or where they are from.\nEmployee well-being is essential. We offer all colleagues a wide range of resources that help support their mental, physical and financial well-being so they can thrive in and out of work. We are working to ensure that our offices, branches and digital spaces are accessible and safe for all.\nInclusion goes hand in hand with resilience. We aim to help people build the capabilities they need to achieve their goals and to deal with the challenges they face, so we are focused on delivering products, services and education that support our colleagues, customers and communities.", "chunk_word_count": 530, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Unlocking the potential of Chinese ecosystems", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 70, "page_start": 70, "page_end": 77 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 118, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Communities\nWe also help our colleagues build resilience by ensuring that they are equipped with the skills and knowledge they need to progress their careers during a period of significant economic transformation.\nWe are developing an updated global philanthropy strategy that allows us to work alongside the communities we operate within, and which aligns with our ESG areas of focus – ‘transition to net zero’ and ‘building inclusion and resilience’.\n### Colleagues\nWe believe that an inclusive, healthy and rewarding workplace helps the whole Group succeed. We are focused on recruiting and retaining diverse talent by offering fair pay and career progression so we can ensure our colleagues – and particularly our leadership – are representative of the communities we serve. We do this by setting meaningful goals and tracking and monitoring our progress. In 2023, we continued to make progress against all of our goals, although the progress we are making with women in senior leadership roles has not been as fast paced as we would like.\n### Customers\nWe believe that fostering inclusion and building resilience helps us to create long-term value and growth. By removing unnecessary barriers and striving to be a fair and equitable organisation, we can attract and retain the best talent, support a wider customer base to achieve their goals and stimulate growth in our communities. This is how we open up a world of opportunity for our colleagues, our customers and our communities.\nWe are committed to helping our customers access the financial services they need. They should not find it more difficult to access finance because of their gender, their ethnicity, their sexual orientation, their neurodiversity or their disability. Our ambition is to create a welcoming, inclusive and accessible banking experience for all our customers.\n### Promoting diversity and fostering inclusion\n### Our approach to diversity and inclusion\nOur purpose, ‘Opening up a world of opportunity’, explains why we exist as an organisation, and is the foundation of our diversity and inclusion strategy. Inclusion is an enabler for our ‘energise’ strategic pillar, and is embedded in the values of our organisation. By valuing difference and seeking different\nperspectives, we can more accurately reflect the societies we serve, creating better outcomes for customers and colleagues.\nGroup-wide priorities for which we hold senior executives accountable. Some executives also have local priorities, which ensures our diversity and inclusion agenda remains locally relevant.\nOur data-driven strategy enables us to set aspirational goals to track and monitor our progress. We remain focused on specific\n### How we hold ourselves to account\n### We set meaningful goals\n### We report and track progress", "chunk_word_count": 449, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Communities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 77, "page_start": 77, "page_end": 78 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 119, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### We benchmark our performance\nOur executive Directors and Group Executives are accountable for progressing our agenda through a series of diversity and inclusion aspirational goals that align to three public commitments that we have made. In 2023, we continued to make progress against our three goals by:\nMeasuring our performance ensures we consistently and accurately monitor the progress made against our aspirational goals. Our databacked approach tracks this through:\nExternal disclosures and benchmarks allow us to measure the progress that we are making and identify opportunities for future prioritisation. $\\ln 2 0 2 3$ , we:\n– an inclusion dashboard, which monitors progress against goals with trend data on hiring, promotion and exit ratios, is reported to the Group Executive Committee on a quarterly basis; and\n– scored $8 7 . 2 \\%$ in the Bloomberg Gender-Equality Index measuring our gender-related data, transparency and performance;\n– achieving a $3 4 . 1 \\%$ representation of women in senior leadership roles, with a goal of achieving $3 5 \\%$ by 2025;\n– maintained our Stonewall Gold standard and rank as a top global LGBTQ $^ +$ inclusion employer; and\n– semi-annual review meetings where our Head of Inclusion meets each Group Executive to review data, their progress against their aspirational goals, and to support further progress.\n– attaining a $3 . 0 \\%$ representation of Black heritage colleagues in senior leadership in the UK and US combined, against a goal to achieve $3 . 4 \\%$ by 2025; and\n– ranked as a Top 75 employer in the UK Social Mobility Index in our first year of entering a submission.\n– increasing our Inclusion index as measured in our Snapshot survey, to $78 \\%$ against a 2023 target of $7 5 \\%$ .\n### A data-driven approach to inclusion\nWe are evolving our data-driven approach by enabling more of our colleagues to self-identify across a range of data points. This data has enabled us to set locally relevant priorities and identify areas of our organisation where we need to focus our attention. We invite colleagues to self-identify on a broad range of data points where we can, although given the international nature of our business, there are some jurisdictions where we are unable to invite colleagues to share their diversity data with us. We have enabled $91 \\%$ of our colleagues to disclose their ethnic background, with $6 2 \\%$ of colleagues choosing to do so, where this is legally permissible.\nOur approach goes beyond ethnic heritage and considers broader representation within the workplace. We have enabled $90 \\%$ of the workforce to share whether they have a disability, $7 1 \\%$ of our workforce to share their sexual orientation, and all UK-based colleagues to share their socio-economic background.", "chunk_word_count": 472, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > We benchmark our performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 78, "page_start": 78, "page_end": 78 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 120, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Our approach to Asian heritage representation\nOur roots as an organisation trace back over 150 years to Hong Kong, where HSBC opened its doors to serve clients with international needs. Asia remains a strategic focus for us today.\nTo better reflect the communities we serve, we have a focus on increasing representation across our global workforce, including Asian heritage representation. Defining Asian heritage can be complex due to the vast range of ethnicities and identities across the region. In 2023, $3 7 . 8 \\%$ of our senior leaders were able to self-identify as being from an Asian heritage background. To deliver our international strategy it is vital that we are both representative of our local communities, and able to mobilise leaders with global perspective and diverse heritage backgrounds across our international network.\n### Creating a diverse environment\n### Women in senior leadership", "chunk_word_count": 157, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Our approach to Asian heritage representation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 78, "page_start": 78, "page_end": 78 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 121, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Black colleagues in senior leadership\nThe programme encourages participants to support each other with the tools and shared experiences to structure their careers, expand their network and seek job opportunities. It also helps to create improved visibility of talent to senior leadership.\nSince achieving our ambition of having $30 \\%$ of senior leadership positions held by women in 2020, we set a new goal to reach $3 5 \\%$ by 2025. We remain on track, with $3 4 . 1 \\%$ of senior leadership roles held by women at the end of 2023, excluding our Canada business, which is planned for sale in 2024. Progress in the past year has not been as fast paced as we would like. A total of $3 7 . 7 \\%$ of all external appointments into senior positions were female, compared with $3 5 . 7 \\%$ in 2022, and women represented $3 9 . 6 \\%$ of all promotions into senior leadership roles in 2023.\nWe remain on track to double the number of Black colleagues in senior leadership roles globally by 2025, having increased the number of Black senior leaders by $6 2 \\%$ since 2020.\nIn 2022, we set a new Group-wide ethnicity strategy, which is overseen by a senior working group and led by our Group Chief Risk and Compliance Officer. The aim of the strategy is to ensure we accurately reflect the communities we serve and the societies in which we operate. We continue to identify challenges colleagues from diverse backgrounds face in achieving their aspirations at HSBC.\n[IMAGE CAPTION] Gender diversity statiGender diversity data\nDevelopment programmes, including our Accelerating Female Leaders initiative, have helped to increase the visibility, sponsorship and network of our high performing, senior women. Since the start of the programme in 2017, $2 4 \\%$ of participants have been promoted and $2 \\%$ have taken a lateral move to develop their careers. We have also retained over $7 9 \\%$ of colleagues who completed the programme.\nWe have continued to focus on the development of Black heritage colleagues through the delivery of dedicated development programmes. Using data analytics, we have identified that in the UK, Black heritage female colleagues are less likely to hold positions as people managers. To address this, we introduced the Solaris programme to provide coaching and development for our UK-based Black heritage female colleagues. Forty women have successfully completed the programme and $2 9 \\%$ have been promoted.\nIn our 2023 Accelerating into Leadership programme, which prepares high potential, mid-level colleagues for leadership roles, $4 3 \\%$ of participants were women. More than 5,200 women also participated in our Coaching Circles programme, which matches senior leaders with a small group of colleagues to provide advice and support on the development of leadership skills and network building.\nWe also partnered with Vivida, a virtual reality firm, to launch an immersive learning programme designed to bring to life the experiences of Black heritage and ethnic minority colleagues, highlighting the pressures, barriers and biases faced by these communities. The programme has been completed by 11,900 colleagues, and was nominated for awards at the 2023 European Diversity Awards and as finalists at The 2024 Learning Awards.", "chunk_word_count": 545, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Black colleagues in senior leadership", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 79, "page_start": 79, "page_end": 79 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 122, "chunk_text": "# Opening up a world of opportunity\n## 2022 progress from baseline 3%\n### Black colleagues in senior leadership\nOur succession planning for key leadership roles includes an assessment of the diversity of our succession plans. We are improving the gender diversity of those roles critical to our organisation and the successors to those roles. In 2023, $40 \\%$ of the succession pool for these roles were women, compared with $3 6 \\%$ in 2022.\n## 1 Combined Group Executives and direct reports includes HSBCGroup Executivesand theirdirect reports (excluding administrative staff)as of 31 December2023.\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\nIn 2023 EmpowHER was launched, a programme created by Black heritage women for Black heritage women at midmanagement levels across the UK business.\n3 In our leadership structure,we classify senior leadershipas thoseat career band 3andabove; middlemanagementasthoseatglobalcareer band $4 ;$ andjuniormanagementas thoseatglobal careerbands 5and 6.\nare committed to paying colleagues fairly regardless of their gender or ethnicity and have processes to ensure that remuneration is free from bias. We review our pay practices and undertake a pay equity review annually, including a regular independent third-party review of equal pay in major markets. If pay differences are identified that are not due to objective, tangible reasons such as performance, skills or experience, we make adjustments.\napproximately $80 \\%$ of our workforce (excluding our Canada business held for sale. In 2023, our mean aggregate UK-wide gender pay gap was $4 3 . 2 \\%$ , compared with $4 5 . 2 \\%$ in 2022, and the ethnicity pay gap was $4 . 5 \\%$ , compared with $0 . 4 \\%$ in 2022. Our UK gender pay gap is driven by several factors including the shape of our workforce, where there are more men than women in senior higher-paid roles, and more women than men in junior roles. While we are confident in our approach to pay equity, until women and ethnic minority colleagues are proportionately represented across all areas and levels of the organisation we will continue to see gaps in average pay. We\nRepresentation and pay gaps\nWe publish this data annually to ensure both transparency and a maintained focus on addressing representation gaps within the organisation. Our gender and ethnicity pay gap reporting shows the difference in average pay between two groups of people (regardless of roles or seniority). We have reported our UK gender representation and pay gap data since 2017 in line with reporting regulations, and have voluntarily extended this to include the US, mainland China, Hong Kong, India, Mexico, Singapore and the UAE, alongside ethnicity data for the UK and US. In 2023, we also included gender pay gap data for Argentina and Malaysia, covering\nFor further details on our representation data, pay gap data,and actions,see www.hsbc.com/ diversitycommitmentsand the ESG Data Pack atwww.hsbc.com/esg.", "chunk_word_count": 478, "section_path": "Opening up a world of opportunity > 2022 progress from baseline 3% > Black colleagues in senior leadership", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 79, "page_start": 79, "page_end": 79 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 123, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Fostering an inclusive culture\nOur inclusion strategy seeks to make HSBC an organisation in which every colleague can feel like they belong, and are empowered to contribute their perspectives and ideas. Our strategy sits above a range of diversity and inclusion strands from gender, ethnicity and faith to disability and socio-economic background – we want to ensure that all colleagues are able to realise their full potential.\nEach of our non-executive Directors and most Group Executives are aligned with one of our global ERGs, ensuring there is a direct link between senior leadership and our colleagues. The non-executive Director dedicated to workforce engagement is closely aligned to our diversity and inclusion strategy and has attended events such as our 2023 Global ERG Summit.\n### UK socio-economic diversity\nIn 2023, our ERGs led numerous initiatives and events, including the Ability network hosting a global summit aimed at driving cultural change to build confidence for colleagues with a disability. Our Nurture ERG, which supports working parents and carers, launched the #LeaveLoudly Campaign globally. Its aim is to drive engagement by counteracting ‘presenteeism’, acknowledging that everyone has multifaceted lives, and to show that leaders across HSBC support a healthy work-life balance.\nWe believe that no-one should be limited by their socio-economic background and are committed to driving socio-economic inclusion within our workforce.\nWe use the Inclusion index in our annual Snapshot survey to measure the extent to which our colleagues feel a sense of belonging and psychological safety within the organisation, alongside their perception of fairness and trust. In 2023, we achieved a score of $78 \\%$ , which is three percentage points ahead of our annual aspirational goal, and two percentage points ahead of the financial services industry benchmark.\nIn 2022, we began exploring the impact socioeconomic background has on our colleagues, working with them, and internal and external stakeholders to develop our understanding on socio-economic diversity.\nIn 2023, we entered the Social Mobility Index for the first time and gained recognition as a top 75 employer. Our Strive ERG, sponsored by the Group Chief Human Resources Officer, now has over 1,000 members. We have continued to be an active member of Progress Together, focused on helping members progress and retain a socio-economically diverse workforce, including taking part in the largest financial services study of socioeconomic diversity.\nAnalysis of our Inclusion index allows us to measure engagement levels of specific colleague groups in greater detail, in particular different diversity strands, to better understand the experiences of our colleagues globally. We found that scores from colleagues who identify as male and female were broadly in line with the overall Groupwide result, at $7 9 \\%$ and $7 7 \\%$ respectively. From an ethnicity perspective, our Black heritage colleagues were four percentage points below the Group-wide average, while our Asian heritage colleagues’ results were on a par with the overall score, at $78 \\%$ .", "chunk_word_count": 507, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Fostering an inclusive culture", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 80, "page_start": 80, "page_end": 80 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 124, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Looking to the future on disability\nEnhancing the experience of our employees, particularly those with disabilities, is a vital part of our commitment to build an inclusive organisation. A key initiative has been a targeted career development programme to empower colleagues with confidence to drive their careers forward.\nRecognising the pivotal role of line managers, we have introduced a learning plan through our Degreed platform to help managers support team members with physical, sensory, long-term, and mental health conditions, as well as those who identify as neurodiverse. Our Ability ERG has hosted support sessions globally, where colleagues shared their experiences and raised awareness for disability inclusion, and the support provided by HSBC.\nWe launched a career development programme through the Strive ERG, enabling colleagues from different backgrounds to lead with impact and build career confidence.\n### Our employee resource groups\nWe continue to improve the socio-economic diversity data we collect by running campaigns encouraging our colleagues and job applicants to share their socio-economic background. In 2023, we extended our socio-economic focus to Asia, with an initial data collection pilot in Singapore through our employee engagement survey. We also launched a new learning plan, available for all employees to better understand what socioeconomic diversity is and why it matters.\nOur employee resource groups (‘ERGs’) foster an inclusive culture and contribute significantly to the experience of tens of thousands of colleagues. They operate globally and are led by colleagues with a range of shared values, identities, interests and goals, including disability, $\\mathsf { L G B T Q + } ,$ ethnicity, faith and gender.\nIn collaboration with PurpleSpace, the disability network and professional development hub, we sponsored and published a Leadership Model resource for employee groups. In 2023, we also sponsored the UK Business Disability Forum’s roundtable and conference. We have enhanced the support we provide to colleagues through our workplace adjustment programme partnering with Microlink, extending the availability of this service to almost 37,790 colleagues in our global service centres and technology centres in India.\n### Supporting colleagues experiencing menopause\nMany of our female colleagues will experience menopause symptoms during their career. We do not want menopause to be a silent struggle and we have put in place the right support so it does not need to be. In 2023, we launched a new global framework centred around three principles of: creating awareness; removing barriers; and being adaptable. These form the basis of our menopause toolkit, which is available to all colleagues, and includes guidance on how to access menopause support and guidance for line managers on how to best support those in need.\nWe recognise that there is much more we can do to support those who are experiencing menopause and those who are supporting others experiencing it. Senior sponsorship is helping to raise awareness and our first step is to provide access to dedicated resources on menopause.\n### Building a healthy workplace", "chunk_word_count": 510, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Looking to the future on disability", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 80, "page_start": 80, "page_end": 80 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 125, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Listening to our colleagues\nWe are committed to addressing this type of behaviour and will continue to take action where we find that an employee has breached our values and high standards of conduct.\nListening to our colleagues is an essential part of building a healthy workplace at HSBC. We capture employee feedback in a variety of ways to understand how our colleagues feel about HSBC and to help us improve the employee experience.\n### Employee conduct and harassment\nWe expect all our employees to treat each other with respect and dignity, and we do not tolerate or condone harassment or bullying in any form. We continually strive to improve awareness and education around such behaviours, and strengthen our understanding and response to these issues across all levels of the organisation. In 2023, our overall Snapshot Speak up index improved slightly to $76 \\%$ , up one percentage point from 2022.\n### Employee engagement:\n77%", "chunk_word_count": 181, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Listening to our colleagues", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 81, "page_start": 81, "page_end": 81 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 126, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### How we listen\nOur annual Snapshot survey runs every September and gives all HSBC employees the opportunity to share their experiences of working at the organisation. Our 2023 survey achieved a record response rate of $8 5 \\%$ , up from $78 \\%$ in 2022, with nearly 180,000 colleagues choosing to share their views.\nEmployee engagement score (2022: 74%)\nWe encourage our colleagues to speak up about poor behaviour or things that do not seem right, and we have included bullying, harassment, discrimination and retaliation in our 2023 Global Mandatory Training curriculum. Our Snapshot survey revealed an increase in colleagues able to state their opinion without fear of negative consequences, with $7 2 \\%$ of colleagues feeling able to do so, up from $70 \\%$ in 2022.\n81%\nThe results of Snapshot are discussed at all levels. Our record participation has enabled us to put more data directly in the hands of our people managers, with more than 11,000 teams able to access their results, while maintaining the confidentiality of individual employees’ responses. Managers are supported by a guided action planning tool to help them understand and interpret insights relevant to their team, while directing them towards support resources for them and their teams to explore. Results are also shared with executive leadership teams across the Group, with detailed reporting provided to our Group People Committee and the Board.\nOf colleagues who feel confident about this company’s future (2022: $7 7 \\% )$\n85%\nIn 2023, we launched our global code of conduct which is supported by our global antibullying and harassment code. This continues to help us to maintain high standards of conduct across the Group.\nOf colleagues who completed our annual Snapshot survey (2022: $78 \\% )$ ）\nWe have mandatory procedures, both globally and locally, for handling and investigating employee concerns, which include those for bullying and harassment. Cases are continually monitored from our speak-up channels, and data is reported to management committees to ensure there is visibility at leadership level.\nWe complement the Snapshot survey with our annual Performance and Reward survey, which runs every March. Open to all employees, it captures feedback on our annual performance and pay review cycle, providing valuable insight into how well we are meeting our colleagues’ needs and expectations on compensation, development and professional growth.\nIn 2023, we had a total of 834 concerns raised relating to bullying, harassment, discrimination and retaliation. Where the concerns were substantiated following an investigation, appropriate action was taken, which included termination of services, where appropriate. In 2023, $3 8 \\%$ of concerns raised were either partly or fully substantiated and 24 colleagues were dismissed in relation to bullying, harassment, discrimination or retaliation.\nWe also run targeted listening activities for employees at key moments in their careers, capturing detailed feedback from new joiners, internal movers and voluntary leavers.", "chunk_word_count": 499, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > How we listen", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 81, "page_start": 81, "page_end": 81 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 127, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Promoting mental health awareness\nA poll posted by a senior leader on our intranet revealed that $94 \\%$ of colleagues said they trust leadership more when they open up about their own mental health.\nTo build on this sentiment, we celebrated World Mental Health Day by running a global awareness campaign ‘The Big Mental Health Conversation’ in October 2023. We encouraged leaders to post questions on our intranet to gather feedback from colleagues on their experiences and how we can improve mental health support. We surveyed our colleagues during the campaign and half said they were very satisfied with the mental health support HSBC offers. Supporting the mental health of our colleagues continues to be a priority, including ensuring that we continue to signpost how colleagues can access available support. Throughout 2023, we also held over 200 virtual events, featuring internal and external experts providing advice on mental health and topics related to well-being.\n### Listening to our colleagues continued\n### Employee engagement\nWe use eight Snapshot indices to measure key areas of focus and compare against peer institutions. The table below sets out how we performed.\n### What employees told us\nAnalysis of the key drivers of our engagement scores showed that engaged colleagues are more likely to feel positive about their career, our strategy and our leadership. Our free text responses also showed that training and progression opportunities was the most cited reason for recommending HSBC, followed by our approach to flexible and hybrid working and the strength of our management.\nOur Snapshot survey showed that $67 \\%$ of employees plan to stay at HSBC for five or more years, a two percentage point increase since 2022. This aligned with a drop in voluntary turnover in 2023 to $9 . 3 \\%$ , compared with $1 4 . 1 \\%$ in 2022, and reflects trends in the wider employment market. Results from our listening channels continued to show that career opportunities and competitive reward packages remain the two key drivers behind our ability to attract and retain talented colleagues.\nSeven of our eight Snapshot indices improved in 2023, while our change leadership index remained static. Our headline measure of employee engagement captures how employees feel about HSBC: whether they are proud to say they work here, whether they would recommend working at HSBC, and how motivated they feel to do their best work. Employee engagement increased by three percentage points compared with 2022, and seven percentage points above the external financial services benchmark. Our employee focus index, which measures how employees feel about their day-to-day work, increased by four percentage points to put HSBC four points ahead of the industry benchmark.\nNegative comments continued to focus around pay and benefits but were mentioned less than in 2022. For further details of our approach to being a great place to work, including pay transparency, see page 81.\nWe are committed to building on our high levels of engagement and feedback throughout 2024.", "chunk_word_count": 519, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Promoting mental health awareness", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 81, "page_start": 81, "page_end": 82 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 128, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Being a great place to work\nTo deliver our purpose, ambition and strategy we need the best people, performing at their best. Creating a great workplace helps us attract, retain and motivate our colleagues so they can deliver for our customers.\n### Recognising colleagues’ success\nWe have continued to enhance our ‘At Our Best’ platform that allows colleagues to recognise each other’s contributions, by providing mobile access to encourage realtime acts of appreciation. In 2023, colleagues made more than 1.4 million At Our Best recognitions, an increase of $13 \\%$ from 2022.\nWe are committed to recognising the achievements of our colleagues’ success. Variable pay, which forms part of total compensation alongside fixed pay, allows us to recognise the performance and behaviours of our colleagues.\nUnderpinning this is our reward strategy, which we updated in 2022 to create an environment where the best people want to work. Our workforce proposition is rooted in our purpose and values, and the principles of rewarding colleagues responsibly, recognising colleagues’ success and supporting our colleagues to grow.\nAt the beginning of each year, we ask colleagues to set goals with support from their line managers to ensure they are aligned with the overall Group strategy and business priorities. As a result, $8 7 \\%$ of colleagues said they have a clear understanding of what is expected of them throughout the year.\nManagers are encouraged to recognise colleagues’ service anniversaries every five years up to 40 years of service. This also includes the presentation of a special commemorative HSBC medallion. The At Our Best platform supports the global service recognition programme, which in 2023 helped to celebrate more than 30,000 service anniversaries.", "chunk_word_count": 303, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Being a great place to work", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 83, "page_start": 83, "page_end": 83 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 129, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Rewarding colleagues responsibly\nWe expect our people managers to hold regular performance and development conversations to review progress, incorporate feedback and discuss well-being. In 2023, our Snapshot survey revealed that $8 1 \\%$ of colleagues said they had regular performance conversations with their manager, while $6 3 \\%$ had them at least once a month, up from $5 7 \\%$ in 2022. These conversations also provide an opportunity for colleagues to regularly revisit any goals set to maintain the right level of challenge in their day-to-day work.\nWe believe in rewarding our colleagues responsibly, which means ensuring that our pay and benefits provide financial security for all. Our annual Performance and Reward survey measures several factors, including how colleagues feel about our reward proposition. In 2023, seven key performance indicators related to our year-end review improved by four or more percentage points, including a nine percentage point increase in colleagues who feel they are paid fairly for the work they do.\nShare plans are another way to empower colleagues to participate in the Group’s success and to have a share in the rewards. In 2023, we expanded our global share plan to include the Philippines, making it available to $91 \\%$ of colleagues globally. Our 2020 threeyear Sharesave plan, in which $4 2 \\%$ of UK employees took part, matured in November 2023. The share price at maturity represented more than double the option price, providing employees with significant share price growth. We ran information webinars, attended by more than 11,000 colleagues, and offered support resources to help our colleagues understand tax considerations and the choices available to them at maturity.\nAs part of our commitment to rewarding colleagues responsibly, we went beyond compliance in assessing statutory minimum wages, to ensure that all colleagues are paid at least a living wage.\nAt year-end, employees are rated on both performance and behaviour. In our Pay and Benefits survey, $7 2 \\%$ of colleagues said their year-end performance assessment fairly reflected their performance and $8 3 \\%$ agreed that rating decisions were determined in an unbiased way, regardless of any protected characteristics or work patterns. In our Snapshot survey, $8 1 \\%$ of employees said they receive feedback that helps them improve their performance, compared with $7 4 \\%$ in 2022, and $8 1 \\%$ feel motivated to do the best job they can, up from $78 \\%$ last year.\nA living wage should be sufficient to cover an adequate standard of living considering the cost of goods and services in each country and territory in which we operate. In 2023, we worked with the Fair Wage Network, which provided an independent source of wage levels. As a result, HSBC achieved accreditation as a global living wage employer in 2024. We will continue to review our pay levels to ensure that no colleague falls below a living wage level.", "chunk_word_count": 503, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Rewarding colleagues responsibly", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 83, "page_start": 83, "page_end": 83 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 130, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Supporting our colleagues to grow\nTo help our colleagues to grow personally and professionally, we are committed to providing flexibility and choice around how, when and where they work, supporting their well-being, and helping them develop skills. The sections on the next page detail the ways in which we support our colleagues. For further details of our approach to skills and career development, see page 83.\nForfurther details of our approach to collague remuneration,see page 290.\n### Increasing social connection in the office\nSince the Covid-19 pandemic and the return of colleagues to the office, we identified the need for changes to improve team cohesion and a sense of belonging among our colleagues in Hong Kong. To help address, this we created a new type of work and social space at the HSBC Centre office in Kowloon, Hong Kong.\n‘The Hub’ is a flexible informal space that can be adapted to accommodate a range of different group activities and number of people, from large social events to smaller team training sessions. It is also designed to be a multi-level and interconnected space, with a central social meeting point to enhance the sense of community, improve levels of engagement and encourage greater social connection between colleagues.\n### Being a great place to work continued\nSocial well-being and flexible working In 2023, we focused on embedding hybrid working across the Group and helping colleagues strike the right balance of office and remote working.\nWe have continued to make the meditation app Headspace and counselling services available to all colleagues globally.", "chunk_word_count": 284, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Supporting our colleagues to grow", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 83, "page_start": 83, "page_end": 84 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 131, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Prioritising benefits that matter most to colleagues\nMore than 200,000 colleagues took part in mental health awareness training as part of global mandatory training. Our voluntary mental health education modules have been completed by 31,000 employees, with people managers making up $7 4 \\%$ of the completions. Our network of mindfulness champions, who are specially trained colleagues who volunteer to run mindfulness sessions, community events and courses for the benefit of fellow colleagues, has almost 200 members with representation in 22 countries and territories. In 2023, we held 1,400 mindfulness sessions, a $2 6 \\%$ increase compared with 2022, and these were attended by 25,000 colleagues.\nOur colleagues continue to embrace hybrid working, with $78 \\%$ now splitting their time between home and the workplace, compared with $5 8 \\%$ in 2022. To support managers and colleagues to continue to find the right balance between individual flexibility and social connection, we have refreshed our training to equip managers with skills to lead flexible teams. In 2023, hybrid workers spent approximately $4 7 \\%$ of their time in the workplace, compared with $3 6 \\%$ in 2022.\nFor a second year our Pay and Benefits survey showed that $5 9 \\%$ of colleagues feel their benefits meet their needs and those of their family ‘well’. To improve sentiment, we have focused on enhancing benefits in areas that colleagues tell us are most important including health, saving for the future and time off.\nCancer checks were made available to all UK colleagues, as early detection can result in higher survival rates. In the US, we have enhanced our fertility, adoption and surrogacy benefits to support colleagues starting a family. We also expanded our gender dysphoria benefits for $\\mathsf { L G B T Q + }$ colleagues in the UK.\nWe know that getting the balance right has a positive effect on our colleagues. Colleagues who spend around $40 \\%$ of their time in the workplace reported the highest positive sentiment across $\\mathsf { k e y }$ employee indices, including engagement, trust and inclusion.", "chunk_word_count": 369, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Prioritising benefits that matter most to colleagues", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 84, "page_start": 84, "page_end": 84 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 132, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Physical well-being\nThe Snapshot survey also revealed an increase in physical well-being, with $7 4 \\%$ of colleagues rating their physical health as positive, compared with $7 1 \\%$ in 2022.\nWe track and measure responses from our Snapshot survey to ensure our broader approach to flexibility works for our customers and teams. A total of $8 1 \\%$ of colleagues said they feel a genuine sense of belonging to their team, a two percentage point increase from 2022. A new question in the survey also found that $8 7 \\%$ of new joiners feel they receive the right level of face-to-face support in order to succeed.\nIn February 2023, our Pay and Benefits survey showed that $6 9 \\%$ of colleagues highly valued the health benefits we offer, and $34 \\%$ of colleagues wanted more support with physical activity and exercise. In response, we launched a platform called Virgin Pulse, which incentivises colleagues to set and track health goals, and to take part in active challenges. Since launching globally in November 2023, more than 5,700 colleagues have downloaded the app and more than 30 activity challenges have been run.\nCarer leave of five paid working days has also been introduced in the UAE, Egypt, Algeria, Bahrain, Kuwait, Qatar, Türkiye, Saudi Arabia and Mexico.\nTo help employees plan for their retirement, we became the first international bank to launch a defined contribution pension plan in Vietnam. We also implemented a new defined contribution plan in Guernsey and enhanced our retirement savings plan in Egypt, to support employees to plan for retirement with the benefit of employer contributions.\nIn the same survey, $7 6 \\%$ of colleagues said they are able to integrate their work and personal life positively, a slight increase compared with $7 5 \\%$ in 2022. To help the worklife balance of our colleagues, in Australia, we have introduced 20-weeks paid, genderneutral parental leave for when a child joins their family. Longer periods of paid parental leave have also been introduced in Mexico, Singapore, South Korea, Taiwan and Thailand.\nWe have continued to provide access to private medical insurance as well as telemedicine healthcare services in the majority of our countries and territories, covering $9 8 \\%$ of permanent employees. In certain countries and territories, we also provide on-site medical centres that the majority of colleagues can access.\nretirement or longer-term savings plans to $9 5 \\%$ of permanent employees, and our life insurance cover is available to $9 9 . 9 \\%$ of colleagues to help provide financial security for their families.\n### Mental well-being", "chunk_word_count": 454, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Physical well-being", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 84, "page_start": 84, "page_end": 84 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 133, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Financial well-being\nSupporting the mental health of our colleagues remains a top priority. Cost-ofliving pressures and global crises continue to increase mental health challenges in many countries and territories. Our Snapshot survey revealed a slight decrease in mental well-being, with $8 3 \\%$ of colleagues rating their mental health as positive, compared with $8 4 \\%$ in 2022. However, it also found that $7 4 \\%$ of colleagues feel comfortable talking to their manager about their mental health, and $7 7 \\%$ said they know how to access mental health support at work. Both increased one percentage point compared with 2022.\nWe recognise that financial challenges remain a concern for colleagues, caused by increases in the cost of living globally. Our Snapshot survey revealed a slight increase in financial well-being, with $6 1 \\%$ of colleagues reporting positively, compared with $60 \\%$ in 2022. Just over half $( 5 6 \\% )$ of colleagues said they have at least three months of essential outgoings saved, the same as in 2022.\nAwards\nCCLA Global 100 Mental Health Benchmark – Ranked number 1 global employer for the second consecutive year\nIn 2023, we ran campaigns in all regions to raise awareness of financial education and tools, and more than 1,000 colleagues attended our seminars on psychology and spending habits. We continue to offer\n### Developing skills, careers and opportunities\n### Learning and skills development\nWe aim to build a dynamic environment where our colleagues can develop skills and undertake experiences that help them fulfil their potential. Our approach helps us meet our key strategic priorities and support our colleagues to achieve their career goals.\nWe have continued to deliver targeted skills programmes, including our Vision 27 programme that aims to ensure we are attracting, developing and retaining critical technology talent. We have also expanded our Accelerating Wealth Programme, which prioritises hiring for transferable skills rather than experience. For further details of how we are achieving our wealth goals in Asia, see page 84.\n### Identifying and retaining future talent\nThe need for talent is greater than ever. In 2023, a further 9,000 managers completed our compulsory inclusive hiring training, promoting cognitive awareness of bias. Our targeted talent programmes and enterprise-wide solutions are designed to support employees transitioning to more complex roles, and provide wider career opportunities and career growth.\n### Our learning and skills platforms\nWe continue to evolve the opportunities to learn and develop at HSBC. We use a range of skill development platforms, learning courses and resources to help colleagues take ownership of their development and career, including:", "chunk_word_count": 454, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Financial well-being", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 84, "page_start": 84, "page_end": 85 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 134, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Building skills with Talent Marketplace\nOur people capability teams partner with businesses and functions to identify the key skills we need now and in the future. We also continue to support colleagues to develop new skills that achieve their career aspirations.\n– HSBC University, our home for learning and skills accessed online and through a network of training centres, where learning is organised through technical academies on topics of strategic importance;\nOur recruitment programmes are a key enabler of achieving our broader diversity goals (see page 76). In 2023, we welcomed more than 720 graduates and 651 interns to the organisation. The graduate intake represented 48 nationalities, over 25 ethnic backgrounds, and $5 1 \\%$ were women. In 2023, we continued to broaden our emerging talent programmes beyond traditional graduate and internship programmes, developing early access schemes for those in school and first year of university, as well as expanding our apprenticeship scheme (see page 84).\nWe have helped colleagues identify opportunities to enhance their skills through our Talent Marketplace. More than 38,000 colleagues have created a profile on the platform to help identify their existing skills and those they would like to develop. In 2023, it matched colleagues to a number of projects and networking opportunities unlocking over 123,000 hours of skills development.\n– Degreed, our learning experience platform that provides access to internal and external learning content and courses, where colleagues can share, collaborate and learn with individuals and in groups via learning pathways;\n– Talent Marketplace, our online platform that uses artificial intelligence (‘AI’) to match colleagues interested in developing specific skills or career goals with opportunities that exist throughout our global network; and – Careers at HSBC, which enables all employees to set alerts and search for internal career opportunities.\nProjects centred around Cloud computing, data analytics, software development and project management have created opportunities for colleagues to work on indemand skills.\nWe continually refresh all our talent programmes to ensure they remain aligned to HSBC’s strategic priorities. Our key programmes include:\n### Training at HSBC\nIn 2023, we continued to enable colleagues to learn via a range of channels including digital and on-the-job learning. This is reflected in a reduction in overall learning hours as colleagues access different learning channels.", "chunk_word_count": 401, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Building skills with Talent Marketplace", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 85, "page_start": 85, "page_end": 85 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 135, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Our learning fundamentals\nWe expect all colleagues, regardless of their contract type, to complete global mandatory training each year. This training plays a critical role in shaping our culture, ensuring a focus on the issues that are fundamental to our work, such as sustainability, financial crime risk and our intolerance of bullying and harassment. New joiners attend our Global Discovery programme, which is designed to build their knowledge of the organisation and engage with our purpose, values and strategy.\n– Accelerating Female Leaders, which has been re-designed in partnership with Cranfield School of Management. This programme supports female colleagues with learning materials, coaching and senior sponsorship to help them prepare for leadership roles; and – Accelerating into Leadership, which aims to improve role mobility and retention, and supports colleagues identified as having the capacity, interest and drive to succeed in more complex roles.\n### 5.3 million\nTraining hours by our colleagues in 2023. (2022: 6.3 million)\n### 23.9 hours\nAs the risks and opportunities our business faces change, our global academies adapt to offer general and targeted development. Our Risk Academy provides learning for every employee in traditional areas of risk management such as financial crime risk, and also offers more specific development for those in senior leadership, high-risk roles and learning for colleagues on emerging issues such as ESG risk, terrorist financing, proliferation financing and sanctions.\nTraining hours per FTE in 2023. (2022: 28.8 hours)\n### Energising our colleagues for growth\nWe aspire to offer colleagues the opportunity to develop their skills while ensuring we build a pipeline of talent to support our strategic priorities. It is vital that we demonstrate the right leadership and create the right environment to energise our colleagues for growth.\nWe need to build strong leadership and develop our colleagues’ capabilities to navigate the transition to net zero and achieve our climate goals. In 2023, we worked with our internal experts from the Sustainability Centre of Excellence to provide more advanced skills training in key transition areas such as energy transition, climate technology and financed emissions, alongside other core sustainability topics such as biodiversity.\nIn 2023, our technology colleagues completed more than 800,000 hours of learning and gained over 950 certifications in software development, cyber, AI, data processes, Cloud computing and app development, among others. Our new Principle Engineer and Principle Architecture accelerator programmes have equipped colleagues with advanced technical knowledge and skills, enhancing their ability to innovate in their roles.\n### Skilling the transition to net zero\nThe Sustainability Academy was launched in 2022 to support our net zero ambitions. As the academy has evolved we have shifted the focus from knowledge building to capability building across key colleague groups who are supporting customers on their transition to net zero. In 2023, we applied four main activities to support this effort:\n### Supporting our Asia wealth strategy", "chunk_word_count": 500, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Our learning fundamentals", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 85, "page_start": 85, "page_end": 86 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 136, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Leadership development\nOur ambition is to become the preferred international financial partner for clients, and the expansion of our wealth management services particularly in Asia, sits at the heart of this ambition.\nWe continue to strengthen the training and development opportunities we offer our leaders at all levels of the Group, to ensure they are equipped with the clarity, alignment and capability with our goals to drive the performance of our organisation. In 2023, we significantly increased investment in the development of our leadership population.\n– supplying on-demand learning modules based on role, region and client-base for colleagues who support customers with core transition activities;\nTo help achieve this, we have continued to expand our Accelerating Wealth Programme, which offers a skills-based development plan for colleagues who are looking to pursue a career as a relationship manager in wealth management. The programme enables HSBC to develop talent from within and hire talented people with different career backgrounds from outside the business. In 2023, we extended the programme to external applicants in Hong Kong and to internal applicants in mainland China, India and Singapore. We will continue to add new countries and territories in 2024 to provide a sustainable hiring channel for frontline roles.\nFor senior leaders, our Executive and Managing Director Leadership Programmes helped bring our purpose and strategy to life through innovative flagship courses, masterclasses and strategy briefing sessions.\n– creating advanced workshops across our global businesses and functions to build colleagues’ knowledge and develop practical skills to achieve business outcomes;\nWe recognise the importance of people managers in shaping the experience of our colleagues. In 2023, we re-designed our People Management Excellence programme to better support managers at all levels. The face-to-face and virtual training includes a focus on the role and expectations of managers, how to design and organise work, and how to nurture a productive team environment. In 2023, over 3,800 colleagues attended this programme.\n– encouraging external certifications and qualifications, where required, to deepen colleagues’ expertise; and\n– designing a 16-week sustainability leadership programme, in partnership with Imperial College London, which combines education on core sustainability concepts with change management, purpose and leadership principles. In 2023, the programme was completed by more than 170 senior leaders. Additional net zero learning opportunities were also provided to the Board and 100 of our most senior leaders.", "chunk_word_count": 415, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Leadership development", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 86, "page_start": 86, "page_end": 86 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 137, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Technology transformation\nWe are committed to delivering better customer outcomes through digital transformation. Our technology transformation skills programme aims to ensure we attract, develop and retain the skilled talent we need to execute our strategy.\nSupporting UK emerging talent\nWe continue to extend our emerging talent programmes beyond traditional graduate and internship schemes to support our socio-economic diversity ambitions (see page 78). In 2023, we awarded more than 100 apprenticeships to external and internal applicants. Our degree apprenticeship programmes provided an alternative to the traditional university route for 47 individuals, and we launched a disability apprenticeship programme for our Marketing function. We have also offered over 460 structured work placements to secondary school students and continued to support the #merkybook financial literacy programme for young people.\nHSBC has funded 30 University of Cambridge scholarships for Black and socially disadvantaged students through our Stormzy partnership, and will invest a further £2m to achieve 60 scholarships by 2026 to support underrepresented groups. In 2023, Black heritage representation in our graduate and summer internship programmes was $10 \\%$ of job applicants and $1 1 \\%$ of new hires.\n### Building customer inclusion and resilience\n### Our approach to customer inclusion and resilience\nWe are committed to improving accessibility experiences across our digital channels and continuously review our browser-based websites in 23 markets, and our mobile banking services in 18 markets, against the WCAG 2.0 AA standards. We also share our digital accessibility expertise with partners, companies and colleagues. More than 10,000 people and 66 companies have taken advantage of our specialised training programmes. To further share our best practice externally, HSBC sponsored and hosted AbilityNet’s Techshare Pro event in our Group head office in London. Our work on digital accessibility was recognised with 11 awards in 2023.\nWe believe that financial services, when accessible and fair, can reduce inequality and help more people access opportunities. We are playing an active role in opening up a world of opportunity for individuals by supporting their financial well-being, and removing the different barriers that people can face in accessing financial services.\nIn 2022, we launched our ‘Wel $+ ^ { \\prime }$ reward programme on the HSBC HK Mobile Banking app to help customers improve the health of their body, money and mind. Reward points are earned by completing a series of simple activities, such as building their financial knowledge. In 2023, we added new capabilities, such as bonus badges, and more than 212,000 customers have engaged with Well $^ +$ in Hong Kong since launch.", "chunk_word_count": 446, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Technology transformation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 86, "page_start": 86, "page_end": 87 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 138, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Access to products and services\nWe provide innovative solutions to help improve customer access to products and services. HSBC UK and HSBC Hong Kong provide no-cost accounts for customers who do not qualify for a standard account or who might need additional support due to social or financial vulnerability. In 2023, HSBC Egypt ran a campaign that allowed new customers to open bank accounts with no minimum balance required and no account opening fees. In the UK, we continue to make our branches more accessible by providing ‘safe spaces’ for domestic abuse victims, where they can seek specialist support and advice. In 2023, we also launched a specialist training programme to raise awareness among our colleagues of modern slavery and human trafficking. This has been completed by more than 5,300 UK colleagues. In addition, our strategic partnership with housing and homelessness charity Shelter UK aims to support those in crisis and build financial resilience solutions to help prevent homelessness in the future.\nTo help customers understand complex products and make informed decisions, HSBC Life UK launched a series of quick video guides to explain the key benefits, exclusions and underwriting process of critical illness cover.\nSupport for customers extends beyond our digital channels and we recognise that not all disabilities are visible or immediately obvious to others. We have expanded our commitment to the Hidden Disabilities Sunflower Lanyard Scheme, rolling it out across the UK, Hong Kong, the Channel Islands and Australia. The lanyard indicates that an individual may need a little more help, support or time. HSBC UK is also making use of virtual reality tools, such as EBOX (Empathy Box), to give colleagues the opportunity to experience vulnerability from the perspective of the customer.\nTo support Hong Kong customers with special educational needs, we launched simple step-by-step guides, which were shared with our partners, to explain how to access basic banking services.\nWe also support programmes that help expand the financial knowledge of children and young people to ensure future resilience. HSBC Egypt partnered with Injaz Al-Arab, a member of JA Worldwide, to deliver its ‘building a financially capable generation’ programme to students in seven schools in Cairo. In Mexico, we created a podcast, targeted at developing the financial capabilities of young people with each episode covering a specific theme, to enhance their basic financial knowledge.\nIn 2023, HSBC UK was awarded the UK Construction Industry Council’s Inclusive Environments Recognition at the Organisational Level certification. This recognises the strong organisation and design processes HSBC has put in place to support accessible and inclusive design.\n### Making banking accessible\nNumber of no-cost accounts held for customers who do not qualify for a standard account or who might need additional support due to social or financial vulnerability.", "chunk_word_count": 483, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Access to products and services", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 87, "page_start": 87, "page_end": 87 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 139, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Supporting women\nHSBC UAE and HSBC Singapore have collaborated with digital financial education provider Sophia, to create a programme designed specifically to help female customers build their financial knowledge. It covers a range of topics, including budgeting, ways to invest and investment strategies.\nWe continued to build on our financial literacy programmes for young people in the UK, with the launch of the first financial capability skills module for the Duke of Edinburgh’s Award.\n### Supporting financial knowledge and education\nCreating an inclusive banking experience We aim to ensure that our banking products and services are designed to be accessible for customers experiencing either temporary or permanent challenging circumstances, such as disability, impairment or a major life event.\nIn Mexico, our Mujeres Al Mundo programme continues to support women as customers through products, services, education and networking. In 2023, we also supported female-owned businesses through our $\\$ 1$ 1bn Female Entrepreneur Fund, alongside hosting bespoke Pitch Day events for a number of female entrepreneurs seeking investment.\nWe continue to invest in financial education content and features across different channels to help customers, colleagues and communities be confident users of financial services.\nSince 2020, we received over 6.6 million unique visitors to our global digital financial education content. We continue to help customers expand their financial capabilities through our personal financial management tools. In 2023, HSBC UK launched new capabilities on our app enabling customers to manage their budgets, see their spending insights and view financial fitness content. This new tab on the app has attracted over 4.5 million unique visitors. We also added investment pots and goals to help motivate customers to save for the future.\nA simplified version of the HSBC HK Mobile Banking app aims to continue to enhance digital inclusion for all, including seniors. The app is the first of its kind among Hong Kong banks and has attracted more than 477,000 unique users since launch.\n### Engaging with our communities", "chunk_word_count": 350, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Supporting women", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 87, "page_start": 87, "page_end": 87 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 140, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Building a more inclusive and resilient world\nWe have a long-standing commitment to support the communities in which we operate. We aim to empower people and communities to develop the skills and knowledge needed to thrive in the future.\nWe also work with our charity partners around the world to strengthen the resilience of disadvantaged communities:\n[IMAGE CAPTION] Charitable giving in 2023 $( \\% )$\n– In Hong Kong, we announced a three-year partnership with Food Angel to increase its capacity to provide meals to underprivileged elderly groups.\nThrough the global reach of our charitable partnerships we bring together diverse people, ideas and perspectives that help us open up opportunities and build a more inclusive world.\n– In the US, we expanded our workforce development programme with Feeding America to support communities to find meaningful employment, especially mothers and Black, Indigenous People of Colour women.\nSocial, including Future Skills: $26 \\%$ Environment, including the Climate Solutions Partnership: $37 \\%$ Local priorities: $24 \\%$ Disaster relief and other giving: $13 \\%$\nBuilding community and future skills We work with charity partners to initiate programmes that help people and communities respond to opportunities and challenges as global economies transition towards a low-carbon future. In 2023, these included:\n– In the UK, we announced a three-year partnership with Shelter to help develop the homeless charity’s training, guidance, tools and support within local communities to help build financial resilience.\n– launching a three-year partnership with the British Council in Brazil, Mexico, India, Indonesia and Vietnam, and extending The Prince’s Trust programmes in Australia, Canada, India and Malaysia, to help young, marginalised people develop the skills they need to thrive in the green economy;\nTotal cash giving towards charitable programmes \\$107.3m\n– In France, we continued our work with Article 1 to help young people from deprived communities succeed in higher education through mentoring programmes.\n– We supported disaster relief agency response to humanitarian needs, including those in Israel, Libya, Morocco, the Palestinian territories, Türkiye, and the Hawaiian island of Maui.\n– partnering with the Guangdong Lvya Rural Women Development Foundation in China to help equip women in remote mountain areas with sustainable farming skills; and – partnering with the Ghabbour Foundation in Egypt to help provide technicians with specialist skills training to work in the electric vehicle market.\nHours volunteered during work time >181,800\n### Community engagement and volunteering\nWe offer paid volunteering days, and encourage our people to offer their time, skills and knowledge to causes within their communities. In 2023, our colleagues gave over 181,800 hours to community activities during work hours.\nPeople projected to be reached through our Future Skills programme\n1.25m\n### Awards\n– National CSR Fund 2023 UAE – Platinum Impact Seal \n– Charitable giving by HSBC in China received recognition from the China Philanthropy Times", "chunk_word_count": 493, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Building a more inclusive and resilient world", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 88, "page_start": 88, "page_end": 88 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 141, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Advancing financing and digital literacy\nOver the past five years, HSBC worked with three microfinance networks to advance financial and digital literacy of women from unbanked and underbanked communities in India. The programme has engaged with more than 550,000 women to build awareness and understanding of digital payment platforms, and enhance their ability to access banking services, such as savings, credit and insurance, as well as government welfare schemes. By the end of 2023, 56,000 women had undertaken loan repayments worth $\\$ 521,000$ via digital channels. Insights from the initiative will be shared with financial institutions and the National Payment Corporation of India, set up by the banking regulator to oversee retail payments and settlement systems in India, to increase unbanked households’ access to financial services and products.\n### Governance\n### Acting responsibly\nWe remain committed to high standards of governance. We work alongside our regulators and recognise our contribution to building healthy and sustainable societies.\n### At a glance\nWe strive to meet our responsibilities to society, including through being transparent in our approach to paying taxes. We also seek to ensure we respect global standards on human rights in our workplace and our supply chains, and continually work to improve our compliance management capabilities.\n### Our relationship\nWe act on our responsibility to run our business in a way that upholds high standards of corporate governance.\nCustomer experience is at the heart of how we operate. It is imperative that we treat our customers well, that we listen, and that we act to resolve complaints quickly and fairly. We measure customer satisfaction through net promoter scores across each of our global businesses, listen carefully to customer feedback so we know where we need to improve, and take steps to do this. Our customer satisfaction performance improved in many markets in which we operate, although we still have work to do to improve our rank position against competitors.\nWe are committed to working with our regulators to manage the safety of the financial system, adhering to the spirit and the letter of the rules and regulations governing our industry.\nFor furtherdetails of our corporate governance,see ourcorporate governance report onpage 238.\n### Setting high standards of governance TCFD", "chunk_word_count": 394, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Advancing financing and digital literacy", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 88, "page_start": 88, "page_end": 89 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 142, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### How ESG is governed\nThe Board takes overall responsibility for ESG strategy, overseeing executive management in developing the approach, execution and associated reporting. Progress against our ESG ambitions is reviewed through Board discussion and review of key topics such as updates on customer experience and employee sentiment. The Board is regularly provided with specific updates on ESG matters, including the financed emissions sector targets, human rights and employee well-being. Board members receive ESGrelated training as part of their induction and ongoing development, and seek out further opportunities to build their skills and experience in this area. For further details of Board members’ ESG skills and experience, see page 239. For further details of their induction and training in 2023, see page 253.\ndefining and measuring the success of our climate ambition, and developing commercial opportunities that support it through the sustainability execution programme.\nWe expect that our approach to ESG governance is likely to continue to develop, in line with our evolving approach to ESG matters and stakeholder expectations.\nGiven the wide-ranging remit of ESG matters, the governance activities are managed through a combination of specialist governance infrastructure and regular meetings and committees, where appropriate. These include the Group Disclosure and Controls Committee and Group Audit Committee, which provide oversight for the scope and content of ESG disclosures, and the Group People Committee, which provides oversight support for the Group’s approach to performance management. For some areas, such as climate where our approach is more advanced, dedicated governance activities exist to support the wide range of activities, including climate risk management in the Environmental Risk Oversight Forum.\n### ESG Committee\n### Group Risk Management Meeting\nHas oversight of ESG strategy, policy, material commitments and external disclosure. Oversees and monitors progress against ESG strategy, policies, plans, targets, commitments and execution processes. Reports to the Board of progress on the commitments, deliverables and targets under the sustainability execution programme.\nOversees the enterprise-wide management of all risks, including updates relating to the Group’s climate risk profile and risk appetite, top and emerging climate risks, and key climate initiatives.\nChair: Group Chief Risk and Compliance O\u0004cer\nCo-Chairs: Group Chief Financial O\u0004cer, and Group Chief Sustainability O\u0004cer\n### Supporting governance\n### Sustainability Execution Committee", "chunk_word_count": 395, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > How ESG is governed", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 90, "page_start": 90, "page_end": 90 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 143, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Environmental Risk Oversight Forum\nHas oversight of environmental strategy, including commercial execution and operationalisation through the sustainability execution programme. This included financed and facilitated emissions targets and commitments, implementation and execution of transition plans, and delivery of $\\$ 7500$ to $\\$ 1$ 1tn sustainable finance and investment by 2030.\nOversees risk activities relating to climate and sustainability risk management, including the transition and physical risks from climate change. Equivalent forums have been established at a regional level, where appropriate.\nThe Group Chief Risk and Compliance Officer and the chief risk officers of our PRAregulated businesses are the senior managers responsible for climate financial risks under the UK Senior Managers Regime. Climate risks are considered in the Group Risk Management Meeting and the Group Risk Committee, with scheduled updates provided, as well as detailed reviews of material matters, such as climate-related stress testing exercises.\nChair: Senior adviser, ESG Risk\nChair: Group Head of Commercial Banking, and Group Chief Sustainability O\u0004cer\nThe diagram on the right provides an illustration of our ESG governance process, including how the Board’s strategy on climate is cascaded and implemented throughout the organisation. It identifies examples of forums that manage both climate-related opportunities and risks, along with their responsibilities and the responsible chair. The structure of the process is similar for the escalation of problems, with issues either resolved in a given forum or raised to the appropriate level of governance with appropriate scope and authority.\n### Regional, global business and global functions\n### Examples of ESG-related management governance\nhe following governance bodies support management in its delivery of ESG activities\n### Digital Business Services Executive Committee\n### Group Reputational Risk Committee\n### Human Rights Steering Committee\nOversees the global delivery of ESG activities within our own operations, services and technology elements of our strategy.\nProvides recommendations and advice on significant reputational risk matters with impact across the Group.\nOversees the Group’s evolving approach to human rights and provides enhanced governance.\nChair: Group Chief Risk and Compliance O\u0004cer\nChair: Group Chief Operating O\u0004cer\nChair: Group Chief Risk and Compliance O\u0004cer\nIn 2023, we enhanced our ESG governance with the establishment of a new Sustainability Execution Committee, which focuses on\n### Human rights\n### Our respect for human rights\nAs set out in our Human Rights Statement, we recognise the role of business in respecting human rights. Our approach is guided by the UN Guiding Principles on Business and Human Rights (‘UNGPs’) and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.\n### Our salient human rights issues\nIllustration of HSBC Group’s inherent human rights risks mapped to business activities.", "chunk_word_count": 459, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Environmental Risk Oversight Forum", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 90, "page_start": 90, "page_end": 91 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 144, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Our salient human rights issues\nWe continue to raise awareness and develop our understanding of our salient human rights issues. These are the human rights at risk of the most severe negative impact through our business activities and relationships.\nAn extensive review of our salient human rights issues conducted in 2022 identified five human rights risks inherent to HSBC’s business globally, and five types of activity through which such risks might arise. These are represented in the adjacent table.\n$\\ln { 2 0 2 3 }$ , building on this assessment, we provided practical guidance and training, where relevant, to our colleagues across the Group on how to identify and manage human rights risk.\nWe continued to develop our in-house capability on human rights with the launch of further online resources for all staff and bespoke human rights training for colleagues in key roles, including those managing relationships with suppliers, and those with responsibility for overseeing risk management processes.\nThrough our membership of international certification schemes such as the Forestry Stewardship Council, the Roundtable on Sustainable Palm Oil and the Equator Principles, we support standards aimed at respecting human rights.\nWe are now focusing on translating this into risk management enhancements in two key areas of activity. These are the services we provide to business customers and the goods and services we buy from third parties.\nOur sustainability risk policies are reviewed periodically to ensure they reflect our priorities.\n### Managing risks to human rights\nIn 2023, we continued the process of adapting our risk management procedures to reflect what we learned from our work on salient human rights issues and related guidance.\nThe actions we are taking to address these salient human rights issues are consistent with our values and will help us to meet our commitments on diversity and inclusion, and those we have made under the UN Global Compact and WEF metrics on risk for incidents of child, forced or compulsory labour.\nDFor further details,see our sustainabilityrisk policiesatwww.hsbc.com/who-we-are/esg-andresponsible-business/managing-risk/ sustainability-risk.\nWe continued to embed and build on the Sustainable Procurement Mandatory Procedure, which sets out the minimum sustainability requirements for procurement activity. This included enhanced procedures for human rights risk identification through the introduction of a human rights residual risk questionnaire for suppliers as part of our global onboarding assessment process, and human rights supplier audit pilots in our Asia-Pacific and Latin America regions to assess the potential need for further supplier audits in the future.", "chunk_word_count": 434, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Our salient human rights issues", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 91, "page_start": 91, "page_end": 91 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 145, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Financial crime controls\nThe risk of us causing, contributing or being linked to adverse human rights impacts is also mitigated by our financial crime risk framework, which includes our global policies and associated controls.\nD For furtherdetails of the actions taken to respect the right to decent work,see our 2023 Annual Statementunder the UKModern Slavery Act at www.hsbc.com/modernslaveryact.\nDForfurtherdetailsof howwefightfinancial crime,see www.hsbc.com/who-we-are/ esg-and-responsible-business/ fighting-financial-crime.\nDFor further details of theactions taken to respect therighttoequalityandfreedomfrom discrimination,see 'Our approach to diversity and inclusion'on page 76.\nSustainability risk policies\nSome of our business customers operate in sectors where the risk of adverse human rights impact is high. Our sustainability risk policies for agricultural commodities, energy, forestry, mining and metals consider human rights issues such as forced labour, harmful or exploitative child labour and land rights. They also consider the rights of indigenous peoples such as ‘free prior and informed consent’, workers’ rights, and the health and safety of communities.\nNew approaches to identifying and managing human rights risk in respect of our business customers have also been piloted. These included screening for indicators of potential negative impacts on people, including media monitoring and other relevant third-party data.\n### Our respect for human rights continued\n### Driving change\nHSBC Asset Management has also incorporated human rights and modern slavery considerations into its Global Voting Guidelines. This helps to identify non-compliance with UN Global Compact principles, as well as a company’s competency in human rights management and disclosures. Where a company falls below expectations, HSBC Asset Management may vote against the re-election of the board chair or relevant board director.", "chunk_word_count": 290, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Financial crime controls", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 91, "page_start": 91, "page_end": 92 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 146, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Supporting those impacted and those potentially at risk\nWe continued to participate in industry forums, including the Thun Group of Banks, which is an informal group that seeks to promote understanding of the UNGPs within the sector, and the UN Global Compact Human Rights Working Group.\nWe continued to expand our Survivor Bank programme, which has now supported over 3,000 survivors of modern slavery and human trafficking in the UK, and is a model for making financial services more accessible to vulnerable communities worldwide.\nHSBC has been a member of the Mekong Club since 2016. We are a participant of its monthly financial services working group, and we use its informative typological toolkits, infographics, and other multimedia resources covering current and emerging issues. Our Compliance teams regularly collaborate and engage with the Mekong Club in designing Group-wide knowledge sharing and training sessions.\nWe built on this experience in developing access to banking services for customers with no fixed abode in the UK and in Hong Kong, providing over 5,700 accounts under these programmes.\nAs a signatory to the Net Zero Asset Management Initiative, HSBC Asset Management is taking steps to reduce the carbon exposure of its portfolios and engage with issuers on their climate strategies. It also recognises the impact that the climate transition can have on workers, communities, consumers and other stakeholders, and has published its perspectives on a just transition.\nFor further details of our work to support vulnerablecommunities,see page 86.\n### Effectiveness\nThe table below includes some indicative metrics we use to measure year-on-year continual improvement to our human rights processes.\n### Investments\nSince 2022, HSBC Asset Management has published an annual Global Stewardship Plan outlining its approach to engagement, prioritisation of investee companies, objectivesetting and escalation procedures. The plan also highlights its thematic priorities including human rights.\nFor the Global Stewardship Plan, see www.assetmanagement.hsbc.co.uk/-/media/files/ attachments/uk/policies/stewardship-plan-uk.pdf.\nFor further diversity and inclusion metrics, see page 76 in this ESG review,as wellas Section 4 of the 2023 Annual Statement under the UK ModernSlaveryAct,which isavailableatwww. hsbc.com/who-we-are/esg-and-responsiblebusiness/modern-slavery-act.\nForfurtherdetails of the Net Zero Asset Management Initiative, see www. assetmanagement.hsbc.co.uk/en/institutionalinvestor/about-us/road-to-net-zero/a-transitionfor-everyone.\nHSBC Asset Management recognises collaborative engagement as a tool to promote change. It participates in investor-led joint engagement initiatives where it believes these can have a positive influence. It is a signatory to the Principles for Responsible Investment Advance initiative to promote active stewardship on human rights and social issues. It has also actively contributed to other sector-specific initiatives, including engaging with technology firms on digital rights and responsible AI, and working with ESG data providers to promote higher quality human rights data set.", "chunk_word_count": 457, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Supporting those impacted and those potentially at risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 92, "page_start": 92, "page_end": 92 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 147, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Monitoring effectiveness\nWorking for a just transition\nJust Energy Transition Partnerships are becoming increasingly popular bringing key stakeholders together to enable a clean, fair energy transition in emerging economies that rely heavily on coal. Essentially, they are multilateral financial agreements aimed at accelerating the phase-out of fossil fuels, in a way that addresses the social consequences of doing so.\nForfurtherdetails on HSBC's role in Just Energy Transition Partnerships with Indonesiaand Vietnam,see www.hsbc.com/news-and-views/views/hsbc-views/jetps-powering-a-faster-energy-transition. Read more on Just Energy Transition Partnerships on page 68of this ESG Review.\n### Customer experience\nWe remain committed to improving customers’ experiences. In 2023, we gathered feedback from over one million customers across our three global businesses to help us understand our strengths and the areas we need to focus on. We were ranked among the top three banks against our competitors in $5 8 \\%$ of our six key markets across WPB and CMB1 . This was lower than in 2022 when we were ranked among the top three banks against our competitors in $6 6 \\%$ of our key markets.\nIn 2023, we launched the CMB Customer Impact Forum, a dedicated global forum set up to provide oversight of our business and corporate customers’ experiences and promote continuous improvement. This, alongside our WPB ‘Customer in the room’ programme launched in 2022, helps ensure we use feedback in all aspects of how we run our business and prioritise initiatives that matter most to our customers.\nIn CMB, we were ranked among the top three banks against our competitors in four of our six key markets. We ranked first in Hong Kong and as a top three bank in mainland China, Singapore and Mexico. In India and the UK, we were ranked outside the top three. Our NPS rank improved in the UK, driven by our business banking customers and our top three ranking among UK corporate customers. Our NPS declined slightly among our mid-market enterprise customers.\n### How we fared\nIn WPB, our NPS increased in four of our six key markets, which were Hong Kong, Mexico, India and Singapore. Our NPS in the UK declined slightly, largely among our mass affluent customers. In Hong Kong, we remained first overall against our competitors, driven by our mass affluent customers. In India we ranked in first place, driven by increased digitalisation. We introduced digital self-service solutions for updating customer details and downloading key documents, and digitised our onboarding process. We were also a top three bank in mainland China, based on 2022 data (see footnote 3 in the adjacent table).\nIn GBM, we had one of the highest NPS scores in the market against our competitors, including the quality of our digital trade finance platforms and for satisfaction with our digital capabilities.\n### Customer satisfaction", "chunk_word_count": 484, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Monitoring effectiveness", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 92, "page_start": 92, "page_end": 93 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 148, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Listening to drive improvement\nWe have continued to embed our feedback system so we can better listen, learn and act on our customers’ feedback. We use the net promoter score (‘NPS’) to provide a consistent measure of our performance. NPS is measured by subtracting the percentage of ‘detractors’ from the percentage of ‘promoters’. ‘Detractors’ are customers who provide a score of 0 to 6, and ‘promoters’ are customers who provide a score of 9 to 10 to the question: ‘On a scale on 0 to 10, how likely is it that you would recommend HSBC to a friend or colleague’.\nIn our private bank, our global NPS increased to 42 points, compared with 25 points in 2022. This was largely due to increased customer satisfaction in Asia, with improved scores in Hong Kong, Singapore, Taiwan and mainland China. This was driven by relationship manager engagement and enhancements to our digital services.\n1 The six markets comprise: the UK, Hong Kong Mexico,mainlandChina,Idiaandingapore. Rank positions are provided using data gathered through third-party research agencies.\nWe run studies that allow us to benchmark ourselves against other banks. We try to make it as easy as possible for customers to give us feedback, accelerating our use of digital realtime surveys to capture insight. By sharing this and other feedback with our front-line teams, and allowing them to respond directly to customers, we are improving how we address issues and realise opportunities.\n2 We benchmark our NPS against our key competitors to createa rankpositionin each market.This table is based is on the numberof markets where we are in the top three or have improved rank fromthepreviousyear.\n3 OurWPB NPS ranking in mainland China is based on2022 results.Due to data integritychallenges, weareunable toproducea2023 ranking.Thenext mainland China results will be in 2024.", "chunk_word_count": 321, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Listening to drive improvement", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 93, "page_start": 93, "page_end": 93 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 149, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Acting on feedback\nIn CMB, we introduced a new credit application system, the Digital Credit Portal, in 15 markets. It uses internal and external data combined with automation to streamline credit journeys. In Hong Kong, the portal also integrates with a credit decision engine to automate credit decisions for qualifying customers, reducing the assessment time on loan approvals from days to as little as a few minutes. Our digital onboarding tool, SmartServe, has been implemented in 21 markets to support international and domestic account opening. We have onboarded $89 \\%$ of eligible customers through the digital platform, with $7 2 \\%$ of customers rating this experience as ‘easy’.\nIn GBM, we continued to execute our strategy and refine the client coverage model. In 2023, we accelerated our ‘originate-to-distribute’ model, providing clients with an effective capital efficiency strategy. We have refinanced our in-country and cross-border coverage model in mainland China and refreshed our growth plans in India based on client feedback. We also launched growth initiatives against our Asia-MENAT corridor to better service our clients.\nWe have continued to focus on developing our products and services, and enhancing our digital capabilities to improve customer experience.\nIn WPB, we redesigned our international products and services to make it quicker and easier to bank internationally. This involved the launch of six products and services across 10 international markets. International customers can open an international account digitally pre-departure, gain access to a credit card in their new market, and make use of cross-border payment solutions with 24/7 global support to manage their international needs.\n### How we listen\nTo improve how we serve our customers, we must be open to feedback and acknowledge when things go wrong. We continue to adapt at pace to provide support for customers facing new challenges, new ways of working and those that require enhanced care needs.\nWe aim to be open and consistent in how we track, record and manage complaints, although as we serve a wide range of customers – from personal banking and wealth customers to large corporates, institutions and governments – we tailor our approach in each of our global businesses. As the table on the right demonstrates, we have a consistent set of principles that enable us to remain customer-focused throughout the complaints process.\nFor further details of complaints volumes by geography,see our ESG Data Pack at www.hsbc.com/esg.", "chunk_word_count": 420, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Acting on feedback", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 93, "page_start": 93, "page_end": 94 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 150, "chunk_text": "# Opening up a world of opportunity\n## 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors.\n### Wealth and Personal Banking (‘WPB’)\nIn 2023, we received approximately 1.2 million complaints from customers. The ratio of complaints per 1,000 customers per month in our large markets remained stable at around 2.3.\nIn response to an increase in credit and debit card fraud attacks in Mexico during the first quarter of 2023, we focused on strengthening our monitoring and fraud detection capabilities to help protect our customers. In October, we also released the new Visa Account Attack Intelligence tool to mitigate foreign e-commerce attacks on customer debit cards. As a result of these efforts, average monthly complaints in Mexico for the last nine months of the year decreased by $2 0 . 5 \\%$ compared with the first quarter.\nIn the UK, complaints fell $19 \\%$ . In 2023, we applied the new UK Consumer Duty rules to our complaint handling processes and invested in root cause analysis to ensure good outcomes and avoid instances of foreseeable harm. We will continue to focus on enhancing our processes and on training complaint handlers to improve the customer experience and reduce our complaint volumes further.\nIn our private bank, we received 507 complaints, an increase of 176 compared with 2022. This was largely due to growth in our customer base since establishing new private banking operations in the UAE and Mexico, along with an increase in complaints in the US. This led to an increase in administration and service issues, a high proportion of which were attributable to delays and errors in processing client instructions. Overall, the private bank resolved 465 complaints. Complaint data for the new private banking operation in India was reported within the WPB figures, pending system development to separately report the complaint figures.\nThe decrease in complaints in Hong Kong was primarily driven by improvements in our digital capabilities to make it easier for customers to connect with us. Regular reviews, analysis of customer feedback and greater collaboration across business lines to address emerging customer pain points also contributed to the fall in complaints.\n1A complaint is any expression of dissatisfaction about WPB's activities,products or services wherea response or resolution is explicitly or implicitly expected.\n## 2 Markets included: Hong Kong,mainland China, France,theUK,UAE,Mexico,Canadaandthe U.\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\nActing on feedback\nIn 2023, we continued to develop and embed tools and capabilities across our business to deliver improved experiences for our customers around the world. Through our measurement of customer experience, we identify opportunities for improvement, develop agile customer experience plans and track and measure our progress. As a result of standardising our approach to customer experience globally, we have strengthened our capability to listen, understand and act on what our customers are telling us on a regular basis.\n### How we listen continued", "chunk_word_count": 493, "section_path": "Opening up a world of opportunity > 2 Directors (or equivalent) of subsidiary companies thatare included in the Group's consolidated financial statements,excluding corporate directors. > Wealth and Personal Banking (‘WPB’)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 94, "page_start": 94, "page_end": 94 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 151, "chunk_text": "# Opening up a world of opportunity\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\n### Commercial Banking (‘CMB’)\nIn 2023, we received 45,899 customer and client complaints, a decrease of $2 7 \\%$ from 2022. Of the overall volumes, 33,777 came from HSBC UK and 7,354 from Asia-Pacific.\nWe attribute the overall decrease in our complaint volumes to enhanced training of our front-line colleagues to ensure they can identify the differences between a complaint, query and feedback. We also focused on addressing the root causes of the complaint trends, as well on improvements to our systems, processes and advice to our clients.\nThe most common complaint related to servicing and transactions, with the largest volume of complaints globally coming from business banking customers, which represented $8 7 \\%$ of our total complaints.\nWe resolved 47,812 complaints globally in 2023. The average resolution time for complaints was 24 days, which was just above our global target of 20 days.\n### Acting on feedback\n$\\ln 2 0 2 3$ , we focused on improvements to our governance of complaints, creating regular forums in key markets to ensure that analysis of the root cause of issues and trends are prioritised to enhance our understanding of pain points for our customers. Since the Covid-19 pandemic, there has been increased efforts Group-wide to identify customers who are more exposed to harm or declare as vulnerable. In 2023, we focused on identifying these complaint types to ensure that we can offer adjustments and support within our processes. This new process helps to improve our understanding and support of clients at risk of financial or non-financial harm to ensure our banking services are accessible to all.\n### Global Banking and Markets (‘GBM’)\n$\\mathsf { I n } 2 0 2 3$ , we received 1,552 customer complaints in Global Banking, a decrease of $2 7 \\%$ from 2022. Of the overall complaint volumes, $4 9 \\%$ came from Europe and $23 \\%$ came from the Middle East, North Africa and Türkiye. The most common complaint, at $3 8 \\%$ of total complaints, related to servicing, which was in line with previous years.\nIn Markets and Securities Services (‘MSS’) complaints increased by $2 1 \\%$ to 354. We attribute some of the increase to improvements in our data reporting processes globally. The majority of complaints were operational in nature and resolved in a timely manner. Of the overall MSS complaints, $4 7 \\%$ came from Europe and $34 \\%$ from Asia, our two largest markets.\nWe have continued to invest in our client feedback tool to create a more consistent and streamlined experience for colleagues across GBM and our wholesale businesses globally. In 2023, we introduced additional automation to improve the process of logging complaints, and simplified our procedures to make it easier for front-line colleagues to record feedback. We have also introduced mandatory training around conduct and complaints to ensure our people are acting on the feedback they receive and are consistent in how they evaluate queries and complaints.\n### Integrity, conduct and fairness", "chunk_word_count": 514, "section_path": "Opening up a world of opportunity > 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints. > Commercial Banking (‘CMB’)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 95, "page_start": 95, "page_end": 95 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 152, "chunk_text": "# Opening up a world of opportunity\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\n### Safeguarding the financial system\nWe have continued our efforts to combat financial crime and reduce its impact on our organisation, customers and the communities that we serve. Financial crime includes fraud, bribery and corruption, tax evasion, sanctions and export control violations, money laundering, terrorist financing and proliferation financing.\nmonitoring capability and our trade screening controls, and investing in the application of machine learning to improve the accuracy and timeliness of our detection capabilities.\nThese new technologies should enhance our ability to respond effectively to unusual activity and be more granular in our risk assessments. This helps us to protect our customers, the organisation and the integrity of the global financial system against financial crime.\nWe manage financial crime risk because it is the right thing to do to protect our customers, shareholders, staff, the communities in which we operate, as well as the integrity of the financial system on which we all rely. We have a financial crime risk management framework that is applicable across all global businesses and functions, and in all countries and territories in which we operate. The financial crime risk framework, which is overseen by the Board, is supported by our financial crime policy that is designed to enable adherence to applicable laws and regulations globally. Annual global mandatory training is provided to all colleagues, with additional targeted training tailored to certain individuals. We carry out regular risk assessments to identify where we need to respond to evolving financial crime threats, as well as to monitor and test our financial crime risk management programme.\n### Our anti-bribery and corruption policy\n### The scale of our work\nOur global financial crime policy requires that all activity must be: conducted without intent to bribe or corrupt; reasonable and transparent; considered to not be lavish nor disproportionate to the professional relationship; appropriately documented with business rationale; and authorised at an appropriate level of seniority. There were no concluded legal cases regarding bribery or corruption brought against HSBC or its employees in 2023. Our global financial crime policy requires that we identify and mitigate the risk of our customers and third parties committing bribery or corruption. Among other controls, we use customer due diligence and transaction monitoring to identify and help mitigate the risk that our customers are involved in bribery or corruption. We perform anti-bribery and corruption risk assessments on third parties that expose us to this risk.\nEach month, on average, we monitor over 1.35 billion transactions for signs of financial crime. In 2023, we filed over 96,000 suspicious activity reports to law enforcement and regulatory authorities where we identified potential financial crime. We perform daily screening of 125 million customer records for sanctions exposure. In 2022, we reported screened customer records as a monthly average, although screening was, and continues to be, performed on a daily basis.", "chunk_word_count": 492, "section_path": "Opening up a world of opportunity > 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints. > Safeguarding the financial system", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 96, "page_start": 96, "page_end": 96 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 153, "chunk_text": "# Opening up a world of opportunity\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\n### 98%\nWe continue to invest in new technology, including through the deployment of a capability to monitor correspondent banking activity. We are also enhancing our fraud\nTotal percentage of permanent and nonpermanent employees who received financial crime training, including on anti-bribery and corruption.\n### Whistleblowing\nWe want colleagues and stakeholders to have confidence in speaking up when they observe unlawful or unethical behaviour. We offer a range of speak-up channels to listen to the concerns of individuals and have a zero tolerance policy for acts of retaliation.\nto variable pay and performance ratings, or operational actions including changes to policies and procedures.\nWe actively promote our full range of speakup channels to colleagues to help ensure their concerns are handled through the most effective route. In 2023, $4 \\%$ fewer concerns were raised through HSBC Confidential compared with 2022. Of the concerns investigated through the HSBC Confidential channel in 2023, $8 1 \\%$ related to individual behaviour and personal conduct, $14 \\%$ to security and fraud risks, $4 \\%$ to compliance risks and less than $1 \\%$ to other categories.\nFor furtherdetailsof theroleof the GroupAudit Committeeinrelationtowhistleblowing,see page 270.\n### Listening through whistleblowing channels\nOur global whistleblowing channel, HSBC Confidential, is one of our speak-up channels, which allows colleagues and other stakeholders to raise concerns confidentially and, if preferred, anonymously (subject to local laws). In most of our markets, HSBC Confidential concerns are raised through an independent third party, offering 24/7 hotlines and a web portal in multiple languages. We also provide and monitor an external email address for concerns about accounting, internal financial controls or auditing matters (accountingdisclosures@hsbc.com). Concerns are investigated proportionately and independently, with action taken where appropriate. This can include disciplinary action, such as dismissal and adjustments\nHSBC Confidential concerns raised in 2023:\n1,746 (2022: 1,817)\nThe Group Audit Committee has oversight of the Group’s whistleblowing arrangements, and the Chair of the Group Audit Committee acts as HSBC’s Whistleblowers’ Champion with responsibility for ensuring and overseeing the integrity, independence and effectiveness of the Group’s policies and procedures.\nSubstantiation rate of concerns investigated through HSBC Confidential in 2023:\n41% (2022: 41%)\nRegulatory Compliance sets the whistleblowing policy and procedures, and provides the Group Audit Committee with periodic updates on their effectiveness. Specialist teams and investigation functions own whistleblowing controls, with monitoring in place to determine control effectiveness.\n### A responsible approach to tax\nWe seek to pay our fair share of tax in all jurisdictions in which we operate, and to minimise the likelihood of customers using our products and services to evade or inappropriately avoid tax. We also abide by international protocols that affect our organisation. Our approach to tax and governance processes is designed to achieve these goals.\n– We seek to ensure that our entities active in nil or low tax jurisdictions have clear business rationale for why they are based in these locations and appropriate transparency over their activities.\n– We implement processes that aim to ensure that inappropriately tax-motivated products and services are not provided to our customers.", "chunk_word_count": 526, "section_path": "Opening up a world of opportunity > 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints. > 98%", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 96, "page_start": 96, "page_end": 97 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 154, "chunk_text": "# Opening up a world of opportunity\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\n### Our tax contributions\n– We seek to have open and transparent relationships with all tax authorities. Given the size and complexity of our organisation, which operates across over 60 jurisdictions, a number of areas of differing interpretation or disputes with tax authorities exist at any point in time. We cooperate with the relevant local tax authorities to mutually agree and resolve these in a timely manner.\nThe effective tax rate for the year of $1 9 . 1 \\%$ was higher than in the previous year (2022: $4 . 7 \\% )$ . The effective tax rate for the year was increased by $2 . 3 \\%$ from the non-taxable impairment of the Group’s interest in BoCom, and reduced by $1 . 6 \\%$ by the release of provisions for uncertain tax positions and by $1 . 5 \\%$ by the non-taxable provisional gain on the acquisition of SVB UK. Further details are provided on page 369.\nThrough adoption of the Group’s risk management framework, we seek to ensure that we do not adopt inappropriately taxmotivated transactions or products, and that tax planning is scrutinised and supported by genuine commercial activity. HSBC has no appetite for using aggressive tax structures.\nWith respect to our customers’ taxes, we are guided by the following principles:\nThe UK bank levy charge for 2023 of $\\$ 339m$ was higher than the charge of $\\$ 12 m$ in 2022, mainly due to adjustments arising upon filing prior year returns, which represented a credit in 2022 and a charge in 2023.\nWith respect to our own taxes, we are guided by the following principles:\n– We have made considerable investments to support external tax transparency initiatives and reduce the risk of banking services being used to facilitate customer tax evasion. Initiatives include the US Foreign Account Tax Compliance Act, the OECD Standard for Automatic Exchange of Financial Account Information (‘Common Reporting Standard’), and the UK legislation on the corporate criminal offence of failing to prevent the facilitation of tax evasion.\n– We are committed to applying both the letter and spirit of the law. This includes adherence to a variety of measures arising from the OECD Base Erosion and Profit Shifting initiative including the ‘Pillar Two’ global minimum tax rules which will apply to the Group from 2024. These rules seek to ensure that the Group pays tax at a minimum rate of $1 5 \\%$ in each jurisdiction in which it operates. We have identified 12 jurisdictions that may have an effective tax rate below $1 5 \\%$ in 2024. We continually monitor the number of active subsidiaries within each jurisdiction as part of our ongoing entity rationalisation programme.\nAs highlighted below, in addition to paying $\\$ 60\\mathrm { . 6 b }$ of our own tax liabilities during 2023, we collected taxes of $\\$ 10.80$ on behalf of governments around the world. A more detailed geographical breakdown of the taxes paid in 2023 is provided in the ESG Data Pack.\n[IMAGE CAPTION] Taxes paid – by type of tax\n[IMAGE CAPTION] Taxes paid – by region\n[IMAGE CAPTION] Taxes collected – by region", "chunk_word_count": 541, "section_path": "Opening up a world of opportunity > 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints. > Our tax contributions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 97, "page_start": 97, "page_end": 97 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 155, "chunk_text": "# Opening up a world of opportunity\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\n### Conduct: Our product responsibilities\nOur conduct approach guides us to do the right thing and to focus on the impact we have for our customers and the financial markets in which we operate. It is embedded into the way we design, approve, market and manage products and services, with a focus on five clear outcomes:\nOur approach includes:\n### Financial promotion\nOur policies help to ensure that in the sale of products and services, we use marketing and product materials that support customer understanding and fair customer outcomes. This includes providing information on products and services that is clear, fair and not misleading. We also have controls in place to ensure our cross-border marketing complies with relevant regulatory requirements.\n– designing products to meet identified customer needs;\n– managing products through governance processes, helping to ensure they meet customers’ needs and deliver a fair exchange of value;\n– We understand our customers’ needs. \n– We provide products and services that offer a fair exchange of value. \n– We service customers’ ongoing needs and put it right if we make a mistake. \n– We act with integrity in the financial markets we operate in. \n– We operate resiliently and securely to avoid harm to customers and markets.\n– periodically reviewing products to help ensure they remain relevant and perform in line with expectations we have set; and\n– improving, or withdrawing from sale, products which do not meet our customers’ needs or no longer meet our high standards.\n### Product governance\nOur product management policy covers the entire lifecycle of the product. This helps ensure that our products meet our requirements before we sell them and allows continued risk-based oversight of product performance against the intended customer outcomes.\n### Meeting our customers’ needs\nOur policies and procedures set standards to ensure that we consider and meet customer needs. These include:\nWe train all our colleagues on our approach to customer and market conduct, helping to ensure our conduct outcomes are part of everything we do.\n– enabling customers to understand the key features of products and services; – enabling customers to make informed decisions before purchasing a product or service; and – ensuring processes are in place for the provision of advice to customers.\nWhen we decide to withdraw a product from sale, we aim to consider the implications for our existing customers and agree actions to help them achieve a fair outcome where appropriate.\n### Designing products and services\nOur approach to product development is set out in our policies and provides a clear basis on which informed decisions can be made. Our policies require that products must be fit-for-purpose throughout their existence, meeting regulatory requirements and associated conduct outcomes.\nThey help us provide the right outcomes for customers, including those with enhanced care needs. This helps us to support customers who are more vulnerable to external impacts, including the current cost of living crisis (see ‘Supporting our customers in challenging economic times’ on page 15).", "chunk_word_count": 518, "section_path": "Opening up a world of opportunity > 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints. > Conduct: Our product responsibilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 98, "page_start": 98, "page_end": 98 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 156, "chunk_text": "# Opening up a world of opportunity\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\n### Our approach with our suppliers\nWe maintain global standards and procedures for the onboarding and use of third-party suppliers. We require suppliers to meet our third-party risk compliance standards and we assess them to identify any financial stability concerns.\nand servers, and computer hardware. Engagement with suppliers has given us a better understanding of their decarbonisation efforts and the challenges and opportunities of achieving net zero in these categories. As a result, strategies for these procurement categories will include decarbonisation plans from 2024 onwards.\n### Supplier code of conduct\nOur supplier code of conduct sets out our ambitions, targets and commitments on the environment, diversity and human rights, and outlines the minimum standards we expect of our suppliers on these issues. We seek to formalise adherence to the code with clauses in our supplier contracts, which support the right to audit and act if a breach is discovered. At the end of 2023, $9 5 \\%$ of approximately 10,400 contracted suppliers had either confirmed adherence to the supplier code of conduct or provided their own alternative that was accepted by our Global Procurement function.\n### Sustainable procurement\nSupporting and engaging with our supply chain is vital to the development of our sustainable procurement processes. In 2023:\n– We completed analysis to understand the impacts and dependencies of our supply chain on biodiversity. The analysis will inform the development of a biodiversity strategy for global procurement in 2024, to reduce supply chain biodiversity impacts.\n– We published net zero guides to help buyers and suppliers understand our net zero ambitions. The guides explain our carbon reduction requirements and provide practical advice for meeting these ambitions, as laid out in our supplier code of conduct.\n– We launched the supplier diversity portal in the UK and US. The portal enables small and medium-sized enterprises or businesses, which are majority-owned, operated and controlled by historically underrepresented groups, to register interest in becoming an HSBC supplier. For further details, see www.hsbc.com/our-approach/risk-andresponsibility/working-with-suppliers.\nFor further details of the number of suppliers in each geographical region,see the ESG Data Pack at www. hsbc.com/esg.\n– We began developing decarbonisation plans for high-emitting procurement categories, including real estate services, telecommunications, data centres\n### Safeguarding data", "chunk_word_count": 388, "section_path": "Opening up a world of opportunity > 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints. > Our approach with our suppliers", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 98, "page_start": 98, "page_end": 98 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 157, "chunk_text": "# Opening up a world of opportunity\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\n### Data privacy\nWe are committed to protecting and respecting the data we hold and process, in accordance with the laws and regulations of the markets in which we operate.\nAs part of our three lines of defence model, our Global Internal Audit function provides independent assurance as to whether our data privacy risk management approaches and processes are designed and operating effectively. In addition, we have established data privacy governance structures, and continue to embed accountability across all businesses and functions.\nOur approach rests on having the right talent, technology, systems, controls, policies and processes to ensure appropriate management of privacy risk. Our Group-wide privacy policy and principles provide a consistent global approach to managing data privacy risk, and must be applied by all our global businesses and functions. Our privacy principles are available at www.hsbc.com/who-we-are/ esg-and-responsible-business/managing-risk/ operational-risk.\nWe continue to implement industry practices for data privacy and security. Our privacy teams work closely with our data protection officers, industry bodies and research institutions to drive the design, implementation and monitoring of privacy solutions. We conduct regular reviews and privacy risk assessments, and continue to develop solutions to strengthen our data privacy controls.", "chunk_word_count": 215, "section_path": "Opening up a world of opportunity > 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints. > Data privacy", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 99, "page_start": 99, "page_end": 99 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 158, "chunk_text": "# Opening up a world of opportunity\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\n### Data Privacy Day\nIn January 2023, we held a hybrid roundtable event for our colleagues to mark International Data Privacy Day. The event was hosted by our Global Head of Data Legal, and guest speakers included the former UK Information Commissioner and industry specialists from an external law firm, with HSBC’s own data privacy experts in attendance.\nWe conduct regular employee training and awareness sessions on data privacy and security issues throughout the year. This includes mandatory training for all our colleagues globally, with additional training sessions, where needed, to keep up to date with new developments in this space.\nWe continue to enhance our internal data privacy tools to improve accountability for data privacy. We have procedures to articulate the actions needed to deal with data privacy considerations. These include notifying regulators, customers or other data subjects, as required under applicable privacy laws and regulations, in the event of a reportable incident occurring.\nWe provide transparency to our customers and stakeholders on how we collect, use and manage their personal data, and their associated rights. Where relevant, we work with third parties to help ensure adequate protections are provided, in line with our data privacy policy and as required under data privacy law. We offer a broad range of channels in the markets where we operate, through which customers and stakeholders can raise concerns about the privacy of their data.\nThe event covered privacy-related developments likely to have the greatest impact across the Group. Key themes included upcoming data privacy reforms in the UK and the implications for global organisations, and trends in enforcement of data privacy laws and regulations. We also reviewed the impact, successes and challenges of General Data Protection Regulation (‘GDPR’) implementation globally.\nIntellectual property rights practices We have a group intellectual property risk policy, supported by controls and guidance, to manage risk relating to intellectual property. This is to help ensure that commercially and strategically valuable intellectual property is identified and protected appropriately, including by applying to register trademarks and patents and enforcing our intellectual property rights against unauthorised use by third parties. Our intellectual property framework also helps us avoid infringement of third-party intellectual property rights, supporting our consistent and effective management of intellectual property risk in line with our risk appetite.\nOur dedicated privacy teams report to the highest level of management on data privacy risks and issues, and oversee our global data privacy programmes. We review data privacy regularly at multiple governance forums, including at Board level, to help ensure appropriate challenge and visibility for senior executives. Data privacy laws and regulations continue to evolve globally. We continually monitor the regulatory environment to ensure we respond appropriately to any changes.", "chunk_word_count": 470, "section_path": "Opening up a world of opportunity > 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints. > Data Privacy Day", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 99, "page_start": 99, "page_end": 99 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 159, "chunk_text": "# Opening up a world of opportunity\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\n### The ethical use of data and AI\nArtificial intelligence and other emerging technologies provide the opportunity to process and analyse data at a depth and breadth not previously possible. While these technologies offer significant potential benefits for our customers, they also pose potential ethical risks for the financial services industry and society as a whole. We have a set of principles to help ensure we consider and address the ethical issues that could arise. HSBC’s Principles for the Ethical Use of Data and Artificial Intelligence are available at www.hsbc.com/who-we-are/esg-andresponsible-business/our-conduct.\nWe continue to develop and enhance our approach to, and oversight of, AI, taking into consideration the fast-evolving regulatory landscape, market developments and best practice.\n### Cybersecurity\nThe threat of cyber-attacks remains a concern for our organisation, as it does across the financial sector and other industries. As cyber-attacks continue to evolve, failure to protect our operations may result in the loss of sensitive data, disruption for our customers and our business, or financial loss. This could have a negative impact on our customers and our reputation, among other risks.\n### Policy and governance", "chunk_word_count": 205, "section_path": "Opening up a world of opportunity > 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints. > The ethical use of data and AI", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 99, "page_start": 99, "page_end": 100 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 160, "chunk_text": "# Opening up a world of opportunity\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\n### Cyber training and awareness\nWe have a robust suite of cybersecurity policies, procedures and key controls designed to help ensure that the organisation is well managed, with effective oversight and control. This includes but is not limited to defined information security responsibilities for employees, contractors and third parties, as well as standard procedures for cyber incident identification, investigation, mitigation and reporting.\nWe understand the important role our people play in protecting against cybersecurity threats. Our aim is to equip every colleague with the appropriate tools and behaviours they need to keep our organisation and customers’ data safe. We provide cybersecurity training and awareness to our people, ranging from our top executives to IT developers to front-line relationship managers around the world.\nWe continue to monitor ongoing geopolitical events and changes to the cyber threat landscape and take proactive measures with the aim to reduce any impact to our customers.\nOver $94 \\%$ of our IT developers hold at least one of our enhanced security certifications to help ensure we build secure systems and products.\nWe operate a three lines of defence model, aligned to the enterprise risk management framework, to help ensure oversight and challenge of our cybersecurity capabilities and priorities. In the first line of defence, we have risk owners within global businesses and functions who are accountable for identifying and managing cyber risk. They work with cybersecurity control owners to apply the appropriate risk treatment in line with our risk appetite. Our controls are designed to be executed in line with our policies and are reviewed and challenged by our risk stewards representing the second line of defence. They are independently assured by the Global Internal Audit function, the third line of defence. The assessment and management of our cybersecurity risk is led and coordinated by a Global Chief Information Security Officer, who has extensive experience in financial services, security and resilience, as well as in strategy, governance, risk management and regulatory compliance. The Global Chief Information Security Officer is supported by regional and business level chief information security officers. In the event of incidents, the Global Chief Information Security Officer and relevant supporting officers are informed by our security operations team and are engaged in alignment with our cybersecurity incident response protocols.\nWe host an annual Cyber Awareness Month for all colleagues, covering topics such as online safety at home, social media safety, safe hybrid working, and cyber incidents and response. Our dedicated cybersecurity training and awareness team provides a wide range of education and guidance to both customers and our colleagues about how to identify and prevent online fraud.", "chunk_word_count": 455, "section_path": "Opening up a world of opportunity > 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints. > Cyber training and awareness", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 100, "page_start": 100, "page_end": 100 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 161, "chunk_text": "# Opening up a world of opportunity\n## 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints.\n### Prevent, detect and mitigate\nWe invest in business and technical controls to help prevent, detect and mitigate cyber threats. Our cybersecurity controls follow a ’defence in depth’ approach, making use of multiple security layers, recognising the complexity of our environment. Our ability to detect and respond to attacks through round-the-clock security operations centre capabilities is intended to help reduce the impact of attacks.\nWe have a cyber intelligence and threat analysis team, which proactively collects and analyses internal and external cyber information to continuously evaluate threat levels for the most prevalent attack types and their potential outcomes. We actively participate in the broader cyber intelligence community, including by sharing technical expertise in investigations, alongside others in the financial services industry and government agencies around the world.\nOver 99%\nEmployees completed mandatory cybersecurity training on time.\nOver 94%\nIT developers hold at least one of our internal secure developer certifications.\nIn 2023, we further strengthened our cyber defences and enhanced our cybersecurity capabilities with the objective to help reduce the likelihood and impact of unauthorised access, security vulnerabilities being exploited, data leakage, third-party security exposure, and advanced malware. These defences build upon a proactive data analytical approach to help identify advanced targeted threats and malicious behaviour.\nOver 90\nKey performance indicators, control effectiveness and other matters related to cybersecurity, including significant cyber incidents, are presented on a regular basis to various management risk and control committees including to the Board, the Group Risk Management Meeting and across global businesses, functions and regions. This is done to ensure ongoing awareness and management of our cybersecurity position.\nCybersecurity education events were held globally.\nOver 96%\nWe work with our third parties, including suppliers, financial infrastructure bodies and other non-traditional third parties, in an effort to help reduce the threat of cyber-attacks impacting our business services.\nOf survey respondents to cybersecurity education events said they have a better understanding of cybersecurity following these events.\nOur cybersecurity capabilities are regularly assessed against the National Institute of Standards and Technology framework by independent third parties, and we proactively collaborate with regulators to participate in regular testing activities. HSBC also engages external independent third parties to support our penetration and threat-led penetration testing, which help to identify vulnerabilities to cyber threats and test security resilience.\nWe have a third-party security risk management process in place to assess, identify and manage the risks associated with cybersecurity threats with supplier and other third-party relationships. The process includes risk-based cybersecurity due diligence reviews that assess third parties’ cybersecurity programmes against our standards and requirements.\n### Financial review\nThe financial review gives detailed reporting of our financial performance at Group level as well as across our different global businesses and legal entities.", "chunk_word_count": 473, "section_path": "Opening up a world of opportunity > 3 The UK,Mexico and Hong Kong make up $86 \\%$ of total complaints. > Prevent, detect and mitigate", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 100, "page_start": 100, "page_end": 101 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 162, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Moving to a dynamic new London HQ\nOur global headquarters is to relocate to the heart of the City of London, after we signed contracts to move to the new Panorama St Paul’s development.\nWhen selecting our future location, we wanted a head office that provides flexible, dynamic and inclusive workspaces for colleagues and clients. We also wanted the choice of building to contribute to our net zero commitments through sustainable design, with the building constructed to high sustainability standards, using predominantly repurposed materials.\nWith our lease at our existing Canary Wharf office expiring in early 2027, we expect colleagues to start moving to Panorama St Paul’s from late 2026.\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Financial summary\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Contents\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Cost target\nAt our full-year 2022 results, we set a target for our ‘adjusted‘ operating expenses of growth for 2023 compared with 2022. Under our new reporting framework we no longer present ‘adjusted‘ results. The exception to this is for operating expenses, where our ‘target basis’ will adjust reported results for notable items and the period-onperiod effects of foreign currency translation differences. We also exclude the impact of retranslating comparative period financial information at the latest rates of foreign exchange in hyperinflationary economies, which is not within our control. We consider that this measure provides useful information to investors by quantifying and excluding the items that management considered when setting and assessing cost-related targets. In our target basis, we also exclude the costs related to the acquisition of SVB UK and related investments internationally, which are expected to add approximately $1 \\%$ to our cost growth compared with 2022.\n100 Changes to presentation from 1 January 2023 \n100 Use of alternative performance measures \n101 Critical estimates and judgements \n101 Impact of hyperinflationary accounting \n102 Consolidated income statement \n103 Income statement commentary \n106 Supplementary table for planned disposals \n107 Consolidated balance sheet\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Changes to presentation from 1 January 2023", "chunk_word_count": 387, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Moving to a dynamic new London HQ", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 101, "page_start": 101, "page_end": 102 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 163, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Changes to our reporting framework\nOur 2022 baseline for operating expenses on this basis is $\\$ 29.80 n$ , which has been retranslated at the average rates of foreign exchange for 2023.\nOn 1 January 2023, we updated our financial reporting framework. We no longer report ‘adjusted’ results, which excluded the impact of both foreign currency translation differences and significant items. Instead, we compute constant currency performance by adjusting comparative reported results only for the effects of foreign currency translation differences between the relevant periods. This will enable users to understand the impact of foreign currency translation differences on the Group’s performance. We separately disclose ‘notable items‘, which are components of our income statement that management would consider as outside the normal course of business and generally non-recurring in nature. While our primary segmental reporting by global business remains unchanged, effective from 1 January 2023, the Group changed the supplementary presentation of results from geographical regions to main legal entities to better reflect the Group’s structure.\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Resegmentation\nIn the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers’ respective needs, a portfolio of our Global Banking customers within our entities in Latin America was transferred from GBM to CMB for reporting purposes. Comparative data have been re-presented accordingly. Similar smaller transfers from GBM to CMB were also undertaken within our entities in Australia and Indonesia, where comparative data have not been re-presented.\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Banking NII\nAt our interim 2023 results, we introduced banking net interest income. This alternative performance measure is reconciled on page 104, and deducts from Group reported net interest income: the impact of the cost of funding reported in net interest income used to fund trading and fair value net assets; the impact of foreign exchange swaps in Markets Treasury, where an offsetting income or loss is recorded in trading and fair value income, and third-party net interest income from our insurance business.", "chunk_word_count": 376, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Changes to our reporting framework", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 102, "page_start": 102, "page_end": 102 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 164, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### IFRS 17 ‘Insurance Contracts’\nOn 1 January 2023, HSBC adopted IFRS 17 ‘Insurance Contracts’. As required by the standard, the Group applied the requirements retrospectively with comparative data previously published under IFRS 4 ‘Insurance Contracts’ restated from the 1 January 2022 transition date. As required by IAS 1 ‘Presentation of Financial Statements’ a third statement of financial position as at the transition date of 1 January 2022 has been disclosed (for further details, see page 331). Under IFRS 17 there is no present value of in-force business (‘PVIF’) asset recognised up front. Instead the measurement of the insurance contract liability takes into account fulfilment cash flows and a contractual service margin (‘CSM’) representing the unearned profit. In contrast to the Group’s previous IFRS 4 accounting where profits are recognised up front, under IFRS 17 they are deferred and systematically recognised in revenue as services are provided over the expected coverage period. The CSM also includes directly attributable costs, which had previously been expensed as incurred and which are now incorporated within the insurance liability measurement and recognised over the expected coverage period.\nThis resulting measure is intended to approximate the Group’s banking revenue that is directly impacted by changes in interest rates.", "chunk_word_count": 226, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > IFRS 17 ‘Insurance Contracts’", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 102, "page_start": 102, "page_end": 102 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 165, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Use of alternative performance measures\nOur reported results are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IFRS Accounting Standards’), as detailed in the financial statements starting on page 329.\nTo measure our performance, we supplement our IFRS Accounting Standards figures with non-IFRS Accounting Standards measures, which constitute alternative performance measures under European Securities and Markets Authority guidance and non-GAAP financial measures defined in and presented in accordance with US Securities and Exchange Commission rules and regulations. These measures include those derived from our reported results that eliminate factors that distort year-on-year comparisons. The ‘constant currency performance’ measure used throughout this report is described below. Definitions and calculations of other alternative performance measures are included in our ‘Reconciliation of alternative performance measures’ on page 130. In addition, insurance-specific non-GAAP measures including ‘Insurance manufacturing value of new business‘, ‘Insurance manufacturing proxy embedded value‘, and ‘Insurance equity plus CSM net of tax‘ are provided on pages 116 to 117, together with their definitions and reconciliation to GAAP measures. All alternative performance measures are reconciled to the closest reported performance measure.\nIn conjunction with the implementation of IFRS 17, the Group has made use of the option to re-designate to fair value through profit or loss assets that were previously held at amortised cost totalling $\\$ 55.$ 1bn, and eligible assets previously held at fair value through other comprehensive income totalling $\\$ 1$ .1bn. The re-designation of amortised cost assets generated a net increase to assets of $\\$ 4.90\\mathsf { n }$ because the fair value measurement on transition was higher than the previous amortised cost carrying amount.\nThe impact of the transition was a reduction of $\\$ 1.1$ bn on the Group’s full-year 2022 reported revenue and a reduction of $\\$ 0.5$ 5bn on full-year 2022 reported profit before tax. The Group’s total equity at 1 January 2022 reduced by $\\$ 10.5$ bn to $\\$ 196.36$ on the transition, and tangible equity reduced by $\\$ 2.4$ bn to $\\$ 146.90n$ . For further details of our adoption of IFRS 17, see Note 38 ‘Effects of adoption of IFRS 17’ on page 422.\nThe global business segmental results are presented on a constant currency basis in accordance with IFRS 8 ‘Operating Segments’ as detailed in Note 10 ‘Segmental analysis’ on page 372.\nrecovery strategies for certain wholesale credit-impaired loans. A high degree of uncertainty is involved in making estimations using assumptions that are highly subjective and very sensitive to the risk factors. See Note 1.2(i) on page 348.", "chunk_word_count": 447, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Use of alternative performance measures", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 102, "page_start": 102, "page_end": 103 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 166, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Constant currency performance\n– Deferred tax assets: The most significant judgements relate to those made in respect of recoverability, which are based on expected future profitability. See Note 1.2(l) on page 353.\nConstant currency performance is computed by adjusting reported results for the effects of foreign currency translation differences, which distort year-on-year comparisons.\n– Valuation of financial instruments: In determining the fair value of financial instruments a variety of valuation techniques are used, some of which feature significant unobservable inputs and are subject to substantial uncertainty. See Note 1.2(c) on page 345.\nWe consider constant currency performance to provide useful information for investors by aligning internal and external reporting, and reflecting how management assesses year-on-year performance.\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Notable items\n– Impairment of investment in subsidiaries: Impairment testing, including testing for reversal of impairment, involves significant judgement in determining the value in use, and in particular estimating the present values of cash flows expected to arise from continuing to hold the investment, based on a number of management assumptions. See Note 1.2(a) on page 343.\nWe separately disclose ‘notable items’, which are components of our income statement that management would consider as outside the normal course of business and generally non-recurring in nature.\nThe tables on pages 112 to 113 and pages 123 to 128 detail the effects of notable items on each of our global business segments, legal entities and selected countries/territories in 2023, 2022 and 2021.\n– Impairment of interests in associates: Impairment testing, including testing for reversal of impairment, involves significant judgement in determining the value in use, and in particular estimating the present values of cash flows expected to arise from continuing to hold the investment, based on a number of management assumptions. The most significant judgements relate to the impairment testing of our investment in Bank of Communications Co., Limited (‘BoCom’). See Note 1.2(a) on page 343.", "chunk_word_count": 347, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Constant currency performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 103, "page_start": 103, "page_end": 103 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 167, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Foreign currency translation differences\nForeign currency translation differences reflect the movements of the US dollar against most major currencies during 2023.\nWe exclude them to derive constant currency data, allowing us to assess balance sheet and income statement performance on a likefor-like basis and to better understand the underlying trends in the business.\nImpairment of goodwill and non-financial assets: A high degree of uncertainty is involved in estimating the future cash flows of the cash-generating units (‘CGUs’) and the rates used to discount these cash flows. See Note 1.2(a) on page 343 and Note $1 . 2 ( \\mathsf { n } )$ on page 353.\nForeign currency translation differences for 2023 are computed by retranslating into US dollars for non-US dollar branches, subsidiaries, joint ventures and associates:\n– Provisions: Significant judgement may be required due to the high degree of uncertainty associated with determining whether a present obligation exists, and estimating the probability and amount of any outflows that may arise. See Note $1 . 2 ( \\mathsf { m } )$ on page 353.\n– the income statements for 2022 and 2021 at the average rates of exchange for 2023; and – the balance sheets at 31 December 2022 and 31 December 2021 at the prevailing rates of exchange on 31 December 2023.\nNo adjustment has been made to the exchange rates used to translate foreign currency-denominated assets and liabilities into the functional currencies of any HSBC branches, subsidiaries, joint ventures or associates. The constant currency data of HSBC’s Argentina subsidiaries have not been adjusted further for the impacts of hyperinflation. Since 1 June 2022, Türkiye has been deemed a hyperinflationary economy for accounting purposes. HSBC has an operating entity in Türkiye and the constant currency data have not been adjusted further for the impacts of hyperinflation.\n– Post-employment benefit plans: The calculation of the defined benefit pension obligation involves the determination of key assumptions including discount rate, inflation rate, pension payments and deferred pensions, pay and mortality. See Note $1 . 2 ( \\mathsf { k } )$ on page 352.\n– Non-current assets and disposal groups held for sale: Management judgement is required in determining the likelihood of the sale to occur, and the anticipated timing in assessing whether the held for sale criteria have been met. See Note 1.2(o) on page 354.\nWhen reference is made to foreign currency translation differences in tables or commentaries, comparative data reported in the functional currencies of HSBC’s operations have been translated at the appropriate exchange rates applied in the current period on the basis described above.\nGiven the inherent uncertainties and the high level of subjectivity involved in the recognition or measurement of the items above, it is possible that the outcomes in the next financial year could differ from the expectations on which management’s estimates are based, resulting in the recognition and measurement of materially different amounts from those estimated by management in these financial statements.", "chunk_word_count": 513, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Foreign currency translation differences", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 103, "page_start": 103, "page_end": 103 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 168, "chunk_text": "# Opening up a world of opportunity\n## 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Critical estimates and judgements\nThe results of HSBC reflect the choice of accounting policies, assumptions and estimates that underlie the preparation of HSBC’s consolidated financial statements. The material accounting policies, including the policies which include critical estimates and judgements, are described in Note 1.2 on the financial statements. The accounting policies listed below are highlighted as they involve a high degree of uncertainty and have a material impact on the financial statements:\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Impact of hyperinflationary accounting\nWe continue to treat Argentina and Türkiye as hyperinflationary economies for accounting purposes. The impact of applying IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ and the hyperinflation provisions of IAS 21 ’The Effects of Changes in Foreign Exchange Rates’ in the current period for our operations in both Argentina and Türkiye was a decrease in the Group’s profit before tax of $\\$ 1,297m$ (2022: \\$548m), comprising a decrease in revenue, including loss on net monetary position, of $\\$ 1$ ,586m (2022: $\\$ 541m$ ) and a decrease in ECL and operating expenses of $\\$ 2890$ (2022: increase of $\\$ 7m$ ). The CPI at 31 December for Argentina was 3,576, with an increase in the year of 2,429.13 (2022: 563.92 increase). The CPI for Türkiye was 1,859 with an increase in the year of 730.89 (2022: 359.94 increase).\nImpairment of amortised cost financial assets and financial assets measured at fair value through other comprehensive income (‘FVOCI’): The most significant judgements relate to defining what is considered to be a significant increase in credit risk, determining the lifetime and point of initial recognition of revolving facilities, selecting and calibrating the probability of default (‘PD’), the loss given default (‘LGD’) and the exposure at default (‘EAD’) models, as well as selecting model inputs and economic forecasts, making assumptions and estimates to incorporate relevant information about late-breaking and past events, current conditions and forecasts of economic conditions, and selecting applicable\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Consolidated income statement\n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures\n### Five-year financial information\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the years ended 31 December 2021, 2020 and 2019 are prepared on an IFRS 4 basis.", "chunk_word_count": 432, "section_path": "Opening up a world of opportunity > 100 Financial summary \n111 Global businesses and legal entities \n130 Reconciliation of alternative performance measures > Critical estimates and judgements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 103, "page_start": 103, "page_end": 104 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 169, "chunk_text": "# Opening up a world of opportunity\n## 2 Provisional gain recognised in respect of the acquisition of SVB UK.\n3 In the fourth quarter of 2023, an impairment loss of \\$2.0bn was recognised relating to the sale of our retail banking operations in France. This largely offset the \\$2.1bn recognised in the first quarter of 2023 on the reversal of the held for sale classification at that time. In 2023, a total net \\$0.1bn of credit was recognised in other operating income, reflecting the net asset value disposed under the final terms of sale. The \\$0.4bn impairment of goodwill recognised in the third quarter in 2022 has not been reversed.\n4 Other operating (expense)/income includes a loss on net monetary positions of \\$1,667m (2022: \\$678m; 2021: \\$576m) as a result of applying IAS 29 ‘Financial Reporting in Hyperinflationary Economies’ and disposal losses on capitalised markets treasury repositioning of \\$977m in 2023.\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n6 Includes dividend paid during the period, which consisted of a second interim dividend of \\$0.23 per ordinary share in respect of the financial year ended 31 December 2022 paid in April 2023 and the first, second and third interim dividends of \\$0.30 per ordinary share in respect of the financial year ending 31 December 2023.\n7 In 2023, our dividend payout ratio was adjusted for material notable items and related impacts. In 2022, our dividend payout ratio was adjusted for the loss on classification to held for sale of our retail banking business in France, items relating to the planned sale of our banking business in Canada, and the recognition of certain deferred tax assets. No items were adjusted for in 2021, 2020 or 2019.\nFor a summary of our financial performance in 2023, see page 27.\nFor further financial performance data for each global business and legal entity, see pages 111 to 114 and 120 to 130 respectively. The global business segmental results are presented on a constant currency basis in accordance with IFRS 8 ‘Operating Segments’ as set out in Note 10: Segmental analysis on page 372.\n### Income statement commentary\nThe following commentary compares Group financial performance for the year ended 2023 with 2022, unless otherwise stated.\n### Net interest income", "chunk_word_count": 388, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Income statement commentary", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 104, "page_start": 104, "page_end": 105 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 170, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Summary of interest income by type of asset\nNet interest income (‘NII’) for 2023 was $\\$ 35.80\\mathrm { n }$ , an increase of $\\$ 5.45 n$ or $1 8 \\%$ compared with 2022. This reflected higher average interest rates across major currencies compared with 2022.\nThe impact of hyperinflation in Argentina on NII in 2023 was an adverse movement of $\\$ 0.56n$ , with an associated impact on NIM of 2bps. The impact in the fourth quarter of 2023 was an adverse movement of $\\$ 0.56n$ , with an associated impact on NIM of 9bps. This compared with minimal movements in the equivalent periods in 2022. The increase in hyperinflationary accounting impacts in 2023 was notably due to the impact of the devaluation of the Argentinian peso.\nExcluding the unfavourable impact of foreign currency translation differences, net interest income increased by $\\$ 6.05\\mathsf { n }$ or $20 \\%$ .\nNII for the fourth quarter of 2023 was $\\$ 8.30n$ , down $10 \\%$ compared with the previous quarter, and down $8 \\%$ compared with the fourth quarter of 2022. The decrease was predominantly driven by the impact of higher funding costs across our liabilities, which included the impact of deposit migration in our main legal entities in Asia and Europe. In addition, the fourth quarter of 2023 included an adverse impact of $\\$ 0.20\\mathsf { n }$ , relating to the first nine months of 2023, due to reclassifications to NII from ‘net income from financial instruments held for trading or managed on a fair value basis’ related to hedges in Canada that will not recur given the expected sale of the business.\nNet interest margin (‘NIM’) for 2023 of $1 . 6 6 \\%$ was 24bps higher compared with 2022, as the rise in the yield on average interestearning assets (‘AIEA’) of 220bps was partly offset by the rise in the funding costs of average interest-bearing liabilities of 196bps.\nThe increase in NIM in 2023 included the unfavourable impact of foreign currency translation differences. Excluding this, NIM increased by 27bps.\nThe change in interest income in 2023 compared with 2022 included an adverse impact of foreign currency translation differences of $\\$ 123,456$ . After excluding foreign currency translation differences, interest income increased by $\\$ 49.20n$ .\nNIM for the fourth quarter of 2023 was $1 . 5 2 \\%$ , down 18bps compared with the previous quarter, and down 16bps compared with the fourth quarter of 2022. The decreases were predominantly driven by a rise in funding costs of average interest-bearing liabilities, which included the impact of customer deposit migration in our main legal entities in Asia and Europe, as well as the Argentina hyperinflation impact as noted above, partly offset by an increase in the yield on AIEA.", "chunk_word_count": 491, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Summary of interest income by type of asset", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 105, "page_start": 105, "page_end": 106 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 171, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Summary of interest income by type of asset\nInterest expense for 2023 of $\\$ 65.1$ bn increased by $\\$ 42.60 n$ compared with 2022. This reflected an increase in funding costs of 223bps, mainly due to the impact of higher interest rates on our liabilities including customer deposit migration, notably in Asia and Europe. Within interest expense was the effect of higher funding costs associated with supporting our trading and fair value activities, as explained below in banking net interest income.\nInterest income for 2023 of $\\$ 100.90\\mathrm { n m }$ increased by $\\$ 48.06 n$ compared with 2022. Interest income of $\\$ 26.7 b n$ in the fourth quarter of 2023 was down \\$0.5bn compared with the previous quarter, and up $\\$ 7.8 b n$ compared with the fourth quarter of 2022. The respective increases of $\\$ 48.06 n$ and $\\$ 7.8 b n$ were predominantly driven by the impact of higher market interest rates. The decrease of $\\$ 0.56\\mathsf { n }$ compared with the previous quarter was predominantly due to hyperinflation in Argentina.\nThe rise in interest expense included the favourable effects of foreign currency translation differences of $\\$ 0$ .6bn. Excluding this, interest expense increased by $\\$ 43.20n$ .\nInterest expense of $\\$ 123.456 n$ in the fourth quarter of 2023 was up \\$0.5bn compared with the third quarter of 2023, and up $\\$ 8.$ 5bn compared with the fourth quarter of 2022. The increase was predominantly driven by the impact of higher market interest rates, and the impact of deposit migration.", "chunk_word_count": 286, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Summary of interest income by type of asset", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 106, "page_start": 106, "page_end": 106 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 172, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Banking net interest income\nBanking net interest income is an alternative performance measure, and is defined as Group reported net interest income after deducting:\nIn CMB, net fee income increased by $\\$ 0.20\\mathsf { n }$ driven by higher fees from credit facilities, notably in Europe and the UK due to an increase in trade products. Fee income also grew in account services, reflecting greater client activity in transaction banking, mainly in Global Payments Solutions (‘GPS’), and in cards, as spending increased compared with 2022. These increases were partly offset by a reduction in fees from funds under management and broking activities.\n– the internal cost to fund trading and fair value net assets for which associated revenue is reported in ‘Net income from financial instruments held for trading or managed on a fair value basis’, also referred to as ‘trading and fair value income’. These funding costs reflect proxy overnight or term interest rates as applied by internal funds transfer pricing;\nIn WPB, net fee income increased by \\$0.1bn. The rise was mainly due to higher cards income, mainly in our legal entities in Hong Kong and in Mexico, as customer spending increased. However, income from broking fell, notably in Hong Kong, due to weaker equity markets and muted customer sentiment. The rise in cards activity resulted in higher fee expenses.\n– the funding costs of foreign exchange swaps in Markets Treasury, where an offsetting income or loss is recorded in trading and fair value income. These instruments are used to manage foreign currency deployment and funding in our entities; and\n– third-party net interest income in our insurance business.\nIn our segmental disclosures, the funding costs of trading and fair value net assets are predominantly recorded in GBM in ‘net income from financial instruments held for trading or managed on a fair value basis’. On consolidation, this funding is eliminated in Corporate Centre, resulting in an increase in the funding costs reported in net interest income with an equivalent offsetting increase in ‘net income from financial instruments held for trading or managed on a fair value basis’ in this segment. In the second quarter of 2023 we implemented a consistent reporting approach across our most material entities that contribute to our trading and fair value net assets, which resulted in an increase to the first half of 2023 associated funding costs reported through the intersegment elimination in Corporate Centre of approximately $\\$ 0.45\\mathsf { n }$ , recognised in the second quarter of 2023. In the consolidated Group results, the cost to fund these trading and fair value net assets is reported in net interest income.", "chunk_word_count": 467, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Banking net interest income", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 106, "page_start": 106, "page_end": 106 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 173, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Banking net interest income\nIn GBM, net fee income decreased by $\\$ 0.20\\mathsf { n }$ . This was driven by higher fee expense, notably in our main entities in Hong Kong, mainly relating to GBM products sold to customers in other global businesses. In Europe, fee expense grew in our private credit business, and we incurred higher interbank and clearing fee expense. There was a decrease in corporate finance fee income, reflecting lower client activity in Europe, and a fall in broking income due to lower equity turnover. Global custody income also fell. This was partly offset by an increase in underwriting income, from an increase in syndicated fees in Europe and a rise in fees in the US following historical lows in 2022.\nNet income from financial instruments held for trading or managed on a fair value basis of $\\$ 16.76n$ was $\\$ 6.4$ 4bn higher compared with 2022. This reflected a rise in income, primarily relating to trading activities in GBM, for which the associated funding costs are reported in net interest income, notably in our main legal entities in Hong Kong and Europe. The rise also included a favourable movement on non-qualifying hedges of $\\$ 0.56n$ due to the nonrecurrence of fair value losses in 2022. These increases were partly offset by an adverse fair value movement on foreign exchange hedges related to the planned sale of our banking business in Canada.\nThe internally allocated funding cost of \\$8.7bn, which was incurred in 2023 to generate trading and fair value income, related to trading, fair value and associated net asset balances predominantly in GBM. At 31 December 2023, these stood at approximately \\$164bn.\nNet fee income of \\$11.8bn was $\\$ 0.1$ bn higher than in 2022, and included an adverse impact from foreign currency translation differences of $\\$ 0.$ .1bn. The rise in net fee income in CMB and WPB was partly offset by a reduction in GBM.\nNet income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss of $\\$ 7$ 9bn compared with a net expense of $\\$ 123.80n$ in 2022. This increase reflected favourable movements on debt\nsecurities, due to movements in interest rates, and equities. The increases were notably in our portfolios in Hong Kong and France.\nThis favourable movement resulted in a corresponding movement in insurance finance expense, which has an offsetting impact for the related liabilities to policyholders.\nInsurance finance expense of \\$7.8bn compared with an income of $\\$ 123.80n$ in 2022, reflecting the impact of investment returns on underlying assets on the value of liabilities to policyholders, which moves inversely with ‘net income from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss’.", "chunk_word_count": 490, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Banking net interest income", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 106, "page_start": 106, "page_end": 107 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 174, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Banking net interest income\nOther operating expense of $\\$ 1$ .1bn was $\\$ 0$ .9bn higher than in 2022. The increase primarily related to losses in 2023 in Markets Treasury on asset disposals of $\\$ 1.0 b n$ relating to repositioning and risk management activities in our hold-to-collect-and-sell portfolio in certain key legal entities. These actions are accretive to net interest income and reduce the consumption of the Group‘s financial resources.\nInsurance service result of $\\$ 1.$ 1bn increased by \\$0.3bn compared with 2022, primarily due to an increase in the release of the contractual service margin (‘CSM’). This primarily reflected a higher CSM balance from higher new business written and favourable assumption updates, primarily from updates to lapse rate assumptions. The increase also reflected a reduction in losses from onerous contracts. Under IFRS 17, the measurement of the insurance contract liability takes into account fulfilment cash flows and a CSM representing the unearned profit. In contrast to the Group’s previous IFRS 4 accounting where profits are recognised up front, under IFRS 17 they are deferred and systematically recognised in revenue as services are provided over the life of the contract. The CSM also includes attributable cost, which had previously been expensed as incurred and which is now incorporated within the insurance liability measurement and recognised over the life of the contract.\nThe increased expense also included a loss of $\\$ 0.30n$ in 2023 relating to corrections to historical valuation estimates in our life insurance business, and losses related to the disposal of our New Zealand retail mortgage loan portfolio and the merger of HSBC Bank Oman in 2023 with Sohar International. These were partly offset by losses in 2022 relating to the disposal of our branch operations in Greece and the planned disposal of our business in Russia.\nChange in expected credit losses and other credit impairment charges (‘ECL’) were a charge of $\\$ 3.4 b n$ , a decrease of $\\$ 0.1$ bn or $4 \\%$ compared with 2022.\nThe charge in 2023 primarily comprised stage 3 net charges, notably related to mainland China commercial real estate sector exposures. ECL charges in this sector were $\\$ 1.00\\mathsf { n }$ in 2023. The charge in 2023 also reflected the impact of continued economic uncertainty, rising interest rates and inflationary pressures. The charge in 2022 of $\\$ 3.$ 6bn included charges related to mainland China commercial real estate exposures of $\\$ 1.30n$ .\nGain on acquisition of $\\$ 1$ .6bn related to the provisional gain recognised in respect of the acquisition of Silicon Valley Bank UK Limited.\nImpairment loss relating to the sale of the retail banking operations in France was a net impairment reversal of $\\$ 0.20\\mathsf { n }$ in 2023, compared with an impairment of $\\$ 230 n$ in 2022.\nFor further details on the calculation of ECL, including the measurement uncertainties and significant judgements applied to such calculations, the impact of the economic scenarios and management judgemental adjustments, see pages 156 to 168.", "chunk_word_count": 527, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Banking net interest income", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 107, "page_start": 107, "page_end": 107 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 175, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Banking net interest income\nIn accordance with IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’, the disposal group was classified as held for sale on 30 September 2022, at which point the Group recognised the estimated impairment of $\\$ 230 n$ , which included impairment of goodwill of \\$0.4bn and related transaction costs. In the first quarter of 2023, $\\$ 2.1$ bn of this impairment loss was reversed as the sale became less certain. It was reinstated in the fourth quarter of 2023 as we reclassified these operations as held for sale and remeasured the disposal group at the lower of carrying value and fair value less costs to sell, resulting in a $\\$ 2.0 b n$ impairment loss, reflecting the final terms of the sale. The sale completed on 1 January 2024.\n### Operating expenses\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis. \n2 Other operating expenses includes professional fees, contractor costs, transaction taxes, marketing and travel. The decrease was driven by favourable currency translation differences and lower restructuring and other related costs following the completion of our cost-saving programme at the end of 2022.\n### Staff numbers (full-time equivalents)1\nOperating expenses of $\\$ 32.$ bn were \\$0.6bn or $2 \\%$ lower than in 2022, including a favourable impact of $\\$ 0.45\\mathsf { n }$ from foreign currency translation differences.\nThis was driven by lower restructuring and other related costs following the completion of our cost to achieve programme, which concluded at the end of 2022, as well as a $\\$ 0.20\\mathsf { n }$ reduction due to a reversal of historical asset impairments, and the effects of our continued cost discipline. There was also a favourable impact of $\\$ 0.20\\mathsf { n }$ due to the impact of hyperinflationary accounting in Argentina in 2023.", "chunk_word_count": 366, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Banking net interest income", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 107, "page_start": 107, "page_end": 108 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 176, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Tax expense\nThese reductions were partly offset by an increase in technology costs, the impacts of inflation, a higher performance-related pay accrual and severance payments. In addition, the UK bank levy increased by $\\$ 0.30n$ , which included adjustments related to prior years, and we incurred a $\\$ 0.2$ bn charge in the US relating to the FDIC special assessment.\nThe effective tax rate for 2023 of $1 9 . 1 \\%$ was higher than the $4 . 7 \\%$ in 2022. The effective tax rate for 2023 was increased by 2.3 percentage points by the non-deductible impairment of investments in associates, and reduced by 1.6 percentage points by the release of provisions for uncertain tax positions and reduced by 1.5 percentage points by the non-taxable accounting gain on the acquisition of SVB UK. The effective tax rate for 2022 was reduced by 12.8 percentage points by the recognition of a deferred tax asset on historical tax losses of HSBC Holdings as a result of improved profit forecasts for the UK tax group. Excluding these items, the effective tax rates were $1 9 . 9 \\%$ for 2023 and $1 7 . 5 \\%$ for 2022.\nThe number of employees expressed in full-time equivalent staff (‘FTE’) at 31 December 2023 was 220,861, an increase of 1,662 compared with 31 December 2022. The number of contractors at 31 December 2023 was 4,676, a decrease of 1,371.\nShare of profit in associates and joint ventures of $\\$ 2.8 b n$ was $\\$ 0.1$ bn or $3 \\%$ higher than in 2022, reflecting an increase in the share of profit from Saudi Awwal Bank (‘SAB’).\n### Return on average tangible equity\n$\\mathsf { i n } \\ 2 0 2 3$ , RoTE was $1 4 . 6 \\%$ , compared with $1 0 . 0 \\%$ in 2022. Excluding the impact of strategic transactions and the impairment of BoCom, RoTE was $1 5 . 6 \\%$ .\nImpairment of interest in associate of \\$3.0bn related to our investment in BoCom.", "chunk_word_count": 367, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Tax expense", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 108, "page_start": 108, "page_end": 108 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 177, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Supplementary table for planned disposals\nWe maintain a $1 9 . 0 3 \\%$ interest in BoCom. Since our investment in 2004, BoCom has grown its business significantly to the extent that it has recently been designated as a global systemically important bank (‘GSIB’).\nThe income statements and selected balance sheet metrics for the year ended 31 December 2023 of our banking business in Canada and our retail banking operations in France are shown below.\nFor accounting purposes, the balance sheet carrying value attributed to BoCom represents our share of its net assets. We perform quarterly impairment tests incorporating a value-in-use calculation, recognising the gap between this carrying value and the fair value (based on the list share price). We have previously disclosed that the excess of the value-in-use calculation over its carrying value has been marginal in recent years, and that reasonably possible changes in assumptions could generate an impairment.\nThe asset and liability balances relating to these planned disposals are reported on the Group balance sheet within ‘Assets held for sale’ and ‘Liabilities of disposal groups held for sale’, respectively, as at 31 December 2023.\nRecent macroeconomic, policy and industry factors resulted in a wider range of reasonably possible value-in-use outcomes for our BoCom valuation. At 31 December 2023, the Group performed an impairment test on the carrying value which resulted in an impairment of $\\$ 3.0 b n$ , as the recoverable amount as determined by a value-in-use calculation was lower than the carrying value. Our value-in-use calculation uses both historical experience and market participant views to estimate future cash flows, relevant discount rates and associated capital assumptions.\nThis impairment will have no material impact on HSBC’s capital, capital ratios or distribution capacity, and therefore no impact on dividends or share buy-backs. The insignificant impact on HSBC’s capital and CET1 ratio is due to the compensating release of regulatory capital deductions to offset the impairment charge.\n1 Under the terms of the sale agreement, the pre-tax profit on sale will be recognised through a combination of the consolidation of HSBC Canada’s results into the Group’s financial statements from 30 June 2022 until completion, and the remaining gain on sale recognised at completion.\nWe remain strategically committed to mainland China as demonstrated by our recent announcements to acquire Citi’s retail wealth management portfolio and the investments made into mainland China in recent years. BoCom remains a strong partner in China, and we remain focused on maximising the mutual value of our partnership. Our positive views on the medium- and long-term structural growth opportunities in mainland China are unchanged.\n2 France retail includes the transferring of the retail banking business, HSBC SFH and associated supporting services. For further details, see Note 23: Assets held for sale and liabilities of disposal groups held for sale on page 401.\nFor further details, see Note 18: Interests in associates and joint ventures on page 391.\n3 Includes \\$3.5bn in Canada in respect of operational risk RWAs, and $\\$ 0.6 b n$ associated with our retail banking business in France.", "chunk_word_count": 536, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Supplementary table for planned disposals", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 108, "page_start": 108, "page_end": 108 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 178, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Consolidated balance sheet\n### Balance sheet commentary compared with 31 December 2022\n### Combined view of customer lending and customer deposits\nAt 31 December 2023, total assets of $\\$ 3.00$ were \\$89bn or $3 \\%$ higher on a reported basis and increased by \\$31bn or $1 \\%$ on a constant currency basis.\nReported loans and advances to customers as a percentage of customer accounts was $5 8 . 2 \\%$ compared with $5 8 . 8 \\%$ at 31 December 2022. The movement in this ratio reflected a higher growth in customer accounts than in lending.", "chunk_word_count": 125, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Consolidated balance sheet", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 109, "page_start": 109, "page_end": 110 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 179, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Assets\nCash and balances at central banks decreased by $\\$ 41$ bn or $1 3 \\%$ , which included a $\\$ 1$ 3bn favourable impact of foreign currency translation differences. The decrease was mainly in HSBC UK, reflecting a reduction in customer accounts and repurchase agreements, as well as an increase in the deployment of our cash surplus into financial investments. Cash fell in HSBC Bank plc as our European branches managed liquidity requirements and due to the completion of the sale of our retail banking operations in France. Cash also decreased in the UK as we deployed our commercial surplus into reverse repurchase agreements and financial investments.\nTrading assets increased by $\\$ 7$ 1bn or $3 3 \\%$ , mainly as we captured increased client activity in equity and debt securities, particularly in Hong Kong and HSBC Bank plc. The increase in trading assets also reflected the use of surplus liquidity to fund trading activities given the subdued demand for customer lending.\nDerivative assets decreased by $\\$ 54 b n$ or $1 9 \\%$ , mainly in Europe, reflecting adverse revaluation movements on interest rate contracts due to a stabilisation and downward shift in long-term yield curve rates in most major markets. Foreign exchange contracts also fell, primarily in HSBC Bank plc, as a result of reduced volatility in foreign exchange rate movements in 2023. The decrease in derivative assets was consistent with the decrease in derivative liabilities, as the underlying risk is broadly matched.\nreductions in our main entities in Hong Kong and the UK and a reduction of \\$2bn due to the sale of our business in Oman.\nLoans and advances to customers of $\\$ 9390n$ increased by $\\$ 156n$ or $2 \\%$ on a reported basis. This included a favourable impact of foreign currency translation differences of $\\$ 18 b n$ .\nIn GBM, customer accounts were marginally lower, falling $\\$ 20n$ . Balances fell in Hong Kong and the UK, although there was growth in continental Europe and Singapore. Balances fell by $\\$ 9$ 1bn following the sale of our business in Oman, and by \\$4bn due to the transfer of customers from GBM to CMB in Australia and Indonesia.\nOn a constant currency basis, loans and advances to customers fell by \\$3bn, reflecting the following movements.\nIn WPB, customer lending increased by $\\$ 2$ 1bn, reflecting growth in mortgage balances, notably in our main legal entities in Hong Kong (up \\$6bn), the UK (up \\$5bn), Mexico (up \\$1bn) and Australia (up \\$1bn). There was an increase of $\\$ 7.8 b n$ in secured lending in our main entity in Europe following the reclassification of a portfolio of home loans previously classified as assets held for sale, relating to the sale of our retail banking operations in France. The increase also included growth of \\$3bn in credit card balances, mainly in our entities in Hong Kong, the UK and Mexico. These increases were partly offset by reductions due to business divestments in Oman and New Zealand.", "chunk_word_count": 530, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Assets", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 110, "page_start": 110, "page_end": 111 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 180, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Assets\nRepurchase agreements – non-trading increased by \\$44bn or $3 5 \\%$ , notably in HSBC Bank plc, reflecting higher client demand, and in our main entity in Asia due to a higher requirement for short-term funding.\nDerivative liabilities decreased by \\$51bn or $1 8 \\%$ , which is consistent with the reduction in derivative assets, since the underlying risk is broadly matched.\nDebt securities in issue increased by \\$16bn or $20 \\%$ , due to a net increase in debt issuances.\nIn GBM, lending fell by \\$16bn due to a reduction in term lending, primarily in our main legal entities in Hong Kong, including a reduction in the commercial real estate sector, and in Europe, reflecting muted client demand. Lending also fell by \\$1bn due to the merger of our operations in Oman with Sohar International. In addition there was a transfer of GBM customers to CMB in Australia and Indonesia, resulting in a \\$3bn reduction.\nLiabilities of disposal groups held for sale of $\\$ 1080$ primarily comprised the liabilities relating to the sale of our retail banking operations in France and the planned sale of our banking business in Canada.", "chunk_word_count": 221, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Assets", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 111, "page_start": 111, "page_end": 111 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 181, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Equity\nTotal shareholders’ equity, including non-controlling interests, increased by \\$7bn or $4 \\%$ compared with 31 December 2022.\nIn CMB, customer lending was \\$7bn lower, mainly in our main legal entities in Hong Kong, including in the commercial real estate sector, and in the US, as well as in HSBC Bank plc, reflecting weaker client demand in a higher interest rate environment. Lending also fell by \\$1bn due to the sale of our business in Oman. In HSBC UK, lending grew by \\$4bn, as an increase from the acquisition of SVB UK of \\$8bn partly mitigated reductions from clients repaying their facilities. The transfer of customers to CMB from GBM in Australia and Indonesia, referred to above, led to an increase of \\$3bn.\nShareholders’ equity was increased by profits generated of $\\$ 256n$ and net gains through other comprehensive income (‘OCI’) of \\$5bn. These increases were partly offset by the impact of dividends paid of $\\$ 123n$ , the redemption of perpetual subordinated contingent convertible capital securities of $\\$ 4 b n$ and the impact of our $\\$ 70n$ share buy-back activities in 2023.\nThe net gains through OCI of \\$5bn included favourable movements of \\$3bn on financial instruments designated as hold-to-collect-and-sell, which are held as hedges to our exposure to interest rate movements. The favourable movement was a result of the fall in longterm market yield curves in 2023. The net gain also included a favourable movement on cash flow hedges of $\\$ 30n$ and from the effects of hyperinflation of $\\$ 20n$ . These gains were partly offset by fair value losses on liabilities related to changes in own credit risk of $\\$ 9$ 1bn, as well as other smaller losses.\nFinancial investments increased by \\$78bn or $2 1 \\%$ , mainly in Asia and Europe from the purchase of debt securities, treasury and other eligible bills, as we redeployed our commercial surplus to benefit from higher yield curves and enhance our hedging activities on net interest income. The increase was across both debt instruments held at fair value through other comprehensive income and instruments held at amortised cost.\nAssets held for sale of \\$114bn primarily comprised the assets relating to the sale of our retail banking operations in France and the planned sale of our banking business in Canada. This balance was broadly stable compared with 2022, as a decrease of \\$8bn relating to the transfer to loans and advances to customers of a portfolio of secured home loans in France was largely offset by a transfer of cash into assets held for sale, related to the completion of the sale of our retail banking operations there.", "chunk_word_count": 469, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Equity", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 111, "page_start": 111, "page_end": 111 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 182, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Financial investments\nAs part of our interest rate hedging strategy, we hold a portfolio of debt instruments, reported within financial investments, which are classified as hold-to-collect-and-sell. As a result, the change in value of these instruments is recognised through ‘debt instruments at fair value through other comprehensive income’ in equity.\nAt 31 December 2023, we recognised a pre-tax cumulative unrealised loss reserve through other comprehensive income of $\\$ 3.90n$ related to these hold-to-collect-and-sell positions. This reflected a $\\$ 2.$ 6bn pretax gain in 2023, inclusive of movements on related fair value hedges. The gain in 2023 included a reduction in unrealised losses due to the disposal of securities as part of repositioning actions taken in this portfolio of $\\$ 1.0 b n$ . Overall, the Group is positively exposed to rising interest rates through net interest income, although there is an adverse impact on our capital base in the early stages of a rising interest rate environment due to the fair value of hold-to collect-andsell instruments.\n### Liabilities\nCustomer accounts of $\\$ 1.60$ increased by $\\$ 41$ bn or $3 \\%$ on a reported basis. This included a favourable impact of foreign currency translation differences of $\\$ 280 n$ .\nOn a constant currency basis, customer accounts increased by \\$13bn, reflecting the following movements.\nIn WPB, customer accounts grew by \\$12bn, reflecting higher interestbearing term and money market deposit balances, as interest rates rose, primarily in our main legal entity in Asia, notably Hong Kong (up $\\$ 100\\mathsf { n }$ , or $3 \\%$ ), Singapore (up \\$5bn, or $1 5 \\%$ ), Australia (up \\$3bn, or $1 9 \\%$ ), mainland China (up \\$3bn, or $1 9 \\%$ ) and Taiwan up (\\$2bn, or $34 \\%$ ). However, customer accounts fell by $\\$ 14 b n$ in HSBC UK, reflecting cost of living and competitive pressures. There was also a reduction due to the sale of our business in Oman.\nOver time, these adverse movements will unwind as the instruments reach maturity, although not all will necessarily be held to maturity.\nWe also hold a portfolio of financial investments measured at amortised cost, which are classified as hold-to-collect. At 31 December 2023, there was a cumulative unrealised loss of $\\$ 1.70n$ , although the unrealised loss is not reflected on our balance sheet. This included $\\$ 1.00\\mathsf { n }$ that related to debt instruments held to manage our interest rate exposure, representing a $\\$ 0.80\\mathsf { n }$ improvement during 2023.\nIn CMB, customer accounts increased by \\$3bn. The growth included an increase of \\$6bn related to our acquisition of SVB UK, as well as increases in our entities in Asia, excluding Hong Kong, and in continental Europe, mainly in term and money market deposits. In addition, a transfer of customers from GBM to CMB in Australia and Indonesia resulted in a rise of \\$4bn. These increases mitigated", "chunk_word_count": 510, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Financial investments", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 111, "page_start": 111, "page_end": 111 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 183, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Risk-weighted assets\nRisk-weighted assets (‘RWAs’) totalled \\$854.1bn at 31 December 2023, a $\\$ 14.45$ increase since 2022, including foreign currency translation differences of $\\$ 2.0 b n$ . This was mainly due to:\n– a $\\$ 6.20\\mathsf { n }$ increase from acquisitions, mainly from SVB UK, partly offset by a disposal of our Oman business; and – a $\\$ 19.9$ bn decrease in RWAs due to changes in methodology and policy.\n– a $\\$ 26.26,7$ increase in asset size, which was mostly attributed to WPB lending growth and a rise in operational risk RWAs, offset by reduced lending in CMB and GBM;\n### Customer accounts by country/territory\n### Global businesses and legal entities\n### Contents\n### Basis of preparation\nThe Group Chief Executive, supported by the rest of the GEC, is considered the Chief Operating Decision Maker (‘CODM’) for the purposes of identifying the Group’s reportable segments. Global business results are assessed by the CODM on the basis of constant currency performance. We separately disclose ‘notable items’, which are components of our income statement that management would consider as outside the normal course of business and generally non-recurring in nature. Constant currency performance information for 2022 and 2021 are presented as described on page 101. As required by IFRS 8, reconciliations of the total constant currency global business results to the Group’s reported results are presented on page 373.\n111 Summary \n111 Supplementary analysis of constant currency results and notable items by global business \n114 Reconciliation of reported and constant currency risk-weighted assets \n114 Supplementary tables for WPB and GBM \n120 Analysis of reported results by legal entities \n123 Summary information – legal entities and selected countries/ territories \n128 Analysis by country/territory\nSupplementary reconciliations from reported to constant currency results by global business are presented on pages 111 to 113 for information purposes.", "chunk_word_count": 333, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Risk-weighted assets", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 112, "page_start": 112, "page_end": 113 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 184, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Summary\nGlobal business performance is also assessed using return on tangible equity (‘RoTE’). A reconciliation of global business RoTE to the Group’s RoTE is provided on page 132.\nThe Group Chief Executive, supported by the rest of the Group Executive Committee (‘GEC‘), reviews operating activity on a number of bases, including by global business and legal entities. Our global businesses – Wealth and Personal Banking, Commercial Banking, and Global Banking and Markets – along with Corporate Centre are our reportable segments under IFRS 8 ‘Operating Segments’ and are presented below and in Note 10: Segmental analysis on page 372.\nOur operations are closely integrated and, accordingly, the presentation of data includes internal allocations of certain items of income and expense. These allocations include the costs of certain support services and global functions to the extent that they can be meaningfully attributed to global businesses and legal entities. While such allocations have been made on a systematic and consistent basis, they necessarily involve a degree of subjectivity. Costs that are not allocated to global businesses are included in Corporate Centre.\nOn 1 January 2023, we updated our financial reporting framework and changed the supplementary presentation of results from geographical regions to main legal entities to better reflect the Group’s structure.\nWhere relevant, income and expense amounts presented include the results of inter-segment funding along with inter-company and interbusiness line transactions. All such transactions are undertaken on arm’s length terms. The intra-Group elimination items for the global businesses are presented in Corporate Centre.\nThe results of main legal entities are presented on a reported and constant currency basis, including HSBC UK Bank plc, HSBC Bank plc, The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank Middle East Limited, HSBC North America Holdings Inc., HSBC Bank Canada and Grupo Financiero HSBC, S.A. de C.V.\nHSBC Holdings incurs the liability of the UK bank levy, with the cost being recharged to its UK operating subsidiaries. The current year expense will be reflected in the fourth quarter as it is assessed on our balance sheet position as at 31 December.\nThe results of legal entities are presented on a reported basis on page 120 and a constant currency basis on page 123.\nIn the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers’ respective needs, a portfolio of our customers within our entities in Latin America was transferred from Global Banking and Markets to Commercial Banking for reporting purposes. Comparative data have been represented accordingly. Similar smaller transfers from Global Banking and Markets to Commercial Banking were also undertaken within our entities in Australia and Indonesia, where comparative data have not been represented.\n### Notable items\nNotable items (continued)", "chunk_word_count": 484, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Summary", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 113, "page_start": 113, "page_end": 115 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 185, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Reconciliation of reported and constant currency risk-weighted assets\n1 In the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers’ respective needs, a portfolio of our customers within our entities in Latin America was transferred from GBM to CMB for reporting purposes. Comparative data have been re-presented accordingly.\n### Supplementary tables for WPB and GBM\n### WPB constant currency performance by business unit\nA breakdown of WPB by business unit is presented below to reflect the basis of how the revenue performance of the business units is assessed and managed.\n### WPB – summary (constant currency basis)\n1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue. \n2 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 is prepared on an IFRS 4 basis. \n3 We adopted IFRS 17 from 1 January 2023 and have restated 2022 financial data. Data for 2021 has not restated, and ‘Life insurance manufacturing’ is disclosed on the basis of preparation prevailing in 2021, which includes results from our manufacturing business only, with insurance distribution presented in ‘banking operations’.\n### Life insurance business performance\nThe following table provides an analysis of the performance of our life insurance business for the period. It comprises income earned by our insurance manufacturing operations within our WPB business, as well as income earned and costs incurred within our Wealth insurance distribution channels, consolidation and inter-company elimination entries.\n### Results of WPB’s life insurance business unit (constant currency basis)", "chunk_word_count": 318, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Reconciliation of reported and constant currency risk-weighted assets", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 116, "page_start": 116, "page_end": 117 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 186, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### WPB insurance manufacturing (constant currency basis)\nhe following table shows the results of our insurance manufacturing operations for our WPB business and for all global business segments in aggregate.\nResults of insurance manufacturing operations1,2,3\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for 2022 have been restated accordingly; comparative data for 2021 are reported under IFRS 4 ‘Insurance Contracts’. \n2 Constant currency results are derived by adjusting for period-on-period effects of foreign currency translation differences. The impact of foreign currency translation differences on ‘All global businesses’ profit before tax was a \\$13m increase for 2022 and a \\$53m decrease in 2021. \n3 The results presented for insurance manufacturing operations are shown before elimination of inter-company transactions with HSBC non-insurance operations. The ‘All global businesses‘ result consists primarily of WPB business, as well as a small proportion of CMB business. \n4 Net investment return under IFRS 17 for all global businesses for 2023 was \\$195m (2022: \\$183m), which consisted of net interest income, net income/(expenses) on assets held at fair value through profit or loss, and insurance finance income/(expense). \n5 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue. \n6 The effect of applying hyperinflation accounting in Argentina on insurance manufacturing operations in all global business resulted in a decrease of \\$41m in revenue in 2023 (2022: decrease of \\$7m, 2021: increase of \\$1m) and a decrease of \\$41m in profit before tax in 2023 (2022: decrease of \\$6m, 2021: increase of \\$1m).", "chunk_word_count": 292, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > WPB insurance manufacturing (constant currency basis)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 118, "page_start": 118, "page_end": 118 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 187, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Insurance manufacturing\nProfit before tax of $\\$ 0.6 b n$ in 2022 reduced by $\\$ 1$ .5bn compared with 2021, primarily reflecting the change in reporting basis from IFRS 4 ‘Insurance Contracts’ in 2021 to IFRS 17 ‘Insurance Contracts’ in 2022. Further information regarding the impact of transition is provided in Note 38 ‘Effects of adoption of IFRS 17’ on page 422.\nThe following commentary, unless otherwise specified, relates to the ‘All global businesses’ results.\nProfit before tax of $\\$ 0.80\\mathsf { n }$ increased by $\\$ 0.1$ bn compared with 2022. This primarily reflected the following:\n– Insurance service result of $\\$ 1$ .1bn increased by $\\$ 0.30n$ compared with 2022. This was driven by an increase in the release of CSM of $\\$ 0.20\\mathsf { n }$ as a result of a higher closing CSM balance from the effect of new business written and favourable assumption updates primarily from updates to lapse rate assumptions. The improved insurance service result also reflected a reduction to losses from onerous contracts of $\\$ 0.$ 1bn, mainly in Hong Kong and Singapore, in part due to improved market conditions in 2023.\nAnnualised new business premiums (‘ANP’) is used to assess new insurance premiums generated by the business. It is calculated as $100 \\%$ of annualised first year regular premiums and $10 \\%$ of single premiums, before reinsurance ceded. ANP in 2023 increased by $6 1 \\%$ compared with 2022, primarily from strong new business sales in Hong Kong and a shift in product mix from single to multi-premium products.", "chunk_word_count": 286, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Insurance manufacturing", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 118, "page_start": 118, "page_end": 118 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 188, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Insurance manufacturing value of new business\n– Net investment return (excluding net interest income) increased by $\\$ 0.1$ bn, with positive asset returns in 2023 compared with losses in the prior period.\nInsurance manufacturing value of new business is a non-GAAP alternative performance measure that provides information about value generation from new business sold during the period. Since transitioning to IFRS 17, insurance manufacturing value of new business is a metric used internally to measure the long-term profitability of new business sold, and its disclosure supports the consistent communication of this performance measure, albeit on a new calculation basis. Insurance manufacturing value of new business is calculated as the sum of the IFRS 17 new business CSM and loss component adjusted for:\nOther operating income reduced by $\\$ 0.2$ bn compared with 2022, and included a $\\$ 0.30\\mathsf { n }$ loss from corrections to historical valuation estimates, partly offset by gains of $\\$ 0.20\\mathsf { n }$ from reinsurance contracts in Hong Kong.\nnecessitates changes to the underlying economic scenario models used in the valuation of policyholder guarantees to reflect this basis.\n– a full attribution of expenses incurred within our insurance manufacturing operations. IFRS 17 considers only directly attributable expenses within the new business CSM measurement; and long-term asset spreads expected to be generated over the contract term. Under IFRS 17, new business CSM is in contrast calculated on a market consistent risk neutral basis. This also\nThere were no other adjustments made, with demographic and expense assumptions remaining unchanged, except for inclusion of future non-attributable expenses as described above. The IFRS 17 risk adjustment remained unchanged, with no additional allowances made for market risks. Insurance manufacturing value of new business was measured before tax and after inclusion of the impact of reinsurance.", "chunk_word_count": 324, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Insurance manufacturing value of new business", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 118, "page_start": 118, "page_end": 119 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 189, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Insurance equity plus CSM net of tax\nThe present value of projected future profits is calculated as the CSM net of tax adjusted for:\nInsurance equity plus CSM net of tax is a non-GAAP alternative performance measure that provides information about our insurance manufacturing operations’ net asset value plus the future earnings from in-force business. At 31 December 2023, insurance equity plus CSM net of tax was \\$16,583m (31 December 2022: \\$14,646m).\n– a full attribution of expenses incurred within our insurance manufacturing operations, net of tax. IFRS 17 considers only directly attributable expenses within the CSM measurement; and – long-term asset spreads expected to be generated over the contract term, net of tax. Under IFRS 17, CSM is in contrast calculated on a market consistent risk neutral basis. This also necessitates changes to the underlying economic scenario models used in the valuation of policyholder guarantees to reflect this basis.\nAt 31 December 2023, insurance equity plus CSM net of tax was calculated as insurance manufacturing operations equity of \\$7,731m plus CSM of \\$10,786m less tax of $\\$ 1$ ,934m. At 31 December 2022, it was calculated as insurance manufacturing operations equity of $\\$ 7,236 m$ plus CSM of $\\$ 9$ ,058m less tax of \\$1,648m.\nThere are no other adjustments made, with demographic and expense assumptions remaining unchanged, except for inclusion of future non-attributable expenses as described above. The IFRS 17 risk adjustment remained unchanged, with no additional allowances made for market risks. Insurance manufacturing proxy embedded value was measured after tax and after inclusion of the impact of reinsurance.\n### Insurance manufacturing proxy embedded value\nInsurance manufacturing proxy embedded value is a non-GAAP alternative performance measure that provides information about the value of the insurance manufacturing operations and is defined as total shareholders’ equity plus the present value of projected future profits. It is not comparable with peer embedded value disclosure as there is no single industry standard basis of calculation.\n\n### WPB: Wealth balances\nThe following table shows the wealth balances, which include invested assets and wealth deposits. Invested assets comprise customer assets either managed by our Asset Management business or by external third-party investment managers, as well as self-directed investments by our customers.\n### WPB – reported wealth balances1\n### Asset Management: funds under management\nThe following table shows the funds under management of our Asset Management business. Funds under management represents assets managed, either actively or passively, on behalf of our customers. Funds under management are not reported on the Group’s balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager.\n### Asset Management – reported funds under management1", "chunk_word_count": 475, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Insurance equity plus CSM net of tax", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 119, "page_start": 119, "page_end": 120 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 190, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Asset Management – reported funds under management by legal entities\n1 Funds under management are not reported on the Group’s balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager. \n2 Funds under management of \\$177bn in 2023 and \\$143bn in 2022 relating to our Asset Management entity in the UK are reported under ‘other trading entities’ in the table above.\nAt 31 December 2023, Asset Management funds under management amounted to \\$684bn, an increase of \\$89bn or $1 5 \\%$ . The increase reflected net new invested assets of $\\$ 54 b n$ and a positive impact from market performances and foreign exchange translation. Net new invested assets were notably from additions in money market and exchange traded funds, as well as passive and private equity products.\n### Global Private Banking: client balances\nGlobal Private Banking client balances comprises invested assets and deposits, which are translated at the rates of exchange applicable for their respective year-ends, with the effects of currency translation reported separately.\n### Global Private Banking – reported client balances1\n### Global Private Banking – reported client balances by legal entities\n1 Client balances are not reported on the Group’s balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager. Customer deposits included in these client balances are on balance sheet.\n### Retail invested assets\nThe following table shows the invested assets of our retail customers. These comprise customer assets either managed by our Asset Management business or by external third-party investment managers as well as self-directed investments by our customers.\nRetail invested assets are not reported on the Group’s balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager.\n\n### Retail invested assets by legal entities\n1 ‘Retail net new invested assets’ covers nine markets, comprising Hong Kong including Hang Seng Bank (Hong Kong), mainland China, Malaysia, Singapore, HSBC UK, UAE, US, Canada and Mexico. The net new invested assets relating to all other geographies is reported in ‘foreign exchange and others’.\n### WPB invested assets\nNet new invested assets represents the net customer inflows from retail invested assets, Asset Management third-party distribution and Global Private Banking invested assets. It excludes all customer deposits. The net new invested assets in the table below is non-\nadditive from the tables above, as net new invested assets managed by Asset Management that are generated by retail clients or Global Private Banking will be recorded in both businesses.\n### WPB: Invested assets\n### GBM: Securities Services and Issuer Services\n### Assets held in custody", "chunk_word_count": 480, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Asset Management – reported funds under management by legal entities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 120, "page_start": 120, "page_end": 121 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 191, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Assets under administration\nCustody is the safekeeping and servicing of securities and other financial assets on behalf of clients. Assets held in custody are not reported on the Group’s balance sheet, except where it is deemed that we are acting as principal rather than agent in our role as investment manager. At 31 December 2023, we held $\\$ 9.7\\mathrm { t n }$ of assets as custodian, an increase of $6 \\%$ compared with 31 December 2022. The balance comprised $\\$ 80$ of assets in Securities Services, which were recorded at market value, and $\\$ 0.90$ of assets in Issuer Services, recorded at book value.\nOur assets under administration business includes the provision of bond and loan administration services, transfer agency services and the valuation of portfolios of securities and other financial assets on behalf of clients and complements the custody business. At 31 December 2023, the value of assets held under administration by the Group amounted to $\\$ 4.90$ , which was $9 \\%$ higher than at 31 December 2022. The balance comprised $\\$ 2.90$ of assets in Securities Services, which were recorded at market value, and $\\$ 2.00$ of assets in Issuer Services, recorded at book value.\nThe increase was mainly in Securities Services balances. This was driven by net asset inflows in Europe and Asia, favourable market movements in Asia, North America and Latin America, and a positive impact of currency translation differences in Europe.\nThe increase was mainly driven by Securities Services balances due to net asset inflows in Europe and Asia together with a favourable impact of currency translation differences, market movements and onboarding of new clients in Europe. Issuer Services balances also rose driven by new issuances, notably in the US and the $\\mathsf { U K } ,$ as well as a favourable impact of currency translation differences in the UK.\n### Analysis of reported results by legal entities\nHSBC reported profit/(loss) before tax and balance sheet data\n### Summary information – legal entities and selected countries/territories\nLegal entity reported and constant currency results¹\n### Legal entity results: notable items\n### Selected countries/territories results1\n### Legal entity reported and constant currency results (continued)\n### Selected countries/territories results (continued)\n\n### Analysis by country/territory\nProfit/(loss) before tax by country/territory within global businesses\n### Middle East, North Africa and Türkiye supplementary information\nThe following tables show the results of our Middle East, North Africa and Türkiye business operations on a regional basis (including results of all the legal entities operating in the region and our share of the results of Saudi Awwal Bank). They also show the profit before tax of each of the global businesses.", "chunk_word_count": 469, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Assets under administration", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 122, "page_start": 122, "page_end": 132 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 192, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Middle East, North Africa and Türkiye regional performance\n1 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue. \n2 In the second quarter of 2023, loans and advances to customers of \\$2,975m were classified as ‘Assets held for sale’, and customer accounts of \\$4,878m were classified as ‘Liabilities of disposal groups held for sale’ in respect of the planned merger of our business in Oman. The merger was subsequently completed in August 2023.\n### Profit before tax by global business\n### Reconciliation of alternative performance measures\n### Use of alternative performance measures\n### Contents\n130 Use of alternative performance measures \n131 Alternative performance measure definitions \n132 Return on average ordinary shareholders’ equity and return on average tangible equity \n133 Net asset value and tangible net asset value per ordinary share \n133 Post-tax return and average total shareholders’ equity on average total assets \n133 Expected credit losses and other credit impairment charges as $\\%$ of average gross loans and advances to customers \n133 Target basis operating expenses \n134 Basic earnings per share excluding material notable items and related impacts \n134 Multi-jurisdictional client revenue\nOur reported results are prepared in accordance with IFRS Accounting Standards as detailed in our financial statements starting on page 329.\nAs described on page 100, we use a combination of reported and alternative performance measures, including those derived from our reported results that eliminate factors that distort year-on-year comparisons. These are considered alternative performance measures (non-GAAP financial measures).\nThe following information details the adjustments made to the reported results and the calculation of other alternative performance measures. All alternative performance measures are reconciled to the closest reported performance measure.\nOn 1 January 2023, HSBC adopted IFRS 17 ‘Insurance Contracts’. As required by the standard, the Group applied the requirements retrospectively with comparative data previously published under IFRS 4 ‘Insurance Contracts’ restated from the 1 January 2022 transition date.\nIn addition to the alternative performance measures set out in this section, further alternative performance measures in relation to the Group’s insurance manufacturing operations are set out on pages 116 to 117.", "chunk_word_count": 382, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Middle East, North Africa and Türkiye regional performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 132, "page_start": 132, "page_end": 132 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 193, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Alternative performance measure definitions\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year \nended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis. \n2 Includes the impacts of the sale of our retail banking operations in France. \n3 Includes the provisional gain of \\$1.6bn recognised in respect of the acquisition of SVB UK. \n4 Includes the impairment loss of \\$3.0bn recognised in respect of the Group’s investment in BoCom. See Note 18 on page 394.\nFrom 2024, we intend to revise the adjustments made to return on average tangible equity (‘RoTE’) to exclude all notable items, improving alignment with the treatment of notable items in our other income statement disclosures. On this basis, we continue to target a RoTE in the mid-teens for 2024. If this basis had been adopted for 2023, our RoTE excluding notable items would have been $1 6 . 2 \\%$ .\nThe following table details the adjustments made to reported results by global business:\n### Return on average tangible equity by global business\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis.\nExpected credit losses and other credit impairment charges as $\\%$ of average gross loans and advances to customers and expected credit losses and other credit impairment charges as $\\%$ of average gross loans and advances to customers, including held for sale\n### Target basis operating expenses\nthe acquisition of SVB UK and related investments internationally, which added approximately $1 \\%$ to our cost growth in 2023 compared with 2022. We consider this measure to provide useful information to investors by quantifying and excluding the notable items that management considered when setting and assessing cost-related targets.\nTarget basis operating expenses is computed by excluding the impact of notable items and foreign exchange translation impacts from reported results. We also exclude the impact of retranslating comparative period financial information at the latest rates of foreign exchange in hyperinflationary economies, which we consider to be outside of our control. Our target basis also excludes the impact of", "chunk_word_count": 426, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Alternative performance measure definitions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 133, "page_start": 133, "page_end": 135 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 194, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Basic earnings per share excluding material notable items and related impacts\nMaterial notable items are a subset of notable items. Material notable items are components of our income statement that management would consider as outside the normal course of business and generally non-recurring in nature, which are excluded from our dividend payout ratio calculation and our earnings per share measure, along with related impacts. Categorisation as a material notable item is dependent on the nature of each item in conjunction with the financial impact on the Group’s income statement.\nbanking business in Canada, the acquisition of SVB UK and the impairment of BoCom. The impairment of BoCom is included within material notables given that the impairment relates to the accounting assessment of the future value-in-use. The impairment has no material impact on our distribution capacity, dividends or share buybacks. Related items comprised HSBC Bank Canada‘s financial results from the 30 June 2022 net asset reference date onwards, as a component of the gain on sale will be recognised through the consolidation of HSBC Bank Canada‘s results in the Group‘s results, with the remainder recognised at completion.\nRelated impacts include those items that do not qualify for designation as notable items but whose adjustment is considered by management to be appropriate for the purposes of determining the basis for our dividend payout ratio calculation.\nCommencing in 2024, we will establish a dividend payout ratio on a ‘target basis’. We will disclose at each quarter the adjustments that we will designate as material notable items and related impacts.\nIn 2023, material notable items comprised the impacts of the sale of our retail banking operations in France, the planned sale of our\nBasic earnings per share excluding material notable items and related impacts\n### Number of shares\n1 In 2023, earnings per share (‘EPS’) was adjusted for material notable items and related impacts. 2022 comparatives have not been provided due to the change our reporting framework and restatement due to the adoption of the IFRS 17. See our Annual Report and Accounts 2022 for details of the impacts of adjustments to our EPS in 2022. \n2 Represents an impairment loss of \\$3bn recognised in respect of the Group’s investment in BoCom. See Note 18 on page 392. \n3 Represents the earnings recognised by the banking business in Canada, net of gains and losses on foreign exchange hedges held at Group level, that will reduce the gain on sale recognised by the Group on completion.", "chunk_word_count": 440, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Basic earnings per share excluding material notable items and related impacts", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 136, "page_start": 136, "page_end": 136 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 195, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Multi-jurisdictional revenue\nMulti-jurisdictional revenue is a financial metric we use to assess our ability to drive value from our international network.\nmulti-jurisdictional clients. Wholesale client revenue is derived by excluding from CMB and GBM reported revenue the revenue we generate from client facilitation in fixed income and equities, the 2023 provisional gain on the acquisition of SVB UK, as well as other nonclient revenue.\nIn our wholesale businesses, we identify a client as multi-jurisdictional if they hold a relationship with us that generates revenue in any market outside of where the primary relationship is managed. A client is defined as a mastergroup (HSBC’s own client groupings) that includes both the parent and, where relevant, any subsidiaries.\nIn WPB, we identify a customer as multi-jurisdictional if they bank with us in more than one of our 11 key markets. It is derived by excluding from WPB reported revenue the revenue from Canada and our retail business in France, as well as other non-customer income.\nMulti-jurisdictional client revenue is a component of wholesale client revenue and represents the total client revenue we generate from\n### Wholesale multi-jurisdictional client revenue\n### WPB multi-jurisdictional customer revenue\n1 including allocations of Market Treasury revenue, HSBC Holdings interest expense and hyperinflationary accounting adjustments, and interest earned on capital held in the global businesses.\n### Risk review\nOur risk review outlines our approach to risk management, how we identify and monitor top and emerging risks, and the actions we take to mitigate them. In addition, it explains our material banking risks, including how we manage capital.\n136 Our approach to risk \n136 Our risk appetite \n136 Risk management \n139 Key developments in 2023 \n140 Top and emerging risks \n140 Externally driven \n143 Internally driven \n145 Our material banking risks \n147 Credit risk \n203 Treasury risk \n218 Market risk \n221 Climate risk \n230 Resilience risk \n231 Regulatory compliance risk \n231 Financial crime risk \n232 Model risk \n233 Insurance manufacturing operations\n### Our partnership with Google to fight financial crime\nGoogle Cloud in 2023 officially launched an anti-money laundering artificial intelligence capability, which HSBC co-developed, that has the potential to transform how financial crime is tackled across the industry.\nWe first implemented the solution, known at HSBC as the Dynamic Risk Assessment, in the UK in 2021 and have since deployed it in six markets, covering 80% of our customers.\nAs a result of the tool, we can now identify more financial crime risk, twice as fast and with greater accuracy.\nWe are also continuing to work with Google Cloud on other use cases for artificial intelligence.\n### Our approach to risk", "chunk_word_count": 462, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Multi-jurisdictional revenue", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 136, "page_start": 136, "page_end": 137 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 196, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Our risk appetite\nWe recognise the importance of a strong culture, which refers to our shared attitudes, beliefs, values and standards that shape behaviours including those related to risk awareness, risk taking and risk management. All our people are responsible for the management of risk, with ultimate supervisory oversight residing with the Board. Our risk appetite defines the level and types of risk that we are willing to take, while informing the financial planning process and guiding strategic decision making.\n– trends highlighted in other Group risk reports; \n– communication with risk stewards on the developing risk landscape; strength of our capital, liquidity and balance sheet; \n一 compliance with applicable laws and regulations; effectiveness of the applicable control environment to mitigate risk, informed by risk ratings from risk control assessments; \n– functionality, capacity and resilience of available systems to manage risk; and \n– the level of available staff with the required competencies to manage risks.\nThe following principles guide the Group’s overarching appetite for risk and determine how our businesses and risks are managed.\n### Financial position\n– We aim to maintain a strong capital position, defined by regulatory and internal capital ratios.\nWe formally articulate our risk appetite through our RAS. Setting out our risk appetite helps ensure that we agree a suitable level of risk for our strategy. In this way, risk appetite informs our financial planning process and helps senior management to allocate capital to business activities, services and products.\n– We carry out liquidity and funding management for each operating entity on a stand-alone basis.\n### Operating model\nThe RAS is applied to the development of business line strategies, strategic and business planning, and remuneration. At a Group level, performance against the RAS is reported to the Group Risk Management Meeting alongside key risk indicators to support targeted insight and discussion on breaches of risk appetite and any associated mitigating actions. This reporting allows risks to be promptly identified and mitigated, and informs risk-adjusted remuneration to drive a strong risk culture.\n– We seek to generate returns in line with our risk appetite and strong risk management capability.\n– We aim to deliver sustainable and diversified earnings and consistent returns for shareholders.\n### Business practice\n– We have no appetite for deliberately or knowingly causing detriment to consumers, or incurring a breach of the letter or spirit of regulatory requirements.\nEach global business, region and material operating entity is required to have its own RAS, which is monitored to help ensure it remains aligned with the Group’s RAS. Each RAS and business activity is guided and underpinned by qualitative principles and/or quantitative metrics.\n– We have no appetite for inappropriate market conduct by any member of staff or by any Group business.\n– We are committed to managing the climate risks that have an impact on our financial position and delivering on our net zero ambition.", "chunk_word_count": 509, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Our risk appetite", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 138, "page_start": 138, "page_end": 138 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 197, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Risk management\n– We consider and, where appropriate, mitigate reputational risk that may arise from our business activities and decisions.\nWe recognise that the primary role of risk management is to help protect our customers, business, colleagues, shareholders and the communities that we serve, while ensuring we are able to support our strategy and provide sustainable growth. This is supported through our three lines of defence model described on page 138.\n– We monitor non-financial risk exposure against risk appetite, including exposure related to inadequate or failed internal processes, people and systems, or events that impact our customers or can lead to sub-optimal returns to shareholders, censure, or reputational damage.\nThe implementation of our business strategy remains a key focus. As we implement change initiatives, we actively manage the execution risks. We also perform periodic risk assessments, including against strategies, to help ensure retention of key personnel for our continued safe operation.", "chunk_word_count": 181, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Risk management", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 138, "page_start": 138, "page_end": 138 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 198, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Enterprise-wide application\nOur risk appetite encapsulates the consideration of financial and nonfinancial risks. We define financial risk as the risk of a financial loss as a result of business activities. We actively take these types of risks to maximise shareholder value and profits. Non-financial risk is the risk to achieving our strategy or objectives as the result of failed internal processes, people and systems, or from external events.\nWe aim to use a comprehensive risk management approach across the organisation and across all risk types, underpinned by our culture and values. This is outlined in our risk management framework, including the key principles and practices that we employ in managing material risks, both financial and non-financial. The framework fosters continuous monitoring, promotes risk awareness and encourages a sound operational and strategic decision-making and escalation process. It also supports a consistent approach to identifying, assessing, managing and reporting the risks we accept and incur in our activities, with clear accountabilities. We actively review and enhance our risk management framework and our approach to managing risk, through our activities with regard to: people and capabilities; governance; reporting and management information; credit risk management models; and data.\nOur risk appetite is expressed in both quantitative and qualitative terms and applied at the global business and regional levels, and to material operating entities. Every three years, the Group Risk and Compliance function commissions an external independent firm to review the Group’s approach to risk appetite and to help ensure that it remains in line with market best practice and regulatory expectations. This review was last carried out in 2021 and confirmed the Group’s risk appetite statement (‘RAS’) remains aligned to best practices, regulatory expectations and strategic goals. Our risk appetite continues to evolve and expand its scope as part of our regular review process.\nGroup Risk and Compliance is independent from the global businesses, including our sales and trading functions. It provides challenge, oversight and appropriate balance in risk/return decisions.\nThe Board reviews and approves the Group’s risk appetite regularly to make sure it remains fit for purpose. The Group’s risk appetite is considered, developed and enhanced through:\n– an alignment with our strategy, purpose, values and customer needs;\n### Our risk management framework\nThe following diagram and descriptions summarise key aspects of the risk management framework, including governance, structure, risk management tools and our culture, which together help align employee behaviour with risk appetite.\n### Key components of our risk management framework", "chunk_word_count": 438, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Enterprise-wide application", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 138, "page_start": 138, "page_end": 139 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 199, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Risk governance\nThe Board has ultimate supervisory responsibility for the effective management of risk and approves our risk appetite.\nThe Group Chief Risk and Compliance Officer, supported by members of the Group Risk Management Meeting, holds executive accountability for the ongoing monitoring, assessment and management of the risk environment and the effectiveness of the risk management framework.\nDay-to-day responsibility for risk management is delegated to senior managers with individual accountability for decision making. All our people have a role to play in risk management. These roles are defined using the three lines of defence model, which takes into account our business and functional structures, including regulatory compliance and financial crime, as described in the following commentary, ‘Our responsibilities’.\nThe Group Chief Risk and Compliance Officer is also responsible for the oversight of reputational risk, with the support of the Group Reputational Risk Committee. The Group Reputational Risk Committee considers matters arising from customers, transactions and third parties that either present a serious potential reputational risk to the Group or merit a Group-led decision to ensure a consistent risk management approach across the regions, global businesses and global functions. Further details can be found under the ‘Reputational risk’ section of www.hsbc.com/who-we-are/esg-and-responsiblebusiness/managing-risk.\nWe use a defined executive risk governance structure to help ensure there is appropriate oversight and accountability of risk, which facilitates reporting and escalation to the Group Risk Management Meeting. This structure is summarised in the following table.\n### Our responsibilities\nAll our people are responsible for identifying and managing risk within the scope of their roles. Roles are defined using the three lines of defence model, which takes into account our business and functional structures as described below.\nWe have continued to strengthen the control environment and our approach to the management of risk, as set out in our risk management framework. Our ongoing focus is on helping to ensure more effective oversight and better end-to-end identification and management of financial and non-financial risks. This is overseen by the Enterprise Risk Management function, headed by the Global Head of Enterprise Risk Management.\n### Three lines of defence\nTo create a robust control environment to manage risks, we use an activity-based three lines of defence model. This model delineates management accountabilities and responsibilities for risk management and the control environment.", "chunk_word_count": 409, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Risk governance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 139, "page_start": 139, "page_end": 140 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 200, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Stress testing and recovery planning\nOur stress testing programme assesses our capital and liquidity strength through a rigorous examination of our resilience to external shocks, and forms part of our risk management and capital and liquidity planning. As well as undertaking regulatory-driven stress tests, we conduct our own internal stress tests in order to understand the nature and level of material risks, quantify the impact of such risks and develop plausible mitigating actions. The outcome of a stress test provides management with key insights into the impact of severely adverse events on the Group and provides an indication of resilience to regulators on the Group’s financial stability.\nThe model underpins our approach to risk management by clarifying responsibility and encouraging collaboration, as well as enabling effective coordination of risk and control activities. The three lines of defence are summarised below:\n– The first line of defence owns the risks and is responsible for identifying, recording, reporting and managing them in line with risk appetite, and ensuring that the right controls and assessments are in place to mitigate them.\n– The second line of defence challenges the first line of defence on effective risk management, and provides advice, guidance and assurance of the first line of defence to ensure it is managing risk effectively.\n### Internal stress tests\nOur internal capital assessment uses a range of stress scenarios that explore risks identified by management. They include potential adverse macroeconomic, geopolitical, climate and operational risk events, as well as other potential events that are specific to HSBC.\nThe third line of defence is our Global Internal Audit function, which provides independent assurance as to whether our risk management approach and processes are designed and operating effectively.\nThe selection of stress scenarios is based upon the output of our identified top and emerging risks and our risk appetite. Stress testing analysis helps management understand the nature and extent of vulnerabilities to which the Group is exposed. Using this information, management decides whether risks can or should be mitigated through management actions or, if they were to crystallise, be absorbed through capital and liquidity. This in turn informs decisions about preferred capital and liquidity levels and allocations.", "chunk_word_count": 392, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Stress testing and recovery planning", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 140, "page_start": 140, "page_end": 140 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 201, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Group Risk and Compliance function\nOur Group Risk and Compliance function is responsible for the Group’s risk management framework. This responsibility includes establishing global policy, monitoring risk profiles, and identifying and managing forward-looking risk. Group Risk and Compliance is made up of sub-functions covering all risks to our business. Forming part of the second line of defence, the Group Risk and Compliance function is independent from the global businesses, including sales and trading functions. It provides challenge, appropriate oversight and balance in risk/return decisions.\nDuring 2023, we completed a Group-wide internal stress test alongside testing of the Group’s strategy, otherwise known as the corporate plan, to test and inform our strategy and assumptions. The stress scenario explored the potential impact of interest rate shocks and a deep recession. Under this scenario, inflation re-intensifies as accentuated geopolitical tensions lead to severe global supply chain disruptions and a rise in energy prices.\nResponsibility for minimising both financial and non-financial risk, including regulatory compliance and financial crime, lies with our people. They are required to manage the risks of the business and operational activities for which they are responsible. We maintain adequate oversight of our risks through our various specialist risk stewards and the collective accountability held by our chief risk and compliance officers.\nIn addition to the Group-wide stress testing scenarios, each major subsidiary conducts regular macroeconomic and event-driven scenario analysis specific to its region. They also participate, as required, in the regulatory stress testing programmes of the jurisdictions in which they operate, such as stress tests required by the Bank of England\n(‘BoE’) in the UK, the Federal Reserve Board (‘FRB’) in the US, and the Hong Kong Monetary Authority (‘HKMA’) in Hong Kong. Global functions and businesses also perform bespoke stress testing to inform their assessment of risks to potential scenarios.\nAlthough we continue to track the transition of remaining contracts to alternative interest rate benchmarks, overall, our regulatory compliance, conduct and legal risks have materially diminished. We will continue to monitor until all contracts are fully transitioned.\nWe also conduct reverse stress tests each year at Group level and, where required, at subsidiary entity level to understand potential extreme conditions that would make our business model non-viable. Reverse stress testing identifies potential stresses and vulnerabilities we might face, and helps inform early warning triggers, management actions and contingency plans designed to mitigate risks.\n### Key developments in 2023\nIn 2023, we actively managed the risks related to macroeconomic and geopolitical uncertainties, as well as other key risks described in this section. In addition, we sought to enhance our risk management in the following areas:", "chunk_word_count": 464, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Group Risk and Compliance function", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 140, "page_start": 140, "page_end": 141 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 202, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Recovery and resolution plans\n– We enhanced our model risk frameworks and controls as we seek to manage the increasing numbers of climate risk, artificial intelligence (‘AI’) and machine learning models being embedded in business processes. Focus is also on generative AI due to the pace of technological changes and regulatory and wider interest in adoption and usage.\nRecovery and resolution plans form part of the integral framework safeguarding the Group’s financial stability. The Group recovery plan, together with stress testing, help us understand the likely outcomes of adverse business or economic conditions and in the identification of appropriate risk mitigating actions. The Group is committed to further developing its recovery and resolution capabilities, including in relation to the Resolvability Assessment Framework.\nWe implemented two revised risk appetite frameworks to better manage and strengthen our controls with respect to concentration risks. These relate to concentration risks arising from exposures to countries and territories, and to single customer groups.", "chunk_word_count": 187, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Recovery and resolution plans", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 141, "page_start": 141, "page_end": 141 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 203, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Ibor transition\nInterbank offered rates (‘Ibors’) were previously used extensively to set interest rates on different types of financial transactions and for valuation purposes, risk measurement and performance benchmarking.\nWe enhanced our processes, framework and capabilities to seek to improve the control and oversight of our material third parties, and to help maintain our operational resilience and meet new and evolving regulatory requirements.\nThe publication of sterling, Swiss franc, euro, Japanese yen and US dollar Libor interest rate benchmarks, as well as the Euro Overnight Index Average (‘Eonia’) and other local interbank interest rates globally, has ceased following regulatory announcements and industry initiatives. To support any remaining contracts referencing sterling and US dollar Libor benchmarks, the UK’s Financial Conduct Authority (‘FCA’) has compelled the ICE Benchmark Administration Limited to publish the three-month sterling Libor setting using an alternative ‘synthetic’ methodology until 31 March 2024, and the one-month, three-month and six-month US dollar Libor settings until 30 September 2024. We continue to support our customers in the transition of the limited number of outstanding contracts relying on ‘synthetic’ Libor benchmarks in line with these dates.\n– We continued to make progress with our comprehensive regulatory reporting programme in seeking to strengthen our global processes, improve consistency and enhance controls across regulatory reports.\n– Through our climate risk programme, we continued to embed climate considerations throughout the organisation, including through risk policy updates and the completion of our annual climate risk materiality assessment. We also developed risk metrics to monitor and manage exposures, and further enhanced our internal climate scenario analysis.\n– We deployed industry-leading technology and advanced analytics capabilities into new markets to improve our ability to identify suspicious activities and prevent financial crime.\nThere are approximately 90 of these contracts remaining, which are predominantly syndicated lending contracts, where Commercial Banking and Global Banking customers have required additional time to enable refinancing or restructuring, with transition expected to be completed prior to 30 September 2024. Additionally, there are a small number of Group-issued MREL and capital securities and client retail mortgages that are contingent on demised Ibors after the end of their fixed interest rate periods. HSBC remains committed to seeking to remediate and/or mitigate relevant risks relating to Ibor-demise, as appropriate, for these contracts. HSBC expects to be able to remediate and/or mitigate these risks by the relevant interest rate calculation dates, which may occur post-cessation of the relevant Ibor. All other contracts referencing benchmarks that are no longer published have been transitioned in line with client and investor discussions.\n– We continued to develop and enhance our electronic communication policies and standards to help ensure that we act on the most substantive issues. A Group-wide approach to providing corporate device access is being implemented to meet regulatory expectations.\n– We are embedding our suite of regulatory management systems following the Group-wide roll-out of regulatory horizon scanning capabilities, and enhanced regulation mapping tooling.\nWe continued to stabilise our net interest income, despite the fluctuations in interest rate expectations, driven by central bank rate increases and a reassessment of the trajectory of inflation in major economies.", "chunk_word_count": 544, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Ibor transition", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 141, "page_start": 141, "page_end": 141 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 204, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Top and emerging risks\nChina, in turn, imposed a number of its own sanctions and trade restrictions that target, or provide authority to target, foreign individuals and companies as well as certain goods such as rare earth minerals and metals, and technology and services. These, as well as certain law enforcement measures, have been imposed against certain countries, Western consulting and data intelligence firms, defence companies and public officials associated with the implementation of foreign sanctions against China.\nWe use a top and emerging risks process to provide a forward-looking view of issues with the potential to threaten the execution of our strategy or operations over the medium to long term.\nWe proactively assess the internal and external risk environment, as well as review the themes identified across our regions and global businesses, for any risks that may require global escalation. We update our top and emerging risks as necessary.\nOur current top and emerging risks are as follows.\nFurther sanctions, counter-sanctions and trade restrictions may adversely affect the Group, its customers and the markets in which the Group operates, by creating regulatory, reputational and market risks.\n### Externally driven", "chunk_word_count": 219, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Top and emerging risks", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 142, "page_start": 142, "page_end": 142 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 205, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Geopolitical and macroeconomic risks\nEconomic and financial risks also remain significant, and we continue to monitor our risk profile closely in the context of uncertainty over global macroeconomic policies.\nHSBC faces elevated geopolitical risks, with the Russia-Ukraine war continuing to have global economic and political implications, and the Israel-Hamas war increasing tensions in the Middle East, leading to recent attacks on shipping in the Red Sea and countermeasures, which have begun to disrupt supply chains. HSBC is monitoring and assessing the impacts of these wars.\nA fall in global energy and food prices from the highs of 2022 facilitated a process of disinflation across key economies during 2023. To date, the Israel-Hamas war has not materially disrupted energy supply, and non-OPEC producers, including the US, increased output in the fourth quarter of 2023. Similarly, geopolitical developments in the Middle East have not to date led to a sustained increase in energy prices, but disruption and further price volatility continue to be a risk. The escalation or a broadening of either the Russia-Ukraine war or the Israel-Hamas war could aggravate supply chain disruptions and drive inflation higher and may pose challenges for our customers and our business.\nThe Russia-Ukraine war has continued to elevate geopolitical instability, which could have continued ramifications for the Group and its customers. HSBC continues to monitor and respond to financial sanctions and trade restrictions that have been adopted in response. These sanctions and trade restrictions are complex, novel and evolving. In particular, the US, the UK and the EU, as well as other countries, have imposed significant sanctions and trade restrictions against Russia. Such sanctions and restrictions target certain Russian government officials, politically exposed persons, business people, Russian oil imports, energy products, financial institutions and other major Russian companies and sanctions evasion networks. These countries have also enacted more generally applicable investment, export, and import bans and restrictions. In December 2023, the US established a new secondary sanctions regime, providing itself broad discretion to impose severe sanctions on non-US banks that are knowingly or even unknowingly engaged in certain transactions or services involving Russia’s military-industrial base. This creates challenges associated with the detection or prevention of third-party activities beyond HSBC’s control. The imposition of such sanctions against any non-US HSBC entity could result in significant adverse commercial, operational, and reputational consequences for HSBC, including the restriction or termination of the non-US HSBC entity’s ability to access the US financial system and the freezing of the entity’s assets that are subject to US jurisdiction. In response to such sanctions and trade restrictions, as well as asset flight, Russia has implemented certain countermeasures, including the expropriation of foreign assets.\nFollowing the reduction in global inflation rates, central banks in most developed markets are expected to have concluded monetary policy tightening in the second half of 2023. A further fall in inflation is expected to enable reductions in interest rates throughout 2024, although forecasts still assume that they remain materially higher than in recent years. Higher financing costs will raise interest payment burdens for many counterparties.", "chunk_word_count": 536, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Geopolitical and macroeconomic risks", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 142, "page_start": 142, "page_end": 142 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 206, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Geopolitical and macroeconomic risks\nFiscal deficits are also expected to remain large in both developed and emerging markets, as public spending on items including social welfare, defence and climate transition initiatives is expected to remain high. In many countries, the fiscal response to the Covid-19 pandemic has also left a very high public debt burden. Against a backdrop of slower economic growth and high interest rates, a rise in borrowing costs could increase the financial strains on highly indebted sovereigns.\nPolitical changes may also have implications for policy. Many countries are expected to hold elections in 2024. This may result in continuity in some markets, but significant political and policy change in others. Political change could bring uncertainty to the political and legal frameworks in markets where the Group operates.\nOur business in Russia principally serves multinational corporate clients headquartered in other countries, is not accepting new business or customers and is consequently on a declining trend. Following a strategic review, HSBC Europe BV (a wholly-owned subsidiary of HSBC Bank plc) has entered into an agreement to sell its wholly-owned subsidiary HSBC Bank (RR) (Limited Liability Company), subject to regulatory and governmental approvals. The planned sale of our business in Russia became less certain and remains subject to regulatory approval.\nSector-specific risks are also closely monitored. Mainland China commercial real estate conditions remain distressed as offshore financing conditions and buyer demand remain subdued. Signs of a material or sustained recovery are yet to emerge, with market data still reflecting reduced investment and weak sentiment. The Chinese government is expected to expand fiscal and monetary support to the economy to boost growth and lending in 2024, including specific measures to support developers and stimulate housing demand. However, the risk of a slow and protracted recovery remains significant. The business and financial performance of corporates operating in this market has been weak, and refinancing risks are likely to continue in 2024. State-owned enterprises continue to outperform privately-owned enterprises in general, with above market average sales performance, market share gains and greater access to funding. The challenges in this sector could create further pressure on our customers. We continue to closely monitor and take actions to proactively risk manage our portfolio.\nThe US-China relationship remains complex. To date, the US, the UK, the EU and other countries have imposed various sanctions and trade restrictions on Chinese persons and companies, and the countries’ respective approaches to strategic competition with China continue to develop. Although sanctions and trade restrictions are difficult to predict, increases in diplomatic tensions between China and the US and other countries could result in further sanctions and trade restrictions that could negatively impact the Group, its customers and the markets in which the Group operates. For example, there is a continued risk of additional sanctions and trade restrictions being imposed by the US and other governments in relation to human rights, technology, and other issues, and this could create a more complex operating environment for the Group and its customers.", "chunk_word_count": 528, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Geopolitical and macroeconomic risks", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 142, "page_start": 142, "page_end": 142 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 207, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Geopolitical and macroeconomic risks\nMacroeconomic, financial and geopolitical risks have all impacted our macroeconomic risk scenarios. Our Central scenario, which has the highest probability weighting in our IFRS 9 ‘Financial Instruments’ calculations of ECL, assumes that GDP growth rates in our main markets will slow down in 2024, followed by a moderate recovery in\n2025. It is anticipated that inflation will converge towards central banks’ target rates by early 2025. Similarly, interest rates are expected to decline but remain materially higher than in recent years. We also consider scenarios where commodity prices are materially higher, inflation and interest rates rise and a global recession follows, although we assign these scenarios a lower probability of occurring.\n### Technology and cybersecurity risk\nLike other organisations, we operate in an extensive and complex technology landscape. We need to remain resilient in order to support customers, our colleagues and financial markets globally. Risks arise where, for example, technology is not understood, maintained or developed appropriately. We also continue to operate in an increasingly complex cyber threat environment globally. These threats include potential unauthorised access to customer accounts and attacks on systems, whether ours or our third-party suppliers’. These threats require ongoing investment in business and technical controls to defend against them.\nForecasts remain uncertain, and changing economic conditions and the materialisation of key risks could reduce the accuracy of the Central scenario forecast. In particular, forecasts in recent years have been sensitive to commodity price changes, changing supply chain conditions, monetary policy adjustments and inflation expectations. Uncertainty remains with respect to the relationship between the economic factors and historical loss experience, which has required adjustments to modelled ECL in cases where we determined that the model was unable to capture the material underlying risks.", "chunk_word_count": 319, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Geopolitical and macroeconomic risks", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 142, "page_start": 142, "page_end": 143 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 208, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Mitigating actions\n– We continue to upgrade many of our IT systems and are transforming how software solutions are developed, delivered, maintained and tested as part of our investment in the Group’s operational resilience capabilities to seek to meet the expectations of our customers and regulators and to help prevent disruptions to our services.\nDespite these risks, forecast stability and reduced forecast dispersion in our main markets ensured that the Central scenario for impairment was assigned the same likelihood of occurrence across our key markets.\nFor further details of our Central and other scenarios, see ‘Measurement uncertainty and sensitivity analysis of ECL estimates’ on page 156.\n– Our cyber intelligence and threat analysis team continually evaluate threat levels for the most prevalent cyber-attack types and their potential outcomes (see page 98), and we continue to seek to strengthen our controls to help reduce the likelihood and impact of advanced malware, data leakage, exposure through third parties and security vulnerabilities.\nGlobal tensions over trade, technology and ideology are manifesting themselves in divergent regulatory standards and compliance regimes, presenting long-term strategic challenges for multinational businesses.\nWe continue to seek to enhance our cybersecurity capabilities, including Cloud security, identity and access management, metrics and data analytics, and third-party security reviews and to invest in mitigating the potential threats of emerging technologies.\nAs the geopolitical landscape evolves, compliance by multinational corporations with their legal or regulatory obligations in one jurisdiction may be seen as supporting the law or policy objectives of that jurisdiction over another, creating additional compliance, reputational and political risks for the Group. We maintain dialogue with our regulators in various jurisdictions on the impact of legal and regulatory obligations on our business and customers.\n– We regularly report and review cyber risk and control effectiveness at executive level across global businesses, functions and regions, as well as at non-executive Board level to help ensure there is appropriate visibility and governance of the risk and its mitigating actions.\nThe financial impact on the Group of geopolitical risks in Asia is heightened due to the region’s relatively high contribution to the Group’s profitability, particularly in Hong Kong.\nWe participate globally in industry bodies and working groups to collaborate on tactics employed by cyber-crime groups and to work together to seek to prevent, detect and defend against cyber-attacks on financial organisations globally.\nWhile it is the Group’s policy to comply with all applicable laws and regulations of all jurisdictions in which it operates, geopolitical tensions, and potential ambiguities in the Group’s compliance obligations, will continue to present challenges and risks for the Group and could have a material adverse impact on the Group‘s business, financial condition, results of operations, prospects, strategy and reputation, as well as on the Group’s customers.\n– We respond to attempts to compromise our cybersecurity in accordance with our cybersecurity framework, which adheres to applicable laws, rules and regulations. To date, none of these attacks have had a material impact on our business or operations.", "chunk_word_count": 524, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Mitigating actions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 143, "page_start": 143, "page_end": 143 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 209, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Environmental, social and governance (’ESG’) risk\n### Mitigating actions\n– We closely monitor geopolitical and economic developments in key markets and sectors, and undertake scenario analysis where appropriate. This helps us to take actions to manage our portfolios where necessary, including through enhanced monitoring, amending our risk appetite and/or reducing limits and exposures.\nWe are subject to financial and non-financial risks associated with ESG-related matters. Our current areas of focus include climate risk, nature-related risks and human rights risks. These can impact us both directly and indirectly through our business activities and relationships. For details of how we govern ESG, see page 88.\n– We stress test portfolios of particular concern to identify sensitivity to loss under a range of scenarios, with management actions being taken to rebalance exposures and manage risk appetite where necessary.\nOur assessment of climate risks covers three distinct time periods, comprising: short term, which is up to 2025; medium term, which is between 2026 and 2035; and long term, which is between 2036 and 2050. These time periods are aligned to the Climate Action $1 0 0 +$ framework v1.2.\nWe regularly review key portfolios – including our commercial real estate portfolio – to help ensure that individual customer or portfolio risks are understood and that our ability to manage the level of facilities offered through any downturn is appropriate.\nWe may face credit losses if our customers’ business models fail to align to a net zero economy or if our customers face disruption to their operations or deterioration to their assets as a result of extreme weather.\n– We continue to seek to manage sanctions and trade restrictions through the use of reasonably designed policies, procedures and controls, which are subject to ongoing testing, auditing and enhancements.\nWe may face trading losses if climate change results in changes to macroeconomic and financial variables that negatively impact our trading book exposures.\n– We have taken steps, where necessary, to enhance physical security in geographical areas deemed to be at high risk from terrorism and military conflicts.\nWe may face impacts from physical risk on our own operations and premises, owing to the increase in frequency and severity of weather events and chronic shifts in weather patterns, which could affect our ability to conduct our day-to-day operations.\nWe may face increased reputational, legal, and regulatory compliance risks if we fail to make sufficient progress towards our net zero ambition, and ESG-related targets, commitments and ambitions, if we fail to meet evolving regulatory expectations and requirements on the management of climate risk and broader ESG risks, or if we knowingly or unknowingly make inaccurate, unclear, misleading, or unsubstantiated claims regarding sustainability to our stakeholders.\n– In 2023, we conducted pilot exercises to assess nature risk exposures, focusing on our continental Europe portfolios in line with regulatory expectations.\n– In 2023, we provided practical guidance and training, where relevant, to our colleagues across the Group on how to identify and manage human rights risk. For further details, see page 89.", "chunk_word_count": 531, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Environmental, social and governance (’ESG’) risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 143, "page_start": 143, "page_end": 144 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 210, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Mitigating actions\n– We have expanded the scope of financial reporting risk to explicitly include oversight over accuracy and completeness of climaterelated and broader ESG disclosures. In 2023, we updated the risk appetite statement to reference our ESG and climate-related disclosures. We also updated our internal controls to incorporate requirements for addressing the risk of misstatement in climaterelated and broader ESG disclosures. To support this, we have developed a framework to guide control implementation over climate-related and broader ESG disclosures, which includes areas such as process and data governance, and risk assessment.\nRequirements, policy objectives, expectations or views may vary by jurisdiction and stakeholder in relation to ESG-related matters. We may be subject to potentially conflicting approaches to ESG matters in certain jurisdictions, which may impact our ability to conduct certain business within those jurisdictions or result in additional regulatory compliance, reputational, political or litigation risks. These risks may also arise from divergence in the implementation of ESG, climate policy and financial regulation in the many regions in which we operate, including initiatives to apply and enforce policy and regulation with extraterritorial effect.\nWe continue to engage with our customers, investors and regulators proactively on the management of climate-related and broader ESG risks. We also engage with initiatives, including the Climate Financial Risk Forum, Equator Principles, Task Force on Climate-related Financial Disclosures and CDP (formerly the Carbon Disclosure Project) to help drive best practice for climate risk management.\nWe may face financial reporting risk in relation to our climate-related and broader ESG disclosures, as any data, methodologies, scenarios and reporting standards we have used may evolve over time in line with market practice, regulation or developments in science. We may also face the risk of making reporting errors due to issues relating to the availability, accuracy and verifiability of data, and system, process and control challenges. Any changes and reporting errors could result in revisions to our internal frameworks and reported data and could mean that reported figures are not reconcilable or comparable year on year. We may also have to re-evaluate our progress towards our climate-related targets in the future.\nFor further details of our approach to climate risk management, see ‘Climate risk’ on page 221.\nFor further details of ESG risk management, see ‘Financial crime risk‘ on page 231 and ‘Regulatory compliance risk’ on page 231.\nWe may face model risk, as the uncertain and evolving impacts of climate change and data and methodology limitations present challenges to creating reliable and accurate model outputs.\nOur ESG review can be found on page 42.", "chunk_word_count": 454, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Mitigating actions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 144, "page_start": 144, "page_end": 144 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 211, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Financial crime risk\nWe may face climate and broader ESG-related litigation and regulatory enforcement risks, either directly if stakeholders think that we are not adequately managing climate and broader ESG-related risks, or indirectly if our clients and customers are themselves the subject of litigation, potentially resulting in the revaluation of client assets.\nFinancial institutions remain under considerable regulatory scrutiny regarding their ability to detect and prevent financial crime. In 2023, these risks were exacerbated by rising geopolitical tensions and ongoing macroeconomic factors. These challenging developments require managing conflicting laws and approaches to legal and regulatory regimes, and implementing increasingly complex and less predictable sanctions and trade restrictions.\nWe may also be exposed to nature-related risks beyond climate change. These risks arise when the provision of ecosystem services, such as water availability, air quality and soil quality, is compromised by human activity. Nature risk can manifest through macroeconomic, market, credit, reputational, legal and regulatory risks, for both HSBC and our customers.\nAmid high levels of inflation and increasing cost of living pressures, we face increasing regulatory expectations with respect to managing internal and external fraud and protecting vulnerable customers. In addition, the accessibility and increasing sophistication of generative AI brings financial crime risks. While there is potential for the technology to support financial crime detection, there is also a risk that criminals use generative AI to perpetrate fraud, particularly scams.\nRegulation and disclosure requirements in relation to human rights, and to modern slavery in particular, are increasing. Businesses are expected to be transparent about their efforts to identify and respond to the risk of negative human rights impacts arising from their business activities and relationships.\nThe digitisation of financial services continues to have an impact on the payments ecosystem, with an increasing number of new market entrants and payment mechanisms, not all of which are subject to the same level of regulatory scrutiny or regulations as banks. Developments around digital assets and currencies have continued at pace, with an increasing regulatory and enforcement focus on the financial crimes linked to these types of assets.", "chunk_word_count": 372, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Financial crime risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 144, "page_start": 144, "page_end": 144 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 212, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Mitigating actions\n– A dedicated Environmental Risk Oversight Forum is responsible for shaping and overseeing our approach and providing support in managing climate and sustainability risk. For further details of the Group’s ESG governance structure, see page 88.\nOur climate risk programme continues to support the development of our climate risk management capabilities across four key pillars: governance and risk appetite, risk management, stress testing and scenario analysis, and disclosures. We continue to enhance our approach and mitigation of the risk of greenwashing.\nExpectations continue to increase with respect to the intersection of ESG issues and financial crime, as our organisation, customers and suppliers transition to net zero. These are particularly focused on potential ‘greenwashing’, human rights issues and environmental crimes. In addition, climate change itself could heighten risks linked to vulnerable migrant populations in countries where financial crime is already more prevalent.\n– In January 2024, we updated our energy policy covering the broader energy system including upstream oil and gas, oil and gas power generation, coal, hydrogen, renewables and hydropower, nuclear, biomass and energy from waste. We also updated our thermal coal phase-out policy, which aims to drive thermal coal phase-out aligned to science-based timeframes. We take a riskbased approach in the way that we identify transactions and clients to which our energy and thermal coal phase-out policies apply, and report on relevant exposures, adopting approaches proportionate to risk and materiality. For further details of our sustainability risk policies, see page 67.\nWe also continue to face increasing challenges presented by national data privacy requirements, which may affect our ability to manage financial crime risks across markets.\nMitigating actions\nWe continue to seek to manage sanctions and trade restrictions through the use of reasonably designed policies, procedures and controls, which are subject to ongoing testing, auditing and enhancements.\n– We continue to develop our fraud controls and invest in capabilities to fight financial crime through the application of advanced analytics and AI, while monitoring technological developments and engaging with third parties.\n### Internally driven\n### Data risk\n– We are looking at the impact of a rapidly changing payments ecosystem, as well as risks associated with direct and indirect exposure to digital assets and currencies, in an effort to maintain appropriate financial crime controls.\nWe use multiple systems and growing quantities of data to support our customers. Risk arises if data is incorrect, unavailable, misused, or unprotected. Along with other banks and financial institutions, we need to meet external regulatory obligations and laws that cover data, such as the Basel Committee on Banking Supervision’s 239 guidelines and the General Data Protection Regulation.\n– We regularly review our existing policies and control framework so that developments relating to ESG are considered and the financial crime risks are mitigated to the extent possible.\n– We engage with regulators, policymakers and relevant international bodies, seeking to address data privacy challenges through international standards, guidance and legislation.", "chunk_word_count": 514, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Mitigating actions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 144, "page_start": 144, "page_end": 145 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 213, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Mitigating actions\nThrough our global data management framework, we monitor the quality, availability and security of data that supports our \ncustomers and internal processes. We work towards resolving any identified data issues in a timely manner. \nWe continue to make improvements to our data policies and to our control framework – which includes trusted sources, data flows and data quality – in order to enhance the end-to-end management of data risk. \nWe have established a global data management utility and \ncontinue to simplify and unify data management activities across the Group. \nWe seek to protect customer data through our data privacy \nframework, which establishes practices, design principles and guidelines that enable us to demonstrate compliance with data privacy laws and regulations. \nWe continue to modernise our data and analytics infrastructure through investments in Cloud technology, data visualisation, \nmachine learning and AI. \nWe continue to educate our employees on data risk and data management. We have delivered regular mandatory training \nglobally on how to protect and manage data appropriately.\n### Digitalisation and technological advances risk\nDevelopments in technology and changes to regulations are enabling new entrants to the industry, particularly with respect to payments. This challenges us to continue innovating to address evolving customer requirements, drive efficiency and adapt our products to attract and retain customers. As a result, we may need to increase our investment in our business to adapt or develop products and services to respond to our customers’ evolving needs. We also need to ensure that new digital capabilities do not weaken our resilience or wider risk management capabilities.\nNew technologies such as generative AI, large language models blockchain and quantum computing offer both business opportunities and potential risks for HSBC. As with the use of all technologies, we aim to maximise their potential while seeking to ensure a robust control environment is in place to help manage the inherent risks, such as the impact on encryption algorithms.\n### Mitigating actions:\n– We continue to monitor this emerging risk and advances in technology, as well as changes in customer behaviours, to understand how these may impact our business. We assess new technologies to help develop appropriate controls and maintain resilience. We closely monitor and assess financial crime risk and the impact on payment transparency and architecture.\n### Risks arising from the receipt of services from third parties\nWe use third parties to provide a range of goods and services. It is critical that we ensure we have appropriate risk management policies, processes and practices over the selection, governance and oversight of third parties and their supply chain, particularly for key activities that could affect our operational resilience. Any deficiency in the management of risks associated with our third parties could affect our ability to support our customers and meet regulatory expectations.", "chunk_word_count": 492, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Mitigating actions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 145, "page_start": 145, "page_end": 145 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 214, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Evolving regulatory environment risk\nWe aim to keep abreast of the emerging regulatory compliance and conduct risk agenda. Current focus areas include but are not limited to: ESG agenda developments, including in particular managing the risk of ‘greenwashing’; ensuring good customer outcomes, including addressing customer vulnerabilities due to cost of living pressures; enhancements to regulatory reporting controls; and employee compliance, including the use of e-communication channels.\n### Mitigating actions\n– We continue to monitor the effectiveness of the controls operated by our third-party providers and request third-party control reports, where required.\n– We continue to enhance the effective management of our intra-Group arrangements using the same control standards as we have for external third-party arrangements.\nThe competitive landscape in which the Group operates may be impacted by future regulatory changes and government intervention.\n– We have strengthened the way third-party risk is overseen and managed across all non-financial risks, and have enhanced our processes, framework and reporting capabilities to help improve the visibility of risk and enable more robust management of our material third parties by our global businesses, functions and regions.", "chunk_word_count": 211, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Evolving regulatory environment risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 145, "page_start": 145, "page_end": 145 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 215, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Mitigating actions\n– We monitor regulatory developments to understand the evolving regulatory landscape, and seek to respond with changes in a timely manner. We engage with governments and regulators, and respond to consultations with a view to help shape regulations that can be implemented effectively. We hold regular meetings with relevant authorities to discuss strategic contingency plans, including those arising from geopolitical issues. Our purpose-led conduct approach aligns to our purpose and values, in particular the value ‘we take responsibility’.\n– We are implementing the changes required by new regulations as set by our regulators.\nModel risk\nModel risk arises whenever business decision making includes reliance on models. We use models in both financial and non-financial contexts, as well as in a range of business applications such as customer selection, product pricing, financial crime transaction monitoring, creditworthiness evaluation and financial reporting. Assessing model performance is a continuous undertaking. Models can need redevelopment as market conditions change. Significant increases in global inflation and interest rates have impacted the reliability and accuracy of both credit and market risk models.\nWe continued to prioritise the redevelopment of internal ratings-based (‘IRB’) and internal model methods (‘IMM’) models, in relation to counterparty credit, as part of the IRB repair and Basel III programmes, with a key focus on enhancing the quality of data used as model inputs. Some models have been approved and a number are pending approval decisions from the UK’s Prudential Regulation Authority (‘PRA’) and other key regulators. Some IMM and internal model approach (‘IMA’) models have been approved for use, and feedback has been received for some IRB models. Climate risk modelling is a key focus for the Group as HSBC’s commitment to ESG has become a key part of the Group’s strategy. Focus is also on AI and machine learning where the pace of technological advances is driving significant changes in modelling techniques.\n### Change execution risk\nThe needs of our customers are evolving faster than ever, particularly with regard to technological advancements and the global transition to a low-carbon economy. The resulting scale, complexity and pace of strategic and regulatory change have elevated the level of risk for executing such changes safely and efficiently.", "chunk_word_count": 393, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Mitigating actions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 145, "page_start": 145, "page_end": 146 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 216, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Mitigating actions\nChange execution risk is part of our risk taxonomy and control library so that it is defined, assessed, managed, reported and overseen in the same way as our other material risks. Our change framework provides colleagues across all levels of the Group who deliver on strategic and organisational initiatives with a common and consistent understanding of their role in achieving value and outcomes. The Change Prioritisation and Oversight Committee oversees the prioritisation, strategic alignment and management of execution risk for all strategic change portfolios and initiatives.\nModel risk remains a key area of focus given the regulatory scrutiny in this area, with local regulatory exams taking place in many jurisdictions and the PRA’s publication of supervisory statement 1/23 (SS1/23) which provided revised principles on how model risk should be managed, as well as further developments in policy expected from other regulators.\n\n### Risks associated with workforce capability, capacity and environmental factors with potential impact on growth\n– We have continued to embed the enhanced monitoring, review and challenge of expected credit loss model performance through our Model Risk Management function as part of a broader quarterly process to determine loss levels. The Model Risk Management team aims to provide effective review and challenge of any future redevelopment of these models.\nOur global businesses and functions in all of our markets are exposed to risks associated with workforce capacity challenges, including challenges to retain, develop and attract high-performing employees in key labour markets, and compliance with employment laws and regulations. Failure to manage these risks may have an impact on the delivery of our strategic objectives. It could also result in poor customer outcomes or a breach of employment laws and regulations, which may lead to regulatory sanctions or legal claims.\n– A programme of work is in progress to address the requirements of the new PRA guidance for managing model risk.\n– Model Risk Governance committees at the Group, business and functional levels continue to provide oversight of model risk.\n– A full review of the Group’s model landscape is being undertaken across the organisation to ensure models are being deployed in line with global business strategy.", "chunk_word_count": 388, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Mitigating actions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 146, "page_start": 146, "page_end": 146 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 217, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Mitigating actions\n– We seek to promote a diverse and inclusive workforce and provide health and well-being support. We continue to build our speak-up culture through active campaigns.\n– Model Risk Management works closely with businesses to ensure that IRB/IMM/IMA models in development meet risk management, pricing and capital management needs. Global Internal Audit provides assurance over the risk management framework for models.\n– We monitor hiring activities and levels of employee attrition, with each business and function putting in place plans to help ensure they have effective workforce forecasting to meet business demands.\nAdditional assurance work is performed by the model risk governance teams, which act as second lines of defence. The teams test whether controls implemented by model users comply with model risk policy and if model risk standards are adequate.\n– We monitor people risks that could arise due to organisational restructuring, helping to ensure we manage redundancies sensitively and support impacted employees. We encourage our people leaders to focus on talent retention at all levels, with an empathetic mindset and approach, while ensuring the whole proposition of working at HSBC is well understood.\n– Models using AI or generative AI techniques are validated and monitored to help ensure that risks that are determined by the algorithms have adequate oversight and review. A framework to manage the range of risks that are generated by these advanced techniques, and to recognise the multidisciplinary nature of these risks, is being developed.\n– Our Future Skills curriculum helps provides skills that will help to enable employees and HSBC to be successful in the future.\n– We develop succession plans for key management roles, with oversight from the Group Executive Committee.\n### Our material banking risks\n### Description of risks – banking operations (continued)\n### Risks\n### Arising from\n### Measurement, monitoring and management of risk\n### Regulatory compliance risk (see page 231)\nRegulatory compliance risk arises from the failure to observe relevant laws, codes, rules and regulations and can manifest itself in poor market or customer outcomes and lead to fines, penalties and reputational damage to our business.\nRegulatory compliance risk is:\nRegulatory compliance risk is the risk associated with breaching our duty to clients and other counterparties, inappropriate market conduct (including unauthorised trading) and breaching related financial services regulatory standards.\nmeasured by reference to risk appetite, identified metrics, incident assessments, regulatory feedback and the judgement and assessment of our regulatory compliance teams; monitored against the first line of defence risk and control assessments, the results of the monitoring and control assurance activities of the second line of defence functions, and the results of internal and external audits and regulatory inspections; and managed by establishing and communicating appropriate policies and procedures, training employees in them and monitoring activity to help ensure their observance. Proactive risk control and/or remediation work is undertaken where required.", "chunk_word_count": 502, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Mitigating actions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 146, "page_start": 146, "page_end": 148 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 218, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Financial crime risk (see page 231)\nFinancial crime risk is the risk that HSBC’s products and services will be exploited for criminal activity. This includes fraud, bribery and corruption, tax evasion, sanctions and export control violations, money laundering, terrorist financing and proliferation financing.\nFinancial crime risk arises from day-today banking operations involving customers, third parties and employees.\nFinancial crime risk is:\nmeasured by reference to risk appetite, identified metrics, incident assessments, regulatory feedback and the judgement of, and assessment by, our compliance teams; monitored against the first line of defence risk and control assessments, the results of the monitoring and control assurance activities of the second line of defence functions, and the results of internal and external audits and regulatory inspections; and managed by establishing and communicating appropriate policies and procedures, training employees in them and monitoring activity to help ensure their observance. Proactive risk control and/or remediation work is undertaken where required.\n### Model risk (see page 232)\nModel risk is the risk of the \npotential for adverse \nconsequences from model errors or the inappropriate use of \nmodelled outputs to inform \nbusiness decisions.\nModel risk arises in both financial and non-financial contexts whenever business decision making includes reliance on models.\nModel risk is:\n– measured by reference to model performance tracking and the output of detailed technical reviews, with key metrics including model review statuses and findings; monitored against model risk appetite statements, insight from the independent validations completed by the model risk management team, feedback from internal and external audits, and regulatory reviews; and \nmanaged by creating and communicating appropriate policies, procedures and guidance, training colleagues in their application, and supervising their adoption to ensure operational effectiveness.\nOur insurance manufacturing subsidiaries are regulated separately from our banking operations. Risks in our insurance entities are managed using methodologies and processes that are subject to Group oversight. Our insurance operations are also subject to many of the same risks as our banking operations, and these are covered by the Group’s risk management processes. However, there are specific risks inherent to the insurance operations as noted below.\n### Description of risks – insurance manufacturing operations\n### Measurement, monitoring and management of risk\n### Risks\n### Arising from", "chunk_word_count": 395, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Financial crime risk (see page 231)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 148, "page_start": 148, "page_end": 148 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 219, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Financial risk (see page 235)\nFor insurance entities, financial ris includes the risk of not being able to effectively match liabilities arising under insurance contracts with appropriate investments and that the expected sharing of financial performance with policyholders under certain contracts is not possible.\nExposure to financial risk arises from:\nFinancial risk is:\n– market risk affecting the fair values of financial assets or their future cash flows; \ncredit risk; and \n– liquidity risk of entities being unable to make payments to policyholders as they fall due.\n– measured for credit risk, in terms of economic capital and the amount that could be lost if a counterparty fails to make repayments; for market risk, in terms of economic capital, internal metrics and fluctuations in key financial variables; and for liquidity risk, in terms of internal metrics including stressed operational cash flow projections;\n– monitored through a framework of approved limits and delegated authorities; and\n– managed through a robust risk control framework, which outlines clear and consistent policies, principles and guidance. This includes using product design, asset liability matching and bonus rates.\nInsurance risk (see page 237)\nInsurance risk is the risk that, over time, the cost of insurance policies written, including claims and benefits, may exceed the total amount of premiums and investment income received.\nThe cost of claims and benefits can be influenced by many factors, including mortality and morbidity experience, as well as lapse and surrender rates.\nInsurance risk is:\n– measured in terms of life insurance liabilities and economic capital allocated to insurance underwriting risk; monitored through a framework of approved limits and delegated authorities; and managed through a robust risk control framework, which outlines clear and consistent policies, principles and guidance. This includes using product design, underwriting, reinsurance and claims-handling procedures.\n### Credit risk\nThe principal objectives of our credit risk management are:\n### Contents\n– to maintain across HSBC a strong culture of responsible lending, and robust risk policies and control frameworks; to both partner and challenge our businesses in defining, implementing and continually re-evaluating our risk appetite under actual and scenario conditions; and to ensure there is independent, expert scrutiny of credit risks, their costs and their mitigation.\n147 Overview \n147 Credit risk management \n149 Credit risk in 2023 \n149 Summary of credit risk \n153 Stage 2 decomposition \n154 Assets held for sale \n155 Credit exposure \n156 Measurement uncertainty and sensitivity analysis of ECL \nestimates \n168 Reconciliation of changes in gross carrying/nominal amount and \nallowances for loans and advances to banks and customers \nincluding loan commitments and financial guarantees \n172 Credit quality \n176 Wholesale lending \n190 Personal lending \n198 Supplementary information \n202 HSBC Holdings\n### Key risk management processes\n### IFRS 9 ‘Financial Instruments’ process\nThe IFRS 9 process comprises three main areas: modelling and data; \nimplementation; and governance.", "chunk_word_count": 495, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Financial risk (see page 235)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 148, "page_start": 148, "page_end": 149 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 220, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Modelling, data and forward economic guidance\nWe have established IFRS 9 modelling and data processes in various geographies, which are subject to internal model risk governance including independent review of significant model developments.\nWe have a centralised process for generating unbiased and independent global economic scenarios. Scenarios are subject to a process of review and challenge by a dedicated central team and individually for each region. Each quarter, the scenarios and probability weights are reviewed and checked for consistency with the economic conjuncture and current economic and financial risks. These are subject to final review and approval by senior management in a Forward Economic Guidance Global Business Impairment Committee.\n### Overview\nCredit risk is the risk of financial loss if a customer or counterparty fails to meet an obligation under a contract. Credit risk arises principally from direct lending, trade finance and leasing business, but also from other products such as guarantees and derivatives.\n### Implementation\n### Credit risk management\nA centralised impairment engine performs the expected credit losses calculation using data, which is subject to a number of validation checks and enhancements, from a variety of client, finance and risk systems. Where possible, these checks and processes are performed in a globally consistent and centralised manner.\n### Key developments in 2023\nThere were no material changes to the policies and practices for the management of credit risk in 2023. We continued to apply the requirements of IFRS 9 ‘Financial Instruments’ within the Credit Risk sub-function. For our wholesale portfolios, we introduced new policies for the management of country risk, subordinated debt assessments, and a revised risk appetite framework. Implementation of these changes did not have a material impact on our wholesale portfolios.\n### Governance\nRegional management review forums are established in key sites and regions in order to review and approve the impairment results. Regional management review forums have representatives from Credit Risk and Finance. The key site and regional approvals are reported up to the relevant global business impairment committee for final approval of the Group’s ECL for the period. Required members of the committee are the Wholesale Global Chief Corporate Credit Officer and Chief Risk and Compliance Officer for Wealth and Personal Banking Risk, as well as the relevant global business’s Chief Financial Officer and the Global Financial Controller.\nWe actively managed the risks related to macroeconomic uncertainties, including interest rates, inflation, fiscal and monetary policy, broader geopolitical uncertainties and conflicts.\nFor further details, see ‘Top and emerging risks’ on page 140.\n### Governance and structure", "chunk_word_count": 448, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Modelling, data and forward economic guidance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 149, "page_start": 149, "page_end": 149 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 221, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Concentration of exposure\nWe have established Group-wide credit risk management and related IFRS 9 processes. We continue to assess the impact of economic developments in key markets on specific customers, customer segments or portfolios. As credit conditions change, we take mitigating actions, including the revision of risk appetites or limits and tenors, as appropriate. In addition, we continue to evaluate the terms under which we provide credit facilities within the context of individual customer requirements, the quality of the relationship, local regulatory requirements, market practices and our local market position.\n### (Audited)\nConcentrations of credit risk arise when a number of counterparties or exposures have comparable economic characteristics, or such counterparties are engaged in similar activities or operate in the same geographical areas or industry sectors so that their collective ability to meet contractual obligations is uniformly affected by changes in economic, political or other conditions. We use a number of controls and measures to minimise undue concentration of exposure in our portfolios across industries, countries and global businesses. These include portfolio and counterparty limits, approval and review controls, and stress testing.\nCredit Risk sub-function\n(Audited)\n### Credit quality of financial instruments\nCredit approval authorities are delegated by the Board to the Group Chief Executive together with the authority to sub-delegate them. The Credit Risk sub-function in Group Risk and Compliance is responsible for the key policies and processes for managing credit risk, which include formulating Group credit policies and risk rating frameworks, guiding the Group’s appetite for credit risk exposures, undertaking independent reviews and objective assessment of credit risk, and monitoring performance and management of portfolios.\n(Audited)\nOur risk rating system facilitates the internal ratings-based approach under the Basel framework adopted by the Group to support the calculation of our minimum credit regulatory capital requirement. The five credit quality classifications encompass a range of granular internal credit rating grades assigned to wholesale and retail customers, and the external ratings attributed by external agencies to debt securities.\nFor debt securities and certain other financial instruments, external ratings have been aligned to the five quality classifications based upon the mapping of related customer risk rating (‘CRR’) to external credit rating.\nEach CRR band is associated with an external rating grade by reference to long-run default rates for that grade, represented by the average of issuer-weighted historical default rates. This mapping between internal and external ratings is indicative and may vary over time.\n### Wholesale lending\n### Retail lending\nThe CRR 10-grade scale summarises a more granular underlying 23-grade scale of obligor probability of default (‘PD’). All corporate customers are rated using the 10- or 23-grade scale, depending on the degree of sophistication of the Basel approach adopted for the exposure.\nRetail lending credit quality is based on a 12-month point-in-time probability-weighted PD.\n### Credit quality classification", "chunk_word_count": 494, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Concentration of exposure", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 149, "page_start": 149, "page_end": 150 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 222, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Quality classification definitions\n‘Strong’ exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability of default and/or low levels of expected loss. ‘Good’ exposures require closer monitoring and demonstrate a good capacity to meet financial commitments, with low default risk. ‘Satisfactory’ exposures require closer monitoring and demonstrate an average-to-fair capacity to meet financial commitments, with moderate default risk. \n– ‘Sub-standard’ exposures require varying degrees of special attention and default risk is of greater concern. \n– ‘Credit-impaired’ exposures have been assessed as described on Note 1.2(i) on the financial statements.\n### Forborne loans and advances\nremain forborne for a minimum of two years from the date that credit impairment no longer applies. For wholesale and retail lending, any forbearance measures granted on a loan already classed as forborne results in the customer being classed as credit impaired.\n(Audited)\nForbearance measures consist of concessions towards an obligor that is experiencing or about to experience difficulties in meeting its financial commitments.\n### Forborne loans and recognition of expected credit losses\n### (Audited)\nWe continue to class loans as forborne when we modify the contractual payment terms due to having significant concerns about the borrowers’ ability to meet contractual payments when they were due. Our definition of forborne captures non-payment-related concessions, such as covenant waivers.\nForborne loans expected credit loss assessments reflect the higher rates of losses typically experienced with these types of loans such that they are in stage 2 and stage 3. The higher rates are more pronounced in unsecured retail lending requiring further segmentation. For wholesale lending, forborne loans are typically assessed individually. Credit risk ratings are intrinsic to the impairment assessments. The individual impairment assessment takes into account the higher risk of the future non-payment inherent in forborne loans.\n### For details of our policy on forbearance, see Note 1.2(i) in the financial statements.\n### Credit quality of forborne loans\nFor wholesale lending, where payment-related forbearance measures result in a diminished financial obligation, or if there are other indicators of impairment, the loan will be classified as credit impaired if it is not already so classified. All facilities with a customer, including loans that have not been modified, are considered credit impaired following the identification of a payment-related forborne loan. For retail lending, where a material payment-related concession has been granted, the loan will be classified as credit impaired. In isolation, nonpayment forbearance measures may not result in the loan being classified as credit impaired unless combined with other indicators of credit impairment. These are classed as performing forborne loans for both wholesale and retail lending.\nImpairment assessment\n(Audited)\nFor details of our impairment policies on loans and advances and financial investments, see Note $1 . 2 ( \\mathrm { i } )$ on the financial statements.", "chunk_word_count": 490, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Quality classification definitions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 150, "page_start": 150, "page_end": 150 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 223, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Write-off of loans and advances\n(Audited)\nUnder IFRS 9, write-off should occur when there is no reasonable expectation of recovering further cash flows from the financial asset.\nThis principle does not prohibit early write-off, which is defined in local policies to ensure effectiveness in the management of customers in the collections process.\nWholesale and retail lending forborne loans are classified as credit impaired until there is sufficient evidence to demonstrate a significant reduction in the risk of non-payment of future cash flows, observed over a minimum one-year period, and there are no other indicators of impairment. Any forborne loans not considered credit impaired will\nUnsecured personal facilities, including credit cards, are generally written off at between 150 and 210 days past due. The standard period runs until the end of the month in which the account becomes 180 days contractually delinquent. However, in exceptional circumstances, to avoid unfair customer outcomes, deliver customer duty or meet regulatory expectations, the period may be extended further.\nIn wholesale lending, mainland China’s commercial real estate sector continued to deteriorate in 2023, resulting in new and additional stage 3 charges during the year.\nThe ECL charge for 2023 was $\\$ 3.4 b n$ , inclusive of recoveries. This was driven by net stage 3 charges, including $\\$ 1.0 b n$ in the mainland China commercial real estate sector, as well as the impact of continued economic uncertainty in other markets, rising interest rates and inflationary pressures.\nFor secured facilities, write-off should occur upon repossession of collateral, receipt of proceeds via settlement, or determination that recovery of the collateral will not be pursued. Where these assets are maintained on the balance sheet beyond 60 months of consecutive delinquency-driven default, the prospect of recovery is reassessed.\nThe ECL charge comprised: $\\$ 230 n$ in respect of wholesale lending, of which the stage 3 charge was $\\$ 2.2$ bn; $\\$ 1.0 b n$ in respect of personal lending, of which $\\$ 0.7$ bn were in stage 3; and \\$0.1bn in respect of debt instruments measured at FVOCI.\nRecovery activity, on both secured and unsecured assets, may continue after write-off.\nAny unsecured exposures that are not written off at 180 days past due, and any secured exposures that are in ‘default’ status for 60 months or greater but are not written off, are subject to additional monitoring via the appropriate governance forums.\n### Income statement movements are analysed further on page 103.\nWhile credit risk arises across most of our balance sheet, ECL have typically been recognised on loans and advances to customers and banks, in addition to securitisation exposures and other structured products. As a result, our disclosures focus primarily on these two areas. For further details of:", "chunk_word_count": 479, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Write-off of loans and advances", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 150, "page_start": 150, "page_end": 151 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 224, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Credit risk in 2023\nAt 31 December 2023, gross loans and advances to customers and banks of $\\$ 1,063,6$ increased by $\\$ 23.1$ bn, compared with 31 December 2022. This included favourable foreign exchange movements of $\\$ 123,456$ .\n– maximum exposure to credit risk, see page 155; measurement uncertainty and sensitivity analysis of ECL estimates, see page 156; reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees, see page 168; credit quality, see page 172; total wholesale lending for loans and advances to banks and customers by stage distribution, see page 177; wholesale lending collateral, see page 187; total personal lending for loans and advances to customers at amortised cost by stage distribution, see page 191; and personal lending collateral, see page 197.\nExcluding foreign exchange movements, the underlying increase of $\\$ 5.45 n$ was driven by a $\\$ 21$ .1bn rise in personal loans and advances to customers and a $\\$ 8.90\\mathsf { n }$ rise in loans and advances to banks. These were partly offset by a $\\$ 24.6$ bn decrease in wholesale loans and advances to customers.\nThe underlying increase in personal loans and advances to customers was mainly driven by an increase in France (up \\$7.8bn) due to the retention of a portfolio of home loans and other loans previously classified as assets held for sale. It also comprised increases in the UK (up $\\$ 60\\mathrm { { h } }$ ), in Hong Kong (up $\\$ 5.80\\mathsf { n }$ ), in Mexico (up $\\$ 2.30n )$ and in Australia (u $\\mathsf { p } \\$ 1.45\\mathsf { n } \\rangle$ driven by mortgage growth. These were partly offset by a decrease of $\\$ 1230\\mathsf { n }$ due to the merger of our business in Oman and a decrease of $\\$ 1$ .0bn due to the disposal of our retail mortgage loan portfolio in New Zealand.", "chunk_word_count": 356, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Credit risk in 2023", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 151, "page_start": 151, "page_end": 151 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 225, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Summary of credit risk\nWe have adopted the recommendations of the Taskforce on Disclosures about Expected Credit Losses (’DECL’) to provide disclosures that help investors and other stakeholders better understand the risks we manage.\nThe underlying increase in loans and advances to banks was driven by central bank balances and money market lending growth in Singapore (up \\$6.5bn), Hong Kong (up $\\$ 5.$ 1bn) and the UK (up $\\$ 2.8 b n !$ ). These were partly offset by decreases in mainland China (down $\\$ 2.6 b n \\}$ , Malaysia (down $\\$ 1.6 b n \\}$ ) and Switzerland (down $\\$ 1.450\\nw$ ).\nThe DECL Taskforce, which was jointly established by the Financial Conduct Authority, Financial Reporting Council and the Prudential Regulation Authority, was created to help guide ECL disclosure practice and to encourage consistency and comparability across financial institutions.\nThe underlying decrease in wholesale loans and advances to customers was driven by a $\\$ 31$ .5bn reduction in corporate and commercial balances, of which $\\$ 123.76 n$ in stage 1 and $\\$ 16.80$ in stage 2. The decrease was observed mainly in Hong Kong (down $\\$ 123.65$ ), in the UK (down $\\$ 5.450\\mathsf { n } \\rangle$ and in mainland China (down $\\$ 20\\mathsf { h }$ , driven by repayments and deleveraging, as well as de-risking measures on mainland China commercial real estate exposures. It also comprised a decrease in Oman (down $\\$ 2.$ 1bn) due to the merger of our operations in the country. This was partly offset by an increase in balances with non-bank financial institutions (up $\\$ 6.80\\mathsf { n }$ ) mainly in stage 1 in HSBC UK (up $\\$ 5.20 n$ ) due to the acquisition of SVB UK.\nThe following sections of this report include new and redesigned disclosures addressing the taskforce’s recommendations from its third report, which was published in September 2022. For further details of:\nstage 2 decomposition for loans and advances to banks and personal lending products, see page 153; residual average life for personal and wholesale lending by product, see page 153; alignment of management judgemental adjustments to the DECL definition with additional qualitative and quantitative granularity, see page 163; reconciliation of management judgemental adjustments to reported ECL, see page 163; enhanced wholesale ECL sensitivity to future economic conditions, see page 165; enhanced retail ECL sensitivity to future economic conditions, see page 166; reconciliation from reported exposure and ECL to sensitised exposure and weighted ECL, see page 168; reconciliation of changes in gross carrying amount and allowances for loans and advances to banks and customers, see page 171; reconciliation of changes in nominal amount and allowances for loan commitments and financial guarantees, see page 171;", "chunk_word_count": 478, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Summary of credit risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 151, "page_start": 151, "page_end": 151 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 226, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Summary of credit risk\nAt 31 December 2023, the allowance for ECL of $\\$ 12.0$ bn decreased by $\\$ 0.$ .6bn compared with 31 December 2022, including adverse foreign exchange movements of $\\$ 0.20\\mathsf { n }$ . The $\\$ 12.05$ allowance comprised $\\$ 11$ .5bn in respect of assets held at amortised cost, $\\$ 0.45\\mathsf { n }$ in respect of loan commitments and financial guarantees, and $\\$ 0.1$ bn in respect of debt instruments measured at fair value through other comprehensive income (‘FVOCI’).\nExcluding foreign exchange movements, the allowance for ECL in relation to loans and advances to customers decreased by $\\$ 0.65\\mathsf { n }$ from 31 December 2022. This was attributable to:\n– a $\\$ 0.5$ bn decrease in wholesale loans and advances to customers driven by stages 1 and 2; and \na $\\$ 0.1$ bn decrease in personal loans and advances to customers driven by stages 1 and 2.\nStage 3 balances and allowances for ECL at 31 December 2023 remained broadly stable compared with 31 December 2022, as writeoffs and repayments offset new and additional allowances.\n– wholesale lending – credit risk profile by obligor grade for loan and other credit-related commitments and financial guarantees, see page 182;\n– Personal lending – credit risk profile by internal PD band for loan and other credit-related commitments and financial guarantees, see page 197.\n– first lien residential mortgages – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees, see page 194;\nComparative information for the prior period has not been presented in the Annual Report and Accounts 2023 for the majority of the new disclosures as we recognised and prioritised the importance of increasing the comparability of our external disclosures within the timeline recommended by the DECL Taskforce. While prior period information can be valuable in certain contexts, at 31 December 2023 we believed the prospective expansion of the level of disclosures outweighed the benefits of presenting data from prior years. Comparative information is expected to be disclosed from the Annual Report and Accounts 2024.\ncredit cards – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees, see page 195;\nother personal lending – reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees, see page 195;\nThe following disclosure presents the gross carrying/nominal amount of financial instruments to which the impairment requirements in IFRS 9 are applied and the associated allowance for ECL.\n– enhanced personal lending – credit risk profile by internal PD band for loans and advances to customers at amortised cost, see page 196; and", "chunk_word_count": 487, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Summary of credit risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 151, "page_start": 151, "page_end": 152 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 227, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Summary of credit risk\n1 The total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of the financial asset, in which case the ECL is recognised as a provision. \n2 For further details on gross carrying amounts and allowances for ECL related to assets held for sale, see ‘Assets held for sale’ on page 154. At 31 December 2023, the gross carrying amount comprised \\$84,074m of loans and advances to customers and banks (2022: \\$81,221m) and \\$19,112m of other financial assets at amortised cost (2022: \\$21,334m). The corresponding allowance for ECL comprised \\$303m of loans and advances to customers and banks (2022: \\$392m) and \\$21m of other financial assets at amortised cost (2022: \\$23m). \n3 Includes only those financial instruments that are subject to the impairment requirements of IFRS 9. ‘Prepayments, accrued income and other assets’ as presented within the consolidated balance sheet on page 331 comprises both financial and non-financial assets, including cash collateral and settlement accounts. \n4 Represents the maximum amount at risk should the contracts be fully drawn upon and clients default. \n5 Debt instruments measured at FVOCI continue to be measured at fair value with the allowance for ECL as a memorandum item. Change in ECL is recognised in ‘Change in expected credit losses and other credit impairment charges’ in the income statement.\nThe following table provides an overview of the Group’s credit risk by stage and industry, and the associated ECL coverage. The financial assets recorded in each stage have the following characteristics:\n– Stage 3: There is objective evidence of impairment and the financial assets are therefore considered to be in default or otherwise credit impaired on which a lifetime ECL is recognised. POCI: Financial assets that are purchased or originated at a deep discount are seen to reflect the incurred credit losses on which a lifetime ECL is recognised.\n– Stage 1: These financial assets are unimpaired and without significant increase in credit risk on which a 12-month allowance for ECL is recognised. Stage 2: A significant increase in credit risk has been experienced on these financial assets since initial recognition for which a lifetime ECL is recognised.\nUnless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when they are 30 days past due (‘DPD’) and are transferred from stage 1 to stage 2. The following disclosure presents the ageing of stage 2\nfinancial assets by those less than 30 DPD and greater than 30 DPD and therefore presents those financial assets classified as stage 2 due to ageing (30 DPD) and those identified at an earlier stage (less than 30 DPD).\n### Stage 2 days past due analysis at 31 December 2023\n### Stage 2 days past due analysis at 31 December 2022", "chunk_word_count": 503, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Summary of credit risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 152, "page_start": 152, "page_end": 154 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 228, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Stage 2 decomposition\nThe following table presents the stage 2 decomposition of gross carrying amount and allowances for ECL for loans and advances to customers and banks. It also sets out the reasons why an exposure is classified as stage 2 and therefore presented as a significant increase in credit risk at 31 December 2023.\nThe qualitative classification primarily accounts for customer risk rating (‘CRR’) deterioration, watch-and-worry and retail management judgemental adjustments.\nThe quantitative classification shows gross carrying amount and allowances for ECL for which the applicable reporting date probability of default (‘PD’) measure exceeds defined quantitative thresholds for retail and wholesale exposures, as set out in Note 1.2 ‘Summary of material accounting policies’, on page 348.\nA summary of our current policies and practices for the significant increase in credit risk is set out in ‘Summary of material accounting policies’ on page 348.\n### Assets held for sale\n(Audited)\nAt 31 December 2023, the most material balances held for sale arose from our banking business in Canada and our retail banking operations in France.\nAlthough there was a reclassification on the balance sheet, there was no separate income statement reclassification. As a result, charges for changes in expected credit losses and other credit impairment charges shown in the credit risk disclosures include charges relating to financial assets classified as ‘assets held for sale’.\nDisclosures relating to assets held for sale are provided in the following credit risk tables, primarily where the disclosure is relevant to the measurement of these financial assets:\n‘Loans and other credit-related commitments’ and ‘financial guarantees’, as reported in credit disclosures, also include exposures and allowances relating to financial assets classified as ‘assets held for sale’.\n– ‘Maximum exposure to credit risk’ (page 155); and – ‘Distribution of financial instruments by credit quality at 31 December’ (page 172);\nAt 31 December 2023, gross loans and advances of our banking business in Canada were $\\$ 56.5$ bn, and the related allowance for ECL was $\\$ 0.20\\mathsf { n }$ . Gross loans of our retail banking operations in France were $\\$ 27.30n$ , and the related allowance for ECL was $\\$ 0.1$ 1bn.\nThese lending balances are part of associated disposal groups that are measured in their entirety at the lower of carrying amount and fair value less costs to sell. Any difference between the carrying amount of these assets and their sales price is part of the overall gain or loss on the associated disposal group as a whole.\nLending balances held for sale continue to be measured at amortised cost less allowances for impairment and, therefore, such carrying amounts may differ from fair value.\nFor further details of the carrying amount and the fair value at 31 December 2023 of loans and advances to banks and customers classified as held for sale, see Note 23 on the financial statements.\n### Changes in expected credit losses and other credit impairment\n(Audited)\n### Credit exposure", "chunk_word_count": 517, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Stage 2 decomposition", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 155, "page_start": 155, "page_end": 156 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 229, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Maximum exposure to credit risk\n### (Audited)\nThis section provides information on balance sheet items and their offsets as well as loan and other credit-related commitments. Commentary on consolidated balance sheet movements in 2023 is provided on page 108. The offset of derivatives remains in line with the movements in maximum exposure amounts.\n### Other credit risk mitigants\n### ‘Maximum exposure to credit risk’ table\nThe following table presents our maximum exposure before taking account of any collateral held or other credit enhancements (unless such enhancements meet accounting offsetting requirements).\nWhile not disclosed as an offset in the following ‘Maximum exposure to credit risk’ table, other arrangements are in place that reduce our maximum exposure to credit risk. These include a charge over collateral on borrowers’ specific assets, such as residential properties, collateral held in the form of financial instruments that are not held on the balance sheet and short positions in securities. In addition, for financial assets held as part of linked insurance/investment contracts the credit risk is predominantly borne by the policyholder. See page 347 and Note 31 on the financial statements for further details of collateral in respect of certain loans and advances and derivatives.\nThe table excludes trading assets, financial assets designated and otherwise mandatorily measured at fair value through profit or loss, and financial investments measured at fair value through other comprehensive income as their carrying amount best represents the net exposure to credit risk. Equity securities are also excluded as they are not subject to credit risk. For the financial assets recognised on the balance sheet, the maximum exposure to credit risk equals their carrying amount and is net of the allowance for ECL. For financial guarantees and other guarantees granted, it is the maximum amount that we would have to pay if the guarantees were called upon. For loan commitments and other credit-related commitments, it is generally the full amount of the committed facilities.\nCollateral available to mitigate credit risk is disclosed in the ‘Collateral’ section on page 187.\nThe offset in the table relates to amounts where there is a legally enforceable right of offset in the event of counterparty default and where, as a result, there is a net exposure for credit risk purposes. However, as there is no intention to settle these balances on a net basis under normal circumstances, they do not qualify for net presentation for accounting purposes. No offset has been applied to off-balance sheet collateral. In the case of derivatives, the offset column also includes collateral received in cash and other financial assets.", "chunk_word_count": 456, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Maximum exposure to credit risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 157, "page_start": 157, "page_end": 157 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 230, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Maximum exposure to credit risk\nConcentration of exposure\nWe have a number of global businesses with a broad range of products. We operate in a number of geographical markets with the majority of our exposures in Asia and Europe.\noperations of The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank plc, HSBC Bank Middle East Limited and HSBC Bank USA, by the location of the lending branch), see page 176 for wholesale lending and page 190 for personal lending.\nFor an analysis of:\n– financial investments, see Note 16 on the financial statements; \n– trading assets, see Note 11 on the financial statements; \n– derivatives, see page 190 and Note 15 on the financial statements; and loans and advances by industry sector and by the location of the principal operations of the lending subsidiary (or, in the case of the\n### Credit deterioration of financial instruments\n(Audited)\nA summary of our current policies and practices regarding the identification, treatment and measurement of stage 1, stage 2, stage 3 (credit impaired) and POCI financial instruments can be found in Note 1.2 on the financial statements.\n### Measurement uncertainty and sensitivity analysis of ECL estimates\n### (Audited)\nThe recognition and measurement of ECL involves the use of significant judgement and estimation. We form multiple economic scenarios based on economic forecasts, apply these assumptions to credit risk models to estimate future credit losses, and probability weight the results to determine an unbiased ECL estimate.\nScenarios produced to calculate ECL are aligned to HSBC’s top and emerging risks.", "chunk_word_count": 283, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Maximum exposure to credit risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 157, "page_start": 157, "page_end": 158 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 231, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Description of economic scenarios\nThe economic assumptions presented in this section have been formed by HSBC with reference to external forecasts and estimates, specifically for the purpose of calculating ECL.\nManagement assessed the current economic environment, reviewed the latest economic forecasts and discussed key risks before selecting the economic scenarios and their weightings.\nForecasts remain subject to uncertainty and variability. Outer scenarios are constructed so that they capture risks that could alter the trajectory of the economy and are designed to encompass the potential crystallisation of key macro-financial risks.\nScenarios were constructed to reflect the latest geopolitical risks and macroeconomic developments, including the Israel-Hamas war and subsequent disruptions in the Red Sea, and current inflation and monetary policy expectations.\nIn our key markets, Central scenario forecasts remained broadly stable in the fourth quarter of 2023, compared with the third quarter of 2023. The key exception was with regard to monetary policy, where expectations for interest rate cuts were brought forward. There continue to be expectations that 2024 will be a period of below trend growth, with inflation remaining above central bank targets.\nManagement judgemental adjustments are used where modelled ECL does not fully reflect the identified risks and related uncertainty, or to capture significant late-breaking events.\nAt 31 December 2023, there was an overall reduction in management judgemental adjustments compared with 31 December 2022, as modelled outcomes better reflected the key risks at 31 December 2023.\nAt the end of 2023, risks to the economic outlook included a number of significant geopolitical issues. Within our Downside scenarios, the economic consequences from the crystallisation of those risks were captured by higher commodity and goods prices, the reacceleration of inflation, a further rise in interest rates and a global recession.\n### Methodology\nAt 31 December 2023, four scenarios were used to capture the latest economic expectations and to articulate management’s view of the range of risks and potential outcomes. Each scenario is updated with the latest economic forecasts and estimates every quarter.\nThe scenarios used to calculate ECL in the Annual Report and Accounts 2023 are described below.", "chunk_word_count": 375, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Description of economic scenarios", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 158, "page_start": 158, "page_end": 158 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 232, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### The consensus Central scenario\nThree scenarios, the Upside, Central and Downside, are drawn from external consensus forecasts, market data and distributional estimates of the entire range of economic outcomes. The fourth scenario, the Downside 2, represents management’s view of severe downside risks.\nHSBC’s Central scenario reflects expectations for a low growth and high interest rate environment across many of our key markets, where GDP growth is expected to be lower in 2024 than in the previous year.\nExpectations of lower GDP growth in many markets in 2024 are driven by the assumed lagged effects of higher interest rates and inflation in North America and Europe. In the scenario, household discretionary income remains under pressure and business margins deteriorate amid higher refinancing costs. Growth only returns to its long-term expected trend in later years, once inflation reverts back towards central bank targets and interest rates stabilise at lower levels.\nThe Central scenario is deemed the ‘most likely’ scenario, and usually attracts the largest probability weighting. It is created using consensus forecasts, which is the average of a panel of external forecasts.\nThe outer scenarios represent the tails of the distribution and are less likely to occur. The consensus Upside and Downside scenarios are created with reference to distributions for select markets that capture forecasters’ views of the entire range of economic outcomes. In the later years of those scenarios, projections revert to long-term consensus trend expectations. Reversion to trend is done with reference to historically observed quarterly changes in the values of macroeconomic variables.\nIn mainland China and Hong Kong, growth is also expected to be moderately slower in 2024 relative to 2023. The economic boost from post-pandemic reopening has faded, and slower global growth and low trade volumes are expected to moderate activity. In mainland China, the continued fall in investment in the property sector is expected to act as a further brake on the economy, while in Hong Kong, higher interest rates are expected to drive a further decline in property valuations. Despite these headwinds, a steeper downturn is expected to be avoided as the authorities in mainland China increase fiscal and monetary support to the economy. Substantial fiscal expansion is anticipated for 2024, alongside additional credit easing.\nThe fourth scenario, the Downside 2, is designed to represent management’s view of severe downside risks. It is a globally consistent, narrative-driven scenario that explores a more extreme economic outcome than those captured by the consensus scenarios. In this scenario, variables do not, by design, revert to long-term trend expectations and may instead explore alternative states of equilibrium, where economic activity moves permanently away from past trends.\nGlobal GDP is expected to grow by $2 . 2 \\%$ in 2024 in the Central scenario, and the average rate of global GDP growth is forecast to be $2 . 6 \\%$ over the five-year forecast period. This is below the average growth rate over the five-year period prior to the onset of the pandemic of $2 . 9 \\%$ .", "chunk_word_count": 527, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > The consensus Central scenario", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 158, "page_start": 158, "page_end": 158 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 233, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### The consensus Central scenario\nThe consensus Downside and the consensus Upside scenarios are each calibrated to be consistent with a $10 \\%$ probability. The Downside 2 is calibrated to a $5 \\%$ probability. The Central scenario is assigned the remaining $7 5 \\%$ . This weighting scheme is deemed appropriate for the unbiased estimation of ECL in most circumstances. However, management may depart from this probability-based scenario weighting approach when the economic outlook and forecasts are determined to be particularly uncertain and risks are elevated.\nThe key features of our Central scenario are:\n– GDP growth rates in our main markets are expected to slow down in 2024, followed by a moderate recovery in 2025. The slowdown in the UK is particularly notable in this scenario, with growth close to zero through much of 2024. In the scenario, weaker growth is caused by high interest rates, which act to deter consumption and investment.\nIn the fourth quarter of 2023, the weights were consistent with the calibrated scenario probabilities, as key risk metrics implied a decline in the uncertainty attached to the Central scenario, compared with the fourth quarter of 2022. Economic forecasts for the Central scenario remained stable, and the dispersion within consensus forecast panels remained low, even as the Israel-Hamas war escalated. Risks, including the economic consequences of a broader war in the Middle East, were reflected in the Downside scenarios.\n– In most markets, unemployment is expected to rise moderately as economic activity slows, although it remains low by historical standards.\n– Inflation is expected to continue to fall as commodity prices decline, supply disruptions abate, and wage growth moderates. It is anticipated that inflation converges towards central banks’ target rates by early 2025. In mainland China, weak consumption and excess supply has caused inflation to drop sharply but, in the scenario, deflation is not projected to persist.\n– Policy interest rates in key markets are forecast to have peaked and are projected to decline in 2024. In the longer term, they are expected to remain at a higher level than in recent years.\n– The Brent crude oil price is forecast to average around $\\$ 75$ per barrel over the projection period.\nThe Central scenario was created with forecasts available in late November, and reviewed continually until the end of December 2023. In accordance with HSBC’s scenario framework, a probability weight of $7 5 \\%$ has been assigned to the Central scenario across all major markets.\nWeak conditions in housing markets are expected to persist through 2024 and 2025 in many of our main markets, including the UK, Hong Kong and mainland China, as higher interest rates and, in many cases, declining prices, depress activity.\nChallenging conditions are also forecast to continue in the commercial property sector in a number of our key markets. Structural changes to demand in the office segment in particular have driven lower valuations.\nThe following tables describe key macroeconomic variables in the consensus Central scenario.", "chunk_word_count": 522, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > The consensus Central scenario", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 158, "page_start": 158, "page_end": 159 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 234, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Consensus Central scenario 2024–2028 (as at 4Q23)\n### Consensus Central scenario 2023–2027 (as at 4Q22)\nhe graphs compare the Central scenario at the year end 2022 with economic expectations at the end of 2023.\n[IMAGE CAPTION] Note: Real GDP shown as year-on-year percentage change.\n[IMAGE CAPTION] GDP growth: Comparison of Central scenarios Note: Real GDP shown as year-on-year percentage change.\n[IMAGE CAPTION] Note: Real GDP shown as year-on-year percentage change.\n### The consensus Upside scenario\nCompared with the Central scenario, the consensus Upside scenario features stronger economic activity in the near term, before converging to long-run trend expectations. It also incorporates a faster fall in the rate of inflation than incorporated in the Central scenario.\nThese include a faster fall in the rate of inflation that allows central banks to reduce interest rates more quickly, an easing in financial conditions, and a de-escalation in geopolitical tensions as the Israel-Hamas and Russia-Ukraine wars move towards conclusions, and the US-China relationship improves.\nThe scenario is consistent with a number of key upside risk themes.\nThe following tables describe key macroeconomic variables in the consensus Upside scenario.\n### Downside scenarios\nDownside scenarios explore the intensification and crystallisation of a number of key economic and financial risks. These include an escalation of geopolitical tensions, which disrupt key commodity and goods markets, causing inflation and interest rates to rise, and creating a global recession.\nA wage-price spiral, triggered by higher inflation and labour supply shortages, could put sustained upward pressure on wages and services prices, aggravating cost pressures and increasing the squeeze on household real incomes and corporate margins. In turn, it raises the risk of a more forceful policy response from central banks, a steeper trajectory for interest rates, significantly higher defaults and, ultimately, a deep economic recession.\nAs the geopolitical environment remains volatile and complex, risks include:", "chunk_word_count": 333, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Consensus Central scenario 2024–2028 (as at 4Q23)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 159, "page_start": 159, "page_end": 162 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 235, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### The consensus Downside scenario\n– a broader and more prolonged conflict in the Middle East that undermines confidence, drives an increase in global energy costs and reduces trade and investment; a potential escalation in the Russia-Ukraine war, which expands beyond Ukraine’s borders, and further disrupts energy, fertiliser and food supplies; and continued differences between the US and China, which could affect economic confidence, the global goods trade and supply chains for critical technologies.\nIn the consensus Downside scenario, economic activity is weaker compared with the Central scenario. In this scenario, GDP declines, unemployment rates rise, and asset prices fall. The scenario features an escalation of geopolitical tensions, which causes a rise in inflation, as supply chain constraints intensify and energy prices rise. The scenario also features a temporary increase in interest rates above the Central scenario, before the effects of weaker consumption demand begin to dominate and commodity prices and inflation fall again.\nHigh inflation and higher interest rates also remain key risks. Should geopolitical tensions escalate, energy and food prices could rise and increase pressure on household budgets and firms’ costs.\nThe following tables describe key macroeconomic variables in the consensus Downside scenario.\nDownside 2 scenario\nThe Downside 2 scenario features a deep global recession and reflects management’s view of the tail of the economic distribution. It incorporates the crystallisation of a number of risks simultaneously, including a further escalation of geopolitical crises globally, which creates severe supply disruptions to goods and energy markets.\nIn the scenario, as inflation surges and central banks tighten monetary policy further, confidence evaporates. However, this impulse is assumed to prove short lived, as recession takes hold, causing commodity prices to correct sharply and global price inflation to fall.\nThe following graphs show the historical and forecasted GDP growth rate for the various economic scenarios in our four largest markets.\n### Hong Kong\n### Mainland China\n[IMAGE CAPTION] UK", "chunk_word_count": 344, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > The consensus Downside scenario", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 162, "page_start": 162, "page_end": 163 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 236, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Scenario weighting\nIn reviewing the economic environment, the level of risk and uncertainty, management has considered both global and countryspecific factors.\nincrease significantly through 2024. This suggests that there will be increased official support to current economic headwinds, which would reduce the uncertainty attached to current forecasts.\nIn the fourth quarter of 2023, key considerations around uncertainty attached to the Central scenario projections focused on:\nIn the UK, the Central scenario reflects a weak growth environment in which recession risks remain high. Similarly, in the US, the Central scenario reflects expectations for a weaker growth environment in 2024 as the economy adjusts to the higher rates environment.\n– the risk that the Israel-Hamas war escalates and affects economic expectations; the lagged impact of elevated interest rates on household finances and businesses, and the implications of recent changes to monetary policy expectations on growth and employment; and the outlook for real estate in our key markets, particularly in the US, UK, Hong Kong and mainland China.\nFor the UAE, it was agreed that there has been an increase in geopolitical uncertainty since the outbreak of the Israel-Hamas war, with the potential for regional escalation remaining a risk. However, economic and market impacts have been limited and oil production remains unaffected.\nManagement concluded that consensus expectations for Mexico, France and Canada were also consistent with its view of the economic outlook, while assessments of uncertainty were also aligned to historical averages.\nAlthough these risk factors remain significant, management assessed that they were adequately reflected in the scenarios at their calibrated probability. It was noted that despite the escalation of geopolitical risk in the Middle East, economic forecasts had remained stable, and dispersion of forecasts around the consensus were either stable, or have moved lower. Financial market measures of volatility also remained low through the fourth quarter of 2023.\nIn the fourth quarter of 2022, management varied the applied scenario weights to reflect greater uncertainty around the inflation and interest rate outlook, amid supply disruption to energy and food commodity markets due to the Ukraine-Russia war. In Hong Kong and mainland China, uncertainty assessments focused on the upside and downside risks of post-pandemic reopening.\nThis has led management to assign scenario probabilities that are aligned to the standard scenario probability calibration framework. This entailed assigning a $7 5 \\%$ probability weighting to the Central scenario in our major markets. The consensus Upside scenario was awarded a $10 \\%$ weighting, and the consensus Downside scenario was given $10 \\%$ . The Downside 2 was assigned a $5 \\%$ weighting.\nThose factors were reflected in the measures of risk and uncertainty used to inform judgements around the Central scenario. In particular, large forecast changes were observed, alongside wide dispersion of forecasts around consensus estimates and heightened financial market volatility.\nIn support of the decision, it was noted that in mainland China recent policy announcements suggest fiscal and monetary stimulus will\nThe following tables describe the probabilities assigned in each scenario.", "chunk_word_count": 524, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Scenario weighting", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 164, "page_start": 164, "page_end": 164 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 237, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Scenario weightings, $\\%$\nAt 31 December 2023, the consensus Upside and Central scenarios for all markets had a combined weighting of $8 5 \\%$ . At 31 December 2022, mainland China, Hong Kong and the US each had a combined weighting of $7 5 \\%$ for the consensus Upside and Central scenarios. The UK had a combined weighting of $6 5 \\%$ .\n### Critical estimates and judgements\n### How economic scenarios are reflected in ECL calculations\nThe calculation of ECL under IFRS 9 involved significant judgements, assumptions and estimates at 31 December 2023. These included:\nModels are used to reflect economic scenarios on ECL estimates. As described above, modelled assumptions and linkages based on historical information could not alone produce relevant information under the conditions experienced in 2023, and management judgemental adjustments were still required to support modelled outcomes.\n– the selection of weights to apply to the economic scenarios given the rapidly changing economic conditions and the inherent uncertainty of the underlying forecast under each scenario; the selection of scenarios to consider given the changing nature of macroeconomic and geopolitical risks that the Group and wider economy faces; and estimating the economic effects of those scenarios on ECL, particularly sector and portfolio-specific risks, and the uncertainty of default and recovery experience under all scenarios.\nWe have developed globally consistent methodologies for the application of forward economic guidance into the calculation of ECL for wholesale and retail credit risk. These standard approaches are described below, followed by the management judgemental adjustments made, including those to reflect the circumstances experienced in 2023.\nFor our wholesale portfolios, a global methodology is used for the estimation of the term structure of probability of default (‘PD’) and loss given default (‘LGD’). For PDs, we consider the correlation of forward economic guidance to default rates for a particular industry in a country. For LGD calculations, we consider the correlation of forward economic guidance to collateral values and realisation rates for a particular country and industry. PDs and LGDs are estimated for the entire term structure of each instrument.\nThis includes refining model inputs and outputs and using adjustments to ECL based on management judgement and quantitative analysis for impacts that are difficult to model.\nThe effects of management judgemental adjustments are considered for both balances and allowance for ECL when determining whether or not a significant increase in credit risk has occurred and is allocated to a stage where appropriate. This is in accordance with the internal adjustments framework.\nFor impaired loans, allowance for ECL estimates are derived based on discounted cash flow (‘DCF’) calculations for internal forward-looking scenarios specific to individual borrower circumstances (see page 348). Probability-weighted outcomes are applied, and depending on materiality and status of the borrower, the number of scenarios considered will change. Where relevant for the case being assessed, forward economic guidance is incorporated as part of these scenarios. LGD-driven proxy and modelled estimates are used for certain less material cases.", "chunk_word_count": 521, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Scenario weightings, $\\%$", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 164, "page_start": 164, "page_end": 165 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 238, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### How economic scenarios are reflected in ECL calculations\nManagement judgemental adjustments are reviewed under the governance process for IFRS 9 (as detailed in the section ‘Credit risk management’ on page 147). Review and challenge focuses on the rationale and quantum of the adjustments with a further review carried out by the second line of defence where significant. For some management judgemental adjustments, internal frameworks establish the conditions under which these adjustments should no longer be required and as such are considered as part of the governance process. This internal governance process allows management judgemental adjustments to be reviewed regularly and, where possible, to reduce the reliance on these through model recalibration or redevelopment, as appropriate.\nFor our retail portfolios, the models are predominantly based on historical observations and correlations with default rates and collateral values.\nThe drivers of management judgemental adjustments continue to evolve with the economic environment and as new risks emerge.\nFor PD, the impact of economic scenarios is modelled for each portfolio, using historical relationships between default rates and macroeconomic variables. These are included within IFRS 9 ECL estimates using either economic response models or models that contain internal, external and macroeconomic variables. The macroeconomic impact on PD is modelled over the period equal to the remaining maturity of the underlying assets.\nIn addition to management judgemental adjustments there are also ‘Other adjustments’, which are made to address process limitations and data/model deficiencies.\n‘Management judgemental adjustments’ and ‘Other adjustments’ constitute the total value of adjustments to modelled allowance for ECL. For the wholesale portfolio, defaulted exposures are assessed individually and management judgemental adjustments are made only to the performing portfolio.\nFor LGD, the impact is modelled for mortgage portfolios by forecasting future loan-to-value profiles for the remaining maturity of the asset, using national level house price index forecasts and applying the corresponding LGD expectation relative to the updated forecast collateral values.\nAt 31 December 2023, there was a \\$0.2bn reduction in management judgemental adjustments compared with 31 December 2022. For the wholesale portfolio, this was due to modelled outcomes better reflecting the key risks at 31 December 2023. For the retail portfolio, there was an increase in other credit judgements due to the potential delayed impact of economic scenarios on unsecured portfolio defaults, primarily within the UK .\nManagement judgemental adjustments are described below.", "chunk_word_count": 416, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > How economic scenarios are reflected in ECL calculations", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 165, "page_start": 165, "page_end": 165 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 239, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Management judgemental adjustments\nIn the context of IFRS 9, management judgemental adjustments are typically short-term increases or decreases to the modelled allowance for ECL at either a customer, segment or portfolio level where management believes allowances do not sufficiently reflect the credit risk/expected credit losses at the reporting date. These can relate to risks or uncertainties that are not reflected in the models and/or to any late-breaking events with significant uncertainty, subject to management review and challenge.\nManagement judgemental adjustments made in estimating the scenario-weighted reported allowance for ECL at 31 December 2023 are set out in the following table.\nManagement judgemental adjustments at 31 December 2023 were an increase to allowance for ECL of $\\$ 0.1$ bn for the wholesale portfolio and an increase to ECL of $\\$ 0.60\\mathsf { n }$ for the retail portfolio.\nThe allowance for ECL calculated for the Upside and Downside scenarios should not be taken to represent the upper and lower limits of possible ECL outcomes. The impact of defaults that might occur in the future under different economic scenarios is captured by recalculating allowances for loans at the balance sheet date.\nAt 31 December 2023, wholesale management judgemental adjustments were an increase to allowance for ECL of $\\$ 0.1$ 1bn (31 December 2022: \\$0.6bn increase).\nThere is a particularly high degree of estimation uncertainty in numbers representing tail risk scenarios when assigned a $100 \\%$ weighting.\n– Management judgemental adjustments to corporate exposures increased allowance for ECL by $\\$ 0.1$ bn at 31 December 2023 (31 December 2022: \\$0.5bn increase), mostly due to management judgements to reflect heightened uncertainty in specific sectors and geographies, including adjustments to exposures to the real estate sectors in mainland China, the UK and the US. The decrease in adjustments to allowances compared with 31 December 2022 is attributed to a crystallisation of existing risks at that date through downgrades, and an improved reflection of emerging risks in macroeconomic scenarios and modelled outcomes.\nFor wholesale credit risk exposures, the sensitivity analysis excludes allowance for ECL and financial instruments related to defaulted (stage 3) obligors. The measurement of stage 3 ECL is relatively more sensitive to credit factors specific to the obligor than future economic scenarios, and therefore the effects of macroeconomic factors are not necessarily the key consideration when performing individual assessments of allowances for obligors in default. Loans to defaulted obligors are a small portion of the overall wholesale lending exposure, even if representing the majority of the allowance for ECL. Due to the range and specificity of the credit factors to which the ECL is sensitive, it is not possible to provide a meaningful alternative sensitivity analysis for a consistent set of risks across all defaulted obligors.\nAt 31 December 2023, retail management judgemental adjustments were an increase to allowance for ECL of $\\$ 0.6 b n$ (31 December 2022: \\$0.3bn increase). The increase in adjustments to allowance for ECL compared with 31 December 2022 was primarily due to the increase in management judgemental adjustments in other credit judgements (detailed below).", "chunk_word_count": 535, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Management judgemental adjustments", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 165, "page_start": 165, "page_end": 166 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 240, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Management judgemental adjustments\nFor retail mortgage exposures the sensitivity analysis includes allowance for ECL for defaulted obligors of loans and advances. This is because the retail ECL for secured mortgage portfolios, including loans in all stages, is sensitive to macroeconomic variables.\n– Management judgemental adjustments in relation to inflation increased allowance for ECL by $\\$ 0.1$ bn (31 December 2022: $\\$ 0.1$ bn). These adjustments addressed where increasing inflation and interest rates result in affordability risks that were not fully captured by the modelled output.\n### Wholesale and retail sensitivity\nThe wholesale and retail sensitivity tables present the $100 \\%$ weighted results. These exclude portfolios held by the insurance business and small portfolios, and as such cannot be directly compared with personal and wholesale lending presented in other credit risk tables. In both the wholesale and retail analysis, the comparative period results for Downside 2 scenarios are also not directly comparable with the current period, because they reflect different risks relative to the consensus scenarios for the period end.\n– Management judgemental adjustments in relation to other credit judgements increased allowance for ECL by $\\$ 0.56\\mathsf { n }$ (31 December 2022: \\$0.2bn). These adjustments were primarily to capture the potential delayed impact of economic scenarios on unsecured portfolio defaults in the UK.\n### Economic scenarios sensitivity analysis of ECL estimates\nThe wholesale and retail sensitivity analysis is stated inclusive of management judgemental adjustments, as appropriate to each scenario.\nManagement considered the sensitivity of the ECL outcome against the economic forecasts as part of the ECL governance process by recalculating the allowance for ECL under each scenario described above for selected portfolios, applying a $100 \\%$ weighting to each scenario in turn. The weighting is reflected in both the determination of a significant increase in credit risk and the measurement of the resulting allowances.\nFor both retail and wholesale portfolios, the gross carrying amount of financial instruments are the same under each scenario. For exposures with similar risk profile and product characteristics, the sensitivity impact is therefore largely the result of changes in macroeconomic assumptions.\n### Wholesale analysis\nAt 31 December 2023, the highest level of $100 \\%$ scenario-weighted allowance for ECL was observed in the UK and Hong Kong. This higher ECL impact was largely driven by significant exposure in these regions.\nIn the wholesale portfolio, off-balance sheet financial instruments have a lower likelihood to be fully converted to a funded exposure at the point of default, and consequently the sensitivity of the allowance for ECL is lower in relation to its nominal amount, when compared with an on-balance sheet exposure with a similar risk profile.\nCompared with 31 December 2022, the Downside 2 allowance for ECL was lower in Hong Kong and mainland China, mostly due to the crystallisation of defaults for certain high-risk exposures and a decrease of the associated downside uncertainty.\n### Retail analysis", "chunk_word_count": 507, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Management judgemental adjustments", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 166, "page_start": 166, "page_end": 167 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 241, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### IFRS 9 ECL sensitivity to future economic conditions\nAt 31 December 2023, the most significant level of allowance for ECL sensitivity was observed in the UK, Mexico and Hong Kong. Mortgages reflected the lowest level of allowance for ECL sensitivity across most markets given the significant levels of collateral relative to the exposure values. Credit cards and other unsecured lending across stage 1 and 2 are more sensitive to economic forecasts and therefore reflected the highest level of allowance for ECL sensitivity during 2023.\nThe reported gross carrying amount by stage is representative of the weighted scenario allowance for ECL. The allowance for ECL sensitivity to the other scenarios includes changes in allowance for ECL due to the levels of loss and the migration of additional lending balances in or out of stage 2.\n### Group ECL sensitivity results\nThe allowance for ECL of the scenarios and management judgemental adjustments is highly sensitive to movements in economic forecasts. Based upon the sensitivity tables presented above, if the Group allowance for ECL balance was estimated solely on the basis of the Central scenario, Downside scenario or the Downside 2 scenario at 31 December 2023, it would increase/ (decrease) as presented in the below table.\nThere is limited sensitivity in credit cards and other unsecured lending in stage 3 as levels of loss on defaulted exposures remain consistent through various economic conditions. The alternative downside is from the tail of the economic distribution where allowance for ECL is more sensitive based on historical experience.\nAt 31 December 2023, the Group allowance for ECL remained unchanged in the retail portfolio and decreased by $\\$ 0.6 b n$ in the wholesale portfolio, compared with 31 December 2022.\nAt 31 December 2023, the sensitivity of the allowance for ECL to the consensus Central and consensus Upside scenarios decreased for both retail and wholesale portfolios due to lower macroeconomic forecast uncertainty, and the return to standardised weighting for the probability-weighted reported allowance.\nThe decrease in the Downside 2 scenario sensitivity within the wholesale portfolio since 31 December 2022 has been mostly driven by the crystallisation of defaults of higher risk exposures to the mainland China real estate sector and a reduction of related uncertainty. Within the retail portfolio, the increase in the Downside 2 scenario sensitivity was due to portfolio growth in Mexico and scenario forecast deterioration in Hong Kong.", "chunk_word_count": 423, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > IFRS 9 ECL sensitivity to future economic conditions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 168, "page_start": 168, "page_end": 170 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 242, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Reconciliations of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees\nThe following disclosure provides a reconciliation by stage of the Group’s gross carrying/nominal amount and allowances for loans and advances to banks and customers, including loan commitments and financial guarantees.\nThe net remeasurement of ECL arising from transfer of stage represents the increase or decrease due to these transfers, for example, moving from a 12-month (stage 1) to a lifetime (stage 2) ECL measurement basis. Net remeasurement excludes the underlying customer risk rating (‘CRR’)/probability of default (‘PD’) movements of the financial instruments transferring stage. This is captured, along with other credit quality movements in the ‘changes to risk parameters – credit quality’ line item.\nIn addition, a reconciliation by stage of the Group’s gross carrying amount and allowances for loans and advances to banks and customers and a reconciliation by stage of the Group’s nominal amount and allowances for loan commitments and financial guarantees were included in this section following the adoption of the recommendations of the DECL Taskforce‘s third report.\nChanges in ‘Net new and further lending/repayments’ represents the impact from volume movements within the Group’s lending portfolio and includes ‘New financial assets originated or purchased’, ‘assets derecognised (including final repayments)’ and ‘changes to risk parameters – further lending/repayment’.\nMovements are calculated on a quarterly basis and therefore fully capture stage movements between quarters. If movements were calculated on a year-to-date basis they would only reflect the opening and closing position of the financial instrument.\nThe transfers of financial instruments represents the impact of stage transfers upon the gross carrying/nominal amount and associated allowance for ECL.\n(Audited)\n1 Total includes $\\$ 7$ 7bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding allowance for ECL of \\$70m, reflecting business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 401.\nAs shown in the previous table, the allowance for ECL for loans and advances to customers and banks and relevant loan commitments and financial guarantees decreased $\\$ 459 m$ during the period from $\\$ 12345$ at 31 December 2022 to $\\$ 11$ ,495m at 31 December 2023.\n– \\$95m relating to credit-related modifications, which resulted in derecognition; and\n– $\\$ 31m$ of changes to models used for ECL calculation.\nThese were partly offset by:\nThis decrease was driven by:\n– $\\$ 4,830 m$ relating to underlying credit quality changes, including the credit quality impact of financial instruments transferring between stages; \n– $\\$ 180\\mathsf { m }$ relating to the net remeasurement impact of stage transfers; and \n– foreign exchange and other movements of \\$175m.\n– $\\$ 3,922 m$ of assets written off;\n– $\\$ 1,596 m$ relating to volume movements, which included the allowance for ECL associated with new originations, assets derecognised and further lending/repayment;", "chunk_word_count": 520, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Reconciliations of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 170, "page_start": 170, "page_end": 171 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 243, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Reconciliations of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees\nThe ECL charge for the period of $\\$ 3,383 m$ presented in the previous table consisted of $\\$ 4,830 m$ relating to underlying credit quality changes, including the credit quality impact of financial instruments transferring between stages and $\\$ 180\\mathsf { m }$ relating to the net remeasurement impact of stage transfers.\nThis was partly offset by $\\$ 1,596 m$ relating to underlying net book volume movement and $\\$ 31m$ in changes to models used for ECL calculation.\nSummary views of the movement in wholesale and personal lending are presented on pages 179 and 192.\n1 Total includes $\\$ 7$ .7bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale, and a corresponding allowance for ECL of $\\$ 70 m,$ , reflecting business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 401.\n### Credit quality\n### Credit quality of financial instruments\n### (Audited)\nWe assess the credit quality of all financial instruments that are subject to credit risk. The credit quality of financial instruments is a point-in-time assessment of PD, whereas stages 1 and 2 are determined based on relative deterioration of credit quality since initial recognition for the majority of portfolios. Accordingly, for non-creditimpaired financial instruments, there is no direct relationship between the credit quality assessment and stages 1 and 2, although typically the lower credit quality bands exhibit a higher proportion in stage 2.\nThe five credit quality classifications provided below each encompass a range of granular internal credit rating grades assigned to wholesale and personal lending businesses and the external ratings attributed by external agencies to debt securities, as shown in the table on page 148.\n### Credit-impaired loans\nto occur when an exposure is 90 days past due. Therefore, the definitions of credit impaired and default are aligned as far as possible so that stage 3 represents all loans that are considered defaulted or otherwise credit impaired.\nWe determine that a financial instrument is credit impaired and in stage 3 by considering relevant objective evidence, primarily whether:\ncontractual payments of either principal or interest are past due for more than 90 days; – there are other indications that the borrower is unlikely to pay, such as when a concession has been granted to the borrower for economic or legal reasons relating to the borrower’s financial condition; and the loan is otherwise considered to be in default. If such unlikeliness to pay is not identified at an earlier stage, it is deemed", "chunk_word_count": 478, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Reconciliations of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 172, "page_start": 172, "page_end": 177 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 244, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Forbearance\nThe following table shows the gross carrying amounts and allowances for ECL of the Group’s holdings of forborne loans and advances to customers by industry sector and by stages.\nA summary of our current policies and practices for forbearance is set out in ‘Credit risk management’ on page 147.", "chunk_word_count": 79, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Forbearance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 177, "page_start": 177, "page_end": 178 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 245, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Wholesale lending\nThis section provides further details on the major legal entities, countries, territories and products comprising wholesale loans and advances to customers and banks. Product granularity is also provided by stage with legal entity data presented for loans and advances to customers, banks, other credit commitments, financial guarantees and similar contracts. Additionally, this section provides a reconciliation of the opening 1 January 2023 to 31 December 2023 closing gross carrying/nominal amounts and the associated allowance for ECL.\nThe underlying growth in loans and advances to banks was mainly driven by central bank balances and money market lending growth in Singapore (up $\\$ 6.56\\mathsf { n n } \\rangle$ , Hong Kong (up $\\$ 5.$ 1bn), the UK (up $\\$ 2.8 b n )$ and Egypt (up $\\$ 1$ .5bn). These were partly offset by reductions in mainland China (down $\\$ 2.6 b n$ ), Malaysia (down $\\$ 1.6 b n $ ), Switzerland (down $\\$ 1.450\\mathsf { n } )$ ) and the UAE (down $\\$ 1230\\mathsf { n }$ ). There was also a $\\$ 0.6 b n$ decrease from the merger of our business in Oman.\nLoan commitments and financial guarantees increased by $\\$ 27$ .5bn since 31 December 2022 to $\\$ 419.90\\mathrm { n }$ at 31 December 2023. Excluding favourable foreign exchange movements of $\\$ 8.7$ bn, loan commitments and financial guarantees grew by $\\$ 123,456,7$ . This can be mainly attributed to a $\\$ 23.25,7$ increase in unsettled reverse repurchase agreements, partly offset by a decrease of $\\$ 6.30n$ in loan commitments with corporate and commercial customers.\nAt 31 December 2023, wholesale lending for loans and advances to banks and customers of \\$615bn decreased by $\\$ 9.6$ bn compared with 31 December 2022. This included favourable foreign exchange movements of $\\$ 6.$ 1bn. Excluding foreign exchange movements, the total loans and advances to customers decrease of $\\$ 24$ .6bn was driven by a \\$31.5bn decrease in corporate and commercial balances, partly offset by a $\\$ 6.90\\mathsf { n }$ increase in balances from non-bank financial institutions. In addition, there was a $\\$ 8.9$ bn increase in loans and advances to banks.\nThe allowance for ECL attributable to loans and advances to banks and customers of $\\$ 8.20\\mathsf { n }$ at 31 December 2023 decreased from $\\$ 8.6 b n$ at 31 December 2022. This included adverse foreign exchange movements of $\\$ 0.1$ bn.\nThe underlying reduction in corporate and commercial lending was mainly driven by decreases in Hong Kong (down $\\$ 123.65,7$ , in the UK (down $\\$ 5.450\\mathsf { n } \\rangle$ , in mainland China (down $\\$ 20\\mathsf { h n }$ ), in France (down $\\$ 1.6 b n $ ), in the US (down $\\$ 1.30n$ ). These were partly offset by increased lending in India (up $\\$ 1.8 b n !$ ). There was a $\\$ 2.1$ bn decrease from the merger of our business in Oman.", "chunk_word_count": 518, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Wholesale lending", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 178, "page_start": 178, "page_end": 178 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 246, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Wholesale lending\nExcluding foreign exchange movements, the total decrease in the wholesale allowance for ECL attributable to loans and advances to customers and banks was mostly driven by a $\\$ 0.60\\mathsf { n }$ decrease in corporate and commercial balances, partly offset by a $\\$ 0.1$ bn increase in loans to non-bank financial institutions and banks.\nThe allowance for ECL attributable to loan commitments and financial guarantees at 31 December 2023 remained stable at $\\$ 0.450\\mathsf { n }$ compared with 31 December 2022.\nThe underlying decrease in loans advances to corporate and commercial customers within stage 2 included repayments within our commercial real estate portfolio in Hong Kong, together with derisking measures in our mainland China commercial real estate portfolio. In addition, there was a further decrease in the wholesale and retail trade portfolio in the UK largely from repayments and improvements in the economic outlook that led to upgrades to stage 1.\nThe table below provides a breakdown by industry sector and stage of the Group’s gross carrying amount and allowances for ECL for wholesale loans and advances to banks and customers. Counterparties or exposures are classified when presenting comparable economic characteristics, or engaged in similar activities so that their collective ability to meet contractual obligations is uniformly affected by changes in economic, political or other conditions. Therefore, the industry classification does not adhere to Nomenclature des Activités Économiques dans la Communauté Européenne (‘NACE’), which is applicable to other financial regulatory reporting.\nThe underlying growth in loans and advances to non-bank financial institutions was mainly driven by the formation of HSBC Innovation Banking, following the acquisition of SVB UK, in the UK (up $\\$ 6.450\\mathsf { n } )$ . In addition, increases in France (up $\\$ 1$ .4bn) were partly offset by decreases in mainland China (down $\\$ 0.90\\mathsf { n n }$ ).\n1 Total includes \\$13.5bn of gross carrying loans and advances to customers and banks, which were classified to assets held for sale during the year, and a corresponding allowance for ECL of $\\$ 61 m,$ reflecting business disposals as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 401.\nAs shown in the above table, the allowance for ECL for loans and advances to customers and banks and relevant loan commitments and financial guarantees decreased by $\\$ 4545$ during the period from $\\$ 9,057m$ at 31 December 2022 to $\\$ 8,603 m$ at 31 December 2023.\nThese were partly offset by:\n– $\\$ 3,33,8m$ of changes to models used for ECL calculation; and – foreign exchange and other movements of $\\$ 79 m$ .\nThis decrease was driven by:\nThe ECL charge for the period of $\\$ 2,158 m$ presented in the previous table consisted of $\\$ 3,33,8m$ relating to underlying credit quality changes, including the credit quality impact of financial instruments transferring between stages. This was partly offset by $\\$ 1,149 m$ relating to underlying net book volume movement, $\\$ 16 m$ in changes to models used for ECL calculation and $\\$ 15 m$ relating to the net remeasurement impact of stage transfers.", "chunk_word_count": 549, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Wholesale lending", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 178, "page_start": 178, "page_end": 181 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 247, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Wholesale lending\n– $\\$ 2,596 m$ of assets written off; \n– \\$1,149m relating to volume movements, which included the allowance for ECL associated with new originations, assets derecognised and further lending/repayments; \\$95m relating to credit-related modification, which resulted in derecognition; \n– \\$16m relating to changes to models used for ECL calculation; and \n– \\$15m relating to the net remeasurement impact of stage transfers.\nDuring the period, there was a net transfer to stage 2 of $\\$ 15,739 m$ gross carrying/nominal amounts. It was primarily driven by $\\$ 8,792 m$ in Hong Kong, mainly due to deterioration in the real estate and construction sectors, and $\\$ 6,273 m$ in the UK, mainly driven by increased interest rates affecting the corporate and commercial portfolio.\nOur risk rating system facilitates the internal ratings-based approach under the Basel framework adopted by the Group to support calculation of ur minimum credit regulatory capital requirement. The credit quality classifications can be found on page 148.\nWholesale lending – credit risk profile by obligor grade for loans and advances at amortised cost\n### Commercial real estate\nCommercial real estate lending includes the financing of corporate, institutional and high net worth customers who are investing primarily in income-producing assets and, to a lesser extent, in their construction and development. The portfolio has larger concentrations in Hong Kong, the UK, mainland China and the US.\nshort tenors with a particular focus on supporting larger, better capitalised developers involved in residential construction or assets supporting economic expansion.\nExcluding favourable foreign exchange movements of $\\$ 1.1$ bn, commercial real estate lending decreased by $\\$ 123.80\\mathsf { n }$ , mainly from $\\$ 7.45 n$ in Hong Kong due to loan repayments. The decrease included loan sales of \\$0.5bn in the US as part of an initiative to reduce the portfolio exposure.\nOur global exposure is centred largely on cities with economic, political or cultural significance. In more developed markets, our exposure mainly comprises the financing of investment assets, the redevelopment of existing stock and the augmentation of both commercial and residential markets to support economic and population growth. In less developed commercial real estate markets, our exposures comprise lending for development assets on relatively\nDespite the lower exposure, allowance for ECL remained at $\\$ 2.8 b n$ , reflecting the challenging conditions in the commercial property sector, including the impact of lower valuations in the office segment.\n### Commercial real estate lending to customers\n### Commercial real estate lending to customers by global business", "chunk_word_count": 442, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Wholesale lending", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 181, "page_start": 181, "page_end": 186 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 248, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Refinance risk in commercial real estate\nCommercial real estate lending tends to require the repayment of a significant proportion of the principal at maturity. Typically, a customer will arrange repayment through the acquisition of a new loan to settle the existing debt. Refinance risk is the risk that a customer, being\nunable to repay the debt on maturity, fails to refinance it at commercial terms. We monitor our commercial real estate portfolio closely, assessing indicators for signs of potential issues with refinancing.\nThe following table presents the Group’s exposure to borrowers classified in the commercial real estate sector where the ultimate parent is based in mainland China, as well as all commercial real estate exposures booked on mainland China balance sheets.\nThe exposures at 31 December 2023 are split by country/territory and credit quality including allowances for ECL by stage.\n### Mainland China commercial real estate\n### Allowance for ECL by credit quality", "chunk_word_count": 182, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Refinance risk in commercial real estate", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 186, "page_start": 186, "page_end": 188 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 249, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### (Unaudited)\nCommercial real estate financing refers to lending that focuses on commercial development and investment in real estate and covers commercial, residential and industrial assets. The exposures in the table are related to companies whose primary activities are focused on these activities. Lending is generally focused on tier 1 and 2 cities. The table also includes financing provided to a corporate or financial entity for the purchase or financing of a property that supports the overall operations of the business. Such exposures are outside of our normal definition of commercial real estate, as applied elsewhere in this report, but are provided here for a more comprehensive view of our mainland China property exposure.\nAt 31 December 2023, the Group had allowances for ECL of $\\$ 1.8 b n$ (31 December 2022: \\$1.7bn) held against mainland China commercial real estate exposures booked in Hong Kong. ECL coverage increased to $2 8 . 5 \\%$ (31 December 2022: $1 8 . 6 \\%$ ), reflecting a further credit deterioration during the year.\nApproximately half of the unimpaired exposure in the Hong Kong portfolio is lending to state-owned enterprises and relatively strong private-owned enterprises. This is reflected in the relatively low allowance for ECL in this part of the portfolio.\nThe table above shows $5 9 \\%$ (\\$7.1bn) of total exposure with a credit quality of ’satisfactory’ or above, which was slightly higher in proportion compared with 31 December 2022 $( 5 7 \\%$ , \\$9.5bn). Total ‘credit impaired’ exposures increased to $2 6 \\%$ $( \\$ 3. 2 b n$ ) (31 December 2022: $20 \\%$ , $\\$ 3.450\\mathsf { n } \\}$ , reflecting sustained stress in the China commercial real estate market, including weakness in both property market fundamentals and financing conditions for borrowers operating in this sector.\nMarket conditions are likely to remain subdued with a protracted recovery as sentiment and domestic residential demand remain weak, with ongoing refinancing and liquidity risk for corporates operating in this market. The divergence between privately-owned enterprises and state-owned enterprises is likely to continue, with state-owned enterprises achieving above-market sales performance, and benefiting from market share gains and better access to funding.\nAllowances for ECL are substantially against unsecured exposures. For secured exposures, allowances for ECL are minimal, reflecting the nature and value of the security held.\nThe Group has additional exposures to mainland China commercial real estate as a result of lending to multinational corporates booked outside of mainland China, which is not incorporated in the table above.\nFacilities booked in Hong Kong continued to represent the largest proportion of mainland China commercial real estate exposures, although total exposures reduced to $\\$ 6.30n$ , down $\\$ 3.$ 1bn since 31 December 2022, as a result of de-risking measures, repayments and write-offs. This portfolio remains relatively higher risk, with $3 3 \\%$ (31 December 2022: $3 6 \\%$ ) of exposure booked with a credit quality of ‘satisfactory’ or above and $4 7 \\%$ ‘credit impaired’ (31 December 2022: $3 3 \\%$ ).", "chunk_word_count": 529, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > (Unaudited)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 188, "page_start": 188, "page_end": 188 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 250, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Collateral and other credit enhancements\n### (Audited)\nAlthough collateral can be an important mitigant of credit risk, it is the Group’s practice to lend on the basis of the customer’s ability to meet their obligations out of cash flow resources rather than placing primary reliance on collateral and other credit risk enhancements. Depending on the customer’s standing and the type of product, facilities may be provided without any collateral or other credit enhancements. For other lending, a charge over collateral is obtained and considered in determining the credit decision and pricing. In the event of default, the Group may utilise the collateral as a source of repayment.", "chunk_word_count": 136, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Collateral and other credit enhancements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 189, "page_start": 189, "page_end": 189 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 251, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Collateral on loans and advances\nCollateral held is analysed separately for commercial real estate and for other corporate, commercial and financial (non-bank) lending. The following tables include off-balance sheet loan commitments, primarily undrawn credit lines.\nThe collateral measured in the following tables consists of fixed first charges on real estate, and charges over cash and marketable financial instruments. The values in the tables represent the expected market value on an open market basis. No adjustment has been made to the collateral for any expected costs of recovery. Marketable securities are measured at their fair value.\nDepending on its form, collateral can have a significant financial effect in mitigating our exposure to credit risk. Where there is sufficient collateral, an expected credit loss is not recognised. This is the case for reverse repurchase agreements and for certain loans and advances to customers where the loan to value (‘LTV’) is very low.\nOther types of collateral such as unsupported guarantees and floating charges over the assets of a customer’s business are not measured in the following tables. While such mitigants have value, often providing rights in insolvency, their assignable value is not sufficiently certain and they are therefore assigned no value for disclosure purposes.\nMitigants may include a charge on borrowers’ specific assets, such as real estate or financial instruments. Other credit risk mitigants include short positions in securities and financial assets held as part of linked insurance/investment contracts where the risk is predominantly borne by the policyholder. Additionally, risk may be managed by employing other types of collateral and credit risk enhancements, such as second charges, other liens and unsupported guarantees. Guarantees are normally taken from corporates and export credit agencies. Corporates would normally provide guarantees as part of a parent/ subsidiary relationship and span a number of credit grades. The export credit agencies will normally be investment grade.\nThe LTV ratios presented are calculated by directly associating loans and advances with the collateral that individually and uniquely supports each facility. When collateral assets are shared by multiple loans and advances, whether specifically or, more generally, by way of an all monies charge, the collateral value is pro-rated across the loans and advances protected by the collateral.\nFor credit-impaired loans, the collateral values cannot be directly compared with impairment allowances recognised. The LTV figures use open market values with no adjustments. Impairment allowances are calculated on a different basis, by considering other cash flows and adjusting collateral values for costs of realising collateral as explained further on page 348.\nCertain credit mitigants are used strategically in portfolio management activities. While single name concentrations arise in portfolios managed by Global Banking and Corporate Banking, it is only in Global Banking that their size requires the use of portfolio level credit mitigants. Across Global Banking, risk limits and utilisations, maturity profiles and risk quality are monitored and managed proactively. This process is key to the setting of risk appetite for these larger, more complex, geographically distributed customer groups. While the principal form of risk management continues to be at the point of exposure origination, through the lending decision-making process, Global Banking also utilises loan sales and credit default swap (‘CDS’) hedges to manage concentrations and reduce risk.", "chunk_word_count": 563, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Collateral on loans and advances", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 189, "page_start": 189, "page_end": 189 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 252, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Commercial real estate loans and advances\nThe value of commercial real estate collateral is determined by using a combination of external and internal valuations and physical inspections. For commercial real estate, where the facility exceeds regulatory threshold requirements, Group policy requires an independent review of the valuation at least every three years, or more frequently as the need arises.\nIn Hong Kong, market practice is typically for lending to major property companies to be either secured by guarantees or unsecured. In Europe, facilities of a working capital nature are generally not secured by a first fixed charge, and are therefore disclosed as not collateralised.\nThese transactions are the responsibility of a dedicated Global Banking portfolio management team. Hedging activity is carried out within agreed credit parameters, and is subject to market risk limits and a robust governance structure. Where applicable, CDSs are entered into directly with a central clearing house counterparty. Otherwise, the Group’s exposure to CDS protection providers is diversified among mainly banking counterparties with strong credit ratings.\nCDS mitigants are held at portfolio level and are not included in the expected credit loss calculations. CDS mitigants are not reported in the following tables.\n### Other corporate, commercial and financial (non-bank) loans and advances\nOther corporate, commercial and financial (non-bank) loans are analysed separately in the following table, which focuses on the countries/territories containing the majority of our loans and advances balances. For financing activities in other corporate and commercial lending, collateral value is not strongly correlated to principal repayment performance.\nCollateral values are generally refreshed when an obligor’s general credit performance deteriorates and we have to assess the likely performance of secondary sources of repayment should it prove necessary to rely on them.\n### Other credit risk exposures\nIn addition to collateralised lending, other credit enhancements are employed and methods used to mitigate credit risk arising from financial assets. These are summarised below:\nThe Group’s maximum exposure to credit risk includes financial guarantees and similar contracts granted, as well as loan and other credit-related commitments. Depending on the terms of the arrangement, we may use additional credit mitigation if a guarantee is called upon or a loan commitment is drawn and subsequently defaults.\n– Some securities issued by governments, banks and other financial institutions benefit from additional credit enhancements provided by government guarantees that cover the assets.\nFor further information on these arrangements, see Note 33 on the financial statements.\nDebt securities issued by banks and financial institutions include asset-backed securities (‘ABSs’) and similar instruments, which are supported by underlying pools of financial assets. Credit risk associated with ABSs is reduced through the purchase of credit default swap (‘CDS’) protection.", "chunk_word_count": 471, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Commercial real estate loans and advances", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 189, "page_start": 189, "page_end": 192 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 253, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Derivatives\nWe participate in transactions exposing us to counterparty credit risk. Counterparty credit risk is the risk of financial loss if the counterparty to a transaction defaults before satisfactorily settling it. It arises principally from over-the-counter (‘OTC’) derivatives and securities financing transactions and is calculated in both the trading and nontrading books. Transactions vary in value by reference to a market factor such as an interest rate, exchange rate or asset price.\n– Trading loans and advances mainly pledged against cash collateral are posted to satisfy margin requirements. There is limited credit risk on cash collateral posted since in the event of default of the counterparty this would be set off against the related liability. Reverse repos and stock borrowing are by their nature collateralised.\nCollateral accepted as security that the Group is permitted to sell or repledge under these arrangements is described on page 390 of the financial statements.\nThe counterparty risk from derivative transactions is taken into account when reporting the fair value of derivative positions. The adjustment to the fair value is known as the credit valuation adjustment (‘CVA’).\nFor an analysis of CVAs, see Note 12 on the financial statements.\nThe following table reflects by risk type the fair values and gross notional contract amounts of derivatives cleared through an exchange, central counterparty or non-central counterparty.\n### The purposes for which HSBC uses derivatives are described in Note 15 on the financial statements.", "chunk_word_count": 266, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Derivatives", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 192, "page_start": 192, "page_end": 192 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 254, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Personal lending\nThis section presents further disclosures related to personal lending. It provides details of the major legal entities, countries and products that are driving the change observed in personal loans and advances to customers, with the impact of foreign exchange separately identified. Additionally, Hong Kong and UK mortgage book LTV data is provided.\nThe International Swaps and Derivatives Association (‘ISDA’) master agreement is our preferred agreement for documenting derivatives activity. It is common, and our preferred practice, for the parties involved in a derivative transaction to execute a credit support annex (‘CSA’) in conjunction with the ISDA master agreement. Under a CSA, collateral is passed between the parties to mitigate the counterparty risk inherent in outstanding positions. The majority of our CSAs are with financial institutional clients.\nThis section also provides reconciliations of the opening 1 January 2023 to 31 December 2023 closing gross carrying/nominal amounts and associated allowance for ECL by product. Further product granularity is also provided by stage, with data for major legal entities presented for loans and advances to customers, loan and other credit-related commitments and financial guarantees.\nWe manage the counterparty exposure on our OTC derivative contracts by using collateral agreements with counterparties and netting agreements. Currently, we do not actively manage our general OTC derivative counterparty exposure in the credit markets, although we may manage individual exposures in certain circumstances.\nAt 31 December 2023, total personal lending for loans and advances to customers of $\\$ 447$ .5bn increased by $\\$ 32$ 6bn compared with 31 December 2022. This increase included favourable foreign exchange movements of $\\$ 11$ .5bn. Excluding foreign exchange movements, the increase of $\\$ 21$ .1bn was mainly driven by growth in the UK (up $\\$ 60\\mathsf { h }$ ), in Hong Kong (up $\\$ 5.8 b n !$ ), in Mexico (up $\\$ 2.30n )$ ) and in Australia $( \\mathsf { u p } \\$ 1.45 n )$ ). Additionally, France increased by $\\$ 7.8 b n$ due to the retention of the home loan portfolio, which is no longer classified as assets held for sale.\nWe place strict policy restrictions on collateral types and as a consequence the types of collateral received and pledged are, by value, highly liquid and of a strong quality, being predominantly cash.\nWhere a collateral type is required to be approved outside the collateral policy, approval is required from a committee of senior representatives from Markets, Legal and Risk.\nSee Note 31 on the financial statements for details regarding legally enforceable right of offset in the event of counterparty default and collateral received in respect of derivatives.\nThe increase was partly offset by a $\\$ 1.2$ bn decrease from the merger of our business in Oman and a $\\$ 1.0 b n$ decrease from the sale of our retail mortgage loan portfolio in New Zealand.\nThe allowance for ECL attributable to personal lending, excluding offbalance sheet loan commitments and guarantees, remained broadly stable at $\\$ 2.9$ bn at 31 December 2023, as net releases were offset by adverse foreign exchange movements of $\\$ 0.1$ bn.", "chunk_word_count": 542, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Personal lending", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 192, "page_start": 192, "page_end": 193 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 255, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Personal lending\nThe quality of both our Hong Kong and UK mortgage books remained strong, with low levels of impairment allowances. The average LTV ratio on new mortgage lending in Hong Kong was $6 4 \\%$ , compared with an estimated $60 \\%$ for the overall mortgage portfolio. The average LTV ratio on new lending in the UK was $6 5 \\%$ , compared with an estimated $5 3 \\%$ for the overall mortgage portfolio.\nExcluding foreign exchange movements and reclassifications to held for sale, mortgage lending balances increased by $\\$ 15.56n$ to $\\$ 360.90\\mathrm { n }$ at 31 December 2023, mainly in Hong Kong (up $\\$ 5.90\\mathsf { n }$ ), in the UK (up $\\$ 4.90\\mathsf { n } \\rangle$ , in Mexico (up $\\$ 1.76 n $ ), in the US (up $\\$ 1$ .5bn) and in Australia (up \\$1.4bn). The allowance for ECL attributable to mortgages remained broadly stable at $\\$ 0.6$ bn when compared with 31 December 2022.\nExcluding foreign exchange movements and reclassifications to held for sale, other personal lending balances at 31 December 2023 increased by \\$7.8bn compared with 31 December 2022. This was mainly from the retained home loan portfolio in France (up $\\$ 7.450\\nw$ ), which is no longer classified as assets held for sale. In addition, our credit card portfolio in Mexico increased by $\\$ 0.6 b n$ .\nTotal personal lending gross carrying amounts in stage 2 decreased by $\\$ 1$ .4bn compared with 31 December 2022. Excluding favourable foreign exchange movements of $\\$ 230 n$ , the decrease of $\\$ 3.70 n$ was driven by favourable economic conditions and the model updates for interest-only and offset mortgages at a portfolio level in the UK.\nThe allowance for ECL, excluding foreign exchange movements, attributable to other personal lending of $\\$ 2.3$ 3bn remained unchanged from 31 December 2022. The allowance for ECL attributable to credit cards decreased by $\\$ 0.1$ bn, offset by adverse foreign exchange movements of $\\$ 0.1$ bn in other personal lending.\n### Exposure to UK interest-only mortgage loans\nOf the interest-only mortgage loans that expired in 2021, $8 2 \\%$ were repaid within 12 months of expiry with a total of $9 6 \\%$ being repaid within 24 months of expiry. For those expiring during 2022, $9 2 \\%$ were repaid within 12 months of expiry.\nThe following information is presented for HSBC branded interestonly mortgage loans. This excludes offset mortgages in first direct and private banking mortgages.\nAt the end of 2023, the average LTV ratio of the interest-only mortgage loans was $4 4 \\%$ (2022: $4 1 \\%$ ), and $9 7 \\%$ (2022: $9 9 \\%$ ) had an LTV ratio of $7 5 \\%$ or less.\nAt 31 December 2023, interest-only mortgage loan exposures were $\\$ 15.2$ bn (2022: $\\$ 14.45$ ) and the maturity profile was as follows:\n### UK interest-only mortgage loans\n### UK interest-only mortgage loans (continued)", "chunk_word_count": 519, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Personal lending", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 193, "page_start": 193, "page_end": 195 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 256, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Exposure to offset mortgage in first direct\nThe offset mortgage in first direct is a flexible way for our customers to take control of their finances. It works by grouping together the customer’s mortgage, savings and current accounts to offset their credit and debit balances against their mortgage exposure. At 31 December 2023, exposures were worth a total $\\$ 5.00\\mathsf { n }$ with an average LTV ratio of $2 9 \\%$ (2022: \\$5.5bn exposure and $3 2 \\%$ LTV ratio).", "chunk_word_count": 110, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Exposure to offset mortgage in first direct", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 195, "page_start": 195, "page_end": 195 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 257, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Reconciliations of changes in personal lending gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees\nThe following disclosure provides a reconciliation by stage of the Group’s personal lending gross carrying/nominal amount and allowances for loans and advances to customers, including loan commitments and financial guarantees.\nIn addition, three reconciliations by stage of the Group’s gross carrying/nominal amount and allowances for first lien mortgages, credit cards and other personal lending, including loan commitments and financial guarantees were added at 31 December 2023 following the adoption of the recommendations of the DECL Taskforce’s third report.\n(Audited)\n1 Total includes \\$7.8bn of gross carrying loans and advances and a corresponding allowance for ECL of \\$11m, due to the retention of certain balances previously classified as assets held for sale of our retail banking operations in France. For further details, see Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 401.\n2 Total includes \\$2.0bn of gross carrying loans and advances to customers, which were classified to assets held for sale, and a corresponding allowance for ECL of \\$20m, reflecting business disposals, as disclosed in Note 23 ‘Assets held for sale and liabilities of disposal groups held for sale’ on page 401.\nAs shown in the above table, the allowance for ECL for loans and advances to customers and relevant loan commitments and financial guarantees decreased by \\$5m during the period from $\\$ 2,897m$ at 31 December 2022 to $\\$ 2,892 m$ at 31 December 2023.\nThis decrease was driven by:\n– $\\$ 1,326 m$ of assets written off;\n– $\\$ 447m$ relating to volume movements, which included the allowance for ECL associated with new originations, assets derecognised and further lending/repayment; and\n– $\\$ 15 m$ of changes to models used for ECL calculation.\nThese were partly offset by:\nchanges, including the credit quality impact of financial instruments transferring between stages, and $\\$ 195 m$ relating to the net remeasurement impact of stage transfers. This was partly offset by $\\$ 447m$ relating to underlying net book volume movements and \\$15m in changes to models used for the calculation of ECL.\n– $\\$ 1,492 m$ relating to underlying credit quality changes, including the credit quality impact of financial instruments transferring between stages; \n– $\\$ 195 m$ relating to the net remeasurement impact of stage transfers; and \n– foreign exchange and other movements of $\\$ 96 m$ .\nDuring the period, there was a net transfer to stage 2 of $\\$ 1,910 m$ gross carrying/nominal amounts. This increase was mainly driven by $\\$ 1,550 m$ in Mexico, due to slight deterioration in the unsecured portfolio.\nThe ECL charge for the period of $\\$ 1,225 m$ presented in the above table consisted of $\\$ 1,492 m$ relating to underlying credit quality\n(Audited)\n### Collateral on loans and advances", "chunk_word_count": 505, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Reconciliations of changes in personal lending gross carrying/nominal amount and allowances for loans and advances to customers including loan commitments and financial guarantees", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 195, "page_start": 195, "page_end": 199 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 258, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### (Audited)\nThe following table provides a quantification of the value of fixed charges we hold over specific assets where we have a history of enforcing, and are able to enforce, collateral in satisfying a debt in the event of the borrower failing to meet its contractual obligations, and where the collateral is cash or can be realised by sale in an\nestablished market. The collateral valuation excludes any adjustments for obtaining and selling the collateral and, in particular, loans shown as not collateralised or partially collateralised may also benefit from other forms of credit mitigants.\n(Audited)\n### Supplementary information\n### HSBC Holdings\nRisk in HSBC Holdings is overseen by the HSBC Holdings Asset and Liability Management Committee. The major risks faced by HSBC Holdings are credit risk, liquidity risk and market risk (in the form of interest rate risk and foreign exchange risk).\nIn the case of our derivative asset balances (see page 338), there is a legally enforceable right of offset in the event of counterparty default and where, as a result, there is a net exposure for credit risk purposes. However, as there is no intention to settle these balances on a net basis under normal circumstances, they do not qualify for net presentation for accounting purposes. These offsets also include collateral received in cash and other financial assets.\nCredit risk in HSBC Holdings primarily arises from transactions with Group subsidiaries.\nIn HSBC Holdings, the maximum exposure to credit risk arises from two components:\nThe total offset relating to our derivative asset balances was $\\$ 3.0 b n$ at 31 December 2023 (2022: \\$3.1bn).\nfinancial assets on the balance sheet, where maximum exposure equals the carrying amount (see page 338); and financial guarantees and other guarantees, where the maximum exposure is the maximum that we would have to pay if the guarantees were called upon (see Note 34).\nThe credit quality of loans and advances and financial investments, both of which consist of intra-Group lending and US Treasury bills and bonds, is assessed as ‘strong’, with $100 \\%$ of the exposure being neither past due nor impaired (2022: $100 \\%$ ). For further details of credit quality classification, see page 148.\n### Treasury risk\nBanking into the Group. The acquisition was funded from existing resources, and the impacts on our Group LCR and CET1 ratio were minimal.", "chunk_word_count": 418, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > (Audited)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 199, "page_start": 199, "page_end": 205 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 259, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Contents\n203 Overview \n203 Treasury risk management \n205 Other Group risks \n206 Capital risk in 2023 \n210 Liquidity and funding risk in 2023 \n213 Structural foreign exchange risk in 2023 \n214 Interest rate risk in the banking book in 2023\n– In the fourth quarter of 2023, we reclassified our retail banking operations in France as held for sale, recognising a $\\$ 2.0 b n$ loss. In the first quarter, we had recognised a $\\$ 2.1$ bn partial reversal of impairment for this business. The net result for the year was a favourable \\$0.1bn impact. On 1 January 2024, we completed the sale of this business with no material incremental impact on CET1.\n– Having entered into an agreement to sell our banking business in Canada in 2022, the transaction is expected to complete at the end of the first quarter of 2024. The associated gain on sale is expected to add approximately 1.2 percentage points to the CET1 ratio as it stood at 31 December 2023.\n### Overview\nTreasury risk is the risk of having insufficient capital, liquidity or funding resources to meet financial obligations and satisfy regulatory requirements, including the risk of adverse impact on earnings or capital due to structural and transactional foreign exchange exposures, as well as changes in market interest rates, together with pension and insurance risk.\nFor quantitative disclosures on capital ratios, own funds and riskweighted assets (‘RWAs’), see pages 206 to 207. For quantitative disclosures on liquidity and funding metrics, see pages 210 to 211. For quantitative disclosures on interest rate risk in the banking book, see pages 214 to 216.\nTreasury risk arises from changes to the respective resources and risk profiles driven by customer behaviour, management decisions or the external environment.\n### Governance and structure\nThe Global Head of Traded and Treasury Risk Management and Risk Analytics is the accountable risk steward for all treasury risks. The Group Treasurer is the risk owner for all treasury risks, with the exception of pension risk and insurance risk. The Group Treasurer coowns pension risk with the Group Head of Performance, Reward and Employee Relations. Insurance risk is owned by the Chief Executive Officer for Global Insurance.\n### Approach and policy", "chunk_word_count": 396, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Contents", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 205, "page_start": 205, "page_end": 205 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 260, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### (Audited)\nOur objective in the management of treasury risk is to maintain appropriate levels of capital, liquidity, funding, foreign exchange and market risk to support our business strategy, and meet our regulatory and stress testing-related requirements.\nCapital risk, liquidity risk, interest rate risk in the banking book, structural foreign exchange risk and transactional foreign exchange risk are the responsibility of the Group Executive Committee and the Group Risk Committee (‘GRC’). Global Treasury actively manages these risks on an ongoing basis, supported by the Holdings Asset and Liability Management Committee (‘ALCO’) and local ALCOs, overseen by Treasury Risk Management and Risk Management Meetings.\nOur approach to treasury management is driven by our strategic and organisational requirements, taking into account the regulatory, economic and commercial environment. We aim to maintain a strong capital and liquidity base to support the risks inherent in our business and invest in accordance with our strategy, meeting both consolidated and local regulatory requirements at all times.\nOur policy is underpinned by our risk management framework. The risk management framework incorporates a number of measures aligned to our assessment of risks for both internal and regulatory purposes. These risks include credit, market, operational, pensions, structural and transactional foreign exchange risk, and interest rate risk in the banking book.\nPension risk is overseen by a network of local and regional pension risk management meetings. The Global Pensions Risk Management Meeting provides oversight of all pension plans sponsored by HSBC globally, and is chaired by the accountable risk steward. Insurance risk is overseen by the Global Insurance Risk Management Meeting, chaired by the Chief Risk and Compliance Officer for Global Insurance.\nFor further details, refer to our Pillar 3 Disclosures at 31 December 2023.\n### Capital, liquidity and funding risk management processes\n### Treasury risk management\n### Key developments in 2023", "chunk_word_count": 330, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > (Audited)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 205, "page_start": 205, "page_end": 205 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 261, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Assessment and risk appetite\nOur capital management policy is supported by a global capital management framework. The framework sets out our approach to determining key capital risk appetites including CET1, total capital, minimum requirements for own funds and eligible liabilities (‘MREL’), the leverage ratio and double leverage. Our internal capital adequacy assessment process (‘ICAAP’) is an assessment of the Group’s capital position, outlining both regulatory and internal capital resources and requirements resulting from HSBC’s business model, strategy, risk profile and management, performance and planning, risks to capital, and the implications of stress testing. Our assessment of capital adequacy is driven by an assessment of risks. These risks include credit, market, operational, pensions, insurance, structural foreign exchange, interest rate risk in the banking book and Group risk. Climate risk is also considered as part of the ICAAP, and we are continuing to develop our approach. The Group’s ICAAP supports the determination of the consolidated capital risk appetite and target ratios, as well as enables the assessment and determination of capital requirements by regulators. Subsidiaries prepare ICAAPs in line with global guidance, while considering their local regulatory regimes to determine their own risk appetites and ratios.\nFollowing high-profile banking failures in the first quarter of 2023, we reviewed our liquidity monitoring and metric assumptions as part of our internal liquidity adequacy assessment process cycle to ensure they continued to cover observed and emerging risks.\n– In 2023, we reverted to a policy of paying quarterly dividends, with the Board approving three interim dividends of $\\$ 0.10$ per share. We announced \\$7bn of share buy-backs during 2023.\nEffective July 2023, the Bank of England’s Financial Policy Committee doubled the UK countercyclical capital buffer rate from $1 \\%$ to $2 \\%$ , in line with the usual 12-month implementation lag. This change increased our CET1 requirement by 0.2 percentage points.\n– We further stabilised our net interest income against a backdrop of fluctuating interest rate expectations as the trajectory of inflation for major economies was reassessed.\n– Following the acquisition of SVB UK in the first quarter of 2023, we launched HSBC Innovation Banking in June, which combined the expertise of SVB UK with the reach of our international network. We are in the process of integrating HSBC Innovation\nHSBC Holdings is the provider of MREL to its subsidiaries, including equity and non-equity capital. These investments are funded by HSBC Holdings’ own equity capital and MREL-eligible debt. MREL includes own funds and liabilities that can be written down or converted into capital resources in order to absorb losses or recapitalise a bank in the event of its failure. In line with our existing structure and business model, HSBC has three resolution groups – the European resolution group, the Asian resolution group and the US resolution group. There are some smaller entities that fall outside these resolution groups.", "chunk_word_count": 502, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Assessment and risk appetite", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 205, "page_start": 205, "page_end": 206 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 262, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Regulatory developments\nFuture changes to our ratios will occur with the implementation of Basel 3.1. The Prudential Regulation Authority (‘PRA‘) has published its consultation paper on the UK’s implementation, with a proposed implementation date of 1 July 2025. The PRA has also published a set of near-final rules in relation to some Basel 3.1 elements. We are currently assessing the impact of implementation.\nHSBC Holdings seeks to maintain a prudent balance between the composition of its capital and its investments in subsidiaries.\nThe RWA output floor under Basel 3.1 is proposed to be subject to a four-and-a-half year transitional provision. Any impact from the output floor is expected be towards the end of the transition period.\nAs a matter of long-standing policy, the holding company group retains a substantial holdings capital buffer comprising cash and other high-quality liquid assets, which at 31 December 2023 was in excess of \\$27bn, within risk appetite.\n### Regulatory reporting processes and controls\nThe quality of regulatory reporting remains a key priority for management and regulators. We are progressing with a comprehensive programme to strengthen our global processes, improve consistency and enhance controls across regulatory reports.\nWe aim to ensure that management has oversight of our liquidity and funding risks at Group and entity level through robust governance, in line with our risk management framework. We manage liquidity and funding risk at an operating entity level in accordance with globally consistent policies, procedures and reporting standards. This ensures that obligations can be met in a timely manner, in the jurisdiction where they fall due.\nThe ongoing programme of work focuses on our material regulatory reports and is being phased over a number of years. This programme includes data enhancement, transformation of the reporting systems and an uplift to the control environment over the report production process.\nOperating entities are required to meet internal minimum requirements and any applicable regulatory requirements at all times. These requirements are assessed through our internal liquidity adequacy assessment process (‘ILAAP’), which ensures that operating entities have robust strategies, policies, processes and systems for the identification, measurement, management and monitoring of liquidity risk over an appropriate set of time horizons, including intra-day. The ILAAP informs the validation of risk tolerance and the setting of risk appetite. It also assesses the capability to manage liquidity and funding effectively in each major entity. These metrics are set and managed locally but are subject to robust global review and challenge to ensure consistency of approach and application of the Group’s policies and controls.\nWhile this programme continues, there may be further impacts on some of our regulatory ratios, such as the CET1, LCR and NSFR, as we implement recommended changes and continue to enhance our controls across the process.", "chunk_word_count": 484, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Regulatory developments", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 206, "page_start": 206, "page_end": 206 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 263, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Stress testing and recovery and resolution planning\nThe Group uses stress testing to inform management of the capital and liquidity needed to withstand internal and external shocks, including a global economic downturn or a systems failure. Stress testing results are also used to inform risk mitigation actions, input into global business performance measures through tangible equity allocation, and recovery and resolution planning, as well as to reevaluate business plans where analysis shows capital, liquidity and/or returns do not meet their target.", "chunk_word_count": 110, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Stress testing and recovery and resolution planning", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 206, "page_start": 206, "page_end": 206 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 264, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Planning and performance\nCapital and RWA plans form part of the annual financial resource plan that is approved by the Board. Capital and RWA forecasts are submitted to the Group Executive Committee on a monthly basis, and capital and RWAs are monitored and managed against the plan. The responsibility for global capital allocation principles rests with the Group Chief Financial Officer, supported by the Group Capital Management Meeting. This is a specialist forum addressing capital management, reporting into Holdings ALCO.\nIn addition to a range of internal stress tests, we are subject to supervisory stress testing in many jurisdictions. These include the programmes of the Bank of England (‘BoE’), the US Federal Reserve Board, the European Banking Authority, the European Central Bank and the Hong Kong Monetary Authority. The results of regulatory stress testing and our internal stress tests are used when assessing our internal capital and liquidity requirements through the ICAAP and ILAAP. The outcomes of stress testing exercises carried out by the PRA and other regulators feed into the setting of regulatory minimum ratios and buffers.\nThrough our internal governance processes, we seek to strengthen discipline over our investment and capital allocation decisions, and to ensure that returns on investment meet management’s objectives. Our strategy is to allocate capital to businesses and entities to support growth objectives where returns above internal hurdle levels have been identified and in order to meet their regulatory and economic capital needs. We evaluate and manage business returns by using a return on average tangible equity measure and a related economic profit measure.\nWe maintain recovery plans for the Group and material entities, which set out potential options management could take in a range of stress scenarios that could result in a breach of capital or liquidity buffers.\nThe Group recovery plan sets out the framework and governance arrangements to support restoring HSBC to a stable and viable position, and so lowering the probability of failure from either idiosyncratic company-specific stress or systemic market-wide issues. Our material entities’ recovery plans provide detailed actions that management would consider taking in a stress scenario should their positions deteriorate and threaten to breach risk appetite and regulatory minimum levels. This is to help ensure that HSBC entities can stabilise their financial position and recover from financial losses in a stress environment.\nFunding and liquidity plans also form part of the financial resource plan that is approved by the Board. The Board-level appetite measures are the liquidity coverage ratio (‘LCR’) and net stable funding ratio (‘NSFR’), together with an internal liquidity metric. In addition, we use a wider set of measures to manage an appropriate funding and liquidity profile, including legal entity depositor concentration limits, intra-day liquidity, forward-looking funding assessments and other key measures.", "chunk_word_count": 486, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Planning and performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 206, "page_start": 206, "page_end": 206 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 265, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Planning and performance\nThe Group also has capabilities, resources and arrangements in place to address the unlikely event that HSBC might not be recoverable and would therefore need to be resolved by regulators. The Group and the BoE publicly disclosed the status of HSBC’s progress against the BoE’s Resolvability Assessment Framework in June 2022, following the submission of HSBC’s inaugural resolvability self-assessment in October 2021. HSBC has continued to enhance its resolvability capabilities since this time and submitted its second self-assessment in October 2023. A subsequent update was provided to the BoE in January 2024. Further public disclosure by the Group and the BoE as to HSBC’s progress against the Resolvability Assessment Framework will be made in June 2024.\n### Risks to capital and liquidity\nOutside the stress testing framework, other risks may be identified that have the potential to affect our RWAs, capital and/or liquidity position. Downside and Upside scenarios are assessed against our management objectives, and mitigating actions are assigned as necessary. We closely monitor future regulatory developments and continue to evaluate the impact of these upon our capital and liquidity requirements, particularly those related to the UK’s implementation of the outstanding measures to be implemented from the Basel III reforms (‘Basel 3.1‘).\n### Other Group risks\n### Non-trading book foreign exchange exposures\nOverall, HSBC’s recovery and resolution planning helps safeguard the Group’s financial and operational stability. The Group is committed to further developing its recovery and resolution capabilities, including in relation to the Resolvability Assessment Framework.\n### Structural foreign exchange exposures\n### Measurement of interest rate risk in the banking book processes\nStructural foreign exchange exposures arise from net assets or capital investments in foreign operations, together with any associated hedging. A foreign operation is defined as a subsidiary, associate, joint arrangement or branch where the activities are conducted in a currency other than that of the reporting entity. An entity’s functional reporting currency is normally that of the primary economic environment in which the entity operates.", "chunk_word_count": 359, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Planning and performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 206, "page_start": 206, "page_end": 207 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 266, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Assessment and risk appetite\nInterest rate risk in the banking book is the risk of an adverse impact to earnings or capital due to changes in market interest rates. It is generated by our non-traded assets and liabilities, specifically loans, deposits and financial instruments that are not held for trading intent or in order to hedge positions held with trading intent. Interest rate risk that can be economically hedged may be transferred to Global Treasury. Hedging is generally executed through interest rate derivatives or fixed-rate government bonds. Any interest rate risk that Global Treasury cannot economically hedge is not transferred and will remain within the global business where the risks originate.\nExchange differences on structural exposures are recognised in other comprehensive income (‘OCI’). We use the US dollar as our presentation currency in our consolidated financial statements because the US dollar and currencies linked to it form the major currency bloc in which we transact and fund our business. Therefore, our consolidated balance sheet is affected by exchange differences between the US dollar and all the non-US dollar functional currencies of underlying foreign operations.\nGlobal Treasury uses a number of measures to monitor and control interest rate risk in the banking book, including:\nOur structural foreign exchange exposures are managed with the primary objective of ensuring, where practical, that our consolidated capital ratios and the capital ratios of individual banking subsidiaries are largely protected from the effect of changes in exchange rates. We hedge structural foreign exchange positions where it is capital efficient to do so, and subject to approved limits. This is achieved through a combination of net investment hedges and economic hedges. Hedging positions are monitored and rebalanced periodically to manage RWA or downside risks associated with HSBC’s foreign currency investments.\n– net interest income sensitivity; – banking net interest income sensitivity; and – economic value of equity sensitivity.\n### Net interest income and banking net interest income sensitivity\nA principal part of our management of non-traded interest rate risk is to monitor the sensitivity of expected net interest income (‘NII’) under varying interest rate scenarios (i.e. simulation modelling), where all other economic variables are held constant. This monitoring is undertaken at an entity and Group level, where a range of interest rate scenarios are monitored on a one-year basis.\n### For further details of our structural foreign exchange exposures, see page 213.", "chunk_word_count": 424, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Assessment and risk appetite", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 207, "page_start": 207, "page_end": 207 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 267, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Transactional foreign exchange exposures\nTransactional foreign exchange risk arises primarily from day-to-day transactions in the banking book generating profit and loss or fair value through other comprehensive income (‘FVOCI’) reserves in a currency other than the reporting currency of the operating entity. Transactional foreign exchange exposure generated through profit and loss is periodically transferred to Markets and Securities Services and managed within limits, with the exception of limited residual foreign exchange exposure arising from timing differences or for other reasons. Transactional foreign exchange exposure generated through OCI reserves is managed by Global Treasury within approved appetite.\nNII sensitivity figures represent the effect of pro forma movements in projected yield curves based on a static balance sheet size and structure, except for certain mortgage products where balances are impacted by interest rate sensitive prepayments. These sensitivity calculations do not incorporate actions that would be taken by Global Treasury or in the business that originates the risk to mitigate the effect of interest rate movements.\nThe NII sensitivity calculations assume that interest rates of all maturities move by the same amount in the ‘up-shock’ scenario. The sensitivity calculations in the ‘down-shock’ scenarios reflect no floors to the shocked market rates. However, customer product-specific interest rate floors are recognised where applicable.\n### HSBC Holdings risk management\nDuring 2023, we introduced an additional metric to measure and manage the sensitivity of our NII to interest rate shocks. In addition to NII sensitivity, we now also monitor banking NII sensitivity. HSBC has a significant quantity of trading book assets that are funded by banking book liabilities, and the NII sensitivity measure does not include the sensitivity of the internal transfer income from this funding. Banking NII sensitivity includes an adjustment on top of NII sensitivity to reflect this. Going forwards, this will be our primary metric for monitoring and management of interest rate risk in the banking book.\nAs a financial services holding company, HSBC Holdings has limited market risk activities. Its activities predominantly involve maintaining sufficient capital resources to support the Group’s diverse activities; allocating these capital resources across the Group’s businesses; earning dividend and interest income on its investments in the businesses; payment of operating expenses; providing dividend payments to its equity shareholders and interest payments to providers of debt capital; and maintaining a supply of short-term liquid assets for deployment under extraordinary circumstances.\nThe main market risks to which HSBC Holdings is exposed are banking book interest rate risk and foreign currency risk. Exposure to these risks arises from short-term cash balances, funding positions held, loans to subsidiaries, investments in long-term financial assets, financial liabilities including debt capital issued, and structural foreign exchange hedges. The objective of HSBC Holdings’ market risk management strategy is to manage volatility in capital resources, cash flows and distributable reserves that could be caused by movements in market parameters. Market risk for HSBC Holdings is monitored by Holdings ALCO in accordance with its risk appetite statement.", "chunk_word_count": 518, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Transactional foreign exchange exposures", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 207, "page_start": 207, "page_end": 207 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 268, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Economic value of equity sensitivity\nEconomic value of equity (‘EVE’) represents the present value of the future banking book cash flows that could be distributed to equity holders under a managed run-off scenario. This equates to the current book value of equity plus the present value of future NII in this scenario. An EVE sensitivity represents the expected movement in EVE due to pre-specified interest rate shocks, where all other economic variables are held constant. Operating entities are required to monitor EVE sensitivities as a percentage of capital resources.\nFurther details of HSBC’s risk management of interest rate risk in the banking book can be found in the Group’s Pillar 3 Disclosures at 31 December 2023.\nHSBC Holdings uses interest rate swaps and cross-currency interest rate swaps to manage the interest rate risk and foreign currency risk arising from its long-term debt issues. It also uses forward foreign exchange contracts to manage its structural foreign exchange exposures.\nPension risk is assessed using an economic capital model that takes into account potential variations in these factors. The impact of these variations on both pension assets and pension liabilities is assessed using a one-in-200-year stress test. Scenario analysis and other stress tests are also used to support pension risk management, including the review of de-risking opportunities.\nFor quantitative disclosures on interest rate risk in the banking book, see pages 214 to 216.\nTo fund the benefits associated with defined benefit plans, sponsoring Group companies, and in some instances employees, make regular contributions in accordance with advice from actuaries and in consultation with the plan’s fiduciaries where relevant. These contributions are normally set to ensure that there are sufficient funds to meet the cost of the accruing benefits for the future service of active members. However, higher contributions are required when plan assets are considered insufficient to cover the existing pension liabilities. Contribution rates are typically revised annually or once every three years, depending on the plan.", "chunk_word_count": 353, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Economic value of equity sensitivity", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 207, "page_start": 207, "page_end": 208 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 269, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Pension risk management processes\nOur global pensions strategy is to move from defined benefit to defined contribution plans, where local law allows and it is considered competitive to do so. Our most material defined benefit plans have been closed to new entrants for many years, and the majority (including the largest plan in the UK) are also closed to future accrual.\nIn defined contribution pension plans, the contributions that HSBC is required to make are known, while the ultimate pension benefit will vary, typically with investment returns achieved by investment choices made by the employee. While the market risk to HSBC of defined contribution plans is low, the Group is still exposed to operational and reputational risk.\nThe defined benefit plans invest contributions in a range of investments designed to limit the risk of assets failing to meet a plan’s liabilities. Any changes in expected returns from the investments may also change future contribution requirements. In pursuit of these long-term objectives, an overall target allocation is established between asset classes of the defined benefit plan. In addition, each permitted asset class has its own benchmarks, such as stock-market or property valuation indices or liability characteristics. The benchmarks are reviewed at least once every three to five years and more frequently if required by local legislation or circumstances. The process generally involves an extensive asset and liability review.\nIn defined benefit pension plans, the level of pension benefit is known. Therefore, the level of contributions required by HSBC will vary due to a number of risks, including:\n– investments delivering a return below the level required to provide the projected plan benefits; \n– the prevailing economic environment leading to corporate failures, thus triggering write-downs in asset values (both equity and debt); \na change in either interest rates or inflation expectations, causing an increase in the value of plan liabilities; and \n– plan members living longer than expected (known as longevity risk).\nIn addition, some of the Group’s pension plans hold longevity swap contracts. These arrangements provide long-term protection to the relevant plans against costs resulting from pensioners or their dependants living longer than initially expected. The most sizeable plan to do this is the HSBC Bank (UK) Pension Scheme, which holds longevity swaps covering approximately $5 0 \\%$ of the plan’s pensioner liabilities.\n### Capital risk in 2023", "chunk_word_count": 416, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Pension risk management processes", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 208, "page_start": 208, "page_end": 208 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 270, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Capital overview\nCapital adequacy metrics\nReferences to EU regulations and directives (including technical standards) should, as applicable, be read as references to the UK’s version of such regulation or directive, as onshored into UK law under the European Union (Withdrawal) Act 2018, and as may be subsequently amended under UK law.\ntransitional arrangements in CRR II for capital instruments and after their expiry, known as the end point.\nThe liquidity coverage ratio is based on the average month-end value over the preceding 12 months. The net stable funding ratio is the average of the preceding four quarters.\nCapital figures and ratios in the previous table are calculated in accordance with the regulatory requirements of the Capital Requirements Regulation and Directive, the CRR II regulation and the PRA Rulebook (‘CRR II’). The table presents them under the\nRegulatory numbers and ratios are as presented at the date of reporting. Small changes may exist between these numbers and ratios and those submitted in regulatory filings. Where differences are significant, we may restate in subsequent periods.\n### Own funds disclosure\n(Audited)\nAt 31 December 2023, our CET1 capital ratio increased to $1 4 . 8 \\%$ from $1 4 . 2 \\%$ at 31 December 2022, reflecting an increase in CET1 capital of $\\$ 7.20 n$ , partly offset by an increase in RWAs of $\\$ 14.45$ . The key drivers of the overall rise in our CET1 ratio during the year were:\nThe impairment of BoCom had an insignificant impact on our capital and CET1 ratio. This is because the impairment charge had a partially offsetting reduction in threshold deductions from regulatory capital. For regulatory capital purposes, our share of BoCom’s profits is not capital accretive, although the dividends we receive from BoCom are capital accretive.\n– a 1.0 percentage point increase from capital generation, mainly through profits less dividends and share buy-backs; a 0.3 percentage point reduction due to an increase in regulatory deductions, primarily for expected excess loss and intangible assets; and a 0.1 percentage point decrease from the adverse impact of foreign exchange fluctuations and the increase in the underlying RWAs.\nOur Pillar 2A requirement at 31 December 2023, as per the PRA’s Individual Capital Requirement based on a point-in-time assessment, was equivalent to $2 . 6 \\%$ of RWAs, of which $1 . 5 \\%$ was required to be met by CET1. Throughout 2023, we complied with the PRA’s regulatory capital adequacy requirements.\n### Risk-weighted assets\n### RWAs by global business\n### RWAs by legal entities1", "chunk_word_count": 447, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Capital overview", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 208, "page_start": 208, "page_end": 210 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 271, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### RWA movement by global business by key driver\n1 In the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers’ respective needs, a portfolio of our customers within our entities in Latin America was transferred from GBM to CMB for reporting purposes. Comparative data have been re-presented accordingly. \n2 The movements in asset size include the increase in operational risk RWAs, which was driven by revenue. \n3 Credit risk foreign exchange movements in this disclosure are computed by retranslating the RWAs into US dollars based on the underlying transactional currencies.\n### RWA movement by legal entities by key driver1\nRisk-weighted assets (‘RWAs’) rose by $\\$ 14.45$ during the year, driven by an increase of $\\$ 34.45$ from increased lending, higher operational risk RWAs, business acquisitions and foreign exchange movements. These were partly offset by a reduction of $\\$ 19.90n$ due to methodology and policy changes.\n### Asset quality\nAsset quality contributed to an RWA increase of $\\$ 2.50n$ due to credit risk rating migrations and portfolio mix changes, notably in Asia, the US and Europe.\n### Model updates\n### Asset size\nModel updates decreased RWAs by $\\$ 2.6 b n$ , mainly due to a change in our risk approach to multilateral development banks’ exposures, following approval for change from the PRA, the implementation of the exposure at default mortgage model in the UK, and changes to the incremental risk charge model.\nAsset size RWAs increased by $\\$ 26.26,7$ , including a $\\$ 10.45$ rise in operational risk RWAs driven by growth in NII.\nWPB RWAs increased by $\\$ 15.60n$ , notably due to an expansion of retail lending in Asia, the UK and Mexico, additional sovereign exposures in Asia and other trading entities, including a $\\$ 2.90\\mathsf { n }$ rise in operational risk RWAs.\n### Methodology and policy\nThe decrease of RWAs from methodology and policy of $\\$ 19.90n$ was mainly driven by a decline of $\\$ 70 n$ from regulatory changes related to the risk-weighting of residential mortgages in Hong Kong, and credit risk parameter refinements mainly in Asia and Europe.\nCMB RWAs increased by $\\$ 3.20\\mathsf { n }$ , reflecting an increase in operational risk RWAs of $\\$ 5.20 n$ and additional sovereign exposures across various entities. This was partly offset by a net decrease in corporate lending in Asia, the US and Europe.", "chunk_word_count": 429, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > RWA movement by global business by key driver", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 210, "page_start": 210, "page_end": 211 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 272, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Acquisitions and disposals\nGBM RWAs increased by $\\$ 3.20\\mathsf { n }$ , mainly from the $\\$ 4.0 b n$ rise in operational risk RWAs and additional sovereign exposures across various entities. This was partly offset by a fall in lending in Asia and Europe.\nThe increase in RWAs from acquisitions and disposals of $\\$ 620 n$ was primarily due to a rise of $\\$ 9.6 b n$ from the acquisition of SVB UK. This was partly offset by a decline of $\\$ 3.2$ bn from the disposal of our business in Oman.\nCorporate Centre RWAs rose by $\\$ 2.6 b n$ , primarily due to an increase in corporate exposures in Saudi Awwal Bank (‘SAB’).\nForeign currency movements increased total RWAs by $\\$ 2.0 b n$\n### Leverage ratio\n1 Leverage ratio calculation is in line with the PRA’s UK leverage rules. This includes IFRS 9 transitional arrangement and excludes central bank claims.\nOur leverage ratio was $5 . 6 \\%$ at 31 December 2023, down from $5 . 8 \\%$ at 31 December 2022. The increase in the leverage exposure was primarily due to growth in the balance sheet, which led to a fall of 0.4 percentage points in the leverage ratio. This was partly offset by a rise of 0.2 percentage points due to an increase in tier 1 capital.\n### Regulatory transitional arrangements for IFRS 9 ‘Financial Instruments’\nWe have adopted the regulatory transitional arrangements of the Capital Requirements Regulation for IFRS 9, including paragraph four of article 473a. These allow banks to add back to their capital base a proportion of the impact that IFRS 9 has upon their loan loss allowances. Our capital and ratios are presented under these arrangements throughout the tables in this section, including the end point figures.\nAt 31 December 2023, our UK minimum leverage ratio requirement of $3 . 2 5 \\%$ was supplemented by a leverage ratio buffer of $0 . 9 \\%$ , which consists of an additional leverage ratio buffer of $0 . 7 \\%$ and a countercyclical leverage ratio buffer of $0 . 2 \\%$ . These buffers translated into capital values of $\\$ 123.05$ and \\$5.1bn respectively.\n### Regulatory and other developments", "chunk_word_count": 397, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Acquisitions and disposals", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 211, "page_start": 211, "page_end": 211 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 273, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Pillar 3 disclosure requirements\nIn September 2023, the PRA announced changes to the UK implementation of Basel 3.1 with a new proposed implementation date of 1 July 2025. For further details related to the November 2022 consultation, see page 6 of our Pillar 3 Disclosures at 31 December 2022. We are currently assessing the impact of the consultation paper and the associated implementation challenges (including data provision) on our RWAs upon initial implementation. The RWA output floor under Basel 3.1 is now proposed to be subject to a four-and-ahalf year transitional provision. Any impact from the output floor is expected to be towards the end of the transition period.\nPillar 3 of the Basel regulatory framework is related to market discipline and aims to make financial services firms more transparent by requiring publication of wide-ranging information on their risks, capital and management.\nFor further details, see our Pillar 3 Disclosures at 31 December 2023, which is expected to be published on or around 21 February 2024 at www.hsbc.com/investors.\n### Liquidity and funding risk in 2023\n### Liquidity metrics\nAt 31 December 2023, all of the Group’s material operating entities were above the required regulatory minimum liquidity and funding levels.\nIn addition to regulatory metrics, we use a wide set of measures to manage our liquidity and funding profile.\nThe Group liquidity and funding position on an average basis is analysed in the following sections.\nEach entity maintains sufficient unencumbered liquid assets to comply with local and regulatory requirements.\nEach entity maintains a sufficient stable funding profile and is assessed using the NSFR or other appropriate metrics.", "chunk_word_count": 295, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Pillar 3 disclosure requirements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 211, "page_start": 211, "page_end": 212 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 274, "chunk_text": "# Opening up a world of opportunity\n## 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue.\n### Operating entities’ liquidity1\n1 The LCR and NSFR ratios presented in the above table are based on average values. The LCR is the average of the preceding 12 months. The NSFR is the average of the preceding four quarters.\n2 HSBC UK Bank plc refers to the HSBC UK liquidity group, which comprises five legal entities: HSBC UK Bank plc, Marks and Spencer Financial Services plc, HSBC Private Bank (UK) Ltd, HSBC Innovation Bank Limited and HSBC Trust Company (UK) Limited, managed as a single operating entity, in line with the application of UK liquidity regulation as agreed with the PRA.\n3 HSBC Bank plc includes overseas branches and special purpose entities consolidated by HSBC for financial statements purposes. 4 The Hongkong and Shanghai Banking Corporation – Hong Kong branch represents the material activities of The Hongkong and Shanghai Banking Corporation Limited. It is monitored and controlled for liquidity and funding risk purposes as a stand-alone operating entity.\n5 HSBC Singapore includes HSBC Bank Singapore Limited and The Hongkong and Shanghai Banking Corporation – Singapore branch. Liquidity and funding risk is monitored and controlled at country level in line with the local regulator’s approval.\n6 In response to the requirement for an intermediate parent undertaking in line with the EU Capital Requirements Directive (’CRD V’), HSBC Continental Europe acquired control of HSBC Germany and HSBC Bank Malta on 30 November 2022. The averages for LCR and NSFR include the impact of the inclusion of the two entities from November 2022.\n## 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France.\n### Consolidated liquidity metrics\nNet stable funding ratio\nWe manage funding risk based on the PRA’s NSFR rules. The Group’s NSFR at 31 December 2023, calculated from the average of the four receding quarters average, was $123 \\%$ .\n### Liquidity coverage ratio", "chunk_word_count": 341, "section_path": "Opening up a world of opportunity > 5 Net operating income before change in expected credit losses and other credit impairment charges also referred to as revenue. > Operating entities’ liquidity1", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 212, "page_start": 212, "page_end": 212 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 275, "chunk_text": "# Opening up a world of opportunity\n## 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France.\n### Sources of funding\nAt 31 December 2023, the average high-quality liquid assets (‘HQLA‘) held at entity level amounted to \\$795bn (31 December 2022: $\\$ 8123,456,7$ ). The Group consolidation methodology includes a deduction to reflect the impact of limitations in the transferability of entity liquidity around the Group. That resulted in an adjustment of $\\$ 1476n$ to LCR HQLA and $\\$ 70n$ to LCR inflows on an average basis. Furthermore, this methodology was enhanced in 2023 to consider more accurately non-convertible currencies.\nOur primary sources of funding are customer current accounts and savings deposits payable on demand or at short notice. We issue secured and unsecured wholesale securities to supplement customer deposits, meet regulatory obligations and to change the currency mix, maturity profile or location of our liabilities.\nThe following ‘Funding sources’ and ‘Funding uses’ tables provide a view of how our consolidated balance sheet is funded. In practice, all the principal operating entities are required to manage liquidity and funding risk on a stand-alone basis.\nThe tables analyse our consolidated balance sheet according to the assets that primarily arise from operating activities and the sources of funding primarily supporting these activities. Assets and liabilities that do not arise from operating activities are presented at a net balancing source or deployment of funds.\n### Funding sources\n### Liquid assets\nAfter the $\\$ 1476n$ deduction, the average Group LCR HQLA of \\$648bn (31 December 2022: \\$647bn) was held in a range of asset classes and currencies. Of these, $9 7 \\%$ were eligible as level 1 (31 December 2022: $9 7 \\%$ ).\nThe following tables reflect the composition of the average liquidity pool by asset type and currency at 31 December 2023.\n### Liquidity pool by asset type1\n### Funding uses\n1 Group liquid assets numbers are based on average values. \n2 As defined in EU regulations, level 1 assets means ‘assets of extremely high liquidity and credit quality’, and level 2 assets means ‘assets of high liquidity and credit quality’.\n### Liquidity pool by currency1\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. We have restated 2022 comparative data.\n2 ‘Liabilities of disposal groups held for sale’ includes \\$82bn and ‘Assets held for sale’ includes \\$88bn in respect of the planned sale of our banking business in Canada. ‘Liabilities of disposal groups held for sale’ includes \\$26bn and ‘Assets of disposal groups held for sale’ includes \\$28bn in respect of the sale of our retail banking operations in France.\n### Wholesale term debt maturity profile\nThe maturity profile of our wholesale term debt obligations is set out in the following table. The balances in the table are not directly comparable with those in the consolidated balance sheet because the\ntable presents gross cash flows relating to principal payments and not the balance sheet carrying value, which includes debt securities and subordinated liabilities measured at fair value.", "chunk_word_count": 513, "section_path": "Opening up a world of opportunity > 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France. > Sources of funding", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 213, "page_start": 213, "page_end": 214 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 276, "chunk_text": "# Opening up a world of opportunity\n## 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France.\n### Structural foreign exchange risk in 2023\nStructural foreign exchange exposures represent net assets or capital investments in subsidiaries, branches, joint arrangements or associates, together with any associated hedges, the functional currencies of which are currencies other than the US dollar. Exchange differences on structural exposures are usually recognised in ‘other comprehensive income’.\n### Net structural foreign exchange exposures\n### Interest rate risk in the banking book in 2023", "chunk_word_count": 95, "section_path": "Opening up a world of opportunity > 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France. > Structural foreign exchange risk in 2023", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 215, "page_start": 215, "page_end": 215 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 277, "chunk_text": "# Opening up a world of opportunity\n## 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France.\n### Net interest income and banking net interest income\nWe have introduced a new metric to analyse sensitivity of our income to interest rate shocks. In addition to NII sensitivity, we are also disclosing banking NII sensitivity. HSBC has trading book assets that are funded by banking book liabilities and the NII sensitivity measure does not include the sensitivity of the internal transfer income from this funding. Banking NII sensitivity includes an adjustment on top of NII sensitivity to reflect this. The currency split of banking NII sensitivities includes the impact of vanilla foreign exchange swaps to optimise cash management across the Group.\nThe sensitivity analysis performed in the case of a down-shock does not include floors to market rates, and it does not include floors on some wholesale assets and liabilities. However, floors have been maintained for deposits and loans to customers where this is contractual or where negative rates would not be applied.\nAs market and policy rates move, the degree to which these changes are passed on to customers will vary based on a number of factors, including the absolute level of market rates, regulatory and contractual frameworks, and competitive dynamics. To aid comparability between markets, we have simplified the basis of preparation for our disclosure and have used a $5 0 \\%$ pass-on assumption for major entities on certain interest-bearing deposits. Our pass-through asset assumptions are largely in line with our contractual agreements or established market practice, which typically results in a significant portion of interest rate changes being passed on.\nIn this disclosure we present the banking NII sensitivity alongside the NII sensitivity. Over time we expect to phase out NII sensitivity once the appropriate prior period comparables are available for banking NII sensitivity.\nThe following tables set out the assessed impact to a hypothetical base case projection of our NII and banking NII under an immediate shock of 100bps to the current market-implied path of interest rates across all currencies on 1 January 2024 (effects in the first, second and third years). For example, Year 3 shows the impact of an immediate rate shock on the NII and banking NII projected for the third year.\nAn immediate interest rate rise of 100bps would increase projected NII for the 12 months to 31 December 2024 by \\$1.1bn and banking NII by $\\$ 2.8 b n$ . An immediate interest rate fall of 100bps would decrease projected NII for the 12 months to 31 December 2024 by $\\$ 1$ .6bn and banking NII by $\\$ 3.450\\mathsf { n }$ .\nThe sensitivities shown represent a hypothetical simulation of the base case income, assuming a static balance sheet (specifically no assumed migration from current account to term deposits), and no management actions from Global Treasury. This also incorporates the effect of interest rate behaviouralisation, hypothetical managed rate product pricing assumptions, prepayment of mortgages and deposit stability. The sensitivity calculations exclude pensions, insurance, and interests in associates.", "chunk_word_count": 515, "section_path": "Opening up a world of opportunity > 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France. > Net interest income and banking net interest income", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 216, "page_start": 216, "page_end": 216 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 278, "chunk_text": "# Opening up a world of opportunity\n## 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France.\n### Net interest income and banking net interest income\nThe sensitivity of NII for 12 months as at 31 December 2023 decreased by \\$2.5bn in the plus 100bps parallel shock and by $\\$ 2.450\\mathsf { n }$ in the minus 100bps parallel shock, when compared with 31 December 2022. The key drivers of the reduction in NII sensitivity are the increase in stabilisation activities in line with our strategy, as well as deposit migration.\nFor further details of measurement of interest rate risk in the banking book, see page 205.\n### Non-trading value at risk\nNon-trading portfolios comprise positions that primarily arise from the interest rate management of our retail and commercial banking assets and liabilities, financial investments measured at fair value through other comprehensive income, debt instruments measured at amortised cost, and exposures arising from our insurance operations.\nAlthough a valuable guide to risk, VaR is used for non-trading portfolios with awareness of its limitations. For example:\n– The use of historical data as a proxy for estimating future market moves may not encompass all potential market events, particularly those that are extreme in nature. As the model is calibrated on the last 500 business days, it does not adjust instantaneously to a change in the market regime.\n### Value at risk of non-trading portfolios\nValue at risk (‘VaR’) is a technique for estimating potential losses on risk positions as a result of movements in market rates and prices over a specified time horizon and to a given level of confidence. The use of VaR is integrated into the market risk management of nontrading portfolios to have a complete picture of risk, complementing risk sensitivity analysis.\n– The use of a one-day holding period for risk management purposes of non-trading books is only an indication of exposure and not indicative of the time period required to hedge or liquidate positions.\n– The use of a $9 9 \\%$ confidence level by definition does not take into account losses that might occur beyond this level of confidence.\nOur models are predominantly based on historical simulation that incorporates the following features:\nThe interest rate risk on the fixed-rate securities issued by HSBC Holdings is not included in the Group non-trading VaR. The management of this risk is described on page 217.\n– historical market rates and prices, which are calculated with reference to interest rates, credit spreads and the associated volatilities; potential market movements that are calculated with reference to data from the past two years; and calculations to a $9 9 \\%$ confidence level and using a one-day holding period.\nNon-trading VaR also excludes the equity risk on securities held at fair value and non-trading book foreign exchange risk.\nThe daily levels of total non-trading VaR in 2023 are set out in the graph below.\n[IMAGE CAPTION] Daily VaR (non-trading portfolios), $9 9 \\%$ 1 day $( \\$ m )$\nThe Group non-trading VaR for 2023 is shown in the table below.", "chunk_word_count": 518, "section_path": "Opening up a world of opportunity > 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France. > Net interest income and banking net interest income", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 216, "page_start": 216, "page_end": 217 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 279, "chunk_text": "# Opening up a world of opportunity\n## 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France.\n### Non-trading VaR, $9 9 \\%$ 1 day\n(Audited)\n### Non-trading VaR, 99% 1 day (continued)\n(Audited)\n1 Portfolio diversification is the market risk dispersion effect of holding a portfolio containing different risk types. It represents the reduction in unsystematic market risk that occurs when combining a number of different risk types – such as interest rate and credit spreads – together in one portfolio. It is measured as the difference between the sum of the VaR by individual risk type and the combined total VaR. A negative number represents the benefit of portfolio diversification. As the maximum and minimum occurs on different days for different risk types, it is not meaningful to calculate a portfolio diversification benefit for these measures. \n2 The total VaR is non-additive across risk types due to diversification effects.\nThe VaR for non-trading activity increased by $\\$ 123$ from $\\$ 121 m$ at 31 December 2022 to $\\$ 182 m$ at 31 December 2023 due to relatively small changes in risk profile over the year. The average portfolio diversification effect between interest rate and credit spread exposure increased during the year, with the offset increasing to $\\$ 1045$ from $\\$ 45 m$ .\nThe table below measures the sensitivity of the value of this portfolio to an instantaneous 100 basis point increase in interest rates, based on the risk sensitivity of a shift in value for a 1 basis point (‘bps‘) parallel movement in interest rates.\n### Sensitivity of capital and reserves\nGlobal Treasury maintains a portfolio of high-quality liquid assets for contingent liquidity and NII stabilisation purposes, which is in part accounted for under a hold-to-collect-and-sell business model. This hold-to-collect-and-sell portfolio, together with any associated derivatives in designated hedge accounting relationships, is accounted for at fair value through other comprehensive income and has an impact on CET1. The portfolio represents the vast majority of our hold-to-collect-and-sell capital risk and is risk managed with a variety of tools, including risk sensitivities and value at risk measures.\nSensitivity of hold-to-collect-and-sell reserves to interest rate movements", "chunk_word_count": 365, "section_path": "Opening up a world of opportunity > 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France. > Non-trading VaR, $9 9 \\%$ 1 day", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 217, "page_start": 217, "page_end": 218 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 280, "chunk_text": "# Opening up a world of opportunity\n## 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France.\n### At 31 Dec 2022\nThe increase in the sensitivity of the portfolio during 2023 was mainly driven by an increase in NII stabilisation in line with our strategy. The figures in the table above do not take into account the effects of interest rate convexity. The portfolio mostly comprises vanilla sovereign bonds in a variety of currencies, and the primary risk is interest rate duration risk, although the portfolio also generates asset swap, credit spread and asset spread risks that are managed within appetite as part of our risk management framework. A minus 100bps shock would lead to an approximately symmetrical gain.\nyear end. The sensitivities are indicative and based on simplified scenarios. These particular exposures form only a part of our overall interest rate exposure. We apply flooring on negative rates in the minus 100bps scenario in this assessment. Due to increases in interest rates in most markets, the effect of this flooring is immaterial at the end of 2023.\nComparing 31 December 2023 with 31 December 2022, the sensitivity of the cash flow hedging reserve increased by $\\$ 1,537m$ in the plus 100bps scenario and increased by $\\$ 1,562 m$ in the minus 100bps scenario. The increase in the sensitivity of this reserve was mainly driven by an increase in our NII stabilisation. Our exposure to fixed rate pound sterling hedges continued to be the largest in size and in terms of year-on-year increase. Hong Kong dollar and euro hedges contributed to the majority of the rest of the increase in exposure, partly offset by a reduction in the size of US dollar hedges.\nAlongside our monitoring of the hold-to-collect-and-sell reserve sensitivity, we also monitor the sensitivity of reported cash flow hedging reserves to interest rate movements on a yearly basis by assessing the expected reduction in valuation of cash flow hedges due to parallel movements of plus or minus 100bps in all yield curves.\nThe following table describes the sensitivity of our cash flow hedging reserves to the stipulated movements in yield curves at the\n### Third-party assets in Markets Treasury\nThird-party assets in Markets Treasury increased by $5 \\%$ compared with 31 December 2022. The net increase of $\\$ 38 b n$ is partly reflective of higher commercial surpluses during the year, with the\nincrease of \\$76bn in ‘Financial Investments’ and the decrease of \\$39bn in ‘Cash and balances at central banks’ largely driven by NII stabilisation activity.\n\n### Defined benefit pension plans\nMarket risk arises within our defined benefit pension plans to the extent that the obligations of the plans are not fully matched by assets with determinable cash flows.\nFor details of our defined benefit plans, including asset allocation, see Note 5 on the financial statements, and for pension risk management, see page 206.", "chunk_word_count": 487, "section_path": "Opening up a world of opportunity > 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France. > At 31 Dec 2022", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 218, "page_start": 218, "page_end": 219 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 281, "chunk_text": "# Opening up a world of opportunity\n## 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France.\n### Additional market risk measures applicable only to the parent company\nHSBC Holdings monitors and manages foreign exchange risk and interest rate risk. In order to manage interest rate risk, HSBC Holdings uses the projected sensitivity of its NII to future changes in yield curves.\nThe tables below set out the effect on HSBC Holdings’ future NII of an immediate shock of $+ / - 1 0 0 \\mathsf { b } \\mathsf { p s }$ to the current market-implied path of interest rates across all currencies on 1 January 2024.\nThe NII sensitivities shown are indicative and based on simplified scenarios. An immediate interest rate rise of 100bps would decrease projected NII for the 12 months to 31 December 2024 by $\\$ 233m$ . Conversely, an immediate fall of 100bps would increase projected NII for the 12 months to 31 December 2024 \\$233m.\n### Foreign exchange risk\nHSBC Holdings’ foreign exchange exposures derive almost entirely from the execution of structural foreign exchange hedges on behalf of the Group. At 31 December 2023, HSBC Holdings had forward foreign exchange contracts of $\\$ 33.80\\mathrm { n }$ (2022: \\$30.1bn) to manage the Group’s structural foreign exchange exposures.\nOverall the NII sensitivity is mainly driven by floating liabilities funding equity (non-interest bearing) investments in subsidiaries.\nDuring 2023, HSBC Holdings hedged \\$3.6bn of previously unhedged issuances, which increased the negative NII sensitivity to positive parallel shifts in interest rates. In year 1, that impact is offset by a shorter repricing profile of assets.\nFor further details of our structural foreign exchange exposures, see page 213.\n### Sensitivity of net interest income\nHSBC Holdings monitors NII sensitivity in the first, second and third years, reflecting the longer-term perspective on interest rate risk management appropriate to a financial services holding company. These sensitivities assume that any issuance where HSBC Holdings has an option to redeem at a future call date is called at this date.\nAs of the Annual Report and Accounts 2023, HSBC Holdings is no longer disclosing the interest rate repricing gap table, as the sensitivity of net interest income table captures HSBC Holdings‘ exposure to interest rate risk and is aligned to the way we disclose interest rate risk internally to key management.\nThe figures represent hypothetical movements in NII based on our projected yield curve scenarios, HSBC Holdings’ current interest rate risk profile and assumed changes to that profile during the next three years. The sensitivities represent our assessment of the change to a hypothetical base case based on a static balance sheet assumption, and do not take into account the effect of actions that could be taken to mitigate this interest rate risk.\n### Market risk\n### Sensitivity analysis", "chunk_word_count": 476, "section_path": "Opening up a world of opportunity > 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France. > Additional market risk measures applicable only to the parent company", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 219, "page_start": 219, "page_end": 219 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 282, "chunk_text": "# Opening up a world of opportunity\n## 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France.\n### Contents\nSensitivity analysis measures the impact of movements in individual market factors on specific instruments or portfolios, including interest rates, foreign exchange rates and equity prices. We use sensitivity measures to monitor the market risk positions within each risk type. Granular sensitivity limits are set for trading desks with consideration of market liquidity, customer demand and capital constraints, among other factors.\n## 218 Overview \n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Value at risk\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Overview\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### (Audited)\nMarket risk is the risk of an adverse financial impact on trading activities arising from changes in market parameters such as interest rates, foreign exchange rates, asset prices, volatilities, correlations and credit spreads. Market risk arises from both trading portfolios and non-trading portfolios.\nVaR is a technique for estimating potential losses on risk positions as a result of movements in market rates and prices over a specified time horizon and to a given level of confidence. The use of VaR is integrated into market risk management and calculated for all trading positions regardless of how we capitalise them. Where we do not calculate VaR explicitly, we use alternative tools as summarised in the ‘Stress testing’ section below.\nFor further details of market risk in non-trading portfolios, see page 215 of the Annual Report and Accounts 2023.\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Market risk management\nOur models are predominantly based on historical simulation that incorporates the following features:\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Key developments in 2023\nhistorical market rates and prices, which are calculated with reference to foreign exchange rates, commodity prices, interest rates, equity prices and the associated volatilities; \npotential market movements that are calculated with reference to data from the past two years; and \ncalculations to a $9 9 \\%$ confidence level and using a one-day \nholding period.\nThere were no material changes to our policies and practices for the management of market risk in 2023.\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Governance and structure\nThe following diagram summarises the main business areas where trading market risks reside and the market risk measures used to monitor and limit exposures.\nThe models also incorporate the effect of option features on the underlying exposures. The nature of the VaR models means that an increase in observed market volatility will lead to an increase in VaR without any changes in the underlying positions.", "chunk_word_count": 506, "section_path": "Opening up a world of opportunity > 7 HSBC Continental Europe NSFR includes the impact of the sale of our retail banking operations in France. > Contents", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 220, "page_start": 220, "page_end": 220 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 283, "chunk_text": "# Opening up a world of opportunity\n## 218 Overview \n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### VaR model limitations\nAlthough a valuable guide to risk, VaR is used with awareness of its limitations. For example:\nThe use of historical data as a proxy for estimating future market moves may not encompass all potential market events, particularly those that are extreme in nature. As the model is calibrated on the last 500 business days, it does not adjust instantaneously to a change in the market regime. The use of a one-day holding period for risk management purposes of trading books assumes that this short period is sufficient to hedge or liquidate all positions. The use of a $9 9 \\%$ confidence level by definition does not take into account losses that might occur beyond this level of confidence. VaR is calculated on the basis of exposures outstanding at the close of business and therefore does not reflect intra-day exposures.\nThe objective of our risk management policies and measurement techniques is to manage and control market risk exposures to optimise return on risk while maintaining a market profile consistent with our established risk appetite.\nMarket risk is managed and controlled through limits approved by the Group Chief Risk and Compliance Officer for HSBC Holdings. These limits are allocated across business lines and to the Group’s legal entities. Each major operating entity has an independent market risk management and control sub-function, which is responsible for measuring, monitoring and reporting market risk exposures against limits on a daily basis. Each operating entity is required to assess the market risks arising in its business and to transfer them either to its local Markets and Securities Services or Markets Treasury unit for management, or to separate books managed under the supervision of the local ALCO. The Traded Risk function enforces the controls around trading in permissible instruments approved for each site as well as changes that follow completion of the new product approval process. Traded Risk also restricts trading in the more complex derivative products to only those offices with appropriate levels of product expertise and control systems.\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Risk not in VaR framework\nThe risks not in VaR (‘RNIV’) framework captures and capitalises material market risks that are not adequately covered in the VaR model.\nRisk factors are reviewed on a regular basis and are either incorporated directly in the VaR models, where possible, or quantified through either the VaR-based RNIV approach or a stress test approach within the RNIV framework. While VaR-based RNIVs are calculated by using historical scenarios, stress-type RNIVs are estimated on the basis of stress scenarios whose severity is calibrated to be in line with the capital adequacy requirements. The outcome of the VaR-based RNIV approach is included in the overall VaR calculation but excluded from the VaR measure used for regulatory back-testing.\nKey risk management processes", "chunk_word_count": 507, "section_path": "Opening up a world of opportunity > 218 Overview \n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages > VaR model limitations", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 220, "page_start": 220, "page_end": 220 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 284, "chunk_text": "# Opening up a world of opportunity\n## 218 Overview \n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Monitoring and limiting market risk exposures\nOur objective is to manage and control market risk exposures while maintaining a market profile consistent with our risk appetite.\nWe use a range of tools to monitor and limit market risk exposures including sensitivity analysis, VaR and stress testing.\nStress-type RNIVs include a deal contingent derivatives capital charge to capture risk for these transactions and a de-peg risk measure to capture risk to pegged and heavily managed currencies.\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Market risk in 2023\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Stress testing\nStress testing is an important procedure that is integrated into our market risk management framework to evaluate the potential impact on portfolio values of more extreme, although plausible, events or movements in a set of financial variables. In such scenarios, losses can be much greater than those predicted by VaR modelling. Stress testing and reverse stress testing provide senior management with insights regarding the ‘tail risk’ beyond VaR.\nDuring 2023, global financial markets were mainly driven by the inflation outlook, interest rate expectations and recession risks, coupled with banking failures in March, and rising geopolitical tensions in the Middle East from October. Major central banks maintained restrictive monetary policies, and bond markets experienced a volatile year. After rising significantly in the second and third quarters of 2023, US treasury bond yields fell during the fourth quarter, as lower inflation pressures led markets to expect that key rates would be cut in 2024. The interest rate outlook was also a major driver of performance in global equity markets, alongside resilient corporate earnings and positive sentiment in the technology sector. Equities in developed markets advanced significantly amid low volatility, while performance in emerging markets was more subdued. In foreign exchange markets, the US dollar fluctuated against other major currencies, mostly in line with US Federal Reserve policy and bond yields expectations. Investor sentiment remained resilient in credit markets. High-yield and investment-grade credit spreads narrowed, in general, as fears of contagion in the banking sector in the first quarter of 2023 abated, and economic growth remained resilient throughout the year.\nStress testing is implemented at legal entity, regional and overall Group levels. A set of scenarios is used consistently across all regions within the Group. Market risk stress testing incorporates both historical and hypothetical events. Market risk reverse stress tests are designed to identify vulnerabilities in our portfolios by looking for scenarios that lead to loss levels considered severe for the relevant portfolio. These scenarios may be local or idiosyncratic in nature and complement the systematic top-down stress testing.\nThe risk appetite around potential stress losses for the Group is set and monitored against limits.", "chunk_word_count": 500, "section_path": "Opening up a world of opportunity > 218 Overview \n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages > Monitoring and limiting market risk exposures", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 220, "page_start": 220, "page_end": 221 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 285, "chunk_text": "# Opening up a world of opportunity\n## 218 Overview \n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Trading portfolios\nTrading portfolios comprise positions held for client servicing and market-making, with the intention of short-term resale and/or to hedge risks resulting from such positions.\nWe continued to manage market risk prudently during 2023. Sensitivity exposures and VaR remained within appetite as the business pursued its core market-making activity in support of our customers. Market risk was managed using a complementary set of risk measures and limits, including stress testing and scenario analysis.\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Back-testing\nWe routinely validate the accuracy of our VaR models by back-testing the VaR metric against both actual and hypothetical profit and loss. Hypothetical profit and loss excludes non-modelled items such as fees, commissions and revenue of intra-day transactions.\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Trading portfolios\nThe hypothetical profit and loss reflects the profit and loss that would be realised if positions were held constant from the end of one trading day to the end of the next. This measure of profit and loss does not align with how risk is dynamically hedged, and is not therefore necessarily indicative of the actual performance of the business.\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Value at risk of the trading portfolios\nTrading VaR was predominantly generated by the Markets and Securities Services business.\nTrading VaR as at 31 December 2023 increased by $\\$ 3.3m$ compared with 31 December 2022. Interest rate risk factors were the major contributors to VaR at the end of December 2023. The VaR increase during 2023 peaked in September, and was mainly driven by:\nThe number of hypothetical loss back-testing exceptions, together with a number of other indicators, is used to assess model performance and to consider whether enhanced internal monitoring of a VaR model is required. We back-test our VaR at set levels of our Group entity hierarchy.\n– interest rate risk exposures in currencies held across the Fixed Income and Foreign Exchange business lines to facilitate clientdriven activity; and the effects of relatively large short-term interest rate shocks for key currencies, which are captured in the VaR scenario window.\nThese factors were partly offset by lower losses from equity risks and interest rate risks that were captured within the RNIV framework.\nThe daily levels of total trading VaR during 2023 are set out in the graph below.\n[IMAGE CAPTION] Daily VaR (trading portfolios), $9 9 \\%$ 1 day (\\$m)\nThe Group trading VaR for the year is shown in the table below.", "chunk_word_count": 475, "section_path": "Opening up a world of opportunity > 218 Overview \n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages > Trading portfolios", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 221, "page_start": 221, "page_end": 222 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 286, "chunk_text": "# Opening up a world of opportunity\n## 218 Overview \n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Trading VaR, 99% 1 day1\n(Audited)\n1 Trading portfolios comprise positions arising from the market-making and warehousing of customer-derived positions. \n2 Portfolio diversification is the market risk dispersion effect of holding a portfolio containing different risk types. It represents the reduction in unsystematic market risk that occurs when combining a number of different risk types – such as interest rate, equity and foreign exchange – together in one portfolio. It is measured as the difference between the sum of the VaR by individual risk type and the combined total VaR. A negative number represents the benefit of portfolio diversification. As the maximum and minimum occurs on different days for different risk types, it is not meaningful to calculate a portfolio diversification benefit for these measures. \n3 The total VaR is non-additive across risk types due to diversification effects.\nThe table below shows trading VaR at a $9 9 \\%$ confidence level compared with trading VaR at a $9 5 \\%$ confidence level at 31 December 2023. This comparison facilitates the benchmarking of the trading VaR, which can be stated at different confidence levels, with financial institution peers. The $9 5 \\%$ VaR is unaudited.\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Comparison of trading VaR, $9 9 \\%$ 1 day vs trading VaR, $9 5 \\%$ 1 day\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Back-testing\nDuring 2023, the Group experienced no back-testing exceptions on losses against actual or hypothetical profit and losses.\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Market risk balance sheet linkages\nThe following balance sheet lines in the Group’s consolidated position are subject to market risk:\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Trading assets and liabilities", "chunk_word_count": 358, "section_path": "Opening up a world of opportunity > 218 Overview \n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages > Trading VaR, 99% 1 day1", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 222, "page_start": 222, "page_end": 222 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 287, "chunk_text": "# Opening up a world of opportunity\n## 218 Overview \n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Derivative assets and liabilities\nThe Group’s trading assets and liabilities are in almost all cases originated by GBM. Other than a limited number of exceptions, these assets and liabilities are treated as traded risk for the purposes of market risk management. The exceptions primarily arise in Global Banking where the short-term acquisition and disposal of assets are linked to other non-trading-related activities such as loan origination.\nWe undertake derivative activity for three primary purposes: to create risk management solutions for clients, to manage the portfolio risks arising from client business, and to manage and hedge our own risks. Most of our derivative exposures arise from sales and trading activities within GBM. The assets and liabilities included in trading VaR give rise to a large proportion of the income included in net income from financial instruments held for trading or managed on a fair value basis. Adjustments to trading income such as valuation adjustments are not measured by the trading VaR model.\nFor information on the accounting policies applied to financial instruments at fair value, see Note 1 on the financial statements.\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Climate risk TCFD\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Approach\n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages\n### Contents\nWe recognise that the physical impacts of climate change and the transition to a net zero economy can create significant financial risks for companies, investors and the financial system. HSBC may be affected by climate risks either directly or indirectly through our relationships with our customers, which could result in both financial and non-financial impacts.", "chunk_word_count": 327, "section_path": "Opening up a world of opportunity > 218 Overview \n218 Market risk management \n219 Market risk in 2023 \n219 Trading portfolios \n220 Market risk balance sheet linkages > Derivative assets and liabilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 222, "page_start": 222, "page_end": 223 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 288, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Overview\nOur climate risk approach aims to effectively manage the material climate risks that could impact our operations, financial performance and stability, and reputation. It is informed by the evolving expectations of our regulators.\nOur climate risk approach is aligned to the framework outlined by the Taskforce on Climate-related Financial Disclosures (‘TCFD’), which identifies two primary drivers of climate risk:\nWe are developing our climate risk capabilities across our businesses, by prioritising sectors, portfolios and counterparties with the highest impacts.\n– physical risk, which arises from the increased frequency and severity of extreme weather events, such as hurricanes and floods, or chronic gradual shifts in weather patterns or rises in the sea level; and\nWe continue to make progress in enhancing our climate risk capabilities, and recognise it is a long-term iterative process.\ntransition risk, which arises from the process of moving to a net zero economy, including changes in government policy and legislation, technology, market demand, and reputational implications triggered by a change in stakeholder expectations, action or inaction.\nWe aim to regularly review our approach to increase coverage and incorporate maturing data, climate analytics capabilities, frameworks and tools, as well as respond to emerging industry best practice and climate risk regulations.\nThis includes updating our approach to reflect how the risks associated with climate change continue to evolve in the real world, and maturing how we embed climate risk factors into strategic planning, transactions and decision making across our businesses.\nIn addition to these primary drivers of climate risk, we have also identified the following thematic issues related to climate risk, which are most likely to materialise in the form of reputational, regulatory compliance and litigation risks:\nOur climate risk approach is aligned to our Group-wide risk management framework and three lines of defence model, which sets out how we identify, assess and manage our risks. For further details of the three lines of defence framework, see page 138.\nnet zero alignment risk, which arises from the risk of HSBC failing to meet its net zero commitments or failing to meet external expectations related to net zero, because of inadequate ambition and/or plans, poor execution, or inability to adapt to changes in the external environment; and\n– the risk of greenwashing, which arises from the act of knowingly or unknowingly making inaccurate, unclear, misleading or unsubstantiated claims regarding sustainability to our stakeholders.\nThe tables below provide an overview of the climate risk drivers and thematic issues considered within HSBC’s climate risk approach.\nIn 2023, we updated our climate risk materiality assessment, to understand how climate risk may impact across HSBC’s risk taxonomy. The assessment focused on a 12-month time horizon, as well as time horizons for the short-term, medium-term and long-term periods. We define short term as time periods up to 2025; medium term as between 2026 and 2035; and long term as between 2036 and 2050. These time periods align to the Climate Action ${ 1 0 0 + }$ disclosure framework v1.2. The table below provides a summary of how climate risk may impact a subset of HSBC’s principal risks.", "chunk_word_count": 541, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Overview", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 223, "page_start": 223, "page_end": 224 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 289, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Overview\nThe assessment is refreshed annually, and the results may change as our understanding of climate risk and how it impacts HSBC evolve (for further details, see ‘Impact on reporting and financial statements’ on page 44).\nIn addition to this assessment, we also consider climate risk in our emerging risk reporting and scenario analysis (for further details, see ‘Top and emerging risks’ on page 38).\n[IMAGE CAPTION] 1 Our climate risk approach identifies thematic issues such as HSBC net zero alignment risk and the risk of greenwashing, which are most likely to materialise in the form of reputational, regulatory compliance and litigation risks.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Climate risk management\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key developments in 2023", "chunk_word_count": 171, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Overview", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 224, "page_start": 224, "page_end": 224 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 290, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Governance and structure\nOur climate risk programme continues to support the development of our climate risk management capabilities. The following outlines key developments in 2023:\nThe Board takes overall supervisory responsibility for our ESG strategy, overseeing executive management in developing the approach, execution and associated reporting.\nThe ESG Committee supports the development and delivery of our ESG strategy, key policies and material commitments by providing oversight, coordination and management of ESG commitments and initiatives. It is co-chaired by the Group Chief Sustainability Officer and the Group Chief Financial Officer.\n– We updated our climate risk management approach to incorporate net zero alignment risk and developed guidance on how climate risk should be managed for non-financial risk types. We enhanced our climate risk materiality assessment to consider longer time horizons. We enhanced our approach to assessing the impact of climate change on capital, focusing on credit and market risks. We further developed our risk metrics to monitor our performance against our net zero targets for both financed emissions and own operations. We enhanced our internal climate scenario analysis, including through improvements to our use of customer transition plan data. For further details of scenario analysis, see page 65. We have updated our merger and acquisition process to consider potential climate and sustainability-related targets, net zero transition plans and climate strategy, and how this relates to HSBC.\nThe Sustainability Execution Committee has oversight of the environmental strategy, including the commercial execution and operationalisation through the sustainability execution programme, which is a Group-wide programme established to enable the delivery of our sustainability agenda.\nThe Group Reputational Risk Committee considers climate-related matters arising from customers, transactions and third parties that either present a serious potential reputational risk to the Group or merit a Group-led decision to ensure a consistent approach to reputational risk management across the regions, global businesses and global functions.\nThe Group Risk Management Meeting and the Group Risk Committee receive regular updates on our climate risk profile and progress of our climate risk programme.\nWhile we have made progress in enhancing our climate risk framework, further work remains. This includes the need to develop additional metrics and tools to measure our exposure to climaterelated risks, and to incorporate these tools within decision making.\nThe Group Chief Risk and Compliance Officer is the senior manager responsible for the management of climate risk under the UK Senior Managers Regime, which involves holding overall accountability for the Group’s climate risk programme.\nThe Environmental Risk Oversight Forum (formerly the Climate Risk Oversight Forum) oversees risk activities relating to climate and sustainability risk management, including the transition and physical risks from climate change. Equivalent forums have been established at a regional level.\nFor further details of the Group’s ESG governance structure, see page 88.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Risk appetite", "chunk_word_count": 504, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Governance and structure", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 224, "page_start": 224, "page_end": 224 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 291, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Policies, processes and controls\nOur climate risk appetite forms part of the Group’s risk appetite statement and supports the business in delivering our net zero ambition effectively and sustainably.\nWe continue to integrate climate risk into policies, processes and controls across many areas of our organisation, and we will continue to update these as our climate risk management capabilities mature over time. For further details of how we manage climate risk across our global businesses, see page 65.\nOur climate risk appetite statement is approved and overseen by the Board. It is supported by risk appetite metrics and tolerance thresholds. We have also defined additional key management information metrics. Both the risk appetite statement and key management information metrics are reported on a quarterly basis for oversight by the Group Risk Management Meeting and the Group Risk Committee.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Embedding our climate risk approach\nThe table below provides further details of how we have embedded the management of climate risk across key risk types. For further details of our internal scenario analysis, see ‘Insights from climate scenario analysis’ on page 225.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Our approach\nWe have metrics in place to monitor the exposure of our wholesale corporate lending portfolio to six high transition risk sectors, as shown in the below table. As at 31 December 2023, the overall exposure to six high transition risk sectors was \\$112bn. The sector classifications are based on internal HSBC definitions and can be judgemental in nature. The sector classifications are subject to the remediation of ongoing data quality challenges. This data will be enhanced and refined in future years.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Wholesale credit risk\nOur relationship managers engage with our key wholesale customers through a transition engagement questionnaire (formerly the transition and physical risk questionnaire) to gather information and assess the alignment of our wholesale customers’ business models to net zero and their exposure to physical and transition risks. We use the responses to the questionnaire to create a climate risk score for our key wholesale customers.\nOur credit policies require that relationship managers comment on climate risk factors in credit applications for new money requests and annual credit reviews. Our credit policies also require manual credit risk rating overrides if climate is deemed to have a material impact on credit risk under 12 months if not already captured under the original credit risk rating.\nKey developments to our framework in 2023 include expanding the scope of our transition engagement questionnaire to capture new countries, territories and sectors.\nKey challenges for further embedding climate risk into credit risk management relate to the availability of adequate physical risk data to assess impacts to our wholesale customers.", "chunk_word_count": 515, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Policies, processes and controls", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 225, "page_start": 225, "page_end": 225 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 292, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Wholesale loan exposure to high transition risk sectors at 31 December 20231\n1 Amounts shown in the table also include green and other sustainable finance loans, which support the transition to the net zero economy. The methodology for quantifying our exposure to high transition risk sectors and the transition risk metrics will evolve over time as more data becomes available and is incorporated in our risk management systems and processes.\n2 Counterparties are allocated to the high transition risk sectors via a two-step approach. Firstly, where the main business of a group of connected counterparties is in a high transition risk sector, all lending to the group is included in one high transition risk sector irrespective of the sector of each individual obligor within the group. Secondly, where the main business of a group of connected counterparties is not in a high transition risk sector, only lending to individual obligors in the high transition risk sectors is included.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Challenges\nWe continue to enhance our climate scenario analysis exercises so that we can have a more comprehensive understanding of climate headwinds, risks and opportunities to support our strategic planning and actions.\nWhile we have continued to develop our climate risk framework, our remaining challenges include:\n– the diverse range of internal and external data sources and data structures needed for climate-related reporting, which introduces data accuracy and reliability risks; data limitations on customer assets and supply chains, and methodology gaps, which hinder our ability to assess physical risks accurately; industry-wide data gaps on customer emissions and transition plan and methodology gaps, which limit our ability to assess transition risks accurately; and limitations in our management of net zero alignment risk is due to known and unknown factors, including the limited accuracy and reliability of data, merging methodologies, and the need to develop new tools to better inform decision making.\nIn climate scenario analysis, we consider, jointly, both physical risks and transition risks. For further details about these risks, see ‘Climate risk’ on page 221.\nWe also analyse how these climate risks impact principal risk types within our organisation, including credit and traded market risks, nonfinancial risks, and pension risk.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Our climate scenarios\nIn our 2023 climate scenario analysis exercises, we explored five scenarios that were created to examine the potential impacts from climate change for the Group and its entities.\nThe analysis considered the key regions in which we operate, and assessed the impact on our balance sheet across three distinct timeframes: short term up to 2025; medium term from 2026 to 2035; and long term from 2036 to 2050. The time horizons are aligned to the Climate Action ${ 1 0 0 + }$ framework v1.2.", "chunk_word_count": 507, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Wholesale loan exposure to high transition risk sectors at 31 December 20231", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 225, "page_start": 225, "page_end": 227 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 293, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Insights from climate scenario analysis\nWe created our internal scenarios using external publicly available climate scenarios as a reference, including those produced by the Network for Greening the Financial System (‘NGFS’), the Intergovernmental Panel on Climate Change (‘IPCC’) and the International Energy Agency. Using these external scenarios as a template, we adapted them by incorporating the unique climate risks and vulnerabilities to which our organisation and customers across different business sectors and regions are exposed. This helped us produce the scenarios, which vary by severity to analyse how climate risks will impact our portfolios.\nScenario analysis supports our strategy by assessing our potential exposures to risks and vulnerabilities under a range of climate scenarios. It helps to build our awareness of climate change, plan for the future and meet our growing regulatory requirements.\nIn 2023, we enhanced our internal climate scenario analysis exercise by focusing our efforts on generating more granular insights for key sectors and regions to support core decision-making processes, and to respond to our regulatory requirements. We also produced several climate stress tests for regulators around the world, including the Hong Kong Monetary Authority (‘HKMA’) and the Central Bank of the United Arab Emirates.\n– the Near Term scenario, which assumes both a sharp increase in policies that drive a disorderly transition towards net zero and a sharp increase in extreme climate events over a five-year period until 2027. This scenario focused on our business in Asia.\nOur scenarios were:\n– the Net Zero scenario, which is consistent with the Paris Agreement. This assumes that there will be orderly but considerable climate action, limiting global warming to no more than $1 . 5 ^ { \\circ } \\mathrm { C }$ by 2100, when compared with pre-industrial levels;\nWe have chosen these scenarios to provide a holistic view that will supplement the Group’s current and future strategic thinking. They reflect inputs from our key stakeholders and experts across the Group, and have been reviewed through internal governance.\n– the Current Commitments scenario, which assumes that climate action is limited to current governmental committed policies, including already implemented actions, leading to global temperature rises of $2 . 4 ^ { \\circ } \\mathsf { C }$ by 2100. This slow transition scenario helps us to determine the actions we need to take to reach our net zero ambition while operating in a world that is not net zero;\nOur scenarios reflect different levels of physical and transition risks over a variety of time periods. The scenario assumptions include varying levels of governmental climate policy changes, macroeconomic factors and technological developments. However, these scenarios rely on the development of technologies that are still unproven, such as global hydrogen production to decarbonise aviation and shipping.\n– the Delayed Transition Risk scenario, which assumes that climate action is delayed until 2030 with a late disorderly transition to net zero but stringent and rapid enough to limit global warming to under ${ } ^ { 2 ^ { \\circ } \\mathsf { C } }$ by 2100. This scenario allows us to stress test severe but plausible transition risk impacts;", "chunk_word_count": 545, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Insights from climate scenario analysis", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 227, "page_start": 227, "page_end": 228 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 294, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Insights from climate scenario analysis\nThe nature of the scenarios, our developing capabilities, and limitations of the analysis lead to outcomes that are indicative of climate change headwinds, although they are not a direct forecast.\n– the Downside Physical Risk scenario, which assumes climate action is limited to currently implemented governmental policies, leading to extreme global warming with global temperatures increasing by greater than $4 ^ { \\circ } \\mathsf { C }$ by 2100. This scenario allows us to assess physical risks associated with climate change; and\nDevelopments in climate science, data, methodology and scenario analysis techniques will help us shape our approach further. We therefore expect this view to change over time.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Characteristics of our scenarios", "chunk_word_count": 162, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Insights from climate scenario analysis", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 228, "page_start": 228, "page_end": 228 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 295, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Our methodology\nFor our scenario analysis, we used models to assess how transition and physical risks may impact our portfolios under different scenarios. Our models incorporate a range of climate-specific metrics that will have an impact on our customers, including expected production volumes, revenue, costs and capital expenditure.\nOur models support the calculation of outputs that inform us about the level of climate-related ECL provisions required under IFRS 9, and also support the shaping of our climate-related capital approach under ICAAP. In 2023, in addition to incorporating our customers’ transition plans, we enhanced our credit risk models for the wholesale portfolio by updating our assumptions regarding how we expect statesupported companies to be impacted, and improved how we model the impact of emissions on company financial forecasts.\nWe assess how these metrics interplay with economic factors such as carbon prices, which represent the cost effect of climate-related policies that aim to discourage carbon-emitting activities and encourage low-carbon solutions. The expected result of higher carbon prices is a reduction in emissions as high-emission activities become uneconomical. We also assume carbon prices will vary from country to country.\nModelling limitations\nWe continue to look for ways of enhancing our methodology to improve the effectiveness of our climate scenario analyses. There are industry-wide limitations, particularly on data availability, although our models are designed to produce outputs that can support our assessment of the level of our climate resilience.\nThe models for our wholesale corporate lending portfolio consider our customers’ individual climate transition plans where available, while we refine and deepen our assessment of these plans. These results feed into the calculation of our risk-weighted assets and expected credit loss (‘ECL’) projections. For our real estate portfolio models, we focus on physical risk factors, including property locations, perils and insurance coverage when assessing the overall credit risk impact to the portfolio. The results are reviewed by our sector specialists who, subject to our governance procedures, make bespoke adjustments to our results based on their expert judgement where relevant.\nClimate scenario analysis requires considerable amounts of data, although data is only available for a subset of our counterparties. As a result, we have to extrapolate the results observed in the subset to the wider population or dataset. We do not capture the second order impacts of climate risk exposures within our modelling approach, such as impacts on our counterparties from their supply chains.", "chunk_word_count": 425, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Our methodology", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 228, "page_start": 228, "page_end": 229 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 296, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### The Near Term scenario\nOur Near Term scenario allowed us to explore the combined impacts of a disorderly transition towards net zero and extreme acute physical events occurring simultaneously. The scenario was designed to meet HKMA regulatory requirements and will help us to improve how we assess short-term impacts across the Group. As part of the HKMA exercise, our initial analysis was focused on our portfolio in Asia.\nWe continue to enhance our capabilities by incorporating lessons learnt from previous exercises and feedback from key stakeholders, including regulators.\nFor a broad overview of the models that we use for our climate scenario analysis, as well as graphs that show how global carbon prices and carbon emissions will differ under our climate scenarios, see our ESG Data Pack at www.hsbc.com/esg.\nThe exercise allowed us to understand the extent to which a stressed scenario exhibiting both high physical and transition risks in the near term could immediately impact our customers across all our sectors.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Analysing the outputs of climate scenario analysis\nIn the following sections, we assess the impacts to our banking portfolios under different climate scenarios.\nClimate scenario analysis allows us to model how different potential climate pathways may affect and impact the resilience of our customers and our portfolios, particularly in respect of credit losses. As the following chart shows, losses are influenced by their exposure to a variety of climate risks under different climate scenarios.", "chunk_word_count": 280, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > The Near Term scenario", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 229, "page_start": 229, "page_end": 229 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 297, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### How climate change is impacting our wholesale lending portfolio\nIn our internal climate scenario analysis, we assessed the impact of climate-related risks on our corporate counterparties under different climate scenarios, which we measured by reviewing the modelled effect on our ECL.\nThe climate scenario analysis exercise for the wholesale lending portfolio was designed to examine our climate risks and vulnerabilities, primarily in the short and medium term. We focused on the Current Commitment scenario, believing it to be the scenario most likely to unfold in this timeframe, and the Net Zero scenario, which allows us to assess the resilience of our strategy and to identify specific climate-related opportunities.\n[IMAGE CAPTION] How credit losses from climate risks have been modelled under di\u001eerent transition scenarios Impact on wholesale lending portfolios\nWithin our wholesale lending portfolio, customers in higher emitting sectors continue to be most exposed to larger climate-related losses.\nFor each sector in both scenarios, we calculated the projected ECL increase as at 2035, where we compared the increase in ECL under the scenario against a counterfactual scenario that incorporates no climate change.\nWe use the sector’s exposure at default (‘EAD’), which represents the size of our exposure to potential losses from customer defaults. This helps to identify which sectors are the most material to us in terms of the impact of climate change.\n1 The counterfactual scenario is modelled on a scenario where there would be no losses due to climate change. \n2 The dotted line in the chart shows the impact of modelled expected credit losses following our strategic responses to reduce the effect of climate risks under the Net Zero scenario. \n3 The projections shown in this chart were modelled during 2023 and are not intended to reflect the final 31 December 2023 position that is disclosed elsewhere in the Annual Report and Accounts 2023.\nThe table below shows the relative size of exposures at default in 2023 and the increase in cumulative ECL under each scenario compared with a counterfactual scenario by 2035 (expressed as a multiple).\nWhile climate-related losses are expected to remain minimal in the short term, they are likely to increase compared with the counterfactual scenario in the medium and longer term, driven by the transition to a net zero economy.\nThese losses are lower in the Net Zero orderly transition scenario, than in the Delayed Transition Risk scenario where climate action begins later and is more rapid and disruptive as our customers will have less time to restructure their business models and reduce their carbon emissions. As the dotted line in the graph shows, losses in these scenarios can be mitigated through active management approaches, which include identifying new climate-related business opportunities and adapting our portfolios to reduce exposure to climate risks and losses.\nBy building a more climate-resilient balance sheet, we can reduce impairment risks and improve longer-term stability.", "chunk_word_count": 504, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > How climate change is impacting our wholesale lending portfolio", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 229, "page_start": 229, "page_end": 229 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 298, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### How climate change is impacting our wholesale lending portfolio\nUnder the Current Commitments scenario, we expect lower levels of losses relating to transition risks, although we would expect an increase in the effects of climate-related physical risks over the longer term. If the world does not align with a net zero path, physical risks in the medium to long term are expected to continue to rise due to the increasing frequency of extreme weather events.\nWe have continued to incorporate information from our customers’ transition plans to consider more detailed information on how they and their sector will be impacted under different climate scenarios.\nIn 2023, we widened the scope of our climate modelling to include new markets, such as mainland China, and increased the peril coverage within markets already covered.\nThe levels of ECL observed across our wholesale lending portfolio are driven by: our customers’ carbon emissions; the presence of realistic transition plans; the amount of capital investment required to support their transition; and the degree to which their competitive environment impacts their ability to pass on carbon costs.\nIn our analysis of the retail mortgage portfolio, we reassessed the physical perils that could impact the value of properties, which include flooding, wildfire and windstorms. The underlying peril data we use has been enhanced to include updated and higher resolution flood maps where available. We have also worked with external vendors to improve outputs from peril projections and to increase the granularity of data to provide more detailed insights into the impact of climate risks across our portfolio of properties, in particular the impact of wildfires.\nIn 2022, we used scenario analysis to assess the impacts on our corporate counterparties across the sectors that are most affected by climate-related risks.\nIn 2023, we enhanced our approach in some key high-emitting sectors, which includes the construction and building materials, power and utilities, and oil and gas sectors. The analysis below provides a more detailed view of the anticipated impacts on these portfolios and our customers, improving our understanding of climate risks and potential opportunities.\nOur scenario analysis methodology was enriched further in 2023 by combining the impacts of physical risk with transition risks, including rising energy costs and impacts from direct government legislation such as homeowner energy efficiency upgrades in the UK. We have enhanced our modelling by considering customers’ affordability incorporating increased debt servicing costs and the impacts on property valuations. As insurance remains a key mitigator against climate losses, we further refined our assumptions including the assessment of insurance availability for properties that experience frequent climate events.\nThe construction and building materials sector faces an increase in losses because it includes companies with high emissions from manufacturing processes, such as steel or cement, or from their supply chains, which will increase cost pressures due to carbon taxes. The sector also has a high proportion of customers without transition plans.", "chunk_word_count": 508, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > How climate change is impacting our wholesale lending portfolio", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 229, "page_start": 229, "page_end": 230 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 299, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Projected peril risk\nFlooding has the potential to drive significant impacts at an aggregate level but this is localised to specific areas that are close to water sources such as rivers or the coast, or areas that are located in valleys where surface water can ‘pool’.\nAlthough our scenario analysis showed that companies with transition plans performed better on average, their plans typically fall short of requirements needed to meet net zero targets. Overall, we believe there are significant lending opportunities for us to help support our customers as they transition to a lower carbon economy while meeting their growing business demands.\nThe ’Exposure to flooding’ table below shows that the majority of properties located in four of our largest markets are predicted to experience zero to low risk of flooding, with flood depths of less than 0.5 metres, under a 1-in-100-year event in each of the scenarios.\nThese opportunities include the exploration of less carbon-intensive fuel sources, electrification, the integration of carbon capture and storage, and the adoption of new technologies in the search to reduce emissions.\nFlood depths outlined here do not consider building type and property floor level, which would potentially further mitigate the impacts. However, they are considered within our climate risk modelling and loss projections.\nIn the power and utilities sector, our analysis showed that rising costs from increased carbon prices and the capital expenditure required to support transition requirements, infrastructure improvements and decommissioning costs, alongside greater downstream energy demands, will potentially lead to higher debt levels and worsening counterparty risk ratings for customers.\nThe table below sets out the proportion of properties with projected flood depths in a 1-in-100-year severity flood event, under the Current Commitments and Downside Physical Risk scenarios.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Exposure to flooding $( \\% ) ^ { 1 }$\nAs technologies mature, the capital cost of some renewables infrastructure is expected to fall, becoming cheaper than nonrenewable sources due to improved efficiencies. This will reduce the required expenditure for companies.\nIn the oil and gas sector, customers that commit to renewable energy should benefit from the additional greener revenue streams, which will help mitigate the impact of reduced profitability from fossil fuels and heightened carbon prices, enabling them to sustain their gross margins. This sector has relatively lower projected losses as a large proportion of customers provided transition plans with granular information about their climate-related impacts.\nWe have the opportunity to ease potential negative impacts as transition risks increase by supporting our customers to diversify into more renewable and greener revenue streams, and invest in emission-reducing technologies.", "chunk_word_count": 469, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Projected peril risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 230, "page_start": 230, "page_end": 230 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 300, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### How climate change is impacting our retail mortgage portfolio\nAs part of our 2023 internal climate scenario analysis, we completed a detailed climate risk assessment for the UK, Hong Kong, mainland China and Australia, which together represent $7 5 \\%$ of the balances in our global retail mortgage portfolio.\nOur analysis shows that over the longer term, we expect minimal losses to materialise when considering the Current Commitments scenario. Although the severity of climate perils is expected to worsen over time, our overall losses also remain low under a Downside Physical Risk scenario.\nWe have developed tools to provide us with a more granular understanding of the key profit and loss drivers under different climate scenarios. These can be viewed by risk factor, business line or at trading desk level to help traded risk managers to monitor and understand how climate sensitive exposures are impacted.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### How climate change is impacting our commercial real estate portfolios\nWe assessed our commercial real estate customers’ vulnerability to various perils, including flooding and windstorms. Our commercial real estate portfolio is globally diversified with larger concentrations in Hong Kong, the UK and the US.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Sovereign credit risk\nWe assessed the impacts of climate risks on sovereign debt under the different climate scenarios. In particular, our models considered the impacts of climate change on a country’s GDP, the amount of headroom sovereign nations have in terms of their fiscal and external reserves, and their dependency and exposure to particular corporate sectors.\nGeographical location is a key determinant in our exposure to potential physical risk events, which can lead to higher ECL due to the cost of repairing damage as well as impact property valuations in areas where physical risk events are increasing in frequency.\nThe ‘Exposure to peril’ table below shows the proportion of our commercial real estate portfolio exposed to specific physical perils in our key markets.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Pension risk\nWe modelled balance sheet and income statement projections for the main pension plans. Our modelling capability has been enhanced to incorporate climate-specific modelling over a longer timeframe, with the initial exercise being focused on assessing the impacts of a disruptive transition to net zero using the Delayed Transition scenario.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Exposure to peril $( \\% ) ^ { 1 }$\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Non-financial risk\nWe assessed the potential impacts of errors in sustainable lending volumes contained within our ESG disclosures as part of our financial reporting risks. To understand our regulatory compliance risks we assessed any misrepresentations within the marketing of our ESG funds.", "chunk_word_count": 527, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > How climate change is impacting our retail mortgage portfolio", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 230, "page_start": 230, "page_end": 231 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 301, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Use of climate scenario analysis outputs\nClimate scenario analysis plays a crucial role helping us to identify and understand the impact of climate-related risks and potential opportunities as we navigate the transition to net zero.\nOverall, and in line with our 2022 disclosure, our commercial real estate portfolio remains resilient to climate risk, with the more severe impacts mitigated by insurance coverage.\nScenario analysis results have been used to support the Group’s ICAAP. This is an internal assessment of the capital the Group needs to hold to meet the risks identified on a current and projected basis, including climate risk.\nOur most significant credit exposure is in Hong Kong, a region with material physical risk exposures to wind and flooding due to strong tropical cyclones. The impact on prospective credit losses remains low, due to stringent building standards and existing measures in place against flooding and storm surges.\nIn addition, scenario analysis informs our risk appetite statement metrics. As an example, it supports the calibration of physical risk metrics for our retail mortgage portfolios and it is used to consider climate impact in our IFRS 9 assessment.\nOur largest exposure to transition risk is within our UK portfolio. Under the Net Zero scenario, we assessed the impacts of the UK government consultation on non-domestic rental properties being required to hold an energy performance certificate rating of at least $' \\mathsf { B } ^ { \\prime }$ by 2030. To meet these proposed minimum standards, more than $80 \\%$ of the properties in our portfolio would potentially need to be retrofitted, which would increase impairments and lead to a small uplift in ECL for this portfolio.\nFrom a financial planning perspective, internal climate scenario analysis results are used to assess whether additional short-term climate-specific ECL are required within our financial plan.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Next steps\nWe plan to continue to enhance our capabilities for climate scenario analysis including addressing model limitations and data gaps and developing our assessment of liquidity, resilience and insurance risks. We also plan to use the results for decision making, particularly in:\nIn 2023, as part of the scenario analysis exercise for the Central Bank of the United Arab Emirates, we also assessed in more detail the climate risk impacts on our UAE portfolio. Our findings showed that many properties could become chronically exposed to permanent inundation over time due to their relatively low elevation above sea level.\nclient engagement, by identifying climate opportunities and vulnerabilities in specific regions and sectors such as renewables, carbon capture technologies and electric vehicles, and using this information to engage and support clients in their transition to net zero; portfolio steering, by using scenario analysis outputs to inform how to reallocate our portfolio to maximise returns and mitigate risk while achieving our net zero targets; and looking beyond climate change by building capabilities to assess our resilience to wider environmental risks.", "chunk_word_count": 523, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Use of climate scenario analysis outputs", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 231, "page_start": 231, "page_end": 231 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 302, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### How we assess climate risk impacts on other risk types\nWe use climate scenario analysis to assess the impacts on other risks beyond credit risk. These include traded market risks, nonfinancial risks and pension risk.", "chunk_word_count": 62, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > How we assess climate risk impacts on other risk types", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 231, "page_start": 231, "page_end": 231 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 303, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Understanding the resilience of our critical properties\nTraded market risk\nIn 2023, we explored the potential impacts of climate risks on our trading and banking portfolio under the Delayed Transition Risk and Downside Physical Risk scenarios.\nClimate change poses a physical risk to the buildings that we occupy as an organisation, including our offices, retail branches and data centres, both in terms of loss and damage, and business interruption.\nThe analysis considered all relevant asset classes including interest rates, exchange rates, corporate and sovereign bonds and equities. The analysis applied shocks reflecting the impact of abrupt increases in carbon prices or physical risk perils resulting in structural economic impacts that affect the productivity of high-risk sectors at a country level.\nWe measure the impacts of climate and weather events to our buildings on an ongoing basis using historical, current and scenario modelled forecast data. In 2023, there were 27 major storms that had a minor impact on five premises with no impact on the availability of our buildings.\nWe use stress testing to evaluate the potential for impact on our owned or leased premises. Our scenario stress test, conducted in 2023, analysed how eight climate change-related hazards could impact 1,000 of our critical and important buildings. These hazards were coastal inundation, extreme heat, extreme winds, wildfires, riverine flooding, pluvial flooding, soil movement due to drought, and surface water flooding.\nA further 248 properties have the potential to be impacted by climate change, albeit to a lesser extent, with insurance-related losses estimated at between $5 \\%$ and $10 \\%$ of the insured value of our buildings. The principal risks are temperature extremes and water stress.\nA key finding from the Middle of the Road scenario showed that the total number of buildings at risk reduced from 20 to 13. The highlighted facilities are still at risk from the same perils of extreme temperature and water stress by 2050.\nThe 2023 stress test modelled climate change with IPCC’s Taking the Highway scenario (SSP5-8.5), which projects that the rise in global temperatures will likely exceed $4 ^ { \\circ } \\mathsf { C }$ by 2100. It also modelled a less severe IPCC Middle of the Road scenario (SSP2-4.5), which projects that global warming will likely be limited to $2 ^ { \\circ } \\mathsf { C }$ .\nThis forward-looking data along with historical data helps inform real estate planning. We will continue to enhance our understanding of how extreme weather events impact our building portfolio as climate risk assessment tools improve and evolve. We buy insurance for property damage and business interruption and consider insurance as a loss mitigation strategy depending on its availability and price.\nKey findings from the Taking the Highway scenario included that by 2050, 20 of our 1,000 critical and important buildings will have a high potential for impact due to climate change, with insurance-related losses estimated to be in excess of $10 \\%$ of the insured value of the buildings.", "chunk_word_count": 521, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Understanding the resilience of our critical properties", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 231, "page_start": 231, "page_end": 232 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 304, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Understanding the resilience of our critical properties\nWe regularly review and enhance our building selection process and global engineering standards and will continue to assess historical claims data to help ensure our building selection and design standards address the potential impacts of climate change.\nThese include 16 retail properties primarily impacted by extreme temperatures and four data centres, where three face the risk of water stress and one faces extreme temperatures and water stress. This could lead to failure of mechanical cooling equipment or soil movement resulting from drought.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Resilience risk\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Overview\nResilience risk is the risk of sustained and significant business disruption from execution, delivery, physical security or safety events, causing the inability to provide critical services to our customers, affiliates and counterparties. Resilience risk arises from failures or inadequacies in processes, people, systems or external events.\nWe prioritise our efforts on material risks and areas undergoing strategic growth, aligning our location strategy to this need. We also remotely provide oversight and stewardship, including support of chief risk officers, in territories where we have no physical presence.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Governance and structure\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Resilience risk management\nThe Enterprise Risk Management target operating model provides a globally consistent view across resilience risks, strengthening our risk management oversight while operating effectively as part of a simplified non-financial risk structure.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key developments in 2023\nDuring the year, we carried out several initiatives to keep pace with geopolitical, regulatory and technology changes, and strengthened the management of resilience risk:\nWe view resilience risk across seven sub-risk types related to: thirdparty risk; technology and cybersecurity risk; transaction processing risk; business interruption and incident risk; data risk; change execution risk; and facilities availability, safety and security risk.\n– We focused on enhancing our understanding of our risk and control environment, by updating our risk taxonomy and control libraries, and refreshing risk and control assessments.\nRisk appetite and key escalations for resilience risk are reported to the Non-Financial Risk Management Board, chaired by the Group Chief Risk and Compliance Officer, with an escalation path to the Group Risk Management Meeting and Group Risk Committee.\n– We continued to recognise that our customers are impacted by service disruptions, and responded to these urgently and aimed to recover with minimum delay. We continued to initiate postincident review processes to prevent recurrence. Where we identify that investment is required to further enhance the Group’s operational resilience capabilities, findings are fed into the Group’s financial planning, helping to ensure we continue to meet the expectations of our customers and our regulators.", "chunk_word_count": 530, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Understanding the resilience of our critical properties", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 232, "page_start": 232, "page_end": 232 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 305, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key risk management processes\nOperational resilience is our ability to anticipate, prevent, adapt, respond to, recover and learn from operational disruption while minimising customer and market impact. Resilience is determined by assessing whether we can continue to provide our important business services, within an agreed impact tolerance. This is achieved via day-to-day oversight and periodic and ongoing assurance, such as deep dive reviews and controls testing, which may result in challenges being raised to the business by risk stewards. Further challenge is also raised in the form of risk steward opinion papers to formal governance. We accept we will not be able to prevent all disruption but we must prioritise investment to continually improve the response and recovery strategies for our important business services and important group business services to meet regulatory expectations.\n– We continued to monitor markets affected by the Russia-Ukraine and Israel-Hamas wars, as well as other geopolitical events, for any potential impact they may have on our colleagues and operations.\nWe strengthened the way third-party risk is overseen and managed across all non-financial risks, and enhanced the processes, framework and reporting capabilities used by our global businesses, functions and regions.\n– We provided analysis and easy-to-access risk and control information and metrics to enable management to focus on nonfinancial risks in their decision making and appetite setting.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Business operations continuity\n– We further strengthened our non-financial risk governance and senior leadership, and improved our coverage and risk steward oversight for data risk and change execution.\nWe continue to monitor the Russia-Ukraine and Israel-Hamas wars, and remain ready to take measures to ensure business continuity in affected markets should the situations require. There have been no significant disruptions to our services, although businesses and functions in nearby markets continually review their plans and responses to minimise any potential impacts.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Regulatory compliance risk\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Overview\nRegulatory compliance risk is the risk associated with breaching our duty to clients and other counterparties, inappropriate market conduct (including unauthorised trading) and breaching related financial services regulatory standards. Regulatory compliance risk arises from the failure to observe relevant laws, codes, rules and regulations and can manifest itself in poor market or customer outcomes and lead to fines, penalties and reputational damage to our business.\nGroup Chief Risk and Compliance Officer. Regulatory Compliance and Financial Crime teams work together and with relevant stakeholders to achieve good conduct outcomes, and provide enterprise-wide support on the compliance risk agenda in close collaboration with colleagues from the Group Risk and Compliance function.", "chunk_word_count": 493, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Key risk management processes", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 232, "page_start": 232, "page_end": 233 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 306, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key risk management processes\nThe Global Regulatory Compliance capability is responsible for setting global policies, standards and risk appetite to guide the Group’s management of regulatory compliance risk. It also devises the required frameworks, support processes and tooling to protect against regulatory compliance risks. The Group capability provides oversight, review and challenge of the global market, regional and line of business teams to help them identify, assess and mitigate regulatory compliance risks, where required. The Group’s regulatory compliance risk policies are regularly reviewed. Global policies and procedures require the identification and escalation of any actual or potential regulatory breaches, and relevant events and issues are escalated to the Group’s Non-Financial Risk Management Board, the Group Risk Management Meeting and the Group Risk Committee, as appropriate. The Group Head of Regulatory Compliance reports to the Group Chief Risk and Compliance Officer, and attends the Risk and Compliance Executive Committee, the Group Risk Management Meeting and the Group Risk Committee.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Regulatory compliance risk management\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key developments in 2023\nThe dedicated programme to embed our updated purpose-led conduct approach has concluded. Work to map applicable regulations to our risks and controls continued in 2023, alongside the adoption of new tooling to support enterprise-wide horizon scanning for new regulatory obligations and supporting wider work on regulatory reporting enhancements. Climate risk has been integrated into regulatory compliance policies and processes, with enhancements made to the product governance framework and controls to ensure the effective consideration of climate – and in particular the risk of greenwashing – risks.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Governance and structure\nThe Compliance function has now been restructured and integrated into a combined Risk and Compliance function with the appointment of a Group Head of Regulatory Compliance reporting directly into the\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Financial crime risk\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Overview\nFinancial crime risk is the risk that HSBC’s products and services will be exploited for criminal activity. This includes fraud, bribery and corruption, tax evasion, sanctions and export control violations, money laundering, terrorist financing and proliferation financing. Financial crime risk arises from day-to-day banking operations involving customers, third parties and employees.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Governance and structure\nThe structure of the Financial Crime function remained substantively unchanged in 2023, although we continued to review the effectiveness of our governance framework to manage financial crime risk. The Group Head of Financial Crime and Group Money Laundering Reporting Officer continues to report to the Group Chief Risk and Compliance Officer, while the Group Risk Committee retains oversight of matters relating to financial crime.", "chunk_word_count": 536, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Key risk management processes", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 233, "page_start": 233, "page_end": 233 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 307, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Financial crime risk management\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key developments in 2023", "chunk_word_count": 52, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Financial crime risk management", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": null, "page_start": null, "page_end": null }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 308, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key risk management processes\nWe regularly review the effectiveness of our financial crime risk management framework, which includes continued consideration of the complex and dynamic nature of sanctions compliance and export control risk. We continued to respond to the financial sanctions and trade restrictions that have been imposed on Russia, including methods used to limit sanctions evasion.\nWe will not tolerate knowingly conducting business with individuals or entities believed to be engaged in criminal activity. We require everybody in HSBC to play their role in maintaining effective systems and controls to prevent and detect financial crime. Where we believe we have identified suspected criminal activity or vulnerabilities in our control framework, we will take appropriate mitigating action.\nWe continued to make progress with several key financial crime risk management initiatives, including:\nWe manage financial crime risk because it is the right thing to do to protect our customers, shareholders, staff, the communities in which we operate, as well as the integrity of the financial system on which we all rely. We operate in a highly regulated industry in which these same policy goals are codified in law and regulation.\n– We deployed our intelligence-led, dynamic risk assessment capability for customer account monitoring in additional entities and global businesses, including in the UK, the Channel Islands and the Isle of Man, Hong Kong and the UAE. We deployed a next generation capability to increase our monitoring coverage on correspondent banking activity. We successfully introduced the required changes to our transaction screening capability to accommodate the global change to payment systems formatting under ISO 20022 requirements. We made enhancements in response to the rapidly evolving and complex global payments landscape and refined our digital assets and currencies strategy.\nWe are committed to complying with the laws and regulations of all the markets in which we operate and applying a consistently high financial crime standard globally.\nWe continue to assess the effectiveness of our end-to-end financial crime risk management framework, and invest in enhancing our operational control capabilities and technology solutions to deter and detect criminal activity. We have simplified our framework and consolidated previously separate financial crime policies into a single policy to drive consistency and provide a more holistic assessment of financial crime risk. We further strengthened our financial crime risk taxonomy and control libraries and our monitoring capabilities through technology deployments. We developed more targeted metrics, and continued to seek to enhance our governance and reporting. We are committed to working in partnership with the wider industry and the public sector in managing financial crime risk and we participate in numerous public-private partnerships and information sharing initiatives around the world. In 2023, our focus remained on measures to improve the overall effectiveness of the global financial crime framework, notably by providing input into legislative and regulatory reform activities. We did this by contributing to the", "chunk_word_count": 502, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Key risk management processes", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 233, "page_start": 233, "page_end": 233 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 309, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key risk management processes\ndevelopment of responses to consultation papers focused on how financial crime risk management frameworks can deliver more effective outcomes in detecting and deterring criminal activity. Through our work with the Wolfsberg Group and the Institute of International Finance, we supported the efforts of the global standard setter, the Financial Action Task Force. In addition, we participated in a number of public events related to enhancing public-private partnerships, payment transparency, asset recovery, tackling forestry crimes, wildlife trafficking and human trafficking.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Model risk\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Overview\nModel risk is the risk of the potential for adverse consequences from model errors or the inappropriate use of modelled outputs to inform business decisions.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Governance and structure\nModel risk governance committees at the Group, business and functional levels provide oversight of model risk. The committees include senior leaders from the three global businesses and the Group Risk and Compliance function, and focus on model-related concerns and are supported by key model risk metrics. We also have Model Risk Committees in our geographical regions focused on local delivery and requirements. The Group-level Model Risk Committee is chaired by the Group Chief Risk and Compliance Officer, and the heads of key businesses participate in these meetings.\nModel risk arises in both financial and non-financial contexts whenever business decision making includes reliance on models.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key developments in 2023\nIn 2023, we continued to make improvements in our model risk management processes amid regulatory changes in model requirements.\nInitiatives during the year included:", "chunk_word_count": 341, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Key risk management processes", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 234, "page_start": 234, "page_end": 234 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 310, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key risk management processes\n– Following regulatory feedback on a number of our model submissions for our internal ratings-based (‘IRB’) approach for credit risk, internal model method (‘IMM’) for counterparty credit risk and internal model approach (‘IMA’) for market risk, we implemented approved models for IMM and IMA alongside an approved IRB model for UK mortgages. We began a programme of work to address feedback from the PRA and other regulators on the IRB models for wholesale credit.\nWe use a variety of modelling approaches, including regression, simulation, sampling, machine learning and judgemental scorecards for a range of business applications. These activities include customer selection, product pricing, financial crime transaction monitoring, creditworthiness evaluation and financial reporting. Global responsibility for managing model risk is delegated from the Board to the Group Chief Risk and Compliance Officer, who authorises the Group Model Risk Committee. This committee regularly reviews our model risk management policies and procedures, and requires the first line of defence to demonstrate comprehensive and effective controls based on a library of model risk controls provided by Model Risk Management. Model Risk Management also reports on model risk to senior management and the Group Risk Committee on a regular basis through the use of the risk map, risk appetite metrics and top and emerging risks.\n– We made changes to our VaR model in response to multiple breaches that had been observed from market volatility resulting from changes in monetary policy in major markets.\n– We introduced a new procedure to ensure any new tool developed using generative AI would require validation by Model Risk Management before its use.\n– We enhanced our frameworks and controls as climate risk and AI and machine learning models become more embedded in business processes.\nWe regularly review the effectiveness of these processes, including the model risk committee structure, to help ensure appropriate understanding and ownership of model risk is embedded in the businesses and functions.\n– Following the publication of Supervisory Statement 1/23 – the PRA’s guiding principles for how model risks should be managed across the industry – we began a programme of work to seek to meet the enhanced model risk management requirements, with representation from all global businesses and key functions, including Internal Audit.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Insurance manufacturing operations risk\n‘Insurance Contracts’, which became effective on 1 January 2023. Given the fundamental change the new accounting standard represented in insurance accounting, and the complexity of the new standard, this presented additional financial reporting and model risks for the Group, which were managed via the IFRS 17 implementation project. Other areas of focus were the ongoing integration of the insurance business that was acquired through AXA Singapore in 2022 into the Group’s risk management framework, the establishment of a reinsurance entity in Bermuda and controls supporting IFRS 17 implementation.", "chunk_word_count": 509, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Key risk management processes", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 234, "page_start": 234, "page_end": 235 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 311, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Contents\n233 Overview \n233 Insurance manufacturing operations risk management \n234 Insurance manufacturing operations risk in 2023 \n234 Measurement \n235 Key risk types \n235 – Market risk \n236 – Credit risk \n236 – Liquidity risk \n237 – Insurance underwriting risk\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Governance and structure\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### (Audited)\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Overview\nInsurance manufacturing risks are managed to a defined risk appetite, which is aligned to the Group’s risk appetite and risk management framework, including its three lines of defence model. For details of the Group’s governance framework, see page 137. The Global Insurance Risk Management Meeting oversees the control framework globally and is accountable to the WPB Risk Management Meeting on risk matters relating to the insurance business.\nThe key risks for our insurance manufacturing operations are market risk, in particular interest rate and equity, credit risk and insurance underwriting risk. These have a direct impact on the financial results and capital positions of the insurance operations. Liquidity risk, while significant in other parts of the Group, is less material for our insurance operations.\nThe monitoring of the risks within our insurance operations is carried out by Insurance Risk teams. The Group’s risk stewardship functions support the Insurance Risk teams in their respective areas of expertise.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### HSBC’s insurance business\nWe sell insurance products through a range of channels including our branches, insurance sales forces, direct channels and third-party distributors. The majority of sales are through an integrated bancassurance model that provides insurance products principally for customers with whom we have a banking relationship, although the proportion of sales through other sources such as independent financial advisers, tied agents and digital platforms is increasing.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Stress and scenario testing", "chunk_word_count": 382, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Contents", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 235, "page_start": 235, "page_end": 235 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 312, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### (Audited)\nStress testing forms a key part of the risk management framework for the insurance business. We participate in local and Group-wide regulatory stress tests, as well as internally developed stress and scenario tests, including Group internal stress test exercises.\nFor the insurance products we manufacture, the majority of sales are savings, universal life and protection contracts.\nThe results of these stress tests and the adequacy of management action plans to mitigate these risks are considered in the Group’s ICAAP and the entities’ regulatory Own Risk and Solvency Assessments, which are produced by all material entities.\nWe choose to manufacture these insurance products in HSBC subsidiaries based on an assessment of operational scale and risk appetite. Manufacturing insurance allows us to retain the risks and rewards associated with writing insurance contracts by keeping part of the underwriting profit and investment income within the Group.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key risk management processes\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Market risk\nWe have life insurance manufacturing subsidiaries in eight markets, which are Hong Kong, Singapore, mainland China, France, UK, Malta, Mexico and Argentina. In addition, we have: an interest in a life insurance manufacturing associate in India; a captive insurance entity in Bermuda that insures the non-financial risks of the wider Group; and a reinsurance entity in Bermuda.", "chunk_word_count": 268, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > (Audited)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 235, "page_start": 235, "page_end": 235 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 313, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### (Audited)\nAll our insurance manufacturing subsidiaries have market risk mandates and limits that specify the investment instruments in which they are permitted to invest and the maximum quantum of market risk that they may retain. They manage market risk by using, among others, some or all of the techniques listed below, depending on the nature of the contracts written:\nWhere we do not have the risk appetite or operational scale to be an effective insurance manufacturer, we engage with a small number of leading external insurance companies in order to provide insurance products to our customers. These arrangements are generally structured with our exclusive strategic partners and earn the Group a combination of commissions, fees and a share of profits. We distribute insurance products in all of our geographical regions.\nWe are able to adjust bonus rates to manage the liabilities to policyholders for products with participating features. The effect is that a significant proportion of the market risk is borne by the policyholder.\n– We use asset and liability matching where asset portfolios are structured to support projected liability cash flows. The Group manages its assets using an approach that considers asset quality, diversification, cash flow matching, liquidity, volatility and target investment return. We use models to assess the effect of a range of future scenarios on the values of financial assets and associated liabilities, and ALCOs employ the outcomes in determining how best to structure asset holdings to support liabilities.\nThis section focuses only on the risks relating to the insurance products we manufacture.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Insurance manufacturing operations risk management\nKey developments in 2023\nThe insurance manufacturing subsidiaries follow the Group’s risk management framework. In addition, there are specific policies and practices relating to the risk management of insurance contracts, which did not change materially over 2023. During the year, there was continued market volatility observed across interest rates, equity and credit markets and foreign exchange rates. This was predominantly driven by geopolitical factors and wider inflationary concerns. One key area of risk management focus during 2023 was the implementation of the new accounting standard, IFRS 17\n– We use derivatives and other financial instruments to protect against adverse market movements.\n– We design new products to mitigate market risk, such as changing the investment return sharing proportion between policyholders and the shareholder.\ninvesting in high credit-quality investments with deep and liquid markets, monitoring investment concentrations and restricting them where appropriate, and establishing committed contingency borrowing facilities.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Credit risk", "chunk_word_count": 471, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > (Audited)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 235, "page_start": 235, "page_end": 236 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 314, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### (Audited)\nOur insurance manufacturing subsidiaries also have credit risk mandates and limits within which they are permitted to operate, which consider the credit risk exposure, quality and performance of their investment portfolios. Our assessment of the creditworthiness of issuers and counterparties is based primarily upon internationally recognised credit ratings and other publicly available information.\nInsurance manufacturing subsidiaries complete quarterly liquidity risk reports and an annual review of the liquidity risks to which they are exposed.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Insurance underwriting risk\nStress testing is performed on investment credit exposures using credit spread sensitivities and default probabilities.\nOur insurance manufacturing subsidiaries primarily use the following frameworks and processes to manage and mitigate insurance underwriting risks:\nWe use a number of tools to manage and monitor credit risk. These include a credit report containing a watch-list of investments with current credit concerns, primarily investments that may be at risk of future impairment or where high concentrations to counterparties are present in the investment portfolio. Sensitivities to credit spread risk are assessed and monitored regularly.\n– a formal approval process for launching new products or making changes to products; a product pricing and profitability framework, which requires initial and ongoing assessment of the adequacy of premiums charged on new insurance contracts to meet the risks associated with them; a framework for customer underwriting; reinsurance, which cedes risks to third-party reinsurers to keep risks within risk appetite, reduce volatility and improve capital efficiency; and oversight by financial reporting committees in each of our entities of the methodology and assumptions that underpin IFRS 17 reporting.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Capital and liquidity risk\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### (Audited)\nCapital risk for our insurance manufacturing subsidiaries is assessed in the Group’s ICAAP based on their financial capacity to support the risks to which they are exposed. Capital adequacy is assessed on both the Group’s economic capital basis, and the relevant local insurance regulatory basis.\nRisk appetite buffers are set to ensure that the operations are able to remain solvent, allowing for business-as-usual volatility and extreme but plausible stress events.\nLiquidity risk is less material for the insurance business. It is managed by cash flow matching and maintaining sufficient cash resources,\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Insurance manufacturing operations risk in 2023\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Measurement\nThe following tables show the composition of the fair value of underlying items of the Group’s participating contracts at the reporting date.\nBalance sheet of insurance manufacturing subsidiaries by type of contract\n(Audited)", "chunk_word_count": 505, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > (Audited)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 236, "page_start": 236, "page_end": 236 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 315, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Balance sheet of insurance manufacturing subsidiaries by type of contract (continued)\n(Audited)\n1 ‘Life direct participating and investment $D P F$ contracts’ are substantially measured under the variable fee approach measurement model. \n2 ‘Life other contracts’ are measured under the general measurement model and mainly includes protection insurance contracts as well as reinsurance contracts. The reinsurance contracts primarily provide diversification benefits over the life direct participating and investment discretionary participation feature (’DPF’) contracts. \n3 ‘Other contracts’ includes investment contracts for which HSBC does not bear significant insurance risk. \n4 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data have been restated accordingly.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Key risk types\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Market risk\n(Audited)\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Description and exposure\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Sensitivities\nMarket risk is the risk of changes in market factors affecting HSBC’s capital or profit. Market factors include interest rates, equity and growth assets, credit spreads and foreign exchange rates.", "chunk_word_count": 246, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Balance sheet of insurance manufacturing subsidiaries by type of contract (continued)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 237, "page_start": 237, "page_end": 237 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 316, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### (Audited)\nThe following table provides the impacts on the CSM, profit after tax and equity of our insurance manufacturing subsidiaries from reasonably possible effects of changes in selected interest rate, credit spread, equity price, growth assets and foreign exchange rate scenarios for the year. These sensitivities are prepared in accordance with current IFRS Accounting Standards and are based on changing one assumption at a time with other variables being held constant, which in practice could be correlated.\nOur exposure varies depending on the type of contract issued. Our most significant life insurance products are contracts with participating features. These products typically include some form of capital guarantee or guaranteed return on the sums invested by the policyholders, to which bonuses are added if allowed by the overall performance of the funds. These funds are primarily invested in fixed interest, with a proportion allocated to other asset classes to provide customers with the potential for enhanced returns.\nDue in part to the impact of the cost of guarantees and hedging strategies, which may be in place, the relationship between the CSM, profit after tax and total equity and the risk factors is non-linear. Therefore, the results disclosed should not be extrapolated to measure sensitivities to different levels of stress. For the same reason, the impact of the stress is not necessarily symmetrical on the upside and downside. The sensitivities are stated before allowance for management actions, which may mitigate the effect of changes in the market environment.\nParticipating products expose HSBC to the risk of variation in asset returns, which will impact our participation in the investment performance.\nIn addition, in some scenarios the asset returns can become insufficient to cover the policyholders’ financial guarantees, in which case the shortfall has to be met by HSBC. Amounts are held against the cost of such guarantees, calculated by stochastic modelling in the larger entities.\nThe method used for deriving sensitivity information and significant market risk factors remain consistent between 2022 and 2023. In 2022, due to a lower CSM level, some portfolios generated onerous contracts in the 100bps up scenarios for interest rate and credit spread sensitivities, generating income statement losses and equity reductions in those scenarios. This was less prevalent in 2023 as the base CSMs were higher from changing market conditions and changes in lapse rate assumptions.\nThe cost of such guarantees are generally not material and are absorbed by the insurance fulfilment cash flows.\nFor unit-linked contracts, market risk is substantially borne by the policyholder, but some market risk exposure typically remains, as fees earned are related to the market value of the linked assets.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Sensitivity of HSBC’s insurance manufacturing subsidiaries to market risk factors1\n(Audited)\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Credit risk\n(Audited)\nrelated to liabilities under non-linked insurance and investment contracts and shareholders’ funds. The credit quality of insurance financial assets is included in the table on page 172.", "chunk_word_count": 538, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > (Audited)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 237, "page_start": 237, "page_end": 238 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 317, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Description and exposure\nCredit risk is the risk of financial loss if a customer or counterparty fails to meet their obligation under a contract. It arises in two main areas for our insurance manufacturers:\nThe risk associated with credit spread volatility is to a large extent mitigated by holding debt securities to maturity, and sharing a degree of credit spread experience with policyholders.\nrisk associated with credit spread volatility and default by debt security counterparties after investing premiums to generate a return for policyholders and shareholders; and risk of default by reinsurance counterparties and nonreimbursement for claims made after ceding insurance risk.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Liquidity risk\n(Audited)\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Description and exposure\nThe amounts outstanding at the balance sheet date in respect of these items are shown in the table on page 234.\nLiquidity risk is the risk that an insurance operation, though solvent, either does not have sufficient financial resources available to meet its obligations when they fall due, or can secure them only at excessive cost. Liquidity risk may be able to be shared with policyholders for products with participating features.\nThe credit quality of the reinsurers’ share of liabilities under insurance contracts is assessed as ‘satisfactory’ or higher (as defined on page 148), with $100 \\%$ of the exposure being neither past due nor impaired (2022: $1 0 0 \\%$ ).\nThe remaining maturity of insurance contract liabilities is included in Note 4 on page 362.\nCredit risk on assets supporting unit-linked liabilities is predominantly borne by the policyholders. Therefore, our exposure is primarily\nThe amounts of insurance contract liabilities that are payable on demand are set out by the product grouping below:\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Insurance underwriting risk\nThese sensitivities are prepared in accordance with current IFRS Accounting Standards, which have changed following the adoption of IFRS 17 ‘Insurance Contracts’, effective from 1 January 2023. Further information about the adoption of IFRS 17 is provided on page 342.", "chunk_word_count": 393, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Description and exposure", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 238, "page_start": 238, "page_end": 239 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 318, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Description and exposure\nInsurance underwriting risk is the risk of loss through adverse experience, in either timing or amount, of insurance underwriting parameters (non-economic assumptions). These parameters include mortality, morbidity, longevity, lapse and expense rates. Lapse risk exposure on products with premium financing increased over the year as rising interest rates led to an increase in the cost of financing for customers.\nMortality and morbidity risk is typically associated with life insurance contracts. The effect on profit of an increase in mortality or morbidity depends on the type of business being written.\nSensitivity to lapse rates depends on the type of contracts being written. An increase in lapse rates typically has a negative effect on CSM (and therefore expected future profits) due to the loss of future income on the lapsed policies. However, some contract lapses have a positive effect on profit due to the existence of policy surrender charges.\nThe principal risk we face is that, over time, the cost of the contract, including claims and benefits, may exceed the total amount of premiums and investment income received.\nThe tables on pages 234 analyse our life insurance underwriting risk exposures by composition of the fair value of the underlying items.\nExpense rate risk is the exposure to a change in the allocated cost of administering insurance contracts. To the extent that increased expenses cannot be passed on to policyholders, an increase in expense rates will have a negative effect on our profits. This risk is generally greatest for our smaller entities.\nThe insurance underwriting risk profile and related exposures remain largely consistent with those observed at 31 December 2022.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Sensitivities\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### (Audited)\nThe impact of changing insurance underwriting risk factors is primarily absorbed within the CSM, unless contracts are onerous in which case the impact is directly to profits. The impact of changes to the CSM is released to profits over the expected coverage periods of the related insurance contracts.\nThe following table shows the sensitivity of the CSM, profit and total equity to reasonably foreseeable changes in non-economic assumptions across all our insurance manufacturing subsidiaries.", "chunk_word_count": 407, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Description and exposure", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 239, "page_start": 239, "page_end": 239 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 319, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Corporate governance report\nHSBC continues to enhance its corporate governance practices and procedures to support the Board’s ambition of world-class governance.\nThe corporate governance report contains the Report of the Directors and gives details of our Board of Directors, senior management, and Board committees. It outlines key aspects of our approach to corporate governance, including internal control.\nIt also includes the Directors’ remuneration report, which explains our policies on remuneration and their application.\n239 The Board \n244 Senior management \n248 How we are governed \n254 Board matters considered and shareholder \nengagement \n260 Board and committee effectiveness, \nperformance and accountability \n262 Board committees \n279 Directors’ remuneration report \n306 Share capital and other related governance \ndisclosures \n311 Internal control \n313 Employees \n315 Statement of compliance \n316 Directors’ responsibility statement\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### The Board\nThe Board, which seeks to promote the Group’s long-term success, deliver sustainable value to shareholders and promote a culture of openness and debate, comprises diverse, high-calibre members who have experience in our global markets.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Chairman and executive Directors\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Mark E Tucker (66) $\\bullet$\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Noel Quinn (62)\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Georges Elhedery (49)\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Group Chief Executive\nGroup Chief Financial Officer Appointed to the Board:January 2023\nAppointed to the Board: August 2019 \nGroup Chief Executive since:March 2020", "chunk_word_count": 330, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Corporate governance report", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 240, "page_start": 240, "page_end": 241 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 320, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Group Chairman\nAppointed to the Board: September 2017 \nGroup Chairman since: October 2017\nSkills and experience: Georges has over 25 years of experience in the banking industry across Europe, the Middle East and Asia, and has held a number of executive roles at both a regional and global business level.\nSkills and experience: Having qualified as an accountant in 1987, Noel has more than 30 years of banking and financial services experience, both in the UK and Asia.\nSkills and experience: With over 35 years of experience in financial services in Asia, Africa, the US, the EU and the UK, including 30 years living and working in Hong Kong, Mark has a deep understanding of the industry and markets in which we operate.\nCareer: Noel was appointed Group Chief Executive in March 2020, having held the role on an interim basis since August 2019. Since joining HSBC and its constituent companies in 1987, Noel has held a variety of roles including Chief Executive Officer, Global Commercial Banking; Regional Head of Commercial Banking for Asia-Pacific; Head of Commercial Banking UK; and Head of Commercial Finance Europe.\nCareer: Georges was appointed Group Chief Financial Officer and executive Director with effect from 1 January 2023. He is also responsible for the oversight of the Group’s transformation initiatives, strategy and corporate development activities. Georges was previously co-Chief Executive Officer, Global Banking and Markets and also Head of the Markets and Securities Services division of the business. Georges joined HSBC in 2005 with extensive trading experience in London, Paris and Tokyo. He has since held a number of senior leadership roles, including Head of Global Banking and Markets, Middle East and North Africa; Chief Executive Officer for HSBC, Middle East, North Africa and Türkiye; and Global Head of Markets based in London.\nCareer: Mark was previously Chairman, Group Chief Executive and President of AIA Group Limited (‘AIA’), and prior to AIA he was Group Chief Executive of Prudential plc. Mark previously served as a non-executive Director of the Court of the Bank of England and as an independent non-executive Director of Goldman Sachs Group.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Independent non-executive Director of Sustainable Markets Initiative Limited and Chair of the Financial Services Task Force \n– Principal member of the Glasgow Financial Alliance for Net Zero \n– Member of the World Economic Forum’s International Business Council \n– Member of the World Bank Private Sector Investment Lab \n– Member of the Advisory Board of the China Children Development Fund \n– Founding member of CNBC ESG Council \n– Member of the British Infrastructure Council", "chunk_word_count": 469, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Group Chairman", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 241, "page_start": 241, "page_end": 241 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 321, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Non-executive Chairman of Discovery Limited \n– Supporting Chair of Chapter Zero \n– Member of the UK Investment Council \n– Member of the Advisory Group on Trade Finance to the International Chamber of Commerce \n– Member of the Trade Advisory Group on Financial Services to the UK Government’s Department for International Trade \n– Member of the Asia Business Council \n– Member of Hong Kong’s Chief Executive’s Advisory Council on Economic Development \n– Member of the Investment Advisory Council of the Supreme National Investment Committee of the Kingdom of Saudi Arabia \n– Chairman of the Multinational Chairman’s Group \n– Director, Peterson Institute for International Economics \n– Director, Institute of International Finance \n– Asia Society Global Board of Trustees \n– International Advisory Council of the China National Financial Regulatory Administration \n– Hong Kong Academy of Finance International Council of Advisors \n– Member of the Asia Global Institute \n– International Business Leaders’ Advisory Council to the Mayor of Beijing – Adviser to the Mayor \n– International Business Leaders’ Advisory Council to the Mayor of Shanghai – Adviser to the Mayor\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Board committee membership key\nCommittee Chair Group Audit Committee Group Risk Committee Group Remuneration Committee Nomination & Corporate Governance Committee\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Independent non-executive Directors\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Geraldine Buckingham (46) Ri R N\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Rachel Duan (53)", "chunk_word_count": 306, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > External appointments:", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 241, "page_start": 241, "page_end": 242 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 322, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Dame Carolyn Fairbairn (63) Ri R N\nIndependent non-executive Director Appointed to the Board: May 2022\nIndependent non-executive Director \nAppointed to the Board: \nSeptember 2021\nSkills and experience: Geraldine is an experienced executive within the global financial services industry, with significant leadership experience in Asia.\nSkills and experience: Rachel is an experienced business leader with exceptional international experience in the US, Japan, mainland China and Hong Kong.\nSkills and experience: Carolyn has significant experience across the media, government and finance sectors, and a deep understanding of the macroeconomic, regulatory, and political environment.\nCareer: Geraldine is the former Chair and Head of Asia-Pacific at BlackRock, where she was responsible for all business activities across Hong Kong, mainland China, Japan, Australia, Singapore, India and Korea. After stepping down from this role, she acted as senior adviser to the Chairman and Chief Executive Officer of BlackRock. She earlier served as BlackRock’s Global Head of Corporate Strategy, and previously was a partner within McKinsey & Company’s financial services practice.\nCareer: Rachel spent 24 years at General Electric (‘GE’), where she held positions including Senior Vice President of GE, and President and Chief Executive Officer of GE’s Global Markets where she was responsible for driving GE’s growth in Asia-Pacific, the Middle East, Africa, Latin America, Russia and the Commonwealth of Independent States. She also previously served as President and Chief Executive Officer of GE Advanced Materials China and then of the Asia-Pacific; President and CEO of GE Healthcare China; and President and CEO of GE China.\nCareer: An economist by training, Carolyn has served as a partner at McKinsey & Company, a member of the UK prime minister John Major’s Number 10 Policy Unit, and as Director-General of the Confederation of British Industry, and held senior executive positions at the BBC and ITV plc. She has extensive board experience, having previously served as non-executive Director of Lloyds Banking Group plc, The Vitec Group plc, Capita plc and BAE Systems plc. She has also served as a non-executive Director of the UK Competition and Markets Authority and the Financial Services Authority.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Independent non-executive Director of Brunswick Group Partnership Ltd – Independent non-executive Director of H.R.L. Morrison & Co Limited – Member of the Advisory Board of ClimateWorks Centre Australia – Member of the Advisory Board of the McKinsey Health Institute\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Independent non-executive Director of Sanofi S.A. \n– Independent non-executive Director of AXA S.A. \n– Independent non-executive Director of the Adecco Group AG\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Independent non-executive Director of Tesco plc – Chair of Royal Mencap Society – Honorary Fellow of Gonville and Caius College, Cambridge\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### James Forese (60) A Ri N", "chunk_word_count": 537, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Dame Carolyn Fairbairn (63) Ri R N", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 242, "page_start": 242, "page_end": 243 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 323, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Ann Godbehere (68)\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Steven Guggenheimer (58) Ri N\nIndependent non-executive Director Appointed to the Board:May 2020\nIndependent non-executive Director \nAppointed to the Board: \nSeptember2023\nIndependent non-executive Director Appointed to the Board: May 2020\nSkills and experience: Jamie has over 30 years of international business and management experience in the finance industry working in areas including global markets, investment and private banking.\nSkills and experience: Steven brings extensive insight into technologies ranging from artificial intelligence to Cloud computing, through his experience advising businesses on digital transformation.\nSkills and experience: Ann brings deep financial acumen and extensive financial services experience over a 30-year career spanning insurance, retail and private banking, and wealth management. She also provides global perspectives, drawing upon experiences and insights gained from a long career in international business.\nCareer: Steven has more than 25 years of experience at Microsoft, including more than a decade as Corporate Vice President, where he led teams focused on original equipment manufacturers, developers and independent software vendors and artificial intelligence solutions.\nCareer: Jamie formerly served as President of Citigroup. He began his career in securities trading with Salomon Brothers, one of Citigroup’s predecessor companies, in 1985. In addition to his most recent role as Citigroup’s President, he was Chief Executive Officer of Citigroup’s Institutional Clients Group. He has held the positions of Chief Executive of its Securities and Banking division and Head of its Global Markets business.\nCareer: After joining Swiss Re in 1996, Ann served as the company’s Chief Financial Officer from 2003 to 2007. She was also Interim Chief Financial Officer of Northern Rock Bank from 2008 to 2009 in the period immediately after its nationalisation. Ann also has extensive board experience, including with FTSE 100 companies, having previously served as non-executive Director of Prudential plc, British American Tobacco plc, UBS AG, UBS Group AG and as Senior Independent non-executive Director of Rio Tinto plc and Rio Tinto Limited.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Independent non-executive Director of BT Group plc – Independent non-executive Director of Leupold & Stevens, Inc – Independent non-executive Director of Forrit Holdings Limited\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Non-executive Chair of HSBC North America Holdings Inc – Non-executive Chairman of Global Bamboo Technologies\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Non-executive Director and Chair of the Audit Committee of Stellantis N.V. – Non-executive Director and Chair of the Audit Committee of Shell plc\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Dr José Antonio Meade Kuribreña (54)\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Kalpana Morparia (74) Ri N", "chunk_word_count": 528, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Ann Godbehere (68)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 243, "page_start": 243, "page_end": 244 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 324, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Eileen Murray (65) A R N\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### R N\nIndependent non-executive Director Appointed to the Board: March 2023\nIndependent non-executive Director Appointed to the Board: July 2020\nIndependent non-executive Director Appointed to the Board: March 2019 Workforce engagement non-executive Director since: June 2022\nSkills and experience: Kalpana is a skilled business leader with significant experience gained through a 45- year career in banking across Asia, primarily in India.\nSkills and experience: Eileen has extensive knowledge in financial services, technology and corporate strategy from a career spanning more than 40 years.\nSkills and experience: José has extensive experience in public administration, banking and financial policy.\nCareer: Kalpana’s most recent executive role was as Chair of J.P. Morgan, South and Southeast Asia and a member of J.P. Morgan’s Asia executive committee, which she held until her retirement in 2021. Before J.P. Morgan, she was the Joint Managing Director of ICICI Bank, India’s secondlargest bank, from 2001 to 2007.\nCareer: Eileen previously served as co-Chief Executive Officer of Bridgewater Associates, LP. Before this, she was Chief Executive Officer for Investment Risk Management LLC, and President and co-Chief Executive Officer of Duff Capital Advisors. Eileen started her professional career at Morgan Stanley, where she held positions including Controller, Treasurer, and Global Head of Technology and Operations, as well as Chief Operating Officer for its Institutional Securities Group. She was also Head of Global Technology, Operations and Product Control at Credit Suisse.\nCareer: José has held Cabinet-level positions in the federal government of Mexico, including as Secretary of Finance and Public Credit, Secretary of Social Development, Secretary of Foreign Affairs and Secretary of Energy. Prior to his appointment to the Cabinet, he served as Undersecretary and as Chief of Staff in the Ministry of Finance and Public Credit. José is also a former Director General of Banking and Savings at the Ministry of Finance and Public Credit, and served as Chief Executive Officer of the National Bank for Rural Credit.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Independent non-executive Director of Hindustan Unilever Limited \n– Independent non-executive Director of Dr. Reddy’s Laboratories Ltd. \n– Independent non-executive Director of Philip Morris International Inc \n– Governing board member of the Bharti Foundation \n– Governing board member of Foundation for Audit Quality \n– Governing board member of the Generation India Foundation \n– Governing council member of Krea University\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:", "chunk_word_count": 465, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Eileen Murray (65) A R N", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 244, "page_start": 244, "page_end": 244 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 325, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Independent non-executive Director of Alfa S.A.B. de C.V. \n– Independent non-executive Director of Grupo Comercial Chedraui, S.A.B. de C.V. \n– Board member of the Global Center on Adaptation \n– Member of the Advisory Board of the University of California, Centre for US Mexican Studies \n– Member of the UNICEF Mexico Advisory Board\n– Independent non-executive Director of Guardian Life Insurance Company of America – Independent non-executive Director of Broadridge Financial Solutions, Inc – Member of the Advisory Board of Mobilize Capital Partners\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Brendan Nelson (74)\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### David Nish (63)\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Swee Lian Teo (64) Ri N", "chunk_word_count": 175, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > External appointments:", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 244, "page_start": 244, "page_end": 245 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 326, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Aileen Taylor (51)\nGroup Company Secretary and Chief Governance Officer Appointed: November 2019\nIndependent non-executive Director \nAppointed to the Board: \nSeptember2023\nIndependent non-executive Director Appointed to the Board: May 2016 Senior Independent non-executive Director since:February 2020\nIndependent non-executive Director Appointed to the Board:October 2023\nSkills and experience: Aileen is a solicitor with significant governance and regulatory experience across various roles in the banking industry. She is a member of the European Corporate Governance Council, the GC100 and the Financial Conduct Authority’s Listing Authority Advisory Panel.\nSkills and experience: Swee Lian brings extensive experience within the international financial services industry, having previously spent over 27 years with the Monetary Authority of Singapore (‘MAS‘).\nSkills and experience: Brendan brings UK and international financial and auditing expertise, and significant experience in auditing and as audit committee chair of UK-listed companies.\nSkills and experience: David has international experience in financial services, corporate governance, strategy, financial reporting, and operational transformation.\nCareer: During Swee Lian’s time at the MAS, she worked in foreign reserves management, financial sector development, strategic planning and financial supervision, before she became the Deputy Managing Director for Financial Supervision. She retired from the MAS in 2015 after serving as Special Advisor, focused on MAS’s role in the international regulatory framework, in the Managing Director’s office. Swee Lian previously served as a non-executive Director on the boards of AIA Group Limited and the Dubai Financial Services Authority.\nCareer: Brendan spent over 25 years as a partner at KPMG LLP, served on the board from 2000 and as Vice Chairman from 2006, until his retirement in 2010. Internationally, he held various senior positions including Global Chairman of the financial services practice. Subsequently, Brendan joined the boards of bp plc and NatWest Group plc where he also served as Chairman of both companies’ audit committees. During his career, Brendan was President of the Institute of Chartered Accountants of Scotland, a member of the Financial Reporting Review Panel and a member of the Financial Services Authority’s Practitioner Panel. As current Chairman of the Board of BP Pension Fund Trustees Ltd, Brendan has received training in ESG considerations for investment decisions and helped set an ambition to be net zero in terms of greenhouse gas emissions from investments by 2050.\nCareer: David served as Group Chief Executive Officer of Standard Life plc between 2010 and 2015, having joined the company in 2006 as Group Finance Director. He is also a former Group Finance Director of Scottish Power plc and was a partner at Price Waterhouse. David has also previously served as a non-executive Director of HDFC Life (India), Northern Foods plc, Thus plc, London Stock Exchange Group plc, the UK Green Investment Bank plc and Zurich Insurance Group.\nCareer: Prior to joining HSBC, Aileen spent 19 years at the Royal Bank of Scotland Group, holding various legal, risk and compliance roles. She was appointed Group Secretary in 2010 and subsequently Chief Governance Officer and Board Counsel.", "chunk_word_count": 516, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Aileen Taylor (51)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 245, "page_start": 245, "page_end": 245 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 327, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Senior Independent non-executive Director of Vodafone Group plc and Chairman of the Audit and Risk Committee – Honorary Professor of University of Dundee Business School\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Non-executive Director of Singapore Telecommunications Limited and Chair of the Risk Committee \n– Non-executive Director of Avanda Investment Management Pte Ltd \n– Director of Clifford Capital Pte Ltd \n– Director of Clifford Capital Holdings Pte Ltd \n– Chair of CapitaLand Integrated Commercial Trust Management Limited.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### External appointments:\n– Chairman of BP Pension Trustees Ltd\nFormer Directors who served during the year Jackson Tai Jackson Tai retired from the Board on 5 May 2023\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Senior management\nSenior management, which includes the Group Executive Committee, supports the Group Chief Executive in the day-to-day management of the business and the implementation of strategy.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Elaine Arden (55) Group Chief Human Resources Officer\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Colin Bell (56) Chief Executive Officer, HSBC Bank plc and HSBC Europe\nElaine joined HSBC as Group Chief Human Resources Officer in June 2017. Prior to joining HSBC, she was Group Human Resources Director at the Royal Bank of Scotland Group for six years in the aftermath of the global financial crisis. She has held a number of human resources roles throughout her career in financial services, including Head of Human Resources for Direct Line Group. Elaine is a member of the Chartered Institute of Personnel and Development, and a Fellow of the Chartered Institute of Banking in Scotland.\nColin joined HSBC in July 2016 and was appointed Chief Executive Officer, HSBC Bank plc and HSBC Europe in February 2021, having previously held the role of Group Chief Compliance Officer. He is also a Director of HSBC Bank (Singapore) Limited. Colin worked at UBS as Global Head of Compliance and Operational Risk Control. He served for 16 years in the British Army, where he held a variety of command and staff positions, including operational tours of Iraq and Northern Ireland, and roles in the Ministry of Defence and NATO.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Jonathan Calvert-Davies (55) Group Head of Internal Audit", "chunk_word_count": 465, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > External appointments:", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 245, "page_start": 245, "page_end": 246 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 328, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Greg Guyett (60) Chief Executive Officer, Global Banking and Markets\nJonathan is a standing attendee of the Group Executive Committee, having joined HSBC as Group Head of Internal Audit in October 2019. He has over 30 years of experience providing assurance, audit and advisory services to the banking and securities industries in the UK, the US and Europe. Jonathan’s previous roles included leading KPMG UK’s financial services internal audit services practice and PwC’s UK internal audit services practice. He also previously served as interim Group Head of Internal Audit at the Royal Bank of Scotland Group.\nGreg joined HSBC in October 2018 as Head of Global Banking and became co-Chief Executive Officer of Global Banking and Markets in March 2020, before assuming sole responsibility in October 2022. Before joining HSBC, he was President and Chief Operating Officer of East West Bank. Greg began his career as an investment banker at J.P. Morgan, where positions included: Chief Executive Officer for Greater China; Chief Executive Officer, Global Corporate Bank; Head of Investment Banking for Asia-Pacific; and Co-Head of Banking for Asia-Pacific.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Dr Celine Herweijer (46) Group Chief Sustainability Officer\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### John Hinshaw (53) Group Chief Operating Officer\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Bob Hoyt (59) Group Chief Legal Officer\nCeline joined HSBC as Group Chief Sustainability Officer in July 2021, and is responsible for the Group’s execution of its sustainability strategy. She was previously a partner at PwC for over a decade, where she held global leadership roles including acting as its global innovation and sustainability leader. Before joining PwC in 2009, Celine worked as Director of Climate Change and Consulting for Risk Management Solutions. She is a World Economic Forum Young Global Leader, a co-chair of the We Mean Business Coalition, a PhD climate scientist and NASA Fellow.\nJohn became Group Chief Operating Officer in February 2020, having joined HSBC in December 2019. He is Chairman of HSBC Global Services Limited and a Director of HSBC Innovation Bank Limited. John was previously Executive Vice President of Technology and Operations and Chief Customer Officer at Hewlett Packard and Hewlett Packard Enterprise, and has held senior executive positions at Verizon and Boeing. John serves on the boards of Sysco Corporation and Illumio, Inc., and has previously served on the boards of BNY Mellon, DocuSign and the National Academy Foundation.\nBob joined HSBC as Group Chief Legal Officer in January 2021. He was previously Group General Counsel at Barclays from 2013 to 2020. Prior to that, he was General Counsel and Chief Regulatory Affairs Officer for PNC Financial Services Group. Bob has served as General Counsel and Senior Policy Adviser to the US Department of the Treasury under Secretary Henry M. Paulson Jr, and as Special Assistant and Associate Counsel to the White House under President George W. Bush.", "chunk_word_count": 537, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Greg Guyett (60) Chief Executive Officer, Global Banking and Markets", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 246, "page_start": 246, "page_end": 247 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 329, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Steve John (50) Group Chief Communications and Brand Officer\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Pam Kaur (60) Group Chief Risk and Compliance Officer\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### David Liao (51)\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Co-Chief Executive, The Hongkong and Shanghai Banking Corporation Limited\nSteve joined HSBC in December 2019 and was appointed to the Group Executive Committee in April 2021. He has a wealth of senior communications, public policy and leadership experience acquired across a number of multinational and charitable organisations. Steve was previously a partner and Global Director of Communications at McKinsey & Company from 2014 to 2019. He has also held roles with Bupa as Global Director of Corporate Affairs and PepsiCo as Director of Corporate Affairs for their UK and Ireland franchises.\nPam was appointed Group Chief Risk and Compliance Officer in 2021, having been Group Chief Risk Officer since 2020. She is a Director of the Hongkong and Shanghai Banking Corporation Limited. Since joining HSBC in 2013, her roles included Group Head of Internal Audit and Head of Wholesale Market and Credit Risk. Since qualifying as a chartered accountant with Ernst & Young, Pam held various senior audit, compliance, finance and operations roles with Deutsche Bank, the Royal Bank of Scotland Group, Lloyds TSB and Citigroup. She serves as a nonexecutive Director of abrdn plc.\nDavid was appointed Co-Chief Executive of the Asia-Pacific region in 2021. He is also a Director of the Bank of Communications Co., Limited, and Hang Seng Bank Limited. David joined HSBC in 1997, with previous roles including: Head of Global Banking Coverage for Asia-Pacific; President and Chief Executive of HSBC China; Head of Global Banking and Markets, HSBC China; and Treasurer and Head of Global Markets, HSBC China.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Additional members of the Group Executive Committee\nNoel Quinn\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Georges Elhedery\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Aileen Taylor\nBiographies are provided on pages 239 and 243.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Stephen Moss (57) Regional Chief Executive Officer, Middle East, North Africa and Türkiye\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Barry O’Byrne (48) Chief Executive Officer, Global Commercial Banking", "chunk_word_count": 480, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Steve John (50) Group Chief Communications and Brand Officer", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 247, "page_start": 247, "page_end": 248 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 330, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Nuno Matos (56) Chief Executive Officer, Wealth and Personal Banking\nNuno was appointed Chief Executive Officer of Wealth and Personal Banking in 2021. Since joining HSBC in 2015 from Santander Group, he has held various roles, most recently as Chief Executive Officer of HSBC Bank plc and HSBC Europe. He has also held the positions of Chief Executive Officer of HSBC Mexico and Regional Head of Retail Banking and Wealth Management for Latin America. He is currently the Chairman of MP Payments Group Limited.\nBarry was appointed Chief Executive Officer of Global Commercial Banking in 2020, having served in the role on an interim basis since August 2019. He joined HSBC in 2017 as Chief Operating Officer for Commercial Banking. Before joining HSBC, Barry worked at GE Capital for 19 years where he held a number of senior leadership roles, including Chief Executive Officer and Chief Operating Officer for GE Capital International.\nStephen was appointed Regional Chief Executive Officer for the Middle East, North Africa and Türkiye in 2021. He has held a series of roles in Asia, the UK and the Middle East since joining HSBC in 1992, including as Chief of Staff to the Group Chief Executive and overseeing the Group’s mergers and acquisitions, and strategy and planning activities. Stephen is a Director of HSBC Bank Middle East Limited, HSBC Middle East Holdings B.V, HSBC Bank Egypt S.A.E., HSBC Saudi Arabia and Saudi Awwal Bank.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Michael Roberts (63) Chief Executive Officer, HSBC USA and Americas\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Surendra Rosha (55)", "chunk_word_count": 311, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > Nuno Matos (56) Chief Executive Officer, Wealth and Personal Banking", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 248, "page_start": 248, "page_end": 248 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 331, "chunk_text": "# Opening up a world of opportunity\n## 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### John David Stuart (known as Ian Stuart) (60) Chief Executive Officer, HSBC UK Bank plc\nCo-Chief Executive, The Hongkong and Shanghai Banking Corporation Limited\nMichael was appointed Chief Executive Officer of HSBC USA when he joined HSBC in 2019. He became Chief Executive Officer of the Americas with oversight responsibility for Canada and Latin America in 2021. He is a Director of HSBC Bank Canada; Director, President and Chief Executive Officer of HSBC North America Holdings Inc.; and Chairman of HSBC Bank USA, N.A., HSBC USA Inc and HSBC Latin America Holdings (UK) Limited. Previously, Michael spent over 30 years at Citigroup in a number of senior leadership roles, most recently as Global Head of Corporate Banking and Capital Management and Chief Lending Officer.\nIan has been Chief Executive Officer of HSBC UK Bank plc since 2017, having joined HSBC as Head of Commercial Banking in the UK and Europe in 2014. He has worked in financial services for over 40 years, previously holding roles at the Royal Bank of Scotland Group and Barclays. Ian holds an Honorary Masters and Honorary Doctorate degree for his services to the banking sector. He is a member of the UK Finance Board, the UK Investment Council and a business ambassador for Meningitis Now.\nSurendra was appointed Co-Chief Executive of the Asia-Pacific region in 2021. He is a Director of The Hongkong and Shanghai Banking Corporation Limited, HSBC Global Asset Management Limited and HSBC Bank Malaysia Berhad. Surendra joined HSBC in 1991 and has held several senior positions within Global Banking and Markets, including Head of Global Markets in Indonesia and Head of Institutional Sales, Asia-Pacific. He previously held the position of Chief Executive for HSBC India and Head of HSBC’s financial institutions group for Asia-Pacific.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Board and senior management diversity We value difference\nDiversity and inclusion are embedded within the culture of HSBC. The Board remains committed to having an inclusive culture that recognises the importance of gender, social and ethnic diversity, and the benefits gained from different perspectives.\nThis section outlines the key diversity and inclusion metrics for Board members and executive management as at 31 December 2023. This includes tenure, age, skills and experience, as well as gender and ethnic representation.\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Gender and ethnic diversity\n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis\n### Board composition, tenure and age\nThe Financial Conduct Authority requires all listed companies to publish in their Annual Report and Accounts information on female and ethnic heritage representation on the Board and in senior management. The tables below outline the current gender and ethnic diversity of the HSBC Holdings Board and executive management reflecting data gathered through self-identification.\n## 2 Executive Directors", "chunk_word_count": 514, "section_path": "Opening up a world of opportunity > 221 Overview \n222 Climate risk management \n223 Embedding our climate risk approach \n225 Insights from climate scenario analysis > John David Stuart (known as Ian Stuart) (60) Chief Executive Officer, HSBC UK Bank plc", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 248, "page_start": 248, "page_end": 249 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 332, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n[IMAGE CAPTION] Gender Board Executive management\n[IMAGE CAPTION] Tenure1\n1Tenure of a non-executive Director is calculated by reference to the date of their election by shareholders following theirappointment.\n### Skills and experience\n[IMAGE CAPTION] Ethnic diversity Board\n[IMAGE CAPTION] Executive management\nThe summary below provides an overview of the skills and experiences held by the non-executive Directors on the Board. This is based on the current skills matrix, which is reviewed annually by the Nomination & Corporate Governance Committee to ensure that the Board has the skills and experience required to effectively discharge its duties and to support succession planning discussions. The skills and experiences of the newly appointed non-executive Directors are also included in the below extract.\n### How we are governed\nWe are committed to high standards of corporate governance. The Group has a comprehensive range of policies and procedures in place designed to help ensure that it is well managed, with effective oversight and controls.\nCommittee report on page 262. Non-executive Directors also review the performance of management in meeting agreed goals and objectives. The Group Chairman meets with the non-executive Directors without the executive Directors in attendance after Board meetings and otherwise, as necessary.\n### Board and executive governance\nThe roles of Group Chairman and Group Chief Executive are separate. There is a clear division of responsibilities between the leadership of the Board by the Group Chairman, and the executive responsibility for day-to-day management of HSBC’s business, which is undertaken by the Group Chief Executive.\nThe Board, led by the Group Chairman, is responsible among other matters for:\npromoting the Group’s long-term success and delivering \nsustainable value to shareholders; \nestablishing and approving the Group’s strategy and objectives, and monitoring the alignment of the Group’s purpose, strategy and values with the desired culture and standards; \nsetting the Group’s risk appetite and monitoring the Group’s risk profile; \napproving and monitoring capital and financial resource plans for achieving strategic objectives, including material transactions; considering and approving the Group’s technology and \nenvironmental, social and governance strategies; \nensuring effective engagement with, and encouraging participation from, shareholders and other key stakeholders; \napproving the appointment and remuneration of Directors, \nincluding Board roles; \nreviewing the Group’s overall corporate governance arrangements; and \nproviding entrepreneurial leadership of the Group within a \nframework of prudent and effective controls.\nThe majority of Board members are independent non-executive Directors. At 31 December 2023, the Board comprised the Group Chairman, 12 non-executive Directors, and two executive Directors who are the Group Chief Executive and the Group Chief Financial Officer. As previously announced, David Nish will not stand for re-election at the Annual General Meeting (’AGM’) on 3 May 2024.\nFor further details of Board members' career backgrounds, skills, experience and external appointments, see their biographies on page 239, and for a breakdown of the diversity and skills of the Board and senior management, see page 247.", "chunk_word_count": 487, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Skills and experience", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 249, "page_start": 249, "page_end": 250 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 333, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Operation of the Board\nThe Board is ordinarily scheduled to meet nine times a year. In 2023, the Board held 11 meetings. For further details on attendance at those meetings, see page 249. The Board agenda is agreed by the Group Chairman, working with both the Group Chief Executive and the Group Company Secretary and Chief Governance Officer. For further information, see ’Board matters considered and shareholder engagement’ on page 254.\nThe Group Company Secretary and Chief Governance Officer, the Group Chief Risk and Compliance Officer and the Group Chief Legal Officer are regular attendees at Board meetings. The non-executive Chairman of The Hongkong and Shanghai Banking Corporation Limited is also a regular attendee at most Board meetings. The chief executive officers of the three global businesses attend Board strategy discussions, and other senior executives attend Board meetings for specific items as required.\nThe Board’s responsibilities are set out in a schedule of matters reserved within its terms of reference, which are available on our website at www.hsbc.com/who-we-are/leadership-and-governance/ board-responsibilities. The Board’s powers are subject to relevant laws, regulations and HSBC’s articles of association.\nThe role of the independent non-executive Directors is to support the development of strategy, oversee risk, hold management to account and ensure the executive Directors are discharging their responsibilities properly, while creating the right culture to encourage constructive challenge. Further details on the independence of the Board can be found in the Nomination & Corporate Governance\nIn addition, as agreed by the Board, the Board Oversight Sub-Group is called on an ad hoc basis where necessary. Such meetings are an informal mechanism for a smaller group of Board members and management to discuss emerging issues and upcoming Board matters. The Board Oversight Sub-Group was not convened in 2023.\n### Board roles, responsibilities and meeting attendance\nThe table below sets out the Board members’ respective roles, responsibilities and attendance at Board meetings and the AGM in 2023. For a full description of key Board members’ responsibilities, see www.hsbc.com/who-we-are/leadership-and-governance/board-responsibilities.\n### Relationship between the Board and senior management\n### Subsidiary governance\nWe are committed to maintaining high standards of corporate governance throughout the Group. All subsidiary boards and their respective businesses are required to have in place effective governance arrangements with regard to the businesses’ nature, size, location and the sectors in which they operate.\nThe Board delegates day-to-day management of the business and implementation of strategy to the Group Chief Executive. The Group Chief Executive is supported in his management of the Group by recommendations and advice from the Group Executive Committee (’GEC’), an executive forum comprising members of senior management that include chief executive officers of the global businesses and regions, as well as functional heads. For further details of the senior management team, see page 244.", "chunk_word_count": 471, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Operation of the Board", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 250, "page_start": 250, "page_end": 252 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 334, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### The subsidiary accountability framework\nThe subsidiary accountability framework aims to balance appropriate governance oversight by the Group with each subsidiary’s local legal and regulatory duties. The framework supports the Group in promoting effective governance arrangements across its subsidiaries by:\nAll Directors are encouraged to have contact with management at all levels, and have full access to all relevant information. Visits to local business operations and meetings with local management are arranged for the non-executive Directors when they attend Board meetings in different locations, and when travelling for other reasons. Senior management often attend alongside Directors’ stakeholder engagements (see ’Board decision making and engagement with stakeholders’ on page 20). The workforce engagement non-executive Director attends the GEC on occasion to provide senior management with updates on workforce engagements carried out by the Board, including relevant Board observations. For further details, see ’Board stakeholder and workforce engagement’ on page 257.\n– setting out high level principles to enhance communications and connectivity; and ensuring a shared and consistent understanding of the Group’s strategic objectives, culture and values.\nThe subsidiary accountability framework also focuses on ensuring that each subsidiary is led by an effective board with an appropriate balance of skills, diversity, experience and knowledge, having regard to the nature of the subsidiary’s business and local legal and regulatory requirements. Board composition of the Group’s subsidiaries is kept under review as part of succession planning.\n### Executive governance\nThe GEC promotes the tone from the top, set by the Board, across the organisation. This helps to ensure that our colleagues follow our values, and foster a culture that delivers against our purpose of opening up a world of opportunity. At its meetings, the GEC dedicates time to reflect on our purpose and values and how they are demonstrated in the day-to-day course of business.\nThe framework is subject to periodic review by the Board and/or the Nomination & Corporate Governance Committee and updated as required to ensure it is aligned to best practice.", "chunk_word_count": 341, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > The subsidiary accountability framework", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 252, "page_start": 252, "page_end": 252 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 335, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### The role of principal subsidiaries\nCertain subsidiaries are designated formally by the Board as principal subsidiaries. In addition to their obligations under their respective local laws and regulations, principal subsidiaries, supported by regional company secretaries, perform a critical role in ensuring effective and high standards of governance across the Group and in overseeing the implementation of the subsidiary accountability framework in the regions for which they are responsible.\nDuring 2023, the GEC undertook an extensive review of the Group’s strategy with a view to building upon its unique strengths. For further details of our strategy, see page 11.\nThe GEC has led and overseen the delivery of a number of strategic projects to simplify how we get things done, by identifying operating efficiencies, reducing complexity and optimising costs. The GEC will continue to focus on simplification throughout 2024.\nRepresentatives from principal subsidiaries attend the Board and its committee meetings for relevant topics, including when the Board holds meetings outside of the UK. Chairs of the principal subsidiary risk and audit committees also regularly attend respective Group Risk Committee and Group Audit Committee meetings. Attendance and participation at these committees enhance the subsidiary directors' understanding of the challenges facing the Group and help to identify common challenges and share lessons learned. Such committee participation supplements the regular reports, certifications and escalations from principal subsidiaries' boards and their committees to the Board and relevant committee(s) of the Board.\nThe GEC’s operating rhythm helps to facilitate end-to-end governance between senior leadership and the Board.\nThe operating rhythm has the following three pillars:\nregular check-in meetings to review and discuss current and emerging trends and issues; a monthly meeting to review the performance of each of the global businesses in principal geographical areas and legal entities, supported by the development and introduction of a new key performance indicators architecture in 2023; and a strategy- and governance-focused meeting, which is generally held two weeks in advance of each Board meeting.\nThe Group Chairman also interacts regularly with the chairs of the principal subsidiaries, including through the Chairman’s Forum. The Chairman’s Forum comprises the chairs of the principal subsidiaries and the chairs of the Group’s audit, risk and remuneration committees, and where relevant, the Group Chief Executive, other non-executive Directors and relevant executive management, advisers and/or external experts. In 2023, the Chairman’s Forum covered topics such as strategic business considerations, geopolitical issues, resolvability assessment requirements and separability, shareholder engagements, Group-wide connectivity of non-executive Directors, key regulatory themes, ESG insights, employee engagement and financial performance.\nSeparate committees have been established to provide specialist oversight for matters delegated to the Group Chief Executive and senior management. For further details of these committees, see page 252.\nTo further support our senior management, we have dedicated corporate governance officers who support and advise legal entities, global businesses and global functions on our corporate governance practices. These corporate governance officers serve to strengthen the consistency and effectiveness of our end-to-end governance arrangements, and support connectivity and information sharing.\nThe Group Remuneration Committee Chair also hosted dedicated forums with chairs of principal subsidiaries to share key priorities for 2023 and the future. These sessions also provide an opportunity for review and input on proposed pay outcomes and allocation, before approval by the Group Remuneration Committee.", "chunk_word_count": 555, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > The role of principal subsidiaries", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 252, "page_start": 252, "page_end": 252 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 336, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Subsidiary director development\nThe Group is dedicated to supporting the continuing professional development of its subsidiary directors. In May 2023, a two-day nonexecutive director summit was held in Hong Kong, which brought together over 100 non-executive directors from across the Group. Connectivity was a key theme and attendees were reminded of the importance of the subsidiary accountability framework in driving consistent governance standards and ensuring connectivity and engagement across our non-executive director community. The agenda included sessions on strategy and financial performance; Asia-Pacific; subsidiary governance; the macroeconomic environment; diversity and inclusion; sustainability; technology; finance; and risk.\nThe Bank Director Programme, launched in 2022, continues to support subsidiaries with succession planning by developing and equipping internal talent to undertake internal non-executive director roles on subsidiary boards.\nFollowing the success of the Bank Director Programme, a Bank Chair Programme is being developed to ensure existing and prospective chairs of subsidiary boards and board committees have the requisite knowledge, skills and behaviours to be effective chairs.", "chunk_word_count": 175, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Subsidiary director development", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 253, "page_start": 253, "page_end": 253 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 337, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Board and Group Executive committees and working groups\nThe Board delegates oversight of certain audit, risk, remuneration, nomination and governance matters to its committees. Each standing Board committee is chaired by a non-executive Director and has a remit to cover specific topics in accordance with their respective terms of reference. Only the Group Chairman and the independent non-executive Directors are members of Board committees. Details of the work carried out by each of the Board committees can be found in the respective committee reports from page 262.\nThe GEC has established a number of committees to support the Group Chief Executive and senior management in their running of the business, and provide specialist oversight for matters delegated to them, including capital and liquidity, risk management, disclosure and financial reporting, restructuring and investment considerations, transformation oversight, ESG matters and talent and development. These committees also help fulfil their responsibilities under the Senior Managers and Certification Regime.\nThe Chairman’s Committee provides the Board with the opportunity to consider ad hoc and routine matters between scheduled Board meetings. All Board members are invited to attend Chairman’s Committee meetings.\nAs part of its ongoing review of the effectiveness of the Group’s governance arrangements, and in response to the findings from the Board evaluation in 2023, the Board has decided to establish a new Group Technology Committee to oversee the Group’s technology strategy and alignment with the overall Group strategy. The committee, which will be in place from 1 March 2024, will have responsibility for areas where technology is fundamental to strategic delivery, including innovation, data and cyber risk frameworks. As a result, the Technology Governance Working Group, which was established to support oversight of technology strategy, governance and emerging risks, will be demised from the same date. The terms of reference and membership of the Board committees are available at www.hsbc.com/who-we-are/leadership-and-governance/boardcommittees.\nDuring 2023, new committees were established including the Sustainability Execution Committee to provide greater oversight of ESG matters. In addition, the Transformation Oversight Executive Committee was demised and in its place the Change Prioritisation Oversight Committee was formed. The committee provides oversight of the Group's change portfolio, focusing on investment oversight and prioritisation, as well as delivery and execution of ongoing initiatives across the Group.\n### Group Executive Committee Chair: Noel Quinn", "chunk_word_count": 391, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Board and Group Executive committees and working groups", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 254, "page_start": 254, "page_end": 254 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 338, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Board induction and training\nThe Group Company Secretary and Chief Governance Officer works with the Group Chairman to ensure that all Board members receive appropriate training, both individually and collectively, throughout their time on the Board. On appointment, new Directors are provided with tailored and comprehensive induction programmes to fit with their individual experiences and needs, including the process for managing conflicts.\nagreed that the training programme would include key topics relevant to the Directors' respective roles and recent developments, in areas such as corporate governance, recovery and resolution, and technology. Where appropriate, the training sessions were facilitated by external presenters who were able to provide insights into geopolitical matters, macroeconomic issues and investor sentiment. The training sessions were held as part of scheduled Board meetings to allow for in-person interactions as much as possible.\nDuring 2023, Kalpana Morparia, Ann Godbehere, Brendan Nelson and Swee Lian Teo were welcomed to the Board as non-executive Directors. Biographies for each can be found from page 239.\nDirectors were also issued routine training modules that all colleagues must complete annually. During 2023, this training covered topics including risk management, cybersecurity, sustainability, health, safety and well-being, financial crime, and data.\nThe Group Company Secretary and Chief Governance Officer also helps to arrange and deliver the induction programme through formal briefings and introductory sessions with other Board members, senior management, legal counsel, auditors, tax advisers and regulators, as appropriate. Topics covered in the induction programme include, but are not limited to: purpose and values; culture and leadership; governance and stakeholder management; Directors’ legal and regulatory duties; recovery and resolution planning; anti-money laundering and anti-bribery; technical and business briefings; and strategy.\nNon-executive Directors also discussed individual development areas with the Group Chairman as part of their ongoing performance discussions with regard to their contributions on the Board. The Group Company Secretary and Chief Governance Officer makes appropriate arrangements for any additional training needs identified using internal resources, or otherwise, at HSBC’s expense.\nMembers of Board committees receive relevant training as appropriate. Further details on any specific training commissioned by Board committees can be found in the respective committee reports. Directors may take independent professional advice at HSBC’s expense.\nThe induction process is often initiated before appointment to allow each new Board member to contribute meaningfully from appointment, such as in February 2023 when Kalpana Morparia joined the Board meeting as an observer before she was appointed to the Board the following month. The structure of the induction supports good information flows within the Board and its committees, as well as between senior management and non-executive Directors, providing a clear understanding of our culture and way of operating.\nBoard Directors who serve on principal subsidiary boards receive training that is pertinent to circumstances and context relevant to those boards. Opportunities exist for the principal subsidiary committee chairs to share their understanding of specific areas with the Board Directors as part of the Chairman’s Forum. For further details, see ’The role of principal subsidiaries’ on page 250.\nIn January 2023, the Nomination & Corporate Governance Committee agreed the proposed approach to Board training for the year. It was", "chunk_word_count": 532, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Board induction and training", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 255, "page_start": 255, "page_end": 255 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 339, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Directors’ induction and ongoing development in 2023\nThe induction programme was delivered through formal briefings and introductory sessions including topic-specific deep dives, with Board members, senior management, legal counsel, auditors, tax advisers and regulators, as appropriate. Topics covered included, but were not limited to: purpose and values; culture and leadership; governance and stakeholder management; Directors’ legal and regulatory duties; recovery and resolution planning; antimoney laundering and anti-bribery; technical and business briefings; and strategy.\n2 Directors participated in business strategy, market development and business briefings, which are global, regional and/or market-specific. Examples of specific sessions held in 2023 included: ’Technology and the future of artificial intelligence’, ’WPB customer-centricity improvement plan’, and ’Investor sentiments’.\n3 Directors received risk and control training and briefings. Examples of specific sessions held in 2023 included: ’Recovery and resolution’ and ’Capital management’.\n4 Directors received training in Board meetings on: ’Board stakeholder engagement and management’ and various ESG development updates. Directors received additional training through their attendance at forums such as the Chairman's Forum, Remuneration Committee Chairs' Forum and the Non-Executive Director Summit.\n5 Global mandatory training, issued to all Directors, mirrored training undertaken by all employees, including senior management. This included: management of risk under the risk management framework; cybersecurity risk; health, safety and well-being; sustainability; financial crime, including understanding money laundering, terrorist financing, tax transparency, sanctions, fraud and bribery and corruption risks; our values, including workplace harassment; and data privacy and data literacy.\n6 Ann Godbehere and Brendan Nelson, who joined the Board effective 1 September 2023, and Swee Lian Teo, who joined the Board effective 1 October 2023, only participated in training modules that were available to them since their respective joining dates.\n### Board matters considered and shareholder engagement\nDuring 2023, the Board remained focused on HSBC’s strategic direction, overseeing performance, and risk. It considered performance against financial and other strategic objectives, key business challenges, emerging risks, business development, investor relations and the Group’s relationships with its stakeholders. The endto-end governance framework facilitated discussion on strategy and performance by each of the global businesses and across the principal geographical areas, which enabled the Board to support executive management with its delivery of the Group’s strategy.\n### Key areas of focus\nOn 21 February 2023, an interim dividend of $\\$ 0.23$ per share for the 2022 full-year was announced, followed by interim dividends of $\\$ 0.10$ each on 2 May 2023, 1 August 2023 and 30 October 2023. For further details of dividend payments, see page 435.\nThe Board’s key areas of focus in 2023 are set out by theme below.\n### Strategy and business performance\nThe Group remains focused on building a sustainable platform for growth by increasing returns for investors, enhancing customer service, and creating capacity for future investment. The Board reviewed progress within the Group’s global businesses and regions against its four strategic pillars: Focus, Digitise, Energise and Transition. At each Board meeting in 2023, the Board discussed the Group’s strategic performance and opportunities to track strategic execution and delivery.", "chunk_word_count": 511, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Directors’ induction and ongoing development in 2023", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 255, "page_start": 255, "page_end": 256 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 340, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Risk, regulatory and legal considerations\nThe Board, advised by the Group Risk Committee, promotes a strong risk governance culture that shapes the Group’s risk appetite and supports the maintenance of a strong risk management framework, giving consideration to the measurement, evaluation, acceptance and management of risks, including emerging risks.\nThe Board considered the Group’s approach to risk including its regulatory obligations. A number of key frameworks, control documents, core processes and legal responsibilities were also reviewed and approved as required by the Board and/or its relevant committees. These included:\n### Environmental, social and governance\nIn 2020, the Group announced a climate ambition to align its financed emissions to net zero by 2050, and to become net zero in its own operations and supply chain by 2030. The Group aims to achieve this by supporting clients’ transition to a net zero carbon economy and focusing on sustainable finance opportunities, as well as by reducing the carbon emissions in its own operations.\n– the Group’s risk appetite framework and risk appetite statement; \n– the individual liquidity adequacy assessment process; the individual capital adequacy assessment process; the Group’s obligations under the Modern Slavery Act and approval of the Modern Slavery and Human Trafficking Statement; review and approval of the self-assessment to address the BoE's Resolvability Assessment Framework; review and approval of the Group’s risk data aggregation and risk reporting framework aligned to the Basel Committee on Banking Supervision 239 Principles; review of the latest PRA Operational Resilience self-assessment regulatory submission; annual review and approval of the internal controls framework; and \n– the revised terms of reference for the Board and Board committees.\nThe Board takes overall responsibility for ESG strategy, overseeing executive management in developing the approach, execution and associated reporting. The Board considered whether to establish a Board committee dedicated to ESG issues, but instead decided that the best way to support the oversight and delivery of the Group’s climate ambition and ESG strategy was to retain governance at Board level. The GEC further enhanced its governance model of ESG matters with the introduction of a new Sustainability Execution Committee and supporting forums. These support senior management in the operationalisation of the Group’s sustainability strategy, through the oversight of the sustainability execution programme. For further details of the Sustainability Execution Committee and the sustainability execution programme, see page 88.\nIn 2023, the Board oversaw the implementation of ESG strategy through regular dashboard reports and detailed updates including: review and approval of the net zero transition plan, deep dives on the sustainability execution programme, reviews of net zero-aligned policies and climate-aligned financing initiatives.\nThe Board also reviewed and monitored the implications of geopolitical and macroeconomic developments during the year, both directly and by way of updates from the Group Risk Committee, and received regular updates on the Group's risk profile, including in relation to financial crime risk.\n### Financial decisions", "chunk_word_count": 489, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Risk, regulatory and legal considerations", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 256, "page_start": 256, "page_end": 256 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 341, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Technology\nThe Board and its dedicated committees approved key financial decisions throughout the year, including the Annual Report and Accounts 2022, the Interim Report 2023 and the first quarter and the third quarter Earnings Releases.\nThroughout the year, the Board received detailed updates on technology and innovation from the Group Chief Operating Officer, including on the implementation of the technology strategy and key strategic business initiatives.\nAt the end of 2022, the Board approved the 2023 financial resource plan. The Board monitored the Group’s performance against the approved plan, as well as the plans of each of the global businesses. The Board also approved the renewal of the various debt issuance programmes. In January 2024, the Board approved the financial resource plan for 2024.\nFollowing a detailed update at the Board meeting in May 2023, at the Board’s request, management engaged a third party professional services firm to review the technology strategy and provide industry and peer insights. The Board received a number of updates on the review during the second half of 2023, and recommendations were presented at the December 2023 Board meeting.\nThe Board adopted a dividend policy designed to provide sustainable cash dividends, while retaining the flexibility to invest and grow the business in the future, supplemented by additional shareholder distributions, if appropriate. For the financial year 2023, the Group reverted to paying quarterly dividends, and achieved a dividend payout ratio of $50 \\%$ of reported earnings per ordinary share (’EPS’), in line with our published target for 2023 and 2024. EPS for this purpose excludes material notable items and related impacts, including the sale of our retail banking operations in France, the planned sale of the banking business in Canada and the acquisition of SVB UK. In addition to dividend payments, HSBC announced share buy-backs of up to $\\$ 20n$ each on 2 May 2023 and 1 August 2023, and a further share buy-back of up to \\$3bn on 30 October 2023, bringing the total announced for 2023 to $\\$ 70n$ .\nMembers of the Board were also closely involved in the hiring process for the new Group Chief Information Officer, who will join the Group at the end of February 2024.\nIn addition, the Technology Governance Working Group continued to oversee the Group's governance of technology, and supported connectivity with the principal subsidiaries on key technology initiatives. From 1 March 2024, the Technology Governance Working Group will be demised and the Group Technology Committee will be established on the same date.\n### Governance\nThe Board continued to oversee the governance, smooth operation and oversight of the Group and its principal and material subsidiaries, including monitoring compliance with the UK Corporate Governance Code, the Hong Kong Corporate Governance Code and the Companies Act 2006. Governance featured prominently in the Board agendas for the year and helped to shape strategic direction and decision taking on key issues. To see how the Board considered principal decisions in relation to our strategy, see ’Principal strategic decisions’ on pages 22 and 23.", "chunk_word_count": 514, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Technology", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 256, "page_start": 256, "page_end": 257 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 342, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### People and culture\nThe Board continued to dedicate time in its meetings to discuss people-related and culture-related issues, with these topics remaining an important part of its focus. Each scheduled Board meeting begins with a ’culture moment’, which helps to ensure that the right cultural tone is set from the top, and sets the right cultural tone for Board discussion. To help raise its awareness of employee and other stakeholder perspectives, Board meetings and dedicated reports feature insights into behaviours within the Group, which demonstrate alignment to its purpose and values. Board papers highlight relevant stakeholder considerations, including in connection with employees. The Board also gains valuable cultural insights through its many personal interactions with the workforce and other stakeholders. For further details see ’Board decision making and engagement with stakeholders’ on page 20.\nThe Board and senior management continued to support further improvements to various governance initiatives to encourage simplification and promote effective decision making in the business. Guidance and training for Board and committee paper templates took place across global businesses and functions throughout the course of the year to ensure a consistent approach for writing papers. In addition, to drive our simplification agenda, the Group-wide delegations of authority framework was reviewed and standardised, allowing for more efficient signing and execution of contracts and other documentation by directors and senior management across all entities.\nThe Board also learns of people and culture matters by way of presentations at the Chairman’s Forum. The principal subsidiary chairs report on their respective approaches to workforce engagement as well as what they have learned from such engagements and other cultural insights. The Board also receives cultural insights from the allemployee Snapshot survey and broader reporting, which provide key data indicators, including on people's behaviours, sentiment and business outcomes. Through the work of the committees, the Board is also able to monitor how the Group’s culture is working in practice by receiving people-related reports covering whistleblowing, conduct and investigations.\nIn 2023, Jackson Tai retired as an independent non-executive Director. On 1 January 2023, Georges Elhedery joined the Board as Group Chief Financial Officer, and the following were appointed as independent non-executive Directors: Kalpana Morparia on 1 March 2023; Ann Godbehere and Brendan Nelson on 1 September 2023; and Swee Lian Teo on 1 October 2023. The Board, supported by the Nomination & Corporate Governance Committee, reviews the skills and experience of the Board on an ongoing basis. This ensures that the Board and its committees comprise the necessary skills, diversity, experience and competencies to discharge their responsibilities effectively. For further details of the review and changes to the Board, see the Nomination & Corporate Governance report on page 262. For further details of diversity of the Board, see page 247.\nBoard engagement with management and the wider workforce continued to remain a strong area of attention, particularly with the ongoing activities carried out by the dedicated workforce engagement non-executive Director. For further details of the work carried out by the workforce engagement non-executive Director, see page 257.", "chunk_word_count": 516, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > People and culture", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 257, "page_start": 257, "page_end": 257 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 343, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Board engagements with shareholders\nIn 2023, the Group Chairman and Group Chief Executive held a Q&A session with retail shareholders as part of the Informal Shareholders’ Meeting in Hong Kong, and the Board held a Q&A session with shareholders as part of the 2023 AGM in the UK. Board members remained responsive to shareholder requests, and were particularly active following the 2023 AGM poll vote result. They continued to engage in constructive dialogue with top investors, including Ping An Asset Management Co. Ltd. The Group Chairman and the Senior Independent Director, often with the Group Company Secretary and Chief Governance Officer, engaged with a number of our large institutional investors in 16 meetings, including a large group gathering held with the members of The Investor Forum. The Group Chief Executive and the Group Chief Financial Officer, together and separately, attended over 100 meetings with investors. Key topics\nincluded our financial performance, updates on strategy and market presence, geopolitical risks and the macroeconomic outlook in key geographies.\nFor further details of the Group Remuneration Committee Chair’s engagements with key investors and proxy advisory firms, and how they were taken into account by the Group Remuneration Committee in its decision making, see the Directors’ remuneration report on page 279.\nFor further details of how the Board engaged with shareholders during 2023, see ’Board decision making and engagement with stakeholders’ on page 20.\n### Board matters considered in 2023\n### Board stakeholder and workforce engagement\nThe Board is committed to engaging with colleagues, which takes place in a two-way dialogue in a variety of forums. This helps build the Board’s understanding of key themes and topics that are important to the workforce.", "chunk_word_count": 291, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Board engagements with shareholders", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 258, "page_start": 258, "page_end": 259 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 344, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Workforce engagement programme\nA structured workforce engagement programme has been in place throughout 2023 with a focus on topics aligned to the Group’s four strategic pillars. The programme was structured around the Board’s priorities and agenda in 2023. These included in-person engagements when the Board travelled to different regions for Board meetings, which were highly valued by colleagues and Board members alike.\nSince his appointment as dedicated workforce engagement nonexecutive Director in 2022, and in line with the Board's expectation of the role, José Meade has helped deliver a progressive programme of engagements throughout 2023. Outcomes from these engagements have helped inform discussions and decision making in the Boardroom, by taking into account the employee voice on related key themes and topics.\nThe engagements formed the bases of José Meade’s reports to the Directors, aligned to key Board agenda items including those in the geographies in which the Board met. Further engagement events, town halls and meetings with the workforce were scheduled with Board members based on their locality or coincidental travel throughout the year.\nHis dedicated role does not preclude other Board members from engaging with the workforce. It remains the responsibility of all Directors to consider diverse stakeholder views, including employees, across the Group.\nThe engagement events were held both at scale and through more targeted dialogue in smaller groups, to accommodate the breadth of experience, geographical spread and range of seniority of our colleagues. These engagements were designed to promote open dialogue and two-way discussions between the Board and employees, allowing the Board to gain valuable insight on employee perspectives, and in turn inform its deliberations in decision making.\nFor more examples of how the Board has engaged with the workforce and other stakeholders, see ‘Board decision making and engagement with stakeholders’ on page 20.\nJosé Meade’s connectivity with the employee resource groups formed part of the workforce engagement programme. He took part in the annual employee resource group summit in September to discuss his observations since taking on the workforce engagement role, and to hear feedback on how the Board could enhance support for employee resource groups. José also participated in meetings with the employee resource group to which he is aligned, UK Nurture. This helped him better understand their successes, the value of the network and agree how often and through which means he would connect with his employee resource group in 2024.\nThe Board also regularly considers other forms of employee engagement to help be informed of initiatives and sentiment, and to plan for future engagement activities. The Chairman’s Forum, held in December 2023, also discussed employee feedback gained through the Group’s principal subsidiaries. José Meade presented to the Chairman’s Forum an overview of workforce engagement over the course of 2023 and key themes arising. He will continue to discuss workforce engagement with the GEC and the Chairman’s Forum during 2024.", "chunk_word_count": 489, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Workforce engagement programme", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 259, "page_start": 259, "page_end": 259 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 345, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Workforce engagement programme\nDuring the year, the Board acknowledged that relevant aspects of Board discussions on workforce engagement activities and matters, informed by the employee voice, needed to make their way back to management. In this way, relevant views could be taken into consideration when progressing workforce-related matters at the executive level. To facilitate this, José Meade committed to attending the GEC and the Chairman’s Forum to discuss the key themes and outcomes from the 2023 workforce engagements. Feedback gained from the GEC session attended in November 2023 re-emphasised the value colleagues put on the two-way dialogue with Board members. This feedback helped shape the 2024 workforce engagement programme.\n### Report of the Directors | Corporate governance report\n### Workforce engagement non-executive Director\n\"The value of Board-employee engagement is rooted in the Board’s openness to challenge and ability to adopt new approaches in response.\"\n### Q&A with José Meade\nWorkforce engagement non-executive Director\nThe value of Board-employee engagement is rooted in the Board’s openness to challenge and ability to adopt new approaches in response. The key outcomes we get from all our engagement events are discussed not only in the Boardroom, but with executive management and between our principal subsidiaries as well. It is this circular communication that is so important to make sure not only is the employee voice heard, but it forms a backdrop for Board and executive discussions and decisions. For instance, it was interesting to hear from graduates the importance of our hybrid working strategy to them, which was seen as a differentiator compared with competitors. Our Chairman’s Forum discussed each of our regions’ respective workforce engagement programmes in December, which was an invaluable session to understand regional differences in sentiment and where subsidiary Directors were focusing their time for 2024 activities.\n### Q: Since being appointed as the workforce engagement non-executive Director in 2022, what insights have you gained?\nA: When I reflect on the Board’s engagement with the workforce over the year, I am proud of the evolution of our approach since I took on the role. Having a dedicated programme aligned to Board priorities over the course of the year has enabled me to report to the Board on the most pertinent matters depending on our location and agenda. The year 2023 was a very productive year with respect to engaging with our workforce. I met with a large number of our colleagues on a regular basis during the year, and each event has provided me with different and equally valuable insights. I have learnt the value colleagues place on having two-way dialogue with the Board. Linked to this is our non-executive Director engagement with our employee resource groups. Each non-executive Director is aligned to one of our employee resource groups, and we listened to feedback that a more structured approach to nonexecutive Director engagement would be valuable during 2024. As a result, we held dedicated meetings for non-executive Directors to meet with their employee resource groups to agree the cadence for engagement and priorities in 2024.", "chunk_word_count": 516, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Workforce engagement programme", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 259, "page_start": 259, "page_end": 260 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 346, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Q: Where do you see opportunities for 2024?\nA: We plan to build on the successes of 2023 and engage with more colleagues over the course of 2024. Our workforce engagement plan will continue to be guided by our Board priorities for the year and tightly aligned to our four strategic pillars. The plan incorporates, where possible, participation at colleague events already scheduled, which we will supplement with targeted engagement events. We also plan to enhance the visibility of management colleagues in critical roles or on executive committee succession plans to boards across the Group. Lastly, we will align Board member scheduled travel plans to workforce engagement activities in various regions, as well as work to identify how to engage with the workforce in geographies where Board travel is not envisaged.\n### Q: What are your reflections on the value of Boardemployee engagement at HSBC?\nA: Firstly, at every employee engagement event I attended during the year, I was able to hear directly from our colleagues – that is an irreplaceable and extremely valuable insight to gain as a non-executive Director. Having the employee voice in the Boardroom is crucial in equipping Directors with important context to better understand successes and challenges felt throughout the Group. It then helps empower the Board to make better recommendations and feedback to executive management with employee sentiment front-of-mind. At one of our branch visits, I was able to experience first-hand the level of care put into every single one of our clients, which was extraordinary. Following the visit, we got great feedback from the branch team that they were grateful for our time in recognising how our colleagues put customers at the centre of their work, and they said that our front-line staff were highly motivated by our kind words and encouragement.\n### Mexico Town Hall, Mexico City, November 2023\n\"The insight and reflections provided by the speakers was extremely useful as we had a mixture of local and global level input.\"\n### Engagement highlights\n### Workforce engagement non-executive Director activities during 2023\nIn 2023, José Meade undertook a variety of engagements in his role including:\n### Mexico\n– Attended the annual Leones event in Quintana Roo, Mexico. – Approximately 400 employees participated across businesses and functions. – This event recognised our top performers in HSBC Mexico.\n### Hong Kong\n– Visited employees at the HSBC Hong Kong flagship branch and the K11 Atelier Wealth Centre (which opened in October 2021 to provide high net worth wealth management services) to understand their perspective on working life.\n### UK\n### Global Service Centre office visit, Hyderabad, December 2023\n– Participated in an in-person meeting with a small group of local managers in London to discuss the cost of living crisis in the UK.\n68\n9,571\n– The group discussed the support that HSBC had provided to its employees in response, and considered ideas for further support.\nVirtual/physical sessions attended by non-executive Directors\nNumber of employees engaged virtually/physically", "chunk_word_count": 505, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Q: Where do you see opportunities for 2024?", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 260, "page_start": 260, "page_end": 261 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 347, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### US\n– Met with US-based graduates both in-person and virtually to hear the perceptions of the next generation of talent at HSBC.\n8,282\n41\nVirtual/physical sessions attended by workforce engagement non-executive Director\nNumber of employees engaged virtually/physically by workforce engagement non-executive Director\nViews were sought on topics such as expectation versus the reality of what it is like to work at HSBC, personal development opportunities and hybrid working successes and challenges.\n69%\n8\n### Türkiye\nParticipated in an in-person meeting with a diverse group of colleagues to share experiences and views on socioeconomic challenges, career development, and pay and performance.\nCountries of engagement\nHighest employee engagement survey response\n### Global employee resource group summit\n– Attended the virtual annual employee resource group summit and heard about the groups' leaders‘ successes, challenges and their respective look ahead for 2024. Connected with employee resource group representatives across multiple regions in the Group.\n### India\nSpent a day at our Hyderabad office learning about the history of our presence in India and the impact of our global service centres, as well as discussing the future of the workforce and how to create a supportive environment for professional growth.\n– Also participated alongside nearly 5,000 colleagues in a ‘Digitise’ town hall, which discussed HSBC’s digital strategy and the role played by colleagues in India.\n### Board and committee effectiveness, performance and accountability", "chunk_word_count": 240, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > US", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 261, "page_start": 261, "page_end": 261 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 348, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Board effectiveness review format\nThe Board and its committees are committed to regular, independent evaluation of their effectiveness. In 2023, the Board performance review comprised an externally facilitated evaluation in accordance with the UK Corporate Governance Code.\nA comprehensive brief was provided to IBE by the Group Chairman and Company Secretary and Chief Governance Officer. The review took the form of detailed interviews with every Board member, regular attendees of the relevant meetings and key advisers. IBE also observed the Board and its committees at the September 2023 meetings and reviewed the meeting materials.\nDuring 2023, the Nomination & Corporate Governance Committee oversaw the process to appoint an independent service provider to evaluate the Board and its committees' effectiveness and performance. The Group Chairman led a formal tender process, with the support of the Group Company Secretary and Chief Governance Officer, which included a desktop review of proposals and a panel interview with prospective firms to discuss their approach to the evaluation. The panel interviews included the Group Chairman, three non-executive Directors, and the Group Company Secretary and Chief Governance Officer.\nA report was compiled by IBE based on the information and views supplied by those interviewed and IBE’s observations from the September 2023 Board and committee meetings.\nFollowing this process, and based on the recommendation of the panel, the Nomination & Corporate Governance Committee appointed Independent Board Evaluation (‘IBE’) to conduct the Board review in 2023. IBE is an independent external service provider with no other connection with the Group or any individual Directors.\n[IMAGE CAPTION] Board and committee evaluation process\nThe Board made good progress against all of the action points identified during the 2022 evaluation. In particular:\n– Management developed a new key performance indicator architecture relating to performance, execution and risk management as well as other key value drivers.\n– Stakeholder engagement plans were structured around the Board’s visits to Paris, Hong Kong, New York and India during the year, and broader non-executive Director travel. These plans provided the Board with the opportunity to engage with the full spectrum of stakeholder groups, including employees. Further details of the Board’s engagement activities are detailed on page 21.\n– The Sustainability Execution Committee, a management forum, was established to provide greater focus and accountability for progress against the Group’s ESG deliverables and milestones.\n– An independent review of the Group’s technology strategy was performed by a third party, with the outcomes, including lessons learned, and next steps discussed and agreed by the Board.\n– Continued training and guidance was provided to key paper authors and contributors to reinforce the importance of timely, balanced and accurate reporting to the Board.\n– The Board held focused sessions on prioritisation and simplification.", "chunk_word_count": 463, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Board effectiveness review format", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 262, "page_start": 262, "page_end": 262 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 349, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Findings and recommendations\nOverall, the review concluded that the Board was performing well as an engaged, global governance body. The Group Chairman is regarded as an excellent leader of the Board, fostering a culture of openness, with encouragement for Board members to speak freely on any issue. In particular, the effectiveness review highlighted that the Board performed well in various areas including:\nEffecting change: A need for greater focus was identified in relation to the prioritisation of execution, with clearer and more timely progress reporting to the Board, in particular around challenges faced.\n– Board information: Reporting to the Board requires more succinct narrative and relevant key performance indicators. It was reiterated that the Board would continue to hold the Group Chief Executive and members of the GEC accountable for the quality of reporting to the Board.\n– Stakeholder accountability: The Board takes its responsibilities towards stakeholders seriously, positively and sincerely. Board culture: The culture of the Board is regarded as a key strength. Preserving and sustaining this has been a key factor in considering candidates for appointment to the Board. Communication is open and transparent. Relationship with senior management: Board members value the openness between, and access to, the senior management team. Committee chairs: Chairs of committees are well supported by the respective functional teams, including Risk, Finance, HR and Corporate Governance and Secretariat. Board resources and support: The Board appreciates the strategic advice and counsel it receives on governance issues from the Group Company Secretary and Chief Governance Officer and her team.\nTechnology governance: Strengthened governance mechanisms were agreed to support the Board’s review and challenge of technology-related deliverables and monitoring of delivery against the Group-wide technology strategy.\nFurther details of the findings and agreed actions to be taken can be found in the table below. Completion of these actions will be monitored by the Board throughout 2024.\nThe additional areas of feedback gathered from members of the Board and regular attendees will be taken forward at the discretion of the Group Chairman based on his determination of their impact on the overall effectiveness of the Board and its committees.\nSimilar discussions were led by each of the Board committee chairs in their respective January 2024 meetings. Progress against these actions will be included in the Annual Report and Accounts 2024.\nIBE presented its report to the December 2023 Board meeting, and was present for the Board’s discussion, led by the Group Chairman, on the findings identified through IBE’s review. Among other recommendations for consideration that could strengthen the end-toend governance of the Board and its committees, the Board focused on the following three specific themes:\n### Nomination & Corporate Governance Committee\n\"I am confident that the changes to the composition of the Board over the past year have further strengthened the Board’s collective knowledge and experience required to oversee, challenge and support management.\"\n### Mark E Tucker\n### Chair\nNomination & Corporate Governance Committee\n### Membership", "chunk_word_count": 501, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Findings and recommendations", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 263, "page_start": 263, "page_end": 264 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 350, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Key responsibilities\nThe Committee’s key responsibilities include:\noverseeing and monitoring the corporate governance framework of the Group and ensuring that this is consistent with best practice; \noverseeing succession planning and leading the process for identifying and nominating candidates for appointment to the Board and its committees; and \noverseeing succession planning and development for the Group Executive Committee and other senior executives. \n1 Dame Carolyn Fairbairn was unable to attend the January meeting due to a prior commitment. \n2 Ann Godbehere and Brendan Nelson joined the Committee on their appointments to the Board on 1 September 2023. \n3 Kalpana Morparia joined the Committee on her appointment to the Board on 31 March 2023. \n4 Eileen Murray was unable to attend the September meeting due to a prior commitment. \n5 Jackson Tai retired from the Board on 5 May 2023. \n6 Swee Lian Teo joined the Committee on her appointment to the Board on 1 October 2023.\nI am pleased to present the Nomination & Corporate Governance Committee report, which provides an overview of the Committee’s activities during 2023.\nWe also welcomed Kalpana Morparia and Swee Lian Teo and, together with Ann and Brendan’s appointments, I am confident that the changes to the composition of the Board over the past year have further strengthened its collective knowledge and experience required to oversee, challenge and support management.\nI signalled in last year’s report that succession for key roles on the Board would be a priority for the Committee through 2023, and we announced in early December the successors for the roles of Senior Independent Director and Chair of the Group Audit Committee. This represented the culmination of considerable work by the Committee over a number of months.\nAs a result of the changes to the Board during 2023, our year-end 2023 target of at least $40 \\%$ female representation was achieved. We are committed to maintaining this at or above $40 \\%$ going forward. More broadly, we remain committed to ensuring the compositions of the Board and senior management reflect the wider workforce and communities in which we operate, and you can read more on our efforts this year on page 313.\nAs announced in December, David Nish confirmed his plans to retire from the Board at the conclusion of our AGM in May 2024. Brendan Nelson will succeed David as Chair of the Group Audit Committee with effect from 21 February 2024, and Ann Godbehere will succeed him as Senior Independent Director with effect from the conclusion of the 2024 AGM. On behalf of the Board, I want to take this opportunity to thank David for his significant commitment and contribution to HSBC, particularly in his role as Chair of the Group Audit Committee, and for the valuable counsel he has provided to the Board and to me personally. You can read more on the Committee’s work on these appointments later in this report.", "chunk_word_count": 494, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Key responsibilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 264, "page_start": 264, "page_end": 264 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 351, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Key responsibilities\nThe annual review of the performance of the Board and its committees is a critical part of ensuring that our governance practices are aligned with best practice and are working effectively. Independent Board Evaluation conducted the 2023 review for the Board and its committees, and its findings and agreed actions can be found on pages 260 to 261.\nThese actions included the decision to establish the Group Technology Committee, which was discussed by the Committee. Further information on this new Board-level committee is set out on page 252. In addition, the Committee reviewed the approach to the Group’s governance of developing areas such as ESG and AI, and will continue to focus on whether these remain appropriate and forwardlooking as external standards and practices develop.\n### Committee governance\nThe Group Chief Executive, the Group Chief Human Resources Officer, and the Group Head of Talent routinely and selectively attended Committee meetings. The Group Company Secretary and Chief Governance Officer attends all Committee meetings and supports the Group Chairman in ensuring that the Committee fulfils its governance responsibilities.\nThere have been numerous consultations issued over 2023, aimed at improving the effectiveness of the UK audit, governance and regulatory regimes. Given their potential impact, the Committee received updates on these and their potential implications on governance arrangements. The Committee also reviewed and provided input to the Group’s responses to relevant consultations, including the Financial Reporting Council's ('FRC') consultation on proposed revisions to the UK Corporate Governance Code. The Committee continues to monitor potential future developments in the UK, Hong Kong and elsewhere to ensure that the impact of any proposed governance and regulatory changes on HSBC and its international operations is considered.\nRussell Reynolds Associates supported the Committee and the management team in relation to Board succession planning and appointments. It also provides support to management in relation to senior management succession, development and recruitment. It regularly and selectively attended meetings during the year, and has no other connection with the Group or members of the Board.", "chunk_word_count": 348, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Key responsibilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 264, "page_start": 264, "page_end": 265 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 352, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Appointment and re-election of Directors\nA rigorous selection process is followed for the appointment of Directors. Appointments are made on merit and candidates are considered against objective criteria, and with regard to the benefits of a diverse Board. Appointments are made in accordance with HSBC Holdings’ Articles of Association.\nAs we look ahead to the remainder of 2024, the Committee will look to oversee and enhance the succession pipeline at Board and senior management level, as well as efforts to deliver consistent standards of governance best practice across the Group.\nThe Board may at any time appoint any person as a Director or secretary, either to fill a vacancy or as an additional officer. The Board may appoint any Director or secretary to hold any employment or executive office and may revoke or terminate any such appointment.\nNon-executive Directors are appointed for an initial three-year term and, subject to continued satisfactory performance based upon an assessment by the Group Chairman and the Committee, are proposed for re-election by shareholders at each AGM. They typically serve two three-year terms, with any individual's appointment beyond six years to be for a rolling one-year term and subject to thorough review and challenge with reference to the needs of the Board. Where non-executive Directors are appointed beyond six years, an explanation will be provided in the Annual Report and Accounts.\nShareholders vote at each AGM on whether to elect and re-elect individual Directors. All Directors that stood for election and reelection at the 2023 AGM were elected and re-elected by shareholders.\n### Non-executive Director commitments\nThe terms and conditions of the appointments of non-executive Directors are set out in a letter of appointment, which includes the expectations of them, and the estimated time required to perform their role. Letters of appointment of each non-executive Director are available for inspection at the registered office of HSBC Holdings.\nNon-executive Directors serving on the Board and as a member of any committees are expected to serve up to 75 days per annum. The Senior Independent Director is expected to serve an additional 30 days per annum. Those Directors who also chair a large committee are expected to commit up to 100 days per annum, with the Group Risk Committee Chair expected to commit up to 150 days per annum. Any additional time commitment required of non-executive Directors in connection with Board and committee activities is confirmed to them separately.\nBoard approval is required for any non-executive Director’s external commitments, with consideration given to their total time commitments, potential conflicts of interest, and regulatory and investor expectations.\n### Board composition and succession", "chunk_word_count": 446, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Appointment and re-election of Directors", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 265, "page_start": 265, "page_end": 265 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 353, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Board diversity\nDuring 2023, the compositions of the Board and its committees were reviewed, with assessments focused on the skills, knowledge and experience necessary to oversee, challenge and support management in the achievement of the Group’s strategic and business objectives. The assessments were focused on the Board, both collectively and as individual members. The Committee discussed succession planning for key roles on the Board and committees, including the roles of Senior Independent Director and Chair of the Group Audit Committee. The recruitment process for the new Directors provided an opportunity to add significant executive experience in banking. It also provided an opportunity to add deep business and cultural expertise across Asia that the Board had previously identified as a priority, and to meet our target for a woman to hold at least one of the senior Board positions by the end of 2025. In line with these objectives, a list of potential candidates was identified and considered by the Committee. Members of the Board, including the Group Chief Executive and Group Chief Financial Officer, met with potential candidates and their feedback helped inform the Committee’s discussions and recommendations to the Board. The Board then approved the Committee’s recommendations to appoint Kalpana Morparia with effect from 1 March 2023, Ann Godbehere and Brendan Nelson with effect from 1 September 2023, and Swee Lian Teo with effect from 1 October 2023.\nThe Board recognises the importance of gender, social and ethnic diversity, and the benefits diversity brings to Board effectiveness. Diversity is taken into account when considering succession plans and appointments at both Board and senior management level, as well as more broadly across the Group. The Committee also considered the diversity and representation on Board committees when reviewing their composition.\nAt the end of 2023, the Board had $4 7 \\%$ female representation, with seven female Board members out of 15, ahead of the year-end 2025 target set by the FTSE Women Leaders Review. Ann Godbehere’s appointment as Senior Independent Director will mean the Board achieves the FTSE Women Leaders Review target that at least one of the senior Board positions of Chair, Chief Executive Officer, Senior Independent Director or Chief Financial Officer is held by a woman. In accordance with the UK Listing Rules, the Board is on track to be compliant with these diversity targets and will be fully compliant with effect from the conclusion of the 2024 AGM. Beyond gender, the Board continues to exceed the Parker Review target of having at least one Director of ethnic heritage. However, given the international nature of our business, including our heritage in Asia, the Board has set a target to maintain or improve the current representation of Directors from a diverse ethnic heritage.\nThe Board’s diversity and inclusion policy was updated in December 2023. The policy confirms our commitment to, and also details the approach to achieving, our diversity ambitions. Further details on activities to improve diversity across senior management and the wider workforce, together with representation statistics, can be found from page 76. The Board's diversity and inclusion policy is available on www.hsbc.com/who-we-are/leadership-and-governance/boardresponsibilities", "chunk_word_count": 526, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Board diversity", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 266, "page_start": 266, "page_end": 266 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 354, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Board diversity\nKalpana Morparia and Swee Lian Teo each bring significant banking, risk and regulatory experience in Asia. Ann’s deep financial acumen and extensive financial services experience gained over a 30-year career, as well as her extensive large, public-listed company board experience as a non-executive director, makes her the right successor for the role of Senior Independent Director. Brendan’s UK and international financial expertise and significant experience as statutory audit partner, and as audit committee chair at UK-listed companies, as well as previously being President of the Institute of Chartered Accountants of Scotland, will be particularly valuable in the leadership of the Group Audit Committee given the evolving audit, regulatory and disclosure environment in which the Group operates. Their biographies can be found on pages 239 to 243.\n### Independence\nIndependence is a critical component of good corporate governance, and a principle that is applied consistently at both HSBC Holdings and subsidiary level. The Committee has delegated authority from the Board in relation to the assessment of the independence of nonexecutive Directors. In accordance with the UK and Hong Kong Corporate Governance Codes, the Committee has reviewed and confirmed that all non-executive Directors who have submitted themselves for election and re-election at the AGM are considered to be independent. This conclusion was reached after consideration of all relevant circumstances that are likely to impair, or could appear to impair, independence.\nFollowing the annual review of the Board skills matrix, the Committee remains focused on identifying candidates for future appointments with deep business and cultural expertise across Hong Kong and mainland China.\nThe Committee will continue to monitor the market during 2024 for potential candidates for appointment to the Board in both the short and medium term, to ensure that the Board has a pipeline of credible successors.\nIn line with the requirements of the Hong Kong Corporate Governance Code, the Committee also reviewed and considered the mechanisms in place to ensure independent views and input are available to the Board. These mechanisms include:\nNeither Jackson Tai, who retired from the Board during the year, nor David Nish, who is not offering himself for re-election at the 2024 AGM, have raised concerns about the operation of the Board or the management of the company.\n– having the appropriate Board and committee structure in place, including rules on the appointment and tenure of non-executive Directors; facilitating the option of having brokers and external industry experts in attendance at Board meetings during 2023, as well as having representatives from the Group’s key regulators attend Board meetings in relation to specific regulatory items; ensuring non-executive Directors are entitled to obtain independent professional advice relating to their personal responsibilities as a Director at the Group’s expense; having terms of reference for each committee and the Board provide authority to engage independent professional advisers; and holding annual Board and committee effectiveness reviews, with feedback sought from members on the quality of, and access to, independent external advice.", "chunk_word_count": 503, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Board diversity", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 266, "page_start": 266, "page_end": 266 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 355, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Committee composition\nAs part of the decision to establish the Group Technology Committee, when reviewing the Committee composition, it was agreed that Eileen Murray would be appointed as Chair, and Steven Guggenheimer, Kalpana Morparia, Swee Lian Teo and Brendan Nelson would be appointed as members of the Group Technology Committee with effect from 1 March 2024.\nThe Committee also reviewed the composition of the Board committees more broadly to ensure that these remained appropriate and diverse, with consideration of the Board diversity and inclusion policy while utilising the respective skills and expertise of the Board members as set out in the Board skills matrix on page 247. As a result, and in addition to the appointments of members to the Group Technology Committee, it was agreed that Ann Godbehere would be appointed to the Group Audit Committee with effect from 21 February 2024.\n### Senior executive succession and development", "chunk_word_count": 161, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Committee composition", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 266, "page_start": 266, "page_end": 266 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 356, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Subsidiary governance\nIn line with the subsidiary accountability framework, the Committee continued to oversee the corporate governance and succession arrangements across the principal and material subsidiary portfolio. The Committee also reviewed the succession plans for the principal subsidiary chairs to ensure future successors had the necessary skills and experience to effectively oversee and monitor delivery of the Group’s strategic and business priorities within their territory, in accordance with the Group’s governance expectations.\nFollowing Georges Elhedery’s appointment as Group Chief Financial Officer from 1 January 2023, the Committee monitored and received updates on his induction plan.\nThe succession plans for the Group Executive Committee members were approved by the Committee in December 2023. These reflect continued efforts to support the development and progression of diverse talent and promote the long-term success of the Group, with the gender diversity and proportion of Asian heritage successors improving year on year. The approval of succession plans included future internal and external succession options for the Group Chief Executive, to ensure that the Committee has a robust and actionable plan when required. The Committee also reviewed longer-term internal succession options for the Group Chief Executive to enable the Committee to interact more frequently with high potential and diverse talent in the Group.\nWhere a subsidiary was unable to fully comply with the subsidiary accountability framework, the Committee endorsed exceptions, where appropriate, subject to strong rationale, including consideration of local laws and regulations and market practice. Endorsement requests were also subject to thorough review and consideration by the Group Company Secretary and Chief Governance Officer in advance of consideration by the Committee.\nThe Committee reviewed succession plans and oversaw compliance with the Group’s governance expectations of principal and material subsidiaries. The overall quality of succession plans has improved markedly over the past three years, with plans demonstrating a clear focus on strengthening boards’ overall diversity and experience, in line with strategic and business objectives.\nThe Committee continued to receive updates on the development of our talent programme within the Asia-Pacific region. Since its launch in 2020, significant progress has been made towards ensuring that we have a deeper and more diverse leadership bench-strength. Succession plans are more robust, with greater diversity and good succession fulfilment outcomes.\nThe Committee continued to support and seek opportunities to enhance subsidiary connectivity, including through the Chairman’s Forum and Remuneration Committee Chairs’ Forum, which regularly brought together the chairs of the principal subsidiaries to discuss common issues, and the Non-Executive Director Summit which brought over 100 non-executive Directors together in Hong Kong in May 2023.", "chunk_word_count": 436, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Subsidiary governance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 267, "page_start": 267, "page_end": 267 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 357, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Committee evaluation\nThe annual review of the effectiveness of the Board and Board committees, including the Committee, was conducted externally by Independent Board Evaluation for 2023. It determined that the Committee continued to operate effectively, with no specific actions identified for the Committee. Positive feedback was received on the effectiveness of the recruitment processes of new Board members and the succession planning for senior management.\nSubsidiaries also provided opportunities for internal talent to serve on their boards, following the training that they received through the HSBC Bank Director Programme. The Committee continues to support and look for opportunities to enhance subsidiary connectivity through Non-Executive Director Summits and other engagement forums.\nFurther details of the annual review of the Board and committee effectiveness can be found on pages 260 to 261.\n### Matters considered during 2023\n### Group Audit Committee\n\"Given the uncertain external environment, as well as HSBC's growth ambitions, the GAC will continue to play an important role in monitoring the effectiveness of the control environment.\"\n### David Nish\n### Chair\nGroup Audit Committee", "chunk_word_count": 187, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Committee evaluation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 267, "page_start": 267, "page_end": 268 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 358, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Key responsibilities\nThe Committee’s key responsibilities include:\n– monitoring and assessing the integrity of the financial statements, formal announcements and regulatory information in relation to the Group’s financial performance, as well as significant accounting judgements; reviewing the effectiveness of, and ensuring that management has appropriate internal controls over, financial reporting; reviewing management’s arrangements for compliance with prudential regulatory financial reporting; reviewing and monitoring the relationship with the external auditor and overseeing its appointment, remuneration and independence; overseeing the Group’s policies, procedures and arrangements for capturing and responding to whistleblower concerns and ensuring they are operating effectively; and overseeing the work of Global Internal Audit and monitoring and assessing the effectiveness, performance, resourcing, independence and standing of the function.\n1 These included two joint meetings with the Group Risk Committee (‘GRC’) and the Technology Governance Working Group. \n2 Rachel Duan was unable to join one meeting, a joint meeting with the GRC and Technology Governance Working Group, due to prior a commitment. \n3 James Forese rejoined the GAC on 5 May 2023 following his appointment as GRC Chair. \n4 Eileen Murray was unable to join two meetings due to prior commitments. \n5 Brendan Nelson joined the GAC upon appointment to the Board with effect from 1 September 2023 and has been appointed GAC Chair with effect from 21 February 2024. \n6 Jackson Tai retired from the GAC on 5 May 2023 upon his retirement from the Board.\nI am pleased to introduce the Group Audit Committee (‘GAC’) report setting out the key matters and issues considered in 2023.\nThe GAC continued to strengthen our relationships and understanding of issues at the local level through regular information sharing with the principal subsidiary audit committee chairs. This was supplemented with regular meetings with the chairs to discuss key issues, and through their periodic attendance at GAC meetings. I also joined a number of principal subsidiary audit committee meetings throughout the year, which supported connectivity and information flows across the Group.\nAs well as the GAC’s usual obligations for financial reporting and the associated control environment, the GAC spent significant time on the oversight of the Group's ESG disclosures and improvement of the Group’s regulatory reporting, specifically assurance of the Group’s ESG disclosures for the Annual Report and Accounts 2023 and the net zero transition plan and related policies, which were published in January 2024.\nThe Group’s whistleblowing arrangements continue to satisfy regulatory obligations. I regularly met the whistleblowing team to discuss material whistleblowing cases, and the progress made in enhancing the Group’s whistleblowing arrangements.\nInternal financial control also remained a key area of focus for the GAC during 2023. This will continue to be a priority going ahead due to the need for a robust control environment given the ongoing the volume of regulatory- and strategy-driven change across the Group. This included oversight of regulatory and accounting deliverables, such as the enhancement of Finance systems and controls and the progress in the implementation of Basel III.\nThe GAC’s performance and effectiveness were reviewed as part of the Board effectiveness review undertaken during the year. I was pleased that the review concluded that the GAC continued to operate effectively, with no material areas for improvement identified.", "chunk_word_count": 544, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Key responsibilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 268, "page_start": 268, "page_end": 268 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 359, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Key responsibilities\nSignificant time was also spent at GAC meetings on the positioning and forward-looking financial guidance provided to the market as part of our financial reporting for both the current and prior year, notably in relation to returns, costs and expected credit losses (‘ECL’), including those associated with the Group’s exposure to the China corporate real estate market.\nFinally, as announced on 6 December, Brendan Nelson will succeed me as Chair of the GAC following the publication of HSBC’s Annual Report and Accounts 2023 on 21 February 2024. The Board has determined that Brendan’s previous experience, notably as audit chair at NatWest and bp, makes him ideally suited to chair the GAC.\nGiven the uncertain external environment, as well as HSBC’s growth ambitions, the GAC will continue to play an important role in monitoring the effectiveness of the control environment in supporting sustainability of these ambitions.\nDavid Nish\nChair of the Group Audit Committee\n### Committee governance\nThe Committee operates under delegated authority from the Board, and advises the Board on matters concerning the Group’s financial reporting requirements. The Committee Chair reports on the key matters and discussions at the subsequent Board meeting, and the Board also receives copies of the Committee agendas and minutes. This supports the Board's oversight of the work carried out by management, Global Internal Audit and PricewaterhouseCoopers LLP (‘PwC‘), as the Group’s statutory auditor.\nThe Committee Chair continued to engage with various key stakeholders, including regulators such as the UK’s PRA and the Financial Reporting Council, to understand their views, key themes and areas of focus within the broader financial services sector. These included trilateral meetings involving the Group’s external auditor, PwC, and the PRA.\nThe Group Chief Executive, Group Chief Financial Officer, Global Financial Controller, Group Head of Internal Audit, Group Chief Risk and Compliance Officer, Group Company Secretary and Chief Governance Officer and other members of senior management routinely attended meetings of the GAC. The external auditor attended all meetings.\nThe Nomination & Corporate Governance Committee has confirmed that each member of the Committee is independent according to the criteria from the US Securities and Exchange Commission; and the Committee and individual members continue to possess competence relevant to the banking and broader financial services sector in which the Group operates. The Board has determined that David Nish, Brendan Nelson and Eileen Murray are the audit committee ‘financial experts’ for the purposes of section 407 of the Sarbanes-Oxley Act and have recent and relevant financial experience for the purposes of the UK and Hong Kong Corporate Governance Codes.\nThe Chair holds regular meetings with management, Global Internal Audit and PwC, as the external auditor, to discuss relevant items as they had arisen during the year outside the formal Committee process. The Committee also regularly meets with the internal and external auditors, without management present. Private discussions are also held with relevant members of senior management, including the Group Chief Financial Officer and Group Chief Risk and Compliance Officer.\n### Matters considered during 2023\n### Reporting\n[IMAGE CAPTION] l Matter considered $\\bigcirc$ Matter not considered\n### How the Committee discharged its responsibilities", "chunk_word_count": 531, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Key responsibilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 268, "page_start": 268, "page_end": 269 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 360, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Financial, ESG and climate reporting\nThe GAC is responsible for reviewing the Group’s financial reporting during the year, including the Annual Report and Accounts, Interim Report, quarterly earnings releases, analyst presentations and Pillar 3 disclosures.\n– challenged and evaluated management’s application of critical accounting policies and material areas in which significant accounting judgements were applied;\ngave particular regard to the analysis and measurement of IFRS 9 ECL, including the key judgements and management adjustments made in relation to the forward economic guidance, underlying economic scenarios and reasonableness of the weightings, as well as modelling and adjustments;\nFurthermore, as an area of expanded assurance, the GAC, supported by the executive-level ESG Committee, provided close oversight of the disclosure risks in relation to ESG and climate reporting, amid rising stakeholder expectations.\nAs part of its review, the GAC:\n– focused on preparation for disclosures to ensure these were consistent, appropriate and acceptable under the relevant financial and governance reporting requirements;\n– reviewed the narrative commentary on our financial and nonfinancial performance to ensure it remained fair, balanced and understandable;\n– tracked and monitored developments relating to the strategy and scope of ESG and climate disclosures, in particular the assurance related to the Group’s net zero transition plan, which was published at the end of January 2024. The GAC also focused on internal and external assurance within ESG reporting in line with wider market developments to ensure ESG and climate disclosures were materially accurate and consistent;\nThe Committee approved the Integrity of Regulatory Reporting programme, management’s strategy for remediation of deficiencies in relation to the Group's regulatory reporting governance, process and controls. The Committee also provided oversight of the Group's engagement with PRA-requested skilled-persons reviews including the initiation of a review of the sustainability of the Group’s ongoing remediation efforts for regulatory reporting, which commenced in 2023 for an initial period to 31 December 2025. Regular updates will be provided to the Committee by the skilled person throughout the course of their review.\n– tracked and monitored the delivery against the external audit plan;\nprovided advice to the Board on the form and basis underlying the long-term viability statement; and\nManagement provided updates on the status of ongoing HSBCspecific external reviews, and discussed the issues and themes identified from the increased assurance work and focus on regulatory reporting. The GAC also discussed root cause themes, remediation of known issues and new issues identified through the increased assurance work and focus on regulatory reporting. The Committee challenged management on remediation plans, to ensure there was a sustainable reduction in issues and that dependencies with other key programmes were well understood.\nconsidered the key performance metrics related to strategic priorities, and ensured that the performance and outlook statements reflected the risks and uncertainties appropriately.\nIn addition to its work on the Group’s financial disclosures, PwC also provided limited standalone assurance on the Group’s climate reporting. Further details can be found in ’Assurance relating to ESG data’ on page 43.", "chunk_word_count": 506, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Financial, ESG and climate reporting", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 269, "page_start": 269, "page_end": 270 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 361, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Financial, ESG and climate reporting\nIn conjunction with the GRC, the GAC considered the current position of the Group, along with the emerging and principal risks, and carried out a robust assessment of the Group’s prospects. This assessment informed the GAC’s recommendation to the Board on the Group’s long-term viability. The GAC also undertook a detailed review before recommending to the Board that the Group continues to adopt the going concern basis in preparing the annual and interim financial statements. Further details can be found on page 40.\nThe Committee Chair initiated a schedule under which certain principal subsidiary audit committee chairs, chief executive officers and chief financial officers attended GAC meetings to share progress and learnings in relation to their local remediation efforts.\nFurther details can be found in the ‘Principal activities and significant issues considered during 2023’ table on page 271.\n### Adequacy of resources\n### Fair, balanced and understandable\nThe Committee is responsible, under the Hong Kong Listing Rules, to annually assess the adequacy of resources of the accounting, internal audit, financial reporting and ESG performance and reporting functions. It also monitored the legal and regulatory environment relevant to its responsibilities.\nFollowing review and challenge of the disclosures, the Committee recommended to the Board that the Annual Report and Accounts, taken as a whole, were fair, balanced and understandable. These provided the shareholders with the necessary information to assess the Group’s position and performance, business model, strategy and risks facing the business, including in relation to the increasingly important ESG considerations.\nThe Committee determined that each of the functions provided thorough information with regards to people capacity and capability and endorsed the annual update to the Board.\nThe Committee reviewed the draft Annual Report and Accounts 2023 and results announcements to provide feedback and challenge to management. It was supported by the work of the Group Disclosure and Controls Committee, which also reviewed and assessed the Annual Report and Accounts 2023 and investor communications.\nIn recognition that the enhancement of the Group’s regulatory reporting processes and controls was a priority for both the Committee and the Group’s regulators, the GAC also considered the adequacy of regulatory reporting resources as part of the year-end activities.\nThis work enables the GAC to discharge its responsibilities and support the Board in making the statement required under the UK and Hong Kong Corporate Governance Codes.\n### Connectivity with principal subsidiary audit committees\nThe Committee recognises the importance of strong connectivity and alignment with principal subsidiary audit committees. The mechanisms to support this are well established and continued to operate effectively during the year.", "chunk_word_count": 444, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Financial, ESG and climate reporting", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 270, "page_start": 270, "page_end": 270 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 362, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Internal controls\nRegular updates and confirmations are provided to the GAC on the action management takes to remediate any failings or weaknesses identified through the operation of the Group’s framework of internal financial controls. This is supplemented by reviews of these controls by the second line of defence and internal audit, and the external auditors, who provided additional comfort to the Committee on the effectiveness of these controls. These reviews confirmed that there were no material weaknesses as at the year-end.\nThis included information sharing and targeted collaboration between audit committee chairs and management to ensure there was appropriate focus on the local implementation of programmes. During 2023 this included a particular focus on regulatory reporting, with the subsidiary audit committee chairs, chief executive officers and chief financial officers, attending Committee meetings to update on progress, share local challenges, and areas of focus with the Committee.\nThese updates included the Group’s work on compliance with section 404 of the Sarbanes-Oxley Act. Based on this work, the GAC recommended that the Board support its assessment of the internal controls over financial reporting.\nIn addition to the Chair's regular meetings with the audit chairs of the Group’s UK, European, US and Asian principal subsidiaries, and their attendance at Committee meetings for reference items, escalations were received by the Committee for its information and action.\nThe GAC continues to focus on controls over the Group's insurance business following the implementation of the IFRS 17 ‘Insurance Contracts‘ accounting standards. This will remain a focus through 2024, with the GAC scheduled to receive further updates on the control environment for this business and in relation to the change programme more generally through the first half of 2024.\nOn a half-year basis, principal subsidiary audit committees provided certifications to the GAC that regarded the preparation of their financial statements, adherence to Group policies and escalation of any issues that required the attention of the GAC. These certifications also included information regarding the governance, review and assurance activities undertaken by principal subsidiary audit committees in relation to prudential regulatory reporting.\nFor further details of how the Board reviewed the effectiveness of key aspects of internal control, see page 311.\nRegulatory reporting\nExternal auditor\nRegulatory reporting has been a key priority for the Committee over recent years, and will continue to be a priority for 2024. The Committee is focused on monitoring the programme of work to address the quality and reliability of regulatory reporting to meet regulatory expectations.\nThe GAC has the primary responsibility for overseeing the relationship with the Group’s external auditor, PwC. The GAC undertook a formal competitive tender process for the Group’s statutory audit during 2022 following PwC’s appointment for the Annual Report and\nAccounts 2015. This process concluded that PwC would remain as the statutory auditor, which was announced in January 2023. As part of the tender process, PwC committed to a number of initiatives to enhance the effectiveness and efficiency of the Group audit, and progress against these is reported to the Committee on a regular basis to allow these to be monitored.", "chunk_word_count": 523, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Internal controls", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 270, "page_start": 270, "page_end": 271 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 363, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Internal controls\nThere were no breaches of the policy on hiring employees or former employees of the external auditor during the year. The external auditor attended all Committee meetings and the GAC Chair maintains regular contact with the senior audit partner and his team throughout the year.\nThe FRC’s Quality Review team routinely monitors the quality of the audit work of certain UK audit firms through inspections of sample audits and related quality processes. PwC was reviewed on the audit of our financial reporting for the 2022 financial year. The Chair had discussions with the FRC as part of the process, and also discussed the outcome of the inspection with the Senior Audit Partner and the other members of the Committee. The Committee was pleased with the outcome of the inspection, which reported no key findings as well as a number of specific examples of good audit practice.\nPwC completed its ninth audit, providing robust challenge to management and sound independent advice to the Committee on specific financial reporting judgements and the control environment. The senior audit partner is Scott Berryman who has been in the role since 2019. It was announced during 2023 that Matthew Falconer would become the senior audit partner from 2024 as part of the rotation of auditors. The Committee reviewed the external auditor’s approach and strategy for the annual audit and received regular updates on the audit, including observations on the control environment. Key audit matters discussed with PwC are set out in its report on page 318.\n### Independence and objectivity\nThe Committee assessed any potential threats to independence that were self-identified or reported by PwC. The GAC considered PwC to be independent and PwC, in accordance with professional ethical standards and applicable rules and regulations, provided the GAC with written confirmation of its independence for the duration of 2023.\nFollowing the publication of the Financial Reporting Council's (‘FRC’) Audit Committee and the External Audit: Minimum Standard (’the Standard’) during 2023, the Committee confirmed that all requirements of the standard have been complied with.\nThe Committee confirms it has complied with the provisions of The Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014 for the financial statements.\n### External audit plan\nThe GAC reviewed the PwC external audit approach, including the materiality, risk assessment and scope of the audit. PwC highlighted the changes being made to its approach to enhance the quality and effectiveness of the audit. PwC’s plan supports its, and the GAC's, focus on audit quality through standardisation, centralisation and the use of technology. The GAC has questioned PwC on its plans to utilise more digital solutions on the HSBC audit, and updates on this will be provided through 2024.\nFollowing the recommendation to reappoint PwC as the auditor, the associated resolutions concerning the reappointment and the audit fee for 2023 were approved at the 2023 AGM by the shareholders of the Group.", "chunk_word_count": 505, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Internal controls", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 271, "page_start": 271, "page_end": 271 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 364, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Non-audit services\nThe Committee is responsible for setting, reviewing and monitoring the appropriateness of the provision of non-audit services by the external auditor. It also applies the Group’s policy on the award of non-audit services to the external auditor. The non-audit services are carried out in accordance with the external auditor independence policy to ensure that services do not create a conflict of interest. All non-audit services are either approved by the GAC, or by Group Finance when acting within delegated limits and criteria set by the GAC.", "chunk_word_count": 100, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Non-audit services", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 271, "page_start": 271, "page_end": 271 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 365, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Effectiveness of external audit process\nThe GAC assessed the effectiveness of PwC as the Group’s external auditor, using a questionnaire that focused on the overall audit process, its effectiveness and the quality of output.\nIn addition, the GAC Chair, certain principal subsidiary audit chairs and members of the Group Executive Committee met with the Senior Audit Partner to discuss findings from the questionnaire and provide in-depth feedback on the interaction with the PwC audit team.\nPwC highlighted the actions being taken in response to the HSBC effectiveness review, including the development of audit quality indicators. These provide a balanced scorecard and transparent reporting to the GAC on the work of both HSBC teams and PwC during the course of the audit. These audit quality indicators focused on the following areas:\nThe non-audit services carried out by PwC included 64 engagements approved during the year where the fees were over $\\$ 100,000$ but less than \\$1m. Global Finance, as a delegate of the GAC, considered that it was in the best interests of the Group to use PwC for these services because they were:\naudit-related engagements that were largely carried out by \nmembers of the audit engagement team, with the work closely related to the work performed in the audit; \nengagements covered under other assurance services that require obtaining appropriate audit evidence to express a conclusion designed to enhance the degree of confidence of the intended users other than the responsible party about the subject matter information; \nother permitted services such as advisory attestation reports on internal controls of a service organisation primarily prepared for and used by third-party end users; or \nrequired or permitted by local regulators to be performed by the external auditor.\n– findings from inspections across the Group and regulators on PwC as a firm; the hours of audit work delivered by senior PwC audit team members, the extent of specialist and expert involvement, delivery against agreed timetable and milestones and the use of technology; any new control deficiencies in Sarbanes-Oxley locations, proportion of management identified deficiencies and delivery of audit deliverables to agreed timelines; and matters occurring in PwC's global network that could be relevant to the audit of HSBC.\nSpecifically in 2023, PwC reported to the GAC on the recommended actions taken in response to the independent review of governance, culture and accountability that was undertaken by Dr Ziggy Switkowski AO, as well as further detail on audit quality controls across PwC’s global operations.\nEight engagements during the year were approved where the fees exceeded $\\$ 1m$ . These were mainly engagements required by the regulator and incremental fees related to previously approved engagements, including the provision of independent assurance reports on global controls for 2023.\nThe GAC receives regular updates from PwC and management on performance across the audit quality indicators, which provides wider visibility of ongoing and emerging issues. The GAC requested that these indicators included metrics in relation to PwC's IT security, reflecting the significant volume of information that is shared between HSBC and PwC as part of the audit activity.", "chunk_word_count": 521, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Effectiveness of external audit process", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 271, "page_start": 271, "page_end": 272 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 366, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Whistleblowing and speak-up culture\nAn important part of HSBC’s values is speaking up when something does not feel right. HSBC remains committed to ensuring colleagues have confidence to speak up and acting when they do. A wide variety of channels are provided for colleagues to raise concerns, including the Group’s whistleblowing channel, HSBC Confidential (see page 94 for further information).\nThe Board has delegated responsibility to the GAC to oversee the effectiveness of HSBC’s whistleblowing procedures. The Chair of the GAC is a Group Senior Manager (SMF7), and has a prescribed responsibility as the whistleblowers’ champion, to ensure integrity of HSBC’s policies on whistleblowing and protecting those who report concerns. As part of his responsibility, the GAC Chair reports to the Board on the GAC’s oversight of whistleblowing as part of his regular reporting updates.\nIn 2024, Global Internal Audit’s new or heightened areas of coverage are: transformation including regulatory change; people capacity and capability; ESG; material regulatory obligations; Consumer Duty implementation; retail and wholesale credit risk management; Basel III; regulatory reporting; treasury; operational resilience; enterprise-wide risk management; model risk management; machine learning and artificial intelligence; data management and technology. In addition, Global Internal Audit will continue its programme of culture audits to assess the extent that behaviours reflect HSBC’s purpose, ambition, values and strategy, and expand its coverage of franchise audits for locally significant countries. The annual audit plan and material plan updates made in response to changes in the Group’s structure and risk profile are approved by the GAC.\nThe Group Head of Regulatory Compliance regularly updates the GAC on whistleblowing effectiveness, including controls assessments and internal audit findings. The Committee is briefed on culture and conduct risks from whistleblowing cases and actions taken.\nIn 2023, the GAC received updates on topics such as cultural insights from internal HR-led investigations relating to matters reported through HSBC Confidential. Reports were also provided on the actions taken to support different functional areas collaborate postinvestigation. The Chair met with the Group Head of Conduct, Policy and Whistleblowing for briefings on significant whistleblowing matters. In 2024, the GAC will continue to receive briefings on these actions and the ongoing efficiency of the HSBC Confidential channel.\nThe results of audit work, together with an assessment of the Group’s overall governance, risk management and control framework and processes are reported to the GAC, GRC and local audit and risk committees, as appropriate. This reporting highlights key themes identified through audit activity, and the output from continuous monitoring. This includes business and regulatory developments and an independent view of emerging and horizon risk, together with details of audit coverage and any required changes to the annual audit plan. Based on regular internal audit reporting to the GAC, private sessions with the Group Head of Internal Audit, the Global Professional Practices annual assessment and quarterly quality assurance updates, the GAC is satisfied with the effectiveness of the Global Internal Audit function and the appropriateness of its resources.", "chunk_word_count": 503, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Whistleblowing and speak-up culture", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 272, "page_start": 272, "page_end": 272 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 367, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Global Internal Audit\nThe primary role of the Global Internal Audit function is to help the Board and management protect the assets, reputation and sustainability of the Group. Global Internal Audit does this by providing independent and objective assurance on the design and operating effectiveness of the Group’s governance, risk management and control framework and processes, prioritising the greatest areas of risk. The independence of Global Internal Audit from day-to-day line management responsibility is critical to its ability to deliver objective audit coverage by maintaining an independent and objective stance. Global Internal Audit is free from interference by any element in the organisation, including on matters of audit selection, scope, procedures, frequency, timing, or internal audit report content. The Group Head of Internal Audit reports to, and meets frequently with, the Chair of the GAC. In addition, in 2023, there was more interaction between Global Internal Audit senior management and the members of the GAC, aimed at increasing knowledge and awareness of the audit universe and existing and emerging risks identified by Global Internal Audit. Global Internal Audit adheres to The Institute of Internal Auditors’ mandatory guidance.\nExecutive management is accountable for addressing the matters raised by Global Internal Audit, which must be addressed within an appropriate and agreed timetable. Confirmation to this effect must be provided to Global Internal Audit, which validates closure on a risk basis.\nGlobal Internal Audit maintains a close working relationship with HSBC’s external auditor, PwC. The external auditor is kept informed of Global Internal Audit’s activities and results, and is afforded free access to all internal audit reports and supporting records.\nConsistent with previous years, the 2024 audit planning process includes assessing the inherent risks and strength of the control environment across the audit entities representing the Group. Results of this assessment are combined with a top-down analysis of risk themes by risk category to ensure that themes identified are addressed in the annual plan. Audit coverage is achieved using a combination of business and functional audits of processes and controls, risk management frameworks and major change initiatives, as well as regulatory audits, investigations and special reviews. In addition to the ongoing importance of regulatory-focused work, key risk theme categories for 2024 audit coverage remain as: strategy, governance and culture; financial crime, conduct and compliance; financial resilience; and operational resilience. A quarterly continuous monitoring assessment of key risk themes will form the basis of thematic reporting and plan updates and will ultimately drive the 2025 planning process.\nThe Committee considered the recoverability of deferred tax assets, in particular in the US, the UK and France.", "chunk_word_count": 443, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Global Internal Audit", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 272, "page_start": 272, "page_end": 273 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 368, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Tax-related judgements\nHSBC has recognised deferred tax assets to the extent that they are recoverable through expected future taxable profits. Significant judgement continues to be exercised in assessing the probability and sufficiency of future taxable profits, future reversals of existing taxable temporary differences and expected outcomes relating to uncertain tax treatments.\nThe Committee also considered management’s judgements relating to tax positions in respect of which the appropriate tax treatment is uncertain, open to interpretation or has been challenged by the tax authority.\nThe GAC has considered the effect of changes in key assumptions on the HSBC UK Bank plc section of the HSBC Bank (UK) Pensions Scheme, which is the principal plan of HSBC Group. Details of key assumptions can be found on pages 366 to 368 of the ’Notes on the financial statements’.\n### Valuation of defined benefit pension obligations\nThe valuation of defined benefit pension obligations involves highly judgemental inputs and actuarial assumptions which includes rate, inflation rate, mortality rates and other demographic assumptions. Management considered these assumptions in consultation with actuarial experts to determine the valuation of the defined benefit obligations.\nThe Committee considered the key valuation metrics and judgements involved in the determination of the fair value of financial instruments, and agreed with the judgements applied by management, which were validated through appropriate governance and control forums.\n### Valuation of financial instruments\nDuring 2023, management continuously refined its methodology and approach to valuing the Group’s portfolio in relation to investments, trading assets and liabilities and derivatives.\n### Investment in subsidiaries\nThe Committee reviewed the judgements in relation to the impairment review of HSBC Overseas Holdings (UK) Limited and the key inputs such as projected profits, underpinning the recoverable amounts of its subsidiaries.\nManagement has reviewed investments in subsidiaries for indicators of impairment and conducted impairment reviews where relevant. These involve exercising significant judgement to assess the recoverable amounts of subsidiaries, by reference to projected future cash flows, discount rates and regulatory capital assumptions.\nThe GAC received regular management updates on hedging strategy, including the repositioning of structural interest rate hedges.\nThe Committee reviewed controls on, and financial outcomes of, disposals of hold-tocollect-and-sell securities.\n### Impairment of goodwill and nonfinancial assets\nThe Committee reviewed and challenged management’s approach and methodology used for the impairment testing of goodwill and non-financial assets, with a key focus on the projected cash flows included in the forecasts and discount rates used. The GAC also challenged management’s key judgements and considered the reasonableness of the outcomes against business forecasts and strategic objectives of HSBC.\nDuring the year, management tested for impairment goodwill and non-financial assets. Key judgements in this area relate to long-term growth rates, discount rates and projected future cash flows to include for each cash-generating unit tested, both in terms of compliance with the accounting standards and reasonableness of the forecasts.\nThe Committee reviewed reports from management on legal proceedings and regulatory matters, and challenged related accounting judgements and disclosures.", "chunk_word_count": 502, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Tax-related judgements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 273, "page_start": 273, "page_end": 274 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 369, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Legal proceedings and regulatory matters\nManagement has used judgement in relation to the recognition and measurement of provisions, as well as the existence of contingent liabilities for legal and regulatory matters.\nIn accordance with the UK and Hong Kong Corporate Governance Codes, the Directors carried out a robust assessment of the principal risks of the Group and parent company. The GAC considered the statement to be made by the Directors and concluded that the Group and parent company will be able to continue in operation and meet liabilities as they fall due, and that it is appropriate that the long-term viability statement covers a period of three years.\n### Long-term viability and going concern statement\nThe GAC has considered a wide range of information relating to present and future projections of profitability, cash flows, capital requirements and capital resources. These considerations include stressed scenarios that reflect the implications of:\n(iii) climate risk, operational resilience, and other top and emerging risks, and the related impact on profitability, capital and liquidity.\nThe Committee reviewed management’s judgements related to the planned sales of our banking business in Canada, our retail banking operations in France and our banking business in Russia, such as the timing of classification as held-for-sale and the remeasurement of assets.\n### Impact of acquisitions and disposals\nHSBC engaged in a number of business acquisitions and disposals, notably in the UK, Canada, France, Greece, China, Oman and Russia.\nThe Committee considered the financial and accounting impacts of the merger of HSBC Oman with Sohar International Bank of Oman, and the acquisitions of Silicon Valley Bank UK Limited, Silkroad Property Partners Pte Limited and Citi’s retail wealth management portfolio in China.\nSignificant judgement was involved in determining the timing of recognition of assets held-for-sale, gains or losses, and the measurement of assets and liabilities on acquisition or disposal.\n### Committee evaluation and effectiveness", "chunk_word_count": 323, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Legal proceedings and regulatory matters", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 274, "page_start": 274, "page_end": 275 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 370, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Committee priorities\nThe annual review of the effectiveness of the Board committees, including the GAC, was conducted by IBE, Independent Board Evaluation during 2023. The review determined that the GAC continued to operate effectively.\nAt its meeting in December 2023, the Committee agreed a number of priorities for 2024. These included:\nRegulatory reporting: Given the criticality of accurate and timely regulatory reporting to the Group’s licence to operate, the Committee will have a key focus on delivery of the Integrity of Regulatory Reporting programme during 2024.\nPositive feedback was noted on the leadership of the Committee Chair, the composition of the Committee and the focus and balance of time dedicated to discussion at Committee meetings. The review highlighted the continued importance of strong interaction between the GAC, GRC, Technology Governance Working Group and the Board, on key issues including ESG.\nESG: As competent authorities in the markets in which the Group operates launch market-specific disclosure requirements under new regulation, the Committee will continue to focus on the assurance of reporting and disclosure at both a Group and subsidiary level, as well as the effectiveness of the supporting control environment and governance.\nFurther details of the annual review of the Board and Committee effectiveness can be found on pages 260 to 261.\nData: The Committee plans to monitor and provide input into the data strategy, remediation, and controls for the purposes of financial and regulatory reporting, including that data management strategies are embedded across the Group.\n### Group Risk Committee\n\"The Committee takes continuous and active steps to safeguard the Group's capital and liquidity positions, keeping it secure in the face of macroeconomic headwinds, enabling it to effectively deploy capital dynamically to take advantage of opportunities\"\n### James Forese\n### Chair\nGroup Risk Committee", "chunk_word_count": 305, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Committee priorities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 275, "page_start": 275, "page_end": 276 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 371, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Key responsibilities\nThe GRC has overall non-executive responsibility for the oversight of risk-related matters and the risks impacting the Group. The GRC’s key responsibilities include:\noverseeing and advising the Board on all risk-related matters, including financial and non-financial risks; \nadvising the Board on risk appetite-related matters, and key regulatory submissions; \nreviewing the effectiveness of the Group’s risk management framework and internal controls systems (other than internal financial controls overseen by the GAC); \nreviewing and challenging the Group’s stress testing exercises; and \noverseeing the Group’s approach to conduct, fairness and preventing financial crime.\n1 These included six scheduled meetings, three ad hoc meetings and one joint meeting with the Group Audit Committee and the Technology Governance Working Group. \n2 James Forese was appointed Chair of the Committee on 5 May 2023. \n3 Dame Carolyn Fairbairn was unable to attend three meetings due to prior commitments. \n4 Steven Guggenheimer was unable to attend one meeting due to a prior commitment. \n5 Kalpana Morparia joined the GRC on 1 March 2023. She was unable to attend one meeting due to a prior commitment. \n6 Brendan Nelson joined the GRC on 1 September 2023. \n7 Jackson Tai stepped down from the GRC on 5 May 2023. \n8 Swee Lian Teo joined the GRC on 1 October 2023.\nI am pleased to present my first Group Risk Committee (‘GRC’) report, having taken over the role of Chair of the Committee in May 2023. I would like to take this opportunity to express my sincere gratitude to Jackson Tai for his service to GRC, and the Group more broadly, prior to stepping down as Committee Chair. I am also pleased to welcome Kalpana Morparia, Brendan Nelson and Swee Lian Teo, all of whom joined as members of the GRC during 2023, and each of whom brings unique skills and experience to the business of the Committee.\nbanking book strategy, prudential sensitivity analysis and capital and liquidity adequacy. Throughout the year, the GRC reviewed and challenged management on the Group’s regulatory submissions, including the Bank of England’s requirements for the Resolvability Assessment Framework, internal capital adequacy assessment process (‘ICAAP’) and internal liquidity adequacy assessment process (‘ILAAP’). The GRC had primary non-executive responsibility for reviewing the outcomes of regulatory stress tests, including the 2023 annual cyclical scenario hybrid mortgage models update and the postwind-down business restructuring analysis.\nGeopolitical risks and the macroeconomic environment continued to dominate the landscape in 2023, with turmoil in the financial markets leading to the collapse of several banks in the US and Europe in the first half of the year. Commercial real estate in both the US and Asia also came under increasing pressure due to the high interest rate environment, inflationary trends and recessionary concerns. Central banks’ efforts to lower inflation by rapidly raising interest rates also had a wide-ranging impact on retail borrowers as the cost of living increased globally. The GRC has closely monitored the Group’s credit exposures, market risk and settlement limits in response to these events, and has endorsed management’s proactive execution in reducing high risk exposures and accelerating portfolio transformation.", "chunk_word_count": 525, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Key responsibilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 276, "page_start": 276, "page_end": 276 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 372, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Key responsibilities\nNon-financial risks were also a key focus of the GRC in 2023. The GRC carefully considered the Group’s regulatory remediation and change programmes, and worked closely with management to better prioritise and understand where there are key interdependencies. In particular, the Committee reviewed and challenged the Group’s data strategy and other key areas of regulatory focus, including oversight of the operational resilience enhancements, conduct and financial crime, technology and cyber risk. The GRC also provided oversight and support to risk transformation activities to develop stronger risk management capabilities and outcomes across the Group. Climate also continues to be a priority area of oversight with regular reports on areas of risk, such as greenwashing, compliance with regulatory requirements, and ESG policy changes.\nOversight of financial risks has been critical against this external backdrop, and the GRC has paid close focus to the Group’s ongoing treasury, capital and liquidity risk management activities, including early warning indicators, delivery of the interest rate risk in the\nFurther details on these and other areas of GRC oversight during the year are set out below.\n### Committee governance\nThe Group Chief Risk and Compliance Officer, Group Chief Financial Officer, Group Chief Operating Officer, Group Company Secretary and Chief Governance Officer, Group Chief Legal Officer, and Group Head of Internal Audit are standing attendees at GRC meetings. The Chair and members of the GRC also hold private meetings with the Group Chief Risk and Compliance Officer, the Group Head of Internal Audit and the external auditor, PwC, following scheduled GRC meetings.\nreaffirmed the ownership and accountability of risks in the first line of defence.\nThe Chair meets regularly with the Group Chief Risk and Compliance Officer, and, where appropriate, members of senior management, to discuss priorities and track progress on key actions. The Chair also meets regularly with the GRC Secretary to ensure the GRC addresses its governance responsibilities. A summary of coverage is set out in the ’Matters considered during ${ } ^ { 2 0 2 3 ^ { \\prime } }$ table.\nThe participation of our senior business leaders, including the Group Chief Executive who attended five scheduled GRC meetings in 2023, and the chief executive officers of the three global businesses\n1 The GRC receives updates on all risk types through the Group risk profile, which is presented to the majority of meetings. The Committee also met with the Group Chief Risk and Compliance Officer and Risk and Compliance Executive Committee members in October 2023 to review matters relating to risk transformation, wholesale credit risk, treasury risk, model risk, operational risk, data and climate risk.\n### How the Committee discharged its responsibilities", "chunk_word_count": 453, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Key responsibilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 276, "page_start": 276, "page_end": 277 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 373, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Activities outside formal meetings\nDuring the engagement meeting, the GRC developed a better understanding of the efforts to strengthen our capabilities across the Group Risk and Compliance function. There were also in-depth discussions on the progress and remediation of key regulatory concerns. The engagement promoted a healthy working relationship between GRC members and executive management.\nThe GRC held a number of meetings outside its regular schedule to facilitate deeper and more effective oversight of the risks impacting the Group. Areas covered included capital management, stress testing, ICAAP and ILAAP preparations, as well as briefings on the Resolvability Assessment Framework. Further details of these sessions are included in the ’Principal activities and significant issues considered during ${ } ^ { 2 0 2 3 ^ { \\prime } }$ table starting on page 276.\n### Collaborative oversight by the GRC, GAC and Technology Governance Working Group\n### Connectivity with principal subsidiary risk committees\nThe GRC worked closely with the GAC and the Technology Governance Working Group to address any areas of significant overlap, and to oversee risk more comprehensively through intercommittee communications and joint meetings.\nDuring 2023, the GRC continued to actively engage with principal subsidiary risk committees through the scheduled participation of principal subsidiary risk committee chairs at relevant GRC meetings, and through a quarterly connectivity meeting with the principal subsidiary risk committee chairs. This meeting is also attended by the Group Chief Risk and Compliance Officer. This participation and connectivity promoted the sharing of information and best practices between the GRC and principal subsidiary risk committees.\nThe GRC, GAC and the Technology Governance Working Group Chairs convened on two occasions to consider the Group's data strategy and ambitions. Further details of these sessions can be found under ’Collaboration with GAC/GRC/Technology Governance Working Group’ in the GAC report on page 271.\nThe GRC also received reports at its regular meetings on the key risks facing principal subsidiaries including escalations and certifications from the principal subsidiary risk committees. The certifications confirmed that the principal subsidiary risk committees had challenged management on the quality of the information provided, reviewed the actions proposed by management to address any emerging issues and that risk management and internal control systems had been operating effectively.\nThe committees and working group worked closely to ensure appropriate alignment in the review, discussion, challenge and conclusions on topics including risk and control issues relating to digital assets and currencies, and the transition of core Finance capabilities to the Cloud. This ensured that the committees benefited from each other’s expertise and challenge.\nCoordination between the GRC, GAC and the Technology Governance Working Group is supported by cross-membership. The GRC and GAC Chairs are members of both committees, and this strengthened connectivity and the flow of information between the committees. Each of the co-chairs of the Technology Governance Working Group are members of the GRC and GAC, respectively.\nThese interactions furthered the GRC’s understanding of the risk profile of the principal subsidiaries, leading to more comprehensive review and challenge by the GRC.", "chunk_word_count": 513, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Activities outside formal meetings", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 277, "page_start": 277, "page_end": 277 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 374, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Engagement with the Risk and Compliance Executive Committee\nDuring 2023, the GRC met with the Risk and Compliance Executive Committee to promote information sharing, meet and assess the Group Risk and Compliance function leadership team, and encourage active engagement with executive management.\n### Committee evaluation\n### Focus of future activities\n### 2022/2023\nThe GRC’s focus for 2024 will include the following activities:\noversee risk transformation activities to develop even stronger risk management capabilities, including the continued enhancement of the Group's risk appetite and risk management framework, especially in light of continued geopolitical and macroeconomic headwinds;\nDuring 2023, the GRC implemented the recommendations of the 2022 committee evaluation conducted by Lintstock in consultation with the Group Company Secretary and Chief Governance Officer and Chief Risk and Compliance Officer. This included the need for continued focus on the quality of reporting, the importance of focusing limited agenda time to the most critical issues, and further clarity in roles and coordination between the GRC and other Board committees. The outcomes of the evaluation were reported to the Board, and progress was tracked by the GRC through the year.\ncontinue to assess the Group’s operational resilience capability and the implementation of enhancements to the operating model;\ncontinue to oversee treasury risk to strengthen our capital and liquidity management capabilities;\n### 2023/2024\nmonitor delivery against our climate ambitions and the development of appropriate data and model management tools and capabilities;\nDuring the year, the annual review of the effectiveness of the Board committees, including the GRC, was conducted externally by Independent Board Evaluation. The review determined that the GRC continued to operate effectively.\n– continue the oversight of recovery and resolution planning activities to assess our resolvability capabilities if such situation arises;\nAreas for enhancement were identified, including the need for: increased focus on the most significant enterprise risks recognising the breadth of the risk agenda; continued close engagement with subsidiaries; and enhancement of induction programmes for new members given the complexity of much of the subject matter under discussion. A review of escalation parameters and filters will also be undertaken by the GRC in 2024.\ncontinue the oversight of the delivery of technology-related programmes including the data remediation programme, and enhancement of the Group’s IT systems/platform;\ncontinue to oversee financial crime risk and the strengthening of the financial crime control framework, including proactive management by the business; and\nThe outcomes of the evaluation have been reported to the Board and the GRC will track progress in implementing recommendations during 2024.\nassess our strategic opportunities and risks including exposures to digital currencies or assets and use of timely application of technology such as machine learning or artificial intelligence.\nFurther details of the annual review of effectiveness can be found on pages 260 to 261.\nThe Committee will continue to monitor progress to deliver enhancements in response to feedback from the evaluations in 2024.\n### Directors’ remuneration report\n\"The Group’s financial and strategic performance is reflected in the positive remuneration outcomes for our colleagues, and we remain committed to sharing the benefits of our performance with shareholders.\"\n### Dame Carolyn Fairbairn\nChair\nGroup Remuneration Committee\n### Membership1", "chunk_word_count": 533, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Engagement with the Risk and Compliance Executive Committee", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 277, "page_start": 277, "page_end": 281 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 375, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Key responsibilities\nThe Committee’s key responsibilities include:\n– making recommendations to the Board, for approval by shareholders, on the Group's remuneration policy; setting the overarching principles, parameters and governance framework of the Group’s remuneration policy; approving the remuneration of executive Directors and other senior Group employees; and regularly reviewing the effectiveness of the remuneration policy of the Group and its subsidiaries in the context of consistent and effective risk management.\nAll disclosures in the Directors’ remuneration report are unaudited unless otherwise stated. Disclosures marked as audited should be considered audited in the context of financial statements taken as a whole.\n### Dear Shareholder\nWe will continue to engage with our major shareholders and listen to their views as we develop the Directors' remuneration policy next year.\nI am delighted to present our 2023 Directors’ remuneration report on behalf of the members of the Group Remuneration Committee.\n### Performance in 2023\nI would like to thank Jamie Forese for the counsel he provided to us all as a member of the Group Remuneration Committee. We welcomed Eileen Murray and Ann Godbehere as members. They have already made valuable contributions since their respective appointments in 2023.", "chunk_word_count": 206, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Key responsibilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 281, "page_start": 281, "page_end": 281 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 376, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Financial performance\nOur financial performance in 2023 reflected the strength of our balance sheet in a higher interest rate environment and the good progress made executing our strategy over the last four years.\n2023 was a year of good performance and positive progress for the Group. Our colleagues were critical to delivering those outcomes, remaining committed to serving our customers and clients around the world. Against that backdrop, the Committee’s focus in 2023 was on ensuring we deliver an exceptional experience to colleagues. This is crucial to attract, retain and energise the people we need to sustain our performance and grow in markets that are highly competitive.\nWe delivered a reported profit before tax of $\\$ 30.30$ , which was up $\\$ 123,3beth$ compared with 2022. This included a favourable year-on-year impact of $\\$ 2.50n$ relating to the sale of our retail banking operations in France and a provisional gain of $\\$ 1$ .6bn recognised on the acquisition of Silicon Valley Bank UK Limited (’SVB UK’), which were partly offset by the recognition of a $\\$ 3.0$ bn impairment charge relating to the investment in our associate, Bank of Communications Co., Limited (‘BoCom’).\nWe also spent considerable time in 2023 thinking about executive Director remuneration, in the context of our strategy, performance and the removal of the 2:1 UK regulatory cap between variable and fixed pay. We have started to consider policy options ahead of the renewal of the Directors' remuneration policy in 2025.\nReported revenue of \\$66.1bn grew by $30 \\%$ or $\\$ 15.4$ bn compared with 2022, due to good performance by all three businesses reflecting higher net interest income from interest rate rises.\nReported costs fell by $2 \\%$ to $\\$ 32.1$ bn, primarily due to the nonrecurrence of restructuring and other related costs. On our cost target basis, 2023 costs grew by $6 \\%$ versus our target of approximately $3 \\%$ compared with 2022.\nThe Committee reflected on feedback from investors following the vote on the implementation of our current policy at the Annual General Meeting (’AGM’) in 2023, which received $7 9 . 7 5 \\%$ of votes cast in favour.\nOur return on average tangible equity (‘RoTE‘) for 2023 was $1 4 . 6 \\%$ , compared with $1 0 . 0 \\%$ in 2022. Excluding strategic transactions and the BoCom impairment, our RoTE was $1 5 . 6 \\%$ .\nWe explained in our statements of 5 May 2023 and 3 November 2023 that our largest shareholder voted against the Board’s recommendations on a number of resolutions including the Directors’ remuneration report, which impacted the voting results on these resolutions. The Board was pleased that a large majority of shareholders voting at the AGM supported HSBC’s approach. I have met with several of our large institutional investors and proxy advisory firms since the AGM, and there remains strong support for our current Directors' remuneration policy.\nThis performance together with our $5 0 \\%$ payout ratio commitment for 2023 (excluding material notable items and related impacts) enables us to approve a full year dividend of $\\$ 0.61$ per share.", "chunk_word_count": 527, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Financial performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 281, "page_start": 281, "page_end": 281 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 377, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Financial performance\nWe have also established Living Wage benchmarks for every market and were certified as a global Living Wage employer by the Fair Wage Network for 2024. This is critical to give us further confidence in meeting our commitments to reward colleagues responsibly.\n### Strategic performance\nIn 2023, there was further good progress in executing our strategy across the four strategic pillars aligned to our purpose, values and ambition. The completion of the sale of our retail banking operations in France on 1 January 2024 was an important milestone in the turnaround of our business. However, the strategic focus has shifted to investing for growth. The acquisition of SVB UK, and subsequent launch of HSBC Innovation Banking, is a good example of this.\nWe continued to take tangible actions to address the most significant inflationary pressures for colleagues. For example, in Argentina and Türkiye, we adjusted fixed pay regularly through the year. In Egypt, we supported our colleagues with a one-off pay adjustment in response to high inflation.\nWe continued to capitalise on our strengths, which are our two home markets of Hong Kong and the UK, as well as our international wholesale, transaction banking and wealth businesses. The digitisation of our services for personal and corporate customers helped to improve our net promoter scores in key markets and businesses. Meanwhile the growth of transaction banking revenue, fee income in Commercial Banking, and net new invested assets in Wealth all underlined our focus on improving our earnings sustainability, which remains a key priority.", "chunk_word_count": 266, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Financial performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 282, "page_start": 282, "page_end": 282 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 378, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Variable pay\nIn determining the 2023 variable pay pool, the Committee wanted to recognise our strong financial and strategic performance, and the contribution colleagues have made to that.\nThe Committee determined an overall variable pay pool of $\\$ 3,774 m$ , $12 \\%$ higher than $\\$ 3,359 m$ in 2022. This was determined based on a review of our performance against financial and non-financial metrics set out in the Group risk framework. The Committee considered the strength of our financial performance in 2023, and the ratio between variable pay and pre-variable pay profit before tax. The Committee considered the impact of margins on interest rates in our results, and lowered the total pool in line with our countercyclical funding approach. We also considered our total compensation position compared with the market, and the broader economic outlook.\nOur colleagues are the driving force behind our performance and progress, with our 2023 employee Snapshot survey demonstrating that they are more engaged than ever. Our employee focus index, which gauges how colleagues feel about their day-to-day work, was $7 6 \\%$ , which was an increase of four percentage points on 2022. Our employee engagement index is at an all time high of $7 7 \\%$ , which was also an increase of three percentage points and meant we matched or exceeded the global financial services benchmark in all eight of our indices.\nThe Committee considered in respect of all its remuneration decisions for 2023 the Prudential Regulation Authority's ('PRA') 29 January 2024 Notice relating to HSBC Bank plc's and HSBC UK's compliance with the UK Financial Services Compensation Scheme ('FSCS') and related Depositor Protection rules. The PRA penalty was reflected in the calculation of profitability used to determine the pool. The Committee carefully considered input from the Group Risk Committee ('GRC') and determined that no further discretionary adjustment should be made to the overall variable pay pool. The circumstances leading to the penalty require a more detailed review internally to address potential responsibility of individuals, which will be completed by the Committee in 2024, with any remuneration adjustments applied once it is complete.\nWe also continued to support our customers in challenging economic times, particularly in the UK where we supported our personal and business customers by enhancing our range of digital resources and targeting those most in need.", "chunk_word_count": 399, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Variable pay", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 282, "page_start": 282, "page_end": 282 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 379, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Rewarding our colleagues\nOur goal is to deliver a unique and exceptional experience to colleagues so that we sustain our performance in competitive markets. Our reward principles and commitments centre on rewarding colleagues responsibly, recognising their success and supporting them to grow.\nTotal compensation across all our businesses increased relative to 2022, rewarding our colleagues for their contribution to our performance. The distribution of the pool by business considered relative performance against revenue, reported profit before tax and cost targets. Strong differentiation has meant our highest performers received the largest increases in variable pay compared with the previous year.\nPay is a critical part of our proposition. We were encouraged by a nine percentage point improvement to $5 2 \\%$ in colleagues' perceptions they are paid fairly because of actions we took through 2022. The Committee remains very focused on the need to improve this further. For 2024, we are putting more structure in place to improve transparency and clarity about how we make pay decisions.\nBeyond pay we have a strong proposition of benefits, well-being support, flexible working options, and learning and career opportunities to support our colleagues.\n### Key remuneration decisions for executive Directors", "chunk_word_count": 208, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Rewarding our colleagues", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 282, "page_start": 282, "page_end": 282 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 380, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Annual incentive for 2023 performance\nIn 2023, we saw the maturity of the 2020 three-year Sharesave plan, which had the highest take-up rate and contribution level in recent years. The share price at maturity was more than double the option price, meaning colleagues benefited from our share price growth at a time when they needed it most. Over $90 \\%$ of colleagues have access to share ownership plans globally with $2 5 \\%$ of our global population taking part.\nThe Group’s financial and strategic performance is reflected in the executive Directors’ annual scorecards. The Committee believes this reflects their individual leadership and contribution to delivery of the Group‘s performance.\nAt the start of the year, the Committee set the scorecards to align with our reported financial performance. The Committee considered carefully the impact of strategic transactions and one-offs on the Group's financial performance in 2023, including the favourable yearon-year impact of $\\$ 4$ .1bn relating to the sale of our retail banking operations in France and the provisional gain on the acquisition of SVB UK, balanced with the $\\$ 3.0 b n$ impairment charge relating to the investment in BoCom.\nFor further details, see ‘Our approach to workforce reward‘ on page 289.\nFixed pay\nFor the majority of our colleagues, fixed pay is the biggest part of their reward, and many continue to be impacted by the economic environment including inflation and cost of living challenges. Our focus is on ensuring that we provide financial security through fixed pay.\nConsistent with the approach in prior years, the Committee judged that it was appropriate to assess financial performance for the purpose of the annual scorecard excluding these items, to ensure that out-turns were not impacted by one-offs. The assessment of RoTE and profit before tax measures therefore excluded strategic transactions and the BoCom impairment.\nFixed pay is primarily reviewed through our annual pay cycle. Fixed pay ranges were introduced for over 190,000 colleagues to improve clarity and transparency and simplify decision making for our people managers. Effective in 2024, we have awarded an overall fixed pay increase of $4 . 4 \\%$ . The level of increases vary by market, depending on the economic situation and individual roles. The highest increases were made to lower paid colleagues, and then focused on middle management, so that we keep pace with wage inflation.\nThe Committee also considered the impact of interest rates on performance and noted that macroeconomic fluctuations remain a frequent driver of the Group’s business outcomes for our executives to manage. In recent years these factors have not led to discretionary scorecard adjustments for our executive Directors, either positive or negative, which the Committee continues to believe is appropriate.\nAs part of its deliberations, the Committee reflected on the overall risk management in the year, and in respect of the PRA Notice: the nature of the failings identified; the regulator’s finding that the breaches identified were not deliberate or reckless; fines levied; and the tenure and specific responsibilities of the executive Directors in relation to the issues covered.", "chunk_word_count": 519, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Annual incentive for 2023 performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 282, "page_start": 282, "page_end": 283 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 381, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Annual incentive for 2023 performance\nNoel Quinn and Georges Elhedery will each receive a 2024–2026 LTI award of $3 2 0 \\%$ of base salary in respect of their performance for 2023 (Noel Quinn: £4,275,000; Georges Elhedery: £2,496,000). Subject to performance over the next three years, awards will vest over a further five years with a one-year retention period on vesting shares. Further details on our targets can be found on page 286.\nTaking into account inputs from the GRC and the overall accountability of the Group Chief Executive for the performance and risk management of the Group in 2023, the Committee used its judgement and applied a downward adjustment of $7 . 5 0 \\%$ to Noel Quinn’s scorecard outcome.\n### Fixed pay for 2024\nWe have increased the base salary of our executive Directors by $3 \\%$ , effective from 1 March 2024. The increase is lower than the overall fixed pay increase of $4 . 4 \\%$ for our wider workforce.\n### Remuneration in 2024\nThis results in a final scorecard outcome of $7 0 . 2 4 \\%$ of the maximum opportunity for Group Chief Executive Noel Quinn (2022: $7 5 . 3 5 \\%$ ) and an annual incentive of £2,018,000, which is $7 \\%$ lower than £2,164,000 in 2022.\nThe Committee welcomes the change announced by the PRA and the Financial Conduct Authority ('FCA') to remove the existing limits on the ratio between fixed and variable pay.\nThe scorecard for Group Chief Financial Officer Georges Elhedery was $7 6 . 7 5 \\%$ , resulting in an annual incentive of £1,287,000.\nThe announcement, together with the wider considerations on the overall competitiveness of the UK capital markets, provides us an opportunity to consider the competitiveness of our remuneration arrangements for our executive Directors and wider workforce.\nThe Committee considered that these final outcomes were a balanced and appropriate reflection of Group and individual performance delivered in 2023, and appropriate in the context of the pay decisions made for the wider workforce.\nAt the 2024 AGM, we will seek shareholder approval to provide the Committee with discretion, where regulations allow, to set an appropriate variable to fixed pay ratio considering all relevant factors, including our business activities and associated prudential and conduct risks.", "chunk_word_count": 390, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Annual incentive for 2023 performance", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 283, "page_start": 283, "page_end": 283 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 382, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### 2021–2023 long-term incentive ('LTI') vesting\nNoel Quinn and Ewen Stevenson (the former Group Chief Financial Officer) participated in the 2021–2023 LTI that will vest in March 2024. As disclosed in our 2020 Directors’ remuneration report, the Committee considered windfall gains at the time of award and determined no adjustment was appropriate.\nThis will improve flexibility in the structure of remuneration to increase the amount of pay that is variable, subject to the delivery of performance. It will also strengthen our ability to recruit and retain people in competitive markets where many of our international competitors do not have similar restrictions.\nThe maximum RoTE and relative total shareholder return (‘TSR’) targets were exceeded. The capital reallocation to Asia measure was not met and the environment and sustainability measures were assessed to be $100 \\%$ met. Overall, $7 5 . 0 0 \\%$ of the original award will vest on a pro-rata basis over the next five years. Ewen Stevenson’s awards have been pro-rated for time in employment.\nWe remain very supportive of the use of deferral mechanisms and the requirements to deliver a substantial portion of variable remuneration in shares to ensure alignment between shareholders, good risk management and individual reward.\nFor our executive Directors, we have started early engagement with institutional shareholders and proxy advisory bodies ahead of the renewal of our Directors' remuneration policy in 2025. Over several years, the Committee has expressed concerns around the competitiveness of the executive Director remuneration opportunity and indicated that our preference would be to operate a policy with a higher proportion of the package based on variable pay linked to performance. The Committee continues to believe in a more performance-based structure, and we will seek shareholder approval for a new Directors' remuneration policy at the 2025 AGM in line with the normal three-year cycle after engaging with shareholders through 2024.\nAs this is the first LTI vesting for Noel Quinn, his single figure of remuneration for 2023 is materially changed. The 2023 single figure of remuneration for Noel Quinn is £10,641,000 (compared with £5,562,000 for 2022). The value of the LTI award reflects the Group's improvement in performance, shareholder returns and share price over 2021 to 2023, and Noel Quinn's leadership in reshaping the Group to deliver more sustainable returns to shareholders.\nNoel Quinn's LTI vesting also means that the pay ratio measuring the total pay of the Group Chief Executive against the median pay of our UK employees has increased to 169:1 compared with 95:1 last year. Excluding the LTI vesting in respect of the year, the median ratio remained broadly in line with prior years at 86:1. This is consistent with the pay and progression policies for our UK workforce, considering the diverse mix of employees, the pay mix for various roles and the differences in pay structure compared with executive Directors.", "chunk_word_count": 484, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > 2021–2023 long-term incentive ('LTI') vesting", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 283, "page_start": 283, "page_end": 283 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 383, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Conclusion\nOn behalf of the Committee, I would like to thank our shareholders for the time taken to engage with us during the year. We welcome the feedback on our approach to remuneration and I look forward to engaging with you further in the year ahead as we continue our review of the Directors’ remuneration policy, in advance of the 2025 AGM.\n### 2024–2026 LTI awards\nWe have reviewed the performance measures for LTI awards considering the next phase of our strategy over 2024 to 2026. We will retain Group RoTE, relative TSR and environment targets, reflecting our strategic commitments, and to measure relative performance compared with peers. The capital reallocation to Asia measure was previously included to retain focus on repositioning the Group’s capital base through the transformation of the business. While our operations in Asia continue to be of significant strategic importance to the Group, it was the Committee’s view that this measure no longer appropriately incentivises the delivery of sustainable returns achievable across wider markets in which HSBC operates. We are simplifying the 2024–2026 LTI by removing this metric and increasing the weighting of RoTE and relative TSR.\nAs Chair of the Committee, I hope you will support the 2023 Directors’ remuneration report and the resolution to remove the 2:1 cap on variable pay for our Material Risk Takers at this year's AGM.\nDame Carolyn Fairbairn\nChair\nGroup Remuneration Committee 21 February 2024\nThe relative TSR peer group was amended for 2023 to include more Asian peers to better reflect our growth and investment focus. We do not propose to make any changes for 2024 other than the removal of the Credit Suisse Group following its acquisition by UBS Group.\n### Executive remuneration at a glance\nThis section sets out an overview of our performance, 2023 remuneration outcomes for executive Directors and a summary of the policy approved by shareholders at our 2022 AGM, including how we will implement the policy in 2024.\n### Our performance\nReported profit before \ntax \n\\$30.3bn \n(2022: $\\$ 17.1$ bn) \nEmployee engagement \nindex1 \n77% \n(2022: $7 4 \\%$\nNet new invested assets \\$84bn (2022: $\\$ 800$ )\nOperating expenses \\$32.1bn (2022: $\\$ 32.7$ bn)\nReturn on average tangible equity 14.6% (2022: $1 0 . 0 \\% )$ )\nPercentage of colleagues of \nAsian heritage in senior \nleadership roles \n37.8% \n(2022: $3 4 . 0 \\% )$ Percentage of women in senior leadership roles2 34.1% \n(2022: 33.3%) \n1 The 2022 employee engagement index score has been recalculated to reflect a change in the composition of questions in the 2023 index to ensure comparisons remain valid. In 2022 the employee engagement index was reported as $73 \\%$ . \n2 The percentage of women in senior leadership roles excluded the Canada business held for sale.\nInclusion index $78 \\%$ (2022: 76%)\n### Remuneration outcomes for executive Directors\nSummary remuneration outcomes for 2023 are set out below. Further details are set out in our annual report on Directors‘ remuneration on pages 284 to 286.\n### Noel Quinn", "chunk_word_count": 513, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Conclusion", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 283, "page_start": 283, "page_end": 284 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 384, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Georges Elhedery\nAnnual incentive outcome (£000)\n[IMAGE CAPTION] Long-term incentive outcome (£000)\n[IMAGE CAPTION] Single figure of remuneration (£000)\nGeorges Elhedery did not participate in the 2021–2023 long-term incentive\n[IMAGE CAPTION] Shareholding $( \\%$ of base salary)\n### Remuneration policy summary – executive Directors\nOur Directors' remuneration policy was approved at the AGM on 29 April 2022. The full policy can be found on pages 257 to 265 of our Annual Report and Accounts 2021 and in the Directors’ Remuneration Policy Supplement, which is available under Group results and reporting in the ‘Investors‘ section of www.hsbc.com.\n### Annual report on Directors’ remuneration\nThis section sets out how our approved Directors’ remuneration policy was implemented during 2023.\n### Determining executive Directors’ incentive outcomes", "chunk_word_count": 134, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Georges Elhedery", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 284, "page_start": 284, "page_end": 286 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 385, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### (Audited)\nFor any annual incentive award to be made, each executive Director must achieve a minimum standard of conduct and values-aligned behaviour. Both executive Directors met this requirement for 2023.\nThe Inclusion index in our employee Snapshot survey exceeded target, and was significantly above the financial services benchmark.\nThe award is determined by applying the outcome of their annual scorecard to the maximum opportunity, set at $2 1 5 \\%$ of base salary.\nWe met or exceeded our senior leadership diversity representation targets. Our customer net promoter score ('NPS') performance was largely positive relative to our competitors in most areas of our business.\nThe financial measures, weightings and targets were set at the start of the financial year to align with our reported financial performance and before significant changes in the interest rate environment. They considered the 2023 financial plan, data from 2022, external commitments, scenario testing of upside and downside risks in the plan, and analyst consensus where relevant.\nThe Committee considered that the scorecard outcome for personal measures for both Noel Quinn and Georges Elhedery was appropriate against the targets set at the start of the year.\nThe Committee considered carefully the wider context in which performance was delivered and the impact of strategic transactions and one-offs on the Group's financial performance in 2023, including the favourable year-on-year impact of $\\$ 4.1$ bn relating to the sale of our retail banking operations in France and the provisional gain on the acquisition of SVB UK, balanced with the \\$3.0bn impairment charge relating to the investment in BoCom.\nOverall, this resulted in a formulaic scorecard outcome of $7 5 . 9 3 \\%$ of the maximum for Noel Quinn and $7 6 . 7 5 \\%$ for Georges Elhedery.\nThe Committee discussed at length whether the risk and compliance modifier should be applied for 2023 for the Group’s performance against key risk metrics, including the historical failings identified by the PRA in its Notice of 29 January 2024.\nAs part of its deliberations, the Committee reflected on the overall risk management in the year, and in respect of the PRA Notice: the nature of the failings identified; the regulator’s finding that the breaches identified were not deliberate or reckless; fines levied; and the tenure and specific responsibilities of the executive Directors in relation to the issues covered.\nConsistent with the approach in prior years, the Committee judged that it was appropriate to assess financial performance for the purpose of the annual scorecard excluding these items, to ensure that out-turns were not impacted by one-offs. The assessment of RoTE and profit before tax measures therefore excluded strategic transactions and the BoCom impairment.\nTaking into account inputs from the Group Risk Committee and Noel Quinn's overall accountability for the performance and risk management of the Group in 2023, the Committee used its judgement and applied a downward adjustment of $7 . 5 0 \\%$ to his scorecard outcome.", "chunk_word_count": 498, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > (Audited)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 286, "page_start": 286, "page_end": 286 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 386, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### (Audited)\nThe Committee also considered the impact of interest rates on performance and noted that macroeconomic fluctuations remain a frequent driver of the Group’s business outcomes for our executives to manage. In recent years these factors have not led to discretionary scorecard adjustments for our executive Directors, either positive or negative, which the Committee continues to believe is appropriate.\nThis results in a final outcome of $7 0 . 2 4 \\%$ of the maximum opportunity for Noel Quinn (2022: $7 5 . 3 5 \\%$ ) and an annual incentive of £2,018,000, which is $7 \\%$ lower than £2,164,000 in 2022.\nPerformance was above the maximum targets for Group profit before tax, Group RoTE and Asia RoTE. On our cost target basis, growth was $6 \\%$ versus our target of approximately $3 \\%$ compared with 2022 and below the performance range.\nNo risk and compliance modifier was applied for Georges Elhedery who was appointed as Group Chief Financial Officer on 1 January 2023, after all underlying issues identified by the PRA had been fully remediated. Georges Elhedery's scorecard outcome of $7 6 . 7 5 \\%$ results in an annual incentive of £1,287,000.\nFor strategic measures, diversity representation targets were set based on a trajectory to meet our external commitments. Other measures were set based on maintaining or improving when compared with 2022 performance and/or market benchmarks.\n### Annual incentive scorecard assessment\n(Audited)\n### Personal objectives for Noel Quinn and Georges Elhedery\n### Single figure of remuneration\nThe following table shows the single figure of remuneration of each executive Director for 2023, together with comparative figures. This is the first vesting LTI for Noel Quinn since his appointment as Group Chief Executive in 2020 and so materially changes the composition of his single figure of remuneration for 2023.", "chunk_word_count": 311, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > (Audited)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 286, "page_start": 286, "page_end": 288 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 387, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Single figure of remuneration\n1 Georges Elhedery was appointed Group Chief Financial Officer from 1 January 2023. \n2 Taxable benefits include the provision of medical insurance, car benefit, accommodation and tax return assistance (including any associated tax due, where applicable). Non-taxable benefits include the provision of life assurance and other insurance cover. \n3 Annual incentive awards to the executive Directors are awarded $50 \\%$ in cash and $50 \\%$ in shares. The shares portion of the award vests immediately at grant and is subject to a retention period of one year and clawback provisions. \n4 Deferred cash awards granted in prior years include a right to receive notional returns for the period between the grant and vesting date. This is determined by reference to a rate of return specified at the time of grant and paid annually, with the amount disclosed on a paid basis. \n5 An LTI award over 1,118,554 shares was made in February 2021 (in respect of 2020) at a share price of £4.262 for which the performance period ended on 31 December 2023. The value has been computed based on a share price of £6.192, the average share price during the three-month period to 31 December 2023. The value attributable to share price appreciation is £1,619,106. See the following section for details of the assessment outcomes, which resulted in $7 5 . 0 0 \\%$ vesting due to performance.\n### Benefits\nThe values of the significant benefits in the single figure table are set out in the following table. The insurance benefit for Noel Quinn has increased year on year because of the increase in premium at annual renewal. The car benefits for Georges Elhedery are not included in the table below as they were not deemed significant.\n### Long-term incentive (’LTI’) awards\n(Audited)", "chunk_word_count": 310, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Single figure of remuneration", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 288, "page_start": 288, "page_end": 288 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 388, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### LTI awards over 2021 to 2023 performance period\nThe 2021–2023 LTI award was granted to Noel Quinn and Ewen Stevenson in February 2021. Georges Elhedery was in a different role at the time and did not receive the 2021–2023 LTI award.\nThe scorecard delivered an outcome of $7 5 . 0 0 \\%$ , reflecting a significant improvement in shareholder returns across the performance period.\nIn line with the terms of his departure, Ewen Stevenson is a good leaver and his award has been pro-rated for time in employment. Based on the performance outcome, 838,915 shares will vest for Noel Quinn and 371,697 shares will vest for Ewen Stevenson. The awards will vest in five equal annual instalments commencing in March 2024.\nThe 2021–2023 LTI award is subject to a risk and compliance modifier. The Committee received input from the GRC who assessed that the performance targets were delivered with appropriate risk management. On this basis, the Committee considered that no adjustment for risk should be made to the 2021–2023 LTI award. The CET1 capital ratio underpin for the 2021–2023 LTI award was also met.\nThe Committee is mindful of executives not experiencing ’windfall gains’ through the granting of LTI awards when a share price is particularly low. We introduced an upfront windfall gains check for the 2021–2023 LTI award such that if the LTI grant share price experienced a greater than $30 \\%$ decline since the previous grant, then a downward adjustment would be made. The Committee determined that there were no windfall gains to consider for this award given the share price at grant (£4.26) was $2 4 \\%$ below the share price at the previous LTI grant (£5.62).\n1 Awards vest on a straight-line basis for performance between the minimum, target and maximum levels of performance set out in this table. \n2 Assessed based on RoTE in the 2023 financial year. The CET1 capital ratio underpin was met. \n3 Assessed based on share of Group tangible equity (on a constant currency basis and excluding associates) allocated to Asia by 31 December 2023, which was not met. \n4 Carbon reduction assessed on percentage reduction in total energy and travel emissions achieved by 31 December 2023 using 2019 as the baseline. Sustainable finance and investment assessed on cumulative financing provided over the performance period. \n5 The peer group was: Bank of America, Barclays, BNP Paribas, Citigroup, DBS Group Holdings, Deutsche Bank, J.P. Morgan Chase & Co., Lloyds Banking Group, Morgan Stanley, Standard Chartered and UBS Group. Credit Suisse Group was removed from the peer group following its acquisition by UBS Group in June 2023.", "chunk_word_count": 447, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > LTI awards over 2021 to 2023 performance period", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 288, "page_start": 288, "page_end": 289 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 389, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### LTI awards over 2024 to 2026 performance period\nAfter taking into account performance for 2023, the Committee decided to grant Noel Quinn an LTI award of £4,275,000 and Georges Elhedery an LTI award of £2,496,000 (both $3 2 0 \\%$ of base salary).\n– Our emissions reduction targets have been set based on meeting our commitments to procure $90 \\%$ renewable energy by 2025 and halve energy consumption and travel emissions by 2030.\nThe awards will have a three-year performance period starting on 1 January 2024.\nOur sustainable finance and investments measure is based on our ambition announced in 2020 to provide \\$750bn to \\$1tn of financing and investment by 2030. Although the target range is lower than for the 2023–2025 LTI awards, we are on track to meet our 2030 ambition, with changing market conditions slightly impacting our year-on-year trajectory.\nThe Committee has reviewed the performance measures considering feedback from shareholders and the next phase of our strategy. We are simplifying and improving the focus on shareholder returns by assessing performance on three measures, including RoTE and relative TSR which are equally-weighted financial measures, and a third measure linked to our climate ambitions.\nThe LTI is subject to a risk and compliance modifier, which gives the Committee the discretion to ensure performance targets are delivered with appropriate risk management.\nThe capital reallocation to Asia measure was previously included to retain focus on repositioning the Group’s capital base through the transformation of the business. While our operations in Asia continue to be of significant strategic importance to the Group, it was the Committee’s view that this measure no longer appropriately incentivised the delivery of sustainable returns achievable across wider markets in which HSBC operates.\nThe RoTE measure is subject to a CET1 capital ratio underpin. If the CET1 capital ratio at the end of the performance period is below the CET1 risk tolerance level set in the risk appetite statement, then the assessment for this measure will be reduced to nil.\nThe number of shares to be awarded will be adjusted to reflect the expected dividend yield of the shares over the vesting period, as awards are not entitled to dividend equivalents in accordance with regulatory requirements.\nTargets have been set to balance stretch and achievability so that awards act as an effective incentive for management, and incentivise outperformance, aligned to our external strategic commitments.\nTo the extent performance conditions are satisfied at the end of the three-year performance period, the awards will vest in five equal annual instalments commencing from around the third anniversary of the grant date. On vesting, shares equivalent to the net number of shares that have vested (after those sold to cover any income tax and social security payable) will be held for a retention period of up to one year, or such period as required by regulators.\n– The minimum threshold for the RoTE measure is aligned to our external commitment of mid-teens RoTE over the medium term. 一 The relative TSR peer group was amended for 2023 to include more Asian peers to better reflect our growth and investment focus. No changes have been made for 2024 other than the removal of the Credit Suisse Group following its acquisition by UBS Group.", "chunk_word_count": 551, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > LTI awards over 2024 to 2026 performance period", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 289, "page_start": 289, "page_end": 289 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 390, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Performance conditions for the 2024–2026 LTI awards\n### Subject to risk and compliance modifier\nThe Group Remuneration Committee retains the discretion to revise down the formulaic outcome taking into account performance against risk and compliance factors during the performance period.\n1 Awards will vest on a straight-line basis for performance between the minimum, target and maximum levels of performance set in this table. \n2 To be assessed based on RoTE at the end of the performance period, subject to the CET1 capital ratio underpin. \n3 Carbon reduction will be measured based on percentage reduction in total energy and travel emissions achieved by 31 December 2026 using 2019 as the baseline. The sustainable finance and investment metric will assess the cumulative amount provided and facilitated over the period ending 31 December 2026. \n4 The peer group for the 2023 award is: Bank of China (Hong Kong), Barclays, BNP Paribas, China Merchants Bank, Citigroup, DBS Group Holdings, J.P. Morgan Chase & Co., Lloyds Banking Group, OCBC Bank, Standard Chartered and UBS Group.\n### Annual incentive measures for 2024\nThe 2024 annual incentive scorecard measures for our executive Directors have been set to incentivise the delivery of the next phase of our strategy.\nWe have reduced the number of financial measures, reflecting feedback from shareholders to simplify our approach and ensure focus on our key strategic commitments. The weighting of Group RoTE has increased to $2 5 \\%$ (from $1 5 \\%$ in 2023). The overall weighting of financial measures remains at $60 \\%$ .\nFinancial measures will be assessed on a reported basis excluding notable items so that the outcome reflects performance excluding the impact of one-off and items not controlled by management.\nOur first net zero transition plan was launched in January 2024 setting out our approach to net zero and the actions we are taking. To support our ambition, a sustainability measure has been added to the annual scorecard, which will be assessed based on the execution of our sustainability commitments against Board approved plans.\nPersonal measures have been set to ensure meaningful weighting for the most critical objectives for each executive Director.\nThe Committee will continue to retain discretion to adjust the formulaic outcomes of scorecards, taking into account factors such as Group profits, wider business performance and stakeholder experience, to ensure executive reward is aligned with underlying Group performance and the broader stakeholder experience.\nThe weightings and performance measures for the 2024 annual incentive scorecard for executive Directors are in the adjacent table.\nThe targets have been set to reflect the Group’s 2024 plan, while considering macroeconomic uncertainty, including the interest rate environment and inflation. The performance targets are commercially sensitive and it would be detrimental to the Group’s interests to disclose them at the start of the financial year. Subject to commercial sensitivity, we will disclose the targets in the 2024 Directors’ remuneration report.", "chunk_word_count": 489, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Performance conditions for the 2024–2026 LTI awards", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 290, "page_start": 290, "page_end": 290 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 391, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Our approach to workforce reward\nOur goal is to deliver a unique and exceptional experience to energise colleagues to perform at their best. This is critical to strengthening our ability to attract, retain and motivate the people we need, in competitive markets where employee expectations continue to evolve.\n– We will support our colleagues to grow through our proposition beyond pay, with a focus on future skills and development, support for well-being, and flexibility.\nPay is an important part of our overall proposition. Our focus is improving transparency and clarity for colleagues so they understand better how we make pay decisions.\nOur approach is centred on our purpose and values, and our reward principles and commitments are:\nFor 2024, we will introduce a new variable pay structure for over 150,000 junior and middle management colleagues, providing more clarity around the variable pay levels for on-target performance, while retaining flexibility to differentiate outcomes for performance.\n– We will reward our colleagues responsibly through fixed pay security and protection through core benefits, a competitive total compensation opportunity, pay equity, and a more inclusive and sustainable benefits proposition over time.\nWe have been certified by the Fair Wage Network as a global Living Wage employer for 2024. This is an important commitment to give colleagues confidence that our fixed pay levels are sufficient to provide financial security.\n– We will recognise colleagues' success through our performance culture and routines, including feedback and recognition, pay for performance, and all employee share ownership opportunities.\nThe section below highlights some of our achievements in 2023.\n### We will reward you responsibly\n$78 \\%$ up $5 \\%$ from 2022\nMany of our colleagues found 2023 to be a challenging year. While inflation has fallen from levels seen in 2022, it remains high across many of our markets, which has resulted in continued pressures on the cost of living.\nof colleagues say pay recommendations determined regardless of personal characteristics\nFixed pay increases for 2024 were determined based on consistent principles to help address wage inflation in the markets where we operate. Across the Group, there was an overall increase in fixed pay of $4 . 4 \\%$ . The level of increases varied by market, depending on the economic situation and individual roles. Increases were targeted towards more junior and middle management colleagues where fixed pay is a larger proportion of overall pay.\n$52 \\%$ up $9 \\%$ from 2022\nof colleagues say they are paid fairly for what they do\nWe continued to take action outside of our annual cycle to address inflation pressures for colleagues, where the local context required this. In Argentina and Türkiye, we gave our colleagues fixed pay increases throughout the year. In Egypt, we supported our colleagues with a one-off pay adjustment in response to high inflation.\n$59 \\%$ same as 2022 of colleagues say my benefits meet my (and my family's) needs well", "chunk_word_count": 494, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Our approach to workforce reward", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 291, "page_start": 291, "page_end": 291 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 392, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### We will recognise your success\n$81 \\%$ ▲ up $7 \\%$ from 2022\nOver $90 \\%$ of colleagues have access to share ownership plans globally, with $2 5 \\%$ of our global employee population taking part. In the UK, following the maturity of the three-year 2020 Sharesave plan with an option price of £2.627, colleagues benefited from significant share price growth at a time when they needed it most. The 2020 plan had the highest take up rate and contribution level in recent years.\nof colleagues say they receive feedback helping them improve performance\n### 1.4 million recognitions\nthe highest since the At Our Best recognition platform was launched in 2015\n### We will support you to grow\nOur approach to benefits and well-being balances local market practice with global minimum standards. More than $9 5 \\%$ of colleagues have private medical insurance, a retirement plan and life insurance.\n$78 \\%$ ▲ up $20 \\%$ from 2022 of colleagues work flexibly and split their time between home and the workplace\nOur well-being programme focuses on mental, physical, financial and social wellbeing. In our employee Snapshot survey, $8 3 \\%$ of colleagues said their mental health was positive. HSBC has been ranked top tier for mental health in the global CCLA Corporate Mental Health Benchmark.\nWe have prioritised supporting colleagues to work flexibly, balancing customer needs, social connection and individual flexibility. Flexible working remains one of the most cited reasons why colleagues would recommend HSBC as a place to work, and a third of new joiners say it is what attracted them to HSBC.\n$71 \\%$ up $3 \\%$ from 2022\nour career index is higher than the financial services benchmark by $6 \\%$\nWe have delivered a world-class talent marketplace and learning experience platform, providing learning pathways, projects and networking opportunities to more than 200,000 colleagues. An average of 23.9 hours of training was delivered per FTE in 2023.\n### Remuneration structure for employees\nWe set out below the key features of our remuneration framework, which applies on a Group-wide basis, subject to compliance with local laws:\n### Application for Group employees\n– A Group-wide deferral approach is applicable to all employees. A portion of annual incentive awards above a specified threshold is deferred in shares vesting annually over a three-year period $( 3 3 \\%$ vesting on the first and second anniversaries of grant and $34 \\%$ on the third).\n– All of the LTI award, or at least $60 \\%$ of the total variable award (including LTI), is deferred. The deferred awards will vest in five equal annual instalments, with the first vesting on or around the third anniversary of the grant date and the last instalment vesting on or around the seventh anniversary of the grant date.", "chunk_word_count": 472, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > We will recognise your success", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 291, "page_start": 291, "page_end": 293 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 393, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Deferral\nAlign employee interests with the medium- to long-term strategy, stakeholder interests and valuesaligned behaviours.\n– For MRTs, awards are generally subject to a minimum $40 \\%$ deferral $( 6 0 \\%$ for awards of £500,000 or more) over a minimum period of four years.\n– A deferral period of five years is applied for senior management and individuals in specified roles with managerial responsibilities as prescribed under the PRA and FCA remuneration rules and seven years for individuals in PRA-designated senior management functions.\n– In line with the PRA and FCA remuneration rules, and in compliance with local regulations, the deferral requirement for MRTs is not applied to individuals where their total variable pay is £44,000 or less and variable pay is not more than one-third of total compensation. For these individuals, the Group standard deferral applies.\n– All deferred awards are in HSBC shares and subject to a post-vesting retention period of one year.\n– Individuals based outside the UK and identified as MRTs under local regulations, would be subject to local requirements where necessary.\n– All deferred awards are subject to malus provisions, subject to compliance with local laws. Awards granted to MRTs on or after 1 January 2015 and awards granted to non-MRTs on or after 1 January 2022 are subject to clawback.\n– HSBC operates an anti-hedging policy for all employees, which prohibits employees from entering into any personal hedging strategies in respect of HSBC securities.\n– For all Group MRTs and the majority of local MRTs, excluding executive Directors, a minimum $50 \\%$ of the deferred awards is in HSBC shares and the rest into deferred cash. Local regulatory requirements would also apply where necessary.\n– For some employees in our asset management business, where required by the relevant regulations, at least $50 \\%$ of the deferred award is linked to fund units reflective of funds managed by those entities, with the remaining portion in deferred cash awards.\n– Variable pay awards made in HSBC shares or linked to relevant fund units granted to MRTs are generally subject to a one-year retention period post-vesting.\n– MRTs who are subject to a five-year deferral period, except senior management or individuals in PRA- and FCA-designated senior management functions, have a six-month retention period applied to their awards.\n– Where an employee is subject to more than one regulation, the requirement specific to the sector and/or country in which the individual is working is applied.\nrance payments – Where an individual’s employment is terminated involuntarily for gross misconduct then, – Any paym re to contractual subject to compliance with local laws, the Group’s policy is not to make any severance with the ments with payment and all outstanding unvested awards are forfeited. office.\n– For other cases of involuntary termination of employment, the determination of any severance will take into consideration the performance of the individual, contractual notice period, applicable local laws and circumstances of the case.\n– Generally, for good leavers, all outstanding unvested awards will normally continue to vest in line with the applicable vesting dates. Where relevant, any performance conditions attached to the awards, and malus and clawback provisions, will remain applicable to those awards.", "chunk_word_count": 543, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Deferral", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 293, "page_start": 293, "page_end": 293 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 394, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Deferral\n– Severance amounts awarded to MRTs are not considered as variable pay for the purpose of application of the deferral and variable pay cap rules under the PRA and FCA remuneration rules where such amounts include: $( \\mathrm { i } )$ payments of fixed remuneration that would have been payable during the notice and/or consultation period; (ii) statutory severance payments; (iii) payments determined in accordance with any approach applicable in the relevant jurisdictions; and (iv) payments made to settle a potential or actual dispute.\n### Committee governance\nThe Group Chief Executive, the Group Chief Risk and Compliance Officer, the Group Company Secretary and Chief Governance Officer, the Group Chief Human Resources Officer, and the Group Head of Performance, Reward and Employee Relations routinely and selectively attend Committee meetings. As detailed below, the Chair of the Group Remuneration Committee held regular meetings with management, and Committee advisers to discuss specific issues as they arose during the year outside the formal Committee process.\nfrom stakeholders when finalising meeting agendas and track progress on actions and Committee priorities. The Committee Secretary will continue to support the Chair in ensuring that the Committee has fulfilled its governance responsibilities.\nA copy of the Committee’s terms of reference can be found on our website at www.hsbc.com/who-we-are/leadership-and-governance/ board-committees.\nThe Committee Secretary regularly met with the Chair to ensure the Committee fulfilled its governance responsibilities, to consider input\n### Matters considered during 2023\n– Bob Hoyt, Group Chief Legal Officer; and – Aileen Taylor, Group Company Secretary and Chief Governance Officer.\n### Advisers\nThe Committee received input and advice from different advisers on specific topics during 2023. Deloitte provided independent advice to the Committee. Deloitte also provided tax compliance and other advisory services to the Group in 2023. Deloitte is a founding member of the Remuneration Consultants Group and voluntarily operates under the code of conduct in relation to executive remuneration consulting in the UK.\nThe Committee also received feedback and input from the Group Risk Committee and Group Audit Committee on risk, conduct and compliance-related matters relevant to remuneration.\nNo Director is present at Committee meetings when their own remuneration is discussed.\nThe Committee also received advice from Willis Towers Watson on market data and remuneration trends. Willis Towers Watson also provides actuarial support to Global Finance, benchmarking data for the wider workforce and services related to benefits administration for our Group employees. The Committee was satisfied the advice provided by Deloitte and Willis Towers Watson was objective and independent in 2023.\nIn addition to the meetings above, the Chair took the opportunity to meet with the Chair of the Group Risk Committee and Group Audit Committee to consider the Group’s risk and reward alignment framework, which is designed to promote sound and effective risk management in meeting PRA and FCA remuneration rules and expectations.", "chunk_word_count": 482, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Deferral", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 293, "page_start": 293, "page_end": 294 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 395, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Committee effectiveness\nFor 2023, total fees of £292,800 and £51,492 were incurred in relation to remuneration advice provided by Deloitte and Willis Towers Watson, respectively. This was based on pre-agreed fees and a timeand-materials basis.\nIn 2023, the annual review of the effectiveness of the Board committees, including the Group Remuneration Committee, was conducted externally by Ffion Hague, Independent Board Evaluation. The review determined that the Committee continued to operate effectively.\n### Attendees and interaction with other Board committees\nAreas for enhancement were identified, including continued focus on the relationship between the Group and its subsidiary entities, building on the efforts taken under the direction of the Committee Chair, which will be kept under review in 2024.\nDuring the year, Noel Quinn as the Group Chief Executive provided regular briefings to the Committee. In addition, the Committee engaged with, and received updates from, the following:\nThe outcomes of the evaluation have been reported to the Board, and the Committee will track the progress in implementing recommendations during 2024.\n– Mark Tucker, Group Chairman; \n– Elaine Arden, Group Chief Human Resources Officer; Georges Elhedery, Group Chief Financial Officer; \n– Jenny Craik, Group Head of Performance, Reward and Employee Relations; \n– Pam Kaur, Group Chief Risk and Compliance Officer;\nAs highlighted in the Board effectiveness review disclosure on page 261, the Board considered that further improvement is required to ensure reporting is succinct and supported by relevant key performance indicators. Further details of the annual review of the Board effectiveness review can be found on pages 260 to 261.\n### Additional remuneration disclosures\nThis section provides further information and disclosure in relation to executive Director and wider workforce remuneration as required under the Directors' Remuneration Report Regulations, the UK Corporate Governance Code, Hong Kong Ordinances, Hong Kong Listing Rules and the Pillar 3 remuneration disclosures.\nFor the purpose of the Pillar 3 remuneration disclosures, executive Directors and non-executive Directors are considered to be members of the management body. Members of the Group Executive Committee other than the executive Directors are considered as senior management.\n### Policy alignment with UK Corporate Governance Code\nThe table below details how the Group Remuneration Committee addresses the principles set out in the UK Corporate Governance Code in respect of the Directors' remuneration policy:\n### Link between risk, performance and reward\nOur remuneration practices promote sound and effective risk management to support our business objectives and the delivery of our strategy. We set out below the key features of our framework, which enable us to align between risk, performance and reward, subject to compliance with local laws and regulations:\n### Framework", "chunk_word_count": 446, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Committee effectiveness", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 294, "page_start": 294, "page_end": 296 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 396, "chunk_text": "# Opening up a world of opportunity\n## 13 Non-executive Directors\n### Summary of shareholder return and Group Chief Executive remuneration\nThe graph shows HSBC TSR performance (based on the daily spot Return Index in sterling) against the FTSE 100 Total Return Index for the 10-year period ended 31 December 2023.\nThe single figure remuneration for the Group Chief Executive over the past 10 years, together with the outcomes of the respective annual incentive and LTI awards, are presented in the following table.\nThe FTSE 100 Total Return Index has been chosen as a recognised broad equity market index of which HSBC Holdings is a member.\n[IMAGE CAPTION] HSBC TSR and FTSE 100 Total Return Index\n1 The 2012 annual incentive figure for Stuart Gulliver included $60 \\%$ of the annual incentive disclosed in the 2012 Directors’ remuneration report, which was deferred for five years and subject to service conditions and satisfactory completion of the five-year deferred prosecution agreement with the US Department of Justice, entered into in December 2012 (’AML DPA’) as determined by the Committee. The AML DPA performance condition was met and the award vested in 2018. The value of the award at vesting was in the 2018 single figure of remuneration and included as long-term incentive for 2018.\n2 Long-term incentive awards are included in the single figure of remuneration for the year in which the performance period is deemed to be substantially completed. For Group Performance Share Plan (’GPSP’) awards, this is the end of the financial year preceding the date of grant. GPSP awards shown in 2014 to 2015 are therefore related to awards granted in 2015 to 2016.\n3 The GPSP was replaced by the LTI in 2016 and the value for GPSP is nil for 2016 as no GPSP award was made. LTI awards have a three-year performance period and the first LTI award was made in February 2017. The value of the LTI awards expected to vest will be included in the total single figure of remuneration of the year in which the performance period ends. Noel Quinn received the 2021–2023 LTI award that had a performance period which ended on 31 December 2023. This was the first LTI award granted to him as Group Chief Executive.\n### Voting results from Annual General Meeting\n## 2023 Annual General Meeting voting results\nAs set out in the Committee Chair's letter, the Committee reflected on feedback from investors following the vote on the implementation of our current policy at last year’s AGM. We explained in our statements of 5 May 2023 and 3 November 2023 that our largest shareholder voted against the Board’s recommendations on a number of resolutions including the Directors’ remuneration report, which impacted the results of these resolutions.\nThe Board was pleased that a large majority of shareholders voting at the AGM supported HSBC’s strategy. The Committee Chair has met with several of our large institutional investors and proxy advisory firms since the AGM, and there remains strong support for the current remuneration policy.", "chunk_word_count": 504, "section_path": "Opening up a world of opportunity > 13 Non-executive Directors > Summary of shareholder return and Group Chief Executive remuneration", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 297, "page_start": 297, "page_end": 297 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 397, "chunk_text": "# Opening up a world of opportunity\n## 2023 Annual General Meeting voting results\n### Pay ratio\nThe following table shows the ratio between the total pay of the Group Chief Executive and the lower quartile, median and upper quartile pay of our UK employees.\nTotal pay and benefits for the Group Chief Executive is the single figure of remuneration for Noel Quinn. The increase in median ratio is primarily driven by the vesting of the 2021–2023 long-term incentive ('LTI'), which is the first he has received as Group Chief Executive. Excluding the LTI vesting in respect of the year, the ratio remained broadly in line with prior years at 86:1 at median.\n– full-time equivalent annualised fixed pay, which includes base salary and allowances, at 31 December 2023; variable pay awards for 2023; return on deferred cash awards granted in prior years. The deferred cash portion of the annual incentive granted in prior years includes a right to receive notional returns for the period between the grant date and vesting date, which is determined by reference to a rate of return specified at the time of grant. A payment of notional return is made annually and the amount is disclosed on a paid basis in the year in which the payment is made; gains realised from exercising awards from taxable employee share plans; and \n– full-time equivalent value of taxable benefits and pension contributions.\nFull-time equivalent fixed pay and benefits for each employee have been calculated by using each employee’s data as at 31 December 2023. Where an employee works part-time, fixed pay and benefits are grossed up, where appropriate, to full-time equivalent. One-off benefits have not been included in calculating the ratios as these are not permanent in nature and in some cases, depending on individual circumstances, may not truly reflect a benefit to the employee.\nThe reported ratios may not be comparable to our international and listed peers on the FTSE 100, given differences in business mix and size; employment and compensation practices; methodologies for computing pay ratios; and assumptions used by companies.", "chunk_word_count": 346, "section_path": "Opening up a world of opportunity > 2023 Annual General Meeting voting results > Pay ratio", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 298, "page_start": 298, "page_end": 298 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 398, "chunk_text": "# Opening up a world of opportunity\n## 2023 Annual General Meeting voting results\n### Relative importance of spend on pay\nThe total pay and benefits for the median employee for 2023 was £63,000, an $8 . 1 \\%$ increase compared with 2022.\nThe following chart shows the change in:\n– total employee pay between 2022 and 2023; and – dividends and share buy-backs in respect of 2022 and 2023.\nOur UK workforce comprises a diverse mix of colleagues across different businesses and levels of seniority, from junior cashiers in our retail branches to senior executives managing our global business units. We aim to deliver market-competitive pay for each role, taking into consideration the skills and experience required for the business.\nIn 2023, total spend on pay was slightly higher than in 2022. The total return to shareholders increased by $1 5 6 \\%$ compared with 2022, reflecting a higher dividend and $\\$ 70n$ of capital return to shareholders through share buy-backs, which included the up to $\\$ 30n$ buy-back announced at our third quarter of 2023 results. In addition, the Group has announced the intention to initiate a further up to $\\$ 20n$ buy-back. Dividends include an approximation of the amount payable in April 2024 in relation to the fourth interim dividend of $\\$ 0.31$ per ordinary share.\nPay structure varies across roles in order to deliver an appropriate mix of fixed and variable pay. Junior colleagues have a greater portion of their pay delivered in a fixed component, which does not vary with performance and allows them to predictably meet their day-to-day needs. Our senior management, including executive Directors, generally have a higher portion of their total remuneration opportunity structured as variable pay and linked to the performance of the Group, given their role and ability to influence the strategy and performance of the Group. Executive Directors also have a higher proportion of their variable pay delivered in shares, which vest over a period of seven years with a post-vesting retention period of one year. During this deferral and retention period, the awards are linked to the share price so the value of award realised by them after the vesting and retention period will be aligned to the performance of the Group.\n[IMAGE CAPTION] Relative importance of spend on pay\nWe are satisfied that the median pay ratio is consistent with the pay and progression policies for our UK workforce, taking into account the diverse mix of our UK employees, the pay mix applicable to each role and our objective of delivering market competitive pay for each role subject to Group, business and individual performance.\nOur ratios have been calculated using the option ‘A’ methodology prescribed under the UK Companies (Miscellaneous Reporting) Regulations 2018. Under this option, the ratios are calculated using full-time equivalent pay and benefits of all employees providing services in the UK at 31 December 2023. We believe this approach provides accurate information and representation of the ratios. The ratio has been computed taking into account the pay and benefits of nearly 33,000 UK employees, other than the Group Chief Executive. We calculated our pay quartiles and benefits information for our UK employees using:", "chunk_word_count": 529, "section_path": "Opening up a world of opportunity > 2023 Annual General Meeting voting results > Relative importance of spend on pay", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 298, "page_start": 298, "page_end": 298 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 399, "chunk_text": "# Opening up a world of opportunity\n## 2023 Annual General Meeting voting results\n### Relative importance of spend on pay\n1 In our Annual Report and Accounts 2022, we disclosed that the total return to shareholders was \\$9,144m, of which \\$8,144m related to dividends in 2022. This was an error and has been corrected in the chart above.\n### Comparison of Directors’ and employees’ pay\nThe following table compares the changes in each Director’s base salary, taxable benefits and annual incentive between 2020 and 2023 with the percentage change in each of those elements of pay for UKbased employees of HSBC Group Management Services Limited, the employing entity of the executive Directors.\nThere were no changes to the fees or benefits of the non-executive Directors between 2020 and 2023. The year-on-year percentage change in fees noted in the table below is primarily driven by any prorated fees received by the non-executive Director for 2020, 2021, 2022 and 2023 based on time served by them on the Board and the relevant Board committees and any additional responsibilities taken on by the non-executive Director during each year. The value of benefits received by the non-executive Directors reflect the taxable expense reimbursements claimed, and the associated gross-up tax, in relation to attending the Board meetings in each year. Page 301 provides the underlying single figure of remuneration for nonexecutive Directors used to calculate the figures above.\nNon-executive Directors who joined after 1 January 2023 are not included, which includes Ann Godbehere, Kalpana Morparia, Brendan Nelson and Swee Lian Teo.", "chunk_word_count": 257, "section_path": "Opening up a world of opportunity > 2023 Annual General Meeting voting results > Relative importance of spend on pay", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 298, "page_start": 298, "page_end": 299 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 400, "chunk_text": "# Opening up a world of opportunity\n## 2023 Annual General Meeting voting results\n### Annual percentage change in remuneration\n1 Noel Quinn succeeded John Flint as interim Group Chief Executive with effect from 5 August 2019 and was appointed permanently into the role on 17 March 2020. The annual percentage change in 2020 for Noel Quinn is based on remuneration reported in his 2019 single figure of remuneration (for the period 5 August 2019 to 31 December 2019) and his 2020 single figure of remuneration (for the period 1 January 2020 to 31 December 2020). Based on his annualised 2019 compensation as an executive Director, his percentage change in salary, benefits and annual incentive was $2 . 1 \\%$ , $8 5 . 2 \\%$ and $- 5 0 . 9 \\%$ , respectively for 2020.\n2 Noel Quinn voluntarily waived the cash portion of his 2020 annual incentive. The year-on-year percentage change between 2020 and 2021 would be - $. 1 \\%$ without this cash waiver.\n3 Georges Elhedery succeeded Ewen Stevenson as Group Chief Financial Officer with effect from 1 January 2023. Year-on-year comparison for Georges Elhedery will be available from 2024 onwards.\n5 Rachel Duan and Eileen Murray were appointed members of the Group Audit Committee on 1 June 2022. \n6 Rachel Duan and Dame Carolyn Fairbairn did not receive taxable benefits in 2023, resulting in a $100 \\%$ reduction in benefits from the prior year. \n7 Dame Carolyn Fairbairn was appointed as Chair of the Group Remuneration Committee effective 29 April 2022. \n8 James Forese was appointed as non-executive Chair of HSBC North America Holdings, Inc in 2021. Fees for 2021 included fees in relation to this role. \n9 Steven Guggenheimer joined the Board on 1 May 2020 and therefore received fees for only part of 2020. \n10 José Antonio Meade Kuribreña and Jackson Tai did not receive taxable benefits in 2021, resulting in a $100 \\%$ reduction in benefits from the prior year. \n1 Jackson Tai retired from the Board on 5 May 2023.\n12 Employee group consists of individuals employed by HSBC Group Management Services Ltd, the employing entity of the executive Directors, as no individuals are employed directly by HSBC Holdings.\n### Scheme interests awarded during 2023\n### (Audited)\nThe table below sets out the scheme interests granted to executive Directors during 2023 in respect of the 2022 performance year, as disclosed in the 2022 Directors’ remuneration report. No non-executive Directors received scheme interests during the financial year. The below table includes details of immediate shares and fixed pay allowances in compliance with Chapter 17 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.", "chunk_word_count": 449, "section_path": "Opening up a world of opportunity > 2023 Annual General Meeting voting results > Annual percentage change in remuneration", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 299, "page_start": 299, "page_end": 300 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 401, "chunk_text": "# Opening up a world of opportunity\n## 2023 Annual General Meeting voting results\n### Scheme awards in 2023\n(Audited)\n1 In accordance with the remuneration policy approved by shareholders at the 2022 AGM, the LTI award was determined at $320 \\%$ of base salary for Noel Quinn and $160 \\%$ of base salary for Georges Elhedery. The number of shares to be granted was determined by taking HSBC’s closing share price of £6.357 taken on 24 February 2023, and applying a discount based on HSBC’s expected dividend yield of $5 \\%$ per annum for the vesting period (£4.963). LTI awards are conditional share awards subject to a three-year forward-looking performance period and vest in five equal annual instalments, between the third and seventh anniversary of the award date, subject to performance achieved. Awards are subject to malus and clawback for a maximum period of 10 years from the date of the award and are not eligible for dividend equivalents.\n2 Immediate share awards are granted based on the previous years' performance as part of the annual incentive and are not subject to forward-looking performance conditions. On vesting, awards will be subject to a one-year retention period. The face value of the immediate share awards have been computed using HSBC’s closing share price of £6.357 taken on 24 February 2023. Awards are subject to clawback for a maximum period of 10 years from the date of the award.\n3 Fixed pay allowance awards are granted in instalments in accordance with the remuneration policy approved by shareholders at the 2022 AGM, and are not subject to forward-looking performance conditions. Individual tax liabilities were satisfied in cash, therefore the face value awarded represents the net of tax value of the shares and the number of shares awarded reflects the net of tax number of shares. The fixed pay allowance awards have been computed using HSBC's closing share price of £5.997 taken on 12 May 2023, £5.839 taken on 18 August 2023 and £6.093 taken on 6 November 2023. These awards vest immediately and are subject to a retention period and released annually on pro-rata basis over five years, starting in March 2024.\n### Performance conditions for the 2023–2025 LTI awards\n(Audited)\n### Executive Directors’ interests in shares", "chunk_word_count": 375, "section_path": "Opening up a world of opportunity > 2023 Annual General Meeting voting results > Scheme awards in 2023", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 300, "page_start": 300, "page_end": 300 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 402, "chunk_text": "# Opening up a world of opportunity\n## 2023 Annual General Meeting voting results\n### (Audited)\nThe shareholdings of executive Directors in 2023, including the shareholdings of their connected persons, at 31 December 2023 (or the date they stepped down from the Board, if earlier) are set out below. The following table shows the comparison of shareholdings with the company shareholding guidelines. There have been no changes in the shareholdings of the executive Directors from 31 December 2023 to the date of this report.\nWith regard to post-employment shareholding arrangements, we believe that our remuneration structure achieves the objective of ensuring there is ongoing alignment of executive Directors’ interests with shareholder experience post-cessation of their employment due to the following features of the policy:\n– Shares delivered to executive Directors as part of the fixed pay allowance have a five-year retention period, which continues to apply following a departure of an executive Director. Shares delivered as part of an annual incentive award are subject to a one-year retention period, which continues to apply following a departure of an executive Director. LTI awards have a seven-year vesting period with a one-year postvesting retention period, which is not accelerated on departure.\nIndividuals have five years from their appointment date to build up the recommended levels of shareholding. In line with investor guidance, for executive Directors, unvested shares that are not subject to forward-looking performance conditions (on a net of tax basis) can count towards their shareholding requirement under the shareholderapproved policy.\nThe Committee reviews compliance with the shareholding requirement, taking into account shareholder expectations and guidelines. The Committee also has full discretion in determining any penalties for non-compliance.\nThe weighted average holding period of an LTI award within HSBC is therefore six years, in excess of the five-year holding period typically implemented by FTSE-listed companies.\nHSBC operates a policy under which individuals are not permitted to enter into any personal hedging strategies in relation to HSBC shares subject to a vesting and/or retention period.\n### Shares\n### Service contracts\n### Payments to past Directors\nThe service contracts of executive Directors do not have a fixed term. The notice periods of executive Directors are set at the discretion of the Committee, taking into account market practice, governance considerations, and the skills and experience of the particular candidate at that time.", "chunk_word_count": 387, "section_path": "Opening up a world of opportunity > 2023 Annual General Meeting voting results > (Audited)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 301, "page_start": 301, "page_end": 301 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 403, "chunk_text": "# Opening up a world of opportunity\n## 2023 Annual General Meeting voting results\n### (Audited)\nHSBC has received a formal request from the former employer of Ewen Stevenson to reduce the buy-out award granted to him in 2019 by £82,980, which will be offset against the next available vesting for this award. The reduction will be made in line with PRA regulations, acting on the decision made by Ewen Stevenson’s former employer. We understand the reduction was part of a collective adjustment and there are no concerns over Ewen Stevenson's conduct or the discharge of his individual accountabilities.\nService agreements for each executive Director are available for inspection at HSBC Holdings’ registered office. Consistent with the best interests of the Group, the Committee will seek to minimise termination payments. Directors may be eligible for a payment in relation to statutory rights.\nPayments Ewen Stevenson received after he stepped down as an executive Director are set out in the following section.\nIn line with the terms of his departure disclosed in our Annual Report and Accounts 2022, Ewen Stevenson was granted good leaver status and is therefore eligible to receive vesting of the 2021–2023 LTI award, which was pro-rated for time in employment. Ewen’s good leaver status is conditional upon satisfaction of non-compete provisions under which he cannot undertake a role with a defined list of competitor financial services firms for 12 months after his employment ceases with HSBC. Details of the 2021–2023 LTI outcome are outlined on page 286.\nTotal pension entitlements\n(Audited)\nNo employees who served as executive Directors during the year have a right to amounts under any HSBC final salary pension scheme for their services as executive Directors or are entitled to additional benefits in the event of early retirement. There is no retirement age set for Directors, but the normal retirement age for colleagues is 65.\nNo other payments were made to, or in respect of, former Directors in the year in excess of the minimum threshold of £50,000 set for this purpose.\nfixed pay allowance in respect of the same period, which totalled £885,836 and was awarded in immediately vested shares, which are subject to a retention period. In accordance with the approved Directors' remuneration policy, Ewen received cash in lieu of unused holiday totalling £73,621 on expiry of his notice period.\n### Payments for loss of office\n(Audited)\n### Departure terms for Ewen Stevenson\nEwen Stevenson left the Group on 30 April 2023.\nIn accordance with the approved Directors' remuneration policy and contractual terms agreed for the period between 1 January 2023 and 25 October 2023, Ewen received payments totalling £703,519 in lieu of his base salary and pension allowance. Ewen also received his\n### External appointments\nDuring 2023, executive Directors did not receive any fees from external appointments.\n### Directors’ emoluments", "chunk_word_count": 469, "section_path": "Opening up a world of opportunity > 2023 Annual General Meeting voting results > (Audited)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 301, "page_start": 301, "page_end": 302 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 404, "chunk_text": "# Opening up a world of opportunity\n## 2023 Annual General Meeting voting results\n### Emoluments\nThe aggregate amount of Directors’ emoluments (including both executive Directors and non-executive Directors) for the year ended 31 December 2023 was $\\$ 25$ ,391,977. As per our policy, benefits in kind may include, but are not limited to, the provision of medical insurance, income protection insurance, health assessment, life assurance, club membership, tax assistance, car benefit, travel assistance, provision of company owned-accommodation and relocation costs (including any tax due, where applicable).\nThe total aggregate value of benefits provided to former executive Directors was £73,976 (\\$91,945). The aggregate value of Director retirement benefits for current Directors is nil. Amounts are converted into US dollars based on the average exchange rates for the year.\nThere were payments under retirement benefit arrangements with three former Directors of £1,381,674. The provision at 31 December 2023 in respect of unfunded pension obligations to two former Directors amounted to £340,208. This relates to unfunded unapproved retirement benefits schemes.\nTotal benefits in kind of £25,304 (\\$31,450) were provided to Ewen Stevenson until he left the Group. This included income protection benefits valued at £16,414 (\\$20,401), life assurance benefits of £935 (\\$1,162) and other non-taxable expenses of £7,955 (\\$9,887).\n### Emoluments of senior management and five highest paid employees\nThe following tables set out the emoluments paid to senior management, which in this case comprises executive Directors and members of the Group Executive Committee, for the year ended 31 December 2023, or for the period of appointment in 2023 as a Director or member of the Group Executive Committee. Details of the remuneration paid and share awards granted to the five highest paid employees, comprising one executive Director and four Group Executives for the year ended 31 December 2023, are also presented.\nPost-employment medical insurance benefits were provided to former Directors, including Douglas Flint valued at £6,721 (\\$8,354), Stuart Gulliver valued at £6,721 (\\$8,354), John Flint valued at £9,706 $( \\$ 12,064 )$ ), Marc Moses valued at £15,886 (\\$19,745) and Ewen Stevenson valued at £377 (\\$469). Tax return support was also provided to John Flint valued at £5,441 (\\$6,763), Marc Moses valued at £2,500 (\\$3,107) and Ewen Stevenson valued at £1,320 (\\$1,641).\n\n### Emoluments by bands\n### Non-executive Directors\n(Audited)\nThe following table shows the total fees and benefits of non-executive Directors for 2023, together with comparative figures for 2022.\n### Fees and benefits\n### Non-executive Directors’ interests in shares\n### (Audited)\nThe shareholdings of persons who were non-executive Directors in 2023, including the shareholdings of their connected persons, at 31 December 2023, or date of cessation as a Director if earlier, are set out below. There have been no changes in the shareholdings of the non-executive Directors from 31 December 2023 to the date of this report.\nNon-executive Directors are expected to meet the shareholding guidelines of 15,000 shares within five years of the date of their appointment. All non-executive Directors who had been appointed for five years or more at 31 December 2023 met the guidelines.\n### Shares", "chunk_word_count": 509, "section_path": "Opening up a world of opportunity > 2023 Annual General Meeting voting results > Emoluments", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 302, "page_start": 302, "page_end": 304 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 405, "chunk_text": "# Opening up a world of opportunity\n## 2024 fees for non-executive Directors\nFollowing a review of fees during 2023, and in accordance with the shareholder approved Directors’ Remuneration Policy at the Company’s 2022 Annual General Meeting, the Board approved increases to certain of the fees payable to the non-executive Directors and for roles on the Board Committees with effect from 1 January 2024. As a result, each non-executive Director receives a fee of £136,500 per annum. The separate travel allowance of £4,000 per annum has been incorporated within this fee – a separate travel allowance is no longer paid. The fees paid to non-executive Directors who are standing for election or re-election as members of Board Committees are set out in the table below (these Board Committees’ fees and Board fees are pro-rated for part year service where relevant).\n### Position\n1 The Group Chairman does not receive a base fee or any other fee in respect of chairing of the Nomination & Corporate Governance Committee.\n### Non-executive Director appointment and re-election\nNon-executive Directors and the Chair are appointed for fixed terms not exceeding three years, which may be renewed subject to their reelection by shareholders at AGMs. Non-executive Directors and the Chair do not have service contracts, but are bound by letters of appointment issued for and on\nbehalf of HSBC Holdings, which are available for inspection at HSBC Holdings’ registered office. There are no obligations in the nonexecutive Directors’ or Chair's letters of appointment that could give rise to remuneration payments or payments for loss of office.\n### MRT remuneration disclosures\nThe following tables set out the remuneration disclosures for individuals identified as MRTs for HSBC Holdings.\nThe 2023 variable pay information included in the following tables is based on the market value of awards. For share awards, the market value is based on HSBC Holdings’ share price at the date of grant (unless indicated otherwise). For cash awards, it is the value of awards expected to be paid to the individual over the deferral period.\nRemuneration information for individuals who are only identified as MRTs at HSBC Bank plc, HSBC UK Bank plc or other solo-regulated entity levels is included, where relevant, in those entities’ disclosures.", "chunk_word_count": 370, "section_path": "Opening up a world of opportunity > 2024 fees for non-executive Directors > Position", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 304, "page_start": 304, "page_end": 305 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 406, "chunk_text": "# Opening up a world of opportunity\n## 2024 fees for non-executive Directors\n### Remuneration awarded for the financial year (REM1)\n1 Cash-based fixed remuneration is paid immediately. \n2 Paid in HSBC shares. Vested shares are subject to a retention period of up to one year. \n3 Variable pay awarded in respect of 2023. In accordance with shareholder approval received on 23 May 2014 (98% in favour), for each MRT the variable component of remuneration for any one year is limited to $200 \\%$ of fixed component of the total remuneration. HSBC has continued to use the discount rate previously published as PRA remuneration rule 15.13 for 17 individuals for the purpose of calculating the ratio between fixed and variable components of 2023 total remuneration. \n4 26 identified staff members were exempt from the application of the remuneration structure requirements for MRTs under the PRA and FCA remuneration rules. Their total remuneration is $\\$ 6.2 m$ , of which \\$5.1m is fixed pay and \\$1.1m is variable remuneration. \n1 No guaranteed variable remuneration was awarded in 2023. HSBC would offer a guaranteed variable remuneration award in exceptional circumstances for new hires, and for the first year of employment only. It would typically involve a critical new hire, and would also depend on factors such as the seniority of the individual, whether the new hire candidate has any competing offers and the timing of the hire during the performance year. \n2 Includes payments such as payment in lieu of notice, statutory severance, outplacement service, legal fees, ex-gratia payments and settlements (excludes pre-existing benefit entitlements triggered on terminations).\n### Deferred remuneration at 31 December1 (REM3)\n### Identified staff - remuneration by band1 (REM4)\n### Share plan matters considered by the Group Remuneration Committee\nThe Group Remuneration Committee and its delegates considered various matters relating to the HSBC share plans during the financial year.\nCertain awards were granted to executive Directors or senior managers with vesting periods of less than 12 months:\n– Fixed pay allowance awards were granted to executive Directors in accordance with the approved Directors’ remuneration policy, which vest immediately and are subject to a retention period. These awards are not subject to clawback on the basis that they form part of the executive Directors’ fixed pay. The awards were granted under the HSBC Share Plan 2011.\nThe HSBC International Employee Share Purchase Plan (‘ShareMatch’) and The HSBC Holdings Savings-Related Share Option Plan (UK) (‘Sharesave’) were offered in 2023. ShareMatch was offered in the Philippines for the first time. The HSBC variable pay deferral approach for the 2023 performance year was approved, for which certain minor updates were made to comply with legal and regulatory requirements. The structure and quantum of LTI awards for the executive Directors and members of the Group Executive Committee were approved for the 2023 performance year. Other awards with performance conditions were approved for certain strategically important projects during 2023.\nImmediate share awards were granted to executive Directors and senior managers in compliance with our regulatory requirements to deliver a portion of non-deferred variable pay in instruments. These awards vest immediately, and are subject to a retention period and clawback provisions.\n### Share capital and other related governance disclosures", "chunk_word_count": 534, "section_path": "Opening up a world of opportunity > 2024 fees for non-executive Directors > Remuneration awarded for the financial year (REM1)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 305, "page_start": 305, "page_end": 307 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 407, "chunk_text": "# Opening up a world of opportunity\n## 2024 fees for non-executive Directors\n### Share buy-back programme\nOn 10 May 2023, HSBC Holdings commenced a share buy-back programme of its ordinary shares of $\\$ 0.50$ each up to a maximum consideration of $\\$ 2.0 b n$ . This programme concluded on 27 July 2023, with 129,000,963 ordinary shares repurchased for cancellation on UK trading venues and 128,774,800 ordinary shares repurchased for cancellation on The Stock Exchange of Hong Kong Limited $( ^ { \\prime } \\mathsf { H K E } \\mathsf { x } ^ { \\prime } )$ .\nAs at 31 December 2023, 143,374,864 ordinary shares had been repurchased on UK trading venues and 100,547,200 ordinary shares were repurchased on HKEx.\nThe purpose of the buy-back programmes was to reduce HSBC’s number of outstanding ordinary shares.\nAs at 31 December 2023, the total number of ordinary shares repurchased during the year was 760,621,817, representing a nominal value of \\$380,310,908.50 and an aggregate consideration paid by HSBC of £2,470,004,997 on UK trading venues and HK\\$21,646,177,512 on HKEx. The shares repurchased represent $3 . 9 5 \\%$ of the shares in issue. Of the repurchased shares, 44,237,528 were awaiting cancellation as at 31 December 2023.\nOn 3 August 2023, HSBC Holdings commenced a further share buyback programme of its ordinary shares of $\\$ 0.50$ each up to a maximum consideration of $\\$ 2.0 b n$ . This programme concluded on 26 October 2023, with 129,814,790 ordinary shares repurchased for cancellation on UK trading venues and 129,109,200 ordinary shares repurchased for cancellation on HKEx.\nOn 1 November 2023, HSBC Holdings commenced a further share buy-back programme of its ordinary shares of $\\$ 0.50$ each up to a maximum consideration of $\\$ 3.0 b n$ .\nThe table that follows outlines details of the shares repurchased and cancelled on a monthly basis during 2023.\n### Dividends\nThere are no specific restrictions on transfers of ordinary shares, which are governed by the general provisions of the Articles of Association and prevailing legislation.\n### Dividends for 2023\nInformation on the policy adopted by the Board for paying interim dividends on the ordinary shares may be found in the ’Shareholder information’ section on page 435.\nFirst, second and third interim dividends for 2023, each of $\\$ 0.10$ per ordinary share, were paid on 23 June 2023, 21 September 2023 and 21 December 2023. For further details of the dividends approved in 2023, see Note 8 on the financial statements.", "chunk_word_count": 415, "section_path": "Opening up a world of opportunity > 2024 fees for non-executive Directors > Share buy-back programme", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 308, "page_start": 308, "page_end": 309 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 408, "chunk_text": "# Opening up a world of opportunity\n## 2024 fees for non-executive Directors\n### Dividend waivers\nThe Group’s employee benefit trusts, which hold shares in HSBC Holdings in connection with the operation of its share plans, have lodged standing instructions to waive dividends on shares held by them that have not been allocated to employees. Shares held by custodians in connection with the vesting of employee share awards also lodged instructions to waive dividends. The total amount of dividends waived during 2023 was $\\$ 27.16 m$ .\nOn 21 February 2024, the Directors approved a fourth interim dividend for 2023 of $\\$ 0.31$ per ordinary share, making a total of $\\$ 0.61$ for the 2023 full-year. The fourth interim dividend for 2023 will be payable on 25 April 2024 in cash in US dollars, or in sterling or Hong Kong dollars at exchange rates to be determined on 15 April 2024. The fourth interim dividend for 2023 of $\\$ 1.55$ per American Depositary Share, each of which represents five ordinary shares, will be payable by the depositary in US dollars. As the fourth interim dividend for 2023 was approved after 31 December 2023, it has not been included in the balance sheet of HSBC as a liability. The distributable reserves of HSBC Holdings at 31 December 2023 were $\\$ 30.90n$ .\n### Preference shares\nThe preference shares, which have preferential rights to income and capital, do not, in general, confer a right to attend and vote at general meetings.\nThere are three classes of preference shares in the share capital of HSBC Holdings: non-cumulative US dollar preference shares of $\\$ 0.01$ each (‘dollar preference shares’); non-cumulative preference shares of £0.01 each (‘sterling preference shares’); and non-cumulative preference shares of $\\in 0 . 0 1$ (‘euro preference shares’).\nA quarterly dividend of £0.01 per Series A sterling preference share was paid on 15 March, 15 June, 15 September and 15 December 2023.\n### Dividends for 2024\nThe sterling preference share in issue is a Series A sterling preference share. There are no dollar preference shares or euro preference shares in issue.\nThe Group intends to pay quarterly dividends on its ordinary shares during 2024.\nA quarterly dividend of £0.01 per Series A sterling preference share is payable on 15 March, 17 June, 16 September and 16 December 2024 for the quarter then ended at the sole and absolute discretion of the Board of HSBC Holdings plc. Accordingly, the Board of HSBC Holdings plc has approved a quarterly dividend to be payable on 15 March 2024 to holders of record on 29 February 2024.\nInformation on dividends approved for 2022 and 2023 may be found in Note 8 on the financial statements on page 371.\nFurther details of the rights and obligations attaching to the HSBC Holdings’ issued share capital may be found in Note 33 on the financial statements.\n### Share capital\n### Compliance with Hong Kong Listing Rule 13.25A(2)", "chunk_word_count": 489, "section_path": "Opening up a world of opportunity > 2024 fees for non-executive Directors > Dividend waivers", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 309, "page_start": 309, "page_end": 309 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 409, "chunk_text": "# Opening up a world of opportunity\n## 2024 fees for non-executive Directors\n### Issued share capital\nHSBC Holdings has been granted a waiver from strict compliance with Rule 13.25A(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.\nThe nominal value of HSBC Holdings’ issued share capital paid up at 31 December 2023 was $\\$ 9$ ,631,364,096.50 divided into 19,262,728,193 ordinary shares of $\\$ 0.50$ each and one noncumulative preference share of £0.01, representing approximately $1 0 0 . 0 0 \\%$ and $0 . 0 0 \\%$ respectively of the nominal value of HSBC Holdings’ total issued share capital paid up at 31 December 2023.\nUnder this waiver, HSBC’s obligation to file a Next Day Return following the issue of new shares, pursuant to the vesting of share awards granted under its share plans to persons who are not Directors, would only be triggered where it falls within one of the circumstances set out under Rule 13.25A(3).\n### Rights, obligations and restrictions attaching to shares\n### Share capital changes in 2023\nThe rights and obligations attaching to each class of ordinary and noncumulative preference shares in our share capital are set out in full in our Articles of Association. The Articles of Association may be amended by special resolution of the shareholders and can be found on our website at www.hsbc.com/who-we-are/leadership-andgovernance/board-responsibilities.\nIn addition to the share buy-back programme, the following events occurred during the year in relation to the ordinary share capital of HSBC Holdings:\nScrip dividends\nThere were no scrip dividends issued during the year.\nOrdinary shares\nTreasury shares\nHSBC Holdings has one class of ordinary share, which carries no right to fixed income. There are no voting restrictions on the issued ordinary shares, all of which are fully paid. On a show of hands, each member present has the right to one vote at general meetings. On a poll, each member present or voting by proxy is entitled to one vote for every $\\$ 0.50$ nominal value of share capital held.\nOn 30 October 2023, HSBC Holdings cancelled 325,273,407 ordinary shares which were held in treasury, and no longer holds any ordinary shares in treasury.\n### All-employee share plans1\n### HSBC share plans", "chunk_word_count": 374, "section_path": "Opening up a world of opportunity > 2024 fees for non-executive Directors > Issued share capital", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 309, "page_start": 309, "page_end": 310 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 410, "chunk_text": "# Opening up a world of opportunity\n## 2024 fees for non-executive Directors\n### Authorities to allot and to purchase shares and pre-emption rights\nPing An Asset Management Co., Ltd. gave notice on 6 December 2017 that on 4 December 2017 it had an indirect interest in HSBC Holdings ordinary shares of 1,007,946,172, representing $5 . 0 4 \\%$ of the total voting rights at that date.\nAt the AGM in 2023, shareholders renewed the general authority for the Directors to allot new shares up to 13,314,186,248 ordinary shares, 15,000,000 non-cumulative preference shares of $_ { \\pm 0 . 0 1 }$ each, 15,000,000 non-cumulative preference shares of $\\$ 0.01$ each and 15,000,000 non-cumulative preference shares of $\\in 0 . 0 1$ each. Shareholders also renewed the authority for the Directors to make market/off-market purchases of up to 1,997,127,937 ordinary shares. The Directors exercised their market/off-market purchase authority from the 2023 AGM and repurchased 760,621,817 ordinary shares during the year.\nAt 31 December 2023, according to the register maintained by HSBC Holdings pursuant to section 336 of the Securities and Futures Ordinance of Hong Kong:\nBlackRock, Inc. gave notice on 9 March 2022 that on 4 March 2022 it had the following interests in HSBC Holdings ordinary shares: a long position of 1,701,656,169 shares and a short position of 19,262,061 shares, representing $8 . 2 7 \\%$ and $0 . 0 9 \\%$ respectively, of the ordinary shares in issue at that date.\nIn addition, shareholders gave authority for the Directors to grant rights to subscribe for, or to convert any security into, no more than 3,994,255,874 ordinary shares in relation to any issue by HSBC Holdings or any member of the Group of contingent convertible securities that automatically convert into or are exchanged for ordinary shares in HSBC Holdings in prescribed circumstances. For further details on the issue of contingent convertible securities, see Note 33 on the financial statements.\nPing An Asset Management Co., Ltd. gave notice on 25 September 2020 that on 23 September 2020 it had a long position of 1,655,479,531 in HSBC Holdings ordinary shares, representing $8 . 0 0 \\%$ of the ordinary shares in issue at that date.\n### Sufficiency of float\nIn compliance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, at least $2 5 \\%$ of the total issued share capital has been held by the public at all times during 2023 and up to the date of this report.\nOther than as disclosed in the tables above headed ‘Share capital changes in ${ } ^ { 2 0 2 3 ^ { \\prime } }$ , the Directors did not allot any shares during 2023.\n### Debt securities\nIn 2023, HSBC Holdings issued the equivalent of $\\$ 24.56n$ of debt securities in the public capital markets in a range of currencies and maturities, of which $\\$ 123,456$ were in the form of senior securities to ensure it meets the current and proposed regulatory rules, including those relating to the availability of adequate total loss-absorbing capacity. For details of capital instruments and subordinated bailinable debt, see Notes 29 and 33 on pages 406 and 414.", "chunk_word_count": 531, "section_path": "Opening up a world of opportunity > 2024 fees for non-executive Directors > Authorities to allot and to purchase shares and pre-emption rights", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 310, "page_start": 310, "page_end": 310 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 411, "chunk_text": "# Opening up a world of opportunity\n## 2024 fees for non-executive Directors\n### Dealings in HSBC Holdings listed securities\nThe Group has policies and procedures that, except where permitted by statute and regulation, prohibit specified transactions in respect of its securities listed on The Stock Exchange of Hong Kong Limited. Except for dealings as intermediaries or as trustees by subsidiaries of HSBC Holdings, and purchases by HSBC Holdings under the share buy-back programme, neither HSBC Holdings nor any of its subsidiaries has purchased, sold or redeemed any of its securities listed on The Stock Exchange of Hong Kong Limited during the year ended 31 December 2023.\n### Treasury shares\nIn accordance with the terms of a waiver granted by The Stock Exchange of Hong Kong Limited on 19 December 2005, HSBC Holdings will comply with the applicable law and regulation in the UK in relation to the holding of any shares in treasury and with the conditions of the waiver in connection with any shares it may hold in treasury.\n### Directors’ interests\nPursuant to the requirements of the UK Listing Rules and according to the register of Directors’ interests maintained by HSBC Holdings pursuant to section 352 of the Securities and Futures Ordinance of Hong Kong, the Directors of HSBC Holdings at 31 December 2023 had certain interests, all beneficial unless otherwise stated, in the shares or debentures of HSBC Holdings and its associated corporations.\nHSBC Holdings does not hold any ordinary shares in treasury.", "chunk_word_count": 247, "section_path": "Opening up a world of opportunity > 2024 fees for non-executive Directors > Dealings in HSBC Holdings listed securities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 310, "page_start": 310, "page_end": 310 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 412, "chunk_text": "# Opening up a world of opportunity\n## 2024 fees for non-executive Directors\n### Notifiable interests in share capital\nDuring 2023, HSBC Holdings did not receive any notification of major holdings of voting rights pursuant to the requirements of Rule 5 of the Disclosure Guidance and Transparency Rules (’Rule 5 of the DTRs’).\nSave as stated in the following table, no further interests were held by Directors, and no Directors or their connected persons were awarded or exercised any right to subscribe for any shares or debentures in any HSBC corporation during the year.\nNo notifications had been received between 31 December 2023 and 15 February 2024. Previous notifications received are as follows:\n– BlackRock, Inc. gave notice on 3 March 2020 that on 2 March 2020 it had the following: an indirect interest in HSBC Holdings ordinary shares of 1,235,558,490; qualifying financial instruments with 7,294,459 voting rights that may be acquired if the instruments are exercised or converted; and financial instruments with a similar economic effect to qualifying financial instruments, which refer to 2,441,397 voting rights, representing $6 . 0 7 \\%$ , $0 . 0 3 \\%$ and $0 . 0 1 \\%$ , respectively, of the total voting rights at 2 March 2020.\nNo Directors held any short position as defined in the Securities and Futures Ordinance of Hong Kong in the shares or debentures of HSBC Holdings and its associated corporations.\nGeraldine Buckingham has an interest in 3,000, Rachel Duan has an interest in 3,000, James Forese has an interest in 23,000, Ann Godbehere has an interest in 3,000, Steven Guggenheimer has an interest in 3,000, José Antonio Meade Kuribreña has an interest in 3,000, Kalpana Morparia has an interest in 3,000, Eileen Murray has an interest in 15,000 and Jackson Tai has an interest in 13,303 listed American Depositary Shares (’ADS’), which are categorised as equity derivatives under Part XV of the Securities and Futures Ordinance of Hong Kong. Each ADS represents five HSBC Holdings ordinary shares.\n2 Executive Directors’ other interests in HSBC Holdings ordinary shares arising from the HSBC Holdings Savings-Related Share Option Plan (UK) and the HSBC Share Plan 2011 are set out in the Scheme interests in the Directors’ remuneration report on page 279. At 31 December 2023, the aggregate interests under the Securities and Futures Ordinance of Hong Kong in HSBC Holdings ordinary shares, including interests arising through employee share plans and the interests above were: Noel Quinn – 4,993,390; and Georges Elhedery – 1,942,938, representing approximately $0 . 0 3 \\%$ and $0 . 0 1 \\%$ of the shares in issue respectively.\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\nThere have been no changes in the shares or debentures of the current Directors from 31 December 2023 to the date of this report.", "chunk_word_count": 474, "section_path": "Opening up a world of opportunity > 2024 fees for non-executive Directors > Notifiable interests in share capital", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 310, "page_start": 310, "page_end": 311 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 413, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Conflicts of interest\nThe Board has an established policy and set of procedures to ensure that the Board’s management of Directors’ conflicts of interest is effective. The Board has the power to authorise conflicts where they arise, in accordance with the Companies Act 2006 and HSBC Holdings’ Articles of Association. Details of all Directors’ conflicts of interest are recorded in the register of conflicts. Upon appointment, new Directors are advised of the policy and procedures for managing conflicts. Directors are required to notify the Board of any actual or potential conflicts of interest and to update the Board with any changes to the facts and circumstances surrounding such conflicts. Directors are requested to review and confirm their own and their respective closely associated persons’ outside interests and appointments twice each year. The Board has considered, and authorised (with or without conditions) where appropriate, potential conflicts as they have arisen during the year in accordance with its conflicts policy and procedures. All non-executive Directors are subject to re-vetting by the Group's compliance team on a triennial basis following appointment. As part of this re-vetting process, all conflicts checks are refreshed.\n### Listing Rule 9.8.4 and other disclosures\nThis section of the Annual Report and Accounts 2023 forms part of – and includes certain disclosures required – in the Report of the Directors incorporated by cross-reference, including under Listing Rule 9.8.4 and otherwise as applicable by law.\n### Joint Company Secretary\nBoard governance\nAileen Taylor is the Group Company Secretary and Chief Governance Officer.\n### Appointment and re-election of Directors\nHannah Ashdown (47) was appointed as Deputy Group Secretary in December 2021 and for administrative purposes, in October 2022, was appointed as Joint Company Secretary. She is a Fellow of the Chartered Governance Institute UK and Ireland. Hannah has over 20 years’ governance and regulatory experience across multiple sectors including financial services, asset management, energy, leisure and retail.\nFor details on the processes governing the appointment and reelection of Directors, see the Nomination & Corporate Governance Committee report from page 262.\nCommitments\nFor details on the processes governing Director commitments, see the Nomination & Corporate Governance Committee report from page 262.\nDirector is also available to shareholders if they have concerns that cannot be resolved or for which the normal channels would not be appropriate. They can be contacted via the Group Company Secretary and Chief Governance Officer at 8 Canada Square, London E14 5HQ.", "chunk_word_count": 427, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Conflicts of interest", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 311, "page_start": 311, "page_end": 312 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 414, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Directors’ indemnity\nThe Articles of Association of HSBC Holdings contain a qualifying third-party indemnity provision, which entitles Directors and other officers to be indemnified out of the assets of HSBC Holdings against claims from third parties in respect of certain liabilities.\nThe results of the poll vote at the 2023 AGM were published on 5 May 2023 and showed that on resolutions 2, 3(l), 6, 7, 14 and 15 we received votes of between $2 0 . 0 4 \\%$ to $2 3 . 3 0 \\%$ against the Board’s recommendations. In our statement of 5 May 2023, it was noted that our largest shareholder, Ping An, voted against the Board’s recommendations on the above resolutions and a number of others. Ping An’s votes accounted for approximately $1 8 \\%$ to $1 9 \\%$ of all votes cast at the 2023 AGM based on a turnout of around $50 \\%$ . The Board was pleased that a large majority of shareholders voting at the 2023 AGM supported HSBC’s strategy and since the AGM there have been no concerns expressed by shareholders regarding the above resolutions. As referenced in the announcement released on 3 November 2023, we continue to have constructive dialogue and provide corporate access to all our institutional shareholders, including Ping An and respect and listen to their views.\nHSBC Holdings has granted, by way of deed poll, indemnities to the Directors, including former Directors, against certain liabilities arising in connection with their position as a Director of HSBC Holdings or of any Group company. Directors are indemnified to the maximum extent permitted by law.\nThe indemnities that constitute a ’qualifying third-party indemnity provision’, as defined by section 234 of the Companies Act 2006, remained in force for the whole of the financial year (or, in the case of Directors appointed during 2023, from the date of their appointment). The deed poll is available for inspection at the registered office of HSBC Holdings.\nAdditionally, Directors and pension trustees have the benefit of both Directors’ and officers’ liability insurance and pension trustees’ liability insurance.", "chunk_word_count": 368, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Directors’ indemnity", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 312, "page_start": 312, "page_end": 312 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 415, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Annual General Meeting\nQualifying pension scheme indemnities have also been granted to the trustees of the Group’s pension schemes, which were in force for the whole of the financial year and remain in force as at the date of this report.\nThe AGM in 2024 is planned to be held in London, UK at 11:00am on Friday, 3 May 2024. Information on how to vote and participate, both in advance and on the day, can be found in the Notice of the 2024 AGM, which will be sent to shareholders on 22 March 2024 and be available on www.hsbc.com/agm. A live webcast will be available on www.hsbc.com. A recording of the proceedings will be available on www.hsbc.com shortly after the conclusion of the AGM. Shareholders should monitor our website and announcements for any changes to these arrangements. Shareholders may send enquiries to the Board in writing via the Group Company Secretary and Chief Governance Officer, HSBC Holdings plc, 8 Canada Square, London $\\mathsf { E } 1 4 5 \\mathsf { H O }$ or by sending an email to shareholderquestions@hsbc.com.\n### Contracts of significance\nDuring 2023, none of the Directors had a material interest, directly or indirectly, in any contract of significance with any HSBC company. During the year, all Directors were reminded of their obligations in respect of transacting in HSBC securities and following specific enquiry all Directors have confirmed that they have complied with their obligations.\n### General meetings and resolutions", "chunk_word_count": 268, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Annual General Meeting", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 312, "page_start": 312, "page_end": 312 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 416, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Shareholder engagement and communication\nShareholders may require the Directors to call a general meeting other than an AGM, as provided by the UK Companies Act 2006. A valid request to call a general meeting may be made by members representing at least $5 \\%$ of the paid-up capital of HSBC Holdings as carries the right of voting at its general meetings (excluding any paidup capital held as treasury shares). A request must state the general nature of the business to be dealt with at the meeting and may include the text of a resolution that may properly be moved and is intended to be moved at the meeting. At any general meeting convened on such request, no business may be transacted except that stated by the requisition or proposed by the Board.\nThe Board is directly accountable to, and gives high priority to communicating with, HSBC’s shareholders. Information about HSBC and its activities is provided to shareholders in its Interim Reports and the Annual Report and Accounts as well as on www.hsbc.com.\nThe Board seeks to understand investor needs through ongoing dialogue between members of the Board and institutional investors throughout the year. For examples of such engagement, see 'Board engagement with shareholders' on page 256 and the Group Remuneration Committee Chair’s letter on page 279. During 2023, approximately 643 meetings were held with institutional investors and analysts globally.\nShareholders may request the Directors to send a resolution to shareholders for consideration at an AGM, as provided by the UK Companies Act 2006. A valid request must be made by (i) members representing at least $5 \\%$ of the paid-up capital of HSBC Holdings as carries the right of voting at its general meetings (excluding any paid-up capital held as treasury shares), or (ii) at least 100 members who have a right to vote on the resolution at the AGM in question and hold shares in HSBC Holdings on which there has been paid up an average sum, per member, of at least £100.\nOur shareholder communications policy summarises how we communicate with our shareholders, including through financial reporting, general shareholder meetings, investor and analyst meetings and our website. The policy is reviewed annually by the Board, and in 2023 the Board confirmed that it was satisfied with its implementation and effectiveness. The policy can be found at www.hsbc.com/who-we-are/leadership-and-governance/boardresponsibilities.\nThe request must be received by HSBC Holdings not later than (i) six weeks before the AGM in question; or (ii) if later, the time at which the notice of AGM is published.\nWe also publish our current and past financial results, investor presentations and shareholder information such as dividend payments and shareholder meeting details. Stock exchange announcements are also accessible on our website along with information for fixed income investors. For further details, see www.hsbc.com/investors.\nA request may be in hard copy form or in electronic form, and must be authenticated by the person or persons making it. A request may be made in writing to HSBC Holdings at its UK address, referred to in the paragraph above or by sending an email to shareholderquestions@hsbc.com.", "chunk_word_count": 539, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Shareholder engagement and communication", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 312, "page_start": 312, "page_end": 312 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 417, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Shareholder engagement and communication\nDirectors are encouraged to develop an understanding of the views of shareholders. Enquiries from individuals on matters relating to their shareholdings and HSBC’s business are welcomed.\nArticles of Association\nAny individual or institutional investor can make an enquiry by contacting the investor relations team, Group Chairman, Group Chief Executive, Group Chief Financial Officer and Group Company Secretary and Chief Governance Officer. Our Senior Independent\nThe Articles of Association were last approved at the 2022 AGM. The Articles of Association can be found at www.hsbc.com/who-we-are/ leadership-and-governance/board-responsibilities.\n### Events after the balance sheet date\noverseeing emerging risks and potential risks arising from new products and offerings.\nFor details of events after the balance sheet date, see Note 39 on the financial statements.\nTo support the work of the Board, the GRC and the GAC in discharging their responsibilities in this regard, assurance was also provided by executive management confirming that a risk assessment had been undertaken and controls were in place to mitigate the risks arising from the Group’s key activities. Necessary actions will be taken to remedy any failings or weaknesses identified from these activities and included the implementation of additional assurance procedures including in relation to the Group's externally driven ESG and climate-related disclosures, change programmes and regulatory reporting.\n### Change of control\nThe Group is not party to any significant agreements that take effect, alter or terminate following a change of control of the Group. The Group does not have agreements with any Director or employee that would provide compensation for loss of office or employment resulting from a takeover bid.\n### Branches\nThe key risk management and internal control procedures include the following:\nThe Group provides a wide range of banking and financial services through branches and offices in the UK and overseas.\n### Global Principles\nThe Group’s Global Principles set an overarching standard for all policies and procedures and are fundamental to the Group’s risk management structure. They inform and connect our purpose, values, strategy and risk management principles, guiding us to do the right thing and treat our customers and our colleagues fairly at all times. In 2024, the Global Principles will be replaced by a more concise and targeted version of the document, known as the HSBC Book.\n### Research and development activities\nDuring the ordinary course of business, the Group develops new products and services within the global businesses.", "chunk_word_count": 423, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Shareholder engagement and communication", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 312, "page_start": 312, "page_end": 313 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 418, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Political donations\nHSBC does not make any political donations or incur political expenditure within the ordinary meaning of those words. We have no intention of altering this policy. However, the definitions of political donations, political parties, political organisations and political expenditure used in the UK Companies Act 2006 are very wide. As a result, they may cover routine activities that form part of the normal business activities of the Group and are an accepted part of engaging with stakeholders. To ensure that neither the Group nor any of its subsidiaries inadvertently breaches the UK Companies Act 2006, authority is sought from shareholders at the AGM to make political donations.\n### Risk management framework\nThe risk management framework supports our Global Principles, and going forward, our HSBC Book. It outlines the key principles and practices that we employ in managing material risks. It applies to all categories of risk and supports a consistent approach in identifying, assessing, managing and reporting the risks we accept and incur in our activities.\n### Delegation of authority within limits set by the Board\nSubject to certain matters reserved for the Board, the Group Chief Executive has been delegated authority limits and powers within which to manage the day-to-day affairs of the Group. A new delegation of authorities framework was implemented in April 2023 with the aim of providing a simpler Group structure within which the Board and its subsidiaries can manage their delegated powers. These delegated authorities can be used for the approval, signing and execution of specific written agreements and documents such as procurement contracts.\nHSBC provides administrative support to two political action committees (’PACs’) in the US funded by voluntary political contributions by eligible employees. We do not control the PACs, and all decisions regarding the amounts and recipients of contributions are directed by a voluntary Board Finance Committee, which consists of contributing eligible employees. The PACs recorded combined political donations of \\$110,004 during 2023 (2022: \\$100,250).\n### Charitable contributions\nThe delegation of authorities framework is either granted via a separate board resolution or power of attorney or is set out in the relevant Group policy with clear systems of control that are appropriate to the business or function. Authorities to enter into credit and market risk exposures are delegated with limits to line management of Group companies in line with Group policy. Credit and market risks are measured and reported at subsidiary company level and aggregated for risk concentration analysis on a Group-wide basis.\nFor details of charitable contributions, see page 86.\n### Internal control\nThe Board is responsible for maintaining and reviewing the effectiveness of the Group’s risk management and internal control systems, and for determining the level and type of risks the Group is willing to take in achieving its strategic objectives.", "chunk_word_count": 486, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Political donations", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 313, "page_start": 313, "page_end": 313 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 419, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Risk identification and monitoring\nTo meet this requirement and to discharge its obligations under the FCA Handbook and the PRA Rulebook, procedures have been designed: for safeguarding assets against unauthorised use or disposal; for maintaining proper accounting records; and for ensuring the reliability and usefulness of financial information used within the business or for publication.\nSystems and procedures are in place to identify, assess, control and monitor the material risk types facing HSBC as set out in the risk management framework. The Group‘s risk measurement and reporting systems are designed to help ensure that material risks are captured with all the attributes necessary to support well-founded decisions, that those attributes are accurately assessed and that information is delivered in a timely manner for those risks to be successfully managed and mitigated.\nThese procedures provide reasonable assurance against material misstatement, errors, losses or fraud. They are designed to provide effective internal control within the Group and accord with the Financial Reporting Council‘s guidance for Directors, issued in 2014, on risk management, internal control and related financial and business reporting. The procedures have been in place throughout the year and up to 21 February 2024, the date of publication of the Annual Report and Accounts 2023.\n### Changes in market conditions/practices\nProcesses are in place to identify new risks arising from changes in market conditions/practices or customer behaviours, which could expose the Group to heightened risk of loss or reputational damage.\nThe Group employs both a top and emerging risks process to provide forward-looking views of issues with the potential to threaten the execution of our strategy or operations over the medium to long term.\nThe Board, the GRC and the GAC monitored the effectiveness of the Group’s system of risk management and internal control throughout the year. In particular, this focused on the Group’s regulatory remediation and change programmes, and involved working closely with management to better prioritise and understand where there are key interdependencies. In 2024, continued focus will be placed on\nWe remain committed to investing in the reliability and resilience of our IT systems and critical services, including those provided by third parties, that support all parts of our business. We do so to help protect our customers, affiliates and counterparties, and to help\nensure that we minimise any disruption to services that could result in reputational and regulatory consequences. In our approach to defend against these threats, we invest in business and technical controls to help us detect, manage and recover from issues, including data loss, in a timely manner.", "chunk_word_count": 447, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Risk identification and monitoring", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 313, "page_start": 313, "page_end": 314 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 420, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Financial reporting controls\nThe Group’s financial reporting process is controlled using documented accounting policies and reporting formats, supported by detailed instructions and guidance on reporting requirements, issued to all reporting entities within the Group in advance of each reporting period end. The submission of financial information from each reporting entity is supported by a certification by the responsible financial officer and analytical review procedures at reporting entity and Group levels.\nWe continue our focus on the quality and timeliness of the data used to inform management decisions, through measures such as early warning indicators, prudent active risk management of our risk appetite, and ensuring regular communication with our Board and other key stakeholders.\n### Responsibility for risk management\nAll employees are responsible for identifying and managing risk within the scope of their role as part of the three lines of defence model. This is an activity-based model to delineate management accountabilities and responsibilities for risk management and the control environment. The second line of defence sets the policy and guidelines for managing specific risk areas, provides advice and guidance in relation to the risk, and challenges the first line of defence (the risk owners) on effective risk management.\n### Group Disclosure and Controls Committee\nChaired by the Group Chief Financial Officer, the Group Disclosure and Controls Committee supports the discharge of the Group’s obligations under relevant legislation and regulation including the UK and Hong Kong listing rules, the UK Market Abuse Regulation and US Securities and Exchange Commission rules. In so doing, the Group Disclosure and Controls Committee is empowered to determine whether a new event or circumstance should be disclosed, including the form and timing of such disclosure, and review certain material disclosures made or to be made by the Group. The membership of the Group Disclosure and Controls Committee consists of senior management, including the Group Chief Financial Officer, Group Chief Risk and Compliance Officer, Group Chief Legal Officer, and Group Company Secretary and Chief Governance Officer. The Group’s brokers, external auditors and its external legal counsel also attend as required. The integrity of disclosures is underpinned by structures and processes within the Global Finance and Group Risk and Compliance functions that support rigorous analytical review of financial reporting and the maintenance of proper accounting records. As required by the Sarbanes-Oxley Act, the Group Chief Executive and the Group Chief Financial Officer have certified that the Group’s disclosure controls and procedures were effective as at the end of the period covered by the Annual Report and Accounts 2023.\nThe Board delegated authority to the GAC to annually review the independence, autonomy and effectiveness of the Group’s policies and procedures on whistleblowing, including the procedures for the protection of staff who raise concerns of detrimental treatment.", "chunk_word_count": 481, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Financial reporting controls", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 314, "page_start": 314, "page_end": 314 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 421, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Strategic plans\nStrategic plans are prepared for global businesses, global functions and geographical regions within the framework of the Group’s overall strategy. Financial resource plans, informed by detailed analysis of risk appetite describing the types and quantum of risk that the Group is prepared to take in executing its strategy, are prepared and adopted by all major Group operating companies and set out the key business initiatives and the likely financial effects of those initiatives.\n### Internal control over financial reporting\nHSBC is required to comply with section 404 of the US Sarbanes-Oxley Act of 2002 and assess its effectiveness of internal control over financial reporting at 31 December 2023. In 2014, the GAC endorsed the adoption of the principles of the Committee of Sponsoring Organizations of the Treadway Commission (’COSO’) 2013 framework for the monitoring of risk management and internal control systems to satisfy the requirements of section 404 of the Sarbanes-Oxley Act.\nThe annual review of the effectiveness of the Group’s system of risk management and internal control over financial reporting was conducted with reference to the COSO 2013 framework. Based on the assessment performed, the Directors concluded that for the year ended 31 December 2023, the Group’s internal control over financial reporting was effective.\nPwC has audited the effectiveness of HSBC’s internal control over financial reporting and has given an unqualified opinion.\nThe primary mechanism through which comfort over risk management and internal control systems is achieved is through annual assessments of the effectiveness of controls to manage risk, and the reporting of issues on a regular basis through the various risk management and risk governance forums.\n### Other information included in the Annual Report and Accounts 2023\nWe include other non-statutory information in the Annual Report and Accounts to enable a broader perspective of our performance for the period, including ESG and regulatory capital and liquidity information. We highlight on pages 43 and 267 that we are seeking to enhance our governance, process, systems and controls capabilities in both areas, although the scale and nature of the challenges differ between reporting areas. Our improvements in regulatory reporting are intended to strengthen our global processes, improve consistency and enhance controls in order to meet regulatory expectations. ESG reporting continues to evolve, with a lack of globally consistent metrics, taxonomies and best practices and a high reliance on external data. The GAC provides oversight to our reporting improvements in both areas, and is also focused on increasing the level of internal and external assurance in these areas, in line with wider market developments (set out on page 267).\nThe key risk management and internal control procedures over financial reporting include the following:", "chunk_word_count": 468, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Strategic plans", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 314, "page_start": 314, "page_end": 314 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 422, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Entity level controls\nEntity level controls are a defined suite of internal controls that have a pervasive influence over the entity as a whole and meet the principles of the COSO framework. They include controls related to the control environment, such as the Group's values and ethics, the promotion of effective risk management and the overarching governance exercised by the Board and its non-executive committees. The design and operational effectiveness of entity level controls are assessed on an ongoing basis. If issues are significant to the Group, they are escalated to the GRC and also to the GAC, if concerning financial reporting matters.\n### Process level transactional controls\nGoing concern\nKey process level controls that mitigate the risk of financial misstatement are identified, recorded and monitored in accordance with the risk framework. This includes the identification and assessment of relevant control issues against which action plans are tracked through to remediation. Further details of HSBC’s approach to risk management can be found on page 136. The GAC has continued to receive regular updates on HSBC’s ongoing activities for improving the effective oversight of end-to-end business processes, and management continued to identify opportunities for enhancing key controls, such as through the use of automation technologies.\nThe Board, having made appropriate enquiries, is satisfied that the Group as a whole has adequate resources to continue operations for a period of at least 12 months from the date of this report, and it therefore continues to adopt the going concern basis in preparing the financial statements.\nFor further details, see page 40.\n### Employees\nAt 31 December 2023, HSBC had a total workforce equivalent to 221,000 full-time employees compared with 219,000 at the end of 2022. Our main centres of employment were India with approximately 42,000 employees, the UK with 33,000, mainland China with 33,000, Hong Kong with 26,000, Mexico with 17,000 and France with 6,000.\n### Employment of people with a disability\nWe strongly believe in providing equal opportunities for our employees. The employment of people with a disability is included in this commitment. We are committed to retaining disabled employees in the workplace and to providing reasonable adjustments to enable this.\nOur business spans many cultures, communities and continents. We aspire to provide a high-performing environment where our colleagues can fulfil their potential by building their skills and capabilities while focusing on the development of a diverse and inclusive culture. We use employee surveys to assess progress and make changes. We want to provide an open culture, where our colleagues feel connected and supported to speak up, and where our leaders encourage and use feedback. Where we make organisational changes, we support our colleagues, in particular where there are job impacts.", "chunk_word_count": 474, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Entity level controls", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 314, "page_start": 314, "page_end": 315 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 423, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Employee development\nWe aim to build a dynamic, inclusive culture where the best want to develop the skills and experiences that help them fulfil their potential. This determines how we develop our people and recruit, identify and nurture talent. A range of resources bring this to life including:\n– HSBC University, our platform for learning and development with specific business and technical academies; our My HSBC Career portal, which offers career development information and resources; and HSBC Talent Marketplace, our online platform that uses AI to provide opportunities to learn as we work.\n### Employee relations\nWe consult with and, where appropriate, negotiate with employee representative bodies where we have them. It is our policy to maintain well-developed communications and consultation programmes with all employee representative bodies. There have been no material disruptions to our operations from labour disputes during the past five years.\nEveryone at HSBC annually completes global mandatory training. It plays a critical role in shaping our culture by ensuring everyone is focused on issues that are fundamental to working at HSBC, from sustainability, to financial crime risk, to our intolerance of bullying and harassment.\nWe are committed to complying with the applicable employment laws and regulations in the jurisdictions in which we operate, including in relation to working hours and rest periods. HSBC’s global employment practices and relations policy provides the framework and controls through which we seek to uphold that commitment.\nAs the opportunities we face change, we provide development to key groups of colleagues through business and technical academies. This includes our risk academy, which helps us to develop broad capabilities in traditional areas of risk like financial crime but also in emerging risk issues like climate risk and the ethics of AI and data.", "chunk_word_count": 315, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Employee development", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 315, "page_start": 315, "page_end": 315 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 424, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Diversity and inclusion\nOur approach to learning is skills based. Our academies work with our businesses to identify the key skills and capabilities we need in the future. Alongside this, we help colleagues identify, assess and develop the skills that match their ambition and aspirations.\nOur customers, colleagues and communities span many cultures and continents. We value difference and believe that diversity makes us stronger. We are dedicated to building a diverse and connected workforce where everyone feels a sense of belonging.\nOur platform for learning content is Degreed. This helps colleagues identify, assess and develop key skills through internal and external training materials in a way that suits them. Content can range from quick videos, articles or podcasts to packaged programmes or learning pathways.\nOur Group People Committee, which is made up of Group Executive Committee members, governs our diversity and inclusion agenda. It meets regularly to agree actions to improve diverse representation and build a more inclusive culture. Members of our Group Executive Committee are held to account for the actions they take on diversity via aspirational goals contained within their performance scorecards.\nEffective people management and impactful leadership remain critical to our ability to energise for growth. In 2023 we have continued to focus on equipping our management population with the skills they need to lead the organisation and energise our colleagues. We have continued to run our Enterprise Leadership Programme for our most senior leaders and developed the Managing Director Leadership Programme further following the launch in 2022. We have also refreshed our People Management Excellence programme which is available to leaders at all levels of the organisation to help them manage colleagues and nurture a productive team.\nWe expect all colleagues at HSBC to treat each other with dignity and respect to ensure an inclusive environment. Our policies make it clear that we do not tolerate unlawful discrimination, bullying or harassment on any grounds.\nTo align our approach to inclusion best practices, we participate in global diversity benchmarks that help us to identify improvement opportunities. We also track a large number of diversity and inclusion metrics, including those included in the Group executive scorecards, which enable us to identify inclusion barriers and take action where required. Our approach to diversity and inclusion is set out on page 76 alongside our goals and progress.\nFurther details of our diversity and inclusion activity, alongside our Gender and Ethnicity Pay Gap Reports 2023, can be found at www.hsbc.com/diversitycommitments.", "chunk_word_count": 434, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Diversity and inclusion", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 315, "page_start": 315, "page_end": 315 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 425, "chunk_text": "# Opening up a world of opportunity\n## 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian.\n### Health and safety\nWe are committed to providing a safe and healthy working environment for everyone. We have adopted global policies, mandatory procedures, and incident and information reporting systems across the organisation that reflect our core values and are aligned to international standards. Our global health and safety performance is subject to ongoing monitoring and assurance to ensure we are compliant with relevant laws and regulations.\nProtection of our colleagues and operations is of critical importance, and we have effective controls in place to protect our people from natural disasters (such as storms and earthquakes). In 2023, there were 27 named storms that passed over 2,010 of our buildings, resulting in no injuries. Only five buildings in Mexico were affected with minor business impact following Storm Otis.\n### Employee health and safety\nOur chief operating officers have overall responsibility for engendering a positive health and safety culture and ensuring that global policies, procedures and systems are put into practice locally. They also have responsibility for ensuring all local legal requirements are met.\nWe delivered a range of programmes in 2023 to help us understand and manage our health and safety risks:\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\nWe reinforced our advice and risk assessment and control methodology on working from home for employees adopting a hybrid work style, providing more awareness and best practices on good ergonomics and well-being.\n### Remuneration\n– We delivered health and safety training and awareness to 235,000 of our employees and contractors globally, ensuring roles and responsibilities were clear and understood.\nHSBC’s pay and performance strategy is designed to reward competitively the achievement of long-term sustainable performance and attract and motivate the very best people, regardless of gender, ethnicity, age, disability or any other factor unrelated to performance or experience with the Group, while performing their role in the longterm interests of our stakeholders.\n– We completed the annual safety inspection on all of our buildings globally, to ensure we were meeting our standards and continuously improving our safety performance.\nWe maintained measures in our workplaces globally to minimise the risks from the spread of respiratory disease, including through the provision of hand sanitiser, improved ventilation, and guidance on good hygiene practices.\nFor further details of the Group’s approach to remuneration, see page 290.", "chunk_word_count": 409, "section_path": "Opening up a world of opportunity > 3 Jackson Tai has a non-beneficial interest in 11,965 shares of which he is custodian. > Health and safety", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 316, "page_start": 316, "page_end": 316 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 426, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Employee share plans\nWe continued to focus on enhancing the safety culture in our supply chain through our SAFER Together programme, covering the five key elements of best practice safety culture, including speaking up about safety, and recognising excellence.\nSummaries of the share options and share awards granted, exercised/ vested or lapsed during the year and other details required to be disclosed pursuant to Chapter 17 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, including detailed summaries of the HSBC share plans, are available on our website at www.hsbc.com/who-we-are/leadership-and-governance/ remuneration and on the website of The Stock Exchange of Hong Kong Limited at www.hkex.com.hk, or can be obtained upon request from the Group Company Secretary and Chief Governance Officer, 8 Canada Square, London E14 5HQ.\n– We continued to provide our guidance and training programme for our construction partners, focusing on our key markets globally to reduce the likelihood of accidents occurring by helping them understand and deliver industry-leading health and safety performance. More than 7,500 construction workers received safety passport training across 20 countries.\n– In 2023, our Eat Well Live Well programme continued to promote healthier and more sustainable diets among our colleagues with $30 \\%$ of global food sales from HSBC catering outlets comprising healthy options. We also extended the reach of our programme through the launch of increased plant-based offers, monthly events dedicated to Eat Well Live Well, and virtual teaching kitchens accessible to all our employees.\n### Particulars of options held by Directors of HSBC Holdings are set out on page 299.\nNote 5 on the financial statements gives details of share-based payments, including discretionary awards of shares granted under HSBC share plans.\n### Statement of compliance\nUnder the Hong Kong Code, the audit committee should be responsible for the oversight of all risk management and internal control systems. HSBC’s Group Risk Committee is responsible for oversight of internal control, other than internal control over financial reporting, and risk management systems. This is permitted under the UK Corporate Governance Code.\nThe statement of corporate governance practices set out on pages 238 to 316 and the information referred to therein constitutes the ’Corporate governance report’ and ’Report of the Directors’ of HSBC Holdings. The websites referred to do not form part of this report.\nHSBC Holdings has codified obligations for transactions in Group securities in accordance with the requirements of the UK Market Abuse Regulation and the rules governing the listing of securities on HKEx. The Group has been granted certain waivers by HKEx from strict compliance with the rules that take into account accepted practices in the UK, particularly in respect of employee share plans. During the year, all Directors were reminded of their obligations in respect of transacting in HSBC Group securities. Following specific enquiry all Directors have confirmed that they have complied with their obligations.\nThe Group Audit Committee has reviewed and provided assurance to the HSBC Holdings Board on the publication of the Annual Report and Accounts 2023.\nOn behalf of the Board", "chunk_word_count": 529, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Employee share plans", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 316, "page_start": 316, "page_end": 317 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 427, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Mark E Tucker\nGroup Chairman HSBC Holdings plc Registered number 617987 21 February 2024\n### Directors’ responsibility statement\nThe Directors are responsible for preparing the Annual Report and Accounts 2023, the Directors’ remuneration report and the financial statements in accordance with applicable law and regulations.\nEach of the Directors, whose names and functions are listed in the ‘Report of the Directors: Corporate governance report’ on pages 239 to 243 of the Annual Report and Accounts 2023, confirms that, to the best of their knowledge:\nCompany law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the parent company (‘Company’) and the Group financial statements in accordance with UK-adopted international accounting standards. The company has also prepared financial statements in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. In preparing these financial statements, the Directors have also elected to comply with International Financial Reporting Standards issued by the International Accounting Standards Board (IFRS Accounting Standards). Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and Group, and of the profit or loss of the Company and the Group for that period. In preparing these financial statements, the Directors are required to:\n– the Group financial statements, which have been prepared in accordance with UK-adopted international accounting standards, international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and IFRS Accounting Standards, give a true and fair view of the assets, liabilities, financial position, and profit or loss of the Group; and the management report represented by the Report of the Directors includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.\nThe Group Audit Committee has responsibility, delegated to it from the Board, for overseeing all matters relating to external financial reporting. The Group Audit Committee report on page 266 sets out how the Group Audit Committee discharges its responsibilities.\n– select suitable accounting policies and then apply them consistently; make judgements and accounting estimates that are reasonable and prudent; state whether applicable UK-adopted international accounting standards, international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union and IFRS Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company and Group will continue in business.", "chunk_word_count": 480, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Mark E Tucker", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 317, "page_start": 317, "page_end": 318 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 428, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Disclosure of information to auditors\nIn accordance with section 418 of the Companies Act 2006, the Directors’ report includes a statement, in the case of each Director in office as at the date the Report of the Directors is approved, that:\n– so far as the Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and they have taken all the steps they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company’s auditors are aware of that information.\nThe Directors are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.\nThe Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions, and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors’ remuneration report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.\nOn behalf of the Board\n### Mark E Tucker\nGroup Chairman HSBC Holdings plc Registered number 617987 21 February 2024\nThe Directors are responsible for the maintenance and integrity of the Annual Report and Accounts 2023 as they appear on the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.\nThe Directors consider that the Annual Report and Accounts 2023, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.\n### Financial statements\nThe financial statements provide detailed information and notes on our income, balance sheet, cash flows and changes in equity, alongside a report from our independent auditors.\n318 Report of Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of HSBC Holdings plc \n329 Financial statements \n341 Notes on the financial statements\n### Unlocking a world of travel freedom\nWe have continued to build our suite of products aimed at internationally minded customers, with the launch of the TravelOne credit card.\nThe card, which in May 2023 initially launched in Singapore, Malaysia and Vietnam, allows customers to earn extra reward points for travel and cross-border spending. They can then redeem them instantly with 17 international airline programmes and 20,000 hotel partners – a first in the markets where it has launched.\nTravelOne builds on our wealth strategy and supports our ambitions to grow our cross-border international customer franchise and unsecured lending business in south Asia.\n### Report of Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of HSBC Holdings plc\n### Independent auditors’ report to the members of HSBC Holdings plc\n### Report on the audit of the financial statements", "chunk_word_count": 519, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Disclosure of information to auditors", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 318, "page_start": 318, "page_end": 319 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 429, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Opinion\nIn our opinion, HSBC Holdings plc’s group financial statements and parent company financial statements (the “financial statements”):\ngive a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2023 and of the group’s and parent company’s profit and the group’s and parent company’s cash flows for the year then ended;\n– have been properly prepared in accordance with UK-adopted international accounting standards; and – have been prepared in accordance with the requirements of the Companies Act 2006.\nWe have audited the financial statements, included within the Annual Report and Accounts 2023 (the ’Annual Report’), which comprise: the consolidated and parent company balance sheets as at 31 December 2023; the consolidated and parent company income statements, the consolidated and parent company statements of comprehensive income, the consolidated and parent company statements of changes in equity and the consolidated and parent company statements of cash flows for the year then ended; and the notes to the financial statements, comprising material accounting policy information and other explanatory information. Certain notes to the financial statements have been presented elsewhere in the Annual Report, rather than in the notes to the financial statements. These are cross-referenced from the financial statements and are identified as ‘(Audited)’. The relevant disclosures are included in the Risk review section on pages 135 to 237 and the Directors’ remuneration report disclosures on pages 279 to 305.\nOur opinion is consistent with our reporting to the Group Audit Committee (’GAC’).\n### Separate opinion in relation to international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union\nAs explained in note 1.1(a) to the financial statements, the group and parent company, in addition to applying UK-adopted international accounting standards, have also applied international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.\nIn our opinion, the group and parent company financial statements have been properly prepared in accordance with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.\n### Separate opinion in relation to International Financial Reporting Standards as issued by the International Accounting Standards Board\nAs explained in note 1.1(a) to the financial statements, the group and parent company, in addition to applying UK-adopted international accounting standards, have also applied international financial reporting standards as issued by the International Accounting Standards Board (’IFRS Accounting Standards’).\nIn our opinion, the group and parent company financial statements have been properly prepared in accordance with IFRS Accounting Standards.\n### Basis for opinion\nWe conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”), International Standards on Auditing issued by the International Auditing and Assurance Standards Board (“ISAs”) and applicable law. Our responsibilities under ISAs (UK) and ISAs are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.", "chunk_word_count": 531, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Opinion", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 320, "page_start": 320, "page_end": 320 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 430, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Independence\nWe remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with these requirements.\nTo the best of our knowledge and belief, we declare that non-audit services prohibited by either the FRC’s Ethical Standard or Article 5(1) of Regulation (EU) No 537/2014 were not provided to the parent company or its controlled undertakings.\nOther than those disclosed in note 6, we have provided no non-audit services to the parent company or its controlled undertakings in the period under audit.\n### Our audit approach\n### Overview\n### Audit scope\nThis was the fifth and final year that it has been my responsibility to form this opinion on behalf of PricewaterhouseCoopers LLP, who you first appointed on 31 March 2015 in relation to that year‘s audit. In addition to forming this opinion, in this report we have also provided information on how we approached the audit, how it changed from the previous year and details of the significant discussions that we had with the GAC.\n### Key audit matters\n– Expected credit losses - Impairment of loans and advances (group) \n– Impairment of investment in associate - Bank of Communications Co., Ltd (‘BoCom‘) (group) \n– Investments in subsidiaries (parent company) \n– Valuation of defined benefit pension obligations (group)\n### Materiality\nOverall group materiality: US\\$1.6bn (2022: US\\$1bn) based on $5 \\%$ of profit before tax adjusted for notable items. Overall parent company materiality: US\\$1.5bn (2022: US\\$950m) based on $0 . 7 5 \\%$ of total assets. This would result in an overall materiality of US\\$2.1bn and was therefore reduced below the group materiality. – Performance materiality: US\\$1.2bn (2022: US\\$750m) (group) and US\\$1.1bn (2022: US\\$712m) (parent company).\n### The scope of our audit\nAs part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.", "chunk_word_count": 381, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Independence", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 320, "page_start": 320, "page_end": 321 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 431, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Key audit matters\nKey audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.\nThis is not a complete list of all risks identified by our audit.\nHeld for sale accounting (group), which was a key audit matter last year, is no longer included because the risk has reduced following the completion of the sale of the retail banking operations in France. Otherwise, the key audit matters below are consistent with last year.\n### Report of Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of HSBC Holdings plc\n### Expected credit losses – Impairment of loans and advances (group)\n### Nature of the key audit matter\ning expected credit losses (‘ECL’) involves management judgement and is subject to a high degree of estimation uncer\nManagement makes various assumptions when estimating ECL. The significant assumptions that we focused on in our audit included those with greater levels of management judgement and for which variations had the most significant impact on ECL. These included assumptions made in determining economic scenarios and their probability weightings (specifically the central and downside scenarios given these have the most material impact on ECL) and estimating discounted cash flows for material credit impaired exposures in relation to the mainland China commercial real estate portfolio.\nThe level of estimation uncertainty and judgement has remained high during 2023 as a result of the uncertainties in the macroeconomic and geopolitical environment, persistently high levels of inflation in some territories and the rising global interest rate environment, as well as developments in mainland China’s commercial real estate sector and economy more broadly.\nMacroeconomic conditions vary between territories and industries, leading to uncertainty around judgements made in determining the severity and probability weighting of economic scenarios used in ECL models.\nThe modelling methodologies used to estimate ECL are developed using historical experience. The impact of the prevailing macroeconomic conditions has resulted in certain limitations in the reliability of these methodologies to forecast the extent and timing of future customer defaults and therefore estimate ECL. In addition, modelling methodologies do not incorporate all factors that are relevant to estimating ECL, such as the differentiated impact of economic conditions on certain industry sectors. These limitations are addressed with management judgemental adjustments, the measurement of which is inherently judgemental and subject to estimation uncertainty.", "chunk_word_count": 512, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Key audit matters", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 321, "page_start": 321, "page_end": 322 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 432, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Matters discussed with the Group Audit Committee\nWe held discussions with the GAC covering governance and controls over ECL, with a significant focus on the uncertain prevailing macroeconomic conditions and developments in mainland China’s commercial real estate sector. We discussed a number of areas, including:\n– the severity of economic scenarios, and their related probability weightings, across territories; \n– significant assumptions used to estimate the discounted cash flow projections for defaulted exposures in relation to the mainland China commercial real estate portfolio; \n– assumptions made in determining judgemental management adjustments; and \n– the disclosures made in relation to ECL.\n### How our audit addressed our key audit matter\nWe assessed the design and effectiveness of governance and controls over the estimation of ECL. We observed management’s review and challenge in governance forums for (1) the determination of economic scenarios and their probability weightings, and (2) the assessment of ECL for Retail and Wholesale portfolios, including the assessment of management judgemental adjustments.\nWe also tested controls over:\n– model validation and monitoring; \n– the identification of credit impaired triggers; \n– the input of critical data into source systems and the flow and transformation of critical data from source systems to impairment models and management judgemental adjustments; \n– the calculation and approval of management judgemental adjustments to modelled outcomes; and \n– approval of significant individual impairments.\nWe involved our economic experts in assessing the significant assumptions made in determining the severity and probability weighting of economic scenarios. These assessments considered the sensitivity of ECL to variations in the severity and probability weighting of economic scenarios. We involved our modelling specialists in assessing the appropriateness of the significant assumptions and methodologies used for models and certain management judgemental adjustments. We independently re-performed the calculations for a sample of those models and certain management judgemental adjustments. In respect of the mainland China commercial real estate portfolio, we involved our business recovery experts in assessing the discounted cash flows for a sample of credit impaired exposures. We further considered whether the judgements made in selecting the significant assumptions would give rise to indicators of possible management bias.\nIn addition, we performed substantive testing over:\n– the compliance of ECL methodologies and assumptions with the requirements of IFRS 9; – a sample of critical data used in ECL models and to estimate management judgemental adjustments; and – assumptions and critical data for a sample of credit impaired wholesale exposures. We evaluated and tested the audited Credit Risk disclosures made in the Annual Report.\n### Relevant references in the Annual Report and Accounts 2023\n– Audited credit risk disclosures \n– Group Audit Committee Report \n– Note 1.2(d):Financial instruments measured at amortised cost \n– Note 1.2(i): Impairment of amortised cost and FVOCI financial assets\n### Impairment of investment in associate – Bank of Communications Co., Ltd (‘BoCom’) (group)", "chunk_word_count": 490, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Matters discussed with the Group Audit Committee", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 322, "page_start": 322, "page_end": 322 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 433, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Nature of the key audit matter\nAt 31 December 2023, the fair value of the investment in BoCom, based on the share price, had been lower than the carrying amount for a number of years. This is an indicator of potential impairment. An impairment test was performed by management, with supporting sensitivity analysis, using a value in use (‘VIU’) model. On this basis, the investment in BoCom was impaired by US\\$3.0bn. The carrying value of the investment in BoCom amounts to US\\$21.2bn at 31 December 2023.\nThe methodology applied in the VIU model is dependent on various assumptions, both short term and long term in nature. These assumptions, which are subject to estimation uncertainty, are derived from a combination of management’s judgement, analysts’ forecasts, market data or other relevant information.\nThe assumptions that we focused our audit on were those with greater levels of management judgement and subjectivity, and for which variations had the most significant impact on the VIU. Specifically, these significant assumptions included:\n– the discount rate; \n– short term assumptions for operating income growth rate, loans and advances to customers growth rate, cost-income ratio, and expected credit losses as a percentage of loans and advances to customers; \n– long-term assumptions for profit and asset growth rates, expected credit losses as a percentage of loans and advances to customers, and effective tax rates; and \n– capital related assumptions (risk-weighted assets as a percentage of total assets and capital adequacy ratios).\n### Matters discussed with the Group Audit Committee\nWe discussed the appropriateness of the methodology, its consistent application period over period and significant assumptions with the GAC. We also discussed the disclosures made in relation to BoCom, including the use of sensitivity analysis to explain estimation uncertainty.", "chunk_word_count": 309, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Nature of the key audit matter", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 323, "page_start": 323, "page_end": 323 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 434, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### How our audit addressed our key audit matter\nWe had oversight of the audit work performed by our component audit team in Hong Kong in relation to the impairment assessment of BoCom. This work included:\n– testing controls in place over the significant assumptions, the methodology and its consistent application period over period used to determine the VIU, assessing the appropriateness of the methodology used, its application, and the mathematical accuracy of the calculations; challenging the appropriateness of the significant assumptions and, where relevant, their interrelationships; \n– obtaining evidence to corroborate and challenge the data supporting significant assumptions, which included past experience, external market information, third-party sources including analyst reports, information from BoCom management and historical publicly available BoCom financial information; determining a reasonable range for the discount rate assumption, with the assistance of our valuation experts, and comparing it to the discount rate used by management; assessing whether the judgements made in determining the significant assumptions would give rise to indicators of possible management bias; and \n– evaluating and testing the disclosures in relation to BoCom in the Annual Report.\nWe observed certain meetings alongside the component auditor, management and BoCom management to identify facts and circumstances impacting significant assumptions relevant to the determination of the VIU.\nRepresentations were obtained from management that assumptions used were consistent with information currently available to the group.\n### Relevant references in the Annual Report and Accounts 2023\n– Group Audit Committee Report – Note 1.2(a): Interests in associates and joint arrangements – Note 18: Interests in associates and joint ventures\n### Report of Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of HSBC Holdings plc\n### Investments in subsidiaries (parent company)\n### Nature of the key audit matter\nManagement reviewed investments in subsidiaries for indicators of impairment and indicators that impairment charges recognised in prior periods may no longer exist or may have decreased in accordance with IAS 36 as at 31 December 2023. Where indicators have been identified management estimated the recoverable amount using the higher of value in use (‘VIU‘) or fair value less cost to sell.\nThe methodology used to estimate the recoverable amount is dependent on various assumptions, both short term and long term in nature. These assumptions, which are subject to estimation uncertainty, are derived from a combination of management’s judgement, experts engaged by management and market data. The significant assumptions that we focused our audit on were those with greater levels of management judgement and for which variations had the most significant impact on the recoverable amount. Specifically, these included:\n– HSBC’s business plan for 2024 to 2028 focusing on revenue, cost and expected credit loss forecasts; – regulatory capital requirements; \n– long term growth rates; and \n– discount rates.\nManagement’s assessment resulted in an impairment charge of US\\$5.5bn in relation to the investment in HSBC Overseas Holdings (UK) Limited (‘HOHU’), which is an intermediate holding company of certain businesses in North America. This resulted in investment in subsidiaries of US\\$159bn at 31 December 2023.", "chunk_word_count": 523, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > How our audit addressed our key audit matter", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 323, "page_start": 323, "page_end": 324 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 435, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Matters discussed with the Group Audit Committee\nWe discussed the impairment charge for HOHU, the appropriateness of methodologies used and significant assumptions with the GAC, giving consideration to the macroeconomic outlook and HSBC’s strategy.\n### How our audit addressed our key audit matter\nWe assessed the design and tested the effectiveness of controls in place over significant assumptions and the model used to determine the recoverable amounts. We assessed the appropriateness of the methodology used, and tested the mathematical accuracy of the calculations, to estimate the recoverable amounts.\nrespect of the significant assumptions, our testing included the following:\n– challenging management’s business plan and the prospects for HSBC’s businesses, as well as considering the achievement of historic forecasts; obtaining and evaluating evidence relating to significant assumptions, from a combination of historical experience and external market and other financial information; assessing whether the cash flows included in the model were in compliance with the relevant accounting standard; \n– assessing the sensitivity of the recoverable amount to reasonable variations in significant assumptions, both individually and in aggregate; and \n– determining a reasonable range for the discount rate used within the model, with the assistance of our valuation experts, and comparing it to the discount rate used by management.\nWe evaluated and tested the disclosures made in the Annual Report in relation to investment in subsidiaries.\n### Relevant references in the Annual Report and Accounts 2023\n– Group Audit Committee Report – Note 1.2(a): Investments in subsidiaries – Note 19: Investments in subsidiaries\n### Valuation of defined benefit pensions obligations (group)\n### Nature of the key audit matter\nThe group has a defined benefit obligation of US\\$27.0bn, of which US\\$19.8bn relates to HSBC Bank (UK) pension scheme (‘the principal plan’).\nThe valuation of the defined benefit obligation for the principal plan is dependent on a number of actuarial assumptions. Management uses an actuarial expert to determine the valuation of the defined benefit obligations. The valuation methodology uses a number of market based inputs and other financial and demographic assumptions. The significant assumptions that we focused our audit on were those with greater levels of management judgement and for which variations had the most significant impact on the liability. Specifically, these included the discount rate, inflation rate and mortality rate.\nWe discussed with the GAC the methodologies and significant assumptions used by management to determine the value of the defined benefit obligation.", "chunk_word_count": 418, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Matters discussed with the Group Audit Committee", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 324, "page_start": 324, "page_end": 324 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 436, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### How our audit addressed our key audit matter\nWe assessed the design and tested the effectiveness of governance and controls in place over the methodologies and the significant assumptions, including those in relation to the use of management’s experts. We also evaluated the objectivity and competence of management’s expert involved in the valuation of the defined benefit obligation of the principal plan.\nWe assessed the appropriateness of the methodology used, and tested the accuracy of the calculation, to estimate the liability. In respect of the significant assumptions, we used our actuarial experts to understand the judgements made by management and their actuarial expert in determining the significant assumptions and compared these assumptions to our independently compiled expected ranges based on market observable indices and the knowledge and opinions of our actuarial experts.\naluated and tested the disclosures made in the Annual Report in relation to the defined benefit pension oblig\n### Relevant references in the Annual Report and Accounts 2023\n– Group Audit Committee Report – Note 1.2(k): Post-employment benefit plans – Note 5: Employee compensation and benefits", "chunk_word_count": 198, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > How our audit addressed our key audit matter", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 324, "page_start": 324, "page_end": 324 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 437, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### How we tailored the audit scope\nWe tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the group and the parent company, the accounting processes and controls, and the industry in which they operate.\nThe risks that HSBC faces are diverse, with the interdependencies between them being numerous and complex. In performing our risk assessment we engaged with a number of stakeholders to ensure we appropriately understood and considered these risks and their interrelationships. This included stakeholders within HSBC and our own experts within PwC. This engagement covered external factors across the geopolitical, macroeconomic and regulatory and accounting landscape, the impact of climate change risk as well as the internal environment at HSBC, driven by strategy and transformation.\nWe evaluated and challenged management‘s assessment of the impact of climate change risk, which is set out on page 44, including their conclusion that there is no material impact on the financial statements. In making this evaluation we considered management’s use of stress testing and scenario analysis to arrive at the conclusion that there is no material impact on the financial statements. We considered management's assessment on the areas in the financial statements most likely to be impacted by climate risk, including:\nthe impact on ECL on loans and advances to customers, for both physical and transition risk; \nthe forecast cashflows from management’s five year business plan and long term growth rates used in estimating recoverable amounts as part of impairment assessments of investments in subsidiaries, goodwill and intangible assets; \nthe impact of climate related terms on the solely payments of principal and interest test for classification and measurement of loans and advances to customers; and \nclimate risks relating to contingent liabilities as HSBC faces increased reputational, legal and regulatory risk as it progresses towards its climate ambition.\nHSBC’s progress on their ESG targets is not included within the scope of this audit. We were engaged separately to provide independent limited assurance to the Directors over the following ESG data:\n– the 2021 and 2022 on-balance sheet financed emissions for 6 sectors (page 61); \n– the 2020 thermal coal financing drawn balance exposure (page 67) and the 2020 thermal coal mining on-balance sheet financed emissions (page 61); the 2019, 2020, 2021 and 2022 off balance facilitated emissions for 2 sectors (page 61); the cumulative progress made by HSBC on providing and facilitating sustainable financing and investments (page 49); and HSBC’s own operations scope 1, 2 and 3 (limited to business travel) greenhouse gas emissions data for 2023 (page 64); and supply chain greenhouse gas emissions for purchased goods and services, and capital goods for 2023 (page 64).\nThe work performed for a limited assurance report is substantially less than the work performed for our financial audit, which provides reasonable assurance.", "chunk_word_count": 502, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > How we tailored the audit scope", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 325, "page_start": 325, "page_end": 325 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 438, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Scoping\nThrough our risk assessment, we tailored our determination as to which entities and balances we needed to perform testing over to support our group opinion, taking into consideration the complex and disaggregated group structure, the accounting processes and controls as well as the industry in which they operate. The risks of material misstatement can be reduced to an acceptable level by testing the most financially significant entities within the group and those that drive particular significant risks identified as part of our risk assessment. This ensures that sufficient coverage has been obtained for each financial statement line item (’FSLI’). We continually assessed risks and changed the scope of our audit where necessary.\nOur risk assessment and scoping identified certain entities (collectively the ’Significant Subsidiaries’) for which we obtained audit opinions. We obtained full scope audit opinions for the consolidated financial position and performance of The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank plc, and HSBC North America Holdings Inc. We also obtained full scope audit opinions for the company financial position and performance of HSBC UK Bank plc, HSBC Bank Canada and HSBC Mexico S.A. Banco. We obtained audit opinions over specific balances for HSBC Bank Middle East Limited - UAE Operations and the HSBC UK Bank plc group. The audits for HSBC Bank plc and HSBC UK Bank plc were performed by other PwC teams in the UK. All other audits were performed by other PwC network firms.", "chunk_word_count": 261, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Scoping", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 325, "page_start": 325, "page_end": 325 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 439, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Group-wide audit approach\nHSBC has entity level controls that have a pervasive influence across the group, as well as other global and regional governance and controls over aspects of financial reporting, such as those operated by the Global Risk function for expected credit losses. A significant amount of IT and operational processes and controls relevant to financial reporting are undertaken in operations centres run by Digital Business Services (‘DBS‘). Whilst these operations centres are not separate components, the IT and operational processes and controls are relevant to the financial information of the Significant Subsidiaries. Financial reporting processes and controls are also performed centrally in HSBC‘s Group Finance function and finance operation centres (‘Finance Operations’), including the impairment assessment of goodwill and intangible assets, held for sale classifications and the consolidation of the group‘s results, the preparation of financial statements, and management‘s oversight controls relevant to the group‘s financial reporting.\nGroup-wide processes or processes in DBS and Finance Operations are subject to specified audit procedures or an audit over specific FSLIs. These procedures primarily relate to testing of IT general controls, IT dependencies, forward looking economic scenarios for ECL, operating expenses, intangible assets, valuation of financial instruments, existence testing of financial instruments, intercompany eliminations, reconciliations and consolidation as well as payroll. For these areas, we either performed audit work ourselves, or directed and provided oversight of the audit work performed by PwC teams in the UK, Poland, China, Sri Lanka, Malaysia, India, Mexico and the Philippines. Some of this work was relied upon by the PwC teams auditing the Significant Subsidiaries. This audit work, together with analytical review procedures and assessing the outcome of local external audits, also mitigated the risk of material misstatement for balances in entities that were not part of a Significant Subsidiary.\n### Report of Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of HSBC Holdings plc", "chunk_word_count": 334, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Group-wide audit approach", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 325, "page_start": 325, "page_end": 325 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 440, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Significant Subsidiaries audit approach\nIn March 2023, we held a meeting in Hong Kong with the partners and senior staff from the group audit team and certain PwC teams who undertake audits of the Significant Subsidiaries and the operations centres. The meeting focused primarily on our approach to auditing HSBC’s businesses, changes at HSBC and in our PwC teams, and how we continue to innovate and improve the quality of the audit with a focus on technology and our global delivery model. We also discussed our significant audit risks.\nWe asked the partners and teams reporting to us on the Significant Subsidiaries to work to assigned materiality levels reflecting the size of the operations they audited. The overall materiality levels ranged from $\\cup \\mathsf { S } \\$ 107m$ to US\\$1.0bn. Certain Significant Subsidiaries were audited to a local statutory audit materiality that was a lower level than our allocated group materiality.\nWe designed global audit approaches for the products and services that substantially make up HSBC's global businesses, such as lending, deposits and derivatives. These approaches were provided to the partners and teams performing audit testing for the Significant Subsidiaries.\nWe were in active dialogue throughout the year with the component auditors of the Significant Subsidiaries, including consideration of how they planned and performed their work. Senior members of our team undertook at least one in-person site visit where a full scope audit was requested and we had oversight over certain areas of audit work performed. We attended Audit Committee meetings for some of the Significant Subsidiaries. We also attended meetings with management for each of these Significant Subsidiaries at the year end. The audit of The Hongkong and Shanghai Banking Corporation Limited in Hong Kong relied upon work performed by other teams in Hong Kong and the PwC network firms in India, mainland China and Singapore. Similarly, the audit of HSBC Bank plc in the UK relied upon work performed by other teams in the UK and the PwC network firms in France and Germany. We considered how the audit partners and teams for the Significant Subsidiaries instructed and provided oversight to the work performed in these locations. Collectively, Significant Subsidiaries covered $8 3 \\%$ of total assets and $7 4 \\%$ of total operating income.", "chunk_word_count": 398, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Significant Subsidiaries audit approach", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 326, "page_start": 326, "page_end": 326 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 441, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Using the work of others\nWe have continued our use of evidence provided by others through our reliance on management assurance testing of certain controls across the group. This included testing of controls performed by management themselves in certain low risk areas including reconciliations and footnote disclosure controls. We re-performed a portion of the testing to ensure appropriate quality of testing, as well as assessing the competence and objectivity of those performing the testing.\nWe also used the work of PwC experts, for example economic experts for our work around the severity and probability weighting of macroeconomics variables as part of the expected credit loss allowance and actuaries on the estimates used in determining pension liabilities. An increasing number of controls are operated on behalf of HSBC by third parties. We obtained audit evidence from work that is scoped and provided by other auditors that are engaged by those third parties. For example, we obtained a report evidencing the testing of external systems and controls supporting HSBC's payroll and HR processes.\n### Materiality\nThe scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.\nBased on our professional judgement, we determined materiality for the financial statements as a whole as follows:\nWe use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was $7 5 \\%$ (2022: $7 5 \\%$ ) of overall materiality, amounting to US\\$1.2bn (2022: US\\$750m) for the group financial statements and US\\$1.1bn (2022: US\\$712m) for the parent company financial statements.\nIn determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate.\nWe agreed with the GAC that we would report to them misstatements identified during our audit above US\\$80m (group audit) (2022: US\\$50m) and $\\mathsf { U S S B O m }$ (parent company audit) (2022: US\\$50m) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.", "chunk_word_count": 469, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Using the work of others", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 326, "page_start": 326, "page_end": 326 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 442, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Conclusions relating to going concern\nOur evaluation of the directors’ assessment of the group's and the parent company’s ability to continue to adopt the going concern basis of accounting included:\nperforming a risk assessment to identify factors that could impact the going concern basis of accounting, including both internal risks (i.e. strategy execution) and external risks (i.e. macroeconomic conditions); \nunderstanding and evaluating the group’s financial forecasts; \nunderstanding and evaluating the group’s stress testing of liquidity and regulatory capital, including the severity of the stress scenarios that were used; \nunderstanding and evaluating credit rating agency ratings and actions; and \nreading and evaluating the adequacy of the disclosures made in the financial statements in relation to going concern.\nBased on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group's and the parent company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.\nIn auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of th financial statements is appropriate.\nHowever, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group‘s and the parent company's ability to continue as a going concern.\nIn relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting.\nOur responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.", "chunk_word_count": 327, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Conclusions relating to going concern", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 327, "page_start": 327, "page_end": 327 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 443, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Reporting on other information\nThe other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.\nIn connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.\nWith respect to the Strategic report and Report of the Directors, we also considered whether the disclosures required by the UK Companies Ac 2006 have been included.\nBased on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below.\n### Strategic report and Report of the Directors\nIn our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Report of the Directors for the year ended 31 December 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.\nIn light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Report of the Directors.\n### Directors’ Remuneration\nIn our opinion, the part of the Directors‘ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006.", "chunk_word_count": 387, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Reporting on other information", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 327, "page_start": 327, "page_end": 327 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 444, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Corporate governance statement\nThe Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the parent company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report.\nBased on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to:\nThe directors’ confirmation that they have carried out an appropriate assessment of the emerging and principal risks; \nThe disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; \nThe directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s and parent company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; \nThe directors’ explanation as to their assessment of the group's and parent company’s prospects, the period this assessment covers and why the period is appropriate; and", "chunk_word_count": 278, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Corporate governance statement", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 327, "page_start": 327, "page_end": 327 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 445, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Report of Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of HSBC Holdings plc\n– The directors’ statement as to whether they have a reasonable expectation that the parent company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.\nOur review of the directors’ statement regarding the longer-term viability of the group and parent company was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the group and parent company and their environment obtained in the course of the audit.\nIn addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:\nThe directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the group’s and parent company's position, performance, business model and strategy; The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and – The section of the Annual Report describing the work of the GAC.\nWe have nothing to report in respect of our responsibility to report when the directors’ statement relating to the parent company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.\n### Responsibilities for the financial statements and the audit\n### Responsibilities of the directors for the financial statements\nAs explained more fully in the Directors’ responsibility statement, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.\nIn preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.", "chunk_word_count": 489, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Report of Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of HSBC Holdings plc", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 328, "page_start": 328, "page_end": 328 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 446, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Auditors’ responsibilities for the audit of the financial statements\nOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) and ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.\nIrregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.\nBased on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of financial crime laws and regulations and regulatory compliance, including regulatory reporting requirements and conduct of business, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and relevant tax legislation. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries in relation to cost targets, and management bias in accounting estimates. The group engagement team shared this risk assessment with the component auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the group engagement team and/or component auditors included:\nreview of correspondence with and reports from regulators, including the Prudential Regulation Authority (’PRA’) and Financial Conduct Authority (’FCA’); \nreviewed reporting to the GAC and GRC in respect of compliance and legal matters; \nenquiries of management and review of internal audit reports, insofar as they related to the financial statements; \nobtain legal confirmations from legal advisors relating to material litigation and compliance matters; \nassessment of matters reported on the group‘s whistleblowing programmes and the results of management‘s investigation of such matters, insofar as they related to the financial statements; \nchallenging assumptions and judgements made by management in its significant accounting estimates, in particular in relation to the determination of expected credit losses, the impairment assessment of the investment in BoCom, valuation of defined benefit pensions obligations, the impairment assessment of investment in subsidiaries and valuation of financial instruments; \nobtaining confirmations from third parties to confirm the existence of a sample of transactions and balances; and \nidentifying and testing journal entries, including those posted with certain descriptions, posted and approved by the same individual, backdated journals or posted by infrequent and unexpected users.", "chunk_word_count": 532, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Auditors’ responsibilities for the audit of the financial statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 328, "page_start": 328, "page_end": 328 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 447, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Auditors’ responsibilities for the audit of the financial statements\nThere are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.\nOur audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected.\nA further description of our responsibilities for the audit of the financial statements in accordance with ISAs (UK) is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.\nAs part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:", "chunk_word_count": 240, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Auditors’ responsibilities for the audit of the financial statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 328, "page_start": 328, "page_end": 329 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 448, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Auditors’ responsibilities for the audit of the financial statements\nidentify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; \nobtain an understanding of internal controls relevant to the audit in order to design audit procedures that are appropriate in the \ncircumstances, but not for the purpose of expressing an opinion on the effectiveness of the group’s and parent company’s internal controls; evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management; \nconclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group’s and parent company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the group to cease to continue as a going concern; \nevaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation; and obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group and parent company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group and parent company audit. We remain solely responsible for our audit opinion.\nWe communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.\nWe also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where applicable, actions taken to eliminate threats or safeguards applied.", "chunk_word_count": 464, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Auditors’ responsibilities for the audit of the financial statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 329, "page_start": 329, "page_end": 329 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 449, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Auditors’ responsibilities for the audit of the financial statements\nFrom the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.\n### Use of this report\nThis report, including the opinions, has been prepared for and only for the parent company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.\n### Other required reporting\n### Companies Act 2006 exception reporting\nUnder the Companies Act 2006 we are required to report to you if, in our opinion:\nwe have not obtained all the information and explanations we require for our audit; or \nadequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or \ncertain disclosures of directors’ remuneration specified by law are not made; or \nthe parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns.\nWe have no exceptions to report arising from this responsibility.\nAppointment\nFollowing the recommendation of the GAC, we were appointed by the members on 31 March 2015 to audit the financial statements for the year ended 31 December 2015 and subsequent financial periods. The period of total uninterrupted engagement is nine years, covering the years ended 31 December 2015 to 31 December 2023.\n### Report of Independent Registered Public Accounting Firm to the Board of Directors and Shareholders of HSBC Holdings plc\n### Other matter\nAs required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.\nScott Berryman (Senior Statutory Auditor) \nfor and on behalf of PricewaterhouseCoopers LLP \nChartered Accountants and Statutory Auditors \nLondon \n21 February 2024", "chunk_word_count": 490, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Auditors’ responsibilities for the audit of the financial statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 329, "page_start": 329, "page_end": 330 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 450, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### Financial statements\n329 Consolidated income statement \n330 Consolidated statement of comprehensive income \n331 Consolidated balance sheet \n332 Consolidated statement of changes in equity \n335 Consolidated statement of cash flows \n337 HSBC Holdings income statement \n337 HSBC Holdings statement of comprehensive income \n338 HSBC Holdings balance sheet \n339 HSBC Holdings statement of changes in equity \n340 HSBC Holdings statement of cash flows\n### Consolidated income statement\n### for the year ended 31 December 2023\nThe accompanying notes on pages 341 to 434 and the audited sections in the Risk review on pages 135 to 237 (including ‘Measurement uncertainty and sensitivity analysis of ECL estimates’ on pages 156 to 168, and ‘Directors’ remuneration report’ on pages 279 to 305 form an integral part of these financial statements.\nThese financial statements were approved by the Board of Directors on 21 February 2024 and signed on its behalf by:\n### Consolidated statement of changes in equity\n\n### Consolidated statement of changes in equity (continued)", "chunk_word_count": 180, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > Financial statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 331, "page_start": 331, "page_end": 335 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 451, "chunk_text": "# Opening up a world of opportunity\n## 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital.\n### for the year ended 31 December 2021\n1 Cumulative goodwill amounting to \\$5,138m was charged against reserves in respect of acquisitions of subsidiaries prior to 1 January 1998, including \\$3,469m charged against the merger reserve arising on the acquisition of HSBC Bank plc. The balance of \\$1,669m was charged against retained earnings.\n2 Statutory share premium relief under section 131 of the Companies Act 1985 was taken in respect of the acquisition of HSBC Bank plc in 1992, HSBC Continental Europe in 2000 and HSBC Finance Corporation in 2003, and the shares issued were recorded at their nominal value only. In HSBC’s consolidated financial statements, the fair value differences of \\$8,290m in respect of HSBC Continental Europe and \\$12,768m in respect of HSBC Finance Corporation were recognised in the merger reserve. The merger reserve created on the acquisition of HSBC Finance Corporation subsequently became attached to HSBC Overseas Holdings (UK) Limited, following a number of intra-Group reorganisations. During 2009, pursuant to section 131 of the Companies Act 1985, statutory share premium relief was taken in respect of the rights issue and \\$15,796m was recognised in the merger reserve.\n3 The insurance finance reserve reflects the impact of the adoption of the other comprehensive income option for our insurance business in France. Underlying assets supporting these contracts are measured at fair value through other comprehensive income. Under this option, only the amount that matches income or expenses recognised in profit or loss on underlying items is included in finance income or expenses, resulting in the elimination of income statement accounting mismatches. The remaining amount of finance income or expenses for these insurance contracts is recognised in other comprehensive income (‘OCI’).\n4 At 31 December 2023, retained earnings included 256,289,431 treasury shares (2022: 554,452,437; 2021: 558,397,704). These include treasury shares held within HSBC’s insurance business’s retirement funds for the benefit of policyholders or beneficiaries within employee trusts for the settlement of shares expected to be delivered under employee share schemes or bonus plans, and the market-making activities in Markets and Securities Services.\n5 In March 2023, HSBC Holdings issued $\\$ 2,000 m8.000\\%$ contingent convertible securities on which there were \\$4m of external issue costs. 6 In March 2023, HSBC Holdings redeemed $\\$ 2$ ,350m 6.250% contingent convertible securities. In September 2023, HSBC Holdings further redeeme €1,000m 6.000% and SGD750m $5 . 0 0 0 \\%$ contingent convertible securities.\n7 At 31 December 2023, an impairment of $\\$ 5,512 m$ of HSBC Overseas Holdings (UK) Limited was recognised, resulting in a permitted transfer of \\$5,130m from the merger reserve to retained earnings and a realisation of \\$382m shared-based payment reserve within retained earnings.\n8 In May 2023, HSBC Holdings announced a share buy-back of up to $\\$ 2.0 b n$ , which was completed in July 2023. In August 2023, HSBC Holdings announced another share buy-back of up to $\\$ 2.0 b n$ , which was completed in October 2023. In October 2023, HSBC Holdings further announced a share buy-back of up to $\\$ 3.00 n$ , which was completed in February 2024.", "chunk_word_count": 530, "section_path": "Opening up a world of opportunity > 1 Fractures, dislocation, concussion, loss of consciousness, overnight admission to hospital. > for the year ended 31 December 2021", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 336, "page_start": 336, "page_end": 336 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 452, "chunk_text": "# Opening up a world of opportunity\n## 9 The impact of IFRS 17 on previously reported total equity was \\$(10,831)m at 31 December 2022.\n### Consolidated statement of cash flows\n### for the year ended 31 December 2023\n### Consolidated statement of cash flows (continued) for the year ended 31 December 2023\nInterest received was $\\$ 98,910 m$ (2022: \\$55,664m; 2021: \\$40,175m), interest paid was \\$65,980m (2022: \\$22,856m; 2021: \\$12,695m) and dividends received (excluding dividends received from associates, which are presented separately above) were \\$1,869m (2022: \\$1,638m; 2021: \\$1,898m).\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis. \n2 Adjustment to bring changes between opening and closing balance sheet amounts to average rates. This is not done on a line-by-line basis, as details cannot be determined without unreasonable expense. \n3 Post adoption of IFRS 17 ‘Insurance Contracts’, certain assets have been reclassified from ‘Investing activities’ to ‘Operating activities’. The comparative data have not been re-presented. \n4 The ‘Net cash flow on (acquisition)/disposal of subsidiaries, businesses, associates and joint ventures’ includes \\$1.2bn of net cash inflows from the acquisition of Silicon Valley Bank UK Limited in March 2023. \n5 Subordinated liabilities changes during the year are attributable to repayments of \\$(2.1)bn (2022: \\$(1.8)bn; 2021: \\$(0.9)bn) of securities. Non-cash changes during the year included foreign exchange gains/(losses) of \\$0.6bn (2022: \\$(1.1)bn; 2021: \\$(0.3)bn) and fair value gains/(losses) of \\$0.8bn (2022: \\$(3.1)bn; 2021: \\$(1.0)bn). \n6 At 31 December 2023, \\$61.8bn (2022: \\$59.3bn; 2021: \\$33.6bn) was not available for use by HSBC due to a range of restrictions, including currency exchange and other restrictions. \n7 Includes \\$5.6bn (2022: \\$6.5bn) of cash and balances at central banks, \\$0.2bn (2022: \\$1.3bn) of reverse repurchase agreements with banks of one month or less, \\$10.5bn (2022: \\$0.2bn) of loans and advances to banks of one month or less and items in the course of transmission to other banks \\$(0.4)bn (2022: \\$(0.2)bn).\n### HSBC Holdings income statement\n\n### HSBC Holdings statement of comprehensive income", "chunk_word_count": 364, "section_path": "Opening up a world of opportunity > 9 The impact of IFRS 17 on previously reported total equity was \\$(10,831)m at 31 December 2022. > Consolidated statement of cash flows", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 337, "page_start": 337, "page_end": 339 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 453, "chunk_text": "# Opening up a world of opportunity\n## 9 The impact of IFRS 17 on previously reported total equity was \\$(10,831)m at 31 December 2022.\n### HSBC Holdings balance sheet\nThe accompanying notes on pages 341 to 434, the audited sections in the Risk review on pages 135 to 237 and ‘Directors’ remuneration report’ on pages 279 to 305 form an integral part of these financial statements.\nese financial statements were approved by the Board of Directors on 21 February 2024 and signed on its behalf by:\nDividends per ordinary share at 31 December 2023 were \\$0.53 (2022: \\$0.27; 2021: \\$0.22).\n1 Retained earnings include unrealised profits from intercompany transactions and share-based payment reserves, which are excluded from distributable reserves. Distributable reserves include the distributable portions of retained earnings and the merger reserve. Distributable reserves are reduced by ordinary dividend payments, distributions on additional tier 1 instruments, share buy-backs and impairments in investments in subsidiaries. They are increased by profits and the realisation of retained earnings or merger reserves upon impairment of an associated investment in subsidiary.\n2 At 31 December 2023, retained earnings included 20,018,490 (\\$100m) treasury shares (2022: 331,874,221 (\\$2,615m); 2021: 329,871,829 (\\$2,542m)). \n3 In March 2023, HSBC Holdings issued $\\$ 2$ ,000m $8 . 0 0 0 \\%$ contingent convertible securities, on which there were \\$20m of issue costs.\n4 In May 2023, HSBC announced a share buy-back of up to $\\$ 2.00 n$ , which was completed in July 2023. In August 2023, HSBC announced another share buy-back of up to \\$2.0bn, which was completed in October 2023. In October 2023, HSBC further announced a share buy-back of up to $\\$ 3.00 n$ , which was completed in February 2024.\nIn March 2023, HSBC Holdings redeemed \\$2,350m $6 . 2 5 0 \\%$ contingent convertible securities. In September 2023, HSBC Holdings further redeemed €1,000m 6.000% and SGD750m $5 . 0 0 0 \\%$ contingent convertible securities.\n6 At 31 December 2023, an impairment of \\$5,512m of HSBC Overseas Holdings (UK) Limited was recognised, resulting in a permitted transfer of \\$5,130m from the merger reserve to retained earnings, and a realisation of \\$382m share-based payment reserve within retained earnings. In 2022, a part-reversal of the impairment resulted in a transfer from retained earnings back to the merger reserve of \\$2,499m (2021: \\$3,065m).\n### HSBC Holdings statement of cash flows\n### for the year ended 31 December 2023\n### Notes on the financial statements", "chunk_word_count": 406, "section_path": "Opening up a world of opportunity > 9 The impact of IFRS 17 on previously reported total equity was \\$(10,831)m at 31 December 2022. > HSBC Holdings balance sheet", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 340, "page_start": 340, "page_end": 342 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 454, "chunk_text": "# Opening up a world of opportunity\n## 9 The impact of IFRS 17 on previously reported total equity was \\$(10,831)m at 31 December 2022.\n### Contents\n341 1 Basis of preparation and material accounting policies \n355 2 Net fee income \n356 3 Net income/(expense) from financial instruments \nmeasured at fair value through profit or loss \n356 4 Insurance business \n363 5 Employee compensation and benefits \n368 6 Auditor’s remuneration \n368 7 Tax \n371 8 Dividends \n372 9 Earnings per share \n372 10 Segmental analysis \n375 11 Trading assets \n375 12 Fair values of financial instruments carried at fair value \n382 13 Fair values of financial instruments not carried at fair value \n383 14 Financial assets designated and otherwise mandatorily \nmeasured at fair value through profit or loss \n384 15 Derivatives \n389 16 Financial investments \n390 17 Assets pledged, collateral received and assets \ntransferred \n391 18 Interests in associates and joint ventures \n395 19 Investments in subsidiaries \n397 20 Structured entities \n399 21 Goodwill and intangible assets \n401 22 Prepayments, accrued income and other assets \n401 23 Assets held for sale, liabilities of disposal groups held for \nsale and business acquisitions \n404 24 Trading liabilities \n404 25 Financial liabilities designated at fair value \n404 26 Debt securities in issue \n405 27 Accruals, deferred income and other liabilities \n405 28 Provisions \n406 29 Subordinated liabilities \n407 30 Maturity analysis of assets, liabilities and off-balance \nsheet commitments \n412 31 Offsetting of financial assets and financial liabilities \n414 32 Interest rate benchmark reform \n414 33 Called up share capital and other equity instruments \n416 34 Contingent liabilities, contractual commitments and \nguarantees \n416 35 Finance lease receivables \n417 36 Legal proceedings and regulatory matters \n420 37 Related party transactions \n422 38 Effects of adoption of IFRS 17 \n426 39 Events after the balance sheet date \n426 40 HSBC Holdings’ subsidiaries, joint ventures and \nassociates\n## 1 Basis of preparation and material accounting policies\n### 1.1 Basis of preparation\n### (a) Compliance with International Financial Reporting Standards\nThe consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings comply with UK-adopted international accounting standards and with the requirements of the Companies Act 2006, and have also applied international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. These financial statements are also prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IFRS Accounting Standards’), including interpretations issued by the IFRS Interpretations Committee, as there are no applicable differences from IFRS Accounting Standards for the periods presented. There were no unendorsed standards effective for the year ended 31 December 2023 affecting these consolidated and separate financial statements.\n### Standards adopted during the year ended 31 December 2023", "chunk_word_count": 459, "section_path": "Opening up a world of opportunity > 9 The impact of IFRS 17 on previously reported total equity was \\$(10,831)m at 31 December 2022. > Contents", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 343, "page_start": 343, "page_end": 343 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 455, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### IFRS 17 ‘Insurance Contracts’\nOn 1 January 2023, the Group adopted the requirements of IFRS 17 ‘Insurance Contracts’ retrospectively with comparatives restated from the transition date, 1 January 2022. At transition, the Group’s total equity reduced by \\$10,459m.\nOn adoption of IFRS 17, balances based on IFRS 4, including the present value of in-force long-term insurance business (‘PVIF’) asset in relation to the upfront recognition of future profits of in-force insurance contracts, were derecognised. Insurance contract liabilities have been remeasured under IFRS 17 based on groups of insurance contracts, which include the fulfilment cash flows comprising the best estimate of the present value of the future cash flows (for example premiums and payouts for claims, benefits and expenses), together with a risk adjustment for non-financial risk, as well as the contractual service margin (‘CSM’). The CSM represents the unearned profits that will be released and systematically recognised in insurance revenue as services are provided over the expected coverage period.\nIn addition, the Group has made use of the option under the standard to re-designate certain eligible financial assets held to support insurance contract liabilities, which were predominantly measured at amortised cost, as financial assets measured at fair value through profit or loss, with comparatives restated from the transition date. The effects of adoption of IFRS 17 are set out in Note 38 with a description of the policy in Note 1.2(j).\nThe key differences between IFRS 4 and IFRS 17 are summarised in the following table:\n### Notes on the financial statements", "chunk_word_count": 269, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > IFRS 17 ‘Insurance Contracts’", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 343, "page_start": 343, "page_end": 344 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 456, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Transition\nIn applying IFRS 17 for insurance contracts retrospectively, the full retrospective approach (‘FRA’) has been used unless it was impracticable. When the FRA is impracticable such as when there is a lack of sufficient and reliable data, an entity has an accounting policy choice to use either the modified retrospective approach (‘MRA’) or the fair value approach (‘FVA’). The Group has applied the FRA for new business from 2018 at the earliest, subject to practicability, and the FVA for the majority of contracts for which the FRA is impracticable.\nUnder the FVA, the valuation of insurance liabilities on transition is based on the applicable requirements of IFRS 13 ‘Fair Value Measurement’. This requires consideration of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The CSM is calculated as the difference between what a market participant would demand for assuming the unexpired risk associated with insurance contracts, including required profit, and the fulfilment cash flows that are determined using IFRS 17 principles.\nIn determining the fair value, the Group considered the estimated profit margin that a market participant would demand in return for assuming the insurance liabilities with the consideration of the level of capital that a market participant would be required to hold, and the discount rate with an allowance for an illiquidity premium that takes into account the level of ‘matching’ between the Group’s assets and related liabilities. These assumptions were set taking into account the assumptions that a hypothetical market participant operating in each local jurisdiction would consider.\n### Amendments to IAS 12 ‘International Tax Reform – Pillar Two Model Rules’\nOn 23 May 2023, the International Accounting Standards Board (‘IASB’) issued amendments to IAS 12 ‘International Tax Reform – Pillar Two Model Rules’, which became effective immediately and were approved for adoption by all members of the UK Endorsement Board on 19 July 2023 and by the European Union on 8 November 2023. On 20 June 2023, legislation was substantively enacted in the UK to introduce the OECD’s Pillar Two global minimum tax rules and a UK qualified domestic minimum top-up tax, with effect from 1 January 2024. The Group has applied the IAS 12 exception from recognising and disclosing information on associated deferred tax assets and liabilities.\nThere were no other new standards or amendments to standards that had an effect on these financial statements.\n### (b) Differences between IFRS Accounting Standards and Hong Kong Financial Reporting Standards\nThere are no significant differences between IFRS Accounting Standards and Hong Kong Financial Reporting Standards in terms of their application to HSBC, and consequently there would be no significant differences had the financial statements been prepared in accordance with Hong Kong Financial Reporting Standards. The ‘Notes on the financial statements’, taken together with the ‘Report of the Directors’, include the aggregate of all disclosures necessary to satisfy IFRS Accounting Standards and Hong Kong Financial Reporting Standards.\n### (c) Future accounting developments", "chunk_word_count": 523, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Transition", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 344, "page_start": 344, "page_end": 344 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 457, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Minor amendments to IFRS Accounting Standards\nThe IASB has published a number of minor amendments to IFRS Accounting Standards that are effective from 1 January 2024. HSBC expects they will have an insignificant effect, when adopted, on the consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings. Additionally, in August 2023, the IASB published amendments to IAS 21 ‘Lack of Exchangeability’ effective from 1 January 2025. The Group is undertaking an assessment of the potential impact, which is not expected to be significant.\n### (d) Foreign currencies\nHSBC’s consolidated financial statements are presented in US dollars because the US dollar and currencies linked to it form the major currency bloc in which HSBC transacts and funds its business. The US dollar is also HSBC Holdings’ functional currency because the US dollar and currencies linked to it are the most significant currencies relevant to the underlying transactions, events and conditions of its subsidiaries, as well as representing a significant proportion of its funds generated from financing activities.\nTransactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Assets and liabilities denominated in foreign currencies are translated at the rate of exchange at the balance sheet date, except non-monetary assets and liabilities measured at historical cost, which are translated using the rate of exchange at the initial transaction date. Exchange differences are included in other comprehensive income or in the income statement depending on where the gain or loss on the underlying item is recognised. Except for subsidiaries operating in hyperinflationary economies (see Note 1.2(p)), in the consolidated financial statements, the assets and liabilities of branches, subsidiaries, joint ventures and associates whose functional currency is not US dollars are translated into the Group’s presentation currency at the rate of exchange at the balance sheet date, while their results are translated into US dollars at the average rates of exchange for the reporting period. Exchange differences arising are recognised in other comprehensive income. On disposal of a foreign operation, exchange differences previously recognised in other comprehensive income are reclassified to the income statement.\n### (e) Presentation of information\nCertain disclosures required by IFRS Accounting Standards have been included in the sections marked as (‘Audited’) in the Annual Report an Accounts 2023 as follows:\nDisclosures concerning the nature and extent of risks relating to insurance contracts and financial instruments are included in the ‘Risk review’ on pages 135 to 237.\n– The ‘Own funds disclosure’ is included in the ‘Risk review’ on page 207.\nHSBC follows the UK Finance Disclosure Code. The UK Finance Disclosure Code aims to increase the quality and comparability of UK banks’ disclosures and sets out five disclosure principles together with supporting guidance agreed in 2010. In line with the principles of the UK Finance Disclosure Code, HSBC assesses good practice recommendations issued from time to time by relevant regulators and standard setters, and will assess the applicability and relevance of such guidance, enhancing disclosures where appropriate.", "chunk_word_count": 515, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Minor amendments to IFRS Accounting Standards", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 344, "page_start": 344, "page_end": 345 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 458, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### (f) Critical estimates and judgements\nThe preparation of financial information requires the use of estimates and judgements about future conditions. In view of the inherent uncertainties and the high level of subjectivity involved in the recognition or measurement of items, highlighted as the ‘critical estimates and judgements’ in section 1.2 below, it is possible that the outcomes in the next financial year could differ from those on which management’s estimates are based. This could result in materially different estimates and judgements from those reached by management for the purposes of these financial statements. Management’s selection of HSBC’s accounting policies that contain critical estimates and judgements reflects the materiality of the items to which the policies are applied and the high degree of judgement and estimation uncertainty involved.\nManagement has considered the impact of climate-related risks on HSBC’s financial position and performance. While the effects of climate change are a source of uncertainty, as at 31 December 2023 management did not consider there to be a material impact on our critical judgements and estimates from the physical, transition and other climate-related risks in the short to medium term. In particular management has considered the known and observable potential impacts of climate-related risks of associated judgements and estimates in our value in use calculations.\n### (g) Going concern\nThe financial statements are prepared on a going concern basis, as the Directors are satisfied that the Group and parent company have the resources to continue in business for the foreseeable future. In making this assessment, the Directors have considered a wide range of information relating to present and future conditions, including future projections of profitability, liquidity, capital requirements and capital resources.\nThese considerations include stressed scenarios that reflect the uncertainty in the macroeconomic environment following rising inflation, slower Chinese economic activity, and disrupted supply chains as a result of the ongoing Russia-Ukraine and Israel-Hamas wars. They also included other top and emerging risks, including climate change, as well as the related impacts on profitability, capital and liquidity.\n### 1.2 Summary of material accounting policies\n### (a) Consolidation and related policies", "chunk_word_count": 364, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > (f) Critical estimates and judgements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 345, "page_start": 345, "page_end": 345 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 459, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Investments in subsidiaries\nWhere an entity is governed by voting rights, HSBC consolidates when it holds – directly or indirectly – the necessary voting rights to pass resolutions by the governing body. In all other cases, the assessment of control is more complex and requires judgement of other factors, including having exposure to variability of returns, power to direct relevant activities, and whether power is held as agent or principal.\nBusiness combinations are accounted for using the acquisition method. The amount of non-controlling interest is measured either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. This election is made for each business combination.\nHSBC Holdings’ investments in subsidiaries are stated at cost less impairment losses.\nImpairment testing is performed where there is an indication of impairment, by comparing the recoverable amount of the relevant investment to its carrying amount. Indicators of impairment include both external and internal sources of information. Similarly, assessments are made as to whether an impairment loss recognised in prior periods may no longer exist or may have decreased. Where this is the case, such an impairment loss is reversed if there has been a change in the estimate used to determine the relevant recoverable amount since the last impairment loss was recognised, and to the extent that it does not increase the carrying amount above that had no impairment loss been previously recognised.\n### Critical estimates and judgements\nInvestments in subsidiaries are tested for impairment when there is an indication that the investment may be impaired, which involves estimations of value in use reflecting management’s best estimate of the future cash flows of the investment and the rates used to discount these cash flows, both of which are subject to uncertain factors as follows:\n### Goodwill\nGoodwill is allocated to cash-generating units (’CGUs’) for the purpose of impairment testing, which is undertaken at the lowest level at which goodwill is monitored for internal management purposes. HSBC’s CGUs are based on its main legal entities subdivided by global business, except for Global Banking and Markets, for which goodwill is monitored on a global basis.\nImpairment testing is performed at least once a year, or whenever there is an indication of impairment, by comparing the recoverable amount of a CGU with its carrying amount.\nGoodwill is included in a disposal group if the disposal group is a CGU to which goodwill has been allocated or it is an operation within such a CGU. The amount of goodwill included in a disposal group is measured on the basis of the relative values of the operation disposed of and the portion of the CGU retained.", "chunk_word_count": 460, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Investments in subsidiaries", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 345, "page_start": 345, "page_end": 346 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 460, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Critical estimates and judgements\nThe review of goodwill and non-financial assets (see Note 1.2(n)) for impairment reflects management’s best estimate of the future cash flows of the CGUs and the rates used to discount these cash flows, both of which are subject to uncertain factors as follows:\nThe Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year, but does consider this to be an area that is inherently judgemental.\n### HSBC sponsored structured entities\nHSBC is considered to sponsor another entity if, in addition to ongoing involvement with the entity, it had a key role in establishing that entity or in bringing together relevant counterparties so the transaction that is the purpose of the entity could occur. HSBC is generally not considered a sponsor if the only involvement with the entity is merely administrative.\n### Interests in associates and joint arrangements\nJoint arrangements are investments in which HSBC, together with one or more parties, has joint control. Depending on HSBC’s rights and bligations, the joint arrangement is classified as either a joint operation or a joint venture.\nHSBC classifies investments in entities over which it has significant influence, and which are neither subsidiaries nor joint arrangements, as associates.\nHSBC recognises its share of the assets, liabilities and results in a joint operation. Investments in associates and interests in joint ventures are recognised using the equity method. The attributable share of the results and reserves of joint ventures and associates is included in the consolidated financial statements of HSBC based on either financial statements made up to 31 December or pro-rated amounts adjusted for any material transactions or events occurring between the date the financial statements are available and 31 December.\nInvestments in associates and joint ventures are assessed at each reporting date and tested for impairment when there is an indication that the investment may be impaired, by comparing the recoverable amount of the relevant investment to its carrying amount. Goodwill on acquisitions of interests in joint ventures and associates is not tested separately for impairment, but is assessed as part of the carrying amount of the investment. Previously recognised impairments are assessed for reversal when there are indicators that they may no longer exist or have\ndecreased. Any reversal, which may arise only from changes in estimates used to determine the prior impairment loss, is recognised to the extent that it does not increase the carrying amount above that had no impairment loss been previously recognised.\nThe most significant critical estimates relate to the assessment of impairment of our investment in Bank of Communications Co., Limited (‘BoCom’), which involves estimations of value in use:\n### (b) Income and expense\n### Operating income", "chunk_word_count": 476, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Critical estimates and judgements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 346, "page_start": 346, "page_end": 347 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 461, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Interest income and expense\nInterest income and expense for all financial instruments, excluding those classified as held for trading or designated at fair value, are recognised in ‘Interest income’ and ‘Interest expense’ in the income statement using the effective interest method. However, as an exception to this, interest on debt instruments issued by HSBC for funding purposes that are designated under the fair value option to reduce an accounting mismatch and on derivatives managed in conjunction with those debt instruments is included in interest expense.\nInterest on credit-impaired financial assets is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount of the asset less allowance for expected credit losses).\n### Non-interest income and expense\nHSBC generates fee income from services provided at a fixed price over time, such as account service and card fees, or when HSBC delivers a specific transaction at a point in time, such as broking services and import/export services. With the exception of certain fund management and performance fees, all other fees are generated at a fixed price. Fund management and performance fees can be variable depending on the size of the customer portfolio and HSBC’s performance as fund manager. Variable fees are recognised when all uncertainties are resolved. Fee income is generally earned from short-term contracts with payment terms that do not include a significant financing component.\nHSBC acts as principal in the majority of contracts with customers, with the exception of broking services. For most brokerage trades, HSBC acts as agent in the transaction and recognises broking income net of fees payable to other parties in the arrangement.\nHSBC recognises fees earned on transaction-based arrangements at a point in time when it has fully provided the service to the customer. \nWhere the contract requires services to be provided over time, income is recognised on a systematic basis over the life of the agreement.\nWhere HSBC offers a package of services that contains multiple non-distinct performance obligations, such as those included in account servic packages, the promised services are treated as a single performance obligation. If a package of services contains distinct performance obligations, the corresponding transaction price is allocated to each performance obligation based on the estimated stand-alone selling prices.\nDividend income is recognised when the right to receive payment is established. This is the ex-dividend date for listed equity securities, and usually the date when shareholders approve the dividend for unlisted equity securities.\nNet income/(expense) from financial instruments measured at fair value through profit or loss includes the following:", "chunk_word_count": 439, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Interest income and expense", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 347, "page_start": 347, "page_end": 347 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 462, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Non-interest income and expense\n‘Net income from financial instruments held for trading or managed on a fair value basis’: This comprises net trading income, which includes all gains and losses from changes in the fair value of financial assets and financial liabilities held for trading and other financial instruments managed on a fair value basis, together with the related interest income, expense and dividends, excluding the effect of changes in the credit risk of liabilities managed on a fair value basis. It also includes all gains and losses from changes in the fair value of derivatives that are managed in conjunction with financial assets and liabilities measured at fair value through profit or loss. \n‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss’: This includes all gains and losses from changes in the fair value, together with related interest income, expense and dividends in respect of financial assets and liabilities measured at fair value through profit or loss, and those derivatives managed in conjunction with the above that can be separately identifiable from other trading derivatives. \n‘Changes in fair value of designated debt instruments and related derivatives’: Interest paid on debt instruments and interest cash flows on related derivatives is presented in interest expense where doing so reduces an accounting mismatch. \n‘Changes in fair value of other financial instruments mandatorily measured at fair value through profit or loss’: This includes interest on instruments that fail the solely payments of principal and interest test, see (d) below.\nThe accounting policies for insurance service result and insurance finance income/(expenses) are disclosed in Note 1.2(j).", "chunk_word_count": 290, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Non-interest income and expense", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 347, "page_start": 347, "page_end": 347 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 463, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### (c) Valuation of financial instruments\nAll financial instruments are initially recognised at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of a financial instrument on initial recognition is generally its transaction price (that is, the fair value of the consideration given or received). However, if there is a difference between the transaction price and the fair value of financial instruments whose fair value is based on a quoted price in an active market or a valuation technique that uses only data from observable markets, HSBC recognises the difference as a trading gain or loss at inception (a ‘day 1 gain or loss’). In all other cases, the entire day 1 gain or loss is deferred and recognised in the income statement over the life of the transaction until the transaction matures, is closed out, the valuation inputs become observable or HSBC enters into an offsetting transaction. The fair value of financial instruments is generally measured on an individual basis. However, in cases where HSBC manages a group of financial assets and liabilities according to its net market or credit risk exposure, the fair value of the group of financial instruments is measured on a net basis but the underlying financial assets and liabilities are presented separately in the financial statements, unless they satisfy the IFRS offsetting criteria.\n### Critical estimates and judgements\nThe majority of valuation techniques employ only observable market data. However, certain financial instruments are classified on the basis of valuation techniques that feature one or more significant market inputs that are unobservable, and for them, the measurement of fair value is more judgemental:\n### (d) Financial instruments measured at amortised cost\nFinancial assets that are held to collect the contractual cash flows and which contain contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest are measured at amortised cost. Such financial assets include most loans and advances to banks and customers and some debt securities. In addition, most financial liabilities are measured at amortised cost. HSBC accounts for regular way amortised cost financial instruments using trade date accounting. The carrying amount of these financial assets at initial recognition includes any directly attributable transactions costs.\nHSBC may commit to underwriting loans on fixed contractual terms for specified periods of time. When the loan arising from the lending commitment is expected to be sold shortly after origination, the commitment to lend is recorded as a derivative. When HSBC intends to hold the loan, the loan commitment is included in the impairment calculations set out below.", "chunk_word_count": 470, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > (c) Valuation of financial instruments", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 347, "page_start": 347, "page_end": 348 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 464, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Non-trading reverse repurchase, repurchase and similar agreements\nWhen debt securities are sold subject to a commitment to repurchase them at a predetermined price (‘repos’), they remain on the balance sheet and a liability is recorded in respect of the consideration received. Securities purchased under commitments to resell (‘reverse repos’) are not recognised on the balance sheet and an asset is recorded in respect of the initial consideration paid. Non-trading repos and reverse repos are measured at amortised cost. The difference between the sale and repurchase price or between the purchase and resale price is treated as interest and recognised in net interest income over the life of the agreement.\nContracts that are economically equivalent to reverse repo or repo agreements (such as sales or purchases of debt securities entered into together with total return swaps with the same counterparty) are accounted for similarly to, and presented together with, reverse repo or repo agreements.\n### (e) Financial assets measured at fair value through other comprehensive income\nFinancial assets managed within a business model that is achieved by both collecting contractual cash flows and selling and which contain contractual terms that give rise on specified dates to cash flows that are solely payments of principal and interest are measured at fair value through other comprehensive income (‘FVOCI’). These comprise primarily debt securities. They are recognised on trade date when HSBC enters into contractual arrangements to purchase and are generally derecognised when they are either sold or redeemed. They are subsequently remeasured at fair value with changes therein (except for those relating to impairment, interest income and foreign currency exchange gains and losses) recognised in other comprehensive income until the assets are sold. Upon disposal, the cumulative gains or losses in other comprehensive income are recognised in the income statement as ‘Gains less losses from financial instruments’. Financial assets measured at FVOCI are included in the impairment calculations set out below and impairment is recognised in profit or loss.\n### (f) Equity securities measured at fair value with fair value movements presented in other comprehensive income\nThe equity securities for which fair value movements are shown in other comprehensive income are business facilitation and other similar investments where HSBC holds the investments other than to generate a capital return. Dividends from such investments are recognised in profit or loss. Gains or losses on the derecognition of these equity securities are not transferred to profit or loss. Otherwise, equity securities are measured at fair value through profit or loss.", "chunk_word_count": 432, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Non-trading reverse repurchase, repurchase and similar agreements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 348, "page_start": 348, "page_end": 348 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 465, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### (g) Financial instruments designated at fair value through profit or loss\nFinancial instruments, other than those held for trading, are classified in this category if they meet one or more of the criteria set out below and are so designated irrevocably at inception:\nThe use of the designation removes or significantly reduces an accounting mismatch. \nA group of financial assets and liabilities or a group of financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy. \n– The financial liability contains one or more non-closely related embedded derivatives.\nDesignated financial assets are recognised when HSBC enters into contracts with counterparties, which is generally on trade date, and are normally derecognised when the rights to the cash flows expire or are transferred. Designated financial liabilities are recognised when HSBC enters into contracts with counterparties, which is generally on settlement date, and are normally derecognised when extinguished. Subsequent changes in fair values are recognised in the income statement in ‘Net income from financial instruments held for trading or managed on a fair value basis’ or ‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss’ or ‘Changes in fair value of designated debt and related derivatives’ except for the effect of changes in the liabilities’ credit risk, which is presented in ‘Other comprehensive income’, unless that treatment would create or enlarge an accounting mismatch in profit or loss.\nUnder the above criteria, the main classes of financial instruments designated by HSBC are:\n– Debt instruments for funding purposes that are designated to reduce an accounting mismatch: The interest and/or foreign exchange exposure on certain fixed-rate debt securities issued has been matched with the interest and/or foreign exchange exposure on certain swaps as part of a documented risk management strategy.\nFinancial assets and financial liabilities under unit-linked and non-linked investment contracts: A contract under which HSBC does not accept significant insurance risk from another party is not classified as an insurance contract, other than investment contracts with discretionary participation features (‘DPF’), but is accounted for as a financial liability. Customer liabilities under linked and certain non-linked investment contracts issued by insurance subsidiaries are determined based on the fair value of the assets held in the linked funds or by a valuation method. The related financial assets and liabilities are managed and reported to management on a fair value basis. Designation at fair value of the financial assets and related liabilities allows changes in fair values to be recorded in the income statement and presented in the same line.\nFinancial liabilities that contain both deposit and derivative components: These financial liabilities are managed and their performance evaluated on a fair value basis.", "chunk_word_count": 479, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > (g) Financial instruments designated at fair value through profit or loss", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 348, "page_start": 348, "page_end": 349 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 466, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### (h) Derivatives\nDerivatives are financial instruments that derive their value from the price of underlying items such as equities, interest rates or other indices. Derivatives are recognised initially and are subsequently measured at fair value through profit or loss. Derivatives are classified as assets when their fair value is positive or as liabilities when their fair value is negative. This includes embedded derivatives in financial liabilities, which are bifurcated from the host contract when they meet the definition of a derivative on a stand-alone basis.\nWhere the derivatives are managed with debt securities issued by HSBC that are designated at fair value where doing so reduces an accounting mismatch, the contractual interest is shown in ‘Interest expense’ together with the interest payable on the issued debt.\n### Hedge accounting\nWhen derivatives are not part of fair value designated relationships, if held for risk management purposes they are designated in hedge accounting relationships where the required criteria for documentation and hedge effectiveness are met. HSBC uses these derivatives or, where allowed, other non-derivative hedging instruments in fair value hedges, cash flow hedges or hedges of net investments in foreign operations as appropriate to the risk being hedged.\n### Fair value hedge\nFair value hedge accounting does not change the recording of gains and losses on derivatives and other hedging instruments, but results in recognising changes in the fair value of the hedged assets or liabilities attributable to the hedged risk that would not otherwise be recognised in the income statement. If a hedge relationship no longer meets the criteria for hedge accounting, hedge accounting is discontinued and the cumulative adjustment to the carrying amount of a hedged item for which the effective interest rate method is used is amortised to the income statement on a recalculated effective interest rate, unless the hedged item has been derecognised, in which case it is recognised in the income statement immediately.\n### Cash flow hedge\nThe effective portion of gains and losses on hedging instruments is recognised in other comprehensive income and the ineffective portion of the change in fair value of derivative hedging instruments that are part of a cash flow hedge relationship is recognised immediately in the income statement within ‘Net income from financial instruments held for trading or managed on a fair value basis’. The accumulated gains and losses recognised in other comprehensive income are reclassified to the income statement in the same periods in which the hedged item affects profit or loss. When a hedge relationship is discontinued, or partially discontinued, any cumulative gain or loss recognised in other comprehensive income remains in equity until the forecast transaction is recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss previously recognised in other comprehensive income is immediately reclassified to the income statement.", "chunk_word_count": 488, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > (h) Derivatives", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 349, "page_start": 349, "page_end": 349 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 467, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Net investment hedge\nHedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges. The effective portion of gains and losses on the hedging instrument is recognised in other comprehensive income and other gains and losses are recognised immediately in the income statement. Gains and losses previously recognised in other comprehensive income are reclassified to the income statement on the disposal, or part-disposal, of the foreign operation.\n### Derivatives that do not qualify for hedge accounting\nNon-qualifying hedges are derivatives entered into as economic hedges of assets and liabilities for which hedge accounting was not applied.\n### (i) Impairment of amortised cost and FVOCI financial assets\nExpected credit losses (‘ECL’) are recognised for loans and advances to banks and customers, non-trading reverse repurchase agreements, other financial assets held at amortised cost, debt instruments measured at FVOCI, and certain loan commitments and financial guarantee contracts. At initial recognition, an allowance (or provision in the case of some loan commitments and financial guarantees) is recognised for ECL resulting from possible default events within the next 12 months, or less, where the remaining life is less than 12 months (’12-month ECL’). In the event of a significant increase in credit risk, an allowance (or provision) is recognised for ECL resulting from all possible default events over the expected life of the financial instrument (‘lifetime ECL’). Financial assets where 12-month ECL is recognised are considered to be ‘stage $1 ^ { \\prime } ;$ ; financial assets which are considered to have experienced a significant increase in credit risk are in ‘stage $2 ^ { \\prime }$ ; and financial assets for which there is objective evidence of impairment, and so are considered to be in default or otherwise credit impaired are in ‘stage ${ } ^ { 3 ^ { \\prime } }$ . Purchased or originated credit-impaired financial assets (‘POCI’) are treated differently as set out below.\nCredit impaired (stage 3)\nHSBC determines that a financial instrument is credit impaired and in stage 3 by considering relevant objective evidence, primarily whether contractual payments of either principal or interest are past due for more than 90 days, there are other indications that the borrower is unlikely to pay such as that a concession has been granted to the borrower for economic or legal reasons relating to the borrower’s financial condition, or the loan is otherwise considered to be in default.\nIf such unlikeliness to pay is not identified at an earlier stage, it is deemed to occur when an exposure is 90 days past due. Therefore, the definitions of credit impaired and default are aligned as far as possible so that stage 3 represents all loans that are considered defaulted or otherwise credit impaired.\nInterest income is recognised by applying the effective interest rate to the amortised cost (i.e. gross carrying amount less allowance for ECL).", "chunk_word_count": 497, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Net investment hedge", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 349, "page_start": 349, "page_end": 349 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 468, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Write-off\nFinancial assets (and the related impairment allowances) are normally written off, either partially or in full, when there is no realistic prospect of recovery. Where loans are secured, this is generally after receipt of any proceeds from the realisation of security. In circumstances where the net realisable value of any collateral has been determined and there is no reasonable expectation of further recovery, write-off may be earlier.\n### Forbearance\nLoans are identified as forborne and classified as either performing or non-performing when HSBC modifies the contractual terms due to financial difficulty of the borrower. Non-performing forborne loans are stage 3 and classified as non-performing until they meet the curing criteria, as specified by applicable credit risk policy (for example, when the loan is no longer in default and no other indicators of default have been present for at least 12 months). Any amount written off as a result of any modification of contractual terms upon entering forbearance would not be reversed.\nThe Group applies the EBA Guidelines on the application of definition of default for our retail portfolios, which affect credit risk policies and our reporting in respect of the status of loans as credit impaired principally due to forbearance (or curing thereof). Further details are provided under ‘Forborne loans and advances’ on page 148.\nPerforming forborne loans are initially stage 2 and remain classified as forborne until they meet applicable curing criteria (for example, they continue to not be in default and no other indicators of default are present for a period of at least 24 months). At this point, the loan is either stage 1 or stage 2 as determined by comparing the risk of a default occurring at the reporting date (based on the modified contractual terms) and the risk of a default occurring at initial recognition (based on the original, unmodified contractual terms).\nA forborne loan is derecognised if the existing agreement is cancelled and a new agreement is made on substantially different terms, or if the terms of an existing agreement are modified such that the forborne loan is a substantially different financial instrument. Any new loans that arise following derecognition events in these circumstances would generally be classified as POCI and will continue to be disclosed as forborne.", "chunk_word_count": 392, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Write-off", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 350, "page_start": 350, "page_end": 350 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 469, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Loan modifications other than forborne loans\nLoan modifications that are not identified as forborne are considered to be commercial restructurings. Where a commercial restructuring results in a modification (whether legalised through an amendment to the existing terms or the issuance of a new loan contract) such that HSBC’s rights to the cash flows under the original contract have expired, the old loan is derecognised and the new loan is recognised at fair value. The rights to cash flows are generally considered to have expired if the commercial restructuring is at market rates and no payment-related concession has been provided. Modifications of certain higher credit risk wholesale loans are assessed for derecognition, having regard to changes in contractual terms that either individually or in combination are judged to result in a substantially different financial instrument. Mandatory and general offer loan modifications that are not borrower specific, for example market-wide customer relief programmes, generally do not result in derecognition, but their stage allocation is determined considering all available and supportable information under our ECL impairment policy. Changes made to these financial instruments that are economically equivalent and required by interest rate benchmark reform do not result in the derecognition or a change in the carrying amount of the financial instrument, but instead require the effective interest rate to be updated to reflect the change of the interest rate benchmark.", "chunk_word_count": 244, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Loan modifications other than forborne loans", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 350, "page_start": 350, "page_end": 350 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 470, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Significant increase in credit risk (stage 2)\nAn assessment of whether credit risk has increased significantly since initial recognition is performed at each reporting period by considering the change in the risk of default occurring over the remaining life of the financial instrument. The assessment explicitly or implicitly compares the risk of default occurring at the reporting date compared with that at initial recognition, taking into account reasonable and supportable information, including information about past events, current conditions and future economic conditions. The assessment is unbiased, probability-weighted, and to the extent relevant, uses forward-looking information consistent with that used in the measurement of ECL. The analysis of credit risk is multifactor. The determination of whether a specific factor is relevant and its weight compared with other factors depends on the type of product, the characteristics of the financial instrument and the borrower, and the geographical region. Therefore, it is not possible to provide a single set of criteria that will determine what is considered to be a significant increase in credit risk, and these criteria will differ for different types of lending, particularly between retail and wholesale. However, unless identified at an earlier stage, all financial assets are deemed to have suffered a significant increase in credit risk when 30 days past due. In addition, wholesale loans that are individually assessed, which are typically corporate and commercial customers, and included on a watch or worry list, are included in stage 2.\nFor wholesale portfolios, the quantitative comparison assesses default risk using a lifetime probability of default (‘PD’), which encompasses a wide range of information including the obligor’s customer risk rating (‘CRR’), macroeconomic condition forecasts and credit transition probabilities. For origination CRRs up to 3.3, significant increase in credit risk is measured by comparing the average PD for the remaining term estimated at origination with the equivalent estimation at the reporting date. The quantitative measure of significance varies depending on the credit quality at origination as follows:\nFor CRRs greater than 3.3 that are not impaired, a significant increase in credit risk is considered to have occurred when the origination PD has doubled. The significance of changes in PD was informed by expert credit risk judgement, referenced to historical credit migrations and to relative changes in external market rates.\nFor loans originated prior to the implementation of IFRS 9, the origination PD does not include adjustments to reflect expectations of future macroeconomic conditions since these are not available without the use of hindsight. In the absence of this data, origination PD must be approximated assuming through-the-cycle PDs and through-the-cycle migration probabilities, consistent with the instrument’s underlying modelling approach and the CRR at origination. For these loans, the quantitative comparison is supplemented with additional CRR deteriorationbased thresholds, as set out in the table below:", "chunk_word_count": 479, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Significant increase in credit risk (stage 2)", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 350, "page_start": 350, "page_end": 351 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 471, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### urther information about the 23-grade scale used for CRR can be found on page 148.\nFor retail portfolios, default risk is assessed using a reporting date 12-month PD derived from internal models, which incorporate all available information about the customer. This PD is adjusted for the effect of macroeconomic forecasts for periods longer than 12 months and is considered to be a reasonable approximation of a lifetime PD measure. Retail exposures are first segmented into homogenous portfolios, generally by country, product and brand. Within each portfolio, the stage 2 accounts are defined as accounts with an adjusted 12-month PD greater than the average 12-month PD of loans in that portfolio 12 months before they become 30 days past due. The expert credit risk judgement is that no prior increase in credit risk is significant. This portfolio-specific threshold therefore identifies loans with a PD higher than would be expected from loans that are performing as originally expected and higher than that which would have been acceptable at origination. It therefore approximates a comparison of origination to reporting date PDs.\nWe continue to refine the retail transfer criteria approach for certain portfolios as additional data becomes available, in order to utilise a more relative approach. These enhancements take advantage of the increase in origination-related data in the assessment of significant increases in credit risk by comparing remaining lifetime PD to the comparable remaining term lifetime PD at origination based on portfolio-specific origination segments.\n### Unimpaired and without significant increase in credit risk (stage 1)\nECL resulting from default events that are possible within the next 12 months (‘12-month ECL’) are recognised for financial instruments that remain in stage 1.\n### Purchased or originated credit impaired\nFinancial assets that are purchased or originated at a deep discount that reflects the incurred credit losses are considered to be POCI. This population includes new financial instruments recognised in most cases following the derecognition of forborne loans. The amount of change in lifetime ECL for a POCI loan is recognised in profit or loss until the POCI loan is derecognised, even if the lifetime ECL are less than the amount of ECL included in the estimated cash flows on initial recognition.\n### Movement between stages\nFinancial assets can be transferred between the different categories (other than POCI) depending on their relative increase in credit risk since initial recognition. Financial instruments are transferred out of stage 2 if their credit risk is no longer considered to be significantly increased since initial recognition based on the assessments described above. In the case of non-performing forborne loans, such financial instruments are transferred out of stage 3 when they no longer exhibit any evidence of credit impairment and meet the curing criteria as described above.", "chunk_word_count": 472, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > urther information about the 23-grade scale used for CRR can be found on page 148.", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 351, "page_start": 351, "page_end": 351 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 472, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Measurement of ECL\nThe assessment of credit risk and the estimation of ECL are unbiased and probability-weighted, and incorporate all available information which is relevant to the assessment including information about past events, current conditions and reasonable and supportable forecasts of future events and economic conditions at the reporting date. In addition, the estimation of ECL should take into account the time value of money and considers other factors such as climate-related risks.\nIn general, HSBC calculates ECL using three main components: a probability of default (‘PD’), a loss given default (’LGD’) and the exposure at default (‘EAD’).\nThe 12-month ECL is calculated by multiplying the 12-month PD, LGD and EAD. Lifetime ECL is calculated using the lifetime PD instead. The 12-month and lifetime PDs represent the probability of default occurring over the next 12 months and the remaining maturity of the instrument respectively.\nThe EAD represents the expected balance at default, taking into account the repayment of principal and interest from the balance sheet date to the default event together with any expected drawdowns of committed facilities. The LGD represents expected losses on the EAD given the event of default, taking into account, among other attributes, the mitigating effect of collateral value at the time it is expected to be realised and the time value of money.\n### Notes on the financial statements\nWhile 12-month PDs are recalibrated from IRB models where possible, the lifetime PDs are determined by projecting the 12-month PD using a term structure. For the wholesale methodology, the lifetime PD also takes into account credit migration, i.e. a customer migrating through the CRR bands over its life.\nThe ECL for wholesale stage 3 is determined primarily on an individual basis using a discounted cash flow (‘DCF’) methodology. The expected future cash flows are based on estimates as of the reporting date, reflecting reasonable and supportable assumptions and projections of future recoveries and expected future receipts of interest.\nCollateral is taken into account if it is likely that the recovery of the outstanding amount will include realisation of collateral based on its estimated fair value of collateral at the time of expected realisation, less costs for obtaining and selling the collateral.\nThe cash flows are discounted at a reasonable approximation of the original effective interest rate. For significant cases, cash flows under up to four different scenarios are probability-weighted by reference to the status of the borrower, economic scenarios applied more generally by the Group and judgement in relation to the likelihood of the work-out strategy succeeding or receivership being required. For less significant cases where an individual assessment is undertaken, the effect of different economic scenarios and work-out strategies results in an ECL calculation based on a most likely outcome which is adjusted to capture losses resulting from less likely but possible outcomes. For certain less significant cases, the bank may use a LGD-based modelled approach to ECL assessment, which factors in a range of economic scenarios.", "chunk_word_count": 509, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Measurement of ECL", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 351, "page_start": 351, "page_end": 352 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 473, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Period over which ECL is measured\nExpected credit loss is measured from the initial recognition of the financial asset. The maximum period considered when measuring ECL (be it 12-month or lifetime ECL) is the maximum contractual period over which HSBC is exposed to credit risk. However, where the financial instrument includes both a drawn and undrawn commitment and the contractual ability to demand repayment and cancel the undrawn commitment does not serve to limit HSBC’s exposure to credit risk to the contractual notice period, the contractual period does not determine the maximum period considered. Instead, ECL is measured over the period HSBC remains exposed to credit risk that is not mitigated by credit risk management actions. This applies to retail overdrafts and credit cards, where the period is the average time taken for stage 2 exposures to default or close as performing accounts, determined on a portfolio basis and ranging from between two and six years. In addition, for these facilities it is not possible to identify the ECL on the loan commitment component separately from the financial asset component. As a result, the total ECL is recognised in the loss allowance for the financial asset unless the total ECL exceeds the gross carrying amount of the financial asset, in which case the ECL is recognised as a provision. For wholesale overdraft facilities, credit risk management actions are taken no less frequently than on an annual basis.\n### Forward-looking economic inputs\nHSBC applies multiple forward-looking global economic scenarios determined with reference to external forecast distributions representative of its view of forecast economic conditions. This approach is considered sufficient to calculate unbiased expected credit losses in most economic environments. In certain economic environments, additional analysis may be necessary and may result in additional scenarios or adjustments, to reflect a range of possible economic outcomes sufficient for an unbiased estimate. The detailed methodology is disclosed in ‘Measurement uncertainty and sensitivity analysis of ECL estimates’ on page 156.\n### Critical estimates and judgements\nThe calculation of the Group’s ECL under IFRS 9 requires the Group to make a number of judgements, assumptions and estimates. The most significant are set out below:\nEstimates\nJudgements\n### (j) Insurance contracts\nA contract is classified as an insurance contract where the Group accepts significant insurance risk from another party by agreeing to compensate that party if it is adversely affected by a specified uncertain future event. An insurance contract may also transfer financial risk, but is accounted for as an insurance contract if the insurance risk is significant. In addition, the Group issues investment contracts with DPF, which are also accounted under IFRS 17 ’Insurance Contracts’.", "chunk_word_count": 456, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Period over which ECL is measured", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 352, "page_start": 352, "page_end": 353 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 474, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Aggregation of insurance contracts\nIndividual insurance contracts that are managed together and subject to similar risks are identified as a portfolio. Contracts that are managed together usually belong to the same product group, and have similar characteristics such as being subject to a similar pricing framework or similar product management, and are issued by the same legal entity. If a contract is exposed to more than one risk, the dominant risk of the contract is used to assess whether the contract features similar risks. Each portfolio is further separated by the contract’s expected profitability. The portfolios are split by their profitability into: (i) contracts that are onerous at initial recognition; (ii) contracts that at initial recognition have no significant possibility of becoming onerous subsequently; and (iii) the remaining contracts. These profitability groups are then divided by issue date, with most contracts the Group issues after the transition date being grouped into calendar quarter cohorts. For multi-currency groups of contracts, the Group considers its groups of contracts as being denominated in a single currency.\nThe measurement of the insurance contract liability is based on groups of insurance contracts as established at initial recognition, and will include fulfilment cash flows as well as the CSM representing the unearned profit. The Group has elected to update the estimates used in the measurement on a year-to-date basis.\n### Fulfilment cash flows\nThe fulfilment cash flows comprise the following:\n### Best estimates of future cash flows\nThe cash flows within the contract boundary of each contract in the Group include amounts expected to be collected from premiums and payouts for claims, benefits and expenses, and are projected using a range of scenarios and assumptions in an unbiased way based on the Group’s demographic and operating experience along with external mortality data where the Group’s own experience data is not sufficiently large in size to be credible.\n### Adjustment for the time value of money and financial risks associated with the future cash flows\nhe estimates of future cash flows are adjusted to reflect the time value of money (i.e. discounting) and the financial risks to derive an expected resent value. The Group generally makes use of stochastic modelling techniques in the estimation for products with options and guarantees.\nA bottom-up approach is used to determine the discount rate to be applied to a given set of expected future cash flows. This is derived as the sum of the risk-free yield and an illiquidity premium. The risk-free yield is determined based on observable market data, where such markets are considered to be deep, liquid and transparent. When information is not available, management judgement is applied to determine the appropriate risk-free yield. Illiquidity premiums reflect the liquidity characteristics of the associated insurance contracts.", "chunk_word_count": 473, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Aggregation of insurance contracts", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 353, "page_start": 353, "page_end": 353 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 475, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Risk adjustment for non-financial risk\nThe risk adjustment reflects the compensation required for bearing the uncertainty about the amount and timing of future cash flows that arises from non-financial risk. It is calculated as a 75th percentile level of stress over a one-year period. The level of the stress is determined with reference to external regulatory stresses and internal economic capital stresses.\nFor the main insurance manufacturing entity in these locations, the one-year 75th percentile level of stress corresponds to the following percentiles based on an ultimate view of risk over all future years:\n– Asia-Pacific (Hong Kong): 60th percentile (2022: 59th percentile). \n– Europe (France): 60th percentile (2022: 60th percentile). \n– Latin America (Mexico): 65th percentile (2022: 66th percentile).\nThe Group does not disaggregate changes in the risk adjustment between insurance service result (comprising insurance revenue and insurance service expense) and insurance finance income or expenses. All changes are included in the insurance service result.\n### Measurement models\nThe variable fee approach (‘VFA’) measurement model is used for most of the contracts issued by the Group, which is mandatory upon meeting the following eligibility criteria at inception:\nthe contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items; – the Group expects to pay to the policyholder a substantial share of the fair value returns on the underlying items. The Group considers that a substantial share is a majority of returns; and the Group expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in fair value of the underlying items. The Group considers that a substantial proportion is a majority proportion of change on a present value probabilityweighted average of all scenarios.\nFor some contracts measured under VFA, the other comprehensive income (‘OCI’) option is used. The OCI option is applied where the underlying items held by the Group are not accounted for at fair value through profit or loss. Under this option, only the amount that matches income or expenses recognised in profit or loss on underlying items is included in finance income or expenses for these insurance contracts, and hence results in the elimination of accounting mismatches. The remaining amount of finance income or expenses for these insurance contracts issued for the period is recognised in OCI. In addition, the risk mitigation option is used for a number of economic offsets against the instruments that meet specific requirements.\nThe remaining contracts issued and the reinsurance contracts held are accounted for under the general measurement model (‘GMM’).", "chunk_word_count": 446, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Risk adjustment for non-financial risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 353, "page_start": 353, "page_end": 353 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 476, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### CSM and coverage units\nThe CSM represents the unearned profit and results in no income or expense at initial recognition when the group of contracts is profitable. The CSM is adjusted at each subsequent reporting period for changes in fulfilment cash flows relating to future service (e.g. changes in noneconomic assumptions, including mortality and morbidity rates). For initial recognition of onerous groups of contracts and when groups of contracts become onerous subsequently, losses are recognised in insurance service expense immediately.\nFor groups of contracts measured using the VFA, changes in the Group’s share of the underlying items, and economic experience and economic assumption changes adjust the CSM, whereas these changes do not adjust the CSM under the GMM, but are recognised in profit or loss as they arise. However, under the risk mitigation option for VFA contracts, the changes in the fulfilment cash flows and the changes in the Group’s share in the fair value return on underlying items that the instruments mitigate are not adjusted in CSM but recognised in profit or loss. The risk mitigating instruments are primarily reinsurance contracts held.\nThe CSM is systematically recognised in insurance revenue to reflect the insurance contract services provided, based on the coverage units of the group of contracts. Coverage units are determined by the quantity of benefits and the expected coverage period of the contracts.\nThe Group identifies the quantity of the benefits provided as follows:\nInsurance coverage: This is based on the expected net policyholder insurance benefit at each period after allowance for decrements, where net policyholder insurance benefit refers to the amount of sum assured less the fund value or surrender value. Investment services (including both investment-return service and investment-related service): This is based on a constant measure basis which reflects the provision of access for the policyholder to the facility.\nFor contracts that provide both insurance coverage and investment services, coverage units are weighted according to the expected present value of the future cash outflows for each service.\n### Insurance service result\nInsurance revenue reflects the consideration to which the Group expects to be entitled in exchange for the provision of coverage and other insurance contract services (excluding any investment components). Insurance service expenses comprise the incurred claims and other incurred insurance service expenses (excluding any investment components), and losses on onerous groups of contracts and reversals of such losses.\n### Insurance finance income and expenses\nInsurance finance income and expenses comprise the change in the carrying amount of the group of insurance contracts arising from the effects of the time value of money, financial risk and changes therein. For VFA contracts, changes in the fair value of underlying items (excluding additions and withdrawals) are recognised in insurance finance income or expenses.\n### (k) Employee compensation and benefits", "chunk_word_count": 478, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > CSM and coverage units", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 354, "page_start": 354, "page_end": 354 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 477, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Share-based payments\nHSBC enters into both equity-settled and cash-settled share-based payment arrangements with its employees as compensation for the provision of their services.\nThe vesting period for these schemes may commence before the legal grant date if the employees have started to render services in respect of the award before the legal grant date, where there is a shared understanding of the terms and conditions of the arrangement. Expenses are recognised when the employee starts to render service to which the award relates.\nCancellations result from the failure to meet a non-vesting condition during the vesting period, and are treated as an acceleration of vesting recognised immediately in the income statement. Failure to meet a vesting condition by the employee is not treated as a cancellation, and the amount of expense recognised for the award is adjusted to reflect the number of awards expected to vest.\n### Post-employment benefit plans\nHSBC operates a number of pension schemes including defined benefit, defined contribution and post-employment benefit scheme\nPayments to defined contribution schemes are charged as an expense as the employees render service.\nDefined benefit pension obligations are calculated using the projected unit credit method. The net charge to the income statement mainly comprises the service cost and the net interest on the net defined benefit asset or liability, and is presented in operating expenses. Remeasurements of the net defined benefit asset or liability, which comprise actuarial gains and losses, return on plan assets excluding interest and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The net defined benefit asset or liability represents the present value of defined benefit obligations reduced by the fair value of plan assets (see Note $ { \\uparrow } . 2 ( { \\mathtt { C } } ) )$ , after applying the asset ceiling test, where the net defined benefit surplus is limited to the present value of available refunds and reductions in future contributions to the plan.\nThe costs of obligations arising from other post-employment plans are accounted for on the same basis as defined benefit pension plans.\n### Critical estimates and judgements\nThe most significant critical estimates relate to the determination of key assumptions applied in calculating the defined benefit pension obligation for the principal plan.", "chunk_word_count": 399, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Share-based payments", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 354, "page_start": 354, "page_end": 354 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 478, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### (l) Tax\nIncome tax comprises current tax and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case the tax is recognised in the same statement as the related item appears.\nCurrent tax is the tax expected to be payable on the taxable profit for the year and on any adjustment to tax payable in respect of previous years. \nHSBC provides for potential current tax liabilities that may arise on the basis of the amounts expected to be paid to the tax authorities.\nDeferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the balance sheet, and the amounts attributed to such assets and liabilities for tax purposes. Deferred tax is calculated using the tax rates expected to apply in the periods in which the assets will be realised or the liabilities settled.\nIn assessing the probability and sufficiency of future taxable profit, management considers the availability of evidence to support the recognition of deferred tax assets, taking into account the inherent risks in long-term forecasting, including climate change-related, and drivers of recent history of tax losses where applicable. Management also considers the future reversal of existing taxable temporary differences and tax planning strategies, including corporate reorganisations.\nCurrent and deferred tax are calculated based on tax rates and laws enacted, or substantively enacted, by the balance sheet date.\n### Critical estimates and judgements\nThe recognition of deferred tax assets depends on judgements and estimates.\nThe Group does not consider there to be a significant risk of a material adjustment to the carrying amount of deferred tax assets in the next financial year, but does consider this to be an area that is inherently judgemental.\n### (m) Provisions, contingent liabilities and guarantees\n### Provisions\nProvisions are recognised when it is probable that an outflow of economic benefits will be required to settle a present legal or constructive obligation that has arisen as a result of past events and for which a reliable estimate can be made.\nThe recognition and measurement of provisions requires the Group to make a number of judgements, assumptions and estimates. The most significant are set out below:\n### Contingent liabilities, contractual commitments and guarantees\n### Contingent liabilities\nContingent liabilities, which include certain guarantees and letters of credit pledged as collateral security, and contingent liabilities related to legal proceedings or regulatory matters, are not recognised in the financial statements but are disclosed unless the probability of settlement is remote.\nFinancial guarantee contracts\nLiabilities under financial guarantee contracts that are not classified as insurance contracts are recorded initially at their fair value, which is generally the fee received or present value of the fee receivable.", "chunk_word_count": 480, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > (l) Tax", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 355, "page_start": 355, "page_end": 355 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 479, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### (n) Impairment of non-financial assets\nSoftware under development is tested for impairment at least annually. Other non-financial assets are property, plant and equipment, intangible assets (excluding goodwill) and right-of-use assets. They are tested for impairment at the individual asset level when there is indication of impairment at that level, or at the CGU level for assets that do not have a recoverable amount at the individual asset level. In addition, impairment is also tested at the CGU level when there is indication of impairment at that level. For this purpose, CGUs are considered to be the principal operating legal entities divided by global business.\n### Notes on the financial statements\nImpairment testing compares the carrying amount of the non-financial asset or CGU with its recoverable amount, which is the higher of the fair value less costs of disposal or the value in use. The carrying amount of a CGU comprises the carrying amount of its assets and liabilities, including non-financial assets that are directly attributable to it and non-financial assets that can be allocated to it on a reasonable and consistent basis. Non-financial assets that cannot be allocated to an individual CGU are tested for impairment at an appropriate grouping of CGUs. The recoverable amount of the CGU is the higher of the fair value less costs of disposal of the CGU, which is determined by independent and qualified valuers where relevant, and the value in use, which is calculated based on appropriate inputs (see Note 21).\nWhen the recoverable amount of a CGU is less than its carrying amount, an impairment loss is recognised in the income statement to the extent that the impairment can be allocated on a pro-rata basis to the non-financial assets by reducing their carrying amounts to the higher of their respective individual recoverable amount or nil. Impairment is not allocated to the financial assets in a CGU.\nImpairment losses recognised in prior periods for non-financial assets are reversed when there has been a change in the estimate used to determine the recoverable amount. The impairment loss is reversed to the extent that the carrying amount of the non-financial assets would not exceed the amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised in prior periods.\n### Critical estimates and judgements\nThe review of goodwill and other non-financial assets for impairment reflects management’s best estimate of the future cash flows of the CGUs and the rates used to discount these cash flows, both of which are subject to uncertain factors as described in the ‘Critical estimates and judgements’ in Note 1.2(a).\nThe Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill and non-financial assets in the next financial year, but does consider this to be an area that is inherently judgemental.", "chunk_word_count": 492, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > (n) Impairment of non-financial assets", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 355, "page_start": 355, "page_end": 356 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 480, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### (o) Non-current assets and disposal groups held for sale\nHSBC classifies non-current assets or disposal groups (including assets and liabilities) as held for sale when their carrying amounts will be recovered principally through sale rather than through continuing use. To be classified as held for sale, the non-current asset or disposal group must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets (or disposal groups), and the sale must be highly probable. For a sale to be highly probable, the appropriate level of management must be committed to a plan to sell the asset (or disposal group) and an active programme to locate a buyer and complete the plan must have been initiated. Further, the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value. In addition, the sale should be expected to qualify as a completed sale within one year from the date of classification and actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.\nHeld for sale assets and disposal groups are measured at the lower of their carrying amount and fair value less costs to sell except for those assets and liabilities that are not within the scope of the measurement requirements of IFRS 5. If the carrying amount of the non-current asset (or disposal group) is greater than the fair value less costs to sell, an impairment loss for any initial or subsequent write-down of the asset or disposal group to fair value less costs to sell is recognised. Any such impairment loss is first allocated against the non-current assets that are in scope of IFRS 5 for measurement. This first reduces the carrying amount of any goodwill allocated to the disposal group, and then to the other non-current assets of the disposal group pro rata on the basis of the carrying amount of each asset in the disposal group. Thereafter, any impairment loss in excess of the carrying amount of the non-current assets in scope of IFRS 5 for measurement is recognised against the total assets of the disposal group.\n### Critical judgements\nThe classification as held for sale depends on certain judgements:", "chunk_word_count": 411, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > (o) Non-current assets and disposal groups held for sale", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 356, "page_start": 356, "page_end": 356 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 481, "chunk_text": "# Opening up a world of opportunity\n## 1 Basis of preparation and material accounting policies\n### Judgements\nManagement judgement is required in determining whether the IFRS 5 held for sale criteria are met, including whether a sale is highly probable and expected to complete within one year of classification. The exercise of judgement will normally consider the likelihood of successfully securing any necessary regulatory or governmental approvals, which are almost always required for sales of banking businesses, and sanctions risk. For large and complex plans, judgement will also include an assessment of the enforceability of any binding sale agreement, the nature and magnitude of any disincentives for non-performance, and the ability of the counterparty to undertake necessary pre-completion preparatory work, comply with conditions precedent, and otherwise be able to comply with contractual undertakings to achieve completion within the expected timescale. Once classified as held for sale, judgement is required to be applied on a continuous basis to ensure that classification remains appropriate in future accounting periods.\n### (p) Hyperinflationary accounting\nHyperinflationary accounting is applied to those subsidiary operations in countries where the three-year cumulative inflation rate is approaching or exceeding $100 \\%$ . In 2023, this affected the Group’s operations in Argentina and Türkiye. The Group applies IAS 29 to the underlying financial information of relevant subsidiaries to restate their local currency results and financial position so as to be stated in terms of the measuring unit current at the end of the reporting period. Those restated results are translated into the Group’s presentation currency of US dollars for consolidation at the closing rate at the balance sheet date. Group comparatives are not restated for inflation and consequential adjustments to the opening balance sheet in relation to hyperinflationary subsidiaries are presented in other comprehensive income. The hyperinflationary gain or loss in respect of the net monetary position of the relevant subsidiary is included in profit or loss.\nWhen applying hyperinflation accounting for the first time, the underlying financial information is restated in terms of the measuring unit current at the end of the reporting period as if the relevant economy had always been hyperinflationary. Group comparatives are not restated for such historical adjustments.\n## 2 Net fee income\nNet fee income included $\\$ 6,971 m$ of fees earned on financial assets that were not at fair value through profit or loss, other than amounts included in determining the effective interest rate (2022: \\$6,410m; 2021: \\$6,742m), $\\$ 1,872 m$ of fees payable on financial liabilities that were not at fair value through profit or loss, other than amounts included in determining the effective interest rate (2022: \\$1,613m; 2021: \\$1,520m), $\\$ 3,452 m$ of fees earned on trust and other fiduciary activities (2022: \\$3,492m; 2021: \\$3,849m) and $\\$ 333m$ of fees payable relating to trust and other fiduciary activities (2022: \\$370m; 2021: \\$305m).\n## 3 Net income/(expense) from financial instruments measured at fair value through profit or loss\n### HSBC Holdings", "chunk_word_count": 490, "section_path": "Opening up a world of opportunity > 1 Basis of preparation and material accounting policies > Judgements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 356, "page_start": 356, "page_end": 358 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 482, "chunk_text": "# Opening up a world of opportunity\n## 4 Insurance business\nInsurance service result\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data have been restated accordingly.\n2 Total Group ‘Net income/(expense) from assets and liabilities of insurance business, including related derivatives, measured at fair value through profit or loss’ of \\$7,886m gain (2022: \\$13,831m loss) includes returns on assets and liabilities supporting insurance policies of \\$7,627m (2022: $\\$ 123,949 m$ loss) and on shareholder assets of \\$259m (2022: \\$118m gain). Investment returns of $\\$ 7,877 m$ (2022: \\$13,701m loss) include gains of \\$7,627m (2022: \\$13,949m loss) on underlying assets supporting insurance liabilities reported in ‘Net income/(expense) from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss’, \\$257m gains (2022: \\$248m gain) reported in ‘Net interest income’ and \\$7m loss (2022: nil) reported in ‘Other operating income’.\n3 ‘Amounts recognised in OCI’ gross of tax for the year ended 31 December 2023 included fair value gains of \\$497m (2022: \\$2,396m loss) and impairment of \\$4m (2022: \\$4m impairment reversals).\nReconciliation of amounts included in other comprehensive income for financial assets measured at fair value through other comprehensive income – assets supporting contracts measured under the modified retrospective approach\n### Notes on the financial statements\n### esent value of expected future cash flows of insurance contract liabilities and contractual service margin\n### Discount rates\nThe discount rates applied to expected future cash flows are determined through a bottom-up approach as set out in Note 1.2(j) ‘Summary of material accounting policies – Insurance contracts’ on page 351. The blended average of discount rates used within our most material manufacturing entities are as follows:\n## 5 Employee compensation and benefits\n1 In 2023 and 2022, employee compensation and benefits are presented in the income statement net of software capitalisation costs and costs included in the insurance contract fulfilment cash flow liabilities under IFRS 17. In 2021, employee compensation and benefits are presented net of software capitalisation costs in the income statement.\n2 Comprises \\$1,043m (2022: \\$922m; 2021: \\$870m) software capitalisation costs and \\$360m (2022: \\$363m; 2021: n/a) costs included in the insurance contract fulfilment cash flow liabilities under IFRS 17.\n### Average number of persons employed by HSBC during the year by legal entity1\n### Reconciliation of total incentive awards granted to income statement charge\n### Share-based payments\n‘Wages and salaries’ includes the effect of share-based payments arrangements, of which $\\$ 482 m$ was equity settled (2022: $\\$ 400 m$ ; 2021: \\$467m), as follows:\n\n### HSBC share awards\n### Movement on HSBC share awards\n### HSBC share option plans\n### Calculation of fair values\nThe fair values of share options are calculated using a Black-Scholes model. The fair value of a share award is based on the share price at the date of the grant.\n### Movement on HSBC share option plans", "chunk_word_count": 488, "section_path": "Opening up a world of opportunity > 5 Employee compensation and benefits > Average number of persons employed by HSBC during the year by legal entity1", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 358, "page_start": 358, "page_end": 366 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 483, "chunk_text": "# Opening up a world of opportunity\n## 5 Employee compensation and benefits\n### Post-employment benefit plans\nThe Group operates pension plans throughout the world for its employees. ‘Pension risk management processes’ on page 206 contains details of the policies and practices associated with these pension plans, some of which are defined benefit plans. The largest defined benefit plan is the HBUK section of the HSBC Bank (UK) Pension Scheme (‘the principal plan’), created as a result of the HSBC Bank (UK) Pension Scheme being fully sectionalised in 2018 to meet the requirements of the Banking Reform Act. For further details of how the trustee of the HSBC Bank (UK) Pension Scheme manages climate risk, see ’Managing climate risk’ on page 65.\nHSBC holds on its balance sheet the net surplus or deficit, which is the difference between the fair value of plan assets and the discounted value of scheme liabilities at the balance sheet date for each plan. Surpluses are only recognised to the extent that they are recoverable through reduced contributions in the future or through potential future refunds from the schemes. In assessing whether a surplus is recoverable, HSBC has considered its current right to obtain a future refund or a reduction in future contributions together with the rights of third parties such as trustees.", "chunk_word_count": 218, "section_path": "Opening up a world of opportunity > 5 Employee compensation and benefits > Post-employment benefit plans", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 367, "page_start": 367, "page_end": 367 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 484, "chunk_text": "# Opening up a world of opportunity\n## 5 Employee compensation and benefits\n### The principal plan\nThe principal plan has a defined benefit section and a defined contribution section. The defined benefit section was closed to future benefit accrual in 2015, with defined benefits earned by employees at that date continuing to be linked to their salary while they remain employed by HSBC. The plan is overseen by an independent corporate trustee, who has a fiduciary responsibility for the operation of the plan. Its assets are held separately from the assets of the Group.\nThe investment strategy of the plan is to hold the majority of assets in bonds, with the remainder in a diverse range of investments. It also includes some interest rate swaps to reduce interest rate risk, inflation swaps to reduce inflation risk and longevity swaps to reduce the impact of longer life expectancy.\nThe principal plan is subject to the statutory funding objective requirements of the UK Pensions Act 2004, which requires that it be funded to at least the level of technical provisions (an actuarial estimate of the assets needed to provide for the benefits already built up under the plan). Where a funding valuation is carried out and identifies a deficit, the employer and trustee are required to agree to a deficit recovery plan.\nThe latest funding valuation of the plan at 31 December 2019 was carried out by Colin G Singer of Willis Towers Watson Limited, who is a Fellow of the UK Institute and Faculty of Actuaries, using the projected unit credit method. At that date, the market value of the plan’s assets was £31.1bn (\\$41.1bn) and this exceeded the value placed on its liabilities on an ongoing basis by £2.5bn (\\$3.3bn), giving a funding level of $109 \\%$ . These figures include defined contribution assets amounting to £2.4bn (\\$3.2bn). The main differences between the assumptions used for assessing the defined benefit liabilities for this funding valuation and those used for IAS 19 are that an element of prudence is contained in the funding valuation assumptions for discount rate, inflation rate and life expectancy. The funding valuation is used to judge the amount of cash contributions the Group needs to put into the pension scheme. It will always be different to the IAS 19 accounting surplus, which is an accounting rule concerning employee benefits and shown on the balance sheet of our financial statements. The next funding valuation, with an effective date of 31 December 2022, is currently underway and will be concluded no later than the regulatory deadline of 31 March 2024. The plan is estimated to remain in a comfortable surplus relative to the funding liabilities as at the end of 2022, based on assumptions consistent with those used to determine the funding liabilities for the 2019 valuation.", "chunk_word_count": 469, "section_path": "Opening up a world of opportunity > 5 Employee compensation and benefits > The principal plan", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 367, "page_start": 367, "page_end": 367 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 485, "chunk_text": "# Opening up a world of opportunity\n## 5 Employee compensation and benefits\n### The principal plan\nThe actuary also assessed the value of the liabilities if the plan were to have been stopped and an insurance company asked to secure all future pension payments. This is generally larger than the amount needed on the ongoing basis described above because an insurance company would use more prudent assumption, which would allow for reserves and include an explicit allowance for the future administrative expenses of the plan. Under this approach, the amount of assets needed was estimated to be £33bn (\\$44bn) at 31 December 2019.\nThe trust deed gives the ability for HSBC UK to take a refund of surplus assets after the plan has been run down such that no further beneficiaries remain. In assessing whether a surplus is recoverable, HSBC UK has considered its right to obtain a future refund together with the rights of third parties such as trustees. On this basis, any net surplus in the HBUK section of the plan is recognised in HSBC UK’s financial statements and the Group’s financial statements.\n### Income statement charge/(credit)\n### HSBC Holdings\nEmployee compensation and benefit expense in respect of HSBC Holdings’ employees in 2023 amounted to \\$15m (2022: \\$41m). The average number of persons employed during 2023 was 29 (2022: 42). A small number of employees are members of defined benefit pension plans. These employees are members of the HSBC Bank (UK) Pension Scheme. HSBC Holdings pays contributions to such plan for its own employees in accordance with the schedules of contributions determined by the trustees of the plan and recognises these contributions as an expense as they fall due.\n### Defined benefit pension plans\nNet asset/(liability) under defined benefit pension plans\nHSBC expects to make \\$113m of contributions to defined benefit pension plans during 2024, consisting of \\$nil for the principal plan and $\\$ 123 m$ for other plans. Benefits expected to be paid from the plans to retirees over each of the next five years, and in aggregate for the five years thereafter, are as follows:\n### Benefits expected to be paid from plans\n### Post-employment defined benefit plans’ principal actuarial financial assumptions\nHSBC determines the discount rates to be applied to its obligations in consultation with the plans’ local actuaries, on the basis of current average yields of high-quality (AA-rated or equivalent) debt instruments with maturities consistent with those of the defined benefit obligations.\n### Key actuarial assumptions for the principal plan1\n1 For further details of the principal plan, see page 365. \n2 Self-administered pension scheme (‘SAPS’) S3 table, with different tables and multipliers adopted based on gender, pension amount and member status, reflecting the Scheme’s actual mortality experience. Improvements are projected in accordance with the Continuous Mortality Investigation’s CMI 2022 core projection model with an initial addition to improvement of $0 . 2 5 \\%$ per annum, a long-term rate of improvement of $1 . 2 5 \\%$ per annum, a $0 \\%$ weighting to 2020 and 2021 mortality experience, and a $2 5 \\%$ weighting to 2022 mortality experience reflecting updated long-term view on mortality improvements post-pandemic.\n### The effect of changes in key assumptions on the principal plan1", "chunk_word_count": 537, "section_path": "Opening up a world of opportunity > 5 Employee compensation and benefits > The principal plan", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 367, "page_start": 367, "page_end": 369 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 486, "chunk_text": "# Opening up a world of opportunity\n## 5 Employee compensation and benefits\n### Notes on the financial statements\nThe above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit asset recognised in the balance sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the prior period.\n### Directors’ emoluments\nDetails of Directors’ emoluments, pensions and their interests are disclosed in the Directors’ remuneration report on page 279.\n## 6 Auditor’s remuneration\n### Fees payable by HSBC to PwC\n1 Audit fees payable to PwC in 2023 included adjustments made to the prior year audit fee after finalisation of the 2022 financial statements. \n2 Fees payable to PwC for the statutory audit of the consolidated financial statements of HSBC and the separate financial statements of HSBC Holdings. They include amounts payable for services relating to the consolidation returns of HSBC Holdings’ subsidiaries, which are clearly identifiable as being in support of the Group audit opinion. \n3 Including services for assurance and other services that relate to statutory and regulatory filings, including interim reviews. \n4 Including permitted services relating to attestation reports on internal controls of a service organisation primarily prepared for and used by third-party end users, including comfort letters. \n5 Includes reviews of PRA regulatory reporting returns.\nNo fees were payable by HSBC to PwC as principal auditor for the following types of services: internal audit services and services related to litigation, recruitment and remuneration.\nFees payable by HSBC’s associated pension schemes to PwC\nNo fees were payable by HSBC’s associated pension schemes to PwC as principal auditor for the following types of services: internal audit services, other assurance services, services related to corporate finance transactions, valuation and actuarial services, litigation, recruitment and remuneration, and information technology.\nIn addition to the above, the estimated fees paid to PwC by third parties associated with HSBC amounted to $\\$ 123m$ (2022: $\\$ 12.1 m$ ; 2021: \\$6.3m). In these cases, HSBC was connected with the contracting party and may therefore have been involved in appointing PwC. These fees arose from services such as auditing mutual funds managed by HSBC and reviewing the financial position of corporate concerns that borrow from HSBC.\nFees payable for non-audit services for HSBC Holdings are not disclosed separately because such fees are disclosed on a consolidated basis for the Group.\n## 7 T ax\nTax expense", "chunk_word_count": 469, "section_path": "Opening up a world of opportunity > 5 Employee compensation and benefits > Notes on the financial statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 370, "page_start": 370, "page_end": 370 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 487, "chunk_text": "# Opening up a world of opportunity\n## 7 T ax\n### Tax reconciliation\nThe Group’s profits are taxed at different rates depending on the country or territory in which the profits arise. The key applicable tax rates for 2023 include Hong Kong $( 1 6 . 5 \\% )$ ), the US $( 2 1 \\% )$ and the UK $( 2 3 . 5 \\% )$ ). If the Group’s profits were taxed at the statutory rates of the countries in which the profits arose, then the tax rate for the year would have been $2 2 . 6 \\%$ (2022: $2 3 . 3 \\%$ ).\nThe effective tax rate for the year of $1 9 . 1 \\%$ was higher than in the previous year (2022: $4 . 7 \\%$ ). The effective tax rate for the year was increased by $2 . 3 \\%$ by the non-taxable impairment of the Group’s interest in BoCom, reduced by $1 . 6 \\%$ by the release of provisions for uncertain tax positions and reduced by $1 . 5 \\%$ by the non-taxable accounting gain on the acquisition of SVB UK. The effective tax rate for 2022 was reduced by $1 4 . 7 \\%$ as a result of the recognition of previously unrecognised losses in the UK of $\\$ 20\\mathsf { h }$ and France of $\\$ 0.30n$ , in light of improved forecast profitability.", "chunk_word_count": 237, "section_path": "Opening up a world of opportunity > 7 T ax > Tax reconciliation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 371, "page_start": 371, "page_end": 371 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 488, "chunk_text": "# Opening up a world of opportunity\n## 7 T ax\n### Tax reconciliation\nOn 20 June 2023, legislation was substantively enacted in the UK to introduce the ‘Pillar Two’ global minimum tax model rules of the OECD’s Inclusive Framework on Base Erosion and Profit Shifting (’BEPS’) and a UK qualified domestic minimum top-up tax, with effect from 1 January 2024. Under these rules, a top-up tax liability arises where the effective tax rate of the Group’s operations in a jurisdiction, calculated using principles set out in the Pillar Two legislation, is below $1 5 \\%$ . Any resulting tax is payable by HSBC Holdings plc, being the Group’s ultimate parent, to HMRC. In response to the OECD’s Pillar Two global minimum tax rules, many national governments have announced their intention to introduce domestic minimum tax rules that are closely aligned to the OECD’s Pillar Two model rules. Where such qualifying domestic minimum tax rules are introduced, they may be expected to have the effect of increasing local tax liabilities to the $1 5 \\%$ minimum rate, eliminating the top-up tax liability payable in the UK by HSBC Holdings plc in such cases. Based on the Group’s forecasts, top-up tax liabilities are expected to arise in approximately 10 jurisdictions as a result of low or $0 \\%$ statutory tax rates, in particular in respect of the Group’s banking operations in Bermuda and the Channel Islands. Additionally, the application of local tax laws in Hong Kong and mainland China, particularly with regard to the non-taxation of dividend income and income on government bonds, has typically resulted in effective tax rates of below $1 5 \\%$ . This is expected to create future top-up tax liabilities in these jurisdictions, which have statutory tax rates of $1 6 . 5 \\%$ and $2 5 \\%$ , respectively. The application of the Pillar Two global minimum tax rules and the introduction of new domestic minimum tax regimes are currently forecast to increase the Group’s annual effective tax rate by around 0.5 and 1.0 percentage points.\nAccounting for taxes involves some estimation because tax law is uncertain and its application requires a degree of judgement, which authorities may dispute. Liabilities are recognised based on best estimates of the probable outcome, taking into account external advice where appropriate. Exposures relating to legacy tax cases were reassessed during 2023, resulting in a credit of $\\$ 472 m$ to the income statement. We do not expect significant liabilities to arise in excess of the amounts provided. HSBC only recognises current and deferred tax assets where recovery is probable.", "chunk_word_count": 430, "section_path": "Opening up a world of opportunity > 7 T ax > Tax reconciliation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 371, "page_start": 371, "page_end": 371 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 489, "chunk_text": "# Opening up a world of opportunity\n## 7 T ax\n### Notes on the financial statements\nIn applying judgement in recognising deferred tax assets, management has assessed all relevant information, including future business profit projections and the track record of meeting forecasts. Management’s assessment of the likely availability of future taxable profits against which to recover deferred tax assets is based on the most recent financial forecasts approved by management, which cover a five-year period and are extrapolated where necessary, and takes into consideration the reversal of existing taxable temporary differences and past business performance. When forecasts are extrapolated beyond five years, a number of different scenarios are considered, reflecting different downward risk adjustments, in order to assess the sensitivity of our recognition and measurement conclusions in the context of such longer-term forecasts.\nThe Group’s net deferred tax asset of \\$6.5bn (2022: \\$7.4bn) included \\$3.3bn (2022: $\\$ 4.0 b n$ ) of deferred tax assets relating to the UK, $\\$ 3.1$ bn (2022: \\$3.3bn) of deferred tax assets relating to the US and a net deferred asset of \\$0.9bn (2022: \\$1.0bn) in France.\nThe UK deferred tax asset of $\\$ 3.30n$ excluded a \\$1.9bn deferred tax liability arising on the UK pension scheme surplus, the reversal of which is not taken into account when estimating future taxable profits. The UK deferred tax assets are supported by forecasts of taxable profit, also taking into consideration the history of profitability in the relevant businesses. The majority of the deferred tax asset relates to tax attributes which do not expire and are forecast to be recovered within four years and as such are less sensitive to changes in long-term profit forecasts.\nThe net US deferred tax asset of $\\$ 3.1$ 1bn included $\\$ 1.30n$ related to US tax losses, of which \\$1.0bn expire in 10 to 15 years. Management expects the US deferred tax asset to be substantially recovered within 14 years, with the majority recovered in the first nine years.\nThe net deferred tax asset in France of \\$0.9bn included $\\$ 0.7$ bn related to tax losses, which are expected to be substantially recovered within 12 years.", "chunk_word_count": 356, "section_path": "Opening up a world of opportunity > 7 T ax > Notes on the financial statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 372, "page_start": 372, "page_end": 372 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 490, "chunk_text": "# Opening up a world of opportunity\n## 7 T ax\n### Unrecognised deferred tax\nThe amount of gross temporary differences, unused tax losses and tax credits for which no deferred tax asset is recognised in the balance sheet was $\\$ 10.$ .4bn (2022: $\\$ 9.20\\mathsf { n }$ ). This amount included unused US state tax losses of $\\$ 4.0 b n$ (2022: $\\$ 4.$ 1bn) which are forecast to expire before they are recovered and unused UK tax losses of \\$4.5bn (2022: $\\$ 3.56n$ ), which arose prior to 1 April 2017 and can only be recovered against future taxable profits of HSBC Holdings. No deferred tax was recognised on these losses due to the absence of convincing evidence regarding the availability of sufficient future taxable profits against which to recover them. Deferred tax asset recognition is reassessed at each balance sheet date based on the available evidence. Of the total amounts unrecognised, $\\$ 5.1$ bn (2022: $\\$ 3.6 b n$ ) had no expiry date, $\\$ 0.5$ bn (2022: \\$1.2bn) was scheduled to expire within 10 years and the remaining balance is expected to expire after 10 years.\nDeferred tax is not recognised in respect of the Group’s investments in subsidiaries and branches where HSBC is able to control the timing of remittance or other realisation and where remittance or realisation is not probable in the foreseeable future. The aggregate temporary differences relating to unrecognised deferred tax liabilities arising on investments in subsidiaries and branches was $\\$ 14.4$ bn (2022: $\\$ 123,456$ ) and the corresponding unrecognised deferred tax liability was \\$0.7bn (2022: $\\$ 0.70\\mathsf { n }$ ).\n## 8 Dividends\n### Total coupons on capital securities classified as equity\nOn 21 February 2024, the Directors approved a fourth interim dividend in respect of the financial year ended 31 December 2023 of $\\$ 0.31$ per ordinary share, a distribution of approximately \\$5,913m. The fourth interim dividend for 2023 will be payable on 25 April 2024 to holders on the Principal Register in the UK, the Hong Kong Overseas Branch Register or the Bermuda Overseas Branch Register on 8 March 2024. No liability was recorded in the financial statements in respect of the fourth interim dividend for 2023.\nOn 4 January 2024, HSBC paid a coupon on its €1,250m subordinated capital securities, representing a total distribution of €30m (\\$33m). No liability was recorded in the balance sheet at 31 December 2023 in respect of this coupon payment.\n## 9 Earnings per share\nBasic earnings per ordinary share is calculated by dividing the profit attributable to ordinary shareholders of the parent company by the weighted average number of ordinary shares outstanding, excluding own shares held. Diluted earnings per ordinary share is calculated by dividing the basic earnings, which require no adjustment for the effects of dilutive potential ordinary shares, by the weighted average number of ordinary shares outstanding, excluding own shares held, plus the weighted average number of ordinary shares that would be issued on conversion of dilutive potential ordinary shares.\nThe number of anti-dilutive employee share options excluded from the weighted average number of dilutive potential ordinary shares was 23 million (2022: 9.4 million; 2021: 8.6 million).", "chunk_word_count": 530, "section_path": "Opening up a world of opportunity > 7 T ax > Unrecognised deferred tax", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 372, "page_start": 372, "page_end": 374 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 491, "chunk_text": "# Opening up a world of opportunity\n## 10 Segmental analysis\nThe Group Chief Executive, supported by the rest of the Group Executive Committee (‘GEC’), is considered the Chief Operating Decision Maker (‘CODM’) for the purposes of identifying the Group’s reportable segments. Global business results are assessed by the CODM on the basis of constant currency performance that removes the effects of currency translation from reported results. Therefore, we disclose these results on a constant currency basis as required by IFRS Accounting Standards. The 2022 and 2021 income statements are converted at the average rates of exchange for 2023, and the balance sheets at 31 December 2022 and 31 December 2021 at the prevailing rates of exchange on 31 December 2023.\nOur operations are closely integrated and, accordingly, the presentation of data includes internal allocations of certain items of income and expense. These allocations include the costs of certain support services and global functions to the extent that they can be meaningfully attributed to global businesses. While such allocations have been made on a systematic and consistent basis, they necessarily involve a degree of subjectivity. Costs that are not allocated to global businesses are included in Corporate Centre.\nWhere relevant, income and expense amounts presented include the results of inter-segment funding along with inter-company and interbusiness line transactions. All such transactions are undertaken on arm’s length terms. Measurement of segmental assets, liabilities, income and expenses is in accordance with the Group’s accounting policies. Shared costs are included in segments on the basis of actual recharges. The intra-Group elimination items for the global businesses are presented in Corporate Centre.\n### Resegmentation\nIn the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers’ respective needs, a portfolio of our Global Banking customers within our entities in Latin America was transferred from Global Banking and Markets to Commercial Banking for reporting purposes. Comparative data have been re-presented accordingly. Similar smaller transfers from Global Banking and Markets to Commercial Banking were also undertaken within our entities in Australia and Indonesia, where comparative data have not been re-presented.", "chunk_word_count": 354, "section_path": "Opening up a world of opportunity > 10 Segmental analysis > Resegmentation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 374, "page_start": 374, "page_end": 374 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 492, "chunk_text": "# Opening up a world of opportunity\n## 10 Segmental analysis\n### Our global businesses\nWe provide a comprehensive range of banking and related financial services to our customers in our three global businesses. The products and services offered to customers are organised by these global businesses.\nWealth and Personal Banking (‘WPB’) provides a full range of retail banking and wealth products to our customers from personal banking to ultra high net worth individuals. Typically, customer offerings include retail banking products, such as current and savings accounts, mortgages and personal loans, credit cards, debit cards and local and international payment services. We also provide wealth management services, including insurance and investment products, global asset management services, investment management and private wealth solutions for customers with more sophisticated and international requirements.\nCommercial Banking (‘CMB’) offers a broad range of products and services to serve the needs of our commercial customers, including small and medium-sized enterprises, mid-market enterprises and corporates. These include credit and lending, international trade and receivables finance, treasury management and liquidity solutions (payments and cash management and commercial cards), commercial insurance and investments. CMB also offers customers access to products and services offered by other global businesses, such as Global Banking and Markets, which include foreign exchange products, raising capital on debt and equity markets and advisory services.\nGlobal Banking and Markets (‘GBM’) provides tailored financial solutions to major government, corporate and institutional clients and private investors worldwide. The client-focused business lines deliver a full range of banking capabilities, including financing, advisory and transaction services, a markets business that provides services in credit, rates, foreign exchange, equities, money markets and securities services, and principal investment activities.\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis. 2 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.\n3 In the first quarter of 2023, following an internal review to assess which global businesses were best suited to serve our customers’ respective needs, a portfolio of our customers within our entities in Latin America was transferred from GBM to CMB for reporting purposes. Comparative data have been re-presented accordingly.\n4 Net interest expense recognised in Corporate Centre includes \\$8.7bn (2022: \\$2.5bn; 2021: undisclosed) of interest expense in relation to the internal cost to fund trading and fair value net assets; and the funding cost of foreign exchange swaps in our Markets Treasury function. In the second quarter of 2023, we implemented a consistent reporting approach across the most material entities that contribute to our trading and fair value net assets, which resulted in an increase to the associated funding costs reported through the intersegment elimination in Corporate Centre. \n5 Includes an impairment loss of \\$3.0bn recognised in respect of the Group’s investment in BoCom. See Note 18 on page 391.\nReported external net operating income is attributed to countries and territories on the basis of the location of the branch responsible for reporting the results or advancing the funds:", "chunk_word_count": 535, "section_path": "Opening up a world of opportunity > 10 Segmental analysis > Our global businesses", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 374, "page_start": 374, "page_end": 376 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 493, "chunk_text": "# Opening up a world of opportunity\n## 10 Segmental analysis\n### Our global businesses\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data for the financial year ended 31 December 2022 have been restated accordingly. Comparative data for the year ended 31 December 2021 are prepared on an IFRS 4 basis. 2 Net operating income before change in expected credit losses and other credit impairment charges, also referred to as revenue.\n### Constant currency results reconciliation\n### Notable items\n## 11 Trading assets\n## 12 Fair values of financial instruments carried at fair value\n### Control framework\nFair values are subject to a control framework designed to ensure that they are either determined or validated by a function independent of the risk taker.\nWhere fair values are determined by reference to externally quoted prices or observable pricing inputs to models, independent price determination or validation is used. For inactive markets, HSBC sources alternative market information, with greater weight given to information that is considered to be more relevant and reliable. Examples of the factors considered are price observability, instrument comparability, consistency of data sources, underlying data accuracy and timing of prices.\nFor fair values determined using valuation models, the control framework includes development or validation by independent support function of the model logic, inputs, model outputs and adjustments. Valuation models are subject to a process of due diligence before becoming operational and are calibrated against external market data on an ongoing basis.\nChanges in fair value are generally subject to a profit and loss analysis process and are disaggregated into high-level categories including portfolio changes, market movements and other fair value adjustments.\nThe majority of financial instruments measured at fair value are in GBM. GBM’s fair value governance structure comprises its Finance function, Valuation Committees and a Valuation Committee Review Group. Finance is responsible for establishing procedures governing valuation and ensuring fair values are in compliance with accounting standards. The fair values are reviewed by the Valuation Committees, which consist of independent support functions. These committees are overseen by the Valuation Committee Review Group, which considers all material subjective valuations.", "chunk_word_count": 361, "section_path": "Opening up a world of opportunity > 10 Segmental analysis > Our global businesses", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 376, "page_start": 376, "page_end": 377 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 494, "chunk_text": "# Opening up a world of opportunity\n## 12 Fair values of financial instruments carried at fair value\n### Financial liabilities measured at fair value\nIn certain circumstances, HSBC records its own debt in issue at fair value, based on quoted prices in an active market for the specific instrument. When quoted market prices are unavailable, the own debt in issue is valued using valuation techniques, the inputs for which are either based on quoted prices in an inactive market for the instrument or are estimated by comparison with quoted prices in an active market for similar instruments. In both cases, the fair value includes the effect of applying the credit spread that is appropriate to HSBC’s liabilities. The change in fair value of issued debt securities attributable to the Group’s own credit spread is computed as follows: for each security at each reporting date, an externally verifiable price is obtained or a price is derived using credit spreads for similar securities for the same issuer. Then, using discounted cash flow, each security is valued using an appropriate market discount curve. The difference in the valuations is attributable to the Group’s own credit spread. This methodology is applied consistently across all securities.\nStructured notes issued and certain other hybrid instruments are reported as financial liabilities designated at fair value. The credit spread applied to these instruments is derived from the spreads at which HSBC issues structured notes.\nGains and losses arising from changes in the credit spread of liabilities issued by HSBC, recorded in other comprehensive income, reverse ove the contractual life of the debt, provided that the debt is not repaid at a premium or a discount.\n### Fair value hierarchy\nFair values of financial assets and liabilities are determined according to the following hierarchy:\nLevel 1 – valuation technique using quoted market price. These are financial instruments with quoted prices for identical instruments in active markets that HSBC can access at the measurement date. \nLevel 2 – valuation technique using observable inputs. These are financial instruments with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are observable. \nLevel 3 – valuation technique with significant unobservable inputs. These are financial instruments valued using valuation techniques where one or more significant inputs are unobservable.\n### Financial instruments carried at fair value and bases of valuation\nThe table below provides the fair value levelling of assets held for sale and liabilities of disposal groups that have been classified as held for sale in accordance with IFRS 5. For further details, see Note 23.\nTransfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers into and out of levels of the fair value hierarchy are primarily attributable to observability of valuation inputs and price transparency.", "chunk_word_count": 485, "section_path": "Opening up a world of opportunity > 12 Fair values of financial instruments carried at fair value > Financial liabilities measured at fair value", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 378, "page_start": 378, "page_end": 379 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 495, "chunk_text": "# Opening up a world of opportunity\n## 12 Fair values of financial instruments carried at fair value\n### Fair value adjustments\nWe adopt the use of fair value adjustments when we take into consideration additional factors not incorporated within the valuation model that would otherwise be considered by a market participant. We classify fair value adjustments as either ‘risk-related’ or ‘model-related’. The majority of these adjustments relate to GBM. Movements in the amount of fair value adjustments do not necessarily translate in equivalent movements of profits or losses within the income statement, as these movements can be compensated by other related profits or loss effects. For example, as models are enhanced, fair value adjustments may no longer be required. Similarly, fair value adjustments will decrease when the related positions are unwound, but this may not result in profit or loss.\n### Global Banking and Markets fair value adjustments\nThe increase in fair value adjustments was predominantly driven by the reduction in the debit valuation adjustment including a consideration of the overlap with the funding fair value adjustment. This was partly offset by reductions from changes to exposure, and tightening of credit and liquidity market spreads.\n### Bid-offer\nIFRS 13 ‘Fair Value Measurement’ requires the use of the price within the bid-offer spread that is most representative of fair value. Valuation models will typically generate mid-market values. The bid-offer adjustment reflects the extent to which bid-offer costs would be incurred if substantially all residual net portfolio market risks were closed using available hedging instruments or by disposing of or unwinding the position.\n### Uncertainty\nCertain model inputs may be less readily determinable from market data and/or the choice of model itself may be more subjective. In these circumstances, an adjustment may be necessary to reflect the likelihood that market participants would adopt more conservative values for uncertain parameters and/or model assumptions than those used in HSBC’s valuation model.", "chunk_word_count": 318, "section_path": "Opening up a world of opportunity > 12 Fair values of financial instruments carried at fair value > Fair value adjustments", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 379, "page_start": 379, "page_end": 379 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 496, "chunk_text": "# Opening up a world of opportunity\n## 12 Fair values of financial instruments carried at fair value\n### Credit and debit valuation adjustments\nThe credit valuation adjustment (‘CVA’) is an adjustment to the valuation of over-the-counter (‘OTC’) derivative contracts to reflect the possibility that the counterparty may default and that HSBC may not receive the full market value of the transactions.\nThe debit valuation adjustment (‘DVA’) is an adjustment to the valuation of OTC derivative contracts to reflect the possibility that HSBC may default, and that it may not pay the full market value of the transactions. The DVA considers the overlap with the funding fair value adjustment.\nHSBC calculates a separate CVA and DVA for each legal entity, and for each counterparty to which the entity has exposure. With the exception of central clearing parties, all third-party counterparties are included in the CVA and DVA calculations, and these adjustments are not netted across Group entities.\nHSBC calculates the CVA by applying the probability of default (‘PD’) of the counterparty, conditional on the non-default of HSBC, to HSBC’s expected positive exposure to the counterparty and multiplying the result by the loss expected in the event of default. Conversely, HSBC calculates the DVA by applying the PD of HSBC, conditional on the non-default of the counterparty, to the expected positive exposure of the counterparty to HSBC and multiplying the result by the loss expected in the event of default. Both calculations are performed over the life of the potential exposure.\nFor most products HSBC uses a simulation methodology, which incorporates a range of potential exposures over the life of the portfolio, to calculate the expected positive exposure to a counterparty. The simulation methodology includes credit mitigants, such as counterparty netting agreements and collateral agreements with the counterparty.\nThe methodologies do not, in general, account for ‘wrong-way risk’. Wrong-way risk is an adverse correlation between the counterparty’s probability of default and the mark-to-market value of the underlying transaction. The risk can either be general, perhaps related to the currency of the issuer country, or specific to the transaction concerned. When there is significant wrong-way risk, a trade-specific approach is applied to reflect this risk in the valuation.\n### Funding fair value adjustment\nThe funding fair value adjustment (‘FFVA’) is calculated by applying future market funding spreads to the expected future funding exposure of any uncollateralised component of the OTC derivative portfolio. The expected future funding exposure is calculated by a simulation methodology, where available, and is adjusted for events that may terminate the exposure, such as the default of HSBC or the counterparty.\n### Model limitation\nModels used for portfolio valuation purposes may be based upon a simplified set of assumptions that do not capture all current and future material market characteristics. In these circumstances, model limitation adjustments are adopted.\n### Inception profit (Day 1 P&L reserves)\nInception profit adjustments are adopted when the fair value estimated by a valuation model is based on one or more significant unobservable inputs. The accounting for inception profit adjustments is discussed in Note 1.", "chunk_word_count": 510, "section_path": "Opening up a world of opportunity > 12 Fair values of financial instruments carried at fair value > Credit and debit valuation adjustments", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 379, "page_start": 379, "page_end": 380 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 497, "chunk_text": "# Opening up a world of opportunity\n## 12 Fair values of financial instruments carried at fair value\n### Fair value valuation bases\nncial instruments measured at fair value using a valuation technique with significant unobservable inputs – Lev\nLevel 3 instruments are present in both ongoing and legacy businesses. Loans held for securitisation, derivatives with monolines, certain ‘other derivatives’ and predominantly all Level 3 asset-backed securities are legacy positions. HSBC has the capability to hold these positions.\n### Private equity including strategic investments\nThe fair value of a private equity investment (including strategic investments) is estimated on the basis of an analysis of the investee’s financial position and results, risk profile, prospects and other factors; by reference to market valuations for similar entities quoted in an active market; the price at which similar companies have changed ownership; or from published net asset values (‘NAV’) received. If necessary, adjustments are made to the NAV of funds to obtain the best estimate of fair value.\n### Asset-backed securities\nWhile quoted market prices are generally used to determine the fair value of the asset-backed securities (‘ABSs’), valuation models are used to substantiate the reliability of the limited market data available and to identify whether any adjustments to quoted market prices are required. For certain ABSs, such as residential mortgage-backed securities, the valuation uses an industry standard model with assumptions relating to prepayment speeds, default rates and loss severity based on collateral type, and performance, as appropriate. The valuations output is benchmarked for consistency against observable data for securities of a similar nature.\nStructured notes\nThe fair value of Level 3 structured notes is derived from the fair value of the underlying debt security, and the fair value of the embedded derivative is determined as described in the paragraph below on derivatives. These structured notes comprise principally equity-linked notes issued by HSBC, which provide the counterparty with a return linked to the performance of equity securities and other portfolios.\nExamples of the unobservable parameters include long-dated equity volatilities and correlations between equity prices, and interest and foreign exchange rates.\nDerivatives\nOTC derivative valuation models calculate the present value of expected future cash flows, based upon ‘no arbitrage’ principles. For many vanilla derivative products, the modelling approaches used are standard across the industry. For more complex derivative products, there may be some differences in market practice. Inputs to valuation models are determined from observable market data wherever possible, including prices available from exchanges, dealers, brokers or providers of consensus pricing. Certain inputs may not be observable in the market directly, but can be determined from observable prices via model calibration procedures or estimated from historical data or other sources.\n### Reconciliation of fair value measurements in Level 3 of the fair value hierarchy\nTransfers between levels of the fair value hierarchy are deemed to occur at the end of each quarterly reporting period. Transfers into and out of levels of the fair value hierarchy are primarily attributable to observability of valuation inputs and price transparency.", "chunk_word_count": 501, "section_path": "Opening up a world of opportunity > 12 Fair values of financial instruments carried at fair value > Fair value valuation bases", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 380, "page_start": 380, "page_end": 381 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 498, "chunk_text": "# Opening up a world of opportunity\n## 12 Fair values of financial instruments carried at fair value\n### Effect of changes in significant unobservable assumptions to reasonably possible alternatives\nSensitivity of fair values to reasonably possible alternative assumptions\nThe sensitivity analysis aims to measure a range of fair values consistent with the application of a $9 5 \\%$ confidence interval. Methodologies tak account of the nature of the valuation technique employed, as well as the availability and reliability of observable proxy and historical data.\nWhen the fair value of a financial instrument is affected by more than one unobservable assumption, the above table reflects the most favourable or the most unfavourable change from varying the assumptions individually.\n### Key unobservable inputs to Level 3 financial instruments\nhe following table lists key unobservable inputs to Level 3 financial instruments and provides the range of those inputs at 31 December 2023.\nQuantitative information about significant unobservable inputs in Level 3 valuations\nThe range of values above shows the highest and lowest unobservable inputs that have been used to value significant Level 3 exposures and reflects the diversity of the underlying financial instruments in scope and subsequent differentiation in pricing.\n### Private equity including strategic investments\nGiven the bespoke nature of the analysis in respect of each private equity holding, it is not practical to quote a range of key unobservable inputs. The valuation approach includes using a range of inputs that include company-specific financials, traded comparable companies multiples, published net asset values and qualitative assumptions, which are not directly comparable or quantifiable.\n### Prepayment rates\nPrepayment rates are a measure of the anticipated future speed at which a loan portfolio will be repaid in advance of the due date. They vary according to the nature of the loan portfolio and expectations of future market conditions, and may be estimated using a variety of evidence, such as prepayment rates implied from proxy observable security prices, current or historical prepayment rates and macroeconomic modelling.\n### Market proxy\nMarket proxy pricing may be used for an instrument when specific market pricing is not available but there is evidence from instruments with common characteristics. In some cases it might be possible to identify a specific proxy, but more generally evidence across a wider range of instruments will be used to understand the factors that influence current market pricing and the manner of that influence.\n### Volatility\nVolatility is a measure of the anticipated future variability of a market price. It varies by underlying reference market price, and by strike and maturity of the option. Certain volatilities, typically those of a longer-dated nature, are unobservable and are estimated from observable data. The range of unobservable volatilities reflects the wide variation in volatility inputs by reference market price.", "chunk_word_count": 461, "section_path": "Opening up a world of opportunity > 12 Fair values of financial instruments carried at fair value > Effect of changes in significant unobservable assumptions to reasonably possible alternatives", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 382, "page_start": 382, "page_end": 383 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 499, "chunk_text": "# Opening up a world of opportunity\n## 12 Fair values of financial instruments carried at fair value\n### Correlation\nCorrelation is a measure of the inter-relationship between two market variables and is expressed as a number between minus one and one. It is used to value more complex instruments where the payout is dependent upon more than one market variable. There is a wide range of instruments for which correlation is an input, and consequently a wide range of both same-asset correlations and cross-asset correlations is used. In general, the range of same-asset correlations will be narrower than the range of cross-asset correlations. Unobservable correlations may be estimated based upon a range of evidence, including consensus pricing services, HSBC trade prices, proxy correlations and examination of historical price relationships. The range of unobservable correlations quoted in the table reflects the wide variation in correlation inputs by market variable pair.\n### Credit spread\nCredit spread is the premium over a benchmark interest rate required by the market to accept lower credit quality. In a discounted cash flow model, the credit spread increases the discount factors applied to future cash flows, thereby reducing the value of an asset. Credit spreads may be implied from market prices and may not be observable in more illiquid markets.\n### Inter-relationships between key unobservable inputs\nKey unobservable inputs to Level 3 financial instruments may not be independent of each other. As described above, market variables may be correlated. This correlation typically reflects the manner in which different markets tend to react to macroeconomic or other events. Furthermore, the effect of changing market variables on the HSBC portfolio will depend on HSBC’s net risk position in respect of each variable.\n### HSBC Holdings\n### Basis of valuing HSBC Holdings’ financial assets and liabilities measured at fair value\n## 13 Fair values of financial instruments not carried at fair value\nFair values of financial instruments not carried at fair value and bases of valuation\nOther financial instruments not carried at fair value are typically short term in nature and reprice to current market rates frequently. Accordingly, their carrying amount is a reasonable approximation of fair value. They include cash and balances at central banks, items in the course of collection from and transmission to other banks, Hong Kong Government certificates of indebtedness and Hong Kong currency notes in circulation, all of which are measured at amortised cost.\n### Valuation\nFair value is an estimate of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This may be different from the theoretical economic value attributed from an instrument’s cash flows over its expected future life. Our valuation methodologies and assumptions in determining fair values for which no observable market prices are available may differ from those of other companies.", "chunk_word_count": 479, "section_path": "Opening up a world of opportunity > 12 Fair values of financial instruments carried at fair value > Correlation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 383, "page_start": 383, "page_end": 385 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 500, "chunk_text": "# Opening up a world of opportunity\n## 13 Fair values of financial instruments not carried at fair value\n### Loans and advances to banks and customers\nTo determine the fair value of loans and advances to banks and customers, loans are segregated into portfolios of similar characteristics. Fair values are based on observable market transactions, when available. When they are unavailable, fair values are estimated using valuation models incorporating a range of input assumptions. These assumptions may include: value estimates from third-party brokers reflecting overthe-counter trading activity; forward-looking discounted cash flow models, taking account of expected customer prepayment rates, using assumptions that HSBC believes are consistent with those that would be used by market participants in valuing such loans; recent origination pricing for similar loans; and trading inputs from other market participants including observed primary and secondary trades. From time to time, we may engage a third-party valuation specialist to measure the fair value of a pool of loans.\nThe fair value of loans reflects expected credit losses at the balance sheet date and estimates of market participants’ expectations of credit losses over the life of the loans, and the fair value effect of repricing between origination and the balance sheet date. For credit-impaired loans, fair value is estimated by discounting the future cash flows over the time period they are expected to be recovered.\n### Financial investments\nThe fair values of listed financial investments are determined using bid market prices. The fair values of unlisted financial investments are etermined using valuation techniques that incorporate the prices and future earnings streams of equivalent quoted securities.\n### Deposits by banks and customer accounts\nThe fair values of on-demand deposits are approximated by their carrying amount. For deposits with longer-term maturities, fair values are estimated using discounted cash flows, applying current rates offered for deposits of similar remaining maturities.\n### Debt securities in issue and subordinated liabilities\nFair values in debt securities in issue and subordinated liabilities are determined using quoted market prices at the balance sheet date where available, or by reference to quoted market prices for similar instruments.\n### Repurchase and reverse repurchase agreements – non-trading\nFair values of repurchase and reverse repurchase agreements that are held on a non-trading basis provide approximate carrying amounts. This is due to the fact that balances are generally short dated.\n### HSBC Holdings\nThe methods used by HSBC Holdings to determine fair values of financial instruments for the purposes of measurement and disclosure are described above.\n## 14 Financial assets designated and otherwise mandatorily measured at fair value through profit or loss\n## 15 Derivatives\nThe notional contract amounts of derivatives held for trading purposes and derivatives designated in hedge accounting relationships indicate the nominal value of transactions outstanding at the balance sheet date. They do not represent amounts at risk.\nDerivative assets and liabilities decreased during 2023, driven by yield curve movements and changes in foreign exchange rate\n### Use of derivatives\nFor details regarding the use of derivatives, see page 220 under ‘Market risk’.", "chunk_word_count": 504, "section_path": "Opening up a world of opportunity > 13 Fair values of financial instruments not carried at fair value > Loans and advances to banks and customers", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 385, "page_start": 385, "page_end": 386 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 501, "chunk_text": "# Opening up a world of opportunity\n## 15 Derivatives\n### Trading derivatives\nMost of HSBC’s derivative transactions relate to sales and trading activities. Sales activities include the structuring and marketing of derivative products to customers to enable them to take, transfer, modify or reduce current or expected risks. Trading activities include market-making and risk management. Market-making entails quoting bid and offer prices to other market participants for the purpose of generating revenue based on spread and volume. Risk management activity is undertaken to manage the risk arising from client transactions, with the principal purpose of retaining client margin. Other derivatives classified as held for trading include non-qualifying hedging derivatives.\nSubstantially all of HSBC Holdings’ derivatives entered into with subsidiaries are managed in conjunction with financial liabilities.\n### Hedge accounting derivatives\nHSBC applies hedge accounting to manage the following risks: interest rate and foreign exchange risks. Further details of how these risks arise and how they are managed by the Group can be found in the ‘Risk review’.\n### Hedged risk components\nHSBC designates a portion of cash flows of a financial instrument or a group of financial instruments for a specific interest rate or foreign currency risk component in a fair value or cash flow hedge. The designated risks and portions are either contractually specified or otherwise separately identifiable components of the financial instrument that are reliably measurable. Risk-free or benchmark interest rates generally are regarded as being both separately identifiable and reliably measurable, except for the Interest Rate Benchmark Reform Phase 2 transition where HSBC designates alternative benchmark rates as the hedged risk which may not have been separately identifiable upon initial designation, provided HSBC reasonably expects it will meet the requirement within 24 months from the first designation date. The designated risk components account for a significant portion of the overall changes in fair value or cash flows of the hedged items.\nHSBC uses net investment hedges to hedge the structural foreign exchange risk related to net investments in foreign operations including subsidiaries and branches whose functional currencies are different from that of the parent. When hedging with foreign exchange forward contracts, the spot rate component of the foreign exchange risk is designated for an amount of net assets as the hedged risk.\nSources of hedge ineffectiveness may arise from basis risk, including but not limited to the discount rates used for calculating the fair value of derivatives, hedges using instruments with a non-zero fair value, and notional and timing differences between the hedged items and hedging instruments.\n### Fair value hedges\nHSBC enters into fixed-for-floating-interest-rate swaps to manage the exposure to changes in fair value caused by movements in market interest rates on certain fixed-rate financial instruments that are not measured at fair value through profit or loss, including debt securities held and issued.\n### HSBC hedging instrument by hedged risk\n### HSBC hedged item by hedged risk\n### HSBC Holdings hedging instrument by hedged risk", "chunk_word_count": 490, "section_path": "Opening up a world of opportunity > 15 Derivatives > Trading derivatives", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 386, "page_start": 386, "page_end": 388 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 502, "chunk_text": "# Opening up a world of opportunity\n## 15 Derivatives\n### HSBC Holdings hedged item by hedged risk\nFor some debt securities held, HSBC manages interest rate risk in a dynamic risk management strategy. The assets in scope of this strategy are high-quality fixed-rate debt securities, which may be sold to meet liquidity and funding requirements.\nThe interest rate risk of the HSBC fixed-rate debt securities issued is managed in a non-dynamic risk management strategy.\n### Cash flow hedges\nHSBC’s cash flow hedging instruments consist principally of interest rate swaps and cross-currency swaps that are used to manage the variability in future interest cash flows of non-trading financial assets and liabilities, arising due to changes in market interest rates and foreigncurrency basis.\nHSBC applies macro cash flow hedging for interest rate risk exposures on portfolios of replenishing current and forecasted issuances of nontrading assets and liabilities that bear interest at variable rates, including rolling such instruments. The amounts and timing of future cash flows, representing both principal and interest flows, are projected for each portfolio of financial assets and liabilities on the basis of their contractual terms and other relevant factors, including estimates of prepayments and defaults. The aggregate cash flows representing both principal balances and interest cash flows across all portfolios are used to determine the effectiveness and ineffectiveness. Macro cash flow hedges are considered to be dynamic hedges.\nHSBC also hedges the variability in future cash flows on foreign-denominated financial assets and liabilities arising due to changes in foreign exchange market rates with cross-currency swaps, which are considered dynamic hedges.\n### Reconciliation of equity and analysis of other comprehensive income by risk type\nNet investment hedges\nThe Group applies hedge accounting in respect of certain net investments in non-US dollar functional currency foreign operations for changes in spot exchange rates only. Hedging could be undertaken for Group structural exposure to changes in the US dollar to foreign currency exchange rates using forward foreign exchange contracts or by financing with foreign currency borrowings. An economic relationship exists between the hedged net investment and hedging instrument due to the shared foreign currency risk exposure. For further details of our structural foreign exchange exposures, see page 205.\n### Notes on the financial statements\nThe aggregate positions at the reporting date and the performance indicators of both live and de-designated hedges are summarised below.\n### Hedges of net investment in foreign operations", "chunk_word_count": 400, "section_path": "Opening up a world of opportunity > 15 Derivatives > HSBC Holdings hedged item by hedged risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 388, "page_start": 388, "page_end": 390 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 503, "chunk_text": "# Opening up a world of opportunity\n## 15 Derivatives\n### Interest rate benchmark reform: Amendments to IFRS 9 and IAS 39 ‘Financial Instruments’\nHSBC has applied both the first set of amendments (‘Phase 1’) and the second set of amendments (‘Phase 2’) to IFRS 9 and IAS 39 applicable to hedge accounting. The hedge accounting relationships that are affected by Phase 1 and Phase 2 amendments are presented in the balance sheet as ‘Financial assets designated and otherwise mandatorily measured at fair value through other comprehensive income’, ‘Loans and advances to customers’, ‘Debt securities in issue’ and ‘Deposits by banks’. The notional value of the derivatives impacted by the Ibor reform, including those designated in hedge accounting relationships, is disclosed in Note 32. For further details of Ibor transition, see ‘Ibor transition’ on page 139.\nFor some of the Ibors included under the ‘Other’ header in the table below, judgement has been needed to establish whether a transition is required, since there are Ibor benchmarks that are subject to computation methodology improvements and insertion of fallback provisions without full clarity being provided by their administrators on whether these Ibor benchmarks will be demised.\nThe notional amounts of interest rate derivatives designated in hedge accounting relationships do not represent the extent of the risk exposure managed by the Group but they are expected to be directly affected by market-wide Ibor reform and in scope of Phase 1 amendments and are shown in the table below. The cross-currency swaps designated in hedge accounting relationships and affected by Ibor reform are not significant and have not been presented below.\n### Hedging instrument impacted by Ibor reform\n## 16 Financial investments\nCarrying amount of financial investments\n### Equity instruments measured at fair value through other comprehensive income\n### Weighted average yields of investment debt securities\n### Notes on the financial statements\nThe maturity distributions of ABSs are presented in the above table on the basis of contractual maturity dates. The weighted average yield for each range of maturities is calculated by dividing the annualised interest income for the year ended 31 December 2023 by the book amount of debt securities at that date. The yields do not include the effect of related derivatives.\n### HSBC Holdings\n### HSBC Holdings carrying amount of financial investments\n### Weighted average yields of investment debt securities\nThe weighted average yield for each range of maturities is calculated by dividing the annualised interest income for the year ended 31 December 2023 by the book amount of debt securities at that date. The yields do not include the effect of related derivatives.", "chunk_word_count": 433, "section_path": "Opening up a world of opportunity > 15 Derivatives > Interest rate benchmark reform: Amendments to IFRS 9 and IAS 39 ‘Financial Instruments’", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 390, "page_start": 390, "page_end": 392 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 504, "chunk_text": "# Opening up a world of opportunity\n## 17 Assets pledged, collateral received and assets transferred\n### Assets pledged1\n### Financial assets pledged as collateral\nAssets pledged as collateral include all assets categorised as encumbered in the disclosure on page 27 of the Pillar 3 Disclosures at 31 December 2023, except for assets held for sale.\nThe amount of assets pledged to secure liabilities may be greater than the book value of assets utilised as collateral. For example, in the case of securitisations and covered bonds, the amount of liabilities issued plus mandatory over-collateralisation is less than the book value of the pool of assets available for use as collateral. This is also the case where assets are placed with a custodian or a settlement agent that has a floating charge over all the assets placed to secure any liabilities under settlement accounts.\nThese transactions are conducted under terms that are usual and customary for collateralised transactions including, where relevant, standard securities lending and borrowing, repurchase agreements and derivative margining. HSBC places both cash and non-cash collateral in relation to derivative transactions.\nHong Kong currency notes in circulation are secured by the deposit of funds in respect of which the Hong Kong Government certificates of ndebtedness are held.\n### Financial assets pledged as collateral which the counterparty has the right to sell or repledge\nCollateral received1\nThe fair value of assets accepted as collateral relating primarily to standard securities lending, reverse repurchase agreements, swaps of securities and derivative margining that HSBC is permitted to sell or repledge in the absence of default was \\$495,653m (2022: \\$449,896m). The fair value of any such collateral sold or repledged was \\$284,108m (2022: \\$228,245m).\nHSBC is obliged to return equivalent securities. These transactions are conducted under terms that are usual and customary to standard securities lending, reverse repurchase agreements and derivative margining.\n### Assets transferred1\nThe assets pledged include transfers to third parties that do not qualify for derecognition, notably secured borrowings such as debt securities held by counterparties as collateral under repurchase agreements and equity securities lent under securities lending agreements, as well as swaps of equity and debt securities. For secured borrowings, the transferred asset collateral continues to be recognised in full while a related liability, reflecting the Group’s obligation to repurchase the assets for a fixed price at a future date, is also recognised on the balance sheet.\nWhere securities are swapped, the transferred asset continues to be recognised in full. There is no associated liability as the non-cash collateral received is not recognised on the balance sheet. The Group is unable to use, sell or pledge the transferred assets for the duration of the transaction, and remains exposed to interest rate risk and credit risk on these pledged assets.\nTransferred financial assets not qualifying for full derecognition and associated financial liabilities\n### At 31 Dec 2023\n### At 31 Dec 2022\n## 18 Interests in associates and joint ventures\nCarrying amount of HSBC’s interests in associates and joint ventures\n### Principal associates of HSBC\n### Share of profit in associates and joint ventures", "chunk_word_count": 513, "section_path": "Opening up a world of opportunity > 18 Interests in associates and joint ventures > Principal associates of HSBC", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 392, "page_start": 392, "page_end": 393 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 505, "chunk_text": "# Opening up a world of opportunity\n## 18 Interests in associates and joint ventures\n### Bank of Communications Co., Limited\nWe maintain a $1 9 . 0 3 \\%$ interest in Bank of Communications Co., Limited (‘BoCom’). The Group’s investment in BoCom is classified as an associate. Significant influence in BoCom was established with consideration of all relevant factors, including representation on BoCom’s Board of Directors and participation in a resource and experience sharing agreement (‘RES’). Under the RES, HSBC staff have been seconded to assist in the maintenance of BoCom’s financial and operating policies. Investments in associates are recognised using the equity method of accounting in accordance with IAS 28 ‘Investments in Associates and Joint Ventures’, whereby the investment is initially recognised at cost and adjusted thereafter for the post-acquisition change in the Group’s share of associate’s net assets. An impairment test is required if there is any indication of impairment.\n### Impairment testing\nThe fair value of the Group’s investment in BoCom had been below the carrying amount for approximately 12 years. We have previously disclosed that the excess of the value in use (‘VIU’) calculation over its balance sheet value has been marginal in recent years, and that reasonably possible changes in assumptions could generate an impairment.\nRecent macroeconomic, policy and industry-wide factors resulted in a wider range of possible VIU calculation outcomes, and our VIU calculation uses both historical experience and market participant views to estimate future cash flows, relevant discount rates and associated capital assumptions. At 31 December 2023, the Group performed an impairment test on the carrying amount, which resulted in an impairment of $\\$ 3.00\\mathsf { n }$ , as the recoverable amount as determined by a VIU calculation was lower than the carrying value.\n### BoCom\nThe impairment test will be updated in future periods, reflecting updated assumptions in the VIU impairment calculation. Going forward, the carrying value will be aligned to the updated VIU calculation and capped at carrying value that would have been determined had no impairment loss been recognised, rather than at cost and adjusted thereafter for the post-acquisition change in the Group’s share of associate’s net assets, and therefore there is a risk of reversals or further impairments in future periods.\nThe VIU may increase or decrease depending on the effect of changes to model inputs. The main model inputs are described below and are based on factors observed at period-end. The factors that could result in increases or reductions in the VIU include changes in BoCom’s shortterm performance, a change in regulatory capital requirements or revisions to the forecast of BoCom’s future profitability.\nIf the Group did not have significant influence in BoCom, the investment would be carried at fair value rather than the current carrying value.", "chunk_word_count": 461, "section_path": "Opening up a world of opportunity > 18 Interests in associates and joint ventures > Bank of Communications Co., Limited", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 394, "page_start": 394, "page_end": 394 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 506, "chunk_text": "# Opening up a world of opportunity\n## 18 Interests in associates and joint ventures\n### Basis of recoverable amount\nThe impairment test was performed by comparing the recoverable amount of BoCom, determined by a VIU calculation, with its carrying value. The VIU calculation uses discounted cash flow projections based on management’s best estimates of future earnings available to ordinary shareholders prepared in accordance with IAS 36 ’Impairment of Assets’. Significant management judgement is required in arriving at the best estimate.\nThere are two main components to the VIU calculation. The first component is management’s best estimate of BoCom’s earnings. Forecast earnings growth over the short to medium term is lower than recent (within the last five years) actual growth, and reflects the impact of recent macroeconomic, policy and industry factors in mainland China. As a result of management‘s intent to continue to retain its investment, earnings beyond the short to medium term are then extrapolated into perpetuity using a long-term growth rate to derive a terminal value, which comprises the majority of the VIU. The second component is the capital maintenance charge (‘CMC’), which is management’s forecast of the earnings that need to be withheld in order for BoCom to meet capital requirements over the forecast period, meaning that CMC is deducted when arriving at management’s estimate of future earnings available to ordinary shareholders. The CMC reflects the revised capital requirements arising from revisions of the ratio of risk-weighted assets to total assets assumption. The principal inputs to the CMC calculation include estimates of asset growth, the ratio of risk-weighted assets to total assets and the expected capital requirements. An increase in the CMC as a result of a change to these principal inputs would reduce VIU. Additionally, management considers other qualitative factors, to ensure that the inputs to the VIU calculation remain appropriate.", "chunk_word_count": 305, "section_path": "Opening up a world of opportunity > 18 Interests in associates and joint ventures > Basis of recoverable amount", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 394, "page_start": 394, "page_end": 394 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 507, "chunk_text": "# Opening up a world of opportunity\n## 18 Interests in associates and joint ventures\n### Key assumptions in value in use calculation\ne used a number of assumptions in our VIU calculation, in accordance with the requirements of IAS 36:\nLong-term profit growth rate: $3 \\%$ (2022: $3 \\%$ ) for periods after 2027, which does not exceed forecast GDP growth in mainland China and is similar to forecasts by external analysts.\nLong-term asset growth rate: $3 \\%$ (2022: $3 \\%$ ) for periods after 2027, which is the rate that assets are expected to grow to achieve long-term profit growth of $3 \\%$ .\nDiscount rate: $9 . 0 0 \\%$ (2022: $1 0 . 0 4 \\%$ ), which is based on a capital asset pricing model (‘CAPM’), using market data. The discount rate used is within the range of $7 . 9 \\%$ to $9 . 7 \\%$ (2022: $8 . 4 \\%$ to $1 0 . 4 \\%$ ) indicated by the CAPM, and decreased as a consequence of a market-driven reduction in beta. While the CAPM range sits at the lower end of the range adopted by selected external analysts of $8 . 8 \\%$ to $1 3 . 5 \\%$ (2022: $8 . 8 \\%$ to $1 3 . 5 \\%$ ), we continue to regard the CAPM range as the most appropriate basis for determining this assumption.\nExpected credit losses (‘ECL’) as a percentage of loans and advances to customers: ranges from $0 . 8 0 \\%$ to $0 . 9 7 \\%$ (2022: $0 . 9 9 \\%$ to $1 . 0 5 \\%$ ) in the short to medium term, reflecting reported credit experience in mainland China. For periods after 2027, the ratio is $0 . 9 7 \\%$ (2022: $0 . 9 7 \\%$ ), which is higher than BoCom’s average ECL as a percentage of loans and advances to customers in recent years prior to the pandemic.\n– Risk-weighted assets as a percentage of total assets: ranges from $6 2 . 0 \\%$ to $6 3 . 7 \\%$ (2022: $6 1 . 0 \\%$ to $6 4 . 4 \\%$ ) in the short to medium term, reflecting higher risk-weights in the short term followed by an expected reversion to recent historical levels. For periods after 2027, the ratio is $6 2 . 0 \\%$ (2022: $6 1 . 0 \\%$ ), which is similar to BoCom’s actual results in recent years.\nLoans and advances to customers growth rate: ranges from $9 . 0 \\%$ to $1 0 . 0 \\%$ (2022: $7 . 1 \\%$ to $1 1 . 0 \\%$ ) in the short to medium term, reflecting higher growth rate in loans and advances to customers as a result of recent macroeconomic, policy and industry factors in mainland China. Increases in the forecast growth rate of loans and advances to customers results in higher forecast ECL.", "chunk_word_count": 492, "section_path": "Opening up a world of opportunity > 18 Interests in associates and joint ventures > Key assumptions in value in use calculation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 394, "page_start": 394, "page_end": 394 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 508, "chunk_text": "# Opening up a world of opportunity\n## 18 Interests in associates and joint ventures\n### Key assumptions in value in use calculation\nOperating income growth rate: ranges from $- 0 . 4 \\%$ to $9 . 7 \\%$ (2022: $1 . 9 \\%$ to $7 . 7 \\%$ ) in the short to medium term, which is lower than BoCom’s actual results in recent years, and is impacted by projections of net interest income in the short term as a consequence of recent macroeconomic, policy and industry factors in mainland China. \nCost-income ratio: ranges from $3 5 . 5 \\%$ to $3 9 . 8 \\%$ (2022: $3 5 . 5 \\%$ to $3 6 . 3 \\%$ ) in the short to medium term. These ratios are higher than BoCom‘s actual results in recent years and forecasts disclosed by external analysts. \nEffective tax rate (‘ETR’): ranges from $5 . 3 \\%$ to $1 5 . 0 \\%$ (2022: $4 . 4 \\%$ to $1 5 . 0 \\%$ ) in the short to medium term, reflecting BoCom’s actual results and an expected increase towards the long-term assumption through the forecast period. For periods after 2027, the rate is $1 5 . 0 \\%$ (2022: $1 5 . 0 \\%$ ), which is higher than the recent historical average, and aligned to the minimum tax rate as proposed by the OECD/Group of 20 (‘G20’) Inclusive Framework on Base Erosion and Profit Shifting. \nCapital requirements: capital adequacy ratio of $1 2 . 5 \\%$ (2022: $1 2 . 5 \\%$ ) and tier 1 capital adequacy ratio of $9 . 5 \\%$ (2022: $9 . 5 \\%$ ), based on BoCom’s capital risk appetite and capital requirements respectively.\nThe following table further illustrates the impact on VIU of reasonably possible changes to key assumptions. This reflects the sensitivity of the VIU to each key assumption on its own and it is possible that more than one favourable and/or unfavourable change may occur at the same time. Loans and advances to customers growth rate has been added to the list of key assumptions detailed in the table to reflect the greater potential variability associated with the assumption as a result of recent macroeconomic, policy and industry factors in mainland China. The selected rates of reasonably possible changes to key assumptions are based on external analysts’ forecasts, statutory requirements and other relevant external data sources, which can change period to period. Unless specified, favourable and unfavourable changes are consistently applied throughout short-to-medium and long-term forecast years, based on a straight-line average of the base case assumption.", "chunk_word_count": 434, "section_path": "Opening up a world of opportunity > 18 Interests in associates and joint ventures > Key assumptions in value in use calculation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 395, "page_start": 395, "page_end": 395 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 509, "chunk_text": "# Opening up a world of opportunity\n## 18 Interests in associates and joint ventures\n### Sensitivity of VIU to reasonably possible changes in key assumptions\n1 The favourable and unfavourable ranges of the long-term profit growth rate and long-term asset growth rate assumptions reflect the close relationship between these assumptions, which would result in offsetting changes to each assumption.\nConsidering the interrelationship of the changes set out in the table above, management estimates that the reasonably possible range of VIU is $\\$ 12.1$ bn to \\$28.8bn (2022: $\\$ 16.90n$ to $\\$ 28.750\\mathrm { n }$ ), acknowledging that the fair value of the Group’s investment has ranged from $\\$ 6.8 b n$ to $\\$ 123,456,7$ over the last five years as at the date of the impairment tests. The possible range of VIU is based on impacts set out in the table above arising from the favourable/unfavourable change in the earnings in the short to medium term, the long-term expected credit losses as a percentage of loans and advances to customers, and a 50bps increase/decrease in the discount rate. All other long-term assumptions, and the basis of the CMC have been kept unchanged when determining the reasonably possible range of the VIU.\n### Selected financial information of BoCom\nThe statutory accounting reference date of BoCom is 31 December. For the year ended 31 December 2023, HSBC included the associate’s results on the basis of the financial statements for the 12 months ended 30 September 2023, taking into account any known changes in the subsequent period from 1 October 2023 to 31 December 2023 that would have materially affected the results.\n### Notes on the financial statements\n### Selected balance sheet information of BoCom\n### Selected income statement information of BoCom\n### Saudi Awwal Bank\nThe Group’s investment in Saudi Awwal Bank (‘SAB’) is classified as an associate. HSBC is the largest shareholder in SAB with a shareholding of $3 1 \\%$ . Significant influence in SAB is established via representation on the Board of Directors. Investments in associates are recognised using the equity method of accounting in accordance with IAS 28, as described previously for BoCom.\n### Impairment testing\nThere were no indicators of impairment at 31 December 2023. The fair value of the Group’s investment in SAB of \\$6.4bn was above the carrying amount of $\\$ 4.70n$ .", "chunk_word_count": 390, "section_path": "Opening up a world of opportunity > 18 Interests in associates and joint ventures > Sensitivity of VIU to reasonably possible changes in key assumptions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 395, "page_start": 395, "page_end": 396 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 510, "chunk_text": "# Opening up a world of opportunity\n## 19 Investments in subsidiaries\nMain subsidiaries of HSBC Holdings1\n1 Main subsidiaries are either held directly or indirectly via intermediate holding companies. There has been no material percentage change in HSBC’s shareholding for its main subsidiaries since 2022. 2 In addition to the strategic holding disclosed above, the Group held $0 . 0 9 \\%$ (2022: $0 . 0 7 \\%$ ) shareholding as part of its trading books.\nDetails of the debt, subordinated debt and preference shares issued by the main subsidiaries to parties external to the Group are included in Note 26 ‘Debt securities in issue’ and Note 29 ‘Subordinated liabilities’, respectively.\nA list of all related undertakings is set out in Note 40. The principal countries and territories of operation are the same as the countries and territories of incorporation except for HSBC Life (International) Limited, which operates mainly in Hong Kong.\nHSBC is structured as a network of regional banks and locally incorporated regulated banking entities. Each bank is separately capitalised in accordance with applicable prudential requirements and maintains a capital buffer consistent with the Group’s risk appetite for the relevant country or region. HSBC’s capital management process is incorporated in the financial resource plan, which is approved by the Board.\nHSBC Holdings is the primary provider of equity capital to its subsidiaries and also provides them with non-equity capital where necessary. \nThese investments are substantially funded by HSBC Holdings’ issuance of equity and non-equity capital, and by profit retention.\nAs part of its capital management process, HSBC Holdings seeks to maintain a balance between the composition of its capital and its investment in subsidiaries. Subject to this, there is no current or foreseen impediment to HSBC Holdings’ ability to provide funding for such investments. During 2023, consistent with the Group’s capital plan, the Group’s material subsidiaries did not experience any significant restrictions on paying dividends or repaying loans and advances. Also, there are no foreseen restrictions envisaged with regard to planned dividends or payments from material subsidiaries. However, the ability of subsidiaries to pay dividends or advance monies to HSBC Holdings depends on, among other things, their respective local regulatory capital and banking requirements, exchange controls, statutory reserves, and financial and operating performance.\nThe amount of guarantees by HSBC Holdings in favour of other Group entities is set out in Note 34.\nInformation on structured entities consolidated by HSBC where HSBC owns less than $50 \\%$ of the voting rights is included in Note 20 ‘Structured entities’. In each of these cases, HSBC controls and consolidates an entity when it is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.", "chunk_word_count": 461, "section_path": "Opening up a world of opportunity > 19 Investments in subsidiaries", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 397, "page_start": 397, "page_end": 397 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 511, "chunk_text": "# Opening up a world of opportunity\n## 19 Investments in subsidiaries\n### Impairment testing of investments in subsidiaries\nAt each reporting period end, HSBC Holdings reviews investments in subsidiaries for indicators of impairment. An impairment is recognised when the carrying amount exceeds the recoverable amount for that investment. The recoverable amount is the higher of the investment’s fair value less costs of disposal and its VIU, in accordance with the requirements of IAS 36. The VIU is calculated by discounting management’s cash flow projections for the investment. The cash flows represent the free cash flows based on the subsidiary’s binding capital requirements.\nWe used a number of assumptions in our VIU calculation, in accordance with the requirements of IAS 36:\nManagement’s judgement in estimating future cash flows: The cash flow projections for each investment are based on the latest approved plans, which include forecast capital available for distribution based on the capital requirements of the subsidiary, taking into account minimum and core capital requirements. For the impairment test as at 31 December 2023, cash flow projections until the end of 2028 were considered in line with our internal planning horizon. Our cash flow projections include known and observable climate-related opportunities and costs associated with our sustainable products and operating model.\nLong-term growth rates: The long-term growth rate is used to extrapolate the free cash flows in perpetuity because of the long-term perspective of the legal entity. The growth rate reflects long-term inflation for the country or territory within which the investment operates.", "chunk_word_count": 253, "section_path": "Opening up a world of opportunity > 19 Investments in subsidiaries > Impairment testing of investments in subsidiaries", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 397, "page_start": 397, "page_end": 397 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 512, "chunk_text": "# Opening up a world of opportunity\n## 19 Investments in subsidiaries\n### Notes on the financial statements\nDiscount rates: The rate used to discount the cash flows is based on the cost of capital assigned to each investment, which is derived using a CAPM and market implied cost of equity. CAPM depends on a number of inputs reflecting financial and economic variables, including the risk-free rate and a premium to reflect the inherent risk of the business being evaluated. These variables are based on the market’s assessment of the economic variables and management’s judgement. The discount rates for each investment are refined to reflect the rates of inflation for the countries or territories within which the investment operates. In addition, for the purposes of testing investments for impairment, management supplements this process by comparing the discount rates derived using the internally generated CAPM, with cost of capital rates produced by external sources for businesses operating in similar markets. The impacts from climate risk are included to the extent that they are observable in discount rates and asset prices.\nAs at 31 December 2023, the carrying amount of HSBC Holdings’ investments in subsidiaries was $\\$ 159.$ 5bn (2022: \\$167.5bn). The net year-onyear reduction was predominantly due to the recognition of a $\\$ 5.5$ bn impairment of HSBC Holdings’ investment in HSBC Overseas Holdings (UK) Limited, resulting in a cumulative impairment of $\\$ 10.20\\mathsf { n }$ (2022: $\\$ 4.70n$ ), and a carrying amount of $\\$ 25.$ .8bn as at 31 December 2023 (2022: $\\$ 32.80\\Pi$ ).\nThe recoverable amount of HSBC Overseas Holdings (UK) Limited is assessed as the aggregate of the recoverable amounts of its subsidiaries. During 2023, the principal subsidiaries of HSBC Overseas Holdings (UK) Limited were HSBC North America Holdings Limited, HSBC Bank Canada and HSBC Bank Bermuda. In October 2023, HSBC Bank Bermuda was transferred to HSBC Bank plc. As at 31 December 2023, the adjusted net asset value of HSBC Overseas Holdings (UK) Limited fell below the carrying amount therefore management assessed that indicators of impairment were present and an impairment test was performed. The recoverable amount reduced owing to lower projected profits and higher projected capital requirements for HSBC North America Holdings, the transfer of HSBC Bank Bermuda to HSBC Bank plc at its book value which stood below its assessed recoverable amount, and higher prevailing discount rates, as a result of which a $\\$ 50n$ impairment was recognised.\nAs HSBC Overseas Holdings (UK) Limited has entered into a sales purchase agreement with Royal Bank of Canada to dispose of our banking business in Canada, the sales purchase agreement has been used to support the recoverable amount of $\\$ 123,4$ bn (2022: $\\$ 10.80\\mathrm n$ ) (inclusive of the preferred shares) under a fair value less costs of disposal basis. The fair value less costs of disposal of HSBC Bank Canada is at a $\\$ 3.70 n$ (2022: \\$3.7bn) premium to the book value recorded in HSBC Overseas Holdings (UK) Limited. In 2024, a distribution of the proceeds from the planned sale of our banking business in Canada to HSBC Holdings from HSBC Overseas Holdings (UK) Limited could lead to a future impairment. In respect of distributable reserves, an impairment would be offset by the dividend income recognised on the distributions from sales proceeds.", "chunk_word_count": 551, "section_path": "Opening up a world of opportunity > 19 Investments in subsidiaries > Notes on the financial statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 398, "page_start": 398, "page_end": 398 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 513, "chunk_text": "# Opening up a world of opportunity\n## 19 Investments in subsidiaries\n### Sensitivities of key assumptions in calculating VIU\nAt 31 December 2023, the recoverable amount of HSBC Overseas Holdings (UK) Limited remained sensitive to reasonably possible changes in key assumptions impacting its principal subsidiary, HSBC North America Holdings Limited.\nIn making an estimate of reasonably possible changes to assumptions, management considers the available evidence in respect of each input to the model. These include the external range of observable discount rates, historical performance against forecast, and risks attached to the key assumptions underlying cash flow.\nThe following table presents a summary of the key assumptions underlying the most sensitive inputs to the model for HSBC North America Holdings Limited, the key risks attached to each, and details of a reasonably possible change to assumptions where, in the opinion of management, these could result in a change in VIU.\n### Reasonably possible changes in key assumptions\n### Sensitivity of VIU to reasonably possible changes in key assumptions\n1 The recoverable amount of HSBC Overseas Holdings (UK) Limited represents the aggregate of recoverable amounts of the underlying subsidiaries. Single variable sensitivity analysis on a single subsidiary may therefore not be representative of the aggregate impact of the change in the variable. 2 As at 31 December 2022, the impact on the VIU of HSBC North America Holdings Limited of a 100bps increase in the discount rate was $\\$ 123,456$ and a $10 \\%$ decrease in forecast profitability was \\$(1.8)bn, respectively on a single variable basis.\n### Subsidiaries with significant non-controlling interests\n## 20 Structured entities\nHSBC is mainly involved with both consolidated and unconsolidated structured entities through the securitisation of financial assets, conduits and investment funds, established either by HSBC or a third party.\n### Consolidated structured entities\n### Total assets of HSBC’s consolidated structured entities, split by entity type\n### Conduits\nHSBC has established and manages two types of conduits: securities investment conduits (‘SICs’) and multi-seller conduits.\n### Securities investment conduits\nThe SICs purchase highly rated ABSs to facilitate tailored investment opportunities.\nAt 31 December 2023, Solitaire, HSBC’s principal SIC, held \\$1.0bn of ABSs (2022: \\$1.3bn). It is currently funded entirely by commercial paper (‘CP’) issued to HSBC. At 31 December 2023, HSBC held \\$1.3bn of CP (2022: \\$1.5bn).", "chunk_word_count": 380, "section_path": "Opening up a world of opportunity > 19 Investments in subsidiaries > Sensitivities of key assumptions in calculating VIU", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 398, "page_start": 398, "page_end": 399 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 514, "chunk_text": "# Opening up a world of opportunity\n## 20 Structured entities\n### Multi-seller conduit\nHSBC’s multi-seller conduit was established to provide access to flexible market-based sources of finance for its clients. Currently, HSBC bears risk equal to the transaction-specific facility offered to the multi-seller conduit, amounting to $\\$ 6.1$ 1bn at 31 December 2023 (2022: \\$6.2bn). First loss protection is provided by the originator of the assets, and not by HSBC, through transaction-specific credit enhancements. A layer of secondary loss protection is provided by HSBC in the form of programme-wide enhancement facilities.\nSecuritisations\nHSBC uses structured entities to securitise customer loans and advances it originates in order to diversify its sources of funding for asset origination and capital efficiency purposes. The loans and advances are transferred by HSBC to the structured entities for cash or synthetically through credit default swaps, and the structured entities issue debt securities to investors.\nHSBC managed funds\nHSBC has established a number of money market and non-money market funds. Where it is deemed to be acting as principal rather than agent in its role as investment manager, HSBC controls these funds.\nOther\nHSBC has entered into a number of transactions in the normal course of business, which include asset and structured finance transactions where it has control of the structured entity. In addition, HSBC is deemed to control a number of third-party managed funds through its involvement as a principal in the funds.\n### Unconsolidated structured entities\nThe term ‘unconsolidated structured entities’ refers to all structured entities not controlled by HSBC. The Group enters into transactions with unconsolidated structured entities in the normal course of business to facilitate customer transactions and for specific investment opportunities.\nThe maximum exposure to loss from HSBC’s interests in unconsolidated structured entities represents the maximum loss it could incur as a result of its involvement with these entities regardless of the probability of the loss being incurred.\nFor commitments, guarantees and written credit default swaps, the maximum exposure to loss is the notional amount of potential future losses.\nFor retained and purchased investments and loans to unconsolidated structured entities, the maximum exposure to loss is the carrying amount of these interests at the balance sheet reporting date.\nThe maximum exposure to loss is stated gross of the effects of hedging and collateral arrangements that HSBC has entered into in order to mitigate the Group’s exposure to loss.\nSecuritisations\nHSBC has interests in unconsolidated securitisation vehicles through holding notes issued by these entities. In addition, HSBC has investments in ABSs issued by third-party structured entities.\nHSBC managed funds\nHSBC establishes and manages money market funds and non-money market investment funds to provide customers with investment opportunities. Further information on funds under management is provided on page 118.\nHSBC, as fund manager, may be entitled to receive management and performance fees based on the assets under management. HSBC may also retain units in these funds.\nNon-HSBC managed funds\nHSBC purchases and holds units of third-party managed funds in order to facilitate business and meet customer needs.", "chunk_word_count": 504, "section_path": "Opening up a world of opportunity > 20 Structured entities > Multi-seller conduit", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 399, "page_start": 399, "page_end": 400 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 515, "chunk_text": "# Opening up a world of opportunity\n## 20 Structured entities\n### Other\nHSBC has established structured entities in the normal course of business, such as structured credit transactions for customers, to provide finance to public and private sector infrastructure projects, and for asset and structured finance transactions.\nIn addition to the interests disclosed above, HSBC enters into derivative contracts, reverse repos and stock borrowing transactions with structured entities. These interests arise in the normal course of business for the facilitation of third-party transactions and risk managemen solutions.\n### HSBC sponsored structured entities\nThe amount of assets transferred to and income received from such sponsored structured entities during 2023 and 2022 was not significant.\n## 21 Goodwill and intangible assets\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. Comparative data have been restated accordingly. \n2 Included within other intangible assets is internally generated software with a net carrying amount of \\$6,895m (2022: \\$6,166m). During the year, capitalisation of internally generated software was \\$2,306m (2022: \\$2,663m), reversal of impairment was \\$285m (2022: impairment of \\$125m) and amortisation was \\$1,877m (2022: \\$1,447m).\n### Movement analysis of goodwill\n1 Includes goodwill allocated to disposal groups as a result of the sales of our retail banking operations in France and branch operations in Greece, and planned sale of our banking business in Canada, offset by goodwill arising from the acquisition of L&T Investment Management Limited. For further details, see Note 23.\n### Goodwill\n### Impairment testing\nThe Group’s impairment test in respect of goodwill allocated to each cash-generating unit (‘CGU’) is performed at 1 October each year. A review for indicators of impairment is undertaken at each subsequent quarter-end and at 31 December 2023. No indicators of impairment were identified as part of these reviews.\n### Basis of the recoverable amount\nThe recoverable amount of all CGUs to which goodwill has been allocated was equal to its value in use (‘VIU’) at each respective testing date. The VIU is calculated by discounting management’s cash flow projections for the CGU. The key assumptions used in the VIU calculation for each individually significant CGU that is not impaired are discussed below.\n### Key assumptions in VIU calculation – significant CGUs at 1 October 2023\nAt 1 October 2023, aggregate goodwill of \\$1,599m (1 October 2022: \\$1,464m) had been allocated to CGUs that were not considered individually significant. The Group’s CGUs do not carry on their balance sheets any significant intangible assets with indefinite useful lives, other than goodwill.", "chunk_word_count": 421, "section_path": "Opening up a world of opportunity > 20 Structured entities > Other", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 401, "page_start": 401, "page_end": 402 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 516, "chunk_text": "# Opening up a world of opportunity\n## 21 Goodwill and intangible assets\n### Management’s judgement in estimating the cash flows of a CGU\nThe Group does not consider there to be a significant risk of a material adjustment to the carrying amount of goodwill in the next financial year, but does consider this to be an area that is inherently judgemental. The cash flow projections for each CGU are based on forecast profitability plans approved by the Board and minimum capital levels required to support the business operations of a CGU. The Board challenges and endorses planning assumptions in light of internal capital allocation decisions necessary to support our strategy, current market conditions and macroeconomic outlook. For the 1 October 2023 impairment test, cash flow projections until the end of 2028 were considered, in line with our internal planning horizon. Key assumptions underlying cash flow projections reflect management’s outlook on interest rates and inflation, as well as business strategy, including the scale of investment in technology and automation. Our cash flow projections include known and observable climate-related opportunities and costs associated with our sustainable products and operating model. As required by IFRS Accounting Standards, estimates of future cash flows exclude estimated cash inflows or outflows that are expected to arise from restructuring initiatives before an entity has a constructive obligation to carry out the plan, and would therefore have recognised a provision for restructuring costs.\n### Discount rate\nThe rate used to discount the cash flows is based on the cost of equity assigned to each CGU, which is derived using a capital asset pricing model (‘CAPM’) and market implied cost of equity. CAPM depends on a number of inputs reflecting financial and economic variables, including the risk-free rate and a premium to reflect the inherent risk of the business being evaluated. These variables are based on the market’s assessment of the economic variables and management’s judgement. The discount rates for each CGU are refined to reflect the rates of inflation for the countries within which the CGU operates. In addition, for the purposes of testing goodwill for impairment, management supplements this process by comparing the discount rates derived using the internally generated CAPM, with the cost of equity rates produced by external sources for businesses operating in similar markets. The impacts of climate risk are included to the extent that they are observable in discount rates and asset prices.\n### Long-term growth rate\nThe long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective within the Group of business units making up the CGUs. These growth rates reflect inflation for the countries within which the CGU operates or from which it derives revenue.", "chunk_word_count": 452, "section_path": "Opening up a world of opportunity > 21 Goodwill and intangible assets > Management’s judgement in estimating the cash flows of a CGU", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 402, "page_start": 402, "page_end": 402 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 517, "chunk_text": "# Opening up a world of opportunity\n## 21 Goodwill and intangible assets\n### Sensitivities of key assumptions in calculating VIU\nAt 1 October 2023, given the extent by which VIU exceeds carrying amount, the HBUK WPB CGU was not sensitive to reasonably possible adverse changes in key assumptions supporting the recoverable amount. In making an estimate of reasonably possible changes to assumptions, management considers the available evidence in respect of each input to the VIU calculation, such as the external range of discount rates observable, historical performance against forecast and risks attaching to the key assumptions underlying cash flow projections. None of the remaining CGUs are individually significant.\n### Other intangible assets\n### Impairment testing\nImpairment of other intangible assets is assessed in accordance with our policy explained in Note $1 . 2 ( \\mathsf { n } )$ by comparing the net carrying amount of CGUs containing intangible assets with their recoverable amounts. Recoverable amounts are determined by calculating an estimated VIU or fair value, as appropriate, for each CGU. No significant impairment was recognised during the year.\n### Key assumptions in VIU calculation\nThe Group does not consider there to be a significant risk of a material adjustment to the carrying amount of other intangible assets in the next financial year, but does consider this to be an area that is inherently judgemental. We used a number of assumptions in our VIU calculation, in accordance with the requirements of IAS 36:\nManagement’s judgement in estimating future cash flows: We considered past business performance, current market conditions and our macroeconomic outlook to estimate future earnings. As required by IFRS Accounting Standards, estimates of future cash flows exclude estimated cash inflows or outflows that are expected to arise from restructuring initiatives before an entity has a constructive obligation to carry out the plan, and would therefore have recognised a provision for restructuring costs. For some businesses, this means that the benefit of certain strategic actions may not be included in the impairment assessment, including capital releases. Our cash flow projections include known and observable climate-related opportunities and costs associated with our sustainable products and operating model.\nLong-term growth rates: The long-term growth rate is used to extrapolate the cash flows in perpetuity because of the long-term perspective of the businesses within the Group.\nDiscount rates: Rates are based on a combination of CAPM and market-implied calculations considering market data for the businesses and geographies in which the Group operates. The impacts of climate risk are included to the extent that they are observable in discount rates and asset prices.", "chunk_word_count": 430, "section_path": "Opening up a world of opportunity > 21 Goodwill and intangible assets > Sensitivities of key assumptions in calculating VIU", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 402, "page_start": 402, "page_end": 402 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 518, "chunk_text": "# Opening up a world of opportunity\n## 21 Goodwill and intangible assets\n### Sensitivity of estimates relating to non-financial assets\nAs explained in Note 1.2(a), estimates of future cash flows for CGUs are made in the review of goodwill and non-financial assets for impairment. Non-financial assets include other intangible assets shown above, and owned property, plant and equipment and right-of-use assets (see Note 22). The most significant sources of estimation uncertainty are in respect of the goodwill balances disclosed above. There are no nonfinancial asset balances relating to individual CGUs which involve estimation uncertainty that represents a significant risk of resulting in a material adjustment to the results and financial position of the Group within the next financial year.\nNon-financial assets are widely distributed across CGUs within the legal entities of the Group, including Corporate Centre assets that cannot be allocated to CGUs and are therefore tested for impairment at consolidated level. The recoverable amounts of other intangible assets, owned property, plant and equipment, and right-of-use assets cannot be lower than individual asset fair values less costs to dispose, where relevant. At 31 December 2023 none of the CGUs were sensitive to reasonably possible adverse changes in key assumptions supporting the recoverable amount. In making an estimate of reasonably possible changes to assumptions, management considers the available evidence in respect of each input to the VIU calculation, such as the external range of discount rates observable, historical performance against forecast and risks attaching to the key assumptions underlying cash flow projections.\n## 22 Prepayments, accrued income and other assets\nPrepayments, accrued income and other assets include \\$122,863m (2022: \\$112,464m) of financial assets, the majority of which are measured at amortised cost.\n## 23 Assets held for sale, liabilities of disposal groups held for sale and business acquisitions\n1 This represents impairment losses in excess of the carrying value of the non-current assets, excluded from the measurement scope of IFRS 5.\n### Disposal groups and other planned disposals", "chunk_word_count": 328, "section_path": "Opening up a world of opportunity > 21 Goodwill and intangible assets > Sensitivity of estimates relating to non-financial assets", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 402, "page_start": 402, "page_end": 403 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 519, "chunk_text": "# Opening up a world of opportunity\n## 23 Assets held for sale, liabilities of disposal groups held for sale and business acquisitions\n### Sale of our retail banking operations in France\nOn 1 January 2024, HSBC Continental Europe completed the sale of its retail banking business in France to CCF, a subsidiary of Promontoria MMB SAS (‘My Money Group’). The sale also included HSBC Continental Europe’s $100 \\%$ ownership interest in HSBC SFH (France) and its $3 \\%$ ownership interest in Crédit Logement.\nIn the first quarter of 2023, the sale had become less certain, as a result of which we recognised a $\\$ 2.1$ bn partial reversal of the impairment loss recognised in 2022, when the disposal group was classified as held for sale. In the fourth quarter of 2023, following the receipt of regulatory approvals and the satisfaction of other relevant conditions, we reclassified the disposal group as held for sale, and it was subsequently remeasured at the lower of the carrying amount and fair value less costs to sell. This resulted in the reinstatement of a €1.8bn (\\$2.0bn) pre-tax impairment loss reflecting the final terms of the sale, giving rise to a net reversal of impairment recognised in other operating income in the year of \\$0.1bn.\nUpon completion and in accordance with the terms of the sale, HSBC Continental Europe received a €0.1bn (\\$0.1bn) profit participation interest in the ultimate holding company of My Money Group. The associated impacts on initial recognition of this stake at fair value were recognised as part of the pre-tax loss on disposal. In addition, we recognised the reversal of a €0.4bn $( \\$ 0.450\\mathsf { n } )$ deferred tax liability, which had arisen as a consequence of the temporary difference in tax and accounting treatment in respect of the provision for loss on disposal, which was deductible in the French tax return in 2021.\nIn accordance with the terms of the sale, HSBC Continental Europe retained a portfolio of €7.1bn (\\$7.8bn) consisting of home and certain other loans, in respect of which it may consider on-sale opportunities at a suitable time, and the CCF brand, which it licensed to the buyer under a long-term licence agreement. Additionally, HSBC Continental Europe’s subsidiaries, HSBC Assurances Vie (France) and HSBC Global Asset Management (France), have entered into distribution agreements with the buyer. Ongoing costs associated with the retention of the home and certain other loans, net of income on distribution agreements and the brand licence, are estimated to have an after-tax loss impact of €0.1bn (\\$0.1bn) in 2024 based on expected funding rates.", "chunk_word_count": 431, "section_path": "Opening up a world of opportunity > 23 Assets held for sale, liabilities of disposal groups held for sale and business acquisitions > Sale of our retail banking operations in France", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 403, "page_start": 403, "page_end": 403 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 520, "chunk_text": "# Opening up a world of opportunity\n## 23 Assets held for sale, liabilities of disposal groups held for sale and business acquisitions\n### Planned sale of our banking business in Canada\nOn 29 November 2022, HSBC Holdings plc announced that its wholly-owned subsidiary, HSBC Overseas Holdings (UK) Limited, had entered into an agreement for the sale of its banking business in Canada to the Royal Bank of Canada. Completion of the transaction is expected to occur in the first quarter of 2024 and the required governmental approvals have been obtained. The majority of the estimated gain on sale of $\\$ 5.20 n$ (as at 31 December 2023) will be recognised on completion, reduced by earnings recognised by the Group in the period to completion. There would be no tax on the gain recognised at completion. This estimated gain would also have been reduced by $\\$ 0.30n$ in fair value losses recognised on the related foreign exchange hedges in 2023. The estimated pre-tax profit on the sale will be recognised through a combination of the consolidation of HSBC Canada’s results into the Group’s financial statements (between the 30 June 2022 net asset reference date and until completion), and the remaining gain on sale recognised at completion. At 31 December 2023, total assets of $\\$ 87.90 n$ and total liabilities of $\\$ 81.56n$ met the criteria to be classified as held for sale in accordance with IFRS 5.\n### Planned sale of our business in Russia\nOn 30 June 2022, following a strategic review of our business in Russia, HSBC Europe BV (a wholly-owned subsidiary of HSBC Bank plc) entered into an agreement for the sale of its wholly-owned subsidiary HSBC Bank (RR) (Limited Liability Company). In 2022, a \\$0.3bn impairment loss on the planned sale was recognised, upon classification as held for sale in accordance with IFRS 5. As at 31 December 2023, following US sanctions designation of the buyer, the outcome of the planned sale became less certain. This resulted in the reversal of $\\$ 0.20\\mathsf { n }$ of the previously recognised loss, as the business was no longer classified as held for sale. However, owing to restrictions impacting the recoverability of assets in Russia, we recognised charges of $\\$ 0.20\\mathsf { n }$ in other operating income. Completion of the planned sale remains subject to regulatory approval. On completion, accumulated foreign currency translation reserves will be recycled to the income statement.\n### Our branch operations in Greece\nOn 24 May 2022, HSBC Continental Europe signed a sale and purchase agreement for the sale of its branch operations in Greece to Pancreta Bank SA. In the second quarter of 2022, we recognised a loss of $\\$ 0.$ 1bn upon reclassification as held for sale in accordance with IFRS 5. At completion on 28 July 2023, the disposal group included $\\$ 0.30n$ of loans and advances to customers and \\$1.1bn of customer accounts.", "chunk_word_count": 484, "section_path": "Opening up a world of opportunity > 23 Assets held for sale, liabilities of disposal groups held for sale and business acquisitions > Planned sale of our banking business in Canada", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 403, "page_start": 403, "page_end": 404 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 521, "chunk_text": "# Opening up a world of opportunity\n## 23 Assets held for sale, liabilities of disposal groups held for sale and business acquisitions\n### Merger of our business in Oman\nIn November 2022, HSBC Bank Oman SAOG entered into a binding merger agreement with Sohar International Bank SAOG, under which the two banks agreed to take the necessary steps to implement a merger by incorporation, whereby HSBC Bank Oman would merge into Sohar International Bank. Following regulatory and shareholder approvals, the merger was completed on 17 August 2023 by way of dissolution and transfer of all the assets and liabilities of HSBC Bank Oman to Sohar International Bank, with the shareholders of HSBC Bank Oman receiving the consideration in cash and shares in Sohar International Bank. Separately, HSBC Bank Middle East Limited is in the process of establishing a new wholesale banking branch in Oman subject to regulatory approvals.\n### Our New Zealand loan portfolio\nIn August 2023, the Hongkong and Shanghai Banking Corporation Limited (acting through its New Zealand branch) entered into an agreement with Pepper New Zealand Limited, a wholly-owned subsidiary of Pepper Money Limited, to sell its New Zealand retail mortgage loan portfolio. The sale was classified as held for sale in the third quarter of 2023 and was completed on 1 December 2023.\n### Our retail business in Mauritius\nIn November 2023, the Hongkong and Shanghai Banking Corporation Limited (acting through its Mauritius branch) entered into an agreement with ABSA Bank (Mauritius) Limited, a wholly-owned subsidiary of ABSA Bank Group Limited, to sell its Wealth and Personal Banking business The sale is expected to complete in the second half of 2024 subject to regulatory approvals.\nAt 31 December 2023, the major classes of assets and associated liabilities of disposal groups held for sale, excluding allocated impairment losses, were as follows:\n### Business acquisitions", "chunk_word_count": 307, "section_path": "Opening up a world of opportunity > 23 Assets held for sale, liabilities of disposal groups held for sale and business acquisitions > Merger of our business in Oman", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 404, "page_start": 404, "page_end": 405 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 522, "chunk_text": "# Opening up a world of opportunity\n## 23 Assets held for sale, liabilities of disposal groups held for sale and business acquisitions\n### Acquisition of Silicon Valley Bank UK Limited\nIn March 2023, HSBC UK Bank plc acquired Silicon Valley Bank UK Limited (‘SVB UK’), and in June 2023 changed its legal entity name to HSBC Innovation Bank Limited. The acquisition was funded from existing resources and brought the staff, assets and liabilities of SVB UK into the HSBC portfolio. On acquisition, we performed a preliminary assessment of the fair value of the assets and liabilities purchased. We established an opening balance sheet on 13 March 2023 and applied the result of the fair value assessment, which resulted in a reduction in net assets of $\\$ 0.20\\mathsf { n }$ . The provisional gain on acquisition of \\$1.6bn represents the difference between the consideration paid of £1 and the net assets acquired. Further due diligence has been performed post-acquisition, resulting in the recognition of an additional gain of $\\$ 0.1$ bn at 30 September 2023, as required by IFRS 3 ‘Business Combinations’.\nHSBC Innovation Bank Limited contributed $\\$ 0.$ .5bn of revenue and $\\$ 0.20\\mathsf { n }$ to the Group profit after tax for the period from 13 March 2023 to 31 December 2023. As per the disclosure requirements set out in IFRS 3 ‘Business Combinations’, if HSBC Innovation Bank Limited had been acquired on 1 January 2023, management estimates that for the 12 months to 31 December 2023, consolidated revenue would have been \\$66bn and consolidated profit after tax would have been $\\$ 250n$ . In determining these amounts, management has assumed that the previously determined fair value adjustments, which arose on acquisition would have been the same if the acquisition had occurred on 1 January 2023.\nThe details of the business combination at acquisition are as follows:\n### Acquisition of Citibank China’s wealth management portfolio\nIn October 2023, HSBC Bank (China) Company Limited, a wholly-owned subsidiary of The Hongkong and Shanghai Banking Corporation Limited, entered into an agreement to acquire Citibank China’s retail wealth management portfolio in mainland China. The portfolio comprises assets under management and deposits and the associated wealth customers. Upon completion, the acquired business will be integrated into HSBC Bank China’s Wealth and Personal Banking operations. The transaction is expected to complete in the first half of 2024.\n### Acquisition of Silkroad Property Partners Singapore\nIn October 2023, HSBC Global Asset Management Singapore Limited entered into an agreement to acquire $100 \\%$ of the shares of Silkroad Property Partners Pte Ltd (‘Silkroad’) and for HSBC Global Asset Management Limited to acquire Silkroad’s affiliated General Partner entities. Silkroad is a Singapore headquartered Asia-Pacific-focused, real estate investment manager. The acquisition was completed on 31 January 2024.\n## 24 Trading liabilities\n## 1 ‘Deposits by banks’ and ‘Customer accounts’ include fair value repos, stock lending and other amounts.\n## 25 Financial liabilities designated at fair value", "chunk_word_count": 490, "section_path": "Opening up a world of opportunity > 23 Assets held for sale, liabilities of disposal groups held for sale and business acquisitions > Acquisition of Silicon Valley Bank UK Limited", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 405, "page_start": 405, "page_end": 406 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 523, "chunk_text": "# Opening up a world of opportunity\n## HSBC\n1 From 1 January 2023, we adopted IFRS 17 ‘Insurance Contracts’, which replaced IFRS 4 ‘Insurance Contracts’. We have restated 2022 comparative data. \n2 Structured deposits placed at HSBC Bank USA are insured by the Federal Deposit Insurance Corporation, a US government agency, up to \\$250,000 per depositor.\nThe carrying amount of financial liabilities designated at fair value was $\\$ 421 m$ less than the contractual amount at maturity (2022: $\\$ 8,1245$ less). The cumulative amount of change in fair value attributable to changes in credit risk was a loss of \\$1,286m (2022: profit of $\\$ 2345$ ).\nThe carrying amount of financial liabilities designated at fair value was \\$246m less than the contractual amount at maturity (2022: \\$2,405m less). \nThe cumulative amount of change in fair value attributable to changes in credit risk was a loss of \\$682m (2022: \\$516m).\n## 26 Debt securities in issue\n\n## 27 Accruals, deferred income and other liabilities", "chunk_word_count": 164, "section_path": "Opening up a world of opportunity > HSBC", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 406, "page_start": 406, "page_end": 407 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 524, "chunk_text": "# Opening up a world of opportunity\n## 28 Provisions\nContractual commitments include the expected credit loss provision in relation to off-balance sheet financial guarantee contracts and commitments where HSBC has become party to an irrevocable commitment, as defined under IFRS 9 ‘Financial Instruments’; and provisions for performance and other guarantee contracts.\nFurther details of ‘Legal proceedings and regulatory matters’ are set out in Note 36. Legal proceedings include civil court, arbitration or tribunal proceedings brought against HSBC companies (whether by way of claim or counterclaim); or civil disputes that may, if not settled, result in court, arbitration or tribunal proceedings. ‘Regulatory matters’ refers to investigations, reviews and other actions carried out by, or in response to, the actions of regulators or law enforcement agencies in connection with alleged wrongdoing by HSBC.\n### Notes on the financial statements\nCustomer remediation refers to HSBC’s activities to compensate customers for losses or damages associated with a failure to comply with regulations or to treat customers fairly. Customer remediation is often initiated by HSBC in response to customer complaints and/or industry developments in sales practices, and is not necessarily initiated by regulatory action.\nFor further details of the impact of IFRS 9 on undrawn loan commitments and financial guarantees, presented in ‘Contractual commitments’, see Note 34. Further analysis of the movement in the expected credit loss provision is disclosed within the ‘Reconciliation of changes in gross carrying/nominal amount and allowances for loans and advances to banks and customers including loan commitments and financial guarantees‘ table on page 169.\n### Brazil PIS and COFINS tax matters\nBeginning in the late 1990s, HSBC Bank Brasil S.A. – Banco Múltiplo (‘HSBC Brazil’) and other financial services firms brought legal proceedings in Brazil challenging the assessment of PIS and COFINS taxes, which are federal taxes imposed on gross revenues earned by legal entities in Brazil. The Supreme Court of Brazil selected three cases – one involving an insurer, in 2007, and two involving other banks, in 2011 – to set standards that would apply to all of these proceedings. In June 2023, the court ruled against the financial services firms in all three cases. The standards set by the court in this ruling have not yet been applied to HSBC Brazil’s legacy cases, liability for which remained with HSBC after the sale of HSBC’s operations in Brazil to Bradesco in 2016. There are many factors that may affect the range of outcomes and any resulting financial impact for HSBC. Based upon the information currently available, a provision was recognised in respect of one legacy case. The remaining additional tax liability subject to challenge on all legacy PIS and COFINS cases is up to $\\$ 0.450\\mathsf { n }$ .", "chunk_word_count": 452, "section_path": "Opening up a world of opportunity > 28 Provisions", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 407, "page_start": 407, "page_end": 408 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 525, "chunk_text": "# Opening up a world of opportunity\n## 29 Subordinated liabilities\n### HSBC’s subordinated liabilities\nSubordinated liabilities rank behind senior obligations and generally count towards the capital base of HSBC. Capital securities may be called and redeemed by HSBC subject to prior notification to the PRA and, where relevant, the consent of the local banking regulator. If not redeemed at the first call date, coupons payable may reset or become floating rate based on relevant market rates. On subordinated liabilities other than floating rate notes, interest is payable at fixed rates of up to $1 0 . 1 7 6 \\%$ .\nThe balance sheet amounts disclosed in the following table are presented on an IFRS basis and do not reflect the amount that the instruments contribute to regulatory capital, principally due to regulatory amortisation and regulatory eligibility limits.\n### HSBC’s subordinated liabilities: subsidiaries\n## 1 Liability accounts for HSBC Bank Canada have been reclassified to ‘Liabilities of disposal groups held for sale’.\n### HSBC Holdings’ subordinated liabilities\n### HSBC Holdings’ subordinated liabilities in issue", "chunk_word_count": 175, "section_path": "Opening up a world of opportunity > 1 Liability accounts for HSBC Bank Canada have been reclassified to ‘Liabilities of disposal groups held for sale’. > HSBC Holdings’ subordinated liabilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 408, "page_start": 408, "page_end": 408 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 526, "chunk_text": "# Opening up a world of opportunity\n## 1 Liability accounts for HSBC Bank Canada have been reclassified to ‘Liabilities of disposal groups held for sale’.\n### Guaranteed by HSBC Holdings or HSBC Bank plc\nCapital securities guaranteed by HSBC Holdings or HSBC Bank plc were issued by the Jersey limited partnerships. The proceeds of these were lent to the respective guarantors by the limited partnerships in the form of subordinated notes. They qualified as additional tier 1 capital for HSBC under CRR II until 31 December 2021 by virtue of the application of grandfathering provisions. The capital security guaranteed by HSBC Bank plc also qualified as additional tier 1 capital for HSBC Bank plc (on a solo and a consolidated basis) under CRR II until 31 December 2021 by virtue of the same grandfathering process. Since 31 December 2021, these securities have no longer qualified as regulatory capital for HSBC or HSBC Bank plc.\nThese preferred securities, together with the guarantee, are intended to provide investors with rights to income and capital distributions and distributions upon liquidation of the relevant issuer that are equivalent to the rights that they would have had if they had purchased noncumulative perpetual preference shares of the relevant issuer. There are limitations on the payment of distributions if such payments are prohibited under UK banking regulations or other requirements, if a payment would cause a breach of HSBC’s capital adequacy requirements, or if HSBC Holdings or HSBC Bank plc has insufficient distributable reserves (as defined).\nHSBC Holdings and HSBC Bank plc have individually covenanted that, if prevented under certain circumstances from paying distributions on the preferred securities in full, they will not pay dividends or other distributions in respect of their ordinary shares, or repurchase or redeem their ordinary shares, until the distribution on the preferred securities has been paid in full.\nIf the consolidated total capital ratio of HSBC Holdings falls below the regulatory minimum required or if the Directors expect it to do so in the near term, provided that proceedings have not been commenced for the liquidation, dissolution or winding up of HSBC Holdings, the holders’ interests in the preferred securities guaranteed by HSBC Holdings will be exchanged for interests in preference shares issued by HSBC Holdings that have economic terms which are in all material respects equivalent to the preferred securities and their guarantee.\nIf the preferred securities guaranteed by HSBC Bank plc are outstanding in November 2048, or if the total capital ratio of HSBC Bank plc (on a solo or consolidated basis) falls below the regulatory minimum required, or if the Directors expect it to do so in the near term, provided that proceedings have not been commenced for the liquidation, dissolution or winding up of HSBC Bank plc, the holders’ interests in the preferred security guaranteed by HSBC Bank plc will be exchanged for interests in preference shares issued by HSBC Bank plc that have economic terms which are in all material respects equivalent to the preferred security and its guarantee.", "chunk_word_count": 504, "section_path": "Opening up a world of opportunity > 1 Liability accounts for HSBC Bank Canada have been reclassified to ‘Liabilities of disposal groups held for sale’. > Guaranteed by HSBC Holdings or HSBC Bank plc", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 409, "page_start": 409, "page_end": 409 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 527, "chunk_text": "# Opening up a world of opportunity\n## 1 Liability accounts for HSBC Bank Canada have been reclassified to ‘Liabilities of disposal groups held for sale’.\n### Tier 2 securities\nTier 2 capital securities are either perpetual or dated subordinated securities on which there is an obligation to pay coupons. These capital securities are included within HSBC’s regulatory capital base as tier 2 capital under CRR II, either as fully eligible capital or by virtue of the application of grandfathering provisions. In accordance with CRR II, the capital contribution of all tier 2 securities is amortised for regulatory purposes in their final five years before maturity.\n## 30 Maturity analysis of assets, liabilities and off-balance sheet commitments\nThe table on page 408 provides an analysis of consolidated total assets, liabilities and off-balance sheet commitments by residual contractual maturity at the balance sheet date. These balances are included in the maturity analysis as follows:\nTrading assets and liabilities (including trading derivatives but excluding reverse repos, repos and debt securities in issue) are included in the ‘Due not more than 1 month’ time bucket because trading balances are typically held for short periods of time. Financial assets and liabilities with no contractual maturity (such as equity securities) are included in the ‘Due over 5 years’ time bucket. Undated or perpetual instruments are classified based on the contractual notice period, which the counterparty of the instrument is entitled to give. Where there is no contractual notice period, undated or perpetual contracts are included in the ‘Due over 5 years’ time bucket. Non-financial assets and liabilities with no contractual maturity are included in the ‘Due over 5 years’ time bucket. Financial instruments included within assets and liabilities of disposal groups held for sale are classified on the basis of the contractual maturity of the underlying instruments and not on the basis of the disposal transaction. Liabilities under insurance contracts included in ‘other financial liabilities’ are irrespective of contractual maturity included in the ‘Due over 5 years’ time bucket in the maturity table provided below. An analysis of the present value of expected future cash flows of insurance contract liabilities and contractual service margin is provided on page 411. Liabilities under investment contracts are classified in accordance with their contractual maturity. Undated investment contracts are included in the ‘Due over 5 years’ time bucket, although such contracts are subject to surrender and transfer options by the policyholders. – Loan and other credit-related commitments are classified on the basis of the earliest date they can be drawn down.\n### Notes on the financial statements\n## HSBC\nMaturity analysis of assets, liabilities and off-balance sheet commitments\n### HSBC Holdings\nMaturity analysis of assets, liabilities and off-balance sheet commitments", "chunk_word_count": 451, "section_path": "Opening up a world of opportunity > 1 Liability accounts for HSBC Bank Canada have been reclassified to ‘Liabilities of disposal groups held for sale’. > Tier 2 securities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 409, "page_start": 409, "page_end": 412 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 528, "chunk_text": "# Opening up a world of opportunity\n## HSBC\n### Contractual maturity of financial liabilities\nThe following table shows, on an undiscounted basis, all cash flows relating to principal and future coupon payments (except for trading liabilities and derivatives not treated as hedging derivatives). For this reason, balances in the following table do not agree directly with those in our consolidated balance sheet. Undiscounted cash flows payable in relation to hedging derivative liabilities are classified according to their contractual maturities. Trading liabilities and derivatives not treated as hedging derivatives are included in the ‘Due not more than 1 month’ time bucket and not by contractual maturity.\nIn addition, loan and other credit-related commitments and financial guarantees are generally not recognised on our balance sheet. The undiscounted cash flows potentially payable under loan and other credit-related commitments and financial guarantees are classified on the basis of the earliest date they can be called.", "chunk_word_count": 152, "section_path": "Opening up a world of opportunity > HSBC > Contractual maturity of financial liabilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 413, "page_start": 413, "page_end": 413 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 529, "chunk_text": "# Opening up a world of opportunity\n## HSBC\n### HSBC Holdings\nHSBC Holdings’ primary sources of liquidity are dividends received from subsidiaries, interest on and repayment of intra-Group loans and securities, and interest earned on its own liquid funds. HSBC Holdings also raises funds in the debt capital markets to meet the Group’s minimum requirement for own funds and eligible liabilities and maintain an appropriate liquidity buffer. HSBC Holdings uses this liquidity to meet its obligations, including interest and principal repayments on external debt liabilities, operating expenses and collateral on derivative transactions.\nHSBC Holdings is also subject to contingent liquidity risk by virtue of credit-related commitments and guarantees and similar contracts issued relating to its subsidiaries. Such commitments and guarantees are only issued after due consideration of HSBC Holdings’ ability to finance the commitments and guarantees and the likelihood of the need arising.\nHSBC Holdings actively manages the cash flows from its subsidiaries to optimise the amount of cash held at the holding company level. During 2023, consistent with the Group’s capital plan, the Group’s material subsidiaries did not experience any significant restrictions on paying dividends or repaying loans and advances. Also, there are no foreseen restrictions envisaged with regard to planned dividends or payments from material subsidiaries. However, the ability of subsidiaries to pay dividends or advance monies to HSBC Holdings depends on, among other things, their respective local regulatory capital and banking requirements, exchange controls, statutory reserves, and financial and operating performance.\nHSBC Holdings currently has sufficient liquidity to meet its present and forecast requirements. Liquidity risk in HSBC Holdings is overseen by Holdings ALCO.\nThe following table shows, on an undiscounted basis, all cash flows relating to principal and future coupon payments (except for trading liabilities and derivatives not treated as hedging derivatives). For this reason, balances in the following table do not agree directly with those in HSBC Holdings balance sheet. Undiscounted cash flows payable in relation to hedging derivative liabilities are classified according to their contractual maturities. Trading liabilities and derivatives not treated as hedging derivatives are included in the ‘Due not more than 1 month’ time bucket and not by contractual maturity.\nIn addition, loan and other credit-related commitments and financial guarantees are generally not recognised on our balance sheet. The undiscounted cash flows potentially payable under loan and other credit-related commitments and financial guarantees are classified on the basis of the earliest date they can be called.", "chunk_word_count": 405, "section_path": "Opening up a world of opportunity > HSBC > HSBC Holdings", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 413, "page_start": 413, "page_end": 414 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 530, "chunk_text": "# Opening up a world of opportunity\n## 31 Offsetting of financial assets and financial liabilities\nIn the offsetting of financial assets and financial liabilities, the net amount is reported in the balance sheet when the offset criteria are met. This is achieved when there is a legally enforceable right to offset the recognised amounts and there is either an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.\nIn the following table, the ‘Amounts not set off in the balance sheet’ include transactions where:\nthe counterparty has an offsetting exposure with HSBC and a master netting or similar arrangement is in place with a right to set off only in the event of default, insolvency or bankruptcy, or the offset criteria are otherwise not satisfied; and cash and non-cash collateral (debt securities and equities) has been received/pledged for derivatives and reverse repurchase/repurchase, stock borrowing/lending and similar agreements to cover net exposure in the event of a default or other predetermined events.\nThe effect of over-collateralisation is excluded.\n‘Amounts not subject to enforceable netting agreements’ include contracts executed in jurisdictions where the rights of offset may not be upheld under the local bankruptcy laws, and transactions where a legal opinion evidencing enforceability of the right of offset may not have been sought, or may have been unable to obtain.\nFor risk management purposes, the net amounts of loans and advances to customers are subject to limits, which are monitored and the relevant customer agreements are subject to review and updated, as necessary, to ensure the legal right to set off remains appropriate.\n## 32 Interest rate benchmark reform\n1 Comprises financial instruments referencing other significant benchmark rates yet to transition to alternative benchmarks (euro Libor, SOR, THBFIX, MIFOR, Sibor and Johannesburg interbank average rate (‘JIBAR’)). An announcement was made by the South African regulator during the first half of 2023 on the cessation of the JIBAR. Therefore, JIBAR is also included in ‘Others‘ during the current period.\n3 Non-derivative assets exposure relates to contracts for clients requiring additional time for loan restructuring or repayment. The limited number of remaining contracts are expected to be transitioned prior to cessation of ‘synthetic’ GBP Libor from 31 March 2024. Non-derivative financial liabilities relate to MREL instruments that include references to GBP Libor in their contractual terms but are currently using a fixed interest rate. HSBC remains committed to seeking to remediate and/or mitigate the risks associated with these contracts by the relevant interest rate calculation dates.\nThe amounts in the above table relate to HSBC’s main operating entities where HSBC has material exposures impacted by Ibor reform, including in the UK, Hong Kong, France, the US, Mexico, Canada, Singapore, the UAE, Bermuda, Australia, Qatar, Germany, Thailand, India and Japan. The amounts provide an indication of the extent of the Group’s exposure to the Ibor benchmarks that are due to be replaced. Amounts are in respect of financial instruments that:\nractually reference an interest rate benchmark that is planned to transition to an alternative benchmark;\n– have a contractual maturity date beyond the date by which the reference interest rate benchmark is expected to cease; and – are recognised on HSBC’s consolidated balance sheet.", "chunk_word_count": 537, "section_path": "Opening up a world of opportunity > 31 Offsetting of financial assets and financial liabilities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 414, "page_start": 414, "page_end": 416 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 531, "chunk_text": "# Opening up a world of opportunity\n## 33 Called up share capital and other equity instruments\n### Called up share capital and share premium\nHSBC Holdings ordinary shares of $\\$ 0.50$ each, issued and fully paid\n### HSBC Holdings share premium\n### Total called up share capital and share premium\n### HSBC Holdings non-cumulative preference share of £0.01\nThe one non-cumulative sterling preference share of £0.01 (‘sterling preference share’) has been in issue since 29 December 2010 and is held by a subsidiary of HSBC Holdings. Dividends are paid quarterly at the sole and absolute discretion of the Board. The sterling preference share carries no rights of conversion into ordinary shares of HSBC Holdings and no right to attend or vote at shareholder meetings of HSBC Holdings. These securities can be redeemed by HSBC Holdings at any time, subject to prior approval by the PRA.\n### Other equity instruments\nHSBC Holdings has included two types of additional tier 1 capital securities in its tier 1 capital, including the contingent convertible securities described below. These are accounted for as equity because HSBC does not have an obligation to transfer cash or a variable number of its own ordinary shares to holders under any circumstances outside its control. See Note 29 for additional tier 1 securities accounted for as liabilities.", "chunk_word_count": 219, "section_path": "Opening up a world of opportunity > 33 Called up share capital and other equity instruments > Called up share capital and share premium", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 416, "page_start": 416, "page_end": 417 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 532, "chunk_text": "# Opening up a world of opportunity\n## 33 Called up share capital and other equity instruments\n### Additional tier 1 capital – contingent convertible securities\nHSBC Holdings continues to issue contingent convertible securities that are included in its capital base as fully CRR II-compliant additional tier 1 capital securities on an end point basis. These securities are marketed principally and subsequently allotted to corporate investors and fund managers. The net proceeds of the issuances are typically used for HSBC Holdings’ general corporate purposes and to further strengthen its capital base to meet requirements under CRR II. These securities bear a fixed rate of interest until their initial call dates. After the initial call dates, if they are not redeemed, the securities will bear interest at rates fixed periodically in advance for five-year periods based on credit spreads, fixed at issuance, above prevailing market rates. Interest on the contingent convertible securities will be due and payable only at the sole discretion of HSBC Holdings, and HSBC Holdings has sole and absolute discretion at all times to cancel for any reason (in whole or part) any interest payment that would otherwise be payable on any payment date. Distributions will not be paid if they are prohibited under UK banking regulations or if the Group has insufficient reserves or fails to meet the solvency conditions defined in the securities’ terms.\nThe contingent convertible securities are undated and are repayable at the option of HSBC Holdings in whole typically at the initial call date or on any fifth anniversary after this date. In addition, the securities are repayable at the option of HSBC in whole for certain regulatory or tax reasons. Any repayments require the prior consent of the PRA. These securities rank pari passu with HSBC Holdings’ sterling preference shares and therefore rank ahead of ordinary shares. The contingent convertible securities will be converted into fully paid ordinary shares of HSBC Holdings at a predetermined price, should HSBC’s consolidated non-transitional CET1 ratio fall below $7 . 0 \\%$ . Therefore, in accordance with the terms of the securities, if the non-transitional CET1 ratio breaches the $7 . 0 \\%$ trigger, the securities will convert into ordinary shares at fixed contractual conversion prices in the issuance currencies of the relevant securities, subject to anti-dilution adjustments.\n1 This security was called by HSBC Holdings on 30 January 2023 and redeemed and cancelled on 23 March 2023. \n2 This security was issued by HSBC Holdings on 17 December 2020. The first call period commences six months prior to reset date of 17 June 2031. \n3 This security was issued by HSBC Holdings on 9 March 2021. The first call period commences six months prior to reset date of 9 September 2026. \n4 This security was issued by HSBC Holdings on 9 March 2021. The first call period commences six months prior to reset date of 9 September 2031. \n5 This security was issued by HSBC Holdings on 7 March 2023. The first call period commences six months prior to reset date of 7 September 2028. \nThis security has been accounted for net of directly attributable transaction costs. \n6 This security was called by HSBC Holdings on 3 August 2023 and was redeemed and cancelled on 29 September 2023. \n7 This security was called by HSBC Holdings on 3 August 2023 and was redeemed and cancelled on 25 September 2023.", "chunk_word_count": 564, "section_path": "Opening up a world of opportunity > 33 Called up share capital and other equity instruments > Additional tier 1 capital – contingent convertible securities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 417, "page_start": 417, "page_end": 417 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 533, "chunk_text": "# Opening up a world of opportunity\n## 33 Called up share capital and other equity instruments\n### Shares under option\nFor details of the options outstanding to subscribe for HSBC Holdings ordinary shares under the HSBC Holdings Savings-Related Share Option Plan (UK), see Note 5.\n### Aggregate options outstanding under these plans\n### Maximum obligation to deliver HSBC Holdings ordinary shares\nAt 31 December 2023, the maximum obligation to deliver HSBC Holdings ordinary shares under all of the above option arrangements and the HSBC International Employee Share Purchase Plan, together with long-term incentive awards and deferred share awards granted under the HSBC Share Plan 2011, was 208,539,316 (2022: 240,612,019). The total number of shares at 31 December 2023 held by employee benefit trusts that may be used to satisfy such obligations to deliver HSBC Holdings ordinary shares was 20,902,218 (2022: 12,315,711).\n## 34 Contingent liabilities, contractual commitments and guarantees\n1 Guarantees by HSBC Holdings are in favour of other Group entities. These include contracts that provide protection against credit risk on a specified exposure but do not meet the definition of financial guarantees, which have been reclassified to ‘performance and other guarantees’. Prior period comparatives have been restated and the full balance reclassified. \n2 Includes \\$661,015m of commitments at 31 December 2023 (31 December 2022: \\$618,788m), to which the impairment requirements in IFRS 9 are applied where HSBC has become party to an irrevocable commitment.\nThe preceding table discloses the nominal principal amounts of off-balance sheet liabilities and commitments for the Group, which represent the maximum amounts at risk should the contracts be fully drawn upon and the clients default. As a significant portion of guarantees and commitments are expected to expire without being drawn upon, the total of the nominal principal amounts is not indicative of future liquidity requirements. The expected credit loss provision relating to guarantees and commitments under IFRS 9 is disclosed in Note 28.\nThe majority of the guarantees have a term of less than one year, while guarantees with terms of more than one year are subject to HSBC’s annual credit review process.\nContingent liabilities arising from legal proceedings, regulatory and other matters against Group companies are excluded from this note but are disclosed in Notes 28 and 36.\n### Financial Services Compensation Scheme\nThe Financial Services Compensation Scheme (‘FSCS’) provides compensation, up to certain limits, to eligible customers of financial services firms that are unable, or likely to be unable, to pay claims against them. The FSCS may impose a further levy on the Group to the extent the industry levies imposed to date are not sufficient to cover the compensation due to customers in any future possible collapse. The ultimate FSCS levy to the industry as a result of a collapse cannot be estimated reliably. It is dependent on various uncertain factors including the potential recovery of assets by the FSCS, changes in the level of protected products (including deposits and investments) and the population of FSCS members at the time.\n### Associates\nHSBC’s share of associates’ contingent liabilities, contractual commitments and guarantees amounted to \\$69.9bn at 31 December 2023 (2022: $\\$ 64.80\\mathsf { n }$ ). No matters arose where HSBC was severally liable.", "chunk_word_count": 533, "section_path": "Opening up a world of opportunity > 33 Called up share capital and other equity instruments > Shares under option", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 417, "page_start": 417, "page_end": 418 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 534, "chunk_text": "# Opening up a world of opportunity\n## 35 Finance lease receivables\nHSBC leases a variety of assets to third parties under finance leases, including transport assets (such as aircraft), property and general plant and machinery. At the end of lease terms, assets may be sold to third parties or leased for further terms. Rentals are calculated to recover the cost of assets less their residual value, and earn finance income.\nThe table below excludes finance lease receivables reclassified on the balance sheet to ‘Assets held for sale’ in accordance with IFRS 5. Net investment in finance leases of $\\$ 1$ ,595m (2022: \\$1,502m) was reclassified to ‘Assets held for sale’ as a result of the planned sale of our banking business in Canada.\n## 36 Legal proceedings and regulatory matters\nHSBC is party to legal proceedings and regulatory matters in a number of jurisdictions arising out of its normal business operations. Apart from the matters described below, HSBC considers that none of these matters are material. The recognition of provisions is determined in accordance with the accounting policies set out in Note 1. While the outcomes of legal proceedings and regulatory matters are inherently uncertain, management believes that, based on the information available to it, appropriate provisions have been made in respect of these matters as at 31 December 2023 (see Note 28). Where an individual provision is material, the fact that a provision has been made is stated and quantified, except to the extent that doing so would be seriously prejudicial. Any provision recognised does not constitute an admission of wrongdoing or legal liability. It is not practicable to provide an aggregate estimate of potential liability for our legal proceedings and regulatory matters as a class of contingent liabilities.", "chunk_word_count": 291, "section_path": "Opening up a world of opportunity > 35 Finance lease receivables", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 418, "page_start": 418, "page_end": 419 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 535, "chunk_text": "# Opening up a world of opportunity\n## 36 Legal proceedings and regulatory matters\n### Bernard L. Madoff Investment Securities LLC\nVarious non-US HSBC companies provided custodial, administration and similar services to a number of funds incorporated outside the US whose assets were invested with Bernard L. Madoff Investment Securities LLC (‘Madoff Securities’). Based on information provided by Madoff Securities as at 30 November 2008, the purported aggregate value of these funds was $\\$ 8.450\\mathsf { n }$ , including fictitious profits reported by Madoff. Based on information available to HSBC, the funds’ actual transfers to Madoff Securities minus their actual withdrawals from Madoff Securities during the time HSBC serviced the funds are estimated to have totalled approximately \\$4bn. Various HSBC companies have been named as defendants in lawsuits arising out of Madoff Securities’ fraud.\nUS litigation: The Madoff Securities Trustee has brought lawsuits against various HSBC companies and others, seeking recovery of alleged transfers from Madoff Securities to HSBC in the amount of \\$543m (plus interest), and these lawsuits remain pending in the US Bankruptcy Court for the Southern District of New York (the ‘US Bankruptcy Court’).\nCertain Fairfield entities (together, ‘Fairfield’) (in liquidation) have brought a lawsuit in the US against fund shareholders, including HSBC companies that acted as nominees for clients, seeking restitution of redemption payments in the amount of $\\$ 382 m$ (plus interest). Fairfield’s claims against most of the HSBC companies have been dismissed by the US Bankruptcy Court and the US District Court for the Southern District of New York, but remain pending on appeal before the US Court of Appeals for the Second Circuit. Fairfield’s claims against HSBC Private Bank (Suisse) SA and HSBC Securities Services Luxembourg (‘HSSL’) have not been dismissed and their appeals are also pending before the US Court of Appeals for the Second Circuit. Meanwhile, proceedings before the US Bankruptcy Court with respect to the claims against HSBC Private Bank (Suisse) SA and HSSL are ongoing.\nUK litigation: The Madoff Securities Trustee has filed a claim against various HSBC companies in the High Court of England and Wales, seeking recovery of transfers from Madoff Securities to HSBC. The claim has not yet been served and the amount claimed has not been specified.\nCayman Islands litigation: In February 2013, Primeo Fund (‘Primeo’) (in liquidation) brought an action against HSSL and Bank of Bermuda (Cayman) Limited (now known as HSBC Cayman Limited), alleging breach of contract and breach of fiduciary duty and claiming damages. Following dismissal of Primeo’s action by the Grand Court and Court of Appeal of the Cayman Islands, in 2019, Primeo appealed to the Judicial Committee of the Privy Council. In November 2023, the Privy Council issued a judgment upholding the dismissal of Primeo’s claims. This matter is now closed.", "chunk_word_count": 462, "section_path": "Opening up a world of opportunity > 36 Legal proceedings and regulatory matters > Bernard L. Madoff Investment Securities LLC", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 419, "page_start": 419, "page_end": 419 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 536, "chunk_text": "# Opening up a world of opportunity\n## 36 Legal proceedings and regulatory matters\n### Bernard L. Madoff Investment Securities LLC\nLuxembourg litigation: In 2009, Herald Fund SPC (‘Herald’) (in liquidation) brought an action against HSSL before the Luxembourg District Court, seeking restitution of cash and securities in the amount of $\\$ 2.56n$ (plus interest), or damages in the amount of $\\$ 20n$ (plus interest). In 2018, HSBC Bank plc was added to the claim and Herald increased the amount of the alleged damages claim to $\\$ 5$ .6bn (plus interest). The Luxembourg District Court has dismissed Herald’s securities restitution claim, but reserved Herald’s cash restitution and damages claims. Herald has appealed this dismissal to the Luxembourg Court of Appeal, where the matter is pending.\nBeginning in 2009, various HSBC companies have been named as defendants in a number of actions brought by Alpha Prime Fund Limited (‘Alpha Prime’) in the Luxembourg District Court seeking damages for alleged breach of contract and negligence in the amount of \\$1.16bn (plus interest). These matters are currently pending before the Luxembourg District Court.\nBeginning in 2014, HSSL and the Luxembourg branch of HSBC Bank plc have been named as defendants in a number of actions brought by Senator Fund SPC (‘Senator’) before the Luxembourg District Court seeking restitution of securities in the amount of $\\$ 625 m$ (plus interest), or damages in the amount of $\\$ 1880$ (plus interest). These matters are currently pending before the Luxembourg District Court.\nBased on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of the pending matters, including the timing or any possible impact on HSBC, which could be significant.\n### US Anti-Terrorism Act litigation\nSince November 2014, a number of lawsuits have been filed in federal courts in the US against various HSBC companies and others on behalf of plaintiffs who are, or are related to, alleged victims of terrorist attacks in the Middle East. In each case, it is alleged that the defendants aided and abetted the unlawful conduct of various sanctioned parties in violation of the US Anti-Terrorism Act, or provided banking services to customers alleged to have connections to terrorism financing. Seven actions, which seek damages for unspecified amounts, remain pending and HSBC’s motions to dismiss have been granted in three of these cases. These dismissals are subject to appeals and/or the plaintiffs repleading their claims. The four other actions are at an early stage.\nBased on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any possible impact on HSBC, which could be significant.", "chunk_word_count": 446, "section_path": "Opening up a world of opportunity > 36 Legal proceedings and regulatory matters > Bernard L. Madoff Investment Securities LLC", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 419, "page_start": 419, "page_end": 419 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 537, "chunk_text": "# Opening up a world of opportunity\n## 36 Legal proceedings and regulatory matters\n### Interbank offered rates investigation and litigation\nEuro interest rate derivatives: In December 2016, the European Commission (‘EC’) issued a decision finding that HSBC, among other banks, engaged in anti-competitive practices in connection with the pricing of euro interest rate derivatives, and the EC imposed a fine on HSBC based on a one-month infringement in 2007. The fine was annulled in 2019 and a lower fine was imposed in 2021. In January 2023, the European Court of Justice dismissed an appeal by HSBC and upheld the EC’s findings on HSBC’s liability. A separate appeal by HSBC concerning the amount of the fine remains pending before the General Court of the European Union.\nUS dollar Libor: Beginning in 2011, HSBC and other panel banks have been named as defendants in a number of individual and putative class action lawsuits filed in federal and state courts in the US with respect to the setting of US dollar Libor. The complaints assert claims under various US federal and state laws, including antitrust and racketeering laws and the Commodity Exchange Act (‘US CEA’). HSBC has concluded class settlements with five groups of plaintiffs, and several class action lawsuits brought by other groups of plaintiffs have been voluntarily dismissed. A number of individual US dollar Libor-related actions seeking damages for unspecified amounts remain pending.\nBased on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of the pending matters, including the timing or any possible impact on HSBC, which could be significant.", "chunk_word_count": 269, "section_path": "Opening up a world of opportunity > 36 Legal proceedings and regulatory matters > Interbank offered rates investigation and litigation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 420, "page_start": 420, "page_end": 420 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 538, "chunk_text": "# Opening up a world of opportunity\n## 36 Legal proceedings and regulatory matters\n### Foreign exchange-related investigations and litigation\nIn December 2016, Brazil’s Administrative Council of Economic Defense initiated an investigation into the onshore foreign exchange market and identified a number of banks, including HSBC, as subjects of its investigation, which remains ongoing.\nSince 2017, HSBC Bank plc, among other financial institutions, has been defending a complaint filed by the Competition Commission of South Africa before the South African Competition Tribunal for alleged anti-competitive behaviour in the South African foreign exchange market. In 2020, a revised complaint was filed which also named HSBC Bank USA N.A. (‘HSBC Bank USA’) as a defendant. In January 2024, the South African Competition Appeal Court dismissed HSBC Bank USA from the revised complaint, but denied HSBC Bank plc’s application to dismiss. The Competition Commission has appealed the dismissal of HSBC Bank USA to the Constitutional Court of South Africa.\nSince 2015, various HSBC companies and other banks have been named as defendants in a putative class action in the US District Court for the Southern District of New York filed by a group of retail customers who dealt in foreign exchange products. The plaintiffs allege that the defendants conspired to manipulate foreign exchange rates and seek damages for unspecified amounts. This action has been dismissed but remains pending on appeal.\nIn January 2023, HSBC Bank plc and HSBC Holdings reached a settlement-in-principle with plaintiffs in Israel to resolve a class action filed in the local courts alleging foreign exchange-related misconduct. The settlement remains subject to court approval. Lawsuits alleging foreign exchange-related misconduct remain pending against HSBC and other banks in courts in Brazil.\nIn February 2024, HSBC Bank plc and HSBC Holdings were joined to an existing claim brought in the UK Competition Appeals Tribunal against various other banks alleging historical anti-competitive behaviour in the foreign exchange market and seeking damages for unspecified amounts. This matter is at an early stage. It is possible that additional civil actions will be initiated against HSBC in relation to its historical foreign exchange activities.\nThere are many factors that may affect the range of outcomes, and the resulting financial impact, of the pending matters, which could be significant.", "chunk_word_count": 372, "section_path": "Opening up a world of opportunity > 36 Legal proceedings and regulatory matters > Foreign exchange-related investigations and litigation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 420, "page_start": 420, "page_end": 420 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 539, "chunk_text": "# Opening up a world of opportunity\n## 36 Legal proceedings and regulatory matters\n### Precious metals fix-related litigation\nUS litigation: HSBC and other members of The London Silver Market Fixing Limited are defending a class action pending in the US District Court for the Southern District of New York alleging that, from January 2007 to December 2013, the defendants conspired to manipulate the price of silver and silver derivatives for their collective benefit in violation of US antitrust laws, the US CEA and New York state law. In May 2023, this action, which seeks damages for unspecified amounts, was dismissed but remains pending on appeal.\nHSBC and other members of The London Platinum and Palladium Fixing Company Limited are defending a class action pending in the US District Court for the Southern District of New York alleging that, from January 2008 to November 2014, the defendants conspired to manipulate the price of platinum group metals and related financial products for their collective benefit in violation of US antitrust laws and the US CEA. In February 2023, the court reversed an earlier dismissal of the plaintiffs’ third amended complaint and this action, which seeks damages for unspecified amounts, is proceeding.\nCanada litigation: HSBC and other financial institutions are defending putative class actions filed in the Ontario and Quebec Superior Courts of Justice alleging that the defendants conspired to manipulate the price of silver, gold and related derivatives in violation of the Canadian Competition Act and common law. These actions each seek CA\\$1bn in damages plus CA\\$250m in punitive damages. Two of the actions are proceeding and the others have been stayed.\nBased on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any possible impact on HSBC, which could be significant.\nTax-related investigations\nVarious tax administration, regulatory and law enforcement authorities around the world are conducting investigations in connection with allegations of tax evasion or tax fraud, money laundering and unlawful cross-border banking solicitation. HSBC continues to cooperate with these investigations.\nIn March 2023, the French National Financial Prosecutor announced an investigation into a number of banks, including HSBC Continental Europe and the Paris branch of HSBC Bank plc, in connection with alleged tax fraud related to the dividend withholding tax treatment of certain trading activities. HSBC Bank plc and HSBC Germany also continue to cooperate with investigations by the German public prosecutor into numerous financial institutions and their employees, in connection with the dividend withholding tax treatment of certain trading activities.\nBased on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any possible impact on HSBC, which could be significant.", "chunk_word_count": 462, "section_path": "Opening up a world of opportunity > 36 Legal proceedings and regulatory matters > Precious metals fix-related litigation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 420, "page_start": 420, "page_end": 420 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 540, "chunk_text": "# Opening up a world of opportunity\n## 36 Legal proceedings and regulatory matters\n### Gilts trading investigation and litigation\nSince 2018, the UK Competition and Markets Authority (‘CMA’) has been investigating HSBC and four other banks for suspected anticompetitive conduct in relation to the historical trading of gilts and related derivatives. In May 2023, the CMA announced its case against HSBC Bank plc and HSBC Holdings; both HSBC companies are contesting the CMA’s allegations.\nIn June 2023, HSBC Bank plc and HSBC Securities (USA) Inc., among other banks, were named as defendants in a putative class action filed in the US District Court for the Southern District of New York by plaintiffs alleging anti-competitive conduct in the gilts market and seeking damages for unspecified amounts. In September 2023, the defendants filed a motion to dismiss which remains pending. It is possible that additional civil actions will be initiated against HSBC in relation to its historical gilts trading activities.\nBased on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any possible impact on HSBC, which could be significant.\n### UK depositor protection arrangements investigation\nIn January 2022, the UK Prudential Regulation Authority (‘PRA’) commenced an investigation into HSBC Bank plc’s and HSBC UK Bank plc’s compliance with depositor protection arrangements under the Financial Services Compensation Scheme in the UK. In January 2024, the PRA concluded its investigation and imposed a £57m fine on HSBC Bank plc and HSBC UK Bank plc, which has been paid, and this matter is now closed.\n### UK collections and recoveries investigation\nSince 2019, the FCA has been investigating HSBC Bank plc’s, HSBC UK Bank plc’s and Marks and Spencer Financial Services plc’s compliance with regulatory standards relating to collections and recoveries operations in the UK between 2017 and 2018. HSBC continues to cooperate with this investigation.\nThere are many factors that may affect the range of outcomes, and the resulting financial impact, of this matter, which could be significant.\n### Korean short selling investigation\nIn December 2023, the Korean Securities and Futures Commission issued a decision to impose a fine on The Hongkong and Shanghai Banking Corporation Limited in connection with trades in breach of Korean short selling rules and to refer the case to the Korean Prosecutors’ Office fo investigation.\nThere are many factors that may affect the range of outcomes, and the resulting financial impact, of this matter, which could be significant.", "chunk_word_count": 416, "section_path": "Opening up a world of opportunity > 36 Legal proceedings and regulatory matters > Gilts trading investigation and litigation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 421, "page_start": 421, "page_end": 421 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 541, "chunk_text": "# Opening up a world of opportunity\n## 36 Legal proceedings and regulatory matters\n### Silicon Valley Bank (‘SVB’) litigation\nIn May 2023, First-Citizens Bank & Trust Company (‘First Citizens’) brought a lawsuit in the US District Court for the Northern District of California against various HSBC companies and seven US-based HSBC employees who had previously worked for SVB. The lawsuit seeks \\$1bn in damages and alleges, among other things, that the various HSBC companies conspired with the individual defendants to solicit employees from First Citizens and that the individual defendants took confidential information belonging to SVB and/or First Citizens. In January 2024, the court denied the defendants’ motion to dismiss in part and granted it in part, and directed the plaintiff to amend its complaint to specify its allegations as to each defendant. In February 2024, First Citizens filed its amended complaint. This action is ongoing.\nBased on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or any possible impact on HSBC, which could be significant.\n### Film Finance litigation\nIn June 2020, two separate investor groups issued claims against HSBC UK Bank plc (as successor to HSBC Private Bank (UK) Limited (‘PBGB’)) in the High Court of England and Wales seeking damages for unspecified amounts in connection with PBGB’s role in the development of Eclipse film finance schemes. These actions are ongoing.\nBased on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of these matters, including the timing or any possible impact on HSBC, which could be significant.\n### US mortgage securitisation litigation\nBeginning in 2014, a number of lawsuits were filed in various state and federal courts in the US against HSBC Bank USA, as a trustee of more than 280 mortgage securitisation trusts, seeking unspecified damages for losses in collateral value allegedly sustained by the trusts. HSBC Bank USA has reached settlements with a number of plaintiffs to resolve nearly all of these lawsuits. The remaining two actions are pending in a New York state court. HSBC Bank USA and certain of its affiliates continue to defend a mortgage loan repurchase action seeking unspecified damages and specific performance brought by the trustee of a mortgage securitisation trust in New York state court.\nThere are many factors that may affect the range of outcomes, and the resulting financial impact, of the pending matters, which could be significant.", "chunk_word_count": 414, "section_path": "Opening up a world of opportunity > 36 Legal proceedings and regulatory matters > Silicon Valley Bank (‘SVB’) litigation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 421, "page_start": 421, "page_end": 421 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 542, "chunk_text": "# Opening up a world of opportunity\n## 36 Legal proceedings and regulatory matters\n### Mexican government bond litigation\nHSBC Mexico S.A. and other banks are named as defendants in a consolidated putative class action pending in the US District Court for the Southern District of New York alleging anti-competitive conduct in the Mexican government bond market between 2006 and 2017 and seeking damages for unspecified amounts. In February 2024, the US Court of Appeals for the Second Circuit reversed an earlier dismissal of this lawsuit and this matter is proceeding.\nBased on the facts currently known, it is not practicable at this time for HSBC to predict the resolution of this matter, including the timing or any possible impact on HSBC, which could be significant.\nStanford litigation\nSince 2009, HSBC Bank plc has been named as a defendant in numerous claims filed in courts in the UK and the US arising from the collapse of Stanford International Bank Ltd, for which it was a correspondent bank from 2003 to 2009. In February 2023, HSBC Bank plc reached settlements with the plaintiffs to resolve these claims. The US settlement is subject to court approval and the UK settlement has concluded.\n### Other regulatory investigations, reviews and litigation\nHSBC Holdings and/or certain of its affiliates are also subject to a number of other enquiries and examinations, requests for information, investigations and reviews by various regulators and competition and law enforcement authorities, as well as legal proceedings including litigation, arbitration and other contentious proceedings, in connection with various matters arising out of their ordinary course businesses and operations.\nAt the present time, HSBC does not expect the ultimate resolution of any of these matters to be material to the Group’s financial position; however, given the uncertainties involved in legal proceedings and regulatory matters, there can be no assurance regarding the eventual outcome of a particular matter or matters.\n## 37 Related party transactions\nRelated parties of the Group and HSBC Holdings include subsidiaries, associates, joint ventures, post-employment benefit plans for HSBC employees, Key Management Personnel (‘KMP’) as defined by IAS 24, close family members of KMP and entities that are controlled or jointly controlled by KMP or their close family members. KMP are defined as those persons having authority and responsibility for planning, directing and controlling the activities of HSBC Holdings. These individuals also constitute ‘senior management’ for the purposes of the Hong Kong Listing Rules. In applying IAS 24, it was determined that for this financial reporting period all KMP included Directors, former Directors and senior management listed on pages 239 to 246 except for the roles of Group Chief Legal Officer, Group Head of Internal Audit, Group Chief Human Resources Officer, Group Chief Sustainability Officer, Group Head of Strategy, Group Chief Communications and Brand Officer, and Group Company Secretary and Chief Governance Officer who do not meet the criteria for KMP as provided for in the standard.\nParticulars of transactions with related parties are tabulated below. The disclosure of the year-end balance and the highest amounts outstanding during the year is considered to be the most meaningful information to represent the amount of the transactions and outstanding balances during the year.", "chunk_word_count": 531, "section_path": "Opening up a world of opportunity > 36 Legal proceedings and regulatory matters > Mexican government bond litigation", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 421, "page_start": 421, "page_end": 422 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 543, "chunk_text": "# Opening up a world of opportunity\n## 37 Related party transactions\n### Key Management Personnel\nDetails of Directors’ remuneration and interests in shares are disclosed in the ‘Directors’ remuneration report’ on pages 279 to 305. \nIAS 24 ‘Related Party Disclosures’ requires the following additional information for key management compensation.\n### Compensation of Key Management Personnel\nSome of the transactions were connected transactions as defined by the Rules Governing The Listing of Securities on The Stock Exchange of Hong Kong Limited, but were exempt from any disclosure requirements under the provisions of those rules. The above transactions were made in the ordinary course of business and on substantially the same terms, including interest rates and security, as for comparable transactions with persons of a similar standing or, where applicable, with other employees. The transactions did not involve more than the normal risk of repayment or present other unfavourable features.\n### Associates and joint ventures\nThe Group provides certain banking and financial services to associates and joint ventures including loans, overdrafts, interest and non-interest bearing deposits and current accounts. Details of the interests in associates and joint ventures are given in Note 18.\nThe above outstanding balances arose in the ordinary course of business and on substantially the same terms, including interest rates and security, as for comparable transactions with third-party counterparties.\n### Post-employment benefit plans\nAt 31 December 2023, $\\$ 3.1$ bn (2022: $\\$ 2.90\\mathsf { n }$ ) of HSBC post-employment benefit plan assets were under management by HSBC companies, earning management fees of $\\$ 12 m$ in 2023 (2022: $\\$ 12m$ ). At 31 December 2023, HSBC’s post-employment benefit plans had placed deposits of $\\$ 402 m$ (2022: $\\$ 369 m$ ) with its banking subsidiaries, earning interest payable to the schemes of $\\$ 2 m$ (2022: nil). The above outstanding balances arose from the ordinary course of business and on substantially the same terms, including interest rates and security, as for comparable transactions with third-party counterparties.\nThe combined HSBC Bank (UK) Pension Scheme enters into swap transactions with HSBC to manage inflation and interest rate sensitivity of its liabilities and selected assets. At 31 December 2023, the gross notional value of the swaps was $\\$ 7.1$ bn (2022: \\$6.6bn). These swaps had a positive fair value to the scheme of $\\$ 0.5$ bn (2022: \\$0.5bn); and HSBC had delivered collateral of $\\$ 0.65n$ (2022: \\$0.5bn) to the scheme in respect of these arrangements. All swaps were executed at prevailing market rates and within standard market bid/offer spreads.\n### HSBC Holdings\nDetails of HSBC Holdings’ subsidiaries are shown in Note 40.\n### Transactions and balances during the year with subsidiaries\nThe above outstanding balances arose in the ordinary course of business and on substantially the same terms, including interest rates and security, as for comparable transactions with third-party counterparties.\nSome employees of HSBC Holdings are members of the HSBC Bank (UK) Pension Scheme, which is sponsored by a separate Group company. HSBC Holdings incurs a charge for these employees equal to the contributions paid into the scheme on their behalf. Disclosure in relation to the scheme is made in Note 5.", "chunk_word_count": 523, "section_path": "Opening up a world of opportunity > 37 Related party transactions > Key Management Personnel", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 422, "page_start": 422, "page_end": 423 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 544, "chunk_text": "# Opening up a world of opportunity\n## 38 Effects of adoption of IFRS 17\nOn 1 January 2023, the Group adopted IFRS 17 ‘Insurance Contracts’, and as required by the standard applied the requirements retrospectively, with comparatives restated from the transition date, 1 January 2022. The tables below provide the transition restatement impact on the Group’s consolidated balance sheet as at 1 January 2022, as well as the Group consolidated income statement and the Group consolidated statement of comprehensive income for the year ended 31 December 2022.\nFurther information about the effect of the adoption of IFRS 17 is provided in Note 1 ‘Basis of preparation and material accounting policies’ on page 341.\n### Transition drivers\n### Removal of PVIF and IFRS 4 balances\nThe PVIF intangible asset of $\\$ 9,453 m$ previously reported under IFRS 4 within ‘Goodwill and intangible assets’ arose from the upfront recognition of future profits associated with in-force insurance contracts. The PVIF intangible asset is no longer reported following the transition to IFRS 17, as future profits are deferred within the CSM. Other IFRS 4 insurance contract assets (shown above within ‘All other assets’) and insurance contract liabilities are removed on transition, to be replaced with IFRS 17 balances.\n### Remeasurement effect of IFRS 9 re-designations\nLoans and advances of $\\$ 1,849 m$ and debt securities of $\\$ 53,201 m$ , both supporting associated insurance liabilities, were re-designated from an amortised cost classification to fair value through profit and loss. Debt securities supporting the associated insurance liabilities of $\\$ 1,068$ were reclassified from fair value through other comprehensive income to fair value through profit or loss. The re-designations were made in order to more closely align the asset accounting with the valuation of the associated insurance liabilities. The re-designation of amortised cost assets generated a net increase to assets of $\\$ 4,873 m$ because the fair value measurement on transition was higher than the previous amortised cost carrying amount.\n### Recognition of the IFRS 17 fulfilment cash flows\nThe measurement of the insurance contracts liabilities under IFRS 17 is based on groups of insurance contracts and includes a liability for fulfilling the insurance contracts, such as premiums, directly attributable expenses, insurance benefits and claims including policyholder returns and the cost of guarantees. These are recorded within the fulfilment cash flow component of the insurance contract liability, together with the risk adjustment for non-financial risk.\n### Recognition of the IFRS 17 contractual service margin\nThe CSM is a component of the insurance contract liability and represents the future unearned profit associated with insurance contracts that will be released to the profit and loss over the expected coverage period.\nTax effect\nThe removal of deferred tax liabilities primarily results from the removal of the associated PVIF intangible asset, and new deferred tax assets are reported, where appropriate, on temporary differences between the new IFRS 17 accounting balances and their associated tax bases.", "chunk_word_count": 486, "section_path": "Opening up a world of opportunity > 38 Effects of adoption of IFRS 17 > Transition drivers", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 424, "page_start": 424, "page_end": 425 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 545, "chunk_text": "# Opening up a world of opportunity\n## 38 Effects of adoption of IFRS 17\n### Removal of IFRS 4-based revenue items\nAs a result of the removal of the PVIF intangible asset and IFRS 4 results, the associated revenue of $\\$ 265 m$ for the year ended 31 December 2022 that was previously reported within ‘Other operating income/(loss)’ is no longer reported under IFRS 17. This includes the removal of the value of new business and changes to PVIF intangible asset from valuation adjustments and experience variances.\nOn the implementation of IFRS 17, new income statement line items associated with insurance contract accounting were introduced. Consequently, the previously reported IFRS 4 line items ‘Net insurance premium income’ and ‘Net insurance claims and benefits paid and movement in liabilities to policyholders’ were also removed.\n### Remeasurement effect of IFRS 9 re-designations\nFollowing the re-designation of financial assets supporting associated insurance liabilities to fair value through profit or loss classification, the related income statement reporting also changed. Under our previous IFRS 4-based reporting convention, these assets generated interest income of $\\$ 2,233,45$ for the year ended 31 December 2022, which is no longer reported in ‘Net interest income’ under IFRS 17. To the extent that this interest income was shared with policyholders, the corresponding policyholder sharing obligation was previously included within the ‘net insurance claims and benefits paid and movement in liabilities to policyholders’ line.\nFollowing re-designation to fair value through profit or loss, gains and losses from changes in the fair value of underlying assets, together with interest income earned, are both reported within ‘Net expense from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss’. Similar to an IFRS 4 basis, IFRS 17 accounting provides for an offset. While this offset was reported within the claims line under IFRS 4, under IFRS 17 it is reported within the ‘Insurance finance income/(expense)’ line described below.\n### Introduction of IFRS 17 income statement\n### Insurance finance income/(expense)\nInsurance finance income/(expense) of $\\$ 123,799 m$ for the year ended 31 December 2022 represents the change in the carrying amount of insurance contracts arising from the effect of, and changes in, the time value of money and financial risk. For variable fee approach contracts, which represent more than $90 \\%$ of HSBC’s insurance contracts, the insurance finance income/(expense) includes the changes in the fair value of underlying items (excluding additions and withdrawals). It therefore has an offsetting impact to investment income earned on underlying assets supporting insurance contracts. This includes an offsetting impact to the gains and losses on assets re-designated on transition to fair value through profit or loss, and which is now included in ‘Net expense from assets and liabilities of insurance businesses, including related derivatives, measured at fair value through profit or loss’.", "chunk_word_count": 471, "section_path": "Opening up a world of opportunity > 38 Effects of adoption of IFRS 17 > Removal of IFRS 4-based revenue items", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 425, "page_start": 425, "page_end": 426 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 546, "chunk_text": "# Opening up a world of opportunity\n## 38 Effects of adoption of IFRS 17\n### Contractual service margin\nRevenue is recognised for the release of the CSM associated with the in-force business, which was allocated at a rate of approximately $9 \\%$ during 2022. The CSM release is largely impacted by the constant measure allocation approach for investment services, but may vary over time primarily due to changes in the total amount of CSM reported on the balance sheet from factors such as new business written, the Group’s share of investment experience, or changes to assumptions.\n### Onerous contracts\nLosses on onerous contracts are taken to the income statement as incurred.\n### Experience variance and other\n‘Experience variance and other’ represents the expected expenses, claims and recovery of acquisition cash flows, which are reported as part of the insurance revenue. This is offset with the actual expenses and claims incurred in the year and amortisation of acquisition cash flows, which are reported as part of insurance service expense.\n### Attributable expenses\nDirectly attributable expenses are the costs associated with originating and fulfilling an identified portfolio of insurance contracts. These costs include distribution fees paid to third parties as part of originating insurance contracts together with appropriate allocations of fixed and variable overheads, which are included within the fulfilment cash flows and are no longer shown on the operating expenses line, whereas nonattributable expenses remain in the operating expenses.\n### IFRS 17 transition impact on the Group comprehensive income\n### Transition drivers\n### Insurance finance reserve\nThe insurance finance reserve reflects the impact of the adoption of the other comprehensive income option for our insurance business in France. Underlying assets supporting these contracts are measured at fair value through other comprehensive income. Under this option, only the amount that matches income or expenses recognised in profit or loss on underlying items is included in finance income or expenses, resulting in the elimination of income statement accounting mismatches. The remaining amount of finance income or expenses for these insurance contracts is recognised in OCI. At the transition date an insurance finance reserve of $\\$ 696 m$ was recognised and following transition, gains net of tax of $\\$ 1,775 m$ were recorded in the year ended 31 December 2022. An offsetting fair value through other comprehensive income reserve of $\\$ 683m$ recorded on transition represents the accumulated fair value movements on assets supporting these insurance contract liabilities, with associated losses net of tax of \\$1,898m recorded within the fair value through other comprehensive income reserve for the year ended 31 December 2022.", "chunk_word_count": 430, "section_path": "Opening up a world of opportunity > 38 Effects of adoption of IFRS 17 > Contractual service margin", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 426, "page_start": 426, "page_end": 427 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 547, "chunk_text": "# Opening up a world of opportunity\n## 39 Events after the balance sheet date\nOn 1 January 2024, HSBC Continental Europe completed the sale of its retail banking business in France to CCF, a subsidiary of Promontoria MMB SAS (‘My Money Group’). The sale also included HSBC Continental Europe’s $100 \\%$ ownership interest in HSBC SFH (France) and its $3 \\%$ ownership interest in Crédit Logement. In the fourth quarter of 2023, a loss of $\\$ 2.0$ bn was recognised upon reclassification to held for sale, in accordance with IFRS 5, which net of the $\\$ 2.1$ bn partial reversal of impairment recognised in the first quarter of 2023, gave rise to a net reversal of impairment recognised in the year of \\$0.1bn.\nOn 30 January 2024, the PRA concluded its investigation into HSBC Bank plc’s and HSBC UK Bank plc’s compliance with depositor protection arrangements under the Financial Services Compensation Scheme in the UK. The PRA imposed a fine of \\$73m (£57m) on these entities, which was fully provided for as at 31 December 2023, and has now been paid.\nOn 31 January 2024, HSBC Global Asset Management Limited, through its indirect subsidiary HSBC Global Asset Management Singapore Limited, completed the acquisition of the Asia-Pacific-focused real estate investment manager Silkroad Property Partners Pte Ltd. HSBC Global Asset Management Limited also acquired Silkroad’s affiliated General Partner entities as part of the transaction.\nOn 6 February 2024, HSBC Europe B.V., an indirect subsidiary of HSBC Holdings plc, signed an agreement to sell HSBC Bank Armenia CJSC, its wholly-owned subsidiary, to Ardshinbank CJSC subject to regulatory approvals. The transaction is expected to complete within the next 12 months.\nA fourth interim dividend for 2023 of $\\$ 0.31$ per ordinary share (a distribution of approximately \\$5,913m) was approved by the Directors after 31 December 2023. On 21 February 2024, HSBC Holdings announced a share buy-back programme to purchase its ordinary shares up to a maximum consideration of $\\$ 2.0 b n$ , which is expected to commence shortly and complete by our first quarter 2024 results announcement. HSBC Holdings called $\\$ 2,500 m3.803 \\%$ and $\\$ 500\\mathsf { m }$ floating rate senior unsecured debt securities on 25 January 2024. These securities are expected to be redeemed and cancelled on 11 March 2024. These accounts were approved by the Board of Directors on 21 February 2024 and authorised for issue.\n## 40 HSBC Holdings’ subsidiaries, joint ventures and associates\nIn accordance with section 409 of the Companies Act 2006 a list of HSBC Holdings plc subsidiaries, joint ventures and associates, the registered office addresses and the effective percentages of equity owned at 31 December 2023 are disclosed below.\nUnless otherwise stated, the share capital comprises ordinary or common shares that are held by Group subsidiaries. The ownership percentage is provided for each undertaking. The undertakings below are consolidated by HSBC unless otherwise indicated.\n### Associates\nThe undertakings below are associates and equity accounted.\n### Joint ventures\nThe undertakings below are joint ventures and equity accounted.\n### Footnotes for Note 40", "chunk_word_count": 508, "section_path": "Opening up a world of opportunity > 40 HSBC Holdings’ subsidiaries, joint ventures and associates > Associates", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 428, "page_start": 428, "page_end": 434 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 548, "chunk_text": "# Opening up a world of opportunity\n## 40 HSBC Holdings’ subsidiaries, joint ventures and associates\n### Description of shares\n0 Where an entity is governed by voting rights, HSBC consolidates when it holds – directly or indirectly – the necessary voting rights to pass resolutions by the governing body. In all other cases, the assessment of control is more complex and requires judgement of other factors, including having exposure to variability of returns, power to direct relevant activities, and whether power is held as an agent or principal. HSBC’s consolidation policy is described in Note $ { \\mathcal { I } } . { \\mathcal { Z } } ( { a } )$ .\n1 Management has determined that these undertakings are excluded from consolidation in the Group accounts as these entities do not meet the definition of subsidiaries in accordance with IFRS. HSBC’s consolidation policy is described in Note 1.2(a).\n### Registered offices\n\n\n\n\n### Shareholder information\n### Contents\n435 Fourth interim dividend for 2023 \n435 Interim dividends for 2024 \n435 Other equity instruments \n435 2023 Annual General Meeting \n436 Earnings releases and interim results \n436 Shareholder enquiries and communications \n437 Stock symbols \n437 Investor relations \n437 Where more information about HSBC is available \n438 Taxation of shares and dividends \n439 Approach to ESG reporting \n441 Cautionary statement regarding forward-looking statements \n443 Certain defined terms \n444 Abbreviations\nThis section gives important information for our shareholders, including contact information. It also includes an overview of key abbreviations and terminology used throughout the Annual Report and Accounts.\nssary of terms used in the Annual Report and Accounts can be found in the Investors section of www.hsbc.c\n### Fourth interim dividend for 2023\nThe Directors have approved a fourth interim dividend for 2023 of $\\$ 0.31$ per ordinary share. Information on the currencies in which shareholders may elect to have the cash dividend paid can be viewed at www.hsbc.com/investors. The interim dividend will be paid in cash. The timetable for the interim dividend is:\n1 Removals to and from the Overseas Branch register of shareholders in Hong Kong will not be permitted on this date.\n### Interim dividends for 2024\nFor the financial year 2023, the Group reverted to paying quarterly dividends, and achieved a dividend payout ratio of $50 \\%$ of reported earnings per ordinary share (’EPS’), in line with our published target for 2023 and 2024. EPS for this purpose excludes material notable items and related impacts (including those associated with the sale of our retail banking operations in France, the agreed sale of our banking business in Canada and our acquisition of SVB UK). The Board has adopted a dividend policy designed to provide sustainable cash dividends, while retaining the flexibility to invest and grow the business in the future, supplemented by additional shareholder distributions, if appropriate.\nDividends are approved in US dollars and, at the election of the shareholder, paid in cash in one of, or in a combination of, US dollars, pounds sterling and Hong Kong dollars.\n### Other equity instruments", "chunk_word_count": 505, "section_path": "Opening up a world of opportunity > 40 HSBC Holdings’ subsidiaries, joint ventures and associates > Description of shares", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 434, "page_start": 434, "page_end": 437 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 549, "chunk_text": "# Opening up a world of opportunity\n## 40 HSBC Holdings’ subsidiaries, joint ventures and associates\n### Additional tier 1 capital – contingent convertible securities\nBC continues to issue contingent convertible securities that are included in its capital base as fully CRR II-compliant additional tier 1 capital urities. For further details on these securities, see Note 33 on the financial statements.\nHSBC issued $\\$ 2,000 m8.000\\%$ perpetual contingent convertible securities on 7 March 2023.\n2023 Annual General Meeting\nWith the exception of the shareholder requisitioned Resolutions 16, 17 and 18, which the Board recommended that shareholders vote against, all resolutions considered at the 2023 AGM held at 11:00am on 5 May 2023 at The Eastside Rooms, 2 Woodcock Street, Birmingham, B7 4BL, UK, were passed on a poll.\n### Earnings releases and interim results\nFirst and third quarter results for 2024 will be released on 30 April 2024 and 29 October 2024, respectively. The interim results for the six months to 30 June 2024 will be issued on 31 July 2024.\n### Shareholder enquiries and communications\n### Enquiries\nAny enquiries relating to shareholdings on the share register (for example, transfers of shares, changes of name or address, lost share certificates or dividend cheques) should be sent to the Registrars at the address given below. The Registrars offer an online facility, Investor Centre, which enables shareholders to manage their shareholding electronically.\n### Principal Register:\nComputershare Investor Services PLC The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ, United Kingdom\nTelephone: $+ 4 4$ (0) 370 702 0137 www.investorcentre.co.uk/contactus Investor Centre: www.investorcentre.co.uk\nHong Kong Overseas Branch Register:\nComputershare Hong Kong Investor Services Limited Rooms 1712–1716, 17th Floor Hopewell Centre, 183 Queen’s Road East, Hong Kong\nTelephone: $\\yen 852$ 2862 8555 hsbc.ecom@computershare.com.hk Investor Centre: www.investorcentre.com/hk\n### Bermuda Overseas Branch Register:\nInvestor Relations Team \nHSBC Bank Bermuda Limited, 37 Front Street, \nHamilton, HM 11, Bermuda\nhbbm.shareholder.services@hsbc.bm Investor Centre: www.investorcentre.com/bm\nADS Depositary:\nThe Bank of New York Mellon \nShareowner Services, P.O. Box 43006, Providence RI \n02940-3078, USA\nTelephone (US): $+ 1$ 877 283 5786 Telephone (International): $+ 1$ 201 680 6825 shrrelations@cpushareownerservices.com www.mybnymdr.com\nIf you have elected to receive general shareholder communications directly from HSBC Holdings, it is important to remember that your main contact for all matters relating to your investment remains the registered shareholder, or custodian or broker, who administers the investment on your behalf. Therefore, any changes or queries relating to your personal details and holding (including any administration of it) must continue to be directed to your existing contact at your investment manager or custodian or broker. HSBC Holdings cannot guarantee dealing with matters directed to it in error.\nShareholders who wish to receive a hard copy of the Annual Report and Accounts 2023 should contact HSBC’s Registrars. Please visit www.hsbc.com/investors/investor-contacts for further information. You can also download an online version of the report from www.hsbc.com.", "chunk_word_count": 473, "section_path": "Opening up a world of opportunity > 40 HSBC Holdings’ subsidiaries, joint ventures and associates > Additional tier 1 capital – contingent convertible securities", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 437, "page_start": 437, "page_end": 438 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 550, "chunk_text": "# Opening up a world of opportunity\n## 40 HSBC Holdings’ subsidiaries, joint ventures and associates\n### Electronic communications\nShareholders may at any time choose to receive corporate communications in printed form or to receive notifications of their availability on HSBC’s website. To receive notifications of the availability of a corporate communication on HSBC’s website by email, or revoke or amend an instruction to receive such notifications by email, go to www.hsbc.com/investors/shareholder-information/manage-your-shareholding. If you received a notification of the availability of this document on HSBC’s website and would like to receive a printed copy, or if you would like to receive future corporate communications in printed form, please write or send an email (quoting your shareholder reference number) to the appropriate Registrars at the address given above. Printed copies will be provided without charge.\n### Chinese translation\nA Chinese translation of the Annual Report and Accounts 2023 will be available upon request after 22 March 2024 from the Registrars (contact details above). Please also contact the Registrars if you wish to receive Chinese translations of future documents, or if you have received a Chinese translation of this document and do not wish to receive them in future.\n《2023 年報及賬目》備有中譯本，各界人士可於2024年3月22日之後，向上列股份登記處索閱。 \n閣下如欲於日後收取相關文件的中譯本，或已收到本文件的中譯本但不希望繼續收取有關譯本，均請聯絡股份登記處。\n### Stock symbols\nHSBC Holdings ordinary shares trade under the following stock symbols:\n## HSBA\\* 5\nNew York Stock Exchange (ADS) Bermuda Stock Exchange\n## HSBC HSBC.BH\nLondon Stock Exchange Hong Kong Stock Exchange\n∗ HSBC’s Primary market\n### Investor relations\nEnquiries relating to HSBC’s strategy or operations may be directed to:\nNeil Sankoff, Global Head of Investor Relations \nHSBC Holdings plc \n8 Canada Square \nLondon E14 5HQ \nUnited Kingdom \nTelephone: $+ 4 4$ (0) 20 7991 5072 \nEmail: investorrelations@hsbc.com \nYafei Tian, Head of Investor Relations, Asia-Pacific \nThe Hongkong and Shanghai Banking \nCorporation Limited \n1 Queen’s Road Central \nHong Kong \nTelephone: +852 2899 8909 \nEmail: investorrelations@hsbc.com.hk\n### Where more information about HSBC is available\nThe Annual Report and Accounts 2023 and other information on HSBC may be downloaded from HSBC’s website: www.hsbc.com.\nReports, statements and information that HSBC Holdings files with the Securities and Exchange Commission are available at www.sec.gov. Investors can also request hard copies of these documents upon payment of a duplicating fee by writing to the SEC at the Office of Investor Education and Advocacy, 100 F Street N.E., Washington, DC 20549-0213 or by emailing PublicInfo@sec.gov. Investors should call the Commission at (1) 202 551 8090 if they require further assistance. Investors may also obtain the reports and other information that HSBC Holdings files at www.nyse.com (telephone number (1) 212 656 3000).\nHM Treasury has transposed the requirements set out under CRD IV and issued the Capital Requirements Country-by-Country Reporting Regulations 2013. The legislation requires HSBC Holdings to publish additional information in respect of the year ended 31 December 2023 by 31 December 2024. This information will be available on HSBC’s website: www.hsbc.com/tax.\n### Taxation of shares and dividends", "chunk_word_count": 482, "section_path": "Opening up a world of opportunity > 40 HSBC Holdings’ subsidiaries, joint ventures and associates > Electronic communications", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 438, "page_start": 438, "page_end": 439 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 551, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Taxation – UK residents\nThe following is a summary, under current law (unless otherwise noted) and the current published practice of HM Revenue and Customs (‘HMRC’), of certain UK tax considerations that are likely to be material to the ownership and disposition of HSBC Holdings ordinary shares. The summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a holder of shares. In particular, the summary deals with shareholders who are resident solely in the UK for UK tax purposes and only with holders who hold the shares as investments and who are the beneficial owners of the shares, and does not address the tax treatment of certain classes of holders such as dealers in securities. Holders and prospective purchasers should consult their own advisers regarding the tax consequences of an investment in shares in light of their particular circumstances, including the effect of any national, state or local laws.\nPaperless transfers of shares within CREST, the UK’s paperless share transfer system, are liable to stamp duty reserve tax at the rate of $0 . 5 \\%$ of the consideration. In CREST transactions, the tax is calculated and payment made automatically. Deposits of shares into CREST generally will not be subject to stamp duty reserve tax, unless the transfer into CREST is itself for consideration. Until 31 December 2023, the charge to stamp duty reserve tax at $1 . 5 \\%$ on the issue of shares (and transfers integral to capital raising) to a depositary receipt issuer or a clearance service was incompatible with European Union law as retained in the UK following the UK’s departure from the European Union, and was not imposed by HMRC. If the UK Finance Bill 2023-24 is enacted in the form it stands as at the date hereof, that $1 . 5 \\%$ charge will be repealed with retrospective effect from 1 January 2024.\n### Taxation of dividends\nCurrently, no tax is withheld from dividends paid by HSBC Holdings.\n### Taxation – US residents", "chunk_word_count": 350, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Taxation – UK residents", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 440, "page_start": 440, "page_end": 440 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 552, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### UK resident individuals\nUK resident individuals are generally entitled to a tax-free annual allowance in respect of dividends received. The amount of the allowance for the tax year beginning 6 April 2023 is £1,000. To the extent that dividend income received by an individual in the relevant tax year does not exceed the allowance, a nil tax rate will apply. Dividend income in excess of this allowance will be taxed at $8 . 7 5 \\%$ for basic rate taxpayers, $3 3 . 7 5 \\%$ for higher rate taxpayers and $3 9 . 3 5 \\%$ for additional rate taxpayers.\nThe following is a summary, under current law, of the principal UK tax and US federal income tax considerations that are likely to be material to the ownership and disposition of shares or American Depositary Shares (‘ADSs’) by a holder that is a US holder, as defined below, and who is not resident in the UK for UK tax purposes.\nThe summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a holder of shares or ADSs. In particular, the summary deals only with US holders that hold shares or ADSs as capital assets, and does not address the tax treatment of holders that are subject to special tax rules. These include banks, tax-exempt entities, insurance companies, dealers in securities or currencies, persons that hold shares or ADSs as part of an integrated investment (including a ‘straddle’ or ‘hedge’) comprised of a share or ADS and one or more other positions, and persons that own directly or indirectly $10 \\%$ or more (by vote or value) of the stock of HSBC Holdings. This discussion is based on laws, treaties, judicial decisions and regulatory interpretations in effect on the date hereof, all of which are subject to change.\n### UK resident companies\nShareholders that are within the charge to UK corporation tax should generally be entitled to an exemption from UK corporation tax on any dividends received from HSBC Holdings. However, the exemptions are not comprehensive and are subject to anti-avoidance rules.\nIf the conditions for exemption are not met or cease to be satisfied, or a shareholder within the charge to UK corporation tax elects for an otherwise exempt dividend to be taxable, the shareholder will be subject to UK corporation tax on dividends received from HSBC Holdings at the rate of corporation tax applicable to that shareholder.\nFor the purposes of this discussion, a ‘US holder’ is a beneficial holder that is a citizen or resident of the United States, a US domestic corporation or otherwise is subject to US federal income taxes on a net income basis in respect thereof.", "chunk_word_count": 464, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > UK resident individuals", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 440, "page_start": 440, "page_end": 440 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 553, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Taxation of capital gains\nThe computation of the capital gains tax liability arising on disposals of shares in HSBC Holdings by shareholders subject to UK tax on capital gains can be complex, partly depending on whether, for example, the shares were purchased since April 1991, acquired in 1991 in exchange for shares in The Hongkong and Shanghai Banking Corporation Limited, or acquired subsequent to 1991 in exchange for shares in other companies.\nHolders and prospective purchasers should consult their own advisers regarding the tax consequences of an investment in shares or ADSs in light of their particular circumstances, including the effect of any national, state or local laws.\nAny US federal tax advice included in the Annual Report and Accounts 2023 is for informational purposes only. It was not intended or written to be used, and cannot be used, for the purpose of avoiding US federal tax penalties.\nFor capital gains tax purposes, the acquisition cost for ordinary shares is adjusted to take account of subsequent rights and capitalisation issues. Any capital gain arising on a disposal of shares in HSBC Holdings by a UK company may also be adjusted to take account of indexation allowance if the shares were acquired before 1 January 2018, although the level of indexation allowance that is given in calculating the gain would be frozen at the value that would have been applied to a disposal of those shares in December 2017. If in doubt, shareholders are recommended to consult their professional advisers.\n### Taxation of dividends\nCurrently, no tax is withheld from dividends paid by HSBC Holdings. For US tax purposes, a US holder must include cash dividends paid on the shares or ADSs in ordinary income on the date that such holder or the ADS depositary receives them, translating dividends paid in UK pounds sterling into US dollars using the exchange rate in effect on the date of receipt. A US holder that elects to receive shares in lieu of a cash dividend must include in ordinary income the fair market value of such shares on the dividend payment date, and the tax basis of those shares will equal such fair market value.", "chunk_word_count": 372, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Taxation of capital gains", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 440, "page_start": 440, "page_end": 440 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 554, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Stamp duty and stamp duty reserve tax\nTransfers of shares by a written instrument of transfer generally will be subject to UK stamp duty at the rate of $0 . 5 \\%$ of the consideration paid for the transfer (rounded up to the next £5), and such stamp duty is generally payable by the transferee. An agreement to transfer shares, or any interest therein, normally will give rise to a charge to stamp duty reserve tax at the rate of $0 . 5 \\%$ of the consideration. However, provided an instrument of transfer of the shares is executed pursuant to the agreement and duly stamped before the date on which the stamp duty reserve tax becomes payable, under the current published practice of HMRC it will not be necessary to pay the stamp duty reserve tax, nor to apply for such tax to be cancelled. Stamp duty reserve tax is generally payable by the transferee.\nSubject to certain exceptions for positions that are held for less than 61 days, and subject to a foreign corporation being considered a ‘qualified foreign corporation’ (which includes not being classified for US federal income tax purposes as a passive foreign investment company), certain dividends (‘qualified dividends’) received by an individual US holder generally will be subject to US taxation at preferential rates.\nBased on the company’s audited financial statements and relevant market and shareholder data, HSBC Holdings does not believe that it was a passive investment company for its 2023 taxable year and does not anticipate becoming a passive foreign investment company in 2024 or the foreseeable future. Accordingly, dividends paid on the shares or ADSs generally should be eligible for qualified dividends treatment.\nbackup withholding tax, but may be required to comply with applicable certification procedures to establish that they are not US persons in order to avoid the application of such US information reporting requirements or backup withholding tax to payments received within the US or through certain financial intermediaries.\n### Approach to ESG reporting", "chunk_word_count": 344, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Stamp duty and stamp duty reserve tax", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 440, "page_start": 440, "page_end": 441 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 555, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Taxation of capital gains\nThe information set out in the ESG review on pages 41 to 98, taken together with other information relating to ESG issues included in this Annual Report and Accounts 2023, aims to provide key ESG information and data relevant to our operations for the year ended 31 December 2023. The data is compiled for the financial year 1 January to 31 December 2023 unless otherwise specified. Measurement techniques and calculations are explained next to data tables where necessary. There are no significant changes from the previous reporting period in terms of scope, boundary or measurement of our reporting of ESG matters. Where relevant, rationale is provided for any restatement of information or data that has been previously published. We have also considered our obligations under the Environmental, Social and Governance Reporting Guide contained in Appendix C2 to The Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (‘ESG Guide’) and under LR9.8.6R(8) of the Financial Conduct Authority’s (‘FCA’) Listing Rules. We will continue to develop and refine our reporting and disclosures on ESG matters in line with feedback received from our investors and other stakeholders, and in view of our obligations under the ESG Guide and the FCA’s Listing Rules.\nGains realised by a US holder on the sale or other disposition of shares or ADSs normally will not be subject to UK taxation unless at the time of the sale or other disposition the holder carries on a trade, profession or vocation in the UK through a branch or agency or permanent establishment and the shares or ADSs are or have been used, held or acquired for the purposes of such trade, profession, vocation, branch or agency or permanent establishment. Such gains will be included in income for US tax purposes, and will be long-term capital gains if the shares or ADSs were held for more than one year. A long-term capital gain realised by an individual US holder generally will be subject to US tax at preferential rates.", "chunk_word_count": 350, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Taxation of capital gains", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 441, "page_start": 441, "page_end": 441 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 556, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Inheritance tax\nShares or ADSs held by an individual whose domicile is determined to be the US for the purposes of the United States–United Kingdom Double Taxation Convention relating to estate and gift taxes (the ‘Estate Tax Treaty’) and who is not for such purposes a national of the UK will not, provided any US federal estate or gift tax chargeable has been paid, be subject to UK inheritance tax on the individual’s death or on a lifetime transfer of shares or ADSs except in certain cases where the shares or ADSs $( \\mathrm { i } )$ are comprised in a settlement (unless, at the time of the settlement, the settlor was domiciled in the US and was not a national of the UK), (ii) are part of the business property of a UK permanent establishment of an enterprise, or (iii) pertain to a UK fixed base of an individual used for the performance of independent personal services. In such cases, the Estate Tax Treaty generally provides a credit against US federal tax liability for the amount of any tax paid in the UK in a case where the shares or ADSs are subject to both UK inheritance tax and to US federal estate or gift tax.\n### ESG Guide\nWe comply with the ‘comply or explain’ provisions in the ESG Guide, save for certain items, which we describe in more detail below:\n– A1(b) on relevant laws/regulations relating to air and greenhouse gas emissions, discharges into water and land, and generation of hazardous and non-hazardous waste, and on emissions: taking into account the nature of our business, we do not believe that there are relevant laws and regulations in these areas that have significant impacts on our operations. Nevertheless, we are fully compliant with our publication of information regarding scope 1 and 2 carbon emissions, while we only partially publish information on scope 3 carbon emissions, as the data required for that publication is not yet fully available.", "chunk_word_count": 341, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Inheritance tax", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 441, "page_start": 441, "page_end": 441 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 557, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Stamp duty and stamp duty reserve tax – ADSs\nIf shares are transferred to a clearance service or American Depositary Receipt (‘ADR’) issuer (which will include a transfer of shares to the depositary) UK stamp duty and/or stamp duty reserve tax will be payable unless the UK Finance Bill 2023-24 is enacted in the form it stands as at the date hereof and the transfer is, or is treated as being, in the course of a capital raising arrangement. The stamp duty or stamp duty reserve tax is generally payable on the consideration for the transfer and is payable at the aggregate rate of $1 . 5 \\%$ .\n– A1.3 on total hazardous waste produced, A1.4 on total nonhazardous waste produced: Taking into account the nature of our business, we do not consider hazardous waste to be a material issue for our stakeholders. As such, we report only on total waste produced, which includes hazardous and non-hazardous waste.\nThe amount of stamp duty reserve tax payable on such a transfer will be reduced by any stamp duty paid in connection with the same transfer.\n– A1.6 on handling hazardous and non-hazardous waste: Taking into account the nature of our business, we do not consider this to be a material issue for our stakeholders. Notwithstanding this, we continue to focus on the reduction and recycling of all waste. Building on the success of our previous operational environmental strategy, we are continuing to seek to identify key opportunities where we can lessen our wider environmental impact, including waste management. For further details, please see our ESG review on page 63.\nNo stamp duty will be payable on the transfer of, or agreement to transfer, an ADS, provided that the ADR and any separate instrument of transfer or written agreement to transfer remain at all times outside the UK, and provided further that any such transfer or written agreement to transfer is not executed in the UK. No stamp duty reserve tax will be payable on a transfer of, or agreement to transfer, an ADS effected by the transfer of an ADR.\n– A2.4 on sourcing water issue and water efficiency target: Taking into account the nature of our business, we do not consider this to be a material issue for our stakeholders. Notwithstanding this, we have implemented measures to further reduce water consumption through the installation of flow restrictors, auto-taps and low or zero flush sanitary fittings and continue to track our water consumption.", "chunk_word_count": 424, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Stamp duty and stamp duty reserve tax – ADSs", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 441, "page_start": 441, "page_end": 441 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 558, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### US information reporting and backup withholding tax\nDistributions made on shares or ADSs and proceeds from the sale of shares or ADSs that are paid within the US, or through certain financial intermediaries to US holders, are subject to US information reporting and may be subject to a US ‘backup’ withholding tax. General exceptions to this rule happen when the US holder: establishes that it is a corporation (other than an S corporation) or other exempt holder; or provides a correct taxpayer identification number, certifies that no loss of exemption from backup withholding has occurred and otherwise complies with the applicable requirements of the backup withholding rules. Holders that are not US persons (as defined in the US Internal Revenue Code of 1986, as amended) generally are not subject to US information reporting or\n– A2.5 on packaging material, B6(b) on issues related to health and safety and labelling relating to products and services provided, B6.1 on percentage of total products sold or shipped subject to recalls for safety and health reasons and B6.4 in recall procedures: Taking into account the nature of our business, we do not consider these to be material issues for our stakeholders.\nThis is aligned with the materiality reporting principle that is set out in the ESG Guide. See ‘How we decide what to measure’ on page 43 for further information on how we determine what matters are material to our stakeholders.\naddressed in the medium term as more reliable data becomes available and technology solutions are implemented.\n### TCFD recommendations and recommended disclosures\nStrategy (b) related to transition plan: We published our Group-wide net zero transition plan in January 2024. In this plan, we provided an overview of our approach to net zero and the actions we are taking to help meet our ambitions. We want to be clear about our approach, the change underway today and what we plan to do in the future. We also want to be transparent about where there are still unresolved issues and uncertainties. We are still developing our disclosures, including considerations of possible additional data in relation to our financial plans, budgets, and related financial approach for the implementation of the transition plan in the medium term (e.g. amount of capital and other expenditures supporting our decarbonisation strategy).\nAs noted on page 17, we have considered our ‘comply or explain’ obligation under both the UK’s Financial Conduct Authority’s Listing Rules and Sections 414 CA and 414CB of the UK Companies Act 2006, and confirm that we have made disclosures consistent with the TCFD Recommendations and Recommended Disclosures, including its annexes and supplemental guidance, save for certain items, which we summarise below:", "chunk_word_count": 455, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > US information reporting and backup withholding tax", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 441, "page_start": 441, "page_end": 442 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 559, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Targets setting\nMetrics and targets (c) relating to short-term targets: For financed emissions we do not plan to set 2025 targets. We set targets in line with the Net-Zero Banking Alliance (‘NZBA‘) guidelines by setting 2030 targets. While the NZBA define 2030 as intermediate, we use different time horizons for climate risk management. We define short term as time periods up to 2025; medium term is between 2026 and 2035; and long term is between 2036 and 2050. In 2023, we disclose interim 2030 financed emissions targets for seven sectors comprising five on-balance sheet and two combined financed emissions targets, as we outline on page 18. For the shipping sector, we have taken a decision not to set a standalone financed emissions target. The decision follows a reduction in our exposure to the sector after the strategic sale of part of our European shipping portfolio. This aligns with NZBA guidelines on sector inclusion for target setting. We have now set combined on-balance sheet financed emissions and facilitated emissions targets for two emissions-intensive sectors: oil and gas, and power and utilities, and report the combined progress for both sectors. We intend to review the financed emissions baselines and targets annually and restate where relevant, to help ensure that they are aligned with market practice and current climate science. For further details on the restatements and targets and progress of financed emissions, see section ’Our approach to financed emissions recalculations’ and ’Targets and Progress’ on page 56 and 57.\nMetrics and targets (a) relating to internal carbon prices and climaterelated opportunities metrics: We do not currently disclose internal carbon prices due to transitional challenges such as data challenges. But we considered carbon prices as an input for our climate scenario analysis exercise. In addition, we do not currently fully disclose the proportion of revenue or proportion of assets, capital deployment or other business activities aligned with climate-related opportunities, including revenue from products and services designed for a lowcarbon economy, forward-looking metrics consistent with our business or strategic planning time horizons. In relation to sustainable finance revenue and assets we are disclosing certain elements. We expect the data and system limitations related to financial planning and performance, and climate-related opportunities metrics to be addressed in the medium term as more reliable data becomes available and technology solutions are implemented. We expect to further enhance this disclosure in the medium term.", "chunk_word_count": 408, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Targets setting", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 442, "page_start": 442, "page_end": 442 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 560, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Impacts of transition and physical risk\nStrategy (c) relating to quantitative scenario analysis: We do not currently fully disclose the impacts of transition and physical risk quantitatively, due to transitional challenges including data limitations and evolving science and methodologies. In 2023, we have disclosed the impairment impacts for our wholesale, retail and commercial real estate portfolios in different climate scenarios. In addition, we have disclosed losses on our retail mortgage book under three scenarios and flood depths for specific markets. For our wholesale book, we have disclosed potential implications on our expected credit losses for 11 sectors under two scenarios. We have also disclosed a heat map showing how we expect the risks to evolve over time.\nMetrics and targets (c) relating to capital deployment target: We do not currently disclose a target for capital deployment. In relation to capital deployment, since 2015, we have issued more than $\\$ 20n$ of our own green bonds and structured green bonds with the capital invested into a variety of green projects, including: green buildings, renewable energy and clean transportation projects. In 2023, we further progressed our internal review and enhancement of the green bond framework, with further refinement including internal and external review to be undertaken in 2024. This will be subject to continuous review and monitoring to ensure that they remain up to date and reflect updated standards, taxonomies and best practices. Any such developments in standards, taxonomies and best practices over time could result in revisions in our reporting going forward and lead to differences year-on-year as compared to prior years. See the HSBC Green Bond Report for further information.\nMetrics and targets (a) relating to detailed climate-related risk exposure metrics for physical and transition risks: We do not fully disclose metrics used to assess the impact of climate-related physical (chronic) and transitions (policy and legal, technology and market) risks on retail lending, parts of wholesale lending and other financial intermediary business activities (specifically credit exposure, equity and debt holdings, or trading positions, each broken down by industry, geography, credit quality and average tenor). We are aiming to develop the appropriate systems, data and processes to provide these disclosures in future years. We disclose the exposure to six high transition risk wholesale sectors and the flood risk exposure and Energy Performance Certificate breakdown for the UK portfolio.\nMetrics and targets (c) relating to internal carbon pricing target: We do not currently disclose internal carbon pricing target due to transitional challenges such as developing the appropriate systems and processes, but we considered carbon prices as an input for our climate scenario analysis exercise. We expect to further enhance the disclosure in the medium term as more data becomes available.", "chunk_word_count": 459, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Impacts of transition and physical risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 442, "page_start": 442, "page_end": 442 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 561, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Impacts of transition and physical risk\nMetrics and targets (c) on targets related to physical risk: We do not currently disclose targets used to measure and manage physical risk. This is due to transitional challenges including data limitations of physical risk metrics. For retail, we do not use targets to measure and manage physical risk. In 2023 we introduced internally a global ‘soft trigger’ monitoring and review process for physical risk exposure where a market reaches or exceeds a set threshold, as this ensures markets are actively considering their balance sheet risk exposure to peril events. We also consider physical and transition risk as an input for our climate scenario analysis exercise.\n### Impacts on financial planning and performance\nStrategy (b) relating to financial planning and performance: We have used climate scenarios to inform our organisation’s business, strategy and financial planning. In 2023, we continued to incorporate certain aspects of sustainable finance and financed emissions within our financial planning process. We do not fully disclose impacts from climate-related opportunities on financial planning and performance including on revenue, costs and the balance sheet, quantitative scenario analysis, detailed climate risk exposures for all sectors and geographies or physical risk metrics. This is due to transitional challenges in relation to data limitations, although nascent work is ongoing in these areas. We expect these data limitations to be\nWe expect to further enhance our disclosures as our data, quantitative scenario analysis, risk metrics and physical risk targets evolve, and technology solutions are implemented in the medium term.\nprospectuses, press releases and other written materials, and in oral statements made by HSBC’s directors, officers or employees to third parties, including financial analysts. Forward-looking statements involve inherent risks and uncertainties. Readers are cautioned that a number of factors could cause actual results to differ, in some instances materially, from those anticipated or implied in any forwardlooking statement. These include, but are not limited to:\n### Scope 3 emissions disclosure\nMetrics and targets (b) relating to scope 3 emissions metrics: We currently disclose partial scope 3 greenhouse gas emissions including business travel, supply chain and financed emissions. We currently disclose four out of 15 categories of scope 3 greenhouse gas emissions including business travel, supply chain and financed emissions. In relation to financed emissions, we publish on-balance sheet financed emissions for a number of sectors as detailed on page 18. We also publish facilitated emissions for the oil and gas, and power and utilities sectors. Future disclosures on financed emissions and related risks are reliant on our customers publicly disclosing their greenhouse gas emissions, targets and plans, and related risks. We recognise the need to provide early transparency on climate disclosures but balance this with the recognition that existing data and reporting processes require significant enhancements.", "chunk_word_count": 470, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Impacts of transition and physical risk", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 442, "page_start": 442, "page_end": 443 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 562, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Scope 3 emissions disclosure\nchanges in general economic conditions in the markets in which we operate, such as new, continuing or deepening recessions, prolonged inflationary pressures and fluctuations in employment levels and the creditworthiness of customers beyond those factored into consensus forecasts; the Russia-Ukraine war and the Israel-Hamas war and their impact on global economies and the markets where HSBC operates, which could have a material adverse effect on (among other things) our financial condition, results of operations, prospects, liquidity, capital position and credit ratings; deviations from the market and economic assumptions that form the basis for our ECL measurements (including, without limitation, as a result of the Russia-Ukraine war and the Israel-Hamas war, inflationary pressures, commodity price changes, and ongoing developments in the commercial real estate sector in mainland China); potential changes in HSBC’s dividend policy; changes and volatility in foreign exchange rates and interest rates levels, including the accounting impact resulting from financial reporting in respect of hyperinflationary economies; volatility in equity markets; lack of liquidity in wholesale funding or capital markets, which may affect our ability to meet our obligations under financing facilities or to fund new loans, investments and businesses; geopolitical tensions or diplomatic developments producing social instability or legal uncertainty, such as the Russia-Ukraine war or the Israel-Hamas war (including the continuation and escalation thereof) and the related imposition of sanctions and trade restrictions, supply chain restrictions and disruptions, sustained increases in energy prices and key commodity prices, claims of human rights violations, diplomatic tensions, including between China and the US, the UK, the EU, India and other countries, and developments in Hong Kong and Taiwan, alongside other potential areas of tension, which may adversely affect HSBC by creating regulatory, reputational and market risks; the efficacy of government, customer, and HSBC’s actions in managing and mitigating ESG risks, in particular climate risk, nature-related risks and human rights risks, and in supporting the global transition to net zero carbon emissions, each of which can impact HSBC both directly and indirectly through our customers and which may result in potential financial and nonfinancial impacts; illiquidity and downward price pressure in national real estate markets; adverse changes in central banks’ policies with respect to the provision of liquidity support to financial markets; heightened market concerns over sovereign creditworthiness in over-indebted countries; adverse changes in the funding status of public or private defined benefit pensions; societal shifts in customer financing and investment needs, including consumer perception as to the continuing availability of credit; exposure to counterparty risk, including third parties using us as a conduit for illegal activities without our knowledge; the discontinuation of certain key Ibors and the transition of the remaining legacy Ibor contracts to near risk-free benchmark rates, which continues to expose HSBC to some financial and nonfinancial risks; and price competition in the market segments we serve;", "chunk_word_count": 483, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Scope 3 emissions disclosure", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 443, "page_start": 443, "page_end": 443 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 563, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Other matters\nStrategy (b) relating to access to capital: We have considered the impact of climate-related issues on our businesses, strategy and financial planning. Our access to capital may be impacted by reputational concerns as a result of climate action or inaction. In addition, if we are perceived to mislead stakeholders on our business activities or if we fail to achieve our stated net zero ambitions, we could face reputational damage, impacting our revenue-generating ability and potentially our access to capital markets. We expect to further enhance the disclosure in the medium term as more data becomes available.\nTo manage these risks we have integrated climate risk into our existing risk taxonomy, and incorporated it within the risk management framework through the policies and controls for the existing risks where appropriate.\nMetrics and targets (c) relating to water usage target: We have described the targets used by the organisation to manage climaterelated risks and opportunities and performance against targets. However, taking into account the nature of our business, we do not consider water usage to be a material target for our business and, therefore, we have not included a target in this year’s disclosure.\nWith respect to our obligations under LR9.8.6R(8) of the FCA’s Listing Rules, as part of considering what to measure and publicly report, we perform an assessment to ascertain the appropriate level of detail to be included in the climate-related financial disclosures that are set out in our Annual Report and Accounts. Our assessment takes into account factors such as the level of our exposure to climate-related risks and opportunities, the scope and objectives of our climaterelated strategy, transitional challenges, and the nature, size and complexity of our business. See ‘How we decide what to measure’ on page 43 for further information.", "chunk_word_count": 306, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Other matters", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 443, "page_start": 443, "page_end": 443 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 564, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Cautionary statement regarding forward-looking statements\nThis Annual Report and Accounts 2023 contains certain forwardlooking statements with respect to HSBC’s financial condition; results of operations and business, including the strategic priorities; financial, investment and capital targets; and ESG targets, commitments and ambitions described herein.\nStatements that are not historical facts, including statements about HSBC’s beliefs and expectations, are forward-looking statements. Words such as ‘may’, ‘will’, ‘should’, ‘expects’, ‘targets’, ‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’, ‘potential’ and ‘reasonably possible’, or the negative thereof, other variations thereon or similar expressions are intended to identify forward-looking statements. These statements are based on current plans, information, data, estimates and projections, and therefore undue reliance should not be placed on them. Forward-looking statements speak only as of the date they are made. HSBC makes no commitment to revise or update any forward-looking statements to reflect events or circumstances occurring or existing after the date of any forward-looking statements. Written and/or oral forward-looking statements may also be made in the periodic reports to the US Securities and Exchange Commission, summary financial statements to shareholders, proxy statements, offering circulars and\nchanges in government policy and regulation, including the monetary, interest rate and other policies of central banks and other regulatory authorities in the principal markets in which we operate and the consequences thereof (including, without limitation, actions taken as a result of the impact of the Russia-Ukraine war on inflation); initiatives to change the size, scope of activities and interconnectedness of financial institutions in connection with the implementation of stricter regulation of financial institutions in key markets worldwide; revised capital and liquidity benchmarks, which could serve to deleverage bank balance sheets and lower returns available from the current business model and portfolio mix; changes to tax laws and tax rates applicable to HSBC, including the imposition of levies or taxes designed to change business mix and risk appetite; the\npractices, pricing or responsibilities of financial institutions serving their consumer markets; expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; the UK’s relationship with the EU, which continues to be characterised by uncertainty and political disagreement, despite the signing of the Trade and Cooperation Agreement between the UK and the EU, particularly with respect to the potential divergence of UK and EU law on the regulation of financial services; changes in government approach and regulatory treatment in relation to ESG disclosures and reporting requirements, and the current lack of a single standardised regulatory approach to ESG across all sectors and markets; changes in UK macroeconomic and fiscal policy, which may result in fluctuations in the value of the pound sterling; general changes in government policy that may significantly influence investor decisions; the costs, effects and outcomes of regulatory reviews, actions or litigation, including any additional compliance requirements; and the effects of competition in the markets where we operate including increased competition from non-bank financial services companies; and", "chunk_word_count": 493, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Cautionary statement regarding forward-looking statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 443, "page_start": 443, "page_end": 444 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 565, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Cautionary statement regarding forward-looking statements\nThis Annual Report and Accounts 2023 contains a number of images, graphics, infographics, text boxes and illustrative case studies and credentials which aim to give a high-level overview of certain elements of our disclosures and to improve accessibility for readers. These images, graphics, infographics, text boxes and illustrative case studies and credentials are designed to be read within the context of the Annual Report and Accounts 2023 as a whole.", "chunk_word_count": 86, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Cautionary statement regarding forward-looking statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 444, "page_start": 444, "page_end": 444 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 566, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Additional cautionary statement regarding ESG data, metrics and forward-looking statements\nfactors specific to HSBC, including our success in adequately identifying the risks we face, such as the incidence of loan losses or delinquency, and managing those risks (through account management, hedging and other techniques); our ability to achieve our financial, investment, capital and ESG targets, commitments and ambitions (including the positions set forth in our thermal coal phase-out policy and our energy policy and our targets to reduce our on-balance sheet financed emissions and, where applicable, facilitated emissions in our portfolio of selected high-emitting sectors), which may result in our failure to achieve any of the expected benefits of our strategic priorities; evolving regulatory requirements and the development of new technologies, including artificial intelligence, affecting how we manage model risk; model limitations or failure, including, without limitation, the impact that high inflationary pressures and rising interest rates have had on the performance and usage of financial models, which may require us to hold additional capital, incur losses and/or use compensating controls, such as judgemental post-model adjustments, to address model limitations; changes to the judgements, estimates and assumptions we base our financial statements on; changes in our ability to meet the requirements of regulatory stress tests; a reduction in the credit ratings assigned to us or any of our subsidiaries, which could increase the cost or decrease the availability of our funding and affect our liquidity position and net interest margin; changes to the reliability and security of our data management, data privacy, information and technology infrastructure, including threats from cyber-attacks, which may impact our ability to service clients and may result in financial loss, business disruption and/or loss of customer services and data; the accuracy and effective use of data, including internal management information that may not have been independently verified; changes in insurance customer behaviour and insurance claim rates; our dependence on loan payments and dividends from subsidiaries to meet our obligations; changes in our reporting frameworks and accounting standards, which have had and may continue to have a material impact on the way we prepare our financial statements; our ability to successfully execute planned strategic acquisitions and disposals; our success in adequately integrating acquired businesses into our business, including the integration of SVB UK into our CMB business; changes in our ability to manage third-party, fraud, financial crime and reputational risks inherent in our operations; employee misconduct, which may result in regulatory sanctions and/or reputational or financial harm; changes in skill requirements, ways of working and talent shortages, which may affect our ability to recruit and retain senior management and diverse and skilled personnel; and changes in our ability to develop sustainable finance and ESG-related products consistent with the evolving expectations of our regulators, and our capacity to measure the environmental and social impacts from our financing activity (including as a result of data limitations and changes in methodologies), which may affect our ability to achieve our ESG ambitions, targets and commitments, including our net zero ambition, our targets to reduce on-balance sheet financed emissions and, where applicable, facilitated emissions in our portfolio of selected high-emitting sectors and the positions set forth in our thermal coal phase-out policy and our energy policy, and increase the risk of", "chunk_word_count": 550, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Additional cautionary statement regarding ESG data, metrics and forward-looking statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 444, "page_start": 444, "page_end": 444 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 567, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Additional cautionary statement regarding ESG data, metrics and forward-looking statements\ngreenwashing. Effective risk management depends on, among other things, our ability through stress testing and other techniques to prepare for events that cannot be captured by the statistical models it uses; our success in addressing operational, legal and regulatory, and litigation challenges; and other risks and uncertainties we identify in ‘Top and emerging risks’ on pages 140 to 144.\nThe Annual Report and Accounts 2023 contains a number of forwardlooking statements (as defined above) with respect to HSBC’s ESG targets, commitments, ambitions, climate-related pathways, processes and plans, and the methodologies and scenarios we use, or intend to use, to assess our progress in relation to these (‘ESGrelated forward-looking statements’).\nIn preparing the ESG-related information contained in the Annual Report and Accounts 2023, HSBC has made a number of key judgements, estimations and assumptions, and the processes and issues involved are complex. We have used ESG (including climate) data, models and methodologies that we consider, as of the date on which they were used, to be appropriate and suitable to understand and assess climate change risk and its impact, to analyse financed emissions - and operational and supply chain emissions, to set ESGrelated targets and to evaluate the classification of sustainable finance and investments. However, these data, models and methodologies are often new, are rapidly evolving and are not of the same standard as those available in the context of other financial information, nor are they subject to the same or equivalent disclosure standards, historical reference points, benchmarks or globally accepted accounting principles. In particular, it is not possible to rely on historical data as a strong indicator of future trajectories in the case of climate change and its evolution. Outputs of models, processed data and methodologies are also likely to be affected by underlying data quality, which can be hard to assess and we expect industry guidance, market practice, and regulations in this field to continue to change. We also face challenges in relation to our ability to access data on a timely basis, lack of consistency and comparability between data that is available and our ability to collect and process relevant data. Consequently, the ESG-related forward-looking statements and ESG metrics disclosed in the Annual Report and Accounts 2023 carry an additional degree of inherent risk and uncertainty.\nDue to the unpredictable evolution of climate change and its future impact and the uncertainty of future policy and market response to ESG-related issues and the effectiveness of any such response, HSBC may have to re-evaluate its progress towards its ESG ambitions, commitments and targets in the future, update the methodologies it uses or alter its approach to ESG (including climate) analysis and may be required to amend, update and recalculate its ESG disclosures and assessments in the future, as market practice and data quality and availability develop.", "chunk_word_count": 487, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Additional cautionary statement regarding ESG data, metrics and forward-looking statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 444, "page_start": 444, "page_end": 444 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 568, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Additional cautionary statement regarding ESG data, metrics and forward-looking statements\nNo assurance can be given by or on behalf of HSBC as to the likelihood of the achievement or reasonableness of any projections, estimates, forecasts, targets, commitments, ambitions, prospects or returns contained herein. Readers are cautioned that a number of factors, both external and those specific to HSBC, could cause actual achievements, results, performance or other future events or conditions to differ, in some cases materially, from those stated, implied and/or reflected in any ESG-related forward-looking statement or metric due to a variety of risks, uncertainties and other factors (including without limitation those referred to below):\n– Climate change projection risk: this includes, for example, the evolution of climate change and its impacts, changes in the scientific assessment of climate change impacts, transition pathways and future risk exposure and limitations of climate scenario forecasts;\nwe may not be able to achieve our ESG targets, commitments and ambitions (including with respect to the positions set forth in our thermal coal phase-out policy and our energy policy, and our targets to reduce our on-balance sheet financed emissions and, where applicable, facilitated emissions in our portfolio of selected high-emitting sectors), which may result in our failure to achieve some or all of the expected benefits of our strategic priorities; and – we may not be able to develop sustainable finance and ESGrelated products consistent with the evolving expectations of our regulators, and our capacity to measure the environmental and social impacts from our financing activity may diminish (including as a result of data and model limitations and changes in methodologies), which may affect our ability to achieve our ESG targets, commitments and ambitions, including our net zero ambition, our targets to reduce our on-balance sheet financed emissions and, where applicable, facilitated emissions in our portfolio of selected high-emitting sectors and the positions set forth in our thermal coal phase-out policy and energy policy, and increase the risk of greenwashing.\nESG projection risk: ESG metrics are complex and are still subject to development. In addition, the scenarios employed in relation to them, and the models that analyse them have limitations that are sensitive to key assumptions and parameters, which are themselves subject to some uncertainty, and cannot fully capture all of the potential effects of climate, policy and technology-driven outcomes;\nChanges in the ESG regulatory landscape: this involves changes in government approach and regulatory treatment in relation to ESG disclosures and reporting requirements, and the current lack of a single standardised regulatory approach to ESG across all sectors and markets;\n– Variation in reporting standards: ESG reporting standards are still developing and are not standardised or comparable across all sectors and markets, new reporting standards in relation to different ESG metrics are still emerging;\nAny forward-looking statements made by or on behalf of HSBC speak only as of the date they are made. HSBC expressly disclaims any obligation to revise or update these ESG forward-looking statements, other than as expressly required by applicable law.", "chunk_word_count": 511, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Additional cautionary statement regarding ESG data, metrics and forward-looking statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 444, "page_start": 444, "page_end": 445 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 569, "chunk_text": "# Opening up a world of opportunity\n## HSBC HSBC.BH\n### Additional cautionary statement regarding ESG data, metrics and forward-looking statements\nData availability, accuracy, verifiability and data gaps: our disclosures are limited by the availability of high quality data in some areas and our own ability to timely collect and process such data as required. Where data is not available for all sectors or consistently year on year, there may be an impact to our data quality scores. While we expect our data quality scores to improve over time, as companies continue to expand their disclosures to meet growing regulatory and stakeholder expectations, there may be unexpected fluctuations within sectors year on year, and/or differences between the data quality scores between sectors. Any such changes in the availability and quality of data over time, or our ability to collect and process such data, could result in revisions to reported data going forward, including on financed emissions, meaning that such data may not be reconcilable or comparable year-on year;\nWritten and/or oral ESG-related forward-looking statements may also be made in our periodic reports to the US Securities and Exchange Commission, summary financial statements to shareholders, proxy statements, offering circulars and prospectuses, press releases and other written materials, and in oral statements made by HSBC’s Directors, officers or employees to third parties, including financial analysts.\nOur data dictionaries and methodologies for preparing the above ESGrelated metrics and third-party limited assurance reports can be found on: www.hsbc.com/who-we-are/esg-and-responsible-business/esgreporting-centre.\n### Certain defined terms\nDeveloping methodologies and scenarios: the methodologies and scenarios HSBC uses to assess financed emissions and set ESGrelated targets may develop over time in line with market practice, regulation and/or developments in science, where applicable. Such developments could result in revisions to reported data, including on financed emissions or the classification of sustainable finance and investments, meaning that data outputs may not be reconcilable or comparable year-on year; and\nUnless the context requires otherwise, ‘HSBC Holdings’ means HSBC Holdings plc and ‘HSBC’, the ‘Group’, ‘we’, ‘us’ and ‘our’ refer to HSBC Holdings together with its subsidiaries. Within this document the Hong Kong Special Administrative Region of the People’s Republic of China is referred to as ‘Hong Kong’.\nWhen used in the terms ‘shareholders’ equity’ and ‘total shareholders’ equity’, ‘shareholders’ means holders of HSBC Holdings ordinary shares and those preference shares and capital securities issued by HSBC Holdings classified as equity. The abbreviations $\" \\$ \\mathsf { m ^ { \\prime } }$ , ‘\\$bn’ and ‘\\$tn’ represent millions, billions (thousands of millions) and trillions of US dollars, respectively.\nRisk management capabilities: global actions, including HSBC’s own actions, may not be effective in transitioning to net zero and in managing relevant ESG risks, including in particular climate, nature-related and human rights risks, each of which can impact HSBC both directly and indirectly through our customers, and which may result in potential financial and non-financial impacts to HBSC. In particular:\n### Abbreviations\nAdditional information\n### HSBC Holdings plc\nIncorporated in England on 1 January 1959 with limited liability under the UK Companies Act Registered in England: number 617987\n### Registered Office and Group Head Office", "chunk_word_count": 520, "section_path": "Opening up a world of opportunity > HSBC HSBC.BH > Additional cautionary statement regarding ESG data, metrics and forward-looking statements", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 445, "page_start": 445, "page_end": 448 }, { "report": "HSBC Annual Holdings and Accounts Report 2023.pdf", "chunk_idx": 570, "chunk_text": "# Opening up a world of opportunity\n## 8 Canada Square \nLondon E14 5HQ \nUnited Kingdom \nTelephone: 44 020 7991 8888 \nFacsimile: 44 020 7992 4880 \nWeb: www.hsbc.com\n### Corporate Brokers\nMorgan Stanley & Co. International plc \n25 Cabot Square \nLondon E14 4QA \nUnited Kingdom\nBank of America Securities 2 King Edward Street London EC1A 1HQ United Kingdom\nHSBC Bank plc 8 Canada Square London E14 5HQ United Kingdom\nPrinted by Park Communications Limited, London, on Nautilus SuperWhite board and paper using vegetable oil-based inks. Made in Austria, the stocks comprise $100 \\%$ de-inked post-consumer waste. Pulps used are totally chlorine-free.\nAll rights reserved\nThe ${ \\sf F S C ^ { \\otimes } }$ recycled logo identifies a paper which contains $100 \\%$ post-consumer recycled fibre certified in accordance with the rules of the Forest Stewardship Council®.", "chunk_word_count": 138, "section_path": "Opening up a world of opportunity > 8 Canada Square \nLondon E14 5HQ \nUnited Kingdom \nTelephone: 44 020 7991 8888 \nFacsimile: 44 020 7992 4880 \nWeb: www.hsbc.com", "document_id": "HSBC Annual Holdings and Accounts Report 2023", "page": 448, "page_start": 448, "page_end": 450 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 0, "chunk_text": "# 2022 CLIMATE REPORT\nDecember 2022\n## JPMORGAN CHASE & CO.\n### Contents\n### Introduction 2\n### Strategy 16\n### Metrics & Targets 54\nMessage from Our Chairman & CEO 2 \nAbout This Report 3 \nTCFD Index 4 \nCompany at a Glance 6 \nClimate Action to Date 8\nOur Approach to Environmental Sustainability18 \nScaling Green Solutions 19 \nMeeting Needs Responsibly 25 \nMinimizing Our Operational Impact 29 \nAccountability,Transparency and Engagement32\nMeasuring Our Progress 56 \nScaling Green Solutions 57 \nMeeting Needs Responsibly 58 \nMinimizing Our Operational Impact 63\n### Risk Management 36\n### Conclusion & Appendices 66\n### Governance 10\nFirmwide Climate-Related Governance 12 Management of Climate-Related Matters Across the Firm 14\nOur Climate Risk Framework 38 \nRisk Identification 40 \nScenario Analysis 42 \nRisk Management by Risk Type 45 \nFuture Improvements 53\nLooking Ahead 66 \nAppendices 68\n### Introduction\n### About This Report", "chunk_word_count": 141, "section_path": "2022 CLIMATE REPORT > JPMORGAN CHASE & CO. > Contents", "document_id": "JP Morgan Climate Report 2022", "page": 1, "page_start": 1, "page_end": 2 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 1, "chunk_text": "# 2022 CLIMATE REPORT\n## JPMORGAN CHASE & CO.\n### Message from Our Chairman & CEO\nproviders need to invest to achieve net-zero emissions.To support clients,we established the Center for Carbon Transition,centralizing client access to financing,advisory and research solutions to help them make the low-carbon transition and thrive.\nAt the end of the day,our climate ambitions are subject to important prerequisites and considerations, both within and outside of our control, including energy security,investment in innovation,appropriate climate policy,and our own views about orderly transition.\nThis Climate Report is informed by the recommendations of the Task Force on Climate-related Financial Disclosures (\"TCFD\"), including the most recent 2O21 updates and the supplemental guidance for the financial sector.1 JPMorgan Chase also publishes climate-related information annually through multiple channels,including our Environmental, Social and Governance (\"ESG\") report, regulatory filings and press releases,and shares climate-related information with stakeholders through direct conversations.\nSecond,we need to scale investment massively in clean technologies.As the International Energy Agency has emphasized, “huge leaps in clean energy innovation”are core to achieving net zero.This is because the world will rely on traditional fuels until alternatives,like clean hydrogen,are fully available.To accelerate progress, JPMorgan Chase set a target to finance and facilitate $\\$ 2.5$ trillion over ten years to advance sustainable development, including \\$1 trillion for climate action and other green initiatives - with approximately \\$1o6 billion green activities financed in 2021.\nIt is in this context that we are pleased to present our 2022 Climate Report, which outlines the measures we are taking to respond to the climate challenge across our business. We remain committed to addressing energy and climate challenges as part of how we do business and serve our customers,clients,shareholders,and communities each day.\nAs Isaid in my annual letter to shareholders last April, despite the growth in well-intended climate pledges from governments and companies,the world is well short of meeting its net-zero emissions goals by 2O5o.At the same time,resource scarcity is leading to higher energy costs and reduced reliability, hindering national security and hurting the most vulnerable. Disruptions to the global energy system are again highlighting our urgent, global need to provide energy resources securely, reliably and affordably and,at the same time,address long-term clean energy solutions and strategies to reduce our carbon footprint.\nAs informed by TCFD's recommendations, this report provides details on:\nThere is no silver bullet to meet the world's energy and climate goals. But we can start by prioritizing emissions reductions,developing meaningful short- and long-term goals and crafting innovative policy solutions.The curve toward net zero can still be bent before it's too late.\nHow climate-related risks and opportunities are addressed within our corporate governance practices; How our business is responding to climate risks and opportunities,including our evolving strategies and programs to support the transition to a lowcarbon economy; \nHow we identify,assess and manage climate risks within our risk management framework; and \nHow we are measuring our performance and \nmaking progress toward our targets, including for our operational emissions and key sectors of our financing portfolio.", "chunk_word_count": 495, "section_path": "2022 CLIMATE REPORT > JPMORGAN CHASE & CO. > Message from Our Chairman & CEO", "document_id": "JP Morgan Climate Report 2022", "page": 3, "page_start": 3, "page_end": 3 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 2, "chunk_text": "# 2022 CLIMATE REPORT\n## JPMORGAN CHASE & CO.\n### Message from Our Chairman & CEO\nThird,while businesses have important roles to playin driving the transition to a low-carbon economy,the private sector cannot do this alone.Public sector leadership is needed to enact policies that spur long-term and large-scale capital deployment for low-carbon solutions that benefit the global economy, including measures like promoting investment in technology R&D and reductions in permitting timelines for energy infrastructure, such as wind and solar farms,transmission lines and liquefied natural gas.\nThese objectives are not mutually exclusive.We can - and must- do both.To begin,we need to find a better way forward that can bring diverse stakeholders together in pursuit of an appropriate climate approach. Last April,I set out four ways to jump-start that process.These have as much validity today as they did over six months ago:\nJamie Dimon Chairman & CEO, JPMorgan Chase & Co.\nFinally, let'sset meaningful goals and identifyafew tangible, cost-effective solutions to reduce emissions today.This should include minimizing fugitive methane emissions and virtually eliminating wasteful flaring of natural gas.Immediately actionable opportunities like these might require more financing,not less, to prepare companies to thrive in a lower-carbon future.In 2021, JPMorgan Chase set 2O3O targets to reduce the carbon intensity of our financing portfolio,starting with Oil & Gas,Electric Power, and Automotive Manufacturing- and now we are establishing three new sectoral goals for Iron & Steel, Cement and Aviation. It's Worth noting that while we make our own decisions for our company,we may work with coalitions or join organizations that seek to advance progress.\nFirst,we must promote energy security. Constraining the flow of capital needed to produce and move fuels,especially as the war in Ukraine rages on,is a bad idea.The world still needs oil and natural gas today. But not all hydrocarbons are equal when it comes to their carbon footprint.We should be directing more capital toward less carbon-intensive fuel sources and investing in innovations,such as carbon capture and sequestration,as we look to transition to green technologies delivered at scale for Society. JPMorgan Chase is firmly committed to helping finance these kinds of investments and expediting the use of lower-carbon fuels.We don't boycott companies-we believe capital\nAll data in this report is as of December 31, 2021, unless otherwise noted; for example, progress toward our original portfolio-level emissions reduction targets are as of June 30,2022.\n### TCFD Index\nThistableidentifieswheretofindinformationrelatedtoeachoftheecommendeddisclosuresfromTCFD,both inthisreportandin our other publicly available documents.\n### Company at a Glance\nJPMorganChase&Co.(\"JPMorgan Chase\",the“Firm\"or“we\")isafinancialservicescompanybasedintheUnited Statesof America (\"U.S.\"),with branches in 48 states and Washington D.C.,with 271,025 employees in 62 countries worldwide and $\\$ 3.7$ trillion in assetssofDecember31,2021.TheFimisaleaderininvestmentbanking,financialservicesforconsumersandsmallbusinees, commercialbanking,financialtransactionprocessingandassetmanagement.UndertheJ.P.MorganandChasebrands,theFirm serves millonsof customers,predominantlyin theU.S.,andmanyoftheworld's most prominentcorporate,institutionaland government clients globally.\n### Commercial Banking\nCB providescomprehensivefinancialsolutions,including lending,payments,investmentbankingandassetmanagementproducts acrosthree primaryclientsegments: Middle Market Banking,Corporate Client Banking and Commercial Real Estate Banking. Middle Market Bankingcoverssmalland midsized companies,local governmentsand nonprofitclients.Corporate Client Banking coverslargecorporations.CommercialealEstateBankingoversinvestors,developers,andownersofultifamilyicetail, industrial and affordable housing properties.\nJPMorgan Chase'sactivitiesare organized,formanagementreporting purposes,intofour majorreportablebusinesegments, as wellas a Corporate segment.The Firm's consumer business is the Consumer& Community Banking(\"CCB\") segment.The Firm's wholesalebusinesssegmentsaretheCorporate&InvestmentBank(\"CIB\"),CommercialBanking(\"CB\"),andAsset&Wealth Management(\"AWM\").The businesssegmentsare referredtoas“linesof business”(“LOB\").For furtherinformation,referto Business Segment Results on pages 61-80 of our Form 10-K for the year ended December 31,2021.", "chunk_word_count": 513, "section_path": "2022 CLIMATE REPORT > JPMORGAN CHASE & CO. > Message from Our Chairman & CEO", "document_id": "JP Morgan Climate Report 2022", "page": 3, "page_start": 3, "page_end": 5 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 3, "chunk_text": "# 2022 CLIMATE REPORT\n## JPMORGAN CHASE & CO.\n### Asset & Wealth Management\nAset Management (\"AM\")ofers multi-asst investment management solutionsacross equities,fixed incom,alternativesand money market fundsto institutionalandretail investors,providing forabroadrangeof clients'investment needs.The Global Private Bank(PB\")providesretirementproductsandservicesbrokerage,custody,trustsandestates,loans,mortgages,deposits andinvestment management tohighnetworthclients.ThemajorityofAWM'sclientassetsare inactivelymanaged portfolios.\n### Consumer & Community Banking\nCCB fersservices toconsumersandbusinesses throughbank branches,ATMs,digital(including mobileandonline)andtelepone banking.CCB isorganizedinto Consumer&BusinessBanking(including ConsumerBanking,J.P.MorganWealthManagementand BusinessBanking),HomeLending (including Home Lending Production,Home Lending Servicingand RealEstate Portfolios)and Card&Auto.Consumer &Busines Bankingofersdeposit,investmentandlending products,paymentsandservices toconsumers, andlending,deposit,and cash management and payment solutions to smallbusinesses.Home Lending includes mortgage originationandservicingactivities,aswellasportfoliosconsistingofresidentialmortgagesandhomeequityloans.Card&Auto issues credit cards to consumers and smallbusinesses and originates and services auto loans and leases.\n### Corporate\nThe Corporate segmentconsistsofTreasuryand Chief Investment Ofice(\"Clo\")and Other Corporate,which includes Corporate stffunctionsand expense thatiscentrallymanaged.TreasuryandClOis predominantlyresponsiblefor measuring,monitoring, reportingandmanagingtheFirm'sliquidityfunding,capital,structuralinterestrateandforeignexchangerisks.ThemajorOther CorporatefunctionsincludeRealstate,chnologyLegal,CorporateFinance,HumanResources,IternalAudit,iskanagement, Compliance, Control Management,Corporate Responsibility and various Other Corporate groups.\nInformationaboutJPMorganChase'sfinancialperformanceisavailableinourquarterlyearningsmaterials,aswellasquarterlyand annual reports on Form 10-Q and Form 1O-K,respectively.\n### Corporate & Investment Bank\nCIB ofersabroadsuiteofinvestmentbanking,market-making,primebrokerage,andtreasuryandsecuritiesproductsandservices toaglobalclientbaseoforporations,nvestors,financialinstitutions,merchantsandgovernmentandmunicipalentities.Banking offers afullrange ofinvestmentbanking productsand services in allmajorcapital markets,includingadvising oncorporate strategyand structure,capital-raisingin equityanddebt markets,as wellas loan originationand syndication.Bankingalso includesPayments,hichprovidespaymentsservicesenablingclients tomanagepaymentsandreceiptsglobalyandros-boder financing.Markets&Securities Services includes Markets,aglobalmarket-makeracrossproducts,includingcashandderivative instruments,whichalsooferssophisticatedrisk managementsolutions,prime brokerage,andresearch.Markets &Securities ServicesalsoincludesSecuritiesServices,aleadingglobalcustodianhichprovidesustodyfundaccountingandadministation andsecurities lending products principallyforasset managers,insurance companiesand publicand private investment funds.\n### Climate Action to Date\n2005 2007 2008 2012 Established Office of Environmental Affairs to direct Publishedfirst GHG inventory Set target to reduce Scope 1and 2 Exceeded $2 0 \\%$ Scope 1 and 2 (market theFirm'senviomentaliniaives (market-based)GHG emissions by based) GHG emissions reduction target Adoptedacomprehensive EnvironmentalandSocial $2 0 \\%$ by 2012,over 2005 baseline and increased the goal to $40 \\%$ reduction Risk GovernancePolicyandpublishedfirst Began offseting employee business byendof2020,ver2005seline Environmental and Social Policy Framework travel emissions \n2017 2016 2015 2014 2013 \n： ← Settarget to source renewable energy for $100 \\%$ of Executed first Virtual Power Purchase Issued first Representatives of the Became a member of the global power needs by 2020 Agreement to source renewable energy annual ESG 自 Firm were among the Equator Principles Association Made first $\\$ 200$ billion Clean Financing Commitment for our operations Representativesofthe Firm became report Bond Principles Co-authors of the Green members of TCFD \n2019 2020 100% 2021 \\$2.5 022T DATE ： Published first 自 Met goals to source renewableenergytomet $100 \\%$ of global Announced a new 10-year, $\\$ 2.5$ trillion Sustainable Development Launched Carbon Assessment Framework for TCFD-aligned climate power needs annually and achieve operational carbon neutrality Target,including \\$1 trillon to support climate actionand other capital markets transactions with in-scope clients disclosure report Setandachievedatargettofianceandfacilitate $\\$ 200$ bilion green initiatives Published 2030 portfolio-level emissions intensity to support limateaction and sustainable development in 2020 Published J.P.Morgan'sCarbon Compass(021) reductiontargetsforthreenewsectors-Iron& Announced commitment to set portfolio-level emissions methodology and 2O30 intermediate targets for three sectors - Steel, Cement and Aviation intensityreductiontargetsforkeysectors ofourfinancing OilandGas,ectricowerandutomotiveaufacturing portfolio Set additional operational sustainability targets,including to CreatedadedicatedClimate Risk team reduce Scope 1 and 2 (location based) GHG emissions $4 0 \\%$ by Established the Centerfor Carbon Transition as the Firm's 2030,over 2017 baseline centerof excellence to provide clients globally with cutting edge Launched Carbon Assessment Framework (CAF)for balance low-carbon transitionfocusedadvisoryandexpertise sheetransactiosithentscoveredbyogans interediatetagetses) Launched an ESG Solutions team of investment bankers to provide ESG-related corporate finance advice to CIB clients Established the CB Green Economy Team Issued inaugural \\$1 billion green bond Issued \\$1.25 billion green bond and published first green Became a founding member of the Climate Leadership Council bond report IJoined Net-Zero Banking Alliance\n### Governance", "chunk_word_count": 541, "section_path": "2022 CLIMATE REPORT > JPMORGAN CHASE & CO. > Asset & Wealth Management", "document_id": "JP Morgan Climate Report 2022", "page": 5, "page_start": 5, "page_end": 7 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 4, "chunk_text": "# 2022 CLIMATE REPORT\n## JPMORGAN CHASE & CO.\n### Firmwide Climate-Related Governance\n### Board Oversight\nand income,ensure the integrity of the corporation's financial statements and to maintain compliance with the corporation's ethical standards,policies,plans and procedures,and with laws and regulations.As part of this oversight,the Audit Committee considers ESG-and climate-related matters.\nThe Board is responsible for oversight of the business affairs of the Firm on behalf of shareholders. Oversight of ESG matters, including those related to environmental sustainability and climate-related matters,is an important part of the Board's work.Board committees consider climate-related matters within the scope of their responsibilities.\nOurcorporate governance practices helpusservethe interests ofourstakeholders,including Customers,clients,employees, shareholders andcommunities.The Firm believes that our BusinessPrinciples are fundamental tooursuccess,which focus on how we strengthen,safeguard and grow our company over time.These principlesapply consistently acrossLOBs and geographies where we operate.\nClimate-and ESG-related matters are also considered as part of our director education program.For example,in 2O21 directors were provided with education on the Firm's climate risk management framework.\nThe Board Risk Committee is responsible for assisting the Board in its oversight of management's responsibility to implement a global risk management framework reasonably designed to identify,assess and manage the Firm's risks,including ESG and climate risks.Its responsibilities include approval of applicable primary risk policies and review of certain associated frameworks,analysis and reporting established by management. As part of its oversight of the Firm's risks,the Board Risk Committee is responsible for considering issues concerning how the Firm identifies,assesses and manages climate risk.\nTheilustration belowoutlines how environmentalsustainabilityandclimate-related matersareoverseen bythe Boardof Directors (\"the Board\")andseniormanagementandaremanaged within theFirm's LOBs.Wewillcontinuetoenhancethe below structure,as appropriate.\n### Senior Management\nOur management structure is designed to encourage leadership that is consistent with our corporate standards.Senior management - including certain members of the Operating Committee (\"OC\") and relevant leaders within each of our LOBs - are responsible for strategy and execution on ESG matters across the Firm.With respect to climate-related matters, senior management's responsibilities include; consideration and inclusion of climate-related risks into the Firm's strategy and operations;and the implementation of strategic climate-related business initiatives,like our work to finance and facilitate more than \\$1 trillion by the end of 2O3O to support climate action and other green initiatives.\n### Organizational Illustration\nThe Public Responsibility Committee is responsible for overseeing the Firm's positions and practices on public responsibility matters,including environmental sustainability, that reflect JPMorgan Chase's values and impact its reputation among shareholders and other stakeholders.Among the matters the Public Responsibility Committee periodically considers are the Firm's approach to and progress on sustainability initiatives and commitments,external policy developments related to energy and climate change,and stakeholder views.\n## FIRM-WIDE SENIOR SUSTAINABILITY LEADERS", "chunk_word_count": 427, "section_path": "2022 CLIMATE REPORT > JPMORGAN CHASE & CO. > Firmwide Climate-Related Governance", "document_id": "JP Morgan Climate Report 2022", "page": 8, "page_start": 8, "page_end": 8 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 5, "chunk_text": "# 2022 CLIMATE REPORT\n## OPERATINGCOMMITTEE\nOur Firm's most senior management body is the OC,which is responsible for developing and implementing corporate strategy and managing operations.The OC is composed of our Chief Executive Officer (\"CEO\"), Chief Risk Officer (\"CRO\"), Chief Financial Officer (\"CFO\"), General Counsel, CEOs of each of the LOBs and other senior executives.\nThe Corporate Governance & Nominating Committee is responsible for exercising general oversight with respect to the governance of the Board,including its composition, nominees and framework for self-assessment.Among its responsibilities is the review of stockholder proposals and proposed responses. This includes stockholder proposals relating to environmental sustainability issues,such as climate change.\nThe CRO,the Global Head of Sustainability, the Head of the Center for Carbon Transition (\"CCT\") and other senior leaders have provided updates on climate-related initiatives to the OC and Board of Directors to assist the Board in meeting its responsibilities.In addition,the CRO and/or senior management provide the full Board and/or the Board Risk Committee with more in-depth information on specific climate-related matters.\nThe Audit Committee is responsible for assisting the Board in its oversight of,among other things,management's responsibility to ensure that there is an effective system of controls reasonably designed to safeguard the Firm's assets\n### Management of Climate-Related Matters Across the Firm\n## CHIEF ADMINISTRATIVE OFFICE(\"CAO\")\n## CORPORATE SUSTAINABILITY\n## CLIMATERISK\nThe Corporate Sustainability team is responsible for providing advice across the Firm and its LOBs on its approach to managing ESG matters,including supporting the development of sustainability- and climate-focused business strategies and financing opportunities, engaging with stakeholders and policymakers,and facilitating external reporting.The team is led by the Global Head of Sustainability, who reports to the Global Head of Corporate Responsibility and the CRO.\nTheCAO provides multiple globalservices thatsupporttheday-to-dayoperationsoftheFirm'sbusinesses,includingrealstate, sourcingamenities,documentandbusinessolutions,aviationandsecurity.TheCAOhasresourcesfocusedonexecuting theFirms strategyto minimize theenvironmentalimpactofouroperationsandsupplychain.Together,these groupsare responsible for settingandexecutingtheFirmsoperationalsustainabitytargets,including toreduceGHGemissons,wateruseandwaste.This work is overseen by the Chief Administrative Officer,who reports to the CFO of the Firm.\nThe Climate Risk team is responsible for establishing the firmwide framework and strategy for climate risk,developing and advancing climate risk policy and standards,and building our approach to climate risk data.The team is engaging across the Firm to help integrate climate considerations into LOB risk management frameworks.The Climate Risk team is led by the Firmwide Risk Executive for Climate Risk,and is overseen by the CRO.\n## OPERATIONALSUSTAINABILITY\n## GLOBAL ENVIRONMENTAL AND SOCIALRISK MANAGEMENT(\"GESRM\")\nThe Operational Sustainabilityteam is responsibleforthe Firm's carbon management strategy,including tracking and reporting the Firm's GHG emissionsand progresstowardouroperationalsustainabilitytargets.The team also coordinates the implementationofoperationalsustainabilityeffortsacrossthecorporate functions,managessustainability-focusedemployee engagement,andidentifiesand sourcescarbon credits.TheOperational Sustainabilityteamis ledbythe Headof Operational Sustainability,who reports to the CAO CFO.\n## ESG INVESTOR RELATIONS (\"ESG IR\")\nClimate Risk also includes the GESRM team,which is responsible for establishing the Firm's environmental and social (\"E&S\") risk standards that outline the approach for identification,escalation and management of transactions and activities that may present an increased E&S risk.\nThe ESG IR team is responsible for providing information and managing the Firm's relationships with the investor community on climate and other ESG matters.Members of the team are responsible for engaging with the investor community on the Firm's climate strategy,disclosures and performance,and then providing strategic intelligence and advice to senior management and the Board on investor views.ESG IR sits within the Global IR function,which reports to the CFO of the Firm.", "chunk_word_count": 533, "section_path": "2022 CLIMATE REPORT > OPERATINGCOMMITTEE", "document_id": "JP Morgan Climate Report 2022", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 6, "chunk_text": "# 2022 CLIMATE REPORT\n## GLOBAL REAL ESTATE(\"GRE\") ENERGY& SUSTAINABILITY\nThe GREEnergy&Sustainabilityteamisresponsibleforprocurementof theenergy neededfortheFirm'srealestateglobally. The team is focused on deploying onsite renewable energy,implementing energy eficiency measuresand reducing water usage.GREseeks to reduce theenvironmental impact of the Firm's real estate portfolio.The teamreports tothe Head of Property Management,who reports to the Head of GRE.\n## FIRMWIDE BUSINESS RESILIENCY(\"FBR\") AND GLOBAL TECHNOLOGY RESILIENCY MANAGEMENT (\"GTRM\")\nFBR and GTRM are responsible for overseeing our firmwide resiliency program which is designed to enable the Firm to prepare for,adapt to,withstand and recover from business disruptions that may impact critical business functions and supporting assets (e.g., people, technology,facilities and third parties).This includes major events and disruptions that impact the Firm and which may be driven by climate change.The program includes governance,awareness training, planning and testing of recovery strategies,as well as strategic and tactical initiatives to identify,assess,and manage business resiliency risks.The program is required to be managed in accordance with the Firm's overall approach to Operational Risk Management, including alignment with technology,cyber,data, physical security, crisis management, real estate and outsourcing programs.The Head of FBR reports to our Chief Control Manager.The Head of GTRM reports to the Head of Cybersecurity & Technology Controls.\n## OFFICE OF THE CHIEF FINANCIAL OFFICER(\"OCFO\") FORCORPORATERESPONSIBILITY\n## SUPPLIERSUSTAINABILITY\nThe Supplier Sustainabilityteam is responsible for providing oversightof the Firm'ssupplychain with respecttoESG matters, includingonenvironmental sustainability maters.The team works to identifysustainable solutions to meet the Firm's eeds byseting procurement guidelinesand engaging withsupliers tounderstandtheenvironmentalimpactoftheiroperationsand products.The team is ledbythe Global Headof Supplier Sustainability,whoreports tothe Headof Sourcing&Procurement.\nThe OCFO for Corporate Responsibility is responsible for providing oversight and controls for the reporting of the Firm's external ESGrelated commitments.The team is led by the CFO for Corporate Responsibility, Morgan Health,and Diversity, Equity & Inclusion reporting into the Corporate Sector CFO.", "chunk_word_count": 288, "section_path": "2022 CLIMATE REPORT > GLOBAL REAL ESTATE(\"GRE\") ENERGY& SUSTAINABILITY", "document_id": "JP Morgan Climate Report 2022", "page": 9, "page_start": 9, "page_end": 9 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 7, "chunk_text": "# 2022 CLIMATE REPORT\n## LOBAL CRISIS MANAGEMENT (\"GCM\") AND GLOBAL SECURITY OPERATION CENTERS (\"GSOCS\")\nGCMis responsibleforproviding 24hoursadaysevendaysaweek monitoringof incidents potentiall impacting theoperation f theFirm,including naturaldisasters,andforcoordinating withourResiliencyRealEstate,Human ResourcesandTechology groups,among others,to respond to events thatmayaffectour employees,clientsandcustomers.The Head ofGCMmanages ourthreeGSOCs,thatare designedtocontinuouslydetect,analyzeandreportonincidentswithactualorpotentialimpact.he team is led by the Head of GCM,who reports to the Chief Security Officer.\nStrategy\n### Scaling Green Solutions\n### Our Approach to Environmental Sustainability\nJPMorganChasehelpsourclientsnavigatethechallngesandrealize theeconomicopportunitiesofthetransitiontoalow-carbon economy.Webelievehelpingourclientsfinanceandacceleratetheir transitionobjectivescreatespositiveenvironmentalbenefits and generates long-term financial returns for our shareholders.\nTo meet client demandand global limateandsustainability goals,the world willneed todevelopanddeploya hostof new technologies,businessmodelsandothersolutions.Asaglobalfinancialinstitution,we haveanimportantrole toplaybyproviding financing and strategic advice to clients and by helping investors put their capital to work.\nTheseeffortsare guided bythe threepilarsofour environmentalsustainabilitystrategy-scaling green solutions,meting nedsresponsiblyandminimizingouroperational impact-allofwhichisunderpinnedbyourongoingfocus onaccountability transparencyand engagement,which helps us continue to evolve and remain responsive to stakeholder interests.\n### Mobilizing Capital for Climate Action\nDeveloping solutions sufficient to meet the climate challenge will require significant capital.In April 2O21,we announced a target to finance and facilitate $\\$ 1$ trillion toward green initiatives that support climate action by the end of 2030, as part of our broader $\\$ 2.5$ trillion Sustainable Development Target.The 1O-year timeframe of this target is intended to reflect the long-term nature of climate change and our continued resolve to play our part in addressing it.\nOur progress against this target over the 1O-year timeframe wil not be linear,but we will continue to show our work,publishing details of our approach and periodically reporting progress. See page 57 in the Metrics & Targets section of this report for more details and discussion of our progress against our $\\$ 1$ trillion green target.\n[IMAGE CAPTION] Our Approach to Environmental Sustainability\nWe also support the market through our own green bond issuances.As of this report's publishing we have issued two green bonds,governed by our July 2O2O Sustainable Bond Framework, which allocated proceeds to renewable energy investments across the U.S. Collectively, these projects are expected to produce more than 13,ooo gigawat-hours of electricity annually- enough to supply over one million homes with clean electricity each year. See our inaugural Green Bond Report,as well as page 73 of our 2021 ESG Report, for more details on these two issuances.In October 2O22,we updated our Sustainable Bond Framework which will govern green, social and sustainability bond issuances going forward.\nOur \\$1 trillion green target is aimed at accelerating the deployment of solutions for cleaner sources of energy and facilitating the transition to a low-carbon economy.This includes supporting activities which advance climate action (such as renewable energy, clean technology and sustainable transportation) and other environmental objectives (such as water, waste management and conservation).\n### Providing Climate-Related Solutions to Consumers and Investors\n### Our $\\$ 2.5$ Trillion Sustainable Development Target\n$ { \\mathrm { ~ \\textrm ~ { ~ ~ } ~ } } | { \\mathrm { n } } \\ 2 0 2 1$ , we set a target to finance and facilitate more than $\\$ 2.5$ trillion over 10 years - from 2021 through the end of 2030 - to advance long-term solutions that address climate change and contribute to sustainable development.\nand families the tools they need to meet their goals.\nOur Sustainable Development Target (the “Target\") aims to grow and strengthen our business activities across three important areas:\n## ASSETMANAGEMENTSUSTAINABLEINVESTING\n## GLOBALPRIVATEBANKSUSTAINABLEINVESTING", "chunk_word_count": 540, "section_path": "2022 CLIMATE REPORT > LOBAL CRISIS MANAGEMENT (\"GCM\") AND GLOBAL SECURITY OPERATION CENTERS (\"GSOCS\")", "document_id": "JP Morgan Climate Report 2022", "page": 9, "page_start": 9, "page_end": 12 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 8, "chunk_text": "# 2022 CLIMATE REPORT\n## CCB EV AUTO LENDING\nAt J.P. Morgan Asset Management (\"JPMAM\"),we believe contributing to solutions to tackle climate change creates longterm value for our clients.For this reason,we continually strive to enhance our climate-related investment capabilities and our efforts to help clients consider the material implications of climate change within their portfolios.\nAt J.P. Morgan Global Private Bank,we provide retirement products and services,brokerage,investment advisory and other solutions to high-net-worth clients.We currently provide clients with access to multiple sustainable investment strategies across equities,fixed income,alternatives and multi-asset portfolios, with an increasing focus on climate-related opportunities.\nAs automakers accelerate efforts to transition to electric vehicles (\"EVs\"),many consumers are evaluating them for the first time.JPMorgan Chase is responding by helping consumers understand and navigate this new segment and access financing to support their purchases.\n## GREEN\nSupporting climate action and other green initiatives such as clean energy and sustainable resource management\nThe EV landscape is complex and evolving quickly,and information can be hard to find or understand for consumers. In response, Chase Auto launched the EV Education Center, a website intended to help consumers learn about,find and purchase electric and hybrid vehicles,including information about charging, battery range and maintenance.The EV Education Center builds on JPMorgan Chase's efforts to scale green and innovative technologies.\nJPMAM's Global Sustainable Investing Team leads sustainable investing globally in partnership with investment professionals to meet client needs.The team: provides investing research and insights on thematic ESG issues; works with clients to implement sustainable investing solutions;and oversees our ESG-related investment stewardship,including proxy voting and investor engagement. Members of JPMAM's Global Sustainable Investing team are senior staff with relevant experience and a broad range of skills in the ESG space.\nIn response to growing interest in climate-related thematic investing, J.P. Morgan Global Private Bank is actively expanding our range of available strategies and funds.For example,in 2022,we added a growth equity climate solutions investment fund focused on decarbonization,energy eficiency,resource conservation and emissions management.Additionally,we are considering new product opportunities in the sustainable food and agriculture industries.\n## DEVELOPMENT FINANCE\nImproving socioeconomic development in emerging economies", "chunk_word_count": 344, "section_path": "2022 CLIMATE REPORT > CCB EV AUTO LENDING", "document_id": "JP Morgan Climate Report 2022", "page": 12, "page_start": 12, "page_end": 12 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 9, "chunk_text": "# 2022 CLIMATE REPORT\n## COMMUNITY DEVELOPMENT\nAdvancing economic inclusion in developed economies\nWe are also working to increase financing to support EV adoption, including entering into private label relationships with EV manufacturers to provide flexible financing options to consumers.\nThe Global Private Bank also recognizes demand from certain clients that climate risk be incorporated into how they manage their strategy and operations.In line with this,the J.P. Morgan Global Private Bank offers a number of strategies and funds that aim to actively manage and address ESG risks,including climate.\nThe Target reflects the opportunities that we see to support our clients' goals, deploy capital and invest in solutions that can help to advance a more sustainable and inclusive future.\nAt JPMAM,we endeavor to help clients enhance long-term value to their portfolios by considering financially material climate risks and opportunities as part of the investment process.Where aligned with our clients' investment objectives,we also strive to address climate risks and opportunities through meaningful carbon emissions reductions in client portfolios,including by reducing exposure to the largest carbon-emiting companies or sectors,investing in companies which are on a path to reduce carbon emissions,growing our sustainable product suite and actively engaging with our investee companies.To learn more about these efforts see the 2O22 Inaugural JPMAM TCFD Report.\nBy drawing awareness to the work happening across the Firm to advance sustainable development, the Target is designed to contribute toward scaling solutions for the world's toughest challenges. For more information on the Target, including the activities it is designed to support and amplify across our business,see page 6 of our 2O21 ESG Report. To learn more about our progress specifically on the green objective of our Target, please see page 57 in Metrics & Targets.\nFinally,we have invested in tools and solutions to help clients achieve their sustainable investing goals.\n### Supporting Our Clients\n## GREEN, SOCIAL AND SUSTAINABILITY BONDS\nWe continue to broaden our efforts to support the climate-and sustainability-related banking needs of wholesale clients,from early stage and small companies through to multinationals and other large corporations.We deploy our capital and expertise to assst clients working to transition their business model and operations to reduce emissions.As we expand our capabilities across our LOBs,we aim to provide clients with increasingly diverse and innovative solutions while helping to grow the market for green and sustainable financing.\n## CENTER FOR CARBON TRANSITION\nThe CCT provides clients globally with low-carbon transition focused advice and expertise,and works with industry coverage and product teams within the CIB and CB on a wide variety of strategic sustainability focused transactions.The team is also responsible for supporting our banking teams in identifying green business opportunities to meet client demands and amplifying our green economy coverage.\nThe global market for green,social and sustainability bonds has grown rapidly in recent years,rising to over $\\$ 900$ billion in $2 0 2 1 - \\mathsf { a }$ jump of almost $8 0 \\%$ in comparison to 2020.Through our business, JPMorgan Chase is a leading underwriter of such instruments,many of which our clients intend to use to support their climate-related activities.In 2O21, JPMorgan Chase was the number one underwriter of sustainable bonds globally,and the Firm's broker-dealer subsidiaries underwrote over $\\$ 50$ billion in green,social and sustainability bond debt, including approximately $\\$ 30$ billion in green bonds.3", "chunk_word_count": 545, "section_path": "2022 CLIMATE REPORT > COMMUNITY DEVELOPMENT", "document_id": "JP Morgan Climate Report 2022", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 10, "chunk_text": "# 2022 CLIMATE REPORT\n## GREEN ECONOMYBANKING\nThe combined expertise of the CCT and other banking teams helps provide tailored advice and solutions to clients who seek this advice as they adapt and grow their businesses.This includes providing strategic advice on clients'long-term business strategies and working with industry and product teams to structure unique financing Solutions in public and private capital markets.\nAs the need for climate solutions grows,so does the number of companies focused on providing them,with each requiring aunique combination offinancing and advice to achieve its business objectives. Our CB Green Economy Banking team leads our green economy-focused client franchise and is called upon to provide subject matter expertise,banking solutions,and specialized credit underwriting for the growing number of companies focused on sustainable technologies,products and services.Green Economy Banking is currently focused on five sectors一 renewableenergy,eficiencytechnology,sustainablefinance,sustainableagriculture &food technology,andclean energy mobility-withsenior bankers asigned to provide specific sub-industry coverage within each of these sectors.\nThe CCT works to develop and implement the Firm's strategy to align,over time,its financing portfolio with what we consider to be the primary goals of the Paris Agreement.The team has led the creation,and continues to oversee the implementation,of our Carbon Assessment Framework (\"CAF\"),which helps us monitor our progress toward our portfolio-level emissions intensity reduction targets.For more information on our Paris-aligned financing commitment and the CAF,see pages 25-28 in Strategy and pages 58-62 in Metrics & Targets.\n### Scaling a Pioneer in the Carbon Removal Industry\n### Supporting the Global Renewable Energy Expansion\n### Financing Toyota's Sustainable Vision of the Future\n## CASE STUDY", "chunk_word_count": 255, "section_path": "2022 CLIMATE REPORT > GREEN ECONOMYBANKING", "document_id": "JP Morgan Climate Report 2022", "page": 13, "page_start": 13, "page_end": 13 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 11, "chunk_text": "# 2022 CLIMATE REPORT\n## CASE STUDY\nJPMorgan Chase acted as sole placement agent on a $\\$ 650$ million equity private placement for Climeworks, a global pioneer in direct air capture (\"DAC\").The Climeworks technology captures carbon dioxide $( ^ { \\mathfrak { u } } ( { 0 _ { 2 } } ^ { \\mathfrak { n } } )$ directly from the air and permanently stores it underground with its mineralization and storage partner, addressing unabated and historical ${ \\mathsf { C O } } _ { 2 }$ emissions in complement to drastic emissions reduction. By permanently removing harmful ${ \\mathsf { C O } } _ { 2 }$ in the Earth's atmosphere, DAC aims to scale as an important climate action solution.This transaction was the largest private capital raise for a pure-play DAC company to date.The investment intends to fund and unlock Climeworks' next phase of growth: continued scale up and commercialization of the company's technology. Over the next decade,Climeworks plans to develop million-ton per year capacity plants and deploy these large-scale facilities internationally.\nJPMorgan Chase acted as lead active bookrunner and stabilization agent on the $\\$ 998$ million Initial Public Offering (\"IPO\") of Fluence Energy(“Fluence\"),a leading pure-play provider of energy storage technology globally. Energy storage is critical to decarbonizing the electrical grid, reducing variability of renewable generation and reallocating energy to be used when it is most needed. Fluence's solution for utility scale energy storage supports the largest part of the market,assisting utilities,developers,and commercial and industrial customers around the world in delivering a more sustainable, reliable and resilient electric grid. Fluence intends for its products,services and digital applications,in combination with its sponsorship from Siemens and AES,to create meaningful impact in a market that is highly fragmented. We supported the client with a multidisciplinary team and advisory capabilities across the Firm as part of Fluence's IPO.\nJPMorgan Chase acted as the managing bookrunner and sole structuring agent on Toyota Motor Corporation's $\\$ 2.75$ billion Sustainability Bond,a triple-tranche bond under Toyota's “Woven Planet Bond Framework.” The Woven Planet initiative represents Toyota's stated principle of \"doing things for someone other than ourselves.\"4 Toyota has allocated proceeds to be used for projects that contribute to solving both E&S issues,such as green projects to accelerate the reduction of ${ \\mathsf { C O } } _ { 2 }$ emissions in vehicles, plants and offices and the development and manufacturing of advanced safety and driving support technologies, including Toyota Safety SenseTM. The automobile industry has a critical role in addressing ESG issues and this was an inaugural USD Sustainability Bond for Toyota.\nThe financing was co-led by Partners Group and GIC,and included several other institutional technology and infrastructure investors globally. JPMorgan Chase supported the client with a cross-border, crossfunctional team from diverse Investment Banking and Corporate Banking coverage and product groups across the Firm, including the Green Economy Banking team and CCT.\n## 0 Meeting Needs Responsibly", "chunk_word_count": 488, "section_path": "2022 CLIMATE REPORT > CASE STUDY", "document_id": "JP Morgan Climate Report 2022", "page": 13, "page_start": 13, "page_end": 13 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 12, "chunk_text": "# 2022 CLIMATE REPORT\n## GLOBAL MARKETS SUSTAINABILITY CENTER\nWithin CIB Markets,wecreatedthe GMSC in October2O21toamong otherpurposes,furtherdrivethe Firm'seforts in providing sustainabilitysolutionstoinstitutionalinvestors.GCisdevelopingsolutionsacrosasetclasses,fromequitytocedit,cluding newasset classes ike carbon credits,to help clients transition their portfolios to alow-carbon economy.\nWhile we work to scalegreentechnologiesandsolutions,wealsoseek to useourcapitalandexpertiseto meet clientdemands andsupportsocietalandeconomic needs.Asustained move togreener energysources willnot happenwithoutaplantoallcate financingresources.Examplesof this work includealigningour lending and underwriting decisions with ourportfolio-level emissionsintensityreduction targetsinkeycarbon-intensivesectors,managing climateriss thoughtfull inourbusiness(see pages36-53formoreinformation),anddeployingourpilanthropiccapitaltosupportinitiativesthathelpvulnerablecommunities globally advance their resilience to climate change.\n## ESG SOLUTIONS\nOur CIB ESG Solutions teamisamultidisciplinary groupofinvestment bankers-including corporate governance,environmental and proxyadvisory experts-that advisealarge numberof clients acrossour major industryverticalsonimproving their sustainabilitycredentials,optimizingvalue,mitigatingriskandaddresingstakeholderconcerns throughefectiveESGintegration. Theteam manages theESG workstreams ofcapital marketsand M&Atransactions,embeddedindealteams working alongside investment banking product and industry coverage teams.\nIn2021,theESGSolutions team helpedmeetclientdemandbyenablingclientsaccesstoESG-focusedcapitalacrossequitydebt and private markets and had a key role in several IPOs leading the ESG workstream.\n### Aligning Our Financing with the Goals of the Paris Agreement\nA key aspect of our strategy is how we engage with our clients who operate in carbon-intensive industries,with the goal of accelerating the low-carbon transition and encouraging near-term actions that will set a path for global achievement of net-zero emissions.In 2020, we committed to align key sectors of our financing portfolio with what we consider to be the primary goals of the Paris Agreement,which aims to limit the global average temperature rise to well below 2 degrees Celsius,and ideally1.5 degrees Celsius,above pre-industrial levels.In May 2O21,we became the first large U.S.bank to set 2030 portfolio-level emissions intensity reduction targets, which we set for three sectors - Oil & Gas,Electric Power and Auto Manufacturing-and published our Carbon CompassSM (2021) methodology detailing our approach.We also announced our plans to expand our targets to additional sectors of our financing portfolio over time.\nWe aim to continue expanding this work over time for additional carbon-intensive sectors,engaging with our clients on their decarbonization journeys,and aligning that work with global climate goals and evolving best practices for the financial sector.\n### Supporting Green Hydrogen", "chunk_word_count": 318, "section_path": "2022 CLIMATE REPORT > GLOBAL MARKETS SUSTAINABILITY CENTER", "document_id": "JP Morgan Climate Report 2022", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 13, "chunk_text": "# 2022 CLIMATE REPORT\n## CASE STUDY\nJPMorgan Chaseacted as Joint Global Coordinatoron Green Hydrogen Systems'circa €170 millonIPO.Green Hydrogen Systems designsandmanufactures eficient,standardized,andmodularelectrolysersfortheproductionof greenhydrogen,withtheaimof drivingasustainable gobalenergy transition.Green hydrogen isproducedusingrenewableenergyandelectrolysistosplitwater toproducetheenergysource,andefectivelyscalingupgreenhydrogenisconsideredanimportant toltohelpglobaleconomies achieve net-zero emissions by 2050 and limit global temperature rise to $1 . 5 ^ { \\circ } \\mathsf { C } . ^ { 5 }$ Based in Kolding, Denmark, Green Hydrogen Systems is responding tothe growingglobaldemandforelectrolyser technologyas marketsaround theworld diversifytheirenergymix.6\nThis Climate Report provides an opportunity to reflect on our progress to date,including how we have been implementing our existing targets and expanding our approach to additional sectors.Below we summarize key elements of our approach and our strategy for driving progress toward our targets,while in the Metrics & Targets chapter (see pages 54-65) we provide details of our performance to date,as well as disclosure of our portfolio baselines and targets for the three new sectors.\nWe are now setting net-zero aligned targets for three additiona sectors - Iron & Steel, Cement and Aviation - building on the approach and foundation we set with our initial three sectors. Our new targets are intended to align to the International Energy Agency's (\"IEA\") Net Zero Emissions by 2O5O Scenario (\"NZE\").We chose to address these three sectors next given their contribution to total global emissions,and in consideration of the technical and economic maturity of their available decarbonization pathways.We believe expansion to additional sectors also helps us further sharpen our focus on the interplay between the supply and demand sides of the global energy system,which is vital to advancing overall decarbonization and the global path to net-zero emissions. For example,by understanding evolving technologies and approaches in both the Electric Power sector and major industrial sectors pursuing electrification,we believe we are better positioned to meet the needs of both types of clients, including helping them seize opportunities to accelerate and strengthen their transition strategies.\n## KEY ELEMENTS OF OUR APPROACH", "chunk_word_count": 316, "section_path": "2022 CLIMATE REPORT > CASE STUDY", "document_id": "JP Morgan Climate Report 2022", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 14, "chunk_text": "# 2022 CLIMATE REPORT\n## HOW WE ARE DRIVING PROGRESS TOWARD OUR TARGETS\nOurCarbon CompassM methodologies (2021and 2022) incorporate and expanduponseveralrelatedapproaches todefinerobust, decision-useful metricsand science-based targets onasector-by-sector basis.The following keychoicesand considerations informed how we designed our approach:\nAs we continuetoexpandoursector-specifictargets,wearealsofocusedonaligningourcapabilitesandefrts tomakeprogress toward them.Westrivetouseour knowledgeand expertiseto helpclientsframeand acton theirdecarbonization plans.Our strategy centers on the following key elements:\nAframework for assessing our clients'progress.To bring a climate lens to the way we makefinancing decisions,we have developed anassessment methodologyofourclients'emissionsand decarbonizationplans forconsiderationinourdecisionmaking in new in-scope financing transactions for in-scope clients in our targeted sectors. Our CAF uses a combination of quantitativeand qualitative measures to evaluateclients'climate ambitionand performance.Quantitative factors includean analysis ofthe client's historical emisions reductions,currentcarbon intensityand forecasted intensity basedonpublicly announcedtargets.Qualitative factors include reviewingactions theclient has taken todrive progress and otherstrategic actions taken toward decarbonization.Eachof thesefactorsis thenassignedascore,which contributestoaclient'soverall CAF scoreof1-5,allowing thecarbonassessmentresultstobe reviewed asoneconsiderationalongside otherfactors inour transactionreviewprocess.Webelievethis isareasonablydesignedframeworkcurrently,buttheFirmwillcontinue tolook for enhancement opportunities.\nScience-based.Our targets build on the transition pathways outlined by credible,third-party emissions reduction scenarios, including the IEA NZE by 2O5O Scenario and Sustainable Development Scenario (\"SDS\").We also reference a wide range of public resources,including additional climate scenarios,decarbonization research and other frameworks for assessing alignment with global emission reduction goals.\nSector-specific.Within each sector, we focus on specific activities with material emissions and credible transition pathways,enabling us to gain more useful insight and better support our clients in developing and implementing their strategies.\nDecision-useful.For each sector,we define one or more core metrics that capture essential facts about companies' performance and progress toward decarbonization,and that are compatible with the benchmark trajectories we use to evaluate alignment to global emissions goals.\nutilizing best available data. Each metric is designed to make use of consistent,well-reported and standardized data.Where gaps exist,we define processes for use of appropriate alternatives.\n### Key Aspects of Our Carbon Assessment Framework\nQUANTITATIVE ASSESSMENT QUALITATIVE ASSESSMENT Current Carbon Client is scored relative to Holistic view of the client's plans to achieve its Intensity JPMorgan Chase's portfolio decarbonization plans Forecasted Client is scored relative to This includes strategic actions taken by clients to drive \nCarbon Intensity interim target JPMorgan Chase's 2030 progress toward decarbonizing their business Historical Client is scored basedonthe 2-year \nCarbon Intensity change in its carbon intensity Reduction QUANTITATIVE SCORE (1-5) QUALITATIVE SCORE (1-5) → CLIENT CARBON ASSESSMENT FRAMEWORK SCORE← Bucket 1 Bucket 2 Bucket3 Bucket 4 Bucket5 \nLOWEST HIGHEST\nTheframeworkbelowguides howwe have soughttoreasonablydevelop metricsandtargets thatarerobust,decision-usefuland tailored to each included sector.\n[IMAGE CAPTION] How We Design Our Methodology for Each Sector\nGovernanceofour progress.Byconsidering CAFasoneelement ofour transaction-level decision-making forin-scope clients, weareable toassess howanin-scope transactionmayafect progresstowardour portfolio-leveltargets.Acountability for progresstowardthe targets has been asigned tosenior leaders with the relevant LOBs ataregional-and sector-specific level.Thissenior-levelaccountabity-coupled with CAF-isdesigned to serve asamonitoring mechanism tohelp senior management oversee progress toward achieving our targets.\nClient engagement.Assesing decarbonizationplans through our CAF also creates anopportunityforus to engage with our clients,understandtheirviews,plansandconstraints,and gudanceandcapital.TheCCT,togetherwithotherbanking teams, works closelywithclients tohelpadvance clients'decarbonizationinitiatives.Ourgoalis to supportourclients insuccessfully navigating thelow-carbon transition byhelping their managementteamsand boards think throughandimplementtheir plans, while also accelerating emissions reductions across our own financing portfolio.", "chunk_word_count": 491, "section_path": "2022 CLIMATE REPORT > HOW WE ARE DRIVING PROGRESS TOWARD OUR TARGETS", "document_id": "JP Morgan Climate Report 2022", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 15, "chunk_text": "# 2022 CLIMATE REPORT\n## 0 Minimizing Our Operational Impact\nCapitalfacilitationand deployment.We are also working to meet lients'unique capital needs related to decarbonization. Applying theFirm's expertiseinstructuringfinancial instruments,we worktodevelopsolutions-including bothtraditionaland alternativedebtandequityinstruments-tohelpadvance theirdecarbonizationefortswhileoptimizingtheircost ofcapital.Our focus ncapitalsolutionsforourlientsmayalsotranslate intoincreasingreductions inourportfolio-levelemissonsover time.\nA keycomponent ofourapproach tosustainabityis managingourGHGfootprint byreducing ourdirectandindirect emissions, which stem primarilyfromtheoperationofourmore than6Ooo corporateoffices,bankbranchesanddata centers.To guideour eforts,we have developedasetofoperationalsustainabilitytargets,manyofwhicharefocusedonreducingourcontributionto climate change.To view progress made toward our sustainability targets,see pages 63-65 in Metrics & Targets.\n### Achieving and Maintaining Operational Carbon Neutrality\n### Climate Resilience Grantmaking\nJPMorgan Chasedeploysphilanthropiccapitalto nonprofitorganizations tosupportinitiativesthathelpvulnerablecommunities in different parts of the world advance their resilience to climate change.Since 2O19,we have commited over $\\$ 13$ million in grants to advance resilience to climate change,including over $\\$ 5$ million in 2O21,supporting initiatives with local,regional,and international organizations.\nIn 2020,wecommited toachievecarbonneutralityacrosouroperationsannually.TiscommitmentincludesScope1(direct)GHG emissions frombuilding operationsand company-owned aircraftand vehicles;Scope2(indirect)GHG emisions from purchased electricity;and Scope3(indirect)GHG emissionsassciated with businesstravel.I2O21,we metourcarbon-neutral goalfor thesecond yearinarow,using carbon credits tohelpusachieve neutrality.Wearecommittedto maintaining carbon-neutral operations each year going forward.\nOur strategy to maintain carbon-neutral operations is focused on the following:\n### Building Climate and Community CASE STUDY Resilience through Land Trusts\n### Equipping Underserved Communities CASE STUDY to Lead on Climate Resilience\n## IMPROVING EFFICIENCY\n## SOURCING RENEWABLES", "chunk_word_count": 194, "section_path": "2022 CLIMATE REPORT > 0 Minimizing Our Operational Impact", "document_id": "JP Morgan Climate Report 2022", "page": 16, "page_start": 16, "page_end": 16 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 16, "chunk_text": "# 2022 CLIMATE REPORT\n## PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS\nThrough a grant to the Oregon Community Foundation, we are supporting the Pacific Northwest Resilient Landscapes Initiative,a multi-state effort that is providing dozens of nonprofit land trusts with the resources to address climate and community resilience. The overall initiative is supporting 24 projects that will conserve more than 4O,ooo acres - an area larger than Bryce Canyon National Park or 30,5Oo football fields - and aims to strengthen land trusts as they help nature and communities adapt to a changing climate. The initiative is a partnership of the Oregon Community Foundation, Idaho Community Foundation, Seattle Foundation,and the Land Trust Alliance.\nOur grant to Thrive New Orleans, in support of the Thrive Green Business Academy, helps to train and support entrepreneurs of color to pursue business opportunities in stormwater management and green infrastructure. Trainees learn to implement and manage stormwater management and green infrastructure projects, including installing bioswales, permeable surfaces, rain barrels and tree cover. Thrive New Orleans has selfreported that since 2O21 the organization's innovative education pipeline has trained 115 individuals,including Black,Indigenous,and people of color contractors and formerly incarcerated people, that have collectively completed over 1Oo urban resilience projects.In total, trainees have been awarded contracts that generated over $\\$ 3$ million in revenue, enhancing economic and climate resilience for New Orleans communities.\nReducing energy use is our first priority.We undertake a variety of energy efficiency measures,including optimizing the use of heating and cooling in our buildings,and seek to expand their implementation across our operations.\nWe are focused on installing on-site Solar systems at JPMorgan Chase properties and establishing longterm renewable energy procurement agreements (e.g., Power Purchase Agreements and green power supply contracts).We are working to increase the proportion being met with on-site renewable energy and off-site longterm renewable energy contracts to $7 0 \\%$ or more by 2025.In 2021,over $2 0 \\%$ of our renewable procurement came from these solutions.\nTo continue to meet our commitment to source renewable energy for $1 0 0 \\%$ of our global power needs annually and address the remainder of our direct and indirect emissions,we purchase applicable EACs (e.g., Green-E certified Renewable Energy Certificates (\"RECs\"), International RECs)and carbon credits.\n### Our Emissions Reduction Pathway", "chunk_word_count": 370, "section_path": "2022 CLIMATE REPORT > PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS > Our Emissions Reduction Pathway", "document_id": "JP Morgan Climate Report 2022", "page": 16, "page_start": 16, "page_end": 16 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 17, "chunk_text": "# 2022 CLIMATE REPORT\n## PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS\n### Our Approach to Carbon Offsets\nWe believe itisintheinterestofallcompanies topursueeforts toavoid,reduce and/orneutralizeemisions inteir own operations and acrosstheir valuechains.Carbon markets canplayanimportantrole inaccelerating the overalltransitiontoalowcarbon economy. Key benefits may include:\nTo buildonourcommitment tocarbon-neutraloperations,in2O21weannouncedanewtarget toreduceour Scope1and Scope2 (location based) emissions by $4 0 \\%$ by 2030 versus a 2O17 baseline.As of the end of 2O21,we had reduced Scope 1 and Scope 2 location-based emissions by $1 7 \\%$ .Moving forward,we intend to make further progress by increasing our direct use of renewable energy,upgrading existing heating andcoolingsystems,andoptimizing building space.Overtime,aswestrivetoreduceour operationalemissonsthrough these measures,weanticipate needing tobuyfewercarbon credits to neutralizeour emissions.\nEnablingflexibilityforwhen,whereandhowemisionsarereducedorremoved,whichcanhelptolower theaggregatecostof reducing net emissions; \nDrivingcapitaltowardexistingandalreadyscalablesolutions,whichmayhelptodeliver near-termreductions orremovalsfaster; Generating economic valueforreducing orremoving emisions,whichcan incentivize innovationwiththepotentialto further accelerate decarbonization; \nCreatingarange of potential environmental,social and/oreconomic co-benefits,suchaspolutionreduction,jobcreation, community development and enhanced resilience.\nHighlights of our recent emissions reduction effrts include the following:\nData center efficiency.The Firm continues to implement improvements across its data centers by shifting information technology load to newer, more efficient data centers. We also endeavor to share what we have learned with others. For instance,in October 2O21,we joined the Low Carbon Patent Pledge,through which we will share several key patents related to how we efficiently cool and ventilate our data centers,with the aim of helping to speed the transition to low-carbon technology and energy sources.\n·24/7 renewable energy.In 2O21,we worked with energy provider EDF to power our buildings in the United Kingdom (\"u.K.\") with renewable energy around the clock.As part of this effort,our electricity consumption in the U.K.will be matched to renewable generation every minute of the day, providing us with approximately 12o,ooo megawatt hours (\"Mwh\") of renewable electricity each year - enough to power our three million square feet of offices in the U.K., or the equivalent of about 33,ooo homes.\nThrough a variety of roles,including purchasing credits to address our own emissions,deploying capital to promote decarbonizationsolutions,and providingstrategicadvicetosupportclients'transitionefforts,weparticipateinvoluntarycarbon markets whichareanimportanttolforoptimizing investments toreduceemissionsanddriveprogress toward thegoalofnetzero.\nSolarexpansion.We continue to expand on-site solar power at our corporate offce buildings and retail branches across the U.S.As of December 31,2O21,we have added Solar installations at nearly 3oO retail branches in nine States including Arizona, California,Ohio and New York. Our goal is to complete solar installations at approximately 400 additional branches and 125 carports,totaling over 25 megawatts (\"Mw\") of solar capacity.We are also expanding solar installations at our corporate office buildings and expect to deploy approximately 90 MW of additional solar capacity.\nNet zero branch pilot.In 2O22,we opened a Chase retail branch in Pico Rivera, California that is piloting a net zero carbon design.Built from the ground up,the new branch will incorporate a full range of low-carbon technologies and building techniques including a wood frame modular design, low-carbon concrete,enhanced insulation,rooftop solar arrays,full electrification and the use of reclaimed asphalt in the parking lots.We expect to purchase carbon credits to address any emissions associated with construction that cannot be mitigated via sustainable design.The branch is undergoing an intensive 12-month energy performance analysis to provide insights that can inform our approach to designing and retrofitting other branches in the future.", "chunk_word_count": 507, "section_path": "2022 CLIMATE REPORT > PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS > Our Approach to Carbon Offsets", "document_id": "JP Morgan Climate Report 2022", "page": 17, "page_start": 17, "page_end": 17 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 18, "chunk_text": "# 2022 CLIMATE REPORT\n## PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS\n### Accountability, Transparency and Engagement\nWhile weare proudof thestepsourFimhastakentorespondtoclimate-relatedrisksandopportunitiesinourbusiness,e know we have more work todo,andthat we wilcontinueto learn,includingfromthefeedbackwereceivefromstakeholders.We also knowourefortswillhave the greatest impact incombinationwithtoseofothers.For thesereasons,ourstrategyissupported and strengthened by our ongoing efforts to enhance accountability,transparency and engagement.\n### CASE STUDY Strengthening Our Sustainability Commitments Through Employee Engagement\nWe encourage our employees to think about how they canlive more sustainably.Our GoGreen teams are a global network of employee-led teams that work to fostera communityof informed,engagedand inspired employees who contribute to our sustainabilityculture.The mission of the GoGreen teamsis to increase employee awareness ofsustainability initiatives at JPMorgan Chase,including our sustainabilitycommitments,and what theFirm is doing to meet them; and ofer employees opportunities to engage in sustainable activities at work,at home and in their communities.\n### Accountability\nWestrietoleveragetheFirmsrobust governance structures tofostersound managementandacultureofaccountabilityon SG matters,incldingclimaterisksandopportunities.This includesdefiningoversightandmanagementofclimate-relatedrisksand opportunities withinandacross our LOBs,andintegrating them with ourfirmwide governanceframework.To learn more,see the Governance chapter,pages 10-15.\nInthefirst half of 2022,ouremployees wereofered theopportunitytoengage in sustainabilityactivitiesaround the globe. Highlights of GoGreen efforts include:\nWeaimfortransparencyandacountabilitybyreporting progress against keyfinancing commitmentsandoperationaltargets annuallyAdditionallJPorganhasessetugoverancesructurestoonitorprogrsstowardkeyommitmentsdgets, including processes and controls for data disclosure and verification.\nHelping employees discover ways to live sustainably through onsite events such as electric bicycle demonstrations, personal e-waste disposal days, reusable giveaways to reduce single-use plastics,and carbon footprint reduction challenges; and Sponsoring learning sessions with sustainability experts on topics such as making sustainable food choices, composting and gardening at home,recycling and waste management, and establishing a corporate beekeeping program to provide safe pollinator habitats for honeybees.\nParticipating in Earth Hour, going dark for one hour in our homes and within more than 30 JPMorgan Chase buildings; Hosting events around the globe in celebration of Earth Day and World Environment Day; Collaborating with local community organizations to host beach and riverbank clean-ups, wildlife habitat enhancement activities,tree planting andlitter clearing;\n### Public Reporting\nWerecognize stakeholders'interestin timely information concerningour climate-related strategiesandactivities.We plan to continuetoprovideinformationthroughanumberof channels includingour Annual ReportandProxy Statement,ESGand Climate reporting,regulatoryfilings,website,press releases,directconversations with stakeholders,andvariousotherreportsand presentations.\nWeintendtocontinuetousetheTCFD's guidanceto informthedevelopmentofourclimate-relateddisclosures.Wearealsoclosely monitoringregulatorydevelopmentsrelated topotentialmandatoryclimatereportingrequirementsinseveraljurisdictionsaround the world.\n### Stakeholder Engagement\nOurkeystakeholdersincludecustomersandclients,shareholders,employes,communities,regulatorsandpolicymakers,research analystsandsuppliers.Weengagewithstakeholdersthroughout theyeartoobtain insightintotheirneedsandperspectives,andto gather feedback on our strategy and performance,including as they relate to climate change.\n### Realizing Environmental Benefits by Engagement with Our Suppliers\nCASE STUDY\nAt JPMorgan Chase,werecognizethattheenvironmentalimpactofouroperations extends tooursuppliers'practices.As such,we look for opportunities to work withour supliers to operate more sustainably.For example,duringapapershortage caused by supplychain ssues,we worked withoneofoursupliers to recycleour paper sraps,convert them topulpandsellthem back to paper millstuseintheirmanufacturing process.Theseeffortscontributed totherecyclingofover16.5millonpoundsofpaper, saving an estimated 57 millon gallons of water and avoiding more than 8,ooo metric tons of carbon dioxide equivalent $^ { \\prime \\prime } { \\sf m t C O } _ { 2 } { \\sf e } ^ { \\prime \\prime } )$ between January and August of 2022.", "chunk_word_count": 449, "section_path": "2022 CLIMATE REPORT > PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS > Accountability, Transparency and Engagement", "document_id": "JP Morgan Climate Report 2022", "page": 18, "page_start": 18, "page_end": 18 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 19, "chunk_text": "# 2022 CLIMATE REPORT\n## PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS\n### Policy and Industry Engagement\nSimilarly,theFirmmayengagewithindustryinitiativestoelpaddresscomplexglobalchallenges,includingclimatechange,here wearealigned withtheinitiatives'goalsandcancontinue toexerciseourown busines judgmentbasedonthebestiterestof the Firm.We participateinavarietyofinitiatives focusedonadvancing sustainabilitywhere weshareour expertiseand learn from other companies and organizations.Three examples are\nJPMorgan Chase believes that responsible corporate citizenship demands a strong commitment to a healthy and informed democracy through civic and community involvement. Our business is subject to extensive laws and regulations, and changes to such laws can significantly affect how we operate,our revenues and the costs we incur. Because of the impact public policy can have on our businesses,employees, communities and customers,we engage with policymakers holding a range of views,on a range of issues -including banking,financial services,cybersecurity,workforce development, small business,tax,trade,and inclusive economic growth,among others - to advance and protect the long-term interests of the Firm.\nExamples of our recent climate-related public policy and industry engagements include:\nProvidinga grant to the Energy Futures Initiative to support its research on public policy issues and barriers for financing the deployment of decarbonization technologies;\n·In October 2O21,we joined the Net-Zero Banking Alliance (\"NZBA\"), which brings together a global network of banks committed to considering their lending and investment portfolios with net-zero emissions by 2O50.Participation in NZBA is part of our effort as we work to develop our own targets for other sectors and engage with a growing number of clients who are aligning their strategies with science-based emission reduction pathways.It is also a reflection of our support for the ambition of greater climate action.While we are committed to these objectives,we also have noted that NZBA sets a high bar and its goals are subject to other prerequisites and critical considerations,both within and outside our control. These include the necessity of technological advancements, the evolution of consumer behavior and demand,and the need for thoughtful climate polices -all factors required to make achievement of targets feasible-as well as the potential impact of legal and regulatory obligations and the challenge of balancing our commitment to short-term targets with the need to facilitate an orderly and just transition and energy security.As we engage with NZBA and other industry initiatives to which our efforts are aligned,the Firm will continue to make independent decisions that we believe are best for the long-term success of our business.\nWe are working to advance climate resilience solutions.For example, with our support,the Atlantic Council's Adrienne Arsht-Rockefeller Foundation Resilience Center hosted a Resilience Hub at COP26 in Glasgow to build awareness and foster global action to build climate resilience,attracting speakers from 176 participating organizations and over 10,000 visitors.The center-sponsored research has identified challenges from extreme heat, including inequitable public health impacts and significant economic productivity loss. We are also supporting a new center-led initiative called “Cool Capital”to identify and quantify opportunities to channel multiple types of capital into on-the-ground solutions to mitigate the effects of extreme heat on people in 12 cities around the world.\n·Providing a grant to the Climate Leadership Council,and engaging with its recently launched Center for Climate and Trade,which explores and advances policies that leverage trade relationships and guide the global market economy toward greater international cooperation and climate ambition; and\nContributing to the Business Roundtable's submission to the Environmental Protection Agency advocating methane emission reductions standards for the Oil & Gas sector.", "chunk_word_count": 538, "section_path": "2022 CLIMATE REPORT > PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS > Policy and Industry Engagement", "document_id": "JP Morgan Climate Report 2022", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 20, "chunk_text": "# 2022 CLIMATE REPORT\n## PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS\n### Policy and Industry Engagement\nWe recognize the need for thoughtful public policy on climateand energy-related matters.It can help accelerate the Firm's progress on sustainability-related business objectives and contribute to sustainable economic growth.It is among the prerequisites we view as essential to make the achievement of our and others'climate targets feasible.We therefore engage with external stakeholders and trade associations on policies that we believe can help make net zero achievable,including by mobilizing capital for green solutions and supporting clients in the low-carbon transition.\nThe Firm belongs to a number of trade associations that advocate on major public policy issues of importance to the Firm and the communities we serve.The Firm's participation in these associations comes with the understanding that we may not always align with all their positions or those of its other members.We are committed to independent decision-making at the Firm and providing appropriate feedback on the efforts by these associations,including where there is misalignment between the Firm's climate objectives and trade association positions or activities.A list of the Firm's principal trade associations is disclosed in our Political Engagement Report.\n·We continue to work with Oil& Gas industry participants, the public sector,and non-governmental organizations (\"NGOs\") to support improved methane data quality.For example,we engage with the Oil & Gas Methane Partnership,as part of our broader efforts to explore opportunities for industry clients, technology innovators,and data providers to accelerate direct measurement technologies as a preferred method of tracking and reporting methane emissions.\n### Risk Management\n### Our Climate Risk Framework\nchanging climate itself (physical risk).\nTransition risk refers to the financial and economic implications associated with a Societal adjustment to a low-carbon economy.Transition risk drivers include possible changes in public policy,such as legislation and industrial and financial regulation; adoption of new technologies;and shifts in consumer preferences.These drivers could impact our clients,and our business strategy in providing financial services to them. Transition risks may also be influenced by changes in the physical climate.\nPhysical risk refers to economic costs and financial loss associated with a changing climate.Acute physical risk drivers include increased frequency or severity of climate and weather event (e.g., floods,wildfires,tropical storms,etc.).Chronic physical risk drivers include more gradual shifts in the climate and include sea level rise,persistent changes in precipitation levels and average ambient temperature increases.Indirect physical risk drivers include the second-order effects of these acute and chronic risks,such as supply chain disruptions or changes to property valuations.\ne we discuss the Risk Identification,Scenario Analysis,and Risk Management capabilities of this framework.\n[IMAGE CAPTION] JPMC Climate Risk Framework\n### Risk Identification\nTransitionand physicalriskscan manifest inavarietyofways.Theinfographic below provides examplesof diferent typesof transition and physical risks and how they could materialize acros the four major risk types we manage.", "chunk_word_count": 455, "section_path": "2022 CLIMATE REPORT > PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS > Policy and Industry Engagement", "document_id": "JP Morgan Climate Report 2022", "page": 19, "page_start": 19, "page_end": 22 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 21, "chunk_text": "# 2022 CLIMATE REPORT\n## PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS\n### Examples of Potential Climate Risk Impacts\nAt JPMorgan Chase,businesses are required to examine the activities they are responsible for and to identify,discuss and escalate the associated risks.We believe that this practice is the foundation of a risk-aware business culture and an effective risk management process.We have enhanced this process to assess the ways in which climate change can manifest as strategic, credit & investment, market and operational risk types.\nSupporting this assessment is a classification system,illustrated below,that describes how climate risk drivers could translate into potential impacts to our clients,our exposures and our operations.A number of climate change risk assessments are now included in the Firm's risk inventory,and more will likely continue to be added to it as we evolve and deepen our examination of climate change.\n[IMAGE CAPTION] Translating Climate Risk Drivers into Potential Risks to the Firm\n### Scenario Analysis\nTo assess the range of potential climate-driven paths and outcomes,we are analyzing an array of scenarios.We use internationallyrecognized scenariosfromtheNetworkfor Greening the Financial System (\"NGFS\")andthe Intergovernmental Panelon Climate Change(\"IPCc\") to informourmeasurementofthepotentialfinancialand economic impacts tothe Firmfrom the manifestation of climate risks.\nThe NGFSand IPCCscenarios represent widelyaccepted plausible pathways forsociety's future GHG emissions and consider the complexinteractions betweenglobalsocioeconomic systemsand naturalEarthsystemsovertime.Asof2O22,globaltmperatures are approximately $1 . 1 ^ { \\circ } \\mathsf { C }$ above pre-industrial levels (185O-19oO).7We define this as the“current state”of the climate,with assessments of future transition and physical risk based on further warming above this state.\n### Risk Management by Risk Type\n### Transition Risk Scenario Analysis\nTheFirmapplies NGFS-derived macroeconomicvariablesandsector-leveloutcomes to individualclients tohelpassess potential transitionrisk impacts totheFirm.Inordertoquantifyand understandtherangeofthese impacts,weareusinga‘baseline' transition risk scenario and a severe transition risk scenario from the NGFS.\n## BASELINE\n## SEVERETRANSITIONRISK\nWeareusingourresources tobetterunderstand howtransitionandphysicalrisksmaymanifestand theirpotentialimpactsonthe existing risk types the Firm manages.\nThe NGFS Current Policies Scenario represents a low-transition risk scenario that captures the current state of global climate policy. The scenario assumes that no future emissions reduction policies are implemented by governments,leading to high physical risks.& In this scenario, $3 ^ { \\circ } \\mathsf { C }$ or more of warming could occur by 2100.9\nThe NGFS DNZE represents the most severe transition risk scenario.The scenario assumes that global net-zero is reached by 2050 through higher carbon prices with a rapid phase-out of fossil fuels,despite divergence in policies introduced by governments across the world.The scenario assumes that global warming is successfully limited to $1 . 5 ^ { \\circ } \\mathsf { C }$ by 2100,which limits physical risk impacts.\n### JPMorgan Chase Risk Types\n[IMAGE CAPTION] Note:Countrsvfsegaedisiakst aJPMorganChasristype.ThisdiagramisitendedtoaidthecommentarytatfollowsandisntanexhaustivelistoftheFir'sisfunctios.\n### Physical Risk Scenario Analysis\nTheFirmapplies IPCC-derived physicalriskparameters toassess thepotentialimpactsoftheincreasing frequencyandseverityof extreme weathereventsonourbusinessoperations,credit exposures,andcolaterallocations.Consistent with thetransitionrisk approach,weutiizebotha‘baseline'physical riskscenarioandasevere physical iskscenario to informtherangeofoutcomes.", "chunk_word_count": 449, "section_path": "2022 CLIMATE REPORT > PURCHASINGENERGYATTRIBUTE CERTIFICATES(\"EACS\") AND CARBON CREDITS > Examples of Potential Climate Risk Impacts", "document_id": "JP Morgan Climate Report 2022", "page": 22, "page_start": 22, "page_end": 24 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 22, "chunk_text": "# 2022 CLIMATE REPORT\n## SEVEREPHYSICALRISK\nThe IPCC Representative Concentration Pathway(\"RCP\") 4.5 scenario represents an intermediate,middle-of-the-road scenario where social,economic and technological trends do not shift markedly from historical patterns.Global and national institutions work toward but make slow progress in achieving sustainable development goals; overall, the intensity resource and energy use declines.The scenario assumes that global mean temperature reaches $2 . 7 ^ { \\circ } ($ warming above pre-industrial levels by 2100.\nThe IPCC RCP 8.5 scenario represents the worst-case, highest emissions scenario.The scenario assumes that global mean temperature reaches $4 . 4 \\%$ warming above pre-industrial levels by 2100 due to the continued exploitation of abundant fossil fuel resources and a continued rise in resource- and energyintensive activities around the world. Under this scenario,there is no transition to a low-carbon economy and GHG emissions continue to be very high.\n### Credit & Investment Risk\n## CONSUMER CREDIT RISK\nCredit& investment risk is the risk associated with the default or change in the credit profile of a client,counterparty or customer,or loss of principal or a reduction in expected returns on investments.We leverage our risk identification and scenario analysis to measure the potential adverse impacts the baseline and severe climate risk scenarios may have on our credit portfolios,both today and into the future.We are analyzing the direct impacts of transition and physical risk- considering property damage and financial loss due to extreme weather events or the potential reduction in profitability of a client, counterparty or customer as a result of transitioning from a high-carbon to a lower carbon-intensive footprint.We are also considering indirect and longer-term risk drivers,including the potential for change in cost or availability of insurance for physical risks in a given geography, permanent loss or structural changes to consumer preferences.\nAs of December 31,2021,the Firm had $\\$ 1.3$ trillion of consumer credit exposure,including residential real estate,auto loans and credit cards.The Firm is using catastrophe models to quantify the hypothetical physical damage from various climate- and weather-driven events and applying it to our real estate portfolios to estimate potential financial loss. For example,residential real estate loans made up $\\$ 225$ billion of the total consumer credit portfolio,predominantly in the U.S. Today,climate-related risks for this portfolio are substantially mitigated through geographic diversification of the properties, the prevalence of hazard insurance,and the effective average life of the underlying loans,among other factors.As a result, financial losses due to natural disasters and weather events have not been material to the Firm.As we examine the potential for future impacts,we may consider outcomes in which these mitigants are weakened - for example,if insurance becomes less prevalent.", "chunk_word_count": 430, "section_path": "2022 CLIMATE REPORT > SEVEREPHYSICALRISK", "document_id": "JP Morgan Climate Report 2022", "page": 24, "page_start": 24, "page_end": 24 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 23, "chunk_text": "# 2022 CLIMATE REPORT\n## CONSUMER CREDIT RISK\n### Time Horizons\nThepaceandcumulativeefects ofclimatechange are important factorsinconsidering thepotentialfinancialand economic implications.We therefore analyze these scenarios over multiple periods.\nShort-term: Less than 5 years;aligned with the horizon of existing loss and capital adequacy assessments performed by the Firm.\nMedium-term: 5-10 years; aligns to our 2030 Paris-aligned financing commitment and time horizons used for credit risk assessment.\nLong-term: More than 1O years;aligns to the Firm's aim to help set a path for achieving net-zero emissions by 2050, as well as strategic risk assessments.\nThe map below shows,at the U.S.county level, the modeled potential increase in property damage due to flooding in 2O50 under RCP 8.5 compared to 2020.This includes the impact of heavy rainfall, riverine flooding and storm surges,but assumes that no future mitigation steps are taken (such as improving flood defenses).Third-party analysis such as this helps the Firm to assess the potential susceptibility of our credit portfolio to these events.This map was derived utilizing an external risk-based software analytics tool.\n[IMAGE CAPTION] Change in Flood Risk in the U.S. from 202o to 2O5o under RCP 8.5\nThe cumulative effect of physical climate risk may impact our residential real estate portfolio in several ways,including the following:\n·Greater physical damages: increased likelihood or severity of extreme weather events may increase consumer credit losses; Higher insurance premiums: higher insurance premiums may increase living expenses and financial burden for consumers; Reduced coverage or availability of insurance: insurers may further limit types of damage they cover or withdraw coverage from specific geographies; and House price impacts: cumulative effect of climate-driven events may adversely impact house prices and local economies in certain geographies,potentially disproportionately impacting lower-income households and communities.\nAdditionally,we are examining how the transition to a low-carbon economy may create financial burden on consumers from potentially higher energy prices,pass-through of carbon taxes on goods and services,or result in declines in the value of other assets (e.g.,gas-burning vehicles),which could impact consumers'ability to repay and may result in additional credit losses to the Firm.", "chunk_word_count": 334, "section_path": "2022 CLIMATE REPORT > CONSUMER CREDIT RISK > Time Horizons", "document_id": "JP Morgan Climate Report 2022", "page": 24, "page_start": 24, "page_end": 25 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 24, "chunk_text": "# 2022 CLIMATE REPORT\n## WHOLESALE CREDIT RISK\nAs of December 31,2021, the Firm had $\\$ 1.1$ trillion of wholesale credit exposure.The Firm is building a framework to estimate the potential impact of a low-carbon transition on clients' financials and credit ratings.Financial impacts from the carbon transition could manifest in a variety of ways,including weaker demand for carbon-intensive products,resulting in lower revenue,or higher operating costs for carbon-emittng companies as described above.Additionally, companies may need to increase their capital expenditures through investments that improve resilience to the low-carbon transition (e.g.,power companies investing in renewables).\nAlong with financial impacts,and as discussed on pages 27-28,the Firm's framework also incorporates an assessment of a client's decarbonization plans in selected sectors with higher carbon intensity.This is based on several indicators,including current emissions intensity,future emissions reduction targets,recent emissions track record and internal governance structures.The Firm has utilized this framework to assess financial and credit rating impacts for clients in the Oil& Gas,Automotive and utilities sectors in a Severe Transition scenario.10\nBelow is a heatmap of credit exposures using a five-point color scale to indicate carbon intensity of our own lending portfolio - to the extent that data is available -and sectorlevel physical risk.We use carbon intensity data as one input into our transition risk scenario analysis,with more carbon-intensive companies generally subject to higher costs in the event of a carbon tax.The physical risk categorizations are judgment-based, and we are using them as an intermediate indicator while we develop more targeted location-based analysis.\n[IMAGE CAPTION] Heatmap of Credit Exposures (as of December 31, 2021)\n### Operational Risk\n### umber of Days Above $3 5 ^ { \\circ } \\mathrm { C }$ Under RCP 8.5 in 2o5o, with Major JPMC Office Locations Overlaid\nis mapshows the global vulnerabilityto rising heat stress,with thered locations predicted to seethe most days above $3 5 ^ { \\circ } \\mathsf { C }$ in 2050.We have included our offce locations,to give a sense of any key vulnerabilities.\nOperational risk is the risk of an adverse outcome resulting from inadequate or failed internal processes or systems,human factors,or external events impacting the Firm's processes or systems.\n[IMAGE CAPTION] NO.OFDAYS ABOVE35C\nWe have integrated climate risk drivers into our operational risk framework and associated resiliency processes.Increasingly volatile and severe climaterelated events,including more severe storms,flooding, heat and related impacts such as drought and wildfires, have the potential to impact the likelihood and severity of a variety of existing operational risks.The Firm's GRE and Global Security functions review and manage how physical hazards of any form can adversely impact our personnel, facilities,and surrounding infrastructure. Business Resiliency recovery strategies are designed to act as a mitigant to physical risk consequences such as asset disruption.Simulation exercises are conducted to test these recovery strategies.Longer-term,chronic and acute impacts from our climate scenarios are being integrated into the existing risk frameworks with the intention of allowing us to consider potential impacts of climate change when developing strategies for our physical footprint and operations.\nFor example,the map shows the projected number of extreme heat days globally under the most severe physical climate scenario in 2O50,with our major office locations overlaid.This is particularly relevant for locations which may not historically have experienced consistent high temperatures and therefore adaptation may be required.\n### Strategic Risk", "chunk_word_count": 541, "section_path": "2022 CLIMATE REPORT > WHOLESALE CREDIT RISK > Operational Risk", "document_id": "JP Morgan Climate Report 2022", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 25, "chunk_text": "# 2022 CLIMATE REPORT\n## WHOLESALE CREDIT RISK\n### Market Risk\n### Future Improvements\nStrategic risk is the risk to earnings,capital,liquidity or reputation associated with poorly designed or failed business plans or inadequate response to changes in the operating environment.In response to climate change,and in support of our clients transitioning to a lower-carbon economy, the Firm may make changes to its business strategy, product offerings and risk profile.To minimize the strategic risks,we follow a facts and science-based approach with the objective of protecting the long-term resilience and value of the Firm.\nMarket risk is the risk associated with the effect of changes in market factors such as interest and foreign exchange rates,equity and commodity prices,credit spreads or implied volatilities,on the value of assets and liabilities held for both the short and long term.Climate risk drivers may lead to sharp volatility or persistent changes in the prices of commodities and financial assets,for example,companies in carbon intensive industry sectors without credible transition plans may have assets which are viewed as stranded,resulting in materially depressed equity prices.The Firm has established a stress framework to quantify the impact of the transition risk stress scenarios to vulnerable asset classes.We have analyzed a series of physical drivers to estimate the potential impacts of various climate- and weather-driven events to our markets exposures.\nAccess to quality climate data remains a key challenge for climate risk managers.The lack of historical data,given that there is no precedent for what is being projected into the future,makes any climate risk methodology difficult to back-test and is subject to a wide array of assumptions.This is in contrast to many other areas of risk (e.g., credit risk,market risk),which can draw upon decades worth of history on corporate defaults and market dislocations.We are working to improve the depth and breadth of our climate data and technology infrastructure to take advantage of anticipated data enhancements across the industry, such as:", "chunk_word_count": 315, "section_path": "2022 CLIMATE REPORT > WHOLESALE CREDIT RISK > Market Risk", "document_id": "JP Morgan Climate Report 2022", "page": 28, "page_start": 28, "page_end": 28 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 26, "chunk_text": "# 2022 CLIMATE REPORT\n## REPUTATIONRISK\nReputation risk is the risk that an action or inaction may negatively impact perception of the Firm's integrity and reduce confidence in the Firm's competence by various constituents,including clients,counterparties,customers, investors,regulators,employees,communities or the broader public. Reputational risk assessment is designed to take into account the commercial consequences of actions or inactions that may impact clients,customers,employees, capital providers and other stakeholders.In many cases we recognize that a position we take will be favored by some and disapproved of by others and where all positions including neutrality can be controversial.\n·Enhanced corporate emissions data and underlying estimation techniques; \n·Improved company-level assessments of transition plans and credibility of those plans,based on a combination of publicly-announced emissions targets and expertise of client coverage teams; Expanded company and supply chain location data for physical risk vulnerability assessments.\n### Country Risk\nThe Firm,through its LOBs and Corporate, may be exposed to country risk resulting from financial,economic, political or other significant developments which adversely affect the riskiness of the Firm's exposures related to a particular country or set of countries.The negative implications from climate change may impact a country's economic,fiscal, monetary and political frameworks in numerous ways,in turn adversely affecting its sovereign credit ratings. Climate risk considerations are incorporated,as appropriate,in existing sovereign ratings and risk management processes.In addition,the Firm has developed a score to help explore the potential sensitivity of sovereign ratings to climate risks beyond the standard rating horizon or under specific stress scenarios.\nThese future data improvements may help us to model climate risks in a way that captures more than just the direct impacts (e.g., property damage, credit losses from companies subject to a carbon tax),which would allow us to enhance our analysis with indirect impacts (e.g.,from economic effects,commodity price impacts,or population migration) and to be more comprehensive in the way we manage climate risk.\nClimate- and environmental-related business strategies and activities are under increasing scrutiny,and companies are facing reputational risk from the real or perceived lack of progress made toward climate-related commitments, as well as in how they provide transparency around climate-related matters.The Firm may face reputation risk relating to its climate risk framework and environmental sustainability strategy.\n### Metrics & Targets\n### Scaling Green Solutions\n### Measuring Our Progress\nWe intend to measure and report our progress over time on climate-related maters,both to provide information to our stakeholdersand to inform howwe manageand implementour environmentalsustainabilityappoach.Inthissection,we provide detailsof the metricsand targets wearecurrentlyusing in conjunction witheach ofthe threepillars ofour environmental sustainability approach.\nMeeting the climatechallengewillrequire developingand deploying newtechnologies,business modelsand othersolutions throughoutheglobaleconomy.Asagobalfinancialinstitution,wehaveanimportantroletoplaybyprovidingfinancing,strategic adviceandotherservices toclients whoare workingtocreateandimplementsuchsolutions,inordertohelpthem growand drive impactatscale.Detailedbelowdiscuses howwearemeasuring our progressthroughtheamountofthecapitalwefinanceand/or facilitate on behalf of climate-and sustainability-focused activities.\n0\n### $\\$ 1$ Trillion for Green\n## SCALING GREEN SOLUTIONS\n## MEETING NEEDS RESPONSIBLY", "chunk_word_count": 453, "section_path": "2022 CLIMATE REPORT > REPUTATIONRISK", "document_id": "JP Morgan Climate Report 2022", "page": 28, "page_start": 28, "page_end": 30 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 27, "chunk_text": "# 2022 CLIMATE REPORT\n## MINIMIZING OUR OPERATIONALIMPACT\n$ { \\mathrm { ~ \\textrm ~ { ~ ~ } ~ } } | { \\mathrm { ~ n ~ } } 2 0 2 1$ ,we set a target to finance and facilitate more than $\\$ 2.5$ trillion over 10 years- from 2021 through the end of 2030 － to advance long-termsolutions thataddressclimatechangeand contribute to sustainable development.As partofthis target, weaim tofinanceandfacilitate\\$1trlliontosupportclimateactionandother green initiatives.In2O21,ourFirmfinancedand facilitated approximately $\\$ 106$ billion in support of the \\$1 trilion green objective.This encompassed a range of activities including underwritingofgrenbonds,lendingtosupportconstructionofsustainableinfrastructureandraisingcapitalforinnovativeclean technology,renewableenergy,andsustainable transportationcompanies.Thefiguresbelowdemonstrateboth thedepthand breadth of these efforts.\nIncluding progress toward \nour goal of financing and \nfacilitating \\$1 trillion to support \nclimate action,clean energy, \nand sustainable resource \nmanagement by the end of 2030. \nIncluding our Scope 1,2 and 3 \nGHG emissions and performance \nagainst our climate-related \noperational targets. \nIncluding working to align our \nlending and underwriting decisions \nwith our portfolio-level emissions \nintensity reduction targets in key \ncarbon-intensive sectors (i.e., \nour Scope 3 financed emissions) \nand other measures to support \nintegration of climate considerations \ninto the Firm's risk management and \ndecision-making frameworks.\n### Select Eligibility Criteria by Dollar Amount\nTo learnmoreaboutourcriteriafordetermining whatbusinessactivityis eligible tocount towardourSustainable Development Target,and how we account for the value of transactions,see Our Approach to Our Sustainable Development Target.\n### Meeting Needs Responsibly\n### New Sector Targets\nWhenweanouncedourfirstsetofportfolio-levelemissionsintensityreductiontargets,wealsocommitedtosettargetforadditionalsectorsinthefuture.Aspartofthisreport,wearereleasingdetailsoftheinitialbaselinesand2O3Otargetswehaveetforron &Steel,CementandAviation.Among otherreasons,wehaveprioritizedthesesectors-togetherwiththosewehavepreviouslyset targetsfor-basedontheircontributiontototalglobalemissons,theirimportancetothewidereconomyandouraimtohelpthem overcomethesignificantchalengestheyfacetodecarbonize.Theaggregateofthesesixsectorsaccountforthemajorityofglobal emissionsacrossthesuplyanddemandsidevaluechainsoftheglobalenergysystem.Ourworkreflects notonlyouraimtotackle thelargestandmostchalengingsourcesofemissons,butalsoourcommitmenttoengageandsupportourclientsastheynavigate the low-carbon transition.\nAnimportantpartofourstrategyis usingourcapitaland expertisetosupportourclients'decarbonizationefortsand to support societalandeconomic needs.Weare workingtoalignour lendingandunderwriting decisions withourportfolio-levelemisions intensityreductiontargetsinkeycarbon-intensivesectors,managingclimate-relatedE&srisksaspartofmakingcapitalalocation decisions.Below,we provide details of the metrics and targets we have developed for these purposes.\n### Updates on Our Paris-Aligned Financing Commitment\n## OUR APPROACH TO SETTING PORTFOLIO TARGETS\nAbsolute-based metrics are also an area of interest for many of our stakeholders and have a role to play in how we understand the impact of our emissions reduction efforts.In 2023,we intend to share more details on our approach to absolute-based metrics, including disclosure of absolute financed emissions in key sectors of our financing portfolio.\nIn 2021,we set portfolio-level emissions intensity reduction targets for three sectors in our financing portfolio - Oil & Gas, Electric Power and Auto Manufacturing-in line with sciencebased emission reduction pathways.Now,we have set net-zero emissions by 2O5O targets for three additional sectors - Iron & Steel, Cement and Aviation.Below we provide an update on our approach,details of our three new targets,performance to date of our existing targets,and details of how we are managing ongoing data challenges as we work to implement those targets.\n### How We Measure Portfolio-Level Emissions Intensity for Targeted Sectors\nTo measure portfolio-level emissions intensity in each of the included sectors,we compute a portfolio-weighted average of emissions performance for our clients in the sector portfolio. Weights are determined based on our cumulative financing to each client as a share of our total financing to the sector. We include both financing that we directly provide (such as through revolving credit facilities) as well as our share of facilitated financing (such as through our underwriting in debt and equity capital markets).The vast majority of this activity occurs in our CIB and CB LOBs.In the case of revolving credit facilities, financing amounts reflect the total limit of available credit outstanding,not just the drawn amount.", "chunk_word_count": 530, "section_path": "2022 CLIMATE REPORT > OUR APPROACH TO SETTING PORTFOLIO TARGETS > How We Measure Portfolio-Level Emissions Intensity for Targeted Sectors", "document_id": "JP Morgan Climate Report 2022", "page": 30, "page_start": 30, "page_end": 31 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 28, "chunk_text": "# 2022 CLIMATE REPORT\n## OUR APPROACH TO SETTING PORTFOLIO TARGETS\n### Metrics\nThe following highlights key aspects of the methodology for each of the newly included sectors:\nThe emissions metrics we use to evaluate the emissions performance of the sectors for which we have set 2O30 targets are currently intensity-based, meaning they measure emissions relative to a given unit of output (e.g.,kilograms of carbon dioxide per megawatt hour of electricity generation).\n### Iron & Steel\n### Aviation\n### Cement\nWe focus on GHG emissions associated with crude steel production (Scopes 1 and 2),which captures emissions and activity from both primary and secondary steelmaking processes and accounts for approximately $9 7 \\%$ of total value chain emissions for the sector.This enables us to account for variations in the emissions profiles of different steelmaking processes while also concentrating on the full range of decarbonization strategies for the sector, including electrification, increasing scrap recycling,using lowercarbon energy inputs such as biomass or hydrogen,and deploying carbon capture, use and storage technologies.\nWe evaluate GHG emissions (Scopes 1 and 2) from cement manufacturing, which include both energy-related and process emissions and account for approximately $9 0 \\%$ of total lifecycle emissions for the industry. By using cementitious product,we are able to capture both the primary driver of sector emissions (i.e., clinker production) and potential levers for reducing them,including the use of cement and clinker substitutes.\nOur target focuses on direct (Scope 1) ${ \\mathsf { C O } } _ { 2 }$ emissions for revenue-generating passenger service and belly freight operations of airline companies, specifically from combustion of fuels during flight.This allows us to focus on companies'relative progress in reducing and ultimately replacing the use of fossilbased jet fuel, which is the primary driver of the sector's climate impact.\nIntensity-based metrics currently provide the most decisionuseful and effective way for us to evaluate performance at the sector- and client- level against science-based scenarios,and to engage with our clients to advise them on capital allocation decisions.We continue to evaluate the comparative strengths and advantages of both absolute and intensity-based metrics.\nJPMC Sector Client Weight Client Portfolio in JPMC Sector × Emissions Emissions Metric Portfolio (%) Metric\nFor more information on the methodology behind setting our new netzero aligned targets, please see our 2022 Carbon CompasssM methodology.\n### Progress Toward Our Existing Targets\n### Oil & Gas", "chunk_word_count": 391, "section_path": "2022 CLIMATE REPORT > OUR APPROACH TO SETTING PORTFOLIO TARGETS > Metrics", "document_id": "JP Morgan Climate Report 2022", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 29, "chunk_text": "# 2022 CLIMATE REPORT\n## OUR APPROACH TO SETTING PORTFOLIO TARGETS\n### Electric Power\nWe have two 203O targets for our Oil& Gas portfolio: Operational (covering Scopes 1 and 2) and End Use (covering Scope 3).\nElectric Power portfolio emissions intensity has decreased significantly compared to our 2O19 baseline.This was driven by a combination of our clients moving their generation mix to lower emissions sources and the Firm increasing financing to companies and projects with lower emissions intensity.\nSincepublishing portfolio-levelemissions ntensityreductiontargets forOil&Gas,lectricowerandAutoManufacturingsectors in May2021,wehavebeenworking internallandwithclients toguideourportfolios towardour2O30goals.Externally,eare engaging with ourclients onkeyclimate topicsand helping them transitiontowardalow-carbonfuture.Usingour expertie in providingadvisoryservicesandfacilitatingcapital,weare workingwithourclientstowardformulatingandtakingactiontoward achieving their transitionstrategies.Internaly,wecreatedourCAFprocesstoscoreclientson theircarbonperformanceasone considerationaspartofourdecision-makingfornewtransactions within in-scope sectors and havesetupgovernanceframeworks to monitor and guide our progress.\nAs noted in our Carbon CompassSM(2021) methodology, improving visibility, quality and availability of data may also necessitate restatements of our baselines from time to time.We utilize a quantitative and qualitative materiality approach to assess the appropriateness of restatement for each baseline metric,where applicable.As such,we have revised our Oil & Gas Operational 2O19 baseline to reflect data quality improvements over the past year. See page 62 for more details on the data challenges we have experienced and how we are working to address them.\n### Auto Manufacturing\nAuto Manufacturing portfolio emissions intensity has decreased compared to our 2O19 baseline.This was driven mainly by banking new and emerging pure-play EV manufacturers that are bringing EVs to customers across the globe.The sector's overall effort to embrace and speed toward an all-EV future,as well as the behavioral and policy changes that are catalyzing the shift are prerequisites and critical considerations in allowing us to continue to make progress toward our portfolio-level emissions intensity reduction target.\nWebelievetheactionsweare taking todaywillposition uswelltoacelerateprogress towardour targets intheyearsaheadunderstanding thatsuch progress willnotbelinear,andknowing itwilltaketimetoimplement efectivesolutions whilealso continuing to promoteenergysecurityand meet important economicand societalneedsaround theworld.Wearecommittedto responding to this challenge over the long term.\nThebelowtable summarizesourportfolioemisions intensityfortheOil&Gas,ElectricPowerandAuto Manufacturing sectorsas of June30,2022.Moredetailonour progressineachof thesesectorsisprovidedbelow.Tolearnmoreaboutthe methodologyfor setting sector-specific targets please see our Carbon CompassSM methodology (2021).\nAgainst this revised 2O19 baseline, progress on our Oil & Gas Operational 2O3O target remains flat, reflecting marginal emissions intensity and financing changes in the portfolio. We expect the portfolio will benefit from the maturity of our CAF process and continued assessments of new in-scope transactions over time.\n### Progress on 2o3o Targets - Oil & Gas, Electric Power and Auto Manufacturing14\nProgress on our Oil& Gas End Use 2O3O target,as of June 30 2022,is marginally higher compared to our 2019 baseline, driven by portfolio companies shifting their fuel production mix.The difference between the relative carbon intensity of oil and natural gas means that a tilt toward oil will result in higher portfolio End Use carbon intensity.Amidst the backdrop of the pandemic and volatile commodity markets, our portfolio fuel mix for the 2O2O emissions year had a higher proportion of oil than natural gas products,resulting in a higher End Use emissions intensity compared to 2O19. While we recognize the necessity and likelihood of the long-term shift of energy demand away from fossil fuels,the challenging macroeconomic environment that we are operating in makes the decreases in both Operational and End Use carbon intensity our clients are expecting to achieve difficult.\n### O Minimizing Our Operational Impact\n## DATA CHALLENGES\nImprovingthequality,timelinessandavailabilityofdataisakeycomponenttoproperlymeasureemissionsand monitorprogress overtime.Thissectionsummarizesthekeypointsondataconsiderationsandchallenges thatwecontinue toface,andthesteps we are taking to address them.", "chunk_word_count": 544, "section_path": "2022 CLIMATE REPORT > OUR APPROACH TO SETTING PORTFOLIO TARGETS > Electric Power", "document_id": "JP Morgan Climate Report 2022", "page": 32, "page_start": 32, "page_end": 33 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 30, "chunk_text": "# 2022 CLIMATE REPORT\n## DATA CHALLENGES\n### Measurement vs. Estimation\n### Comparable Methodologies\nOur commitment to minimizing the environmentalimpact ofour operations includes measuring and reporting our Scope 1,2 andcertain Scope3emissonsand seting targets to improveour performance acrosseveral related dimensions.Asummaryof ourcurrentoperational targets is provided below,followed byadetailed breakdownanddiscussionofourperformance in key climate-related areas.\nThere are well-known challenges with the quality and reliability of emissions data in many sectors.This means we sometimes rely on estimated versus directly measured emissions data.For example,in the Oil & Gas sector, there are inconsistencies in the measurement, management and reporting of data across organizations,as well as the lack of reliable and standardized techniques for measurement in certain areas, such as methane emissions.As a result,reported methane emissions rely on estimation methods that are less accurate.We are working with industry partners and NGOs to help make direct measurement technologies the preferred method of tracking and reporting methane emissions.More generally,emerging best practices, including reporting to organizations which provide data aggregation services and soliciting assurance for reported GHG emissions data,are steps in the right direction.\nWhile we seek to design and implement robust proxies that minimize the impact on our portfolio when preferred data becomes available, there are cases where this may not be achievable.For example,in our Electric Power portfolio,a small proportion of companies for which no data is available receive a default carbon intensity based on a relatively conservative proxy. Unless the company's North America Industry Classification System (\"NAlCS\") codes or project financing use of proceeds indicate it to be a zero-emitting power producer, in which case it is assigned a carbon intensity of zero,the company is assigned a fuel mix that is equal parts coal and natural gas. However,due to the large differences between the emissions intensities of the different fuel types,there could be significant differences between proxies and actual data. To mitigate this,we are continuing to work with our clients and other stakeholders to improve overall quality and availability of data.We expect to periodically review our data sourcing choices to assess whether better alternatives have become available.\n[IMAGE CAPTION] 2021 Progress Towards Our Operational Sustainability Targets\n### Data Lag\nAnother challenge we consistently face is with the timely availability of data inputs to calculate carbon intensity. In the Auto Manufacturing sector,for example,certain data from regulatory sources can experience significant delays- sometimes two to three years.In such cases,we seek to address gaps using a defined data waterfall approach that may include companydisclosed figures,provided they are verified and prepared in line with recommended protocols that we have identified.Failing that,we use proxy values,though they may not always be ideal for decision-making.As climate- and sustainability-focused disclosure becomes more standardized,we expect lags - especially on company-reported data- to reduce gradually.", "chunk_word_count": 445, "section_path": "2022 CLIMATE REPORT > DATA CHALLENGES > Measurement vs. Estimation", "document_id": "JP Morgan Climate Report 2022", "page": 33, "page_start": 33, "page_end": 33 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 31, "chunk_text": "# 2022 CLIMATE REPORT\n## DATA CHALLENGES\n### Lack of Data on Emerging Decarbonization Technologies\nEmerging technologies such as hydrogen, biofuels,carbon capture,use and storage and carbon credits -will play a key role in helping clients decarbonize. However,data availability in these areas remains a significant challenge.Innovative solutions continue to emerge - such as the use of blockchain to trace carbon credit ownership and retirement, mitigating concerns associated with the use of unverified public reports - but lack the scale today that is necessary to meaningfully impact our portfolio-level emissions intensity.We recognize that data in this space is evolving and will require us to consider viable data solutions as they may become available.\n### GHG Emissions\nJPMorgan Chase's 2O21 operational GHG emissions were driven by two primary activities: powering our buildings (e.g., electricity, heating and cooling) and business travel. Scope 1 GHG emissions include those from building operations and company-owned aircraft and vehicles.Scope 2 emissions,from purchased electricity,are the largest driver of our buildingrelated emissions and overall operational GHG footprint.The majority of our business travel-related emissions are Scope 3 emissions from commercially operated air and rail; reimbursed personal vehicle and rental car travel;and hotel stays.A small portion of our business travel emissions are Scope 1 emissions from company-owned aircraft and vehicles.\nIn 2020,we set a target to achieve and maintain carbon neutrality across our global operations annually, which we have met for each of the last two years (2O2O and 2O21) through the purchase of carbon credits.\nAlthough we aim to continue maintaining carbon neutrality and meeting $1 0 0 \\%$ of our global power needs with renewable energy, we also believe it is important to continue working to reduce our underlying emissions on an ongoing basis.To that end,in 2021 we announced a new target to reduce Scope 1 and 2 (locationbased) emissions by $4 0 \\%$ by 2030 from a 2017 baseline.\nThetablesummarizes our emissons for the categories included inour target,including Scope1(directGHG emissions from building operationsandcompany-ownedaircraft andvehicles;Scope2(indirect)GHG emisions from purchased electricity;and Scope 3 (indirect) GHG emissions associated with business travel.\n### Renewable Energy\nWiththe majorityofouroperationalemissionslinkedtoelectrityuse,increasingouruseofrenewableenergyisacentralpartof our strategy for reducing emissions.Since 2O2O,we have achieved our target of meeting $1 0 0 \\%$ of our global power needs annually usingrenewableenergy,whichwehaveaccomplishedthroughacombinationofon-siteinstalationsatJPMorganChasefacilies and the purchase of renewable energy via both EACs and long-term power purchase agreements.\n### GHG Emissions 2017-202116\nThetablesummarizesourglobalenergyconsumption bydisplayingrenewableenergyuseobtainedviaeitheron-sitegenerationor contractual instruments.\n### Renewable Energy Use 2017-2021\niContractualinsrumentsincdeapicableEACs,ECsfromPPAsUKrnewableenerguaranteeoforiginandeewablesupltacts.\nInrecognitionofthechalengesand limitationsassociated with manyavailableEACs,wearealso working to increasethe proportion of renewable energywe source via other methods,including on-site generation andlong-term power purchase agreements.We have set a target to increase this proportion to at least $7 0 \\%$ by 2025.\niJPMorganCaseutioeatioaltroappachttablisndafouGvetrcdeodndifor which we control the energy usage.\niiope datahasnotbsbecttextealverfiatioomesourefemissosveeedsteyavefoudtodsi for less than $5 \\%$ of total Scope 1 and Scope 2 emissions.\n## iii. Scope 1 emissions include emissions from corporate air travel and owned vehicle fleet.\niv. Includes Scope 1 and 2 location-based GHG emissions; $\\sf m t C O _ { 2 } e / \\$ 1$ revenue\nV.Scope\n## 16 Further definitions regarding Scope 2accounting:\n·Location-baedmetfooeacoutig:AmetodtoquantfyoeGesissedoaveraeeegeneatiomissoctorfor defined locations,including local,subnational,or national boundaries. ·Market-basedmethodforScoecouting:AmetodtoantifycoeGHemissiosasednGemissionsemittedbythegeneatorfrom whichthereporter contractuall purchases electricity bundled with instruments,or unbundled instruments ontheir own.\n### Conclusion & Appendices", "chunk_word_count": 521, "section_path": "2022 CLIMATE REPORT > DATA CHALLENGES > Lack of Data on Emerging Decarbonization Technologies", "document_id": "JP Morgan Climate Report 2022", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 32, "chunk_text": "# 2022 CLIMATE REPORT\n## 16 Further definitions regarding Scope 2accounting:\n### Looking Ahead\nAsaglobalfinancialinstitution,wecanplayan important roleinhelpingtorespond totheclimatechallengeand meetingthe world's energy needs.Wearesupportingclientsacrossectorsandbuildingourowncapabilitiestohelpaccelerate thetransition toalow-carboneconomy.Movingforward,wewillplantoexpandourefortsacrosthepilarsofourenvironmentalsustainability strategy, including:\nWearecommited tosetting high standards inourbusiness activitiesand withourstakeholders.Our governance structuresare designedtopromoteacountability,transparencyandethicalbehavior,consistent withourcorporate standardsand Business Principles.Wehavealreadyimplemented governancestructures tohelpusdrive progresstowardkeycommitmentsand targets and to support both internalandexternal ransparencyonour work.Thisincludes developing processesandcontrols fordata disclosure,andverification.Moving forward,we willcontinueto evaluate whether further enhancementofthese governance systems is warranted.\nEnhancing climate-related disclosures by publishing Scope 3 absolute financed emissions next year, continuing to set portfolio-level targets foradditional sectors,and re-evaluating our targets for the Oil & Gas, Electric Power and Auto manufacturing sectors with intention of aligning them with the IEA NZE scenario.\nScaling green solutions with the aim of contributing to global climate and sustainability goals,including pursuing our target to finance and facilitate \\$1 trillion to support climate action by the end of 2030.\nDeploying our capital in a responsible way and pursuing the goals of the Paris Agreement and our commitments to align our lending and investment portfolios with net-zero emissions by 2050.\nWe willcontinuetoadaptand enhance our environmentalsustainabilitystrategy,governance systems,approach torisk management,and transparencyonour work and progres.In the nearterm,weare focused on progressing how we consider climate-relatedrisks;colect,analyzeanddisclose climate-relateddata;andset,measureandreportonourclimate-related commitments.Moving forward,we may enhance oureforts basedon internal learnings,advances inmarket best practiceand changing regulations.\nMinimizing our operational impact by continuing to advance innovative solutions to reduce our direct and indirect GHG emissions in our corporate offices,bank branches and data centers.\nWe anticipate that our progress wil not be linear, but we will continue to show our work,reporting on details of our approach and progress.\n### Disclaimers\n### Appendices\nTheinformationprovided inthisreportreflects JPMorgan Chase'sapproach toESGasat thedateofthis reportand is subject tochange withoutnotice.Wedo notundertaketoupdateanyofsuch informationin this report.Anyreferences to“sustainable investing\",“sustainableinvestments”,“ESG”orsimilartermsinthisreportare intendedasreferencestotheinternalldefined criteriaof the Firmor our businesses only,asapplicable,and nottoany jurisdiction-specific regulatorydefinition.", "chunk_word_count": 286, "section_path": "2022 CLIMATE REPORT > 16 Further definitions regarding Scope 2accounting: > Looking Ahead", "document_id": "JP Morgan Climate Report 2022", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "JP Morgan Climate Report 2022.pdf", "chunk_idx": 33, "chunk_text": "# 2022 CLIMATE REPORT\n## 16 Further definitions regarding Scope 2accounting:\n### List of Acronyms\nOurapproach toinclusionofdisclosuresinthisreportisinformedbytheTCFDrecommendationsandisdiferentfromdisclosures includedinmandatoryregulatoryreporting,includingunderSecuritiesand Exchange Commission(\"SEC\")regulations.Whilethis reportdescribesevents,includingpotentialfutureevents,thatmaybesignificant,anysignificancedoesnotnecessarilyequateto the level of materiality of disclosures required under U.S.federal securities laws.\nIEA International Energy Agency \nIPCC Intergovernmental Panel on Climate Change \nIPO Initial Public Offering \nIR Investor Relations \nJPMAMJ.P.Morgan Asset Management \nLOB Line of Business \nmtCOzeMetric Tons of Carbon Dioxide Equivalent \nMW Megawatts \nMWh Megawatt Hour \nNGFS Network for Greening the Financial System \nNGO Non-Governmental Organization \nNZBA Net-Zero Banking Alliance \nNZE Net-Zero Emissions by 2050 Scenario \nOC Operating Committee \nOCFO Office of the Chief Financial Officer \nPB Private Bank \nRCP Representative Concentration Pathway \nRECs Renewable Energy Certificates \nRTK Revenue Tonne-Kilometers \nSDS Sustainable Development Scenario \nTCFD Task Force on Climate-Related Financial Disclosures \nU.K. United Kingdom \nu.s. United States\nAM Asset Management \nAWM Asset & Wealth Management \nCAF Carbon Assessment Framework \nCB Commercial Banking \nCCB Consumer & Community Banking \nCCT Center for Carbon Transition \nCEO Chief Executive Officer \nCFO Chief Financial Officer \nCIB Corporate & Investment Bank \nCIO Chief Investment Office \nCO2 Carbon Dioxide \nCRO Chief Risk Officer \nDAC Direct Air Capture \nE&S Environmental and Social \nEAC Energy Attribute Certificate \nESG Environmental, Social and Governance \nEV Electric Vehicle \nFBR Firmwide Business Resiliency \nGCM Global Crisis Management \nGESRM Global Environmental and Social Risk Management \nGHG Greenhouse Gas \nGMSC Global Markets Sustainability Center \nGSOC Global Security Operation Center \nGTRM Global Technology Resiliency Management\nThis reportcontainsforward-looking statements withinthe meaningofthePrivate Securities Litigation ReformActof1995.These statementsrelatetoamongotherthings,ourgoals,ommitments,targets,aspirationsandobjectives,andarebasedontheurent beliefsandexpectationsofJPMorgan Chase'smanagementandaresubjecttosignificant risksanduncertainties,manyof which arebeyondJPMorganChase'scontrol.Expectedresultsoractionsmaydiferfromtheanticipatedgoalsandtargetssetforth inthe forward-lokingstatements.FactorsthatcouldcauseJPMorgan Chase'sactualresults todifermateriallfromthosedescribednthe forward-lookingstatementsincludethenecessityoftechnologicaladvancements,theevolutionofconsumerbehavior,theeedfor thoughtfulclimatepolices,thepotentialimpactoflegalandregulatoryobligations,andthechallengeofbalancingourcommitment toshort-termtargetswiththeneedtofaclitateanorderlyandjustransitionandenergysecurity.Additionalfactorscanbefound in JPMorgan Chase's Annual ReportsonForm10-K,QuarterlyReportsonForm10-QandCurrnt ReportsonForm8-Kfiled withthe SEC.ThosereportsareavailableonJPMorgan Chase'swebsite(https://pmorganchaseco.gcs-web.com/ir/sec-other-filings/overview) andontheSecuritiesand ExchangeCommision'swebsite (htps://www.sec.gov/).JPMorganChasedoesnotundertaketoupdateany forward-looking statements.\nThis reportdoes not includeallapplicable terms orissuesand is notintendedasanoferorsolicitationforthepurchaseorsale ofanyfinancialinstrumentorasanoficialconfirmationofanytransactionorarecommendationforanyinvestment productor strategy.Anyandalltransactions (including potential transactions)presented hereinareforilustration purposes only.\nThis materialdoes notand should notbe deemedto constitute anadvertisementor marketingof the Firm's products and/or services or an advertisement to the public.\nNoreports,documents orwebsitesthatarecitedorreferred tointhisdocumentshallbedemed toformpartofthis report. Informationcontainedinthisreporthasbenobtainedfromsources,includingthosepubliclyavailable,believedtobereliable, butnorepresentationorwarrantyismadebyJPMorgan Chaseastothequality,completenessaccuracy,fitnessforaparticular purpose or non-infringementofsuch information.Sourcesof third-partyinformationreferredto herein retainallrights with respectto such dataand useofsuch databy JPMorgan Chase herein shallnot be deemedto grantalicense toanythird party. The useof any third-partytrademarks orbrandnamesis forinformational purposesonlyand doesnotimplyan endorsement by JPMorgan Chase or that suchtrademark owner has authorized JPMorgan Chase to promote its products or services.\n### Resources\n1.Carbon CompassSM Methodology (2021) \n2. Carbon CompassSM Methodology (2022) \n3.Center for Carbon Transition \n4. JPMAM 2022 TCFD Report\n## 5. Sustainable Development Target Approach \n6. Sustainable Investing (Asset Management) \n7. Sustainable Investing (Global Private Bank)", "chunk_word_count": 395, "section_path": "2022 CLIMATE REPORT > 16 Further definitions regarding Scope 2accounting: > List of Acronyms", "document_id": "JP Morgan Climate Report 2022", "page": 36, "page_start": 36, "page_end": 36 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 0, "chunk_text": "# Doing well by doing good\nMastercard 2022 Environmental, Social and Governance Report\n## INTRODUCTION\n## ENVIRONMENT\n## GOVERNANCE\n## DATA TABLES\n## SOCIAL\n## APPENDIX\nCEO letter About Mastercard Our ESG strategy Recognition ESG governance ESG materiality Stakeholder engagement\nAbout this report \nAssurance letter \nOur stakeholders \nSustainable \nDevelopment Goals \nSASB index \nGRI index \nTCFD index\nGeneral \nEnvironmental \nSocial\nNetwork standards and rules\nOperational environmental footprint\nFinancial inclusion\nCommunity giving and volunteerism\nEnvironmentally focused solutions\nGlobal tax\nHuman rights\nClimate resilience\nGovernance\nPrivacy, data responsibility and security\nResponsible sourcing\nDiversity, equity and inclusion\nRisk management\nTalent attraction, development and well-being\nPolicy engagement and political activity\n### Introduction\nFor us, doing well by doing good means empowering people to reach their full potential, advancing equitable prosperity around the world, and putting innovative solutions to work protecting the planet.", "chunk_word_count": 137, "section_path": "Doing well by doing good > APPENDIX > Introduction", "document_id": "Mastercard 2022 ESG Report", "page": 1, "page_start": 1, "page_end": 3 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 1, "chunk_text": "# Doing well by doing good\n## APPENDIX\n### Our ambition at Mastercard is to power economies and empower people.\nThese are simple words, yet the effort to make them a reality is complex. It requires commitment. It requires prioritization. It is strengthened by the understanding that every action we take has an impact.\n\"sustainable consumption.\" It’s about addressing real problems and delivering real value.\n• Carbon Reduction: Reducing our scope 1 and 2 greenhouse gas emissions, while also ensuring our suppliers have their own science-based emissions reduction goals • Financial Inclusion: Bringing more people – prospective Mastercard credential holders – into the digital economy • Gender Pay Parity: Working to drive equity in the median pay for men and women\nThat’s not only philanthropy – that’s good business. It’s also the right thing to do. That’s the work we do each day. That’s the commitment we made and the actions we take – to be a strong corporate citizen and the strongest possible business all at once.\nWe continually work toward this core goal, building on an understanding that inclusion and diversity in all its forms makes us stronger as a team and as a business. This work helps ensure that there is a healthy world for us to operate within. It delivers on the expectations of our employees, our customers and our partners.\nAs you review the progress that has been made, know that this report is simply the latest transparent snapshot of our continuing journey. This is not the end destination. And these efforts go hand-inhand with the financials we report each quarter. There is no daylight between them.\nIt is these efforts that help us create and sustain long-term value for our shareholders.\nWe envision a world where economic growth is inclusive and sustainable, and the digital economy works for everyone. To do our part to create that world, we move with intention and with pace. It’s about setting – and then being accountable to – standards and principles. It’s recognizing the responsibility to ensure technology helps, not hurts – that new innovations are trusted. It's about providing people with the resources to support their desire for\nThe following pages detail how we measured our progress. Some look at it through the lens of People, Prosperity and Planet. Others approach it in terms of Environmental, Social and Governance. No matter the words or the acronyms, it’s work that must be done.\nAll 30,000 employees at Mastercard play a role in this effort. In fact, we have taken the step to tie every employee’s compensation to these goals. In 2022, we focused on three specific areas:", "chunk_word_count": 439, "section_path": "Doing well by doing good > APPENDIX > Our ambition at Mastercard is to power economies and empower people.", "document_id": "Mastercard 2022 ESG Report", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 2, "chunk_text": "# Doing well by doing good\n## APPENDIX\n### About Mastercard\neasily and with confidence, as well as other services that provide proprietary insights, drawing on our principled use of secure consumer and merchant data. Our investments in new networks, such as open banking solutions and digital identity capabilities, support and strengthen our payments and services solutions. Our Franchise model sets standards and ground rules for our core global payments network that balance value and risk across all stakeholders and allow for interoperability among them. Our payment solutions are designed to ensure safety and security for the global payments ecosystem.\nMastercard is a technology company in the global payments industry. We connect consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide by enabling electronic payments instead of cash and checks and making those payment transactions safe, simple, smart and accessible. We make payments easier and more efficient by providing a wide range of payment solutions and services using our family of well-known and trusted brands, including Mastercard®, Maestro® and Cirrus®. We operate a multi-rail payments network that provides choice and flexibility for consumers, merchants and our customers. Through our unique and proprietary core global payments network, we switch (authorize, clear and settle) payment transactions. We have additional payment capabilities that include automated clearing house $( \" A C \\mathsf { H } ^ { \\prime \\prime } )$ transactions (both batch and real-time account-based payments). Using these capabilities, we offer integrated payment products and services and capture new payment flows. Our value-added services include, among others, cyber and intelligence solutions to allow all parties to transact\nwith merchants’ acceptance of our products. In most cases, account holder relationships belong to, and are managed by, our customers.\nFor more about Mastercard, please visit our website.\nOur core payment network supports what is often referred to as a “four-party” payments network and includes the following participants: account holder (a person or entity who holds a card or uses another device enabled for payment), issuer (the account holder’s financial institution), merchant and acquirer (the merchant’s financial institution). We do not issue cards, extend credit, determine or receive revenue from interest rates or other fees charged to account holders by issuers, or establish the rates charged by acquirers in connection\n### Our ESG strategy\nDoing well by doing good. We’re powering economies and empowering people, building a sustainable world where everyone prospers. Environmental, social and governance (ESG) matters are fundamental to our business strategy, and we leverage our employees, technology, resources, partnerships and expertise to drive positive, lasting impact. Our ESG strategy is expressed through three pillars — People, Prosperity, Planet — and all the work we do is grounded in strong governance principles. Our commitment to environmental and social responsibility — and our core value of operating ethically, responsibly and with decency — is directly connected to our continuing success as a business.\n### People\n### Prosperity\n### Planet\nOperational environmental \nfootprint \nEnvironmentally focused \nsolutions\nFinancial inclusion of individuals and small businesses\nDiversity, equity and inclusion Talent attraction, development and well-being\n### Governance principles\nResponsible and secure use of data\n\n### Our goals and progress in 2022\n### Empowering people to reach their full potential", "chunk_word_count": 535, "section_path": "Doing well by doing good > APPENDIX > About Mastercard", "document_id": "Mastercard 2022 ESG Report", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 3, "chunk_text": "# Doing well by doing good\n## APPENDIX\n### Invest $\\cdot$ million in Black communities in the U.S. to help close the racial wealth and opportunity gap by 2025, from 2020.\n### Close the gap between female and male global median pay at Mastercard.\nWe are on a journey to create an inclusive workplace and world where everyone has an opportunity to succeed.\nWe increased the global median pay for female employees to $\\cdot$ of the median pay for male employees, up $0 . 8 \\%$ from $2 0 2 1 ^ { 1 }$ . Females continue to earn $\\$ 1$ for every $\\$ 1$ males earn, with the median pay gap predominantly due to the fact that we have more men in senior roles, not because men are paid more. Learn more.\nSince we launched our In Solidarity commitment in 2020, we’ve invested $\\cdot$ million in Black communities in the U.S. by expanding city programs to support Black communities, providing affordable financial tools and services, providing capital and resources for Black-owned businesses, and increasing our spend with Black-owned suppliers. Learn more.\n### Grow U.S. Black leadership at the vice president level and above at Mastercard by $50 \\%$ by 2025, from 2020.\n### Educate 5 million girls, ages 8–16, in STEM through our Girls4Tech® program by 2025, from 2014.\nWe grew the number of U.S. Black leaders at vice president level and above from 62 to $\\mathtt { - a }$ year over year increase of $1 6 \\% - \\mathrm { i n } 2 0 2 2$ . Since 2020, the percentage of Black representation in leadership at the vice president level and above in the U.S. has grown by $\\cdot$ . Learn more.\nWe reached 1.8 million girls through our interactive, hands-on Girls4Tech curriculum in 2022, and 3.6 million since the program’s launch in 2014. Learn more.\n### Prosperity\n### Our goals and progress in 2022\n### Fostering prosperity around the world\n### To support those impacted by the pandemic, provide $\\$ 250$ million to support small businesses and their employees with financial, technology, product and insights assets by 2025, from 2020.\n### Connect 1 billion people to the digital economy by 2025.\nWe are focused on powering economies by helping everyone participate equitably in today’s digital economy.\nWorking with our partners we connected more than 100 million people to the digital economy in 2022, and more than 780 million since 2015. Learn more.\n### Connect 50 million micro, small and medium enterprises (MSMEs) to the digital economy through card acceptance by 2025, from 2020.\nSince our commitment in 2020 to support small businesses and their employees affected by the pandemic, we’ve provided $\\cdot$ million in financial, technology, product and insight assets to support resilience and recovery. Learn more.\nWe connected 9 million MSMEs to the digital economy in 2022, and 35 million since 2020. Learn more.\n### Provide 25 million women entrepreneurs by 2025 with solutions that can help them grow their businesses, from 2020.", "chunk_word_count": 501, "section_path": "Doing well by doing good > APPENDIX > Invest $\\cdot$ million in Black communities in the U.S. to help close the racial wealth and opportunity gap by 2025, from 2020.", "document_id": "Mastercard 2022 ESG Report", "page": 7, "page_start": 7, "page_end": 8 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 4, "chunk_text": "# Doing well by doing good\n## APPENDIX\n### Advancing inclusive growth\nThrough the Mastercard Impact Fund and our corporate giving, we contributed $\\cdot$ million to support communities in 2022. Learn more.\nWe provided 8 million women entrepreneurs with solutions that can help them grow their businesses in 2022. Since 2020, we have provided 27 million women entrepreneurs with solutions that can help them grow their businesses, surpassing our goal of 25 million by 2025. Learn more.\n### Planet\n### Our goals and progress in 2022\n### Preserving the planet for future generations\n### Toward our goal of net zero greenhouse gas emissions by 2040, reduce Mastercard’s absolute emissions by our science-based targets of $38 \\%$ for Scope 1 and 2, and $20 \\%$ for Scope 3 by 2025, from our 2016 base year.\n### Through our Priceless Planet Coalition, restore 100 million trees by 2025.\nWe are committed to driving our business toward net zero emissions and accelerating the transition to a low-carbon, regenerative economy.\nThrough 2022, we have engaged more than 130 corporate partners globally to support forest restoration projects; we have secured funding to restore an estimated 13 million trees and have already restored 4 million trees2 . Learn more.\nIn 2022, Mastercard’s Scope 1 and 2 emissions were $44 \\%$ less than in 2016, and Scope 3 emissions were $40 \\%$ less than in 2016. Overall, in 2022, total Scope 1, 2, and 3 emissions were $41 \\%$ less than in 2016.  Learn more.\n### Integrating sustainability with economic growth\nMastercard's Carbon Calculator, launched in 2021, allows consumers to view the estimated carbon footprint of their purchases. In 2022, we continued to expand Carbon Calculator to new markets and it went live with issuers in the UK, Hungary, Taiwan and Italy. Learn more.\n### Our governance principles\n### Embracing inclusion in our data principles\n### Securing trust\nIn 2022, we expanded our industry-leading data responsibility principles to include a commitment to inclusion, further demonstrating our company-wide dedication to data practices, analytics and outputs that promote diversity and equity.\nWe act responsibly and adhere to the highest standards in protection and use of data.\n### Empowering consumers to take control of their data\nIn 2022, Mastercard expanded the informational resources available through the My Data portal, which allows consumers and businesses to understand and manage the personal information that they give permission to Mastercard to hold about them. The site is accessible worldwide and is supported in 26 languages.\n### Recognition\nMastercard is honored to have earned recognition for our ESG work. In 2022, our recognition and awards included the following:\n### Memberof Dow Jones Sustainability Indices\nForbes — America’s Best Employers for Diversity\nPowered by the S&P Global CSA\nFast Company \n— Best Workplaces for \nInnovators: MA named in Top \n100 Companies\nS&P Dow Jones Indices — Dow Jones Sustainability Index North America\nJust Capital — Workforce Equity and Opportunity Ranking\nEthisphere — World’s Most Ethical Companies\nDiversityInc — #2 in Top 50 Companies for Diversity\nCDP — 2022 Mastercard score A-Supplier engagement leaderboard\n— Innovation by Design: Finalist for Accessible Design category; Honorable Mention for Sustainability category", "chunk_word_count": 522, "section_path": "Doing well by doing good > APPENDIX > Advancing inclusive growth", "document_id": "Mastercard 2022 ESG Report", "page": 8, "page_start": 8, "page_end": 11 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 5, "chunk_text": "# Doing well by doing good\n## APPENDIX\n### FTSE4Good\n— Brands That Matter: Finalist for Touch Card and In Solidarity work\nMorgan Stanley Capital International \n(MSCI) — \nESG Rating of AA \nGreat Place to Work® — \nBest Workplaces for Women (Greater \nChina)\nHuman Rights Campaign Foundation — 100% Corporate Equality Index(TM)\nBloomberg — Gender Equality Index\nFTSE Russell — constituent of the FTSE4Good Index Series\nGreat Place to Work Certification: Mastercard India, Australia, Singapore, China, Hong Kong, Taiwan\n— World Changing Ideas: Finalist for Company of the Year; Honorable Mention for Pandemic Response category and Climate category\nANA Multicultural Excellence Awards — People with Disabilities category\n$100 \\%$ Disability Equality Index® — Best Places to Work for Disability Inclusion\nDisability:IN — 2022 Marketplace Innovator of the Year Award for Touch Card\nGreat Place to Work® — India's Best \nWorkplaces — \nBest Workplaces for Diversity, Equity and \nInclusion 2022\nGlassdoor — UK Best Places to Work\nStonewall — \nTop 100 Employer for the LGBTQ+ \ncommunity\n### ESG governance\n### Board of Directors\nThe Board oversees our ESG strategy, as well as certain discrete ESG matters like privacy, data security and talent management, as part of strategic reviews of the business or stand-alone discussions.\nSustainability at Mastercard is driven from the top by our Board of Directors and CEO, and is embedded at every level of our organization.\nOur Board committees oversee the following ESG-related strategies, impacts, risks and opportunities.\n### Nominating and Corporate Governance Committee\n### Audit Committee\n### Risk Committee\n### Human Resources and Compensation Committee\nOversees financial and operational risk exposures and compliance with legal and regulatory requirements and disclosures, including:\nIn coordination with Audit Committee, oversees risk assessment and risk management, including:\nOversees significant ESG activities, policies and programs, including:\nOversees our people strategy, including:\n### Embedding ESG in executive and employee compensation\n• Talent management and succession planning DEI initiatives Compensation, benefit plans, well-being and culture\n• Financial inclusion Environmental stewardship • Human rights • Public policy activities\n• Enterprise risk management • Privacy, data responsibility and data security\n• Business practices • Tax practices\nTo help further align our actions with our ESG goals, and to help ensure that all Mastercard employees share in the responsibility to uphold these goals, we link our annual incentive programs for executives and employees to ESG performance measures, including quantitative objectives for financial inclusion, gender pay equity and greenhousegas emissions reductions.", "chunk_word_count": 402, "section_path": "Doing well by doing good > APPENDIX > FTSE4Good", "document_id": "Mastercard 2022 ESG Report", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 6, "chunk_text": "# Doing well by doing good\n## APPENDIX\n### Management\nOur senior management works together to assess and manage our ESG efforts across the organization. Our ESG Executive Steering Committee is co-chaired by our President of Strategic Growth and Chief Administrative Officer, and includes leaders from every part of the company’s organizational structure including our Chief Financial Officer, regional presidents, business units, marketing and communications. The committee is managed by our Chief Sustainability Officer and meets approximately quarterly to review performance against our ESG goals and provide strategic direction on key sustainability matters.\nTo learn more about our Board structure and compensation, and executive compensation and incentives, see our 2023 Proxy Statement.\nOur Chief Sustainability Officer is also tasked with developing organization-wide ESG goals and working with business units to leverage them as drivers of growth, in collaboration with ESG topic owners and our ESG Working Group made up of the managers responsible for day-to-day implementation of our ESG strategies. The Chief Sustainability Officer reports to the President of the Mastercard Center for Inclusive Growth and Executive Vice President of Sustainability. The President of the Mastercard Center for Inclusive Growth and Executive Vice President of Sustainability is a member of our Management Committee and reports to the President of Strategic Growth. The President of Strategic Growth reports directly to the CEO and provides regular updates to the Board on ESG.\n### ESG materiality\nOur assessment identified the following relevant ESG topics for Mastercard:\nWe make formal ESG materiality3 assessments to capture the views of internal and external stakeholders on ESG topics using interviews, surveys and other channels across our business units and locations. We combine these results with analysis on voluntary ESG frameworks and standards like those from the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures (TCFD) and our own research into ESG industry trends and opportunities to ensure that our efforts prioritize key areas of impact that are important to our external stakeholders and our long-term business success. Although we act on each of the material topics identified, we prioritize those with the greatest likelihood and magnitude of impact and greatest importance to our stakeholders and to our business.\nWe conducted our last materiality assessment in 2020. Its results, along with an analysis of our industry-specific SASB standard, demonstrated that internal and external stakeholders were aligned on what they considered our most important ESG topics. We then established goals and targets for each issue, aligning efforts on each in accordance with its prioritization. We are focused on a handful of topics that were identified as priorities, including financial inclusion, DEI, climate and data responsibility, privacy and security. The 2020 assessment is the basis of our current ESG strategy, including our priority topics. This strategy was shared with the Board of Directors in December 2021.\n## MM MM\n### Governance\n### Environment", "chunk_word_count": 482, "section_path": "Doing well by doing good > APPENDIX > Management", "document_id": "Mastercard 2022 ESG Report", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 7, "chunk_text": "# Doing well by doing good\n## MM MM\n### Social\nOperational environmental footprint\nFinancial inclusion and security, including consumer financial literacy\nNetwork standards and \nrules \nEthics and compliance \nRisk management \nBoard structure and \ncompensation \nExecutive compensation \nand incentives \nPrivacy, data responsibility \nand security \nPolicy engagement and \npolitical activity \nGlobal tax principles\nEnvironmentally focused solutions / sustainable consumption\nTalent attraction, development and well-being\nClimate resilience\nDiversity, equity and inclusion\nCommunity giving and volunteerism / community support, development, resilience\nIn 2023, we engaged a third-party consultant, Business for Social Responsibility, to review our material ESG topics and provide recommendations on ESG rating agency gaps and the updated 2021 GRI Standards. We are in the process of updating our materiality assessment to align with the updated 2021 GRI Standards’ focus on impact materiality and the forthcoming European Sustainability Reporting Standards (ESRS) focus on double materiality.\nResponsible sourcing, including supplier diversity\nHuman rights\n3 In this report, our use of the terms “material,” “materiality” and other similar terms refers to topics that reflect Mastercard’s significant economic, social and environmental impacts or that substantially influence the assessments and decisions of a diverse set of stakeholders. We are not using these terms as they are used under the securities or other laws of the United States or any other jurisdiction or as these terms are used in the context of financial statements and financial reporting.\n### Stakeholder engagement\nAt Mastercard, we regularly engage with our internal and external stakeholders on a wide variety of topics. This engagement is essential to how we operate. Listening to and interacting with a diverse group of stakeholders helps shape our ESG strategy and contributes to our understanding and management of key issues that can impact our stakeholders and our business.\nopen and ongoing dialogue with key stakeholders, gathering insight into their changing views and perspectives and continually assessing our ESG strategy and efforts.\nFor our employees, we help them connect to a broader purpose through our expanded volunteer and employee giving programs. We work with national and local governments to drive increased financial inclusion and inclusive economic growth. We use data-driven insights to help merchants, financial institutions and other organizations create secure customer experiences. We give consumers faster, safer and more convenient ways to pay, get paid and transfer funds. And we work closely with our suppliers to ensure that we can source responsibly and conduct business with integrity.\nOur internal stakeholders include employees and shareholders. Our external stakeholders are comprised of financial institutions, \nmerchants, consumers, nongovernmental organizations (NGOs), suppliers, \ngovernments, international organizations and regulators. To understand the specific needs and priorities of each stakeholder group, we engage our stakeholders in ways most meaningful and relevant to them, \nbased on their expectations \nand requirements.\nFor additional information on how we engage with each stakeholder group, visit Our Stakeholders in the Appendix of this report.\nAs evidenced over the past few years, we know that stakeholder priorities can change quickly. That’s why we work to pursue an\n### Environment\nWe're reducing emissions and resource use in our own operations and across our full value chain, and offering innovative solutions that help our customers, partners and consumers do the same. These activities strengthen our business and help us create long-term value.", "chunk_word_count": 540, "section_path": "Doing well by doing good > MM MM > Social", "document_id": "Mastercard 2022 ESG Report", "page": 13, "page_start": 13, "page_end": 15 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 8, "chunk_text": "# Doing well by doing good\n## MM MM\n### Operational environmental footprint\n### Scope 1, 2, and 3 GHG emissions\nProgress $41 \\%$ reduction\nin 2022, from our 2016 base year\nOverall, in 2022, we reduced total Scope 1, 2 and 3 emissions by 41% from our 2016 base year.\nClimate change is one of the most important issues facing the world today. Mastercard’s commitment to environmental sustainability starts with managing the impacts of our own operations and extends across our full value chain. This means reducing overall greenhouse gas (GHG) emissions, reducing waste, and working with our suppliers to do the same.\n### Scope 1 and 2 GHG emissions\nProgress 44% reduction\nOur 2025 goal 38% reduction\nin 2022, from our 2016 base year\nToward our science-based target of $3 8 \\%$ absolute reduction in Scope 1 and 2 GHG emissions by 2025 from our 2016 base year, in 2022 we reduced Scope 1 and 2 emissions by $44 \\%$ from our 2016 base year. Mastercard remains on target to achieve the short-term milestone in 2025.\n### Scope 3 GHG emissions\n### Our 2025 goal 20% reduction\n### Progress\n### $40 \\%$ reduction\nin 2022, from our 2016 base year\nToward our science-based target of $20 \\%$ absolute reduction in Scope 3 GHG emissions by 2025 from our 2016 base year, in 2022 we reduced Scope 3 emissions by $40 \\%$ from our 2016 base year. Mastercard remains on target to achieve the short-term milestone in 2025.", "chunk_word_count": 249, "section_path": "Doing well by doing good > MM MM > Operational environmental footprint", "document_id": "Mastercard 2022 ESG Report", "page": 16, "page_start": 16, "page_end": 16 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 9, "chunk_text": "# Doing well by doing good\n## MM MM\n### Greenhouse gas emissions reduction\n[IMAGE CAPTION] Total emissions, 2016–2022 $\\mathsf { M T C O } _ { 2 } \\mathsf { e }$ Net revenue, switched transactions, and total emissions, 2016–2022\nWe strive to reduce the climate impact of our global operations and value chain, with a goal to achieve net zero GHG emissions across our Scope 1, 2 and 3 emissions by 2040, aligned with Science Based Targets Initiative’s (SBTi's) recommendations. Our interim targets to reduce absolute Scope 1 and Scope 2 GHG emissions by $3 8 \\%$ and absolute Scope 3 GHG emissions by $20 \\%$ by 2025, compared to 2016, have been approved by SBTi. Mastercard remains on target to achieve the short-term milestones in 2025; reaching a reduction of $44 \\%$ and $40 \\%$ , respectively, in 2022.\nThis increase in emissions is primarily influenced by several key factors. In 2022, employees began returning to the office post-pandemic, the number of employees increased and Mastercard’s office footprint grew to accommodate this growth. While transactions increased $12 \\% ,$ our owned data center energy usage increased $2 \\%$ . The EPA eGrid emissions factors, which are used in our carbon accounting for U.S.-based locations, increased $6 \\%$ on average for our operations due to reduced carbon-neutral options powering the grid and an increased reliance on fossil fuels. This specifically affected our sites in Missouri and New York, which account for $65 \\%$ of our energy usage. We are working with our utility providers to bring green energy onto the grid by investing in long-term renewable energy projects and working with utilities to bring new renewable energy to the grid.\nIn 2022, Mastercard experienced $1 8 \\%$ growth in net revenue and $12 \\%$ growth in switched transactions, compared to the prior year. Total company emissions for Scope 1, 2 and 3 totaled 562,583 metric tons of carbon dioxide $( \\mathsf { M t C O } _ { 2 } \\mathsf { e } )$ , which is a $3 \\%$ increase over 2021. For several years now, we have seen signs of decoupling our corporate growth from our levels of GHG emissions and we remain focused on this task.\n[IMAGE CAPTION] Index, $2 0 1 6 = 1 0 0$\nOur operations (Scope 1 and 2) account for $10 \\%$ of our GHG emissions, with data center operations accounting for $5 7 \\%$ of our Scope 1 and 2 emissions. In 2022, our operations produced $5 6 , 0 0 2 \\mathsf { M t C O } _ { 2 } \\mathsf { e } ,$ which is a $3 \\%$ increase over 2021.\nSince 2020, Mastercard’s global operations (Scope 1 and 2) have been carbon neutral, achieved through ongoing decarbonization efforts, energy efficiency, usage of $100 \\%$ renewable electricity, and purchase of carbon credits to address residual emissions. We employ high-integrity carbon credits verified to recognized standards and only in conjunction with real reductions in carbon emissions. We strive to select credits that have characteristics of permanence and source them from a range of geographic regions. Project types include forestry, clean cookstoves, renewable energy and destruction of refrigerants.", "chunk_word_count": 535, "section_path": "Doing well by doing good > MM MM > Greenhouse gas emissions reduction", "document_id": "Mastercard 2022 ESG Report", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 10, "chunk_text": "# Doing well by doing good\n## MM MM\n### Greenhouse gas emissions reduction\nOur suppliers (Scope 3, Categories 1, 2 and 4) account for $80 \\%$ of our GHG emissions, and their efforts to reduce emissions are key to our emissions reduction efforts. In 2022, our supply chain produced 449,641 ${ \\mathsf { M T C O } } _ { 2 } { \\mathsf { e } } ,$ which is a $1 \\%$ reduction compared to 2021. Other Scope 3 categories including fuel- and energy-related activities, and employee commuting and business travel, account for the remaining $10 \\%$ of our GHG emissions, and were up $36 \\%$ over 2021 primarily due to a post-pandemic rebound in our business travel.\n### Green buildings\nMastercard works to ensure that all of the more than 100 facilities we operate globally are run in an environmentally responsible manner through continuous utility data analysis, audits and leasing/contract language. Mastercard’s operational standards incorporate sustainable solutions such as high-efficiency heating, ventilation and air conditioning, lighting, and waterefficient fixtures.\nAll new construction, renovations and building projects adhere to our Mastercard Environmental Design Standard, an everevolving document that specifies project requirements for energy efficiency, and green buildings certification, and provides guidelines for carbon accounting during the entire process from conception and design to maintenance and operations. This document provides our teams with a baseline for responsible environmental decision-making.\nAs part of our strategy to reduce our GHG emissions, Mastercard seeks buildings with green certifications for new leases and seeks to add green lease terms into contracts. At the end of 2022, $89 \\%$ of our global workspace met regional or international green certification requirements including Leadership in Energy and Environmental Design (LEED), WELL Building, FitWell, BREEAM in Europe, and Greenstar in Asia Pacific. Our owned sites are all greenbuilding certified and fitted with solar panels on-site.\n### LEED Platinum at Dublin\nIn the U.S., we implement the U.S. Environmental Protection Agency’s (EPA's) Energy Star Tenant Space program to assist with measuring energy use, employing energy-efficient practices and procuring energy-efficient office equipment. We apply that program’s criteria globally, and strive to use less than 10 kilowatt hours per square foot per year.\nOur Dublin, Ireland office, located at 1 South County, achieved LEED Platinum certification in March 2022 with a score of 87 points out of 110 possible points. Features of this location include enhanced commissioning, metering and energy performance, a construction waste management plan and a strategic location with access to public transportation. This site also utilizes $1 0 \\%$ renewable power through a contract with the local utility provider.\nBecause the energy efficiency of our owned data centers heavily impacts our energy use and carbon footprint, Mastercard is a member of The Green Grid.\n### Renewable energy\nIn 2022, for the sixth consecutive year, Mastercard used $100 \\%$ renewable energy for our operations. We have been a member of RE100 since 2020. Our renewable energy strategy is a four-pronged approach:\nOur goal is to reduce our number of unbundled RECs and increase longer-term sources of renewable energy. We continue to investigate ways to bring new renewable energy onto the grid wherever we do business.\n[IMAGE CAPTION] 2022 renewable load breakdown", "chunk_word_count": 535, "section_path": "Doing well by doing good > MM MM > Greenhouse gas emissions reduction", "document_id": "Mastercard 2022 ESG Report", "page": 18, "page_start": 18, "page_end": 20 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 11, "chunk_text": "# Doing well by doing good\n## MM MM\n### Expanding our renewable energy portfolio\n• Develop and implement on-site renewable energy sources (solar panels) at our owned facilities \n• Establish long-term renewable energy agreements (five- to 12-year agreements with utility providers or third parties in the U.S., U.K., Australia and other locations) \n• Purchase in-country renewable-energy credits (RECs) for our sites in locations that are too small for long-term agreements \n• For locations in countries without a renewable-energy credit market, purchase RECs in neighboring countries that are connected to the same grid\nIn 2022, as part of our efforts to increase production of renewable energy, we completed the third phase of the solar array at our O’Fallon, Missouri, campus. The full array is now capable of offsetting $6 \\%$ of our total Scope 2 emissions by generating 4.2 MWh annually and is the largest privately owned solar array in the power utility’s territory.\nWe are on track to reduce our percentage of unbundled RECs and increase longer-term sources of renewable energy. We have made significant strides by enrolling in direct renewable energy procurement though utility providers or third-party energy brokers and by expanding our on-site generation.\n### Partnering with suppliers to reduce our Scope 3 emissions", "chunk_word_count": 207, "section_path": "Doing well by doing good > MM MM > Expanding our renewable energy portfolio", "document_id": "Mastercard 2022 ESG Report", "page": 20, "page_start": 20, "page_end": 20 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 12, "chunk_text": "# Doing well by doing good\n## 2022 supplier engagement KPIs\nIn 2022, for the fifth consecutive year, we received an A rating from CDP for supplier engagement.\nBecause our suppliers’ emissions account for $80 \\%$ of our emissions — including just 50 suppliers who account for more than half of those emissions — we are committed to active supplier engagement and development. Our efforts revolve around a four-stage environmental sustainability supplier engagement model that encourages suppliers to:\nTo help our suppliers set and reach their own net zero goals, in 2022 we increased our dedicated staff who collaborate with suppliers and participated in several new initiatives across our supply chain sectors. For example, because sponsorships represent a significant part of our purchased goods and services, we launched a pilot program with several of our sponsorship suppliers to help them gain a deeper understanding of their event-related emissions and identify opportunities to reduce emissions. This initiative lays the groundwork for engaging sponsorships in emission reductions as we work to substantially decarbonize our supply chain.\nFor additional information on our supplier and responsible sourcing efforts, see the Responsible sourcing section of this report.\nSupplier CDP response rate 78%\nHas or is \ncommitted to \nscience-based \ntargets3 \n39%\n• Disclose their emissions footprint by completing the CDP Climate Change Questionnaire \n• Leverage educational resources, both Mastercard and external, to assist them in advancing environmental management practices and performance \n• Evaluate and align on key performance indicators, including setting sciencebased emission reduction goals \n• Collaborate with us to find ways to reduce emissions\nReported Scope 1 and/or 23 81%\nHas net zero goals3 38%\nAnother supplier engagement program that Mastercard launched in 2022 is with media and production suppliers to provide more sustainable options, and track emission reductions. The focus is to utilize a carbon calculator to measure the GHG emissions attributed to the activities of Mastercard media campaigns and productions. Our initial analysis has identified opportunities for improvement in GHG emission hot spots. As Mastercard continues to develop this program, we will aim to refine the data collection process, expand market data sets, and further incorporate industryleading tools.\nReported Scope 33 65%\nIn 2022, we improved to $78 \\%$ the percentage of our invited Tier 1 suppliers who responded to the CDP Climate Change Questionnaire, an increase of $12 \\%$ over 2021. Of those suppliers, $3 9 \\%$ already possess or have submitted science-based targets to the SBTi for review and approval, and $3 8 \\%$ have net zero goals.\nThe percent of invited suppliers who responded to the CDP Climate Change Questionnaire 3 Data is only from suppliers who responded and provided information.", "chunk_word_count": 441, "section_path": "Doing well by doing good > 2022 supplier engagement KPIs", "document_id": "Mastercard 2022 ESG Report", "page": 21, "page_start": 21, "page_end": 21 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 13, "chunk_text": "# Doing well by doing good\n## 2022 supplier engagement KPIs\n### Waste reduction\nWe continue efforts to eliminate waste in our operations. In 2022, we diverted $71 \\%$ of the waste generated by Mastercard-owned sites through recycling, composting, donations and other forms of landfill diversion. This rate of waste diversion was down from $86 \\%$ of waste diverted in 2021, which we attribute to an increase in office attendance as COVID restrictions eased and an increase in the use of single-use plastic in cafeterias.\ncertified in environmental standards and data destruction to protect our customers’ data privacy and the planet.\nIn 2022, nine Mastercard locations became TRUE precertified, achieving recognition for a demonstrated commitment to attaining TRUE certification by working on projects that implement fundamental actions and policies needed to effectively pursue zero waste.\nWe strive to achieve TRUE certification for zero waste at all of our owned facilities and leased sites across the globe where we have the ability to select waste haulers.\nIn 2022, we also continued to ensure that $100 \\%$ of our global electronic waste was recycled by using responsible partners\n[IMAGE CAPTION] Mastercard facilities that have received TRUE precertification\n### San Francisco office receives TRUE certification\nIn 2022, our San Francisco office received TRUE Zero Waste certification, a program aimed at minimizing solid waste streams and diverting what remains from landfills. Certification requires a $90 \\%$ or greater diversion rate of materials from landfills each month over a 12-month period. Through the hard work of the Mastercard sustainability team, facility managers, and on-site staff and partners, the site reached $9 7 \\%$ diversion.\n### Responsible water management\nOur Environmental Statement guides our approach to managing environmental issues including climate, water and waste across our value chain.\nBecause water availability, quality and consumption are increasing areas of global concern, Mastercard internally tracks water use at primary sites for chilling, bathrooms/ kitchens and irrigation. Water use remains non-material to Mastercard as we do not create products that require the use of large quantities of water.\nWe require the use of water-efficient EPA WaterSense-labeled restroom fixtures to reduce overall water use and have designed our owned facilities to use non-potable water for functions that allow its use. For example, our ongoing xeriscaping project to reduce water consumption at our O'Fallon data center site uses rainwater capture for irrigation.", "chunk_word_count": 391, "section_path": "Doing well by doing good > 2022 supplier engagement KPIs > Waste reduction", "document_id": "Mastercard 2022 ESG Report", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 14, "chunk_text": "# Doing well by doing good\n## 2022 supplier engagement KPIs\n### Environmentally focused solutions\nIntegrating environmental sustainability into inclusive economic growth and welfare is a significant global challenge. To help accelerate the transformation to low-carbon, regenerative systems and practices, Mastercard is designing and developing differentiated products and solutions that help our customers, partners and consumers make environmentally conscious choices and achieve their environmental sustainability goals.\nThrough Mastercard’s Sustainability Innovation Lab — our global research and development center for climate-conscious digital products and solutions — as well as our Data & Services advisory, we focus on ways to empower our customers, partners and consumers to transform how they produce, distribute and purchase products and services and help move toward a circular, more sustainable economy.\nThe Carbon\tCalculator also integrates Mastercard Donation technology, allowing consumers to donate to meaningful environmental causes that potentially help counterbalance the GHG emissions of their purchases. To learn more about the Mastercard Donation platform, see the Community\tgiving\tand\tvolunteerism section of this report.\n[IMAGE CAPTION] < April 2022 > ${ } ^ { \\star } \\mathsf { C O } _ { 2 }$ captured by trees over 5 years.\n### Carbon Calculator\nMastercard’s Carbon\tCalculator, developed in collaboration with Swedish fintech Doconomy, allows consumers to view the estimated carbon footprint of their purchases. A consumer’s footprint is tracked month by month across a variety of spending categories, enabling them to consider purchasing decisions to reduce their environmental footprint. In 2022, the Carbon Calculator went live with Mastercard issuers in the U.K., Hungary, Taiwan, and Italy.\nMastercard is the first payments network to integrate GHG emissions calculations into a calculator. The Carbon Calculator was awarded first place at the 2022 Singapore Fintech Festival’s Global FinTech Awards.\nPlant a tree for as little as $\\$ 2$ >\n### Priceless Planet Coalition\nThe global environmental organizations Conservation International and World Resources Institute lead the Priceless Planet Coalition’s mobilization and coordination of restoration efforts, collaborating with local communities and stakeholders for long-term forest stewardship and employing sciencebased best practices for the selection, implementation and long-term monitoring of restoration efforts.\nThrough our Priceless Planet Coalition, we have engaged more than 130 corporate partners globally to support forest restoration projects that mitigate global GHG emissions, promote planet biodiversity and benefit the communities that live in or near reforested landscapes.\nIn 2022, we helped our coalition partners launch more than 150 cause-related campaigns to raise funds for restoring trees and forests.\nIn 2022, we continued work in the program's three initial restoration project areas and added 15 new restoration projects, bringing the total to 18 projects across 19 countries.\nThe Priceless Planet Coalition employs a forest restoration model dedicated to regrowing forests in locations that represent the greatest global need.", "chunk_word_count": 459, "section_path": "Doing well by doing good > 2022 supplier engagement KPIs > Environmentally focused solutions", "document_id": "Mastercard 2022 ESG Report", "page": 24, "page_start": 24, "page_end": 25 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 15, "chunk_text": "# Doing well by doing good\n## 2022 supplier engagement KPIs\n### Trees restored\n[IMAGE CAPTION] Priceless Planet Coalition restoration projects\nOur 2025 goal 100 million restored\nProgress 13 million funded including 4 million restored\nestored Funded\nToward our goal to restore 100 million trees by 2025 through the Priceless Planet Coalition, through 2022, we have secured funding to restore an estimated 13 million trees and have already restored 4 million trees4 . We are implementing actions to accelerate this progress, particularly around the introduction of consumer engagement tools, while remaining committed to implementing the highest quality restoration projects with maximum potential for climate, community, and biodiversity impacts.\n4 Incremental 9 million trees based on an estimated average cost of $\\$ 2$ per tree throughout the Priceless Planet Coalition initiative.\n### Sustainable Card program\n### Wildlife Impact Cards\nMastercard’s Sustainable Card Badge and Certification Program empowers our partners to reduce first-use polyvinyl chloride (PVC) plastic in payment card production by issuing cards made from 23 approved products constructed from recycled or biosourced materials such as recycled ocean plastic and bioplastics made from Thai sugar or Nebraska corn. The environmental claims of these materials are verified via the Card Eco-Certification scheme (CEC), and their use is confirmed by an independent auditor who assesses vendor sustainability claims. An optional badge can be featured on the cards to help consumers identify those that are made with these more sustainable materials.\nMastercard’s Wildlife Impact Card program offers people with a passion for nature and the environment a way to help protect critically endangered species and planet biodiversity. In partnership with the global environmental organization Conservation International, the program helps protect and restore wildlife habitats around the world. Mastercard customers have committed to the program’s cause through donations and marketing activities that raise cause awareness.\nIn 2022, we expanded the program’s global customer and consumer base through our partnership with DSK Bank, the largest bank in Bulgaria. With this new customer relationship, we launched the first wildlifethemed debit card made from materials verified through Mastercard's Sustainable Cards program. Additionally, for every Mastercard Wildlife Impact Card issued, DSK Bank donated $\\$ 1$ to Conservation International without any additional charge to the consumer.\nSince the program’s inception in 2018, more than 330 financial institutions in 80 countries have issued cards through our Sustainable Card program. In 2022, 109 million Mastercard-branded cards were produced using approved materials, expanding the total to 169 million since 2018.\nMastercard announced that effective January 1, 2028, all newly produced cards must be CEC certified. Cards made from first-use PVC will no longer be accepted.\n### Climate resilience\nThe science is clear: The climate is changing and society is facing significant impacts, including \nmore frequent and severe \nweather, extreme \ntemperatures, and other effects of climate change5 . Making \nprogress to reduce climate \nchange this decade is critical, as is the ability to prepare for, and adapt to, these impacts. \nMastercard is doing this by \nfocusing on strong governance, aggressive emissions-reduction goals and comprehensive risk \nmanagement of our \nown operations.", "chunk_word_count": 506, "section_path": "Doing well by doing good > 2022 supplier engagement KPIs > Trees restored", "document_id": "Mastercard 2022 ESG Report", "page": 25, "page_start": 25, "page_end": 27 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 16, "chunk_text": "# Doing well by doing good\n## 2022 supplier engagement KPIs\n### Governance\nMastercard’s Board of Directors is responsible for overseeing the company’s ESG strategy, which includes climate, as well as ensuring that the financial and operational risks and opportunities associated with the strategy are adequately managed. Our Chief Financial Officer and Chief Sustainability Officer share leadership for the assessment and management of climate-related goals, initiatives, issues and risk management. Additionally, Mastercard’s ESG Executive Steering Committee, composed of leaders from each of our business units, meets regularly to review and discuss ESG matters, including climate related topics. Learn more.\nMastercard’s Enterprise Risk Management (ERM) program is designed to provide comprehensive, integrated and balanced management of risk, while facilitating transparent identification and reporting of key business issues and risks. Mastercard has incorporated and considered ESG and climaterelated risks (i.e., physical and transition risks) into the broader framework (i.e., ERM Framework) for managing risks presented to Mastercard through normal business operations. Learn more.\n### Approach\nMastercard’s approach to climate resilience centers around achieving our climate goals and assessing and responding to climate-related risk and opportunities in our own operations and beyond. Our climate goals include achieving net zero emissions by 2040, reducing Mastercard's GHG emissions by our sciencebased targets of $3 8 \\%$ for Scope 1 and 2 and $20 \\%$ for Scope 3 by $2 0 2 5$ , compared to 2016. In support of our climate goals, we have maintained carbon neutrality in our global operations, used $100 \\%$ renewable energy, focused on decarbonization across our value chain and limited our use of offsets. Read more related to these goals in our Operational environmental footprint section.\nMastercard's suite of powerful, flexible solutions are faster, more efficient and more secure than cash and paper vouchers and can be used to support the important work aid agencies undertake during climaterelated events by benefiting communities, stimulating local markets and providing beneficiaries dignity through choice.\nSince 2020, Mastercard has engaged external consultants to support us in the identification and analysis of climaterelated physical and transition risks. This analysis includes different climate scenarios over medium- and long-term horizons.\nrisk evaluations and business continuity planning (BCP) exercises, performed multiple times per year, and we have implemented activities and responses to mitigate potential climate-related disruptions.", "chunk_word_count": 378, "section_path": "Doing well by doing good > 2022 supplier engagement KPIs > Governance", "document_id": "Mastercard 2022 ESG Report", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 17, "chunk_text": "# Doing well by doing good\n## 2022 supplier engagement KPIs\n### Protecting O’Fallon from climate impacts\nIn 2022, a record-breaking 1- in-1,000-year rainfall engulfed the St. Louis area resulting in severe flooding. Mastercard’s nearby O’Fallon, Missouri, office, a key operational data center designed to withstand potentially dangerous weather, was not impacted.\nWe have started to utilize and incorporate results from our analysis of climate-related risks into our business practices. For example, we leverage the results from our climate scenario analysis to inform our real estate competencies, such as transaction management, project management and workplace safety audit integration. In addition, we understand that climaterelated physical vulnerabilities have the potential to disrupt technical capabilities, service delivery, customer service, and employee safety and well-being. For example, extreme temperatures or drought may affect the delivery of energy and water required by information technology (IT) and cooling systems. These results have informed our design of our facility\nAs part of our approach to climate resilience, Mastercard also looks for opportunities to support and affect change with our customers and communities, including preparation for, and responding to, climate-related risks and opportunities. As an example, extreme weather events such as tornados, flooding and winter storms directly affect Mastercard's customers. Humanitarian agencies and international development organizations are increasingly looking to deliver aid digitally.\nWe will continue to monitor and assess climate-related risks and opportunities and embed these decisions into our business strategy and operational execution.\nOur O’Fallon, Missouri, office is located in a 500-year flood plain, which is strategically located above the surrounding 100-year flood plain. A 10-acre retention lake, designed for a controlled release of storm water that feeds to a neighboring creek, ensures the data center’s integrity during extreme weather events.\nThe O’Fallon office is one example of Mastercard’s approach to climateresilient centers and its response to climate-related risks and opportunities in our own operations.\n### Social\nWe are committed to advancing human rights and diversity, equity and inclusion across everything we do, from promoting financial inclusion to recruiting and retaining a talented and diverse workforce. These efforts deliver on the expectations of our employees, our customers and our partners, and help us create long-term value.\n### Financial inclusion\nAt Mastercard, we focus on building an inclusive, \nsustainable digital economy for everyone, everywhere. \nAccess to and use of digital financial services foster \neconomic opportunity and \nhelp improve lives by reducing social inequality and \nsupporting global economic growth. For Mastercard, this goes beyond philanthropy \nand includes activities to \nsupport financial inclusion \nthrough commercially viable products and services that \npromote long-term \nsustainable growth for \nindividuals and \nsmall businesses.\n### Empowering people in a digital economy", "chunk_word_count": 438, "section_path": "Doing well by doing good > 2022 supplier engagement KPIs > Protecting O’Fallon from climate impacts", "document_id": "Mastercard 2022 ESG Report", "page": 28, "page_start": 28, "page_end": 30 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 18, "chunk_text": "# Doing well by doing good\n## 2022 supplier engagement KPIs\n### People connected to the digital economy\nAmid a global shift to a digital economy, many people around the world still lack the financial services they need to build better lives. We are putting our capabilities and resources to work to address this challenge. Through commercially sustainable solutions, we are helping those without access to traditional financial products receive and make payments in digital form. And through our philanthropy, we are galvanizing partnerships and scaling programs to reach those furthest from the financial mainstream.\nProgress 780 million\nOur 2025 goal 1 billion\nToward our goal to connect 1 billion people to the digital economy by 2025, we worked with our partners to connect more than 100 million in 2022. Since 2015, with partners, we have connected more than 780 million people to the digital economy.\n### Commercial solutions for the unbanked and underserved\nWe partner with a broad range of customers — from traditional issuers and governments, to fintechs and mobile network operators — to support the unbanked and underserved by providing entry-level products and solutions designed to address the specific needs of vulnerable populations who are without access to basic digital payment solutions.\nCommunity Pass provides an interoperable infrastructure based on a common digital identity and shared tools, reducing costs associated with reaching underserved communities. The solution enables banks, technology organizations, governments and international development organizations to increase their reach and reduce the cost of delivering services, while also giving users an easy and secure way to prove their identity and maintain control of their personal data. In 2022, Community Pass expanded within six countries: India, Kenya, Tanzania, Uganda, Mauritania and Mozambique. Through 2022, 3 million users were registered with Community Pass. In December 2022, we announced a goal to reach 30 million Community Pass users by 2027.\nHelping the public sector find practical solutions for digitizing vital services. We partner with governments at multiple levels, from municipal to federal, to advise and develop government-to-consumer disbursement programs that meet the needs of each government and its citizens. For example, in Türkiye, through our partnership with the Postal Corporation of Türkiye, we helped deliver social disbursements to support refugees and others in need, as well as provide crossborder services for transferring funds between families and friends.", "chunk_word_count": 387, "section_path": "Doing well by doing good > 2022 supplier engagement KPIs > People connected to the digital economy", "document_id": "Mastercard 2022 ESG Report", "page": 30, "page_start": 30, "page_end": 31 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 19, "chunk_text": "# Doing well by doing good\n## 2022 supplier engagement KPIs\n### Building a sustainable approach to service delivery in Uganda\nIn Uganda, a digital platform called YoPay Agric, which is powered by Mastercard’s Community Pass platform, is linking remote farmers to different partners in the agricultural sector. This technology helps farmers access more markets digitally, even without reliable connectivity. Farmers can send harvest yield information quickly and accurately to sellers, negotiate fair prices with buyers and take advantage of secure digital payments. At the same time, the technology creates a digital transaction record to automatically build a credible financial history.\nEnabling private- and public-sector partnerships to provide support to those who are financially vulnerable. We partner with private organizations to support national governments' initiatives focused on providing aid to certain population segments. For example, Edenred, Sodexo and Up Romania partnered exclusively with Mastercard to issue cards for citizens to use for meal support from retail food network merchants.\nPartnering with emerging players in the payments ecosystem. We engage with partners such as mobile network operators and fintechs around the world to help reach historically unbanked and underserved populations with digital payment solutions. For example, since $2 0 1 9 ,$ we have partnered with Airtel Africa to offer mobile money services including payments and international money transfers to millions of subscribers across 14 countries in Africa.\nTransforming development and humanitarian response. Through our Community Pass solution, Mastercard provides a way to serve people in the most remote communities, many of whom lack data records, formal identification and/ or connectivity.\ncommunity of thinkers, leaders and doers on the front lines of financial inclusion and security. To learn more, see the Community giving and volunteerism section of this report.\n### Supporting inclusion through financial literacy\n### Small businesses connected to the digital economy\nFor more than a decade, Mastercard has provided financial education to individuals in the U.S. through our Master Your Card community empowerment program. Designed for people of all ages as well as new business owners, the Master Your Card program facilitates presentations and workshops on key financial education topics.\n### Progress\nOur 2025 goal 50 million\n## 35 million\n### Helping small businesses succeed\nMicro and small businesses continue to face barriers when accessing the financial tools and resources they need to compete and stay resilient in the global, digital economy. Through our commercial solutions, we are helping micro, small and medium enterprises (MSMEs) securely pay, get paid, access capital and digitize their operations. And through our philanthropy, we are galvanizing partnerships to strengthen the small business ecosystem and help entrepreneurs access the networks, tools and resources they need to thrive.\nToward our goal to connect 50 million MSMEs to the digital economy through card acceptance by 2025, we connected 9 million MSMEs to the digital economy in 2022, bringing our total to 35 million since 2020.\nIn 2022, with the assistance of Mastercard employees who served as volunteer presenters, we hosted 85 virtual and inperson educational sessions and engaged more than 10 thousand individuals, entrepreneurs and small-business owners. Additionally, through the Master Your Card/ Everfi school program, we provided financial education to more than 10 thousand students during the 2021–2022 school year.", "chunk_word_count": 535, "section_path": "Doing well by doing good > 2022 supplier engagement KPIs > Building a sustainable approach to service delivery in Uganda", "document_id": "Mastercard 2022 ESG Report", "page": 31, "page_start": 31, "page_end": 32 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 20, "chunk_text": "# Doing well by doing good\n## 35 million\n### Women entrepreneurs provided business solutions\nProgress 27 million\nOur 2025 goal 25 million\n### Leveraging philanthropy to advance financial inclusion and security\n### Commercial solutions to help small businesses grow\nExpanding economic mobility for those at the base of the economic pyramid requires not only getting people access to the financial tools they need, but also helping them to use those services effectively. Mastercard’s Center for Inclusive Growth is producing independent research, scalable global programs and an empowered\nToward our goal to provide 25 million women entrepreneurs by 2025 with solutions that can help them grow their businesses, in 2022 we provided 8 million women-owned or women-led businesses with solutions. Since 2020, we have provided 27 million women entrepreneurs with solutions that can help them grow their businesses, surpassing our goal of 25 million by 2025.\nHelping merchants make payments and get paid. We work with traditional banks, fintechs and channel partners, including payment facilitators and independent software vendors, to distribute solutions such as Tap on Phone, Mastercard QR and the payment facilitator program to small businesses.\nMastercard’s Digital First Card Program enables financial institutions to offer a completely digital banking experience, allowing small and medium-sized enterprises to easily make business purchases.\nDesigning programs and solutions that empower women entrepreneurs. Our global framework Mastercard Women by Design enables issuers to customize portfolios and enhance existing propositions. In 2022, we continued a range of initiatives, including developing solutions and marketing campaigns tailored to helping women-led businesses. In Singapore, we launched the Lucy Card, a debit card providing free mobile banking for women entrepreneurs to manage their money.\nMastercard has provided $\\$ 244$ million in financial, technology, product and insight assets to support resilience and recovery.\n### In Solidarity: Opening doors for Black-owned small businesses", "chunk_word_count": 303, "section_path": "Doing well by doing good > 35 million > Women entrepreneurs provided business solutions", "document_id": "Mastercard 2022 ESG Report", "page": 32, "page_start": 32, "page_end": 33 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 21, "chunk_text": "# Doing well by doing good\n## 35 million\n### Leveraging philanthropy to empower micro and small businesses\nHelping small businesses go digital. We are helping small businesses better understand and expand their digital capabilities to future-proof their businesses. For example, in 2022 we partnered with the UN World Tourism Organization to make our Digital Readiness Diagnostic Tool available to MSMEs participating in their Digital Futures Programme. The goal of the program is to drive the digital transformation of MSMEs in the tourism sector through guidance and training on e-commerce, data analytics, payments and cybersecurity.\nAs part of our In Solidarity initiative to help close the racial wealth and opportunity gap in Black communities in the U.S., in 2022, Mastercard launched a new Digital Doors® curriculum program to help small businesses become digitally enabled and more financially empowered. Mastercard partnered with small business technical training programs across six In Solidarity focus cities, including St. Louis, Los Angeles, Atlanta, Birmingham, New York City and New Orleans, to integrate the Digital Doors® curriculum and provide 52 thousand small businesses with assistance and coaching to become more financially empowered. Topics covered in the curriculum included digital presence, social media marketing and accounting.\nWhen it comes to accessing credit, many micro and small businesses fall into the “missing middle”— too big to qualify for microfinance, but too small for commercial bank loans — leaving them constrained when it comes to growing their business. Mastercard’s Center for Inclusive Growth is using philanthropy to test, iterate and scale new ways of connecting growth-oriented micro and small businesses to the knowhow, tools and capital they need to survive and thrive in the digital economy. To learn more, see the Community giving and volunteerism section of this report.\n### Helping small businesses get back on their feet post-COVID\nGlobally, small businesses were hit hard by the COVID-19 pandemic. In April 2020, to help address challenges faced by local merchants, Mastercard committed $\\$ 250$ million in support for small businesses and their employees by 2025. The commitment included financial, technology, product and insight assets to support the financial inclusion, security and vitality of small businesses and their workers. Since announcing our commitment in 2020,\nProviding small businesses with better ways to manage their capital. We help MSMEs leverage credit card payments and hold on to their working capital through products like our Mastercard Installments Card For Business. This product provides MSMEs with an open-loop installment program that does not restrict the use of cards at particular stores or types of retailers.\n### Community giving and volunteerism\nAt Mastercard, we leverage our assets, core competencies and employee volunteer efforts to create positive social impact in our communities and accelerate inclusive economic growth around the world. Central to this approach are the philanthropic efforts of the Mastercard Center for Inclusive Growth, which administers our private foundation, the Mastercard Impact Fund, as well as our corporate giving and employee volunteerism.\n### Center for Inclusive Growth and the Mastercard Impact Fund", "chunk_word_count": 498, "section_path": "Doing well by doing good > 35 million > Leveraging philanthropy to empower micro and small businesses", "document_id": "Mastercard 2022 ESG Report", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 22, "chunk_text": "# Doing well by doing good\n## 35 million\n### How we supported our communities in 2022\nEstablished in 2013, the Center for Inclusive Growth is the philanthropic hub of \nMastercard, committed to advancing \nequitable and sustainable economic growth and financial inclusion around the world. The Center leverages corporate resources, such as our network, data insights, expertise and technology, as well as the philanthropic \nresources of the Mastercard Impact Fund, to invest in independent research, pilot and scale impactful programs and build crosssector partnerships to further scale \nsolutions that drive inclusive \neconomic growth.\nMastercard Impact Fund giving cash contributions\n\\$68 million\nCorporate giving cash contributions \\$35 million\nEmployee, Board of Directors and retiree giving\nThe Center administers the Mastercard Impact Fund, an independently directed 501(c)(3) tax exempt private foundation. Through 2022, the Fund has approved 228 grants totaling $\\$ 320$ million, supporting work in 97 countries. In 2022, it provided $\\$ 68$ million in global community support and our programs reached 18 million individuals, small businesses and financial service providers, supporting a range of financial security, small business growth and impact data science outcomes.\n\\$6 million\nEmployee volunteer hours 93,000 hours\n### The Center’s activities focus on the following areas:\nMastercard Impact Fund 2022 giving\nFinancial inclusion: Financial security Increasing the financial security and economic mobility of individuals and workers\n### \\$3 million\nFinancial inclusion: \nSmall business growth \nImproving the financial resilience and growth of micro and small businesses\n\\$24 million\n\\$18 million\n### Impact data science\nBuilding the capacity of nonprofits and governments to use data science to drive equitable outcomes\n\\$23 million\nOther community needs as they are identified, including matching gifts\n### Advancing climate adaptation and resilience through digital finance", "chunk_word_count": 283, "section_path": "Doing well by doing good > 35 million > How we supported our communities in 2022", "document_id": "Mastercard 2022 ESG Report", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 23, "chunk_text": "# Doing well by doing good\n## 35 million\n### Financial inclusion and security programs\nCatalyzing a national financial inclusion strategy in the U.S. In April 2022, the Aspen Institute, in partnership with Mastercard and a coalition of stakeholders, issued a call to action to establish a shared vision for how financial products, business models and policy support the financial security of all U.S. residents. More than 110 signatories to a support letter, as well as a bi-partisan group of federal lawmakers, have indicated support for the strategy. Mastercard has partnered with Aspen to inform strategy development, communications and efforts to educate the private sector, NGOs and government on the opportunity a National Financial Inclusion strategy presents to the country.\nEmpowering women through wage digitization. A project with the BSR HERproject is seeking to promote inclusive economic growth to vulnerable populations, including garment factory managers and workers in Cambodia and Egypt, by transitioning them to formal digital financial services. The program provides garment factory workers, with a focus on women, with the skills and resources to better manage their money, invest in economic opportunities and save for the future. Through 2022, the project has helped 27,000 workers in 17 factories across Cambodia and 16,000 workers in six factories in Egypt.\nScaling digital skills-building. In partnership with YCAB Foundation, Infradigital Foundation, Per Scholas, Mercy Corps and Global Cyber Alliance, the Mastercard Academy 2.0 program has provided more than 280,000 Indonesian youth, midcareer professionals, and small businesses across 37 provinces, with skills to succeed in the digital economy since its launch in 2019. The program’s successes have inspired systemic changes within the government of Indonesia’s approach to digitalization, and through an agreement signed with Mastercard in 2022, the Ministry of Communications and Informatics adopted the Mastercard Academy 2.0 curriculum for its Digital Talent Scholarship academies. This initiative contributed to the government’s goal of ensuring that 9 million Indonesians are digitally literate by 2030 and to the Indonesia Medium-Term National Development Plan (RPJMN) target of integrating 30 million MSMEs into the digital ecosystem by 2024.\nMastercard is catalyzing an innovation ecosystem to deliver inclusive growth technology solutions for greater climate adaptation, resilience and a just transition.\nAt COP27, Mastercard was one of 10 companies to answer President Biden’s PREPARE Call to Action in building climate resilience in partner countries. Our commitment included a new partnership with BFA Global to join the CIFAR Alliance in accelerating innovative fintechenabled solutions to help vulnerable populations build resilience and adapt to climate change in the Global South. The partnership will support a new climate-smart product innovation hub and fieldbuilding efforts to accelerate fintech solutions for resilience.\nMastercard joined the Earthshot Prize in 2022 with the intention of identifying Earthshot Prize contenders specifically at the intersection of environmental sustainability and inclusive growth — high impact solutions aimed at repairing the Earth in scalable ways that can also help local communities build resilience and prosper.", "chunk_word_count": 486, "section_path": "Doing well by doing good > 35 million > Financial inclusion and security programs", "document_id": "Mastercard 2022 ESG Report", "page": 36, "page_start": 36, "page_end": 36 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 24, "chunk_text": "# Doing well by doing good\n## 35 million\n### Small-business growth programs\nDigitizing small businesses. We concluded a four-year program with Accion and more than 50 financial service providers and fintech startups around the world to help small businesses leverage digital tools. At the program’s conclusion, it had provided benefits to more than 12 million individuals and more than 5 million MSEs that are now using digital products on a regular basis. Additionally, women entrepreneurs accounted for $7 5 \\%$ of new product users, and digital products users surveyed reported a $30 \\%$ increase in business growth activities, with $61 \\%$ linking improvements, in part, to the use of digital products.\nStrengthening local small-business ecosystems. Strive is Mastercard’s portfolio of philanthropic programs that support the growth and resilience of small businesses around the world. Since launching in 2021, Strive programs have helped to build capacity, unlock access to capital and drive adoption of digital tools for 4 million micro and small enterprises (MSEs) in 16 markets across Europe, North America, Latin America, Africa, and Asia-Pacific, including U.K., Czechia, and the U.S.\nSparking new ideas to support resilience and growth. The Strive Innovation Fund awarded $\\$ 1$ million in grants to eight organizations — from more than 650 applicants — to develop innovative, scalable solutions to strengthen small businesses’ digital capabilities. One recipient is using Internet of Things–enabled vending machines to grow retailer revenue in Kenya by reducing stock outs and eliminating single-use plastic. Another is testing the viability of using financial literacy education data to de-risk and expand small business credit in Cambodia. Another awardee is trialing the efficacy of virtual reality to upskill entrepreneurs in Brazilian favelas.\n### Impact data science programs\n### In Solidarity: Preparing the data scientists of the future\n### Equipping local leaders with data tools and insights.\n### Building data science capacity for the social impact sector.", "chunk_word_count": 313, "section_path": "Doing well by doing good > 35 million > Small-business growth programs", "document_id": "Mastercard 2022 ESG Report", "page": 37, "page_start": 37, "page_end": 37 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 25, "chunk_text": "# Doing well by doing good\n## 35 million\n### Convening leaders to advance data for social impact.\n• In partnership with the Center for Public Impact, we launched Data for Equity, a collaborative network of eight U.S. city governments working to close wealth and opportunity gaps. The program brings together chief equity, technology and data officers from across the nation to inform equitable and inclusive economic development practices for federal funding allocations. \n• Through our support of Social Progress Imperative, we helped launch the Social Progress Index India tool used by the Institute of Competitiveness and the government of India. The data tool, involving a detailed framework of 49 indicators, will help economic development leaders in government, business and other organizations measure progress in the areas of basic human needs, foundations of well-being, and opportunity, in each Indian state.\n• As part of our ongoing partnership with The Rockefeller Foundation, as founding funders of data.org, we helped to launch its first Capacity Accelerator Network (CAN) in the U.S. The Network focuses on training 1 million purpose-driven data practitioners from underrepresented communities, such as women and ethnic minorities, and bringing together diverse higher education partners, including historically Black colleges and universities, minority-serving institutions and Hispanic-serving institutions. The Center for Inclusive Growth also funded data.org’s Inclusive Growth and Recovery Challenge, which in 2022 generated an additional $\\$ 30$ million for projects around the world, including Kenya, India and Mexico.\n• The Center for Inclusive Growth hosted its inaugural Impact Data Summit in September 2022, convening 170 global social sector leaders to discuss data principles and capacity building for global development. Notable speakers included Mari Pangestu, Managing Partner of the World Bank, Tami Dokken, Chief Data Privacy Officer of the World Bank and Srinija Srinivasan, Founding Editor-in-Chief of Yahoo!.\nAs part of our In Solidarity initiative to help close the racial wealth and opportunity gap in Black communities in the U.S., Mastercard provided a $\\$ 5$ million grant to Howard University to support the creation of the Center for Applied Data Science and Analytics (CADSA).\nData and data science have the potential to provide valuable insights into societal challenges, but unfortunately, racial bias and data misuse can seep into algorithms and prevent people of color from getting equal access to finance, healthcare and justice. CADSA will advance Howard's leadership as a major hub of data science for social impact research and training.\n### Insights to advance inclusive growth\nThrough the support of the Center for Inclusive Growth, in 2022, Mastercard’s research partners produced 130 research articles and other resources to inform inclusive growth strategies. To learn more, please visit our Insights Library.\n• As part of a multiyear grant from the Mastercard Impact Fund, Benefits Data Trust delivered more than 100 thousand benefit enrollments, valued at an estimated $\\$ 255$ million, through improved data capacity and outreach.\nCADSA’s programs and data science curriculum will address health care disparities, environmental justice, and racial and ethnic bias in artificial intelligence algorithms that confront local, national and global societies.\n### Other Mastercard community support", "chunk_word_count": 509, "section_path": "Doing well by doing good > 35 million > Convening leaders to advance data for social impact.", "document_id": "Mastercard 2022 ESG Report", "page": 38, "page_start": 38, "page_end": 38 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 26, "chunk_text": "# Doing well by doing good\n## 35 million\n### Girls educated through Girls4Tech®\nMastercard also regularly makes corporatefunded cash contributions and leverages our company’s people, technology, data and expertise to support important causes around the world. Corporate-funded contributions to a charity or other eligible organization must meet the eligibility requirements outlined in Mastercard’s Corporate Philanthropy Policy. In 2022, Mastercard provided $\\$ 35$ million in corporate donations to more than 550 charities.\nOur 2025 goal 5 million\nProgress 3.6 million\n### Girls4Tech®\nOur signature STEM education program, Girls4Tech, uses an interactive, hands-on curriculum that connects the foundations of our business to STEM principles and inspires girls across the globe to build skills that will help them become the leaders of tomorrow and pursue careers in STEM. Over the past two years, we have expanded Girls4Tech digitally, providing free STEM education resources and curriculum to education partners, teachers and parents on Girls4Tech.com and through partnerships with Discovery Education and We Are Teachers. In 2022, we launched two new programs, Girls4Tech 2.0 for high school girls and Girls4Tech Cybersecurity & AI. In addition, in 2022, 1 thousand Mastercard employees volunteered their time through the program, teaching key STEM topics, including algorithms, big data, cryptology, fraud detection, local intelligence and more.\nToward our goal to educate 5 million girls, ages $8 - 1 6 ,$ in STEM through our interactive, hands-on Girls4Tech® program by 2025, we reached 1.8 million girls in 2022. We have reached 3.6 million girls through Girls4Tech since the program’s launch in 2014.\n### Data for Good\nMastercard’s Data for Good initiative leverages our employee volunteers’ analytical and technical skills, along with aggregated and anonymized data on consumer spending trends, to help nonprofit, government and social enterprise partners with specialized social impact solutions.\nIn 2022, The Inclusive Growth Score™ — developed as part of our Data for Good initiative — was used by 440 individuals representing over 200 organizations in the U.S. and U.K. to support local inclusive growth initiatives. For our employee volunteerism, employees provided more than 940 hours of pro bono data science assistance. In Indonesia, Mastercard hosted a Datathon with MercyCorps on MicroMentor Indonesia, the first free virtual mentoring platform in Indonesia with 215,000 small businesses and volunteer mentors, to advise on how to best support female mentees, improve user experience and increase loyalty rewards for the platform.", "chunk_word_count": 391, "section_path": "Doing well by doing good > 35 million > Girls educated through Girls4Tech®", "document_id": "Mastercard 2022 ESG Report", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 27, "chunk_text": "# Doing well by doing good\n## 35 million\n### Empowering a network to give\nThrough our diverse portfolio of donation technologies and cause-related marketing campaigns, we bring consumers and our customers together to create positive and meaningful impact. Through the Mastercard Donation Platform, we are creating a digital, innovative and scalable donation ecosystem that provides secure, seamless and accessible options to give — for everyone, everywhere — and allows our partners to enable consumers to incorporate giving into their daily activities. By powering giving opportunities for customers, consumers, and cause partners, we are enabling meaningful contributions across economic, social and environmental causes.\nIn 2022, featured campaigns included:\n• World Food Programme. In 2022, Mastercard celebrated its 10-year partnership with the United Nations’ World Food Programme (WFP) while continuing to support campaigns to fund WFP’s school feeding programs and emergency operations. Since the partnership began, Mastercard has provided the equivalent value of 140 million1 school meals, supporting programs in 42 countries.\n• Emergency response in Ukraine. With the unfolding war in Ukraine, Mastercard worked with partners to raise and direct funding where it could provide the greatest impact. In 2022, the initiative mobilized donations through technology at point of sale, digital collection boxes, donation websites and other channels. Donations supported local efforts.\n• Stand Up To Cancer. For a 12th consecutive year, Mastercard supported Stand Up To Cancer and its efforts to accelerate the pace of research to rapidly get new cancer therapies to patients. The annual program invited cardholders to tap or order online at qualifying restaurants and grocery stores whereby a portion of the proceeds were donated.\nIn 2022, Mastercard’s campaigns, \ntechnology and matching contributions \nhelped mobilize $\\$ 52$ million in customer and consumer donations, a $71 \\%$ increase from 2021. This represented more than 280 \ncause-enablement campaigns and \nfundraising technology initiatives, \nsupporting 130 causes and \ncharity organizations.\n### Employee volunteerism\nOur employees are a powerful force for good in the communities where we live and work. We encourage our employees to bring social purpose to their work, donating funds and sharing their skills and expertise to support our charitable partners and advancing our communities through pro bono and volunteer opportunities. In 2022, 5 thousand Mastercard employees participated in our volunteerism and pro bono programs, and volunteered 93 thousand hours.\nveterans who completed the mentorship program successfully gained employment opportunities. In 2022, we had more than 50 active veteran mentorships.\n### Disaster relief", "chunk_word_count": 405, "section_path": "Doing well by doing good > 35 million > Empowering a network to give", "document_id": "Mastercard 2022 ESG Report", "page": 40, "page_start": 40, "page_end": 41 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 28, "chunk_text": "# Doing well by doing good\n## 35 million\n### The Mastercard Foundation\nAt Mastercard, we’re there when people need us. During times of disaster, we and our employees donate funds to support relief and recovery efforts. To advance our disaster relief partnerships beyond philanthropic contributions, we galvanize our employees as trained Red Cross disaster responders. In 2022, trained Mastercard employees served in three 10-day deployments to aid Hurricane Ian and Kentucky tornado relief efforts. Disaster volunteers assisted with aid distribution, clinic support and on-the-ground operations.\nThe Mastercard Foundation is a Canadian private foundation and one of the largest foundations in the world, with $\\$ 35$ billion in assets as of December 31, 2022. The Mastercard Foundation was created in 2006 through the generosity of Mastercard when it became a public company. Since its inception, the Foundation has operated independently of the company, and its policies, operations and program decisions are determined by its own board of directors. To date, the Foundation has deployed $\\$ 5.4$ billion to support youth livelihoods and to advance financial inclusion, security and education in over 70 countries, primarily in Africa, and this work has benefited millions of people. In 2022, Mastercard paid $\\$ 204$ million of dividends to the Mastercard Foundation.\n### Employee giving\nMastercard offers a Matching Gifts Program to encourage and support the generosity and community involvement of employees worldwide. The program provides company matching funds to the charitable organizations employees personally support. To maximize the impact of employee charitable giving, the Mastercard Impact Fund matches, dollar for dollar, individual charitable donations made by eligible employees, retirees and global board members, up to $\\$ 15,000$ per year. In 2022, Mastercard employees, retirees and Board members supported 4 thousand charitable organizations with $\\$ 6$ million in monetary gifts made through the Matching Gifts Program, $\\$ 5$ million of which was matched by the Mastercard Impact Fund.\n### Pro bono\nThrough our pro bono programs — Launch for Social Impact, Racial Justice Pro Bono, and Data for Good and Social Impact — Mastercard offers purpose-based development opportunities to our employees, leveraging their skills and expertise to provide specialized talent to nonprofit partners. In 2022, more than 750 employee volunteers participated globally in pro bono activities and volunteered 15 thousand hours, equating to $\\$ 3$ million in inkind services.\n### Veteran mentoring\nMastercard is dedicated to supporting military veterans’ transition into the civilian workforce. Through our partnership with American Corporate Partners, 300 employees have served as mentors through year-long mentorships, providing career readiness coaching and career advice to veterans since 2014. During that time, more than 200", "chunk_word_count": 432, "section_path": "Doing well by doing good > 35 million > The Mastercard Foundation", "document_id": "Mastercard 2022 ESG Report", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 29, "chunk_text": "# Doing well by doing good\n## 35 million\n### Human rights\nOur commitment to human rights begins with our longstanding belief that everyone has the right to be treated fairly, with decency, dignity and respect. We conduct business in ways that promote, protect and advance human rights, and embed respect for human rights within our own operations and across our value chain. We continue to assess and monitor our risks and impacts in this sphere.\nOur approach is guided by our Boardapproved Human Rights Statement, which identifies and prioritizes the human rights most correlated with our business, and our Modern Slavery and Human Trafficking Statement, which outlines the steps we take to ensure that our business and supply chains are free from human rights abuses, including modern slavery and human trafficking. Sections of our Code of Conduct, Supplier Code of Conduct and Mastercard Network Rules also outline our human rights–related expectations and methods of accountability. We expect our employees and partners, including suppliers, customers and peer organizations, to share our commitment to respecting and promoting human rights and identifying and addressing human rights abuses.\nOur Chief Sustainability Officer briefs the Nominating and Corporate Governance Committee on human rights as necessary.\n### Due diligence\nAs a business that spans the globe, our commitment to human rights includes harnessing the power of our network to promote human rights globally and seeking out means to address human rights violations within our spheres of influence. We conduct the following due diligence activities to support this commitment and better identify, prevent, mitigate and remedy human rights risks.\nInternal policies: Mastercard maintains a number of internal policies on human rights subtopics including, but not limited to, accommodation of disabilities, antidiscrimination, anti-harassment, antiretaliation and other employee relations protocols.", "chunk_word_count": 292, "section_path": "Doing well by doing good > 35 million > Human rights", "document_id": "Mastercard 2022 ESG Report", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 30, "chunk_text": "# Doing well by doing good\n## 35 million\n### Oversight\nOur executive leaders work crossfunctionally to address relevant human rights issues and to support our culture of decency. Given the range of human rights to protect, these efforts span the organization and are shared by members of our management committee and their teams.\nTraining: All Mastercard employees receive biannual trainings in and a required annual certification of our Code of Conduct. Other human rights–related trainings are offered\nenterprise-wide on voluntary or episodic bases, ensuring that employees understand our expectation of a culture of decency and respect.\nmemberships can be found in the UN Sustainable Development Goals section of this report’s Appendix.\n“We leverage \nour assets to \nenhance \nimpact in \nrestorative \njustice, police \nreform, \nwomen's \nempowerment, \nracial equity \nand other \nhuman rights \nareas.”\nPartnerships: Through partnerships with a variety of nonprofits and other organizations, we leverage our assets, including our people, funding, data insights and purpose-driven tools, to enhance impact in restorative justice, police reform, women’s empowerment, racial equity and other human rights areas. For more information on these efforts, see the DEI section of this report.\nEthics Helpline: We offer a third-partymanaged ethics hotline for employees, suppliers, customers, consumers and other stakeholders to report human rights and other ethics violations in a confidential and, if chosen, anonymous manner, where permitted by law. The Ethics Helpline offers instructions in three languages and provides local telephone options with local language interpretation in many countries. Mastercard maintains public whistleblower policies, which can be found in the Policies and Reports page on our website. In addition, to maintain transparency in our investigative processes and outcomes, we compile semiannual Summary of Investigative Activity reports and make them available to all employees.\nSuppliers: Our suppliers are required to attest to the Supplier Code of Conduct, which contains reference to the Mastercard Human Rights Statement as well as requirements on the topics of general human rights, health and safety, and labor and employment laws.\nWe also work to ensure that our products, services and technologies are not used in illicit activities that could further human rights abuses, including money laundering, terrorist financing and evasion of sanctions, and we work with others to monitor, detect and prevent illegal transactions, including child exploitation.\nMemberships: As a member of the U.N. Global Compact and U.N. Women’s Empowerment Principles networks, we affirm our commitment to upholding human rights in concert with global institutions and coalitions. More information on these\n### Responsible sourcing\nOur business success depends on a reliable, resilient, transparent and inclusive supply chain that supports our objectives, drives development and innovation and minimizes environmental impact. We hold ourselves to the highest ethical, professional and legal standards, and we expect the same of our suppliers.", "chunk_word_count": 456, "section_path": "Doing well by doing good > 35 million > Oversight", "document_id": "Mastercard 2022 ESG Report", "page": 42, "page_start": 42, "page_end": 44 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 31, "chunk_text": "# Doing well by doing good\n## 35 million\n### Supplier GHG emissions\nsuppliers to report on their use of small and diverse suppliers, which are considered Tier 2 suppliers.\nOur suppliers — particularly technology and services — account for most of our Scope 3 emissions. Hence, we focus our efforts on engaging with our suppliers to support them in their own reduction goals. Our supplier selection criteria prioritize direct suppliers who are committed to decarbonization and other environmentally responsible practices.\nWe continue to seek out ways to further diversify spend with underrepresented groups and leverage internal and external relationships to support supplier development opportunities.\nFor additional information on our work with suppliers to reduce GHG emissions, see the Operational environmental footprint section of this report.\n### Annual spend with Black-owned suppliers\nProgress $\\$ 100+$ million\nOur 2025 goal \\$100 million\n### Supplier diversity\nThrough our responsible sourcing and supplier diversity programs, we work with suppliers to promote sustainable environmental and social practices, as well as compliance with government regulations. Our primary efforts focus on three areas: reducing the greenhouse gas (GHG) emissions of our supply chain, increasing the diversity of our suppliers, and ensuring that our suppliers protect human rights.\nOur supplier diversity program ensures that equal opportunity is given to diverse suppliers, such as businesses owned by minorities, women, veterans, LGBTQ+ individuals and people with disabilities. As a result, we help create business opportunities that support jobs and wages for underrepresented communities and promote community development. We encourage our direct suppliers, also known as Tier 1 suppliers, to establish their own diverse supply chains. We require Tier 1\nin 2022 annually\nToward our goal to increase our spend with Black-owned suppliers by $70 \\%$ to $\\$ 100$ million annually by 2025 as part of our In Solidarity commitment, in 2022 we exceeded our $\\$ 100$ million spend target for the second consecutive year. While we are proud of this achievement, we know we can do more.\n### Supplier respect for human rights", "chunk_word_count": 334, "section_path": "Doing well by doing good > 35 million > Supplier GHG emissions", "document_id": "Mastercard 2022 ESG Report", "page": 44, "page_start": 44, "page_end": 45 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 32, "chunk_text": "# Doing well by doing good\n## 35 million\n### In Solidarity: Supporting underrepresented technology firm founders\nWe expect our suppliers to share our commitment to respecting and promoting human rights and identifying and addressing human rights abuses. Our Supplier Code of Conduct, which aligns with our Human Rights Statement and Modern Slavery and Human Trafficking Statement, sets out universal principles, guidelines and expectations for our suppliers. The Supplier Code of Conduct covers topics such as raising concerns, reporting unethical behavior, confidentiality, ethics and compliance and we continually revise the Code of Conduct to align with new regulations and changing environments.\nAs part of our In Solidarity initiative to help close the racial wealth and opportunity gap in Black communities in the U.S., Mastercard’s Start Path startup accelerator program is nurturing underrepresented technology firm founders on their journey to scale and innovate.\nMastercard has partnered with the National Minority Supplier Development Council to assist Start Path In Solidarity program participants in becoming certified minority-owned businesses and better position themselves for opportunities in corporate supplier diversity ecosystems.\nStart Path In Solidarity participants receive direct access to our channels, customers and products teams as well as immersive virtual events and programming to uncover coinnovation and growth opportunities. All startups are also paired with a dedicated sponsor who acts as their program champion and works to ensure that they receive support, as well as a Mastercard mentor whose expertise matches their business area.\nTo learn more about our human rights principles and policies, see our section on Human rights.\n### Diversity, equity and inclusion\nDiversity, equity and inclusion (DEI) makes us better. It drives innovation and helps us create value when we listen to our diverse customers and communities and work to solve for their pain points. It helps us grow when we bring in different perspectives to innovate and present our customers with diverse perspectives and solutions. And it helps advance sustainable change throughout our industry and in communities that have historically been marginalized. DEI is part of our core values and underpins everything we do.\n### Rated #2\non DiversityInc’s Top 50 Companies for Diversity (up from #5 in 2021)\n88%\nof employees state that they believe everyone is treated fairly, and diverse backgrounds have the opportunity to succeed at Mastercard (up $3 \\%$ from the previous employee survey in 2020)", "chunk_word_count": 390, "section_path": "Doing well by doing good > 35 million > In Solidarity: Supporting underrepresented technology firm founders", "document_id": "Mastercard 2022 ESG Report", "page": 45, "page_start": 45, "page_end": 46 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 33, "chunk_text": "# Doing well by doing good\n## 35 million\n### Our DEI manifesto\nWe believe in an equitable world, where humanity unites, prosperity is shared and opportunity is open to us all.\nOur responsibility is to lead with basic decency and protect human dignity, develop and design with intentionality and advocate for inclusion as the key to driving innovation and humanity forward.\nWe realize our role in ensuring access for those who have been traditionally marginalized; increasing representation at all levels, especially at the very top; celebrating our unique backgrounds, experiences and perspectives; and making space so that everyone has a seat at the table.\nWe commit ourselves to enabling a workplace and a world where everyone feels they belong and unlocking potential for people everywhere.\nWe believe in equal pay for equal work, standing In Solidarity with those left out, embracing our differences to unlock creative possibilities and showing up as our authentic selves.\nBecause, when no one gets left behind, when we move forward together, we can create limitless possibilities for all.\nstakeholders is supported and put into action by these 11 plans.\n### Board of Directors\n### Board diversity in 2022\n### DEI governance and management\nBecause DEI is central to our culture and strategy, its value is recognized, discussed and reviewed by our top decision-makers, including the Mastercard Board of Directors. The Board’s Human Resources and Compensation Committee reviews people and culture strategy, diversity, and equity and inclusion initiatives. Mastercard’s Corporate Governance Guidelines state that the Board’s Nominating and Corporate Governance Committee should seek to foster Board diversity (geographic, age, gender, sexual orientation, race, ethnicity and cultural background) when nominating directors for election.\n33% 67% 67% \nof our of our of our \nindependent independent independent \ndirectors directors directors are \nidentify identify non-U.S. \nas female as racially or citizens and/ ethnically or have diverse international experience\nOur five regional Inclusion Action Plans — Asia-Pacific, Eastern Europe, Middle East and Africa, Europe, Latin America and the Caribbean and North America — were created in 2020 through a process that included collaboration between regional presidents and their senior management teams, local human resources People and Capabilities teams, our global DEI team and other key stakeholders. The process included examining and adapting inclusivity efforts from best practices and themes at the global level, tailoring them to meet locally relevant focus areas and priorities.\nWe deliver against our DEI priorities through comprehensive, thoughtful and transparent approaches that involve:\n• Corporate structures, including steering committees, DEI policies and oversight by a dedicated DEI team \n• Incentives, including compensation tied to our gender median pay parity goal \n• Investments, including DEI considerations in our investment strategy \n• Mechanisms for recourse, including hotlines, investigations and audits \n• External partnerships and coalitions \n$\\cdot$ Leadership engagement and sponsorship \n• Employee experiences \n• Community outreach", "chunk_word_count": 468, "section_path": "Doing well by doing good > 35 million > Our DEI manifesto", "document_id": "Mastercard 2022 ESG Report", "page": 46, "page_start": 46, "page_end": 47 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 34, "chunk_text": "# Doing well by doing good\n## 35 million\n### Management Committee diversity in 2022\nTo learn more about our Board’s responsibilities and makeup, see our Annual Proxy Statement.\nOur six functional Inclusion Action Plans — Cyber and Intelligence, Data and Services, Finance, Law and Policy, Mastercard Technology and Products and Engineering — were also created in 2020 through the same process outlined above and with the same primary goal of identifying opportunities where we can make more of an impact.\n25% 42% 36% identified as identified as were located female racially or in non-U.S. (globally) ethnically offices diverse (U.S.)\n### Management Committee\nMastercard’s Management Committee meets bi-monthly to discuss various strategic topics including DEI, people, and culture. Committee members also participate in town halls and act as Business Resource Groups (BRG) executive sponsors or mentors.\n### Functional and regional plans\nWe maintain six functional and five regional Inclusion Action Plans to help us improve in specific DEI areas. Our vision to create limitless possibilities for our employees, customers, consumers and other\nIn 2022, we added a third governing body, the Accessibility Steering Committee, focused on driving and monitoring progress in the workplace for people with disabilities. These steering committees lead and direct the efforts of each group and take an active role in delivering against plans.\n### Global DEI team\n### Raising concerns\nOur day-to-day DEI efforts are guided by our Chief Inclusion Officer, who reports to our Chief Administrative Officer, and our global DEI team. Our Chief Inclusion Officer develops and monitors our DEI strategy and plans in partnership with business leaders, meets regularly with our CEO and Management Committee and provides DEI updates to the Mastercard Board of Directors.\nTo help rectify any lapses in DEI policy implementation, our Employee Relations Team and other People and Capabilities professionals investigate employee DEI concerns, perform regular climate checks and monitor our workplace culture. We have also established a third-party-managed Mastercard Ethics Helpline for reporting activity suspect of violating the law, our Code of Conduct or any other company policy. More information on this service can be found in the Ethics and compliance section of this report.\nIn addition, our major DEI campaigns and initiatives are reviewed by our Integrated Marketing and Communications Employee Advisory Council, composed of a global team and regional sub-teams that represent diverse perspectives and make sure our DEI efforts are thoughtful, considerate of local contexts and aligned with our overall Mastercard brand and purpose.\n### Councils and committees\nOur Global DEI Council is chaired by our Chief Executive Officer and provides direction on how best to execute our strategy and to ensure it is embedded throughout the organization. Our Gender Balance and In Solidarity initiatives each have a steering committee consisting of executive sponsors, business leaders, People and Capability leaders and the DEI team. Some of our functions and regions also opt to have their own DEI governance to further drive accountability and progress. Examples include the Cyber & Intelligence Inclusion Council and the Latin America & Caribbean Talent & Diversity Council.", "chunk_word_count": 507, "section_path": "Doing well by doing good > 35 million > Management Committee diversity in 2022", "document_id": "Mastercard 2022 ESG Report", "page": 47, "page_start": 47, "page_end": 48 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 35, "chunk_text": "# Doing well by doing good\n## 35 million\n### DEI policies\nMastercard’s DEI policies are expressed through our global Mastercard Policy Statement on Diversity, Equity and Inclusion, our Code of Conduct and our Supplier Diversity Program.\nMastercard is a member of the Human Rights Campaign’s Business Coalition for the Equality Act. We work to provide LGBTQIA $^ +$ employees with the same basic protections as other federally protected groups.\n### “We are working to ensure that everyone, from intern to executive, is included in and aware of our DEI efforts.”\n### Promoting inclusion as a leadership skill\ncurricula to all employees on topics such as Inclusion@Mastercard and Talking About Race at Work, delivered through articles, videos and guides. These focus on clear, tangible actions all employees can take to create an inclusive work environment. For those in leadership positions, we support the development of inclusion skills and behaviors through components of our Future Leaders, Leadership Now and Women Who Lead programs. For our people managers, we offer a modular curriculum to equip them with skills, reasonable expectations and development opportunities that will help them effectively and inclusively manage their diverse teams. More information on our leadership training programs can be found in the Leadership development section of this report.\nInclusion education and awareness involve our ongoing efforts to engage, educate and inspire our employees, people managers and leaders so that we can build a diverse, equitable and inclusive workforce. From intern to executive, we are working to ensure that everyone is included in and aware of our DEI efforts. In addition to being the right thing to do, a culture of inclusion allows people to bring their best selves to work, increasing creativity, collaboration and productivity.\n### Our first global DEI summit\n### Growth and development\nMastercard offers Conscious Inclusion and Disability in the Workplace training for our new hires. The Conscious Inclusion course helps employees become more aware of how bias can influence behavior, while the Disability in the Workplace course focuses on the value of defining individuals for their abilities rather than disabilities. Additionally, Mastercard offers self-paced learning\nIn October 2022, we hosted “Belong,” our first global DEI employee summit. Connecting inclusion and innovation, the company-wide event used metaverse technology to transmit leadership and employee voices in a creative format with the goal of furthering a sense of belonging across our organization. The two-day event covered the full breadth and depth of Mastercard’s DEI work.\n## 2022 BRG highlights\n### Business resource groups\nMastercard’s nine BRGs, including 149 chapters, provide year-round opportunities for employees and leaders to learn, connect, network, be inspired. These employee-led groups come together based on similar interests or experiences and a shared passion for inclusion. Each group is open to everyone, promotes inclusion of all, represents diverse communities and their allies, and focuses on the topics of intersectionality and well-being.\n### ADAPTability\n### LATIN Network", "chunk_word_count": 482, "section_path": "Doing well by doing good > 35 million > DEI policies", "document_id": "Mastercard 2022 ESG Report", "page": 48, "page_start": 48, "page_end": 50 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 36, "chunk_text": "# Doing well by doing good\n## SALUTE\n### Serving employees and family members with diverse abilities\n### Employees of Latin descent\n### Active and veteran military personnel and their families\nPartnered with our North America Region and Citi (customer) for a marquee Hispanic Heritage Month celebration to celebrate Hispanic excellence and its business contributions.\nLaunched “Community Spaces” for informal connections between employees on topics of neurodiversity, depression, caregiving and invisible disabilities.\nBrought together Mastercard customers and partners for a veteran’s panel conversation in alignment with their goal of developing more external defense and government partnerships.\n## ASIA\n## LEAD\n## WLN\nExploring Asian Society and Trends Hosted forums discussing the rise in anti-Asian hate and held a global bystander intervention training.\nLeading Employees of African Descent Launched Uplift!, our first global Black men’s mentoring program, and sponsored and presented at the U.K. Black Business Week for the first time.\n### Women’s Leadership Network\n### 30%\nHelped employees explore two important topics, thriving parents and menopause, and hosted a podcast series featuring interviews with working parents who are navigating work post-pandemic.\nof Mastercard employees are BRG members\n### ePros\nExperienced professionals with more than 10 years of experience Hosted global conversations about the value of experienced professionals and the need for a multigenerational workforce.\n## PRIDE\n### Being your true self\n### YoPros\nParticipated in parades in five new cities and virtually in the metaverse, and supported expansion of True Name® in the U.S., Canada and Europe.\n### Young Professionals\n149\nCo-hosted an event with the ASIA BRG focused on career mobility and working in the Asia-Pacific region. Participants discussed cultural and working norms of different countries and learned about current regional job opportunities.\nMastercard BRG chapters around the world\n### Developing inclusive products by design\nTo us, doing well by doing good includes innovating with purpose. This means developing solutions to ensure that our products work for everyone who wants to use them.\nIncreasing accessibility for blind and partially sighted people. Mastercard’s Touch Card feature is a new global card standard that makes card identification easier for people who are blind or partially sighted. It creates an accessible system of payment cards with unique, tactile notches — rounded for debit, squared for credit and triangular for prepaid — so anyone can identify their cards with just a touch. These notches enable blind and partially sighted people to know which card they are holding, providing them with greater independence and security across their everyday payment experiences. In 2022, our partners implemented the feature in five markets.\nSupporting transgender and non-binary communities. Mastercard’s True Name® feature eases a pain point for many in the transgender and non-binary communities worldwide, enabling them to display their preferred name on their payment card of choice (credit, debit and/or prepaid cards). Many transgender individuals cannot access legal name changes due to cost, complexity, legal landscape and/or other hurdles associated with official name and gender changes. True Name is now available through our partners in 33 markets.", "chunk_word_count": 501, "section_path": "Doing well by doing good > PRIDE > Being your true self", "document_id": "Mastercard 2022 ESG Report", "page": 50, "page_start": 50, "page_end": 51 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 37, "chunk_text": "# Doing well by doing good\n## PRIDE\n### “Innovating with purpose means we are developing solutions that work for everyone who wants to use them.”\n2021; females continue to earn $\\$ 1$ for every $\\$ 1$ males earn, with the median pay gap predominantly due to the fact that we have more men in senior roles, not because men are paid more.\n### Key DEI initiatives\n• Educated 1.8 million girls through our Girls4Tech® program in 2022, which inspires young girls to build science, technology, engineering and math (STEM) skills that will help them become the leaders of tomorrow. For additional information on this program, see the Community giving and volunteerism section of this report.\nMastercard has several initiatives and programs focused on communities who historically have been marginalized or whose perspectives are missing from leadership tables. This includes initiatives and programs related to including for gender balance, racial equity, LGBTQIA $+$ inclusion and accessibility. These programs and initiatives focus on actions to support our employees, suppliers, customers and society at large.\n• In 2022, 900 women participated in our Women’s Mentoring program, which helps positively impact female employee engagement and supports internal career moves; since 2020, 1,800 female employees have participated in the program.\n### Racial equity\nComing together for our Asian communities In recent years, society has witnessed a continued surge in anti-Asian hate crimes and violence. We have taken steps to end Asian hate by raising awareness across our global communities, empowering our Asian colleagues and calling upon allies to take action. In 2022, our ASIA BRG created space for the community to come together and listen to each other’s stories and share perspectives, and it offered opportunities for employees globally to receive Bystander Intervention Training to learn safe response and intervention methods for this type of harassment.\n• More than 80 women leaders participated in our Boards for Impact program, placing them on nonprofit boards across the U.S., U.K. and Latin America.\n### Gender balance\nWe are building the next generation of female leaders for our company and society. Our efforts focus on expanding opportunities for female employees to advance their careers, supporting smallbusiness owners and startups and partnering with other organizations committed to the need for gender balance. Our Gender Balance steering committee remains focused on increasing female representation at all levels of the organization.\n• Provided 27 million women entrepreneurs with solutions to help their businesses grow, surpassing our five-year goal to help 25 million women-owned or womenled businesses by 2025.\n• Launched the Hello Alice small business credit card in North America to help equip minority and female business owners with the tools to grow their businesses.", "chunk_word_count": 445, "section_path": "Doing well by doing good > PRIDE > “Innovating with purpose means we are developing solutions that work for everyone who wants to use them.”", "document_id": "Mastercard 2022 ESG Report", "page": 52, "page_start": 52, "page_end": 52 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 38, "chunk_text": "# Doing well by doing good\n## 2022 gender balance progress and highlights:\n• Launched the free, prepaid Lucy Card in Singapore to provide free mobile banking for women-led small businesses.\n• Increased the global median pay for female employees to $9 4 . 0 \\%$ of median pay for male employees, up $0 . 8 \\%$ from\n### In Solidarity\nIn Solidarity is our U.S. initiative to combat discrimination and racism against Black communities in all its forms. In Solidarity harnesses our culture of decency and builds on our longstanding efforts to advance inclusion and equality, with a goal of helping close the racial wealth and opportunity gap by 2025. As part of this initiative, we are enhancing our end-to-end talent program to ensure that we’re recruiting, developing and retaining Black employees at every level. We are also making investments to provide Black-owned suppliers, Blackfounded fintechs and Black people access to affordable financial tools and capital.\n### Investment in Black communities in the U.S.\nOur 2025 goal \\$500 million\nProgress \\$423 million\nToward our goal as part of In Solidarity to invest $\\$ 500$ million in Black communities in the U.S. to help close the racial wealth and opportunity gap by 2025, we’ve invested $\\$ 423$ million since 2020. Our support includes expanding city programs to support Black communities, providing affordable financial tools and services and providing capital and resources for Black-owned businesses, and increasing our spend with Black-owned suppliers.", "chunk_word_count": 241, "section_path": "Doing well by doing good > 2022 gender balance progress and highlights:", "document_id": "Mastercard 2022 ESG Report", "page": 52, "page_start": 52, "page_end": 53 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 39, "chunk_text": "# Doing well by doing good\n## 2022 In Solidarity progress and highlights:\n• Launched innovative card programs with Black-owned fintechs, including MoCaFi (for underbanked and credit building), Greenwood (for recirculating wealth within the Black community) and Jobble (for gig economy workers) • Launched a Hello Alice online community platform for Black-owned businesses to connect and access funding, tools and resources in seven In Solidarity focus cities.\n• Bolstered our activity to recruit diverse talent through marquee recruitment events, in-person engagements with historically black colleges and universities (HBCU) and new partnerships • We exceeded our $\\$ 100$ million spend target with Black-owned suppliers for a second consecutive year. • Continued Start Path In Solidarity training, mentorship and coaching, as well as commercial and investor introductions for Black- and minorityowned startups\n• Increased investment in Black-led fintechs and venture capital firms to support Black communities, with a total of $\\$ 12$ million closed since 2021 \n• Through our partnerships and support of CDFIs and community-based organizations, loaned or granted $\\$ 43$ million to Black-owned small businesses\n### LGBTQIA+ inclusion\n• Our PRIDE BRG led a learning session to explain identities and expressions, such as gender, non-binary, trans and orientation, to help create improved understanding among fellow employees that might translate to an increased number of workplace allies and advocates for the LGBTQIA+ community.\nMastercard has long been a vocal advocate and champion of LGBTQIA $+$ rights around the world. We are one of 14 firms that formed Open for Business in 2015, an informal coalition focused on supporting $\\textsf { L G B T Q + }$ inclusion and signed onto the Business Coalition for the Equality $\\mathsf { A c t } ,$ federal legislation that would extend the same basic protections to LGBTQ $^ +$ people as are provided to other protected groups under federal law.\n• In 2022, we continued to expand use of the True Name feature to enable those in the transgender and nonbinary communities to include their true name on debit, credit and prepaid cards. It is now available through our partners in 33 markets.", "chunk_word_count": 350, "section_path": "Doing well by doing good > 2022 In Solidarity progress and highlights:", "document_id": "Mastercard 2022 ESG Report", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 40, "chunk_text": "# Doing well by doing good\n## 2022 LGBTQIA $\\cdot ^ { + }$ inclusion progress and highlights:\n• Launched Letters to my Younger Self, a personal storytelling series for LGBTQIA+ employees to talk to their younger selves about resiliency and how life will look in the future. • Our Asia Pacific team hosted The Arc is Long, a regional conversation on the environment for LGBTQIA $^ +$ rights across the region and how cultural attitudes differ from country to country.\n• In 2022, Mastercard released proprietary research covering 16 countries in Europe and North America, highlighting the experiences of nonbinary and binary LGBTQIA+ individuals across all facets of civic life.\n### “Mastercard has long been a vocal advocate and champion of LGBTQIA+ rights around the world.”\n### Disability and accessibility\nAccessibility and accommodation are key enablers for people living with disabilities. At Mastercard, we believe our employees and our customers deserve to work and engage with us in ways that acknowledge and accommodate their uniqueness.\n### Partners\nWe partner with many organizations globally to further our DEI efforts across our business and society.\n### Asian American and Pacific Islander\nLesbians Who Tech & Allies \nOpen For Business \nOUT Leadership \nPride Circle (India) \nStonewall (U.K.) \nWorld Pride\nThe Asian American Foundation\n### Disability\n### All communities\n## 2022 disability and accessibility progress and highlights:\nBest Buddies \nDisability:IN \nNeurodiversity in the Workplace \nValuable 500\nDiversityInc • LaunchCode Minority Corporate Counsel Association Professional Diversity Network The Conference Board The Council of Urban Professionals The National Association of Minority and Women Owned Law Firms\n• Hosted two employee Open Circle events where employees can discuss their experiences and challenges openly, focusing on post-traumatic stress disorder and neurodiversity and coping with depression and anxiety • Established Global Workplace Design guidelines that are applicable to any acquired companies • Formed a new Accessibility Steering Committee focused on inclusion and accessibility for people with disabilities • Expanded to five markets the reach of our Touch Card global standard for blind or partially sighted cardholders\n### Veterans\nAmerican Corporate Partners \nHiring Our Heroes \nThe Career Transition \nPartnership (U.K.) \nWounded Warrior Project\n### Hispanic\nHispanic National Bar Association Hispanics in Tech Executive Council New York Hispanic Chamber of Commerce • Puerto Rican Legal Defense and Education Fund\n### African American\n### Women\nManagement Leadership for Tomorrow National Action Network \nNational Museum of African American History and Culture \nNational Urban League \nAssociation for Enterprise Opportunity\n$30 \\%$ Club \n• Corporate Counsel Women of Color \n• Financial Alliance for Women \n• Global Summit of Women UN HeForShe", "chunk_word_count": 427, "section_path": "Doing well by doing good > 2022 LGBTQIA $\\cdot ^ { + }$ inclusion progress and highlights:", "document_id": "Mastercard 2022 ESG Report", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 41, "chunk_text": "# Doing well by doing good\n## LGBTQIA+\nHeritage of Pride Human Rights Campaign Lambda Legal\n### Talent attraction, development and well-being\nOur people are our greatest asset. They are key to \ndelivering our business \nstrategy and fundamental to our success. We aspire to be the place where the best \npeople choose to be. \nTo attract, develop, engage and retain the best, we invest in our employees and focus on building a workplace and \nculture that drives innovation, embraces diverse \nperspectives, encourages \ncollaboration, fosters well \nbeing, and enables growth \nand opportunity.\nProgress on our People strategy, along with talent-related risks and opportunities, are reviewed with the Board’s Human Resources and Compensation Committee on a quarterly basis and annually with our full Board of Directors. We also produce a quarterly Culture Health Index to provide our Board with a view on how we are tracking against target on critical components of our culture, including leadership, innovation, inclusion and brand.\n### Our people strategy\nOur People strategy allows us to address evolving external and internal workforce and workplace dynamics to run and protect our business today, while helping transform our business for tomorrow. We continue to prioritize initiatives and measure progress under eight key pillars: Best-in-class talent attraction; differentiated rewards, benefits and policies; transparent people practices; skilled and agile workforce; world-class leadership and succession; culture; future of work experience; and operational excellence.\nAdditionally, our Board and Board committees are tasked with overseeing other human capital management matters on a regular basis, such as ensuring that processes are in place for maintaining an ethical corporate culture; overseeing key diversity and well-being initiatives, policies and practices; and monitoring governance trends in areas such as human rights.\nIn 2022, 95%\nof employees who responded to our annual employee experience survey said they are proud to work at Mastercard\n92%\nwould recommend us as a great place to work — employee referrals are our second largest source of talent\n## 2022 key workforce data\n### The Mastercard Way\nThe Mastercard Way defines our culture and continues to fuel our vision and strategic priorities. In 2022, we evolved our Mastercard Way principles to support the future direction of our company. These three principles — “create value,” “grow together” and “move fast” — address where we’re going as an organization, how we work together and how we deliver for our customers and each other. Each of these principles has a set of underpinning behaviors that everyone in the company is expected to demonstrate.\n### The Mastercard Way\n## 90 countries \\$5.3 employee voluntary turnover\n29,900 global employees\n99% full time\nbillion in total workforce costs\n2% employee involuntary turnover\n11%\nIn 2023 we will be holding ourselves accountable equally for “what we do” and “how we do it” through an evolved performance and development process that incorporates the Mastercard Way behaviors into objectives, performance management and compensation decisions. To hone skills and close gaps, we will also be supporting our executive leadership, people leaders and individual contributors with tailored courses and development experiences in line with these behaviors.\nGrow together \nSay what you mean \nBring in different perspectives \nHelp each other be great\n### Create value", "chunk_word_count": 528, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Create value", "document_id": "Mastercard 2022 ESG Report", "page": 55, "page_start": 55, "page_end": 57 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 42, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Move fast\nThink big andbold Innovate with intention Deliver scalable solutions\nPrioritizewhatmatters Learn and pivot Own the outcome\n42% people of color representation (U.S.)\n39%\nwomen representation\nIn 2022, we executed our first multiregion, cross-functional pool hiring initiative for operations, product management and software engineering skills. By streamlining interviews and standardizing assessment to recruit for skill groups instead of job titles, we saw a reduction in the candidate time in process.\n### Talent attraction and recruitment\nIn 2022, more than 750 recent graduate hires from 37 countries participated in our Launch graduate development program, spending 18 months building business knowledge and professional skills through on-the-job experience.\nIn 2022, more tha n 620 undergraduate interns from more than 30 countries and 240 universities participated in our internship program, gaining hands-on work experience and developing problem-solving and analytical skills while contributing to the Mastercard vision of powering economies and empowering people.\n$\\ln 2 0 2 2$ , our employee headcount grew by $5 { , } 9 0 0$ to 29,900, a $2 5 \\%$ increase compared to 2021. Our voluntary turnover rate remained stable at $12 \\%$ , which was about the same as 2021.\nOur employee satisfaction survey scores and external Glassdoor satisfaction rating of 4.3 vs. an average of 3.7 provide a strong foundation for attracting returning talent, which comprised $7 \\%$ of 2022 hires at Mastercard.\n### Always-on talent acquisition\nThe talent market continued to be competitive in 2022, especially for diverse talent and technology talent with skills in engineering, cybersecurity and consulting. Against this backdrop, we continued to rely on a variety of sources to attract talent, including leveraging the strength of our brand and employing an always-on recruitment model. This helps us prioritize skill areas in line with business priorities and ensure a continuous flow of talent that can be rapidly deployed into evolving spaces such as cryptocurrency, data security and blockchain. This model helps us attract and retain the best talent while ensuring that we have the right people with the right skills to execute our business strategy.\n### Global intern innovation challenge", "chunk_word_count": 362, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Move fast", "document_id": "Mastercard 2022 ESG Report", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 43, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Early career programs\nOur 2022 Innovation Challenge engaged more than 320 of our summer interns across our North America, Europe, Middle East & Africa and Asia-Pacific regions. Interns were challenged to come up with ways that existing Mastercard capabilities could expand the untapped space tourism market with more “priceless” traveler experiences by enhancing AstroShare, a concept that enables space tourists to share their unique experience with others. AstroShare is a result of a partnership between Foundry, Mastercard’s innovation hub for new product development, and New York University.\nMastercard’s global early career programs help build our pipeline of future talent and identify, engage and hire talent from a multitude of backgrounds. Through our programs, we provide current students and recent graduates with development opportunities and exposure to the business experience that is needed to enhance their professional growth.\nOver a five-week period, teams researched, identified and prioritized existing Mastercard solutions and worked with stakeholders to solidify what they learned. This activity provided interns with a unique experience that helped further develop their critical research, interviewing and storytelling skills. Teams produced an innovation brief and executive readout, then delivered a final pitch to a panel of judges. Seven teams were chosen as regional winners and took part in the global finale. The winning team, from the Middle East & Africa region, came up with an innovative way to enhance the AstroShare experience by connecting Mastercard’s Priceless campaign to Mastercard’s Brighterion artificial intelligence applications and Dynamic Yield experience optimization platform.\n### Diversity programs\nWe are committed to fostering and building a diverse talent pipeline and go beyond traditional channels to find and develop diverse and underrepresented talent. In 2022, we bolstered our diverse recruitment activity, reaching 4 thousand candidates through marquee recruitment events, inperson engagements with historically black colleges and universities (HBCU) and new partnerships.\nAccess Point and LaGuardia Community College. Through these programs, candidates can join as new entrants who are actively in school or early in their careers, or re-entrants who have been reskilled in a specific technology career path. In 2022, Mastercard welcomed more than 30 employees from our career new entrant and re-entrant partnerships.\n• Underrepresented talent initiative: Career new entrants and re-entrants. To increase Mastercard’s diverse workforce and create sustainable pathways to tech careers for underrepresented talent, we partner with organizations like the New York CEO Jobs Council and the New York City Mayor’s Office. Together with other corporate leaders from across New York City, we’re working to envision a workforce that meets employer needs and prepares diverse, low-income communities for the future of work, a model that can be replicated in other cities.", "chunk_word_count": 450, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Early career programs", "document_id": "Mastercard 2022 ESG Report", "page": 58, "page_start": 58, "page_end": 59 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 44, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### In Solidarity: Talent attraction\nAs part of our In Solidarity initiative and in support of our goal to grow U.S. Black leadership at Mastercard, we engaged in an array of talent attraction initiatives to recruit new leaders. In 2022, our hires came via referrals as a result of a new market-competitive incentive program, amplification efforts on LinkedIn, rehiring Mastercard alumni and an innovative partnership with an executive search agency.\nSince 2014, we’ve actively recruited and hired underrepresented tech talent, beginning with LaunchCode in St. Louis, Missouri. Since then, we’ve added additional partnerships, including NPower, CareerWise,\nFor additional information on our DEI efforts, please visit the DEI section of this report.\n### Talent development\nDeveloping talent within our organization positions us to quickly mobilize skilled and agile cross-functional teams, adapt to and successfully compete in a fast-paced digital environment, respond to changing market dynamics, retain high-caliber talent, and maintain a culture grounded in decency. The goal of our development efforts is to identify, support and promote long-term talent, while unlocking employee potential, empowering growth and delivering on priorities with speed and at scale.\n### Funding for outside academic opportunities\nleadership roles. Our programs include internal training and mentoring, external partnerships, community engagement activities and pro bono experiences.\nFor eligible employees completing academic credit-bearing course work at institutions of higher education to improve their jobrelated skills and abilities, Mastercard provides financial assistance of up to $\\$ 5,000$ per year for certifications, $\\$ 7,500$ per year for undergraduate studies and $\\$ 12,000$ per year for graduate studies.\n### Mastercard Leadership Academy\nThe Mastercard Leadership Academy offers programs tailored to specific communities and provides multiple ways for people to learn and grow at every stage of their leadership journey. On-demand virtual courses for leadership-skills development, drawing on content from external thought leaders, are available through our Leadership Learning Academy and are open to all employees. We also piloted a new professional coaching service in 2022 to give employees at director level and above a chance to have one-to-one support from external advisors, to advance their capabilities.\n### Skills training with Mastercard guilds and Learning Academies\nMastercard has eight internal technical guilds to help employees from similar job families connect across business units and regions and come together as one community, build their networks and benefit from shared experiences. These guilds are supported by Learning Academies, which provide centralized learning and development experiences, aligned to priority topics for the company.", "chunk_word_count": 419, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > In Solidarity: Talent attraction", "document_id": "Mastercard 2022 ESG Report", "page": 59, "page_start": 59, "page_end": 60 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 45, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Activating our internal talent marketplace\nWe implement robust succession planning for leadership and critical roles across the company, along with mentorship programs and aligned development plans. These are reviewed regularly and shared with the Board of Directors to ensure that the company is prepared for future growth.\nIn 2022, we launched our internal talent marketplace, Unlocked, to all employees. Unlocked enables employees to post and find projects of interest, explore volunteer opportunities and seek out mentors by matching self-identified skills to opportunities. In its first year, $80 \\%$ of employees voluntarily registered on the platform, 200 thousand hours of project work were completed and 3 thousand mentoring relationships were formed.\nMastercard provides access to learning experiences and development opportunities for all employees, to build the knowledge and skills needed to support current business priorities and future business success. We also provide special learner journeys and development opportunities aligned to priority job families and career stages. Employees can easily access this curated content through Mastercard Learning Academies on Degreed.\nWe curate experiences for cohorts of highpotential and emerging leaders, including the Leadership Now and Future Leaders programs. These target talent at VP and director levels, respectively. We also invest in broad leader-development sessions, open to all, but primarily of value to those newer in role.\nIn 2022, Mastercard invested in deepening knowledge and expertise for guild members in three specific areas — sales, product management and engineering. Learning experiences are a combination of ondemand virtual courses and live instructorled training — all designed to provide a consistent experience across business units and regions. In 2022, $45 \\%$ of product managers, $5 9 \\%$ of engineers and $9 9 \\%$ of our sales team members took advantage of these tailored courses.\n### Leadership development\nInclusive, accountable and inspiring people leaders with strong management skills are key to delivering on our business priorities. We go beyond traditional channels to develop diverse talent and design our offerings to ensure both the execution of our strategic succession plans and the attraction of emerging talent into\nThese initiatives all support the company’s efforts to have a strong succession pipeline for senior roles and a culture where the best people choose to be.\nMastercard supports a culture of lifelong learning and encourages employees to pursue educational opportunities — internal and external — as part of their professional development path. We support multiple learning methodologies and approaches, allowing for inclusivity in adult learning needs, and we recognize the importance of allowing for flexibility in how, when and where employees learn.\n### U.S. Black leadership\nOur 2025 goal 50% growth", "chunk_word_count": 445, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Activating our internal talent marketplace", "document_id": "Mastercard 2022 ESG Report", "page": 60, "page_start": 60, "page_end": 61 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 46, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Progress 7% growth\nToward our goal as part of In Solidarity to grow U.S. Black leadership at vice president level and above at Mastercard by $50 \\%$ by 2025, we grew the number of Black leaders at vice president level and above from 62 to ${ \\bf 7 2 - 9 }$ year over year increase of 16% — in 2022. Since 2020, the percentage of Black representation in leadership at the vice president level and above has grown by $7 \\%$ . While we have made significant strides in adding new Black leaders to the organization, the combination of unprecedented headcount growth and a competitive marketplace for senior-level Black talent have slowed our progress toward meeting this goal. We are not where we want to be; however, we are not deterred. We remain committed to our goal and are reassessing our talent strategies and making significant investments in our DEI strategy.\n### Diverse workforce leadership programs\nMentoring program, which provides facilitated mentor matching, curated conversation starters and regular events for mentors and mentees has reached 1,700 mentees over the last three years.\nAs we work to achieve increased representation of women as well as members of the Black community through our In Solidarity program in the U.S., we have invested in the engagement, retention and development of employees across the organization with several large-scale initiatives. For example, our Women's\nFor additional information on Mastercard diversity initiatives, see the DEI section of this report.\nAs noted previously, in 2023 we will further reinforce the alignment of compensation with our culture by holding ourselves accountable equally for “what we do” and “how we do it” through an evolved performance and development process that incorporates the Mastercard Way behaviors and impacts compensation decisions.", "chunk_word_count": 305, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Progress 7% growth", "document_id": "Mastercard 2022 ESG Report", "page": 61, "page_start": 61, "page_end": 62 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 47, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Rewards, benefits and well-being\nMastercard continues to invest in programs and policies that align with our culture of decency, connect with our mission and ESG priorities, reinforce an ownership culture and provide for the health and well-being of our employees and their families.\nIn addition, Mastercard remains dedicated to equitable practices, supported by analytics, designed to ensure equal pay for equal work and progress in closing representation-driven pay gaps. For information on our efforts to close gender and racial pay gaps, please refer to the DEI section of this report.\nOur rewards, benefits and employment policies are designed to support and retain our diverse and inclusive workforce at every stage of their life journeys, while making the company competitive in global and local talent markets. We are committed to offering our employees flexibility in work options, a safe work environment, a comprehensive benefits package, a range of wellness offerings, the opportunity to own company stock and competitive, equitable compensation.\nFollowing an analysis of equity compensation practices in the technology sector and participation across our career levels and job categories, we extended longterm incentives (LTI) to $46 \\%$ of employees in 2022, up from $44 \\%$ in 2021. We also reduced the LTI vesting schedule from four years to three years for LTI awards granted on or after March 1, 2022. Also in 2022, we assessed the competitiveness of our pay for technology positions and adjusted our engineering salary structures to enhance our ability to attract, retain and engage our engineering talent. Additionally, a midyear company-wide salary adjustment increased compensation for $40 \\%$ of employees with $89 \\%$ of those employees at the director level and below.\n### Compensation\nWe periodically review our compensation program and make any needed adjustments to maintain alignment with Mastercard priorities and market best practices. We maintain a living wage for all employees.\nIn 2022 we deployed an ESG modifier under our bonus plan that impacts compensation for all bonus-eligible employees based on our performance against carbon emissions, financial inclusion, and gender pay goals.\n### Overview of benefits offered to all full-time, permanent employees (offerings will vary by country)\n### Benefits\nWe provide critical resources for mental, physical, social and financial well-being to help our employees be at their best and achieve personal growth. In 2022, employees shared that work-life balance, our benefits package, and flexibility are top reasons they choose to stay with Mastercard.\n• Medical coverage Life insurance \n• Accidental death and dismemberment (AD&D) coverage \n• Emergency travel assistance\nAdditional offerings in some countries:", "chunk_word_count": 434, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Rewards, benefits and well-being", "document_id": "Mastercard 2022 ESG Report", "page": 62, "page_start": 62, "page_end": 63 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 48, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Well-being programs and efforts\nAt Mastercard we believe taking care of our employees’ well-being is critical to their professional and personal success. We invest in programs and practices that support individuals with their mental, physical, financial and social well-being.\nThese offerings help improve employees’ daily work habits and routines and help them maintain a successful work-life balance. Our partnerships with Thrive Global and Virgin Pulse provide employees with online resources, services and individual and/ or team challenges to support healthy lifestyle habits in the areas of sleep, movement, stress, nutrition, finances, relationships and medical condition management. These services also support mental well-being, guiding employees through awareness to action plans. To date, $47 \\%$ of our workforce has enrolled in one or both programs.\nAdditionally, our Employee and Family Resource Program offers no-cost counseling, 24/7 access to licensed clinicians, digital tools and resources for Mastercard employees and their family members.\n### Workplace experience", "chunk_word_count": 166, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Well-being programs and efforts", "document_id": "Mastercard 2022 ESG Report", "page": 63, "page_start": 63, "page_end": 64 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 49, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Flexibility: How, when and where we work\nWe recognize the changing, diverse needs of our employees and have implemented a range of flexibility policies and options to support how, where and when people work. In 2022, we introduced a four-week \"work from elsewhere\" benefit that can be taken all at once or intermittently over the calendar year. Recognizing the importance of interruption-free time to focus and think, we continued to offer a meeting-free day every quarter.\nTo ensure a continual focus on the wellbeing of employees, we have dedicated resources in our People and Capability team who focus on designing impactful programs and policies to support the diverse needs of our employees. We also have a Global Medical Director supporting our People & Capability team and working with partners to advise on emerging needs and recommended responses.\nWe have adopted a principle-based and team-driven approach to required time in the office, with leaders and teams deciding through team agreements, when and how often they come together, based on the type of work that needs to be done in support of our customers, company and one another.\nAmong our new programs is a 12-hour certification to support People and Capability team members in becoming trained mental health champions. This will build their confidence and capacity to provide support and will connect employees to relevant mental health resources — including access to mental health professionals when needed.\nWe continue to invest in tools, technology, and experiences to maximize collaboration and productivity.\n86%\nof employees feel they have the flexibility to do their work and support their well-being, and state it as a top reason why they work for Mastercard\nOver the last two years, we have modernized our technology hubs with next generation networks, enhanced meeting room capabilities, created smart offices and refreshed our personal computer and audiovisual technology. Enterprise-wide, we introduced collaboration and productivity tools, such as MS Teams, Navigator, Viva Analytics and OneDrive, to assist workflow from flexible locations. In 2022, we performed a review of how we use office space, including team collaboration in neighborhoods with enhanced shared spaces rather than assigned office seating.\nFor more information on Mastercard’s employee volunteer opportunities, please see the Community giving and volunteerism section of this report.\n### CEO Force for Good Awards\n### Measuring employee engagement\nTo encourage and recognize our employees for their outstanding acts of community service, we host our annual CEO Force for Good Awards. These awards honor the “best of the best” in employee volunteering. Now in its sixth year, we’ve honored more than one thousand employees and have awarded $\\$ 575$ thousand in grants that employees may donate to charities of their choosing.\nTo ensure that we are providing employees with the opportunities they need to be successful in their jobs and grow their careers, we look to them for feedback and input. One way we do this is through an annual employee experience survey. We also conduct supplemental surveys on topics such as people-leader effectiveness.", "chunk_word_count": 513, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Flexibility: How, when and where we work", "document_id": "Mastercard 2022 ESG Report", "page": 64, "page_start": 64, "page_end": 65 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 50, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Community engagement opportunities\nMastercard offers an array of volunteer programs that provide opportunities for employees to give back to their communities while also building leadership and professional skills. We find that such volunteer opportunities instill pride in our employees and advance a purpose-driven culture. We consider these opportunities a part of our talent retention strategy.", "chunk_word_count": 69, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Community engagement opportunities", "document_id": "Mastercard 2022 ESG Report", "page": 65, "page_start": 65, "page_end": 65 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 51, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Employee and workplace safety\nIn 2022, $7 7 \\%$ of invited employees participated in the annual employee experience survey, providing results to inform our people strategy and help us prioritize emerging areas of opportunity. $9 5 \\%$ of respondents indicated that they are proud to work at Mastercard, and the overall employee engagement score increased to $8 8 \\%$ .\nWe believe that safe and healthy working environments improve productivity and employee satisfaction. We do our best to implement the most up-to-date data, science and government guidelines in our workplace safety decisions. As part of our global strategy, we expanded our workplace safety program to better identify and address potential risks to our people, facilities, products and operations. Our real estate services team conducts annual workplace safety audits throughout our global office portfolio and leverages data from a global compliance partner to track local updates and assist with site-specific oversight. In 2022, we completed audits for more than 100 locations. Our global response and security teams are routinely trained by the internal crisis management team on proactive and coordinated rapid response measures to address incidents across Mastercard’s global operations. They have incorporated lessons learned from previous events, such as COVID-19 and the war in Ukraine, in an effort to better address future local and global issues.\nOur 2022 CEO Force for Good winners included an employee in Poland who supported Ukrainian refugees fleeing the conflict, a team of 80 employees from China who provided free virtual training and consulting on branding and data analysis for more than 120 local charities, and a U.S. team from Michigan that helped furnish a home for a veteran and their family emerging from homelessness.\nWe offer our employees five paid volunteer days to make a difference that’s meaningful to them. In addition, employees who volunteer more than 40 hours in one calendar year can take advantage of our Volunteer Incentive Program, which provides up to four $\\$ 500$ grants to an eligible charity of their choice.\nMastercard scored above high-performing industry benchmarks in key areas such as creating an environment where people of diverse backgrounds can succeed and having a people leader who supports well-being.\n“Mastercard \noffers an array \nof volunteer \nprograms that \nprovide \nopportunities \nfor employees \nto give back to \ntheir \ncommunities \nwhile also \nbuilding \nleadership and \nprofessional \nskills.”\nSentiment around perceived career growth opportunity was lower than in previous years. To support improved access to development experiences and job opportunities, we increased the posting of open roles at the vice president level and above to $7 5 \\%$ , up from $6 8 \\%$ in 2021. We also invested in bringing career paths into Unlocked to help employees better understand how their current skills and experiences might be applied to other parts of the organization and what gaps they may need to close to move toward those roles.\nIn 2022, 12 thousand employees also participated in a one-time, future-looking survey focused on benefits and rewards preferences to help us optimize and customize future offerings and further support employee retention and well-being.", "chunk_word_count": 523, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Employee and workplace safety", "document_id": "Mastercard 2022 ESG Report", "page": 65, "page_start": 65, "page_end": 66 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 52, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Governance\nOur strong governance policies and practices provide the foundation needed to meet our environmental and social commitments and support our overall business strategy.\n### Network standards and rules\nMastercard creates a common, consistent experience for payments in different sectors and geographies by setting standards and rules for all participants in our global payments network, ensuring interoperability among them while balancing risk and value across all stakeholders.\n### Benefits:\n• Safety and security — Establishing central principles that are essential to effective network participants. Safeguarding consumer protections and integrity to ensure confidence in all transactions on the network.\n• We provide trust to all players across the ecosystem. \n• We enable interoperability across players and use cases, driving innovations. \n• We establish ubiquity and a consistent payment experience. \n• We set up consistent practices and economic incentives that drive scalability.\n• Responsible stewardship — Setting performance standards to support ecosystem optimization and growth to improve quality over time. Using proactive monitoring to ensure participant adherence to operating standards and to protect the integrity of the ecosystem.\nThis is achieved via key activities throughout the business lifecycle:\nThrough our Franchise model, we work to ensure a balanced payments ecosystem where all participants may benefit by maintaining the ability to differentiate themselves from their competition.\n• Participant onboarding — Determining that each participant meets the necessary prerequisites to partake in and contribute to the network through the defining of clear ecosystem roles and responsibilities.\n• Issue resolution — Addressing disputes (financial or nonfinancial) in a timely and orderly fashion that benefits the entire global network of participants.\nWe create trust and enable scale through standards, rules, governance and issue resolution. Their successful application results in four key benefits across all players of the network and leads to further growth opportunities in adjacent businesses.\n• Operating standards — Defining the technical, operational and financial standards that all network participants are required to uphold. Achieving efficiency, quality output and a high level of performance through the identification of changing and emerging roles within the ecosystem to reduce confusion while supporting compliance with evolving industry regulations.\nOur work with and membership in industry groups is key to allowing us to learn from others’ experiences and share our own best practices. These relationships span a wide range of organizations and geographies, including the Internet Watch Foundation, the National Center for Missing and Exploited Children, the International Centre for Missing and Exploited Children, National Shooting Sports Foundation (NSSF), the International Anti-Counterfeiting Coalition, the Center for Safe Internet Pharmacies and Sandy Hook Promise.\nAcross the blockchain and digital asset space, our principled approach supports work with partners to build trust and compliance in the ecosystem, focusing on three central areas – consumer protection, regulatory compliance and stability in the asset. These principles are complemented with a preference for innovative, energy efficient solutions that consider climate and community impacts. In the past year, the upgrade of some stablecoin networks have delivered on this goal. We welcome this change and look forward to working with partners in continuing this work.", "chunk_word_count": 524, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Governance", "document_id": "Mastercard 2022 ESG Report", "page": 67, "page_start": 67, "page_end": 69 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 53, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### We have a deep respect for the rights of individuals to transact with others so long as such transactions are lawful. We hold all participants in our payments network to high standards, including:\n• Requiring that they follow the laws of any geographic area in which they operate and connect to our network. If we identify or are alerted to potential violations, we quickly investigate and take appropriate remedial action with the acquiring and issuing banks. We levy financial penalties and suspend or terminate the licenses of customers based on specific incidents. Generally, our goal is to work with acquirers and issuers to improve compliance with our rules. This process includes sharing guidance on how to strengthen their controls. \n• Extending our consumer protection standards to ensure recurring payments occur with full transparency to the cardholder and enabling them to easily opt out or cancel subscriptionbased services.\n### Enabling digital asset innovation through trust\nThese broader efforts include our recent support of research by the Cambridge Digital Assets Programme to enable a balanced dialogue about the opportunities and risks presented by a growing digital asset ecosystem.\nWe work with crypto exchanges and our customers to provide consumers opportunities to use converted (to fiat) crypto holdings to pay for purchases across our acceptance network. Mastercard has an extensive review and approval process to validate policies and due diligence activities of the exchanges and other defined service providers. This approach reinforces our commitment to best meet consumer and regulatory expectations.\nWe are constantly innovating, forging crossindustry relationships and defining new standards in order to strengthen the governance around our payments network and the broader payments ecosystem. For example, we continue to engage with lawmakers, law enforcement and other groups to understand the broader environment in which we operate, including any developments in the definition of lawful purchases.\n### Ethics and compliance\nAt Mastercard, we are committed to doing business the right way. This means operating ethically, honestly, fairly and transparently, and in compliance with laws and regulations everywhere we do business. Our commitment is deeply embedded in our culture, shapes every interaction with our employees and stakeholders, and is reflected in how we live our corporate values of decency, integrity and respect.\n### Ethics and compliance oversight", "chunk_word_count": 389, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > We have a deep respect for the rights of individuals to transact with others so long as such transactions are lawful. We hold all participants in our payments network to high standards, including:", "document_id": "Mastercard 2022 ESG Report", "page": 69, "page_start": 69, "page_end": 70 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 54, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Working to ensure compliance\nOur Chief Compliance Officer (CCO) leads and oversees our Ethics and Compliance system, which encompasses a broad set of integrated programs to support these efforts. The CCO reports functionally to the independent Audit Committee of the Board of Directors, and administratively to the Chief Risk Officer. The CCO provides updates to the Audit Committee quarterly or more frequently, as needed. Reports cover performance matters such as the status of investigations, new initiatives, training programs and results of assurance activities.\nOur approach to ethical operations begins with our Code of Conduct. Available in 14 languages, the Code of Conduct outlines expectations for ethical behavior. All employees and our Board of Directors are required to annually review and certify compliance with the Code.\nMastercard employees also participate in the Risk Clarity Survey, conducted by a third party and designed to take the pulse of our ethics and accountability culture globally. The survey assesses our culture of integrity by measuring the attributes that most strongly indicate reduced risk of misconduct. We use the results of this anonymous survey to drive improvements that reinforce our ethical culture. The survey can help us direct ethics and compliance training in a more efficient and effective manner by identifying locations or business units that may need additional employee or manager training, or additional communications promoting our culture of ethics and accountability. The Business Conduct Office provides the results to the region compliance leads and business unit leaders, who use the Risk Clarity data along with other metrics available to them to determine what, if any, actions to take (this could include messaging or training or improvements). The survey is voluntary and anonymous. We launch\nIn addition to the Code of Conduct, our CEO and other senior officers must abide by Supplemental Code of Ethics. This policy reflects our heightened expectations for them to lead by example, particularly in avoiding conflicts of interest.", "chunk_word_count": 333, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Working to ensure compliance", "document_id": "Mastercard 2022 ESG Report", "page": 70, "page_start": 70, "page_end": 70 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 55, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Compliance and ethics training and education\nEvery Mastercard employee is enrolled annually in a mandatory, in-depth curriculum of online compliance training, which includes subjects such as the Code of Conduct, anti-money laundering, economic sanctions, privacy compliance, information security, prevention of insider trading and workplace conduct, including sexual harassment and discrimination. Failure to complete this mandatory training within the prescribed time period may result in escalation, up to and including shut off of the employee’s network access.\nIn 2022, \n100% \nof our employees certified that they \nreviewed the Code of Conduct\nthe survey twice a year to all full-time employees ( $50 \\%$ in H1 and the other $50 \\%$ in H2).\nSummary of Investigative Activity that contains investigative metrics and selected anonymized case profiles.\nOur senior leaders are active participants in organizations that promote ethics and compliance thought leadership, including the World Economic Forum’s Partnering Against Corruption Initiative, the B20 Integrity & Compliance Task Force, the Association of Certified Anti-Money Laundering Specialists and the Centre for Financial Crime and Security Studies.\nTo encourage the use of the Ethics Helpline and other avenues for raising ethical and legal concerns, we have a Non-Retaliation Policy. Anyone found in breach of the Non-Retaliation Policy will be subject to disciplinary action, up to and including termination of employment.\n### Anti-corruption\nOur policies and programs are also designed to comply with applicable anticorruption laws around the world, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. As part of our comprehensive anti-corruption compliance program, we study external enforcement actions and internal business operations, and use what we learn as input into our risk assessment. This further guides our procedures and the implementation of internal controls. We train all employees on our anti-corruption and related policies, procedures and controls, including targeted training to higher-risk departments. We have also built a monitoring program that includes the latest testing technologies, such as AI, to help spot and remediate noncompliance within our global operations to ensure that our controls are operating effectively.\n### Know your customer\nWe have implemented and continue to improve innovative technology advancements aimed at preventing our products and services from being used for laundering money, financing terrorist operations or evading economic sanctions. Our policies and programs are designed to comply with applicable laws and regulations, including implementing risk-based antimoney laundering policies, procedures and controls. These include Know Your Customer (KYC) processes, which are applied to all customers before and during the business relationship. Our risk-based sanctions compliance program includes policies, procedures and controls that are designed to prevent us from having business dealings with prohibited countries, regions, governments, individuals and other entities.", "chunk_word_count": 454, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Compliance and ethics training and education", "document_id": "Mastercard 2022 ESG Report", "page": 70, "page_start": 70, "page_end": 71 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 56, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Ethics Helpline\nAt Mastercard, we promote a “speak up” culture and encourage employees to report any ethical or legal concerns. Our Mastercard Ethics Helpline, hosted by an independent third party, is a confidential around-the-clock service for reporting activity suspected of violating the law, our Code of Conduct or any other company policy. We promptly investigate all concerns and bring in external support, such as outside counsel, as needed. To increase transparency regarding our investigative process and associated outcomes, twice a year we provide our employees with a\n“Mastercard takes \nreasonable steps \nto implement \nrobust policies, \nprocedures and \nprograms \ndesigned to \npromote \ncompliance with \napplicable laws \nand regulatory \nobligations.”\nOur law and policy teams provide updates annually — or more frequently if needed — to our Board’s independent Nominating and Corporate Governance Committee on the antitrust enforcement landscape and our compliance efforts.\n### Regulatory compliance\nMastercard is committed to complying with all applicable laws and regulations. We are subject to an increasingly rigorous landscape of regulatory oversight and compliance that is further affected by the diversification of our products and services.\nRegular risk assessments and mitigation strategies enhance Mastercard’s antitrust and competition law compliance program. We continually monitor the external environment for information that may apply, adjusting our risk assessment and program accordingly. We emphasize the importance of this topic internally by training all employees, providing simple guidance documents and ensuring that controls are in place. Our Antitrust and Competition Law Policy is reviewed and updated annually. We regularly assess and monitor for competitive issues throughout the entire product life cycle, starting with early product development.\nMastercard takes reasonable steps to implement robust policies, procedures and programs designed to promote compliance with applicable laws and regulatory obligations.\nWe coordinate globally while acting locally and leverage our expertise and relationships to manage the effects of regulation on Mastercard.\n### Antitrust and competition law\nMastercard is committed to a fully competitive marketplace. Our policies and programs are designed to comply with antitrust and competition laws across the globe, and we work to ensure a level playing field globally. We encourage open and dynamic markets that drive innovation and value for our company and our customers. We attract and retain our customers by bringing innovative products and services that solve today’s problems and anticipate future needs to the global marketplace.\nWe take antitrust concerns very seriously. Although the company is a defendant in civil litigations, regulatory proceedings and investigations that may allege violations of competition and antitrust law, many of these allegations relate to historical periods. We work closely with regulators around the world to understand and address their concerns relating to competition, and to educate them on the value we bring to the payments space.", "chunk_word_count": 466, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Ethics Helpline", "document_id": "Mastercard 2022 ESG Report", "page": 71, "page_start": 71, "page_end": 72 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 57, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Global tax\nAt Mastercard, we recognize that paying tax is an important element of our commitment to ethical and responsible operations.\nonly in transactions or tax planning that are aligned with our core principles. Our tax strategy applies to all wholly owned Mastercard entities and majorityowned Mastercard affiliates.\nTax policies, strategies and exposures are overseen by and reported regularly to Mastercard’s Audit Committee. The Executive Vice President for Tax meets with the Audit Committee formally at least once a year to discuss tax issues that are relevant to the worldwide group, including details of relevant global tax developments, tax audits, tax controversy and other relevant topics. For more information on our approach to tax, refer to our global tax principles.\nOur approach to tax is guided by a set of key principles designed to foster trust between the company and its stakeholders and to ensure that Mastercard complies with all relevant tax laws, paying the appropriate amount of tax in each of the jurisdictions in which we operate. We have also implemented a robust tax control framework to ensure that these guiding principles are adhered to, and the organization engages\n### Privacy, data responsibility and security\nIn 2022, consumers counted on the Mastercard network to transmit 125.7 billion transactions seamlessly in the blink of an eye. People trust that the transactions will go through whenever and however they pay. As important, they trust that their information is safe with us.\n### Data privacy and security governance\nMastercard’s Board of Directors, including its Audit Committee, and senior management are updated annually, or more frequently as needed, by a core group of Mastercard’s senior executives who are responsible for driving our commitment to best practices in privacy, data governance and data security. These executives include:\n### Chief Privacy Officer\n### Chief Security Officer\nLeads our compliance with worldwide laws and regulations regarding how we collect, use, share, store and transfer data and technology, while also managing our relevant engagements with regulators and policymakers.\nDevelops and oversees the programs, policies and controls we have implemented across the organization to reduce and prevent logical and physical risks, including information security and cyber risks to our people, intellectual assets, data and tangible property.\n### Data Protection Officer\n### Chief Technology Risk Officer\nAs the digital world and digital payments evolve, we have committed ourselves to high standards in privacy, data responsibility and cybersecurity to stay one step ahead. We employ a set of rigorous standards to ensure the protection, safety and security of data within Mastercard, our partners and our vendors.\nReports to the Chief Privacy Officer and ensures that we continue to adhere to the General Data Protection Regulation (GDPR) and local privacy requirements, including by handling privacy requests from individuals and regulators.", "chunk_word_count": 473, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Global tax", "document_id": "Mastercard 2022 ESG Report", "page": 73, "page_start": 73, "page_end": 74 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 58, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Chief Data Officer\nEstablishes and oversees processes that support the holistic assessment and governance of technology risks, such as information security, data security and cyber risks, across the organization, including risk analysis/tracking, control validation and stakeholder assurance.\nOversees our efforts to maintain an ethical, responsible enterprise data program that adheres to our high standards for data quality, curation and governance while minimizing data risks.\nAt Mastercard, Privacy by Design, data responsibility and best-in-class cybersecurity are at the heart of our trust strategy.\n### Data privacy\ncybersecurity, biometrics, product design, cutting-edge privacy engineering and government engagement. We regularly work with policymakers, industry bodies and other key stakeholders around the world to enable businesses to operate globally and use data for responsible innovation while enacting strong privacy and data protections for individuals.\nCybersecurity AI Expert Group (ENISA), the U.K. International Data Transfers Expert Council, the Singapore Data Protection Advisory Committee, the U.S. Chamber of Commerce’s Privacy Project, Advisory Board of the Future of Privacy Forum, Advisory Council of the Center for Information Policy Leadership and the IEEE (Institute of Electrical and Electronics Engineers) Steering Committee on AI Risk Impact Assessments.\nMastercard’s commitment to decency extends to the way we handle data and informs our belief that data protection and privacy are fundamental human rights. This belief is central to our decision-making process and is demonstrated by the way we handle the personal information of our employees, customers, cardholders and other users. Our dedication to data responsibility and privacy has established Mastercard as a trusted partner around the globe. We are committed to maintaining this trust by placing individuals and their privacy at the center of our product development efforts, enabling responsible and sustainable data innovation.\nTo keep, maintain and advance our standing as a global leader in our industry, we actively engage on key privacy, data and technology issues with a number of leading regulatory groups and participate in thought-leadership organizations worldwide. These include the Executive Committee of the Global Board of the International Association of Privacy Professionals, the German Marshall Fund’s Taskforce to Promote Trusted Sharing of Data, the I-COM Data Ethics Council, the Organisation for Economic Co-operation and Development (OECD) Privacy Expert Group and its Network of Experts on AI, the World Economic Forum Taskforce on Data Intermediaries, the EU Agency for\nAll Mastercard employees and contingent workers are required to complete privacy and data responsibility training, and completion of the course is audited. At least annually, Mastercard’s security, privacy and information practices are reviewed by U.S. financial regulators to ensure ongoing compliance with the requirements associated with U.S. financial privacy laws. Mastercard is among a handful of companies that have implemented Binding Corporate Rules in Europe and the United Kingdom and achieved APEC Cross-Border Privacy Rules certifications.\nOur global team of talented privacy professionals is embedded across all parts of the organization and is rapidly upskilling to meet the demands of an increasingly complex regulatory and technological environment. Our team brings together diverse talent across jurisdictions, cultures, backgrounds and disciplines, including experts in compliance assurance, AI,\n### Data rights of individuals\n01\n02\n03\n04\n### You own it", "chunk_word_count": 534, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Chief Data Officer", "document_id": "Mastercard 2022 ESG Report", "page": 74, "page_start": 74, "page_end": 76 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 59, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### You control it\n### You benefit from the use of it\n### We protect it\nWe believe your personal information is personal.\nWe believe people have the right to understand and control how their data is handled.\nWe believe that people’s personal information should be used to make their lives easier.\nWe believe privacy must be embedded in the design of every one of our products and solutions.\nIndividuals own their personal information. As such, they have a right to understand how, when and where it is used and shared. How we handle personal information is clearly outlined in our Global Privacy Notice, which is complemented by product- and activity-specific notices.\nWe strive to use personal information in legitimate, fair and inclusive ways, with full respect for a person’s individual choices. Anyone — at any time and at no cost — can opt out of having their personal information used for marketing, data analytics and other programs through our online system. Beyond this, people have the right to access, correct, modify or move their personal information via our online My Data portal. This is made available for all users worldwide.\nWe uphold a commitment to responsible data-driven innovation, both inside our organization and as a central player in the global digital ecosystem. For example, core to our data innovation approach is how we leverage AI capabilities to make our network safer and our cardholders more secure. By developing and implementing an AI Governance process, we’re able to ensure that our AI continues to be both beneficial and aligned with our broader data responsibility principles.\nOur cutting-edge product innovation process is centered on the individual and ensures the respect and protection of their privacy and personal information from ideation to creation. The products and solutions we develop embrace the concept of privacy by design. An example of privacy by design is Mastercard's Digital Identity Services, which were built on the principle that digital interactions should be privacyenhancing, secure, intelligent, and efficient. This solution secured accreditation under the Trusted Digital Identity Framework (TDIF) in Australia, thanks to its focus on privacy, risk management, and usability.\n### Responsible use of data\n### Data responsibility principles\n### Our global data responsibility principles\n### Security and privacy\nAt Mastercard, we believe organizations like ours have a role to play in building or rebuilding trust in how data is handled. In 2019, when we unveiled our initial data responsibility principles, our vision was for these principles to guide our data-related decisions regardless of the scenario. We knew that as we embarked on our journey to bring data-driven innovation to an increasingly complex and digital world, changes were inevitable.\nThe global events experienced over the past few years underscored the need for diverse thinking. To address this headon, we expanded our data responsibility principles to reflect lessons learned and our company-wide efforts to build inclusion into everything we do, including our data practices.\nAdvance and uphold best-inclass security and privacy practices\nBe deliberate in how we use data and technologies such as AI in order to minimize biases, inaccuracies and unintended consequences", "chunk_word_count": 529, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > You control it", "document_id": "Mastercard 2022 ESG Report", "page": 76, "page_start": 76, "page_end": 77 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 60, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Innovation\nInnovate \nconstantly to \nensure that \nindividuals \nbenefit from the \nuse of their data \nthrough better \nexperiences, \nproducts \nand services\nIn July 2022, we added a seventh data responsibility principle that underscores the importance of inclusion and embraces diversity in all its forms to enable inclusive, comprehensive and equitable data practices, analytics and outputs. Inclusive data is a critical element in efforts to develop products and solutions to close racial wealth and opportunity gaps. Through these seven principles, we believe we can better deliver on our promise of data responsibility.\nIn 2022, after a global pandemic, a worldwide focus on inclusion and a shift to digital, our six data responsibility principles have held strong, helping guide our global efforts to ethically collect, manage and use data, and power our data-driven work with businesses, governments and nonprofits. But we knew there was more work to be done.\n### Accountability\nKeep individual interests at the center of our data practices\n### Social impact\n### Transparency and control\nUse data for good, identifying needs as well as opportunities to make a positive impact on communities and individuals around the world\nClearly and simply explain how we collect, use and share an individual’s data and give individuals the ability to control its use\n### Inclusion\nEmbrace diversity in all its forms to enable data practices, analytics and outputs that are inclusive, comprehensive and equitable\n### Data security and cybersecurity\n### Cybersecurity principles\nEmerging technologies continue to influence the way we live and work. We leverage these new technologies to provide convenience to our customers and to create and enhance new and existing products and services. These technological advances have also created a rapidly evolving cybersecurity environment that includes an increased risk of cybercrime.\n07\n01\n04\n### Culture\n### Privacy\n### Empowerment\nCybersecurity should be embedded into the culture of the digital age as an enabler of innovation.\nIndividuals should own and control their personal information and understand how their information is protected.\nAll communities should have equitable access to cybersecurity resources.\n05\n02\nAt Mastercard, we understand that strong cybersecurity measures are foundational to trust in our global digital ecosystem and the products and solutions that power it. That’s why we continuously innovate to create solutions that will help anticipate and respond to existing and emerging threats, mitigate risk and ensure a robust cybersecurity posture.\nOur ability to secure trust in the global digital ecosystem starts with the work we do to secure our own organization and data. Everything we do — from our rigorous, mandatory all-employee and contingent-worker trainings and follow-the-sun security model to our best-in-class skill-building and analysis facilities and pursuit of top talent — deepens our ability to keep our organization, our people and our data secure.\n### Expertise\n### Collaboration\nFormal and informal academic programs should be supported to create the next generation of cyber experts while growing and evolving the field.\nPublic and private entities should partner and share information and best practices to enhance the security of our broader digital ecosystem.\n06\n03", "chunk_word_count": 520, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Innovation", "document_id": "Mastercard 2022 ESG Report", "page": 77, "page_start": 77, "page_end": 78 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 61, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Convergence\nWe take a multilayered, principled approach to cybersecurity. Our evolving efforts are focused on building security for all types of transactions and helping to ensure the overall stability of the broader digital payments ecosystem.\n### Transparency\nCybersecurity standards and regulations should use common assessments grounded in widely used frameworks and standards to ensure even application across jurisdictions.\nCybersecurity elements should be easier to identify, understand and compare.\n### Third-party certifications, audits and standards\nWe use all the products and solutions at our disposal to conduct regular and comprehensive analyses of our own security profiles and identify opportunities to enhance our resiliency and security posture to continue to stay ahead of the rapidly changing cybersecurity environment. This information is regularly reported to key senior management, including our Board of Directors. Elements of this analysis include:\nOur physical and cyber security program is regularly audited by both U.S. and international regulatory agencies and governing bodies. We also host frequent customer assessments and support penetration tests, both on-site and remotely. As a key component of our critical infrastructure, we ensure that our standards for security, compliance and preparation go above and beyond what is required. The approach, methodology and resulting annual certifications satisfy multiple industry-recognized frameworks, including:\n\"We have added \nexternal \nevaluations of our security program by independent \nthird parties to \nbenchmark these programs against recognized global security \nstandards, sharing the results with \nour Board of \nDirectors.\"\n• Web-based assessments of our public-facing internet presence • Brand-trust protection • Privacy policies and procedures • Vendor assessments, tools and risk analysis\n• The U.S. National Institute of Standards and Technology’s (NIST’s) Special Publication 800-115: “Technical Guide to Information Security Testing and Assessment” \n• Open Web Application Security Project (OWASP) methodology \n• Payment Card Industry (PCI) Security Standard \n• Penetration Testing Execution Standard (PTES) \n• International Organization for Standardization/International Electrotechnical Commission (ISO/IEC) 27001 \n• International Standard on Assurance Engagements (ISAE) \n• System and Organization Controls (SOC) 1, 2 In addition to the internal assessments that test and validate our controls environment, we have added external evaluations of our security program by independent third \nparties to benchmark these programs \nagainst recognized global security \nstandards, the results of which are shared with our Board of Directors. These include the Cyber Risk Institute Profile and \nCybersecurity Resiliency \nOversight Expectations.", "chunk_word_count": 396, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Convergence", "document_id": "Mastercard 2022 ESG Report", "page": 78, "page_start": 78, "page_end": 80 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 62, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Continuous best practices security approach\nAccreditation Board, the Digital Forensics Lab continues to expand its capabilities and respond to investigative needs more rapidly through remote collection.\nMastercard works to actively identify, respond to and manage cyber and physical threats while reducing our risk profile and enabling our business partners to operate in any physical locality.\n• Our Vulnerability Management Team works across our lines of business to provide a comprehensive, integrated approach to improving our ability to define, detect and quickly and efficiently mitigate vulnerabilities within our environment.\nOur security approach includes the following best practices:\n• Our Security Operations Center supports our follow-the-sun security model, enabling 24/7/365 security monitoring and support across the entire sector, with our entire team involved in incident response to minimize and/or mitigate threats to the Mastercard network.\n• Our European Cyber Resilience Centre in Belgium serves as a hub for thought leadership in cybersecurity and continues to expand our technical collaboration across the public and private sectors to combat cyber threats and bolster resilience.\n• Mastercard’s Enterprise Resilience Team strives to create a global culture of preparedness through the development and deepening of key cross-organizational partnerships and a regular cadence of internal education, awareness, planning and practice to help reduce organizational risk.\n• Our Fusion Center serves as the central global hub for our ability to anticipate, identify and mitigate fraud, and cyber and physical security threats. Modeled after law enforcement and government centers, this cross-functional group of 28 teams helps protect Mastercard and enhance the security of the global digital ecosystem.\n• The Mastercard Cyber Range provides dynamic environments for education, research and competitions, with the goal of enhancing cybersecurity expertise both internally and externally and evaluating new technology solutions.\n• The Crisis Management Team focuses on providing role-specific training to responders and supporting and fostering functional and regional relationships across our global response groups. In 2022, the team facilitated 37 exercises across the globe. Participants included key senior stakeholders, steering committees and members of our Board of Directors.\n• Our Digital Forensics Lab is used to examine devices so we can understand the patterns and approaches of threat actors. One of the few private organizations accredited by the American National Standards Institute National\n• In partnership with both internal and external participants, we use threatcasting to forecast and identify potential threats over the next decade and assess how to disrupt, mitigate, remediate and recover from them. In 2022, we testified before the United States House of Representatives Committee on Homeland Security’s Subcommittee on Cybersecurity, Infrastructure Protection, and Innovation on how this best practice enables us to help secure the future by harnessing the potential of emerging technologies while mitigating security risks.", "chunk_word_count": 463, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Continuous best practices security approach", "document_id": "Mastercard 2022 ESG Report", "page": 80, "page_start": 80, "page_end": 80 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 63, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Security education and awareness\nMastercard’s security education and awareness program fosters a security-first mind-set for employees. The organizationwide program, which is administered to all employees and contingent workers, helps keep people informed about the latest risks facing our organization, reinforces key behaviors to reduce risk and offers regular opportunities to put these skills into practice.\nExamples of how we use new technologies to improve cybersecurity include:\n• We host a monthlong Cybersecurity Awareness Month campaign during which all employees are provided with multiple global opportunities to participate in live events. Employees are also given the chance to dedicate meeting-free time to cybersecurity learning and to connect and learn from our security experts from across our various lines of business and geographies. In 2022 we connected with $9 7 \\%$ of our employees through this campaign.\n• Announced in 2022, our Crypto Secure solution enables card issuers to better understand the fraud risks associated with specific crypto exchanges. Insights from CipherTrace help them make informed decisions that protect their businesses as well as the entire payments ecosystem from fraudulent activity.\n• Artificial intelligence (AI) is being deployed at greater scale to help mitigate risk and secure the payments ecosystem. One of our AI-powered solutions has prevented $\\$ 35$ billion in fraud over the past three years, helping to deliver superior digital experiences so individuals can interact with businesses confidently — how, where and when they want.\n• Our advanced behavioral technology assesses data, such as how you hold your phone or how fast you type or swipe, and acts in real time to help prevent fraud by identifying devices and detecting when they have been compromised.\nExamples of our cybersecurity educational offerings include:\n• Identity verification data is now part of our multilayered approach to security, with many technologies working together behind the scenes, such as enhanced behavioral biometrics and machine learning. Our identity technologies also play a critical role in consumer transactions. Technologies like biometrics help people prove their identities. In 2022 we launched Mastercard Identity Check, our new biometric checkout program that enables small businesses to authenticate their customers, while allowing consumers to easily pay for purchases with a smile or a wave.", "chunk_word_count": 378, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Security education and awareness", "document_id": "Mastercard 2022 ESG Report", "page": 81, "page_start": 81, "page_end": 81 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 64, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Use of new technologies\n• All employees and contingent workers must complete an annual training on key security behaviors to ensure that optimal security practices remain a priority. • Our monthly all-employee phishing simulations help employees recognize the signs of a fraudulent email, understand the steps to flag items to our Security Operations Center, and continually hone their skills.\nMastercard leverages the most advanced technologies like AI, quantum and cloud computing to ensure that people can enjoy seamless, safe and secure experiences. Investments in these technologies bolster our continuous efforts to strengthen our world-class security and fraud prevention capabilities while proactively preparing for a post-quantum world.\n• Our new Enhanced Contactless (Ecos) technology is an industry-first. In 2022 we launched the first contactless payment cards to incorporate enhanced quantum-resistant security features. This helps to ensure that as new technologies like quantum computing are introduced, contactless technology is future-proofed so that consumers can continue to enjoy the same high levels of security and convenience they do today.\n### Collaboration\nInternationally, we work in close partnership with key government partners, including the G7, D10, G20 and the Dubai International Financial Centre. We also work with and collaborate with law enforcement agencies around the globe, including Europol, INTERPOL and the U.S. Secret Service, to support their investigative, prevention and intelligence-sharing efforts. We believe in the sharing of intelligence and best practices across the public and private sectors to drive detection, response and interoperability of cyber-defense practices, are active members of the Financial Services Information Sharing and Analysis Center. We also host and participate in sector-specific and multisector cyber-defense exercises including the NATO Cooperative Cyber Defence Centre of Excellence Exercise Locked Shields.\nTo keep abreast of the threat landscape and to share cybersecurity information and best practices, we collaborate internally across business lines and externally across industries, sectors and governments. We work to foster deep industry and public– private partnerships that help us advance and ultimately support the establishment of globally accepted cybersecurity policies, standards and best practices.\n### Tri-Sector Cyber Defense Exercise", "chunk_word_count": 353, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Use of new technologies", "document_id": "Mastercard 2022 ESG Report", "page": 81, "page_start": 81, "page_end": 82 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 65, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Purpose-led solutions: Increasing small business access to cybersecurity\nCollaboration across sectors is essential to our shared security and ongoing work to enhance the security and resiliency of critical infrastructure. In 2022, Mastercard led the first-ever private-sector-led Tri-Sector Cyber Defense Exercise, bringing together representatives from the energy, finance and telecom sectors for a live-fire exercise so teams could test their cyber defense capabilities under real-world conditions. The information gleaned in the exercise helped practitioners master the skills and techniques required for responding to the increasingly sophisticated cyber threats of today. The exercise fostered education and awareness, while demonstrating best practices in defensive and offensive tactics, techniques and procedures.\nAs we bring more people, more businesses and more interactions into the digital ecosystem, collaboration by the wider community is critical to keeping them secure. This is particularly important for small businesses. They often lack the resources to understand and mitigate cybersecurity risk.\nIn the U.S., we are active participants in the Cyber Risk Institute and the Aspen Institute’s global and U.S. cybersecurity groups. We play a leadership role on the Financial Services Sector Coordinating Council, the Cybersecurity and Infrastructure Security Agency’s Cybersecurity Advisory Committee, and the U.S. Secret Service’s Cyber Investigations Advisory Board. We also partner closely with policymakers in the U.S. Congress and in the White House administration, often through the Department of the Treasury and the Department of Homeland Security.\nWe work to make cybersecurity accessible and understandable to small businesses through our partnerships with the Global Cyber Alliance, the Cyber Readiness Institute and the National Cyber Security Alliance. Collectively, we provide small businesses around the world with free cybersecurity resources to help them take immediate action to reduce their cyber risk and strengthen their defenses.\nWe further help shape cybersecurity policy and drive better cross-border connectivity and data-flow solutions through our affiliations with many industry trade associations and coalitions, such as the Information Technology Industry Council, Better Identity Coalition, CyberPeace Institute, Business Roundtable, U.S. Chamber of Commerce and Global Data Alliance.\nOur Digital Doors business acceleration program gives small-business owners around the world access to the resources they need to securely set up shop online, grow and manage their business, accept digital payments and manage their online presence.", "chunk_word_count": 383, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Purpose-led solutions: Increasing small business access to cybersecurity", "document_id": "Mastercard 2022 ESG Report", "page": 82, "page_start": 82, "page_end": 82 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 66, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Risk management\nEffective risk management and oversight are essential to the success of our business strategy and continue to be an important element of our ESG strategy. We take a disciplined and consistent approach to risk, continuously improving our programs and policies to respond to new, existing and potential risk factors, including changing market trends, external events and the global regulatory environment. These efforts are key in helping to ensure organizational resilience and overall business success.\nMastercard’s Enterprise Risk Management (ERM) program is designed to provide comprehensive, integrated oversight and management of risk, as well as to facilitate transparent identification and reporting of key risks to senior management, appropriate Board committees and the Board as a whole. Our ERM framework helps to assure adequate recognition and ownership of the most significant and material potential risks to the company that may have a significant impact on our ability to execute our strategy or meet our objectives, and may adversely impact our brand and reputation.\nclimate risk management process, we also conduct business continuity planning (BCP) activities and table-top exercises designed to address extreme events, including potential climate-related physical risk events.\nThe outputs of the risk identification and assessment process are captured in risk registers that are updated regularly. Based on materiality, the results of these risk assessments feed into periodic updates to the Board and its committees on our consolidated risk profile, including ESGrelated risks.\n### Application of our ERM framework for ESG\nOur risk assessment framework uses a rolling, three-year time horizon for risk identification, assessment and response to enterprise-level risks. However, our assessment of climate-related risks considers potential impacts and mitigations over short-, medium- and long-term horizons. As our business evolves and the risk landscape changes, so does our risk profile. Many risks that were identified in our 2020 ESG Materiality Assessment (e.g., human capital/talent, inclusive of DEI; data privacy and security; climate; third-party; cybersecurity; and responsible data usage), are captured in our existing risk taxonomy, and considered within our ongoing ERM risk assessment process and risk appetite framework. As part of our\nOur ERM risk identification and assessment process uses both top-down and bottom-up approaches across our business units and key functional areas through the performance of periodic risk assessments using defined-risk rating scales. Risks are reported to the ERM team regularly and consolidated at the corporate level to determine the company’s overall corporate risk profile. Mastercard leverages a corporate-wide risk taxonomy and rating scales, which have been updated to capture relevant ESG risk elements, to help identify, categorize and aggregate risks across the organization.\nFor information on how we identify, assess and manage our climate-related risks, including BCP efforts, see the Climate resilience section of this report.", "chunk_word_count": 464, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Risk management", "document_id": "Mastercard 2022 ESG Report", "page": 83, "page_start": 83, "page_end": 83 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 67, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### Policy engagement and political activity\nMastercard’s Government Relations team oversees the company’s public policy strategy, and political contributions and corporate political expenditures are approved by the Executive Vice President for Public Policy. The Nominating and Corporate Governance Committee of the Board of Directors is responsible for overseeing Mastercard’s public policy activities and, at least annually, will review political contributions, trade association dues used for political purposes, corporate political expenditures, lobbying efforts and strategies, Mastercard’s political activity policies and our Political Activity and Public Policy Statement. Mastercard maintains comprehensive internal compliance procedures to ensure that the company’s political and public policy activities fully comply with all laws, regulations and company policies. Mastercard’s political and public policy activities and our Political Activity and Public Policy Statement are reviewed on an annual basis by outside counsel.\nOur Government Relations and Public Policy teams engage in a wide variety of issues that align with our business interests and could potentially impact our company and stakeholders. Mastercard’s belief in transparency around these efforts is expressed in our Political Activity and Public Policy Statement. Information on our 2022 contributions can be found on our website’s Archived Political Activity Disclosures.\n### Data tables\nThe following tables disclose information about our ESG programs, policies and metrics mapped to the following voluntary reporting frameworks and initiatives: The Global Reporting Initiative (GRI); the Sustainability Accounting Standards Board (SASB) Software & IT Services industry standards; and the World Economic Forum (WEF) Stakeholder Capitalism Metrics (SCM) core themes.\ntrics reported are based on relevance to our business and align with our ESG materiality assessment. Additional information about the data presented in the following tables:\nPercentages reported throughout were calculated with denominators excluding unknowns. Gender and ethnicity percentages may not sum to $100 \\%$ as employees may prefer to not self identify. \nSenior management is defined as senior vice president and above. \nPeople of color is defined as U.S. employees that identify and report as Black or African American, Hispanic, Asian, American Indian, Alaska Native, Native Hawaiian/other Pacific Islander or two or more races. Ethnicity data does not include undeclared. \nNew metrics being provided within the 2022 report are flagged with \\*\\*.\n### Appendix", "chunk_word_count": 375, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > Policy engagement and political activity", "document_id": "Mastercard 2022 ESG Report", "page": 84, "page_start": 84, "page_end": 97 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 68, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### About this report\nThis report covers only Mastercard’s business and does not address the performance or operations of our suppliers, contractors or partners. Statements regarding our Environmental Social and Governance (ESG) goals, targets and commitments are aspirational and may also be based on estimates and assumptions under developing standards that may change in the future; as such, no guarantees or promises are made that they will be met or successfully executed, and actual results may differ, possibly materially. Furthermore, data, statistics and metrics included in this report are nonaudited estimates, are not necessarily prepared in accordance with generally accepted accounting principles (GAAP), continue to evolve, and may be based on assumptions believed to be reasonable at the time of preparation, but may be subject to revision.\nThe report covers Mastercard’s global operations for the fiscal year ended December 31, 2022, and has not been externally assured or verified by an independent third party, unless otherwise noted. This report represents our current policy and intent and is not intended to create legal rights or obligations.\nWe have reported in accordance with the Global Reporting Initiative (GRI)’s reporting principles of materiality, sustainability context, and stakeholder inclusiveness and completeness. In addition, this report is informed by the Sustainability Accounting Standards Board (SASB)’s Software & Information Technology (IT) Services Standard and the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). In this report, our use of the terms “material,” “materiality” and other similar terms is consistent with such standards or refers to topics that reflect Mastercard’s significant impacts of ESG or that substantially influence the assessments and decisions of a diverse set of stakeholders.\nEspecially with respect to the matters discussed in this report, many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors, including as the result of changes in circumstances, estimates that turn out to be incorrect, standards of measurement that change over time, assumptions not being realized, or other risks or uncertainties, could cause our actual results, including the achievement of ESG targets, goals, objectives or commitments, to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf.\nthat those results will have the forecasted or expected consequences and effects. We also caution you that the important factors referenced there may not include all of the factors that are important to you. Our forward-looking statements speak only as of the date of this report or as of the date they are made and, except as required by law, we undertake no obligation to update this report to reflect subsequent events or circumstances.", "chunk_word_count": 479, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > About this report", "document_id": "Mastercard 2022 ESG Report", "page": 97, "page_start": 97, "page_end": 98 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 69, "chunk_text": "# Doing well by doing good\n## 90 countries \\$5.3 employee voluntary turnover\n### About this report\nWe are not using these terms as they are used under the securities or other laws of the United States or any other jurisdiction or as these terms are used in the context of financial statements and financial reporting. This report, which speaks only as of its date and is not required to be updated, is not comprehensive, and for that reason, should be read in conjunction with our most recent Annual Report on Form 10-K, our subsequent reports on Forms 10-Q and $8 \\cdot \\mathsf { K } ,$ and other filings made with the Securities and Exchange Commission (SEC).\nThis report may contain links to other internet sites or references to third parties. Such links or references are not incorporated by reference to this report and we can provide no assurance as to their accuracy. The use or inclusion of the information is also not intended to represent endorsements of any products or services.\nThis report contains forward-looking statements pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact could be forward-looking statements. When used in this report, the words “believe,” “expect,” “could,” “may,” “would,” “will,” “trend,” “intend,” “aim,” “estimate,” “drive” and other similar words and expressions are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to Mastercard’s future prospects, developments and business strategies, as well as ESG targets, goals and commitments outlined in this report or elsewhere.\nWe describe these risks and uncertainties in our SEC filings, including our most recent Annual Report on Form 10-K and our subsequent reports on Forms 10-Q and 8-K, as well as, with respect to our ESG goals, targets and commitments outlined in this report or elsewhere, the challenges and assumptions that are either identified in this report or that we are unable to foresee at this time. We cannot assure you that the results reflected or implied by any forward-looking statement will be realized or, even if substantially realized,\n### Assurance letter\n## VERIFICATIONOPINIONDECLARATION GREENHOUSEGASEMISSIONS\n### Period covered by GHG emissions verification:\n### Statement of independence,impartiality and competence\n·January1,2022 to December 31,2022\nApex isan independent professional services company that specializes in Health,Safety，Social and Environmental management services including assurance with over 30 years history in providing these services.\n### Criteria against which verification was conducted:\nTo:The Stakeholders of MasterCard\nWorld Resources Institute (WRl)/World Business Council for Sustainable Development (WBCSD) Greenhouse Gas (GHG) Protocol Corporate Accounting and Reporting Standard (Scope 1and 2) WRI/WBCSD Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (Scope 3)\nNomemberofthe verification teamhasabusiness relationship with MasterCard,its Directors or Managers beyondthatrequired of this assignment.Weconductedthis verification independentlyand to our knowledge there has been no conflict of interest.\nApex Companies,LLC(Apex) was engaged to conduct an independent verification of the greenhouse gas (GHG)emissions reported by MasterCard fortheperiod stated below.Thisverificationopiniondeclaration appliesto the related information included within thescope of work described below.\nApex has implementeda Code of Ethicsacross the businessto maintain high ethical standards among staffin their day-to-day businessactivities.", "chunk_word_count": 529, "section_path": "Doing well by doing good > 90 countries \\$5.3 employee voluntary turnover > About this report", "document_id": "Mastercard 2022 ESG Report", "page": 98, "page_start": 98, "page_end": 99 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 70, "chunk_text": "# Doing well by doing good\n## VERIFICATIONOPINIONDECLARATION GREENHOUSEGASEMISSIONS\n### Reference Standard:\nThedeterminationofthe GHG emissons is the sole responsibilityof MasterCard.MasterCard is responsible forthepreparationand fair presentation of the GHG emissions statement inaccordance with the criteria. Apex'ssoleresponsibilitywas toprovide independent verification on theaccuracy of theGHG emissions reportedandof theunderlying systemsand processesused tocollect,analyze,and reviewtheinformation. Apexis responsible for expressing an opinion on the GHG emissions statement based on the verification. Verificationactivitiesappliedinalimited level ofassuranceverificationareless extensiveinnature,timing, andextent than ina reasonable level of assurance verification.\nISO14064-3 Second Edition:2019-04:-Greenhouse gases--Part 3:Specification with guidance forthe verification and validation of greenhouse gas statements\nThe verfication team has extensive experience in conducting assurance over environmental,social,ethical and health and safety information,systemsand processes,has over 20 years combined experience in this fieldandan excelent understanding of Apex's standard methodology for the verification of greenhouse gas emissionsdata.\n### Level of Assuranceand Qualifications:\nThis verification used a materiality threshold of±5% foraggregate errors in sampled data for each of the above indicators\nDavid Reilly,Technical Reviewer ESG-Principal Consultant Apex Companies,LLC. Santa Ana,California\nBoundaries of the reporting company GHG emissions covered by the verification:\n·Operational Control ·Global Types of GHGs:CO2,N2O,CH4\n### GHG Verification Methodology\nEvidence-gathering procedures included,but were not limited to:\n·Interviews with relevant personnel of MasterCard and their consultant; \nReview of documentary evidence producedby MasterCard and their consultant; Reviewof MasterCard dataand informationsystemsand methodology forcollection,aggregation， analysisand review of information used todetermineGHG emissions;and Audit of samples of data used by MasterCard to determine GHG emissions.\nGHG Emissions Statement:\n### April19,2023\n·Scope1:4,769 metric tons of CO2 equivalent \n·Scope2(Location-Based):51,233metric tons of CO2 equivalent \nScope 2(Market-Based):367 metric tons of CO2 equivalent Scope3: Purchased Goods&Services, Capital Goods,and Upstream Transportation and Distribution (combined):449,641metric tons of CO2 equivalent Fuel-and Energy-Related Activities:9,454 metric tonsof CO2 equivalent Waste Generated in Operations:653 metric tons of CO2 equivalent Business Travel (air and rail travel):26,861 metric tons of CO2 equivalent Employee Commuting:19,612metric tonsof CO2 equivalent Upstream Leased Assets:360 metric tons of CO2 equivalent\nThisverificatioiclationludinginexpressdreinisovdedtsteCaddiselyfrit ofMasterCardinaccordancewiththetermsofouragreementWeconsentothereleaseofthisdeclarationbyyoutothepublicor otherorganizationsbutwithoutacceptingorassuminganyresponsibiltyorliabilityonourpartoanyotherpartywhomayhave accesstothisdeclaration.\n### Verification Opinion:\nBased on the process and procedures conducted,there is no evidence that the GHG emissions statement shown above:\n·is not materially correct and is not a fair representation of the GHG emissions data and information;and has not been prepared in accordance with the WRl/WBCSD GHG Protocol Corporate Accounting and Reporting Standard (Scope1and2),and WRlWBCSD GreenhouseGas Protocol Corporate Value Chain Accounting and Reporting Standard (Scope3).\nIt is our opinion that MasterCard has established appropriate systems for the collction,aggregation and analysis of quantitativedata fordetermination of these GHG emissions for the stated period and boundaries.\nData and information supporting the Scope 1 and Scope 2 GHG emissions assertion were in most cases historical innatureand in somecaseswereestimated\nData and information supporting the Scope 3 GHG emissions statement were in some cases estimated rather than historical in nature.\n### Our stakeholders", "chunk_word_count": 450, "section_path": "Doing well by doing good > VERIFICATIONOPINIONDECLARATION GREENHOUSEGASEMISSIONS > Reference Standard:", "document_id": "Mastercard 2022 ESG Report", "page": 99, "page_start": 99, "page_end": 101 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 71, "chunk_text": "# Doing well by doing good\n## VERIFICATIONOPINIONDECLARATION GREENHOUSEGASEMISSIONS\n### Sustainable Development Goals\nThe United Nations Sustainable Development Goals (SDGs) outline a pathway toward a more inclusive and sustainable future by addressing the most pressing global challenges. The realization of SDGs will require commitment, collaboration and collective action aligned across the public sector, the private sector and civil society.\nAt Mastercard, we concentrate our efforts on those SDGs where we can ensure demonstrable impact. We focus on the intersection of people, prosperity and the planet, leveraging the nature and scale of our business, alongside our people, customers and partners, to influence real change on a global scale. In doing so, we are working to power economies by empowering people and building a sustainable economy where everyone can prosper.\nOur work prioritizes the SDGs described on the following pages:\n## SDG SUB-GOALS WE FOCUS ON\n## OUR COMMITMENTS AND PROGRESS\n## SDG\nMastercard focuses on building an inclusive, sustainable digital economy for everyone, everywhere. Access and use of digital financial services foster economic opportunity and help improve lives by reducing social inequality and supporting global economic growth. For Mastercard, this goes beyond philanthropy and includes activities to support financial inclusion through commercially viable products and services that promote long-term sustainable growth for individuals and small businesses.\n## 1 POVERTY NO\n1.2 By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions, according to national definitions\n1.3 Implement nationally appropriate social protection systems and measures for all, including floors, and by 2030, achieve substantial coverage of the poor and the vulnerable\n• Working with our partners, we have connected 780 million people to the digital economy since 2015, as part of our goal to connect 1 billion by 2025. • Working with our partners, we have connected 35 million MSMEs to the digital economy through card acceptance since 2020, as part of our goal to connect 50 million by 2025. • Since 2020, working with our partners, we have provided 27 million women entrepreneurs with solutions that can help them grow their business, surpassing our goal of 25 million by 2025. • Through Mastercard’s Center for Inclusive Growth and the Mastercard Impact Fund, we have invested in independent research, piloted and scaled impactful programs and built cross-sector partnerships to further scale solutions that drive inclusive economic growth. Through 2022, the Mastercard Impact Fund has contributed $\\$ 320$ million to support a range of financial security, small business growth and impact data science outcomes.\nNo poverty \nEnd poverty in all its forms \neverywhere\n1.4 By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance\n1.5 By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters\n\n\nWe are committed to gender balance both inside and outside of Mastercard.\n### 5.1 End all forms of discrimination against all women and girls everywhere", "chunk_word_count": 542, "section_path": "Doing well by doing good > VERIFICATIONOPINIONDECLARATION GREENHOUSEGASEMISSIONS > Sustainable Development Goals", "document_id": "Mastercard 2022 ESG Report", "page": 102, "page_start": 102, "page_end": 103 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 72, "chunk_text": "# Doing well by doing good\n## 5 GENDER EQUALITY\n5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life\n• Females at Mastercard continue to earn $\\$ 1$ for every $\\$ 1$ men earn. We have continued to make progress on closing the gender median pay gap by increasing the global median pay for female employees to $9 4 . 0 \\%$ of median pay for male employees, up $0 . 8 \\%$ from 2021. The median pay gap is predominantly due to the fact that 1 we have more men in senior roles, not because men are paid more. \n• We continue to build Mastercard’s next generation of women leaders through leadership development programs, including Women Who Lead and the Women’s Mentoring program. \n• Our signature education program, Girls4Tech®, inspires young girls to build STEM skills to become the leaders of tomorrow. We educated 1.8 million girls through Girls4Tech in 2022. \n• Since 2020, Mastercard provided 27 million women entrepreneurs with solutions that can help them grow their business, surpassing our goal of 25 million by 2025. \n• Our philanthropic initiatives, such as the BSR HERproject which focuses on women garment factory workers, provide individuals with the skills and resources to better manage their money, invest in economic opportunities and save for the future.\n5.a Undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance and natural resources, in accordance with national laws\nGender equality Achieve gender equality and empower all women and girls\n5.b Enhance the use of enabling technology, in particular information and communications technology, to promote the empowerment of women\n5.c Adopt and strengthen sound policies and enforceable legislation for the promotion of gender equality and the empowerment of all women and girls at all levels\n8.1 Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 percent gross domestic product growth per annum in the least developed countries\nWe are committed to advancing human rights and diversity, equity and inclusion across everything we do, from promoting financial inclusion to recruiting and retaining a talented and diverse workforce.", "chunk_word_count": 380, "section_path": "Doing well by doing good > 5 GENDER EQUALITY", "document_id": "Mastercard 2022 ESG Report", "page": 103, "page_start": 103, "page_end": 103 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 73, "chunk_text": "# Doing well by doing good\n## DECENT WORK AND 8 ECONOMIC GROWTH\n• We maintain pay equity for women and people of color. Women at Mastercard continue to earn $\\$ 1$ for every $\\$ 1$ men earn. In the U.S., Mastercard employees of color continue to earn $\\$ 1$ for every $\\$ 1$ white employees earn. • We continue to build Mastercard’s talent pipelines at all levels and from a multitude of backgrounds through our early career programs, skills training offerings and leadership development programs. • Our signature education program Girls4Tech inspires young girls to build STEM skills to become the leaders of tomorrow. We educated 1.8 million girls through Girls4Tech in 2022. • Through Mastercard’s Center for Inclusive Growth and the Mastercard Impact Fund, we provided $\\$ 68$ million in global community support and our programs reached 18 million individuals, small businesses and financial service providers supporting a range of financial security, small business growth and impact data science outcomes. Programs like Strive, our signature small business program, are helping small businesses around the world build capacity, unlock access to capital and drive adoption of digital tools and data-driven solutions.\n8.2 Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors\n8.3 Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services\n### Decent work and economic growth\nPromote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.\n8.5 By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value\n8.8 Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment\n8.10 Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all\n## SDG SUB-GOALS WE FOCUS ON\n## OUR COMMITMENTS AND PROGRESS\n## SDG\n9.1 Develop quality, reliable, sustainable and resilient infrastructure, including regional and trans-border infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all\nBeyond access to the formal economy, we are seeking to ensure economic prosperity, particularly for those who have been previously excluded. We believe in a collaborative approach, working through private-private and publicprivate partnerships.", "chunk_word_count": 425, "section_path": "Doing well by doing good > DECENT WORK AND 8 ECONOMIC GROWTH", "document_id": "Mastercard 2022 ESG Report", "page": 103, "page_start": 103, "page_end": 104 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 74, "chunk_text": "# Doing well by doing good\n## 9 INDUSTRY,INNOVATION AND INFRASTRUCTURE\n9.2 Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and gross domestic product, in line with national circumstances, and double its share in least developed countries\n• Working with partners, we have connected 35 million MSMEs to the digital economy through card acceptance since 2020, as part of our goal to connect 50 million by 2025. • Through our Community Pass solution, Mastercard provides a way to serve people in the most remote communities, many of whom lack data records, formal identification and/or connectivity. In 2022, Community Pass expanded to six countries: India, Kenya, Tanzania, Uganda, Mauritania and Mozambique. In December 2022, we announced a goal to reach 30 million Community Pass users by 2027. • Mastercard is working to address systemic racism in the financial system through partnerships like that forged with Howard University. Supported by a $\\$ 5$ million grant from Mastercard, we are helping to launch the Center for Applied Data Science and Analytics (CADSA) to address health care disparities, environmental justice, and racial and ethnic bias in artificial intelligence algorithms that confront local, national and global societies.\n9.3 Increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit, and their integration into value chains and markets\n### Industry, Innovation, Infrastructure\n9.4 By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes, with all countries taking action in accordance with their respective capabilities\nBuild resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.\n9.a Facilitate sustainable and resilient infrastructure development in developing countries through enhanced financial, technological and technical support to African countries, least developed countries, landlocked developing countries and small island developing States\n### 11.1 By 2030, ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums\nWe leverage our employees, technology, resources, partnerships, and expertise to drive positive, lasting impact in our communities.", "chunk_word_count": 349, "section_path": "Doing well by doing good > 9 INDUSTRY,INNOVATION AND INFRASTRUCTURE > Industry, Innovation, Infrastructure", "document_id": "Mastercard 2022 ESG Report", "page": 104, "page_start": 104, "page_end": 104 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 75, "chunk_text": "# Doing well by doing good\n## 9 INDUSTRY,INNOVATION AND INFRASTRUCTURE\n### 11.2 By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all\n• Mastercard partners with a broad range of customers — from traditional issuers and governments, to fintechs and mobile network operators — to support the unbanked and underserved by providing entry-level products and solutions designed to address the specific needs of vulnerable populations who are without access to basic digital payment solutions. \n• Since we launched our In Solidarity commitment in 2020, Mastercard has invested $\\$ 423$ million in Black communities in the U.S. by expanding city programs to support Black communities, providing affordable financial tools and services, and providing capital and resources for Black-owned businesses, and increasing our spend with Black-owned suppliers. \n• Through philanthropic investments, including the CFAR Alliance and the Earthshot Prize, Mastercard is catalyzing an innovation ecosystem to deliver inclusive growth technology solutions for greater climate adaptation, resilience and a just transition. \n• Since our commitment in 2020 to support small businesses and their employees affected by the pandemic, we’ve provided $\\$ 244$ million in financial, technology, product, and insight assets to support resilience and recovery.\n11.3 By 2030, enhance inclusive and sustainable urbanization and capacity for participatory, integrated and sustainable human settlement planning and management in all countries\n$\\pm \\mathbf { 1 . 5 } \\mathsf { B y } 2 0 3 0 ,$ significantly reduce the number of deaths and the number of people affected and substantially decrease the direct economic losses relative to global gross domestic product caused by disasters, including water-related disasters, with a focus on protecting the poor and people in vulnerable situations\n### Sustainable cities and communities\nMake cities and human settlements inclusive, safe, resilient and sustainable.\n11.a Support positive economic, social and environmental links between urban, peri-urban and rural areas by strengthening national and regional development planning\n11.b By 2020, substantially increase the number of cities and human settlements adopting and implementing integrated policies and plans towards inclusion, resource efficiency, mitigation and adaptation to climate change, resilience to disasters, and develop and implement\n## SDG SUB-GOALS WE FOCUS ON\n## SDG\n## OUR COMMITMENTS AND PROGRESS\n### 12.2 By 2030, achieve sustainable management and efficient use of natural resources\nWe are committed to driving our business toward net zero emissions and accelerating the transition to a lowcarbon, regenerative economy. This starts with managing the impacts of our own operations and extends across our full value chain. And we are designing and developing differentiated products and solutions that help our customers, partners and consumers make environmentally conscious choices and achieve their environmental sustainability goals.", "chunk_word_count": 442, "section_path": "Doing well by doing good > 9 INDUSTRY,INNOVATION AND INFRASTRUCTURE > 11.2 By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all", "document_id": "Mastercard 2022 ESG Report", "page": 104, "page_start": 104, "page_end": 105 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 76, "chunk_text": "# Doing well by doing good\n## 12 RESPONSIBLE CONSUMPTION AND PRODUCTION Q\n### 12.5 By 2030, substantially reduce waste generation through prevention, reduction, recycling, and reuse\n12.8 By 2030, ensure that people everywhere have the relevant information and awareness for sustainable development and lifestyles in harmony with nature\n• We diverted $71 \\%$ of the waste generated by Mastercard-owned sites through recycling, composting, donations and other forms of landfill diversion in 2022. \n• We continued to ensure that $100 \\%$ of our global electronic waste in 2022 was recycled by using responsible partners certified in environmental standards and data destruction to protect our customers’ data privacy and the planet. \n• $\\ln 2 0 2 2$ , our San Francisco office received TRUE Zero Waste certification, and nine other Mastercard locations became TRUE precertified. \n• Mastercard’s Sustainability Innovation Lab — our global research and development center for climate-conscious digital products and solutions — and our Data & Services advisory services focus on ways to empower our customers, partners and consumers to transform how they produce, distribute and purchase products and services and help move toward a circular, more sustainable economy. \n• We integrated the Mastercard Carbon Calculator across our global network for banking partners so that their consumers can understand the environmental impact of their spending. In 2022, the Carbon Calculator went live with Mastercard issuers in the U.K., Hungary, Taiwan and Italy. \n• Mastercard announced that effective January 1, 2028, all newly produced cards must be CEC certified. Cards made from first-use polyvinyl chloride (PVC) will no longer be accepted. \n• Since 2018, Mastercard’s Sustainable Card Badge and Certification Program has helped more than 330 financial institutions reduce first-use PVC plastic in payment card production by issuing cards made from 23 approved products constructed from recycled or biosourced materials made from Thai sugar or Nebraska corn.\n12.b Develop and implement tools to monitor sustainable development impacts for sustainable tourism which creates jobs, promotes local culture and products\n### Responsible consumption and production\nEnsure sustainable consumption and production patterns.\n## SDG SUB-GOALS WE FOCUS ON\n## OUR COMMITMENTS AND PROGRESS\n## SDG\n### 13.1 Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries\nWe are reducing emissions and resource use up and down our value chain, including offering innovative solutions that help our customers, partners and consumers do the same.", "chunk_word_count": 395, "section_path": "Doing well by doing good > 12 RESPONSIBLE CONSUMPTION AND PRODUCTION Q", "document_id": "Mastercard 2022 ESG Report", "page": 105, "page_start": 105, "page_end": 106 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 77, "chunk_text": "# Doing well by doing good\n## 13 CLIMATE ACTION\n### 13.2 Integrate climate change measures into national policies, strategies and planning\n• Toward our goal of net zero greenhouse gas emissions by 2040, in 2022, Mastercard’s Scope 1 and 2 emissions were $4 4 \\%$ less than in 2016, and Scope 3 emissions were $40 \\%$ less than in 2016. \n• As part of our Priceless Planet Coalition, through 2022, we have engaged more than 130 corporate partners globally to support forest restoration projects; we have secured funding to restore an estimated 13 million trees and have already restored 4 million trees. \n• We integrated the Mastercard Carbon Calculator across our global network for banking partners so that their consumers can understand the environmental impact of their spending. In 2022, the Carbon Calculator went live with Mastercard issuers in the U.K., Hungary, Taiwan and Italy. \n• Since 2018, Mastercard’s Sustainable Card Badge and Certification Program has helped more than 330 financial institutions reduce first-use polyvinyl chloride (PVC) plastic in payment card production by issuing cards made from 23 approved products constructed from recycled or biosourced materials, such as recycled ocean plastic and bioplastics made from Thai sugar or Nebraska corn. Mastercard announced that effective January 1, 2028, all newly produced cards must be CEC certified. Cards made from first-use PVC will no longer be accepted.\n### 13.3 Improve education, awareness-raising and human and institutional capacity on climate change mitigation, adaptation, impact reduction and early warning\n### Climate action\nTake urgent action to combat climate change and its impacts\nMastercard continues to expand and build upon its collaborations with a wide array of partners in our efforts to accelerate inclusive, sustainable economic growth. This includes partnerships through Mastercard’s Center for Inclusive Growth, which administers the Mastercard Impact Fund (Fund). Through 2022, the Fund, has approved 228 grants totaling $\\$ 320$ million to nonprofit organizations, supporting work in 97 countries. Notable partnership activity in 2022 included the following:\n### 17.3 Mobilize additional financial resources for developing countries from multiple sources", "chunk_word_count": 339, "section_path": "Doing well by doing good > 13 CLIMATE ACTION", "document_id": "Mastercard 2022 ESG Report", "page": 106, "page_start": 106, "page_end": 106 }, { "report": "Mastercard 2022 ESG Report.pdf", "chunk_idx": 78, "chunk_text": "# Doing well by doing good\n## 17 PARTNERSHIPS FOR THE GOALS\n### 17.13 Enhance global macroeconomic stability, including through policy coordination and policy coherence\n### 17.14 Enhance policy coherence for sustainable development\n• In partnership with the Center for Public Impact we launched Data for Equity, a collaborative network of eight U.S. city governments working to close wealth and opportunity gaps. \n• In partnership with the Social Progress Imperative, we created the Social Progress Index India tool used by the Institute of Competitiveness and the government of India. The data tool helps economic development leaders in government, business and other organizations measure progress in the areas of basic human needs, foundations of well-being and opportunity in each Indian state. \n• In April 2022, the Aspen Institute in partnership with Mastercard and a coalition of stakeholders, issued a call to action to establish a shared vision for how financial products, business models and policy support the financial security of all U.S. residents. More than 110 signatories to a support letter, as well as a bi-partisan group of federal lawmakers, have indicated support for the strategy. \n• As part of our ongoing partnership with The Rockefeller Foundation as founding funders of data.org, we helped to launch its first Capacity Accelerator Network (CAN) in the U.S., focused on training 1 million purpose-driven data practitioners from underrepresented communities.\n17.16 Enhance the Global Partnership for Sustainable Development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources, to support the achievement of the Sustainable Development Goals in all countries, in particular developing countries\nPartnerships for the goals Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development\n17.18 By 2020, enhance capacity-building support to developing countries, including for least developed countries and small island developing States, to increase significantly the availability of high-quality, timely and reliable data disaggregated by income, gender, age, race, ethnicity, migratory status, disability, geographic location and other characteristics relevant in national contexts\n### SASB index\n### Table 1. Sustainability Disclosure Topics & Accounting Metrics\n### Table 2. Activity Metrics\n### GRI index\n### Task Force on Climate-related Financial Disclosures (TCFD) index\nIn line with TCFD’s recommendations, we publicly disclose our climate-related information through our annual CDP Climate Change Questionnaire response. We have provided a table mapping TCFD’s disclosure recommendations to our ESG report and CDP responses.", "chunk_word_count": 393, "section_path": "Doing well by doing good > 17 PARTNERSHIPS FOR THE GOALS", "document_id": "Mastercard 2022 ESG Report", "page": 106, "page_start": 106, "page_end": 117 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 0, "chunk_text": "# 2022 ESG Report\n## Creating a more sustainable, inclusive, and growing future for all\n## Introduction\n## Reporting approach\n3 Message from our global managing partner \n5 About McKinsey \n10 Our approach to ESG \n13 2022 progress highlights \n14 Our response to the war in Ukraine \nSustainability \n16 Sustainability at a glance \nOur clients \n17 Our approach \nOur insights \n22 Key publications \nOur actions \n24 Our path to net zero \nInclusive growth \n33 Inclusive growth at a glance \nOur clients \n35 Our approach \nOur insights \n43 Key publications \nOur actions \n45 Our approach to people \nOur giving \n52 Our approach to advancing social responsibility \nResponsible practices \n56 Responsible practices at a glance \n57 Developing and caring for our colleagues \n62 Ethics and compliance \n65 Risk management \n66 Working with clients \n67 Working with suppliers \n70 Human rights \n72 Data privacy and information security\n74 Report scope \n75 Stakeholder engagement \n80 Materiality assessment \n81 How we create value \n82 Performance data \n88 GRI content index \n93 WEF IBC index \n95 TCFD index \n101 Independent assurance \nstatement\n## Message from our global managing partner\nAccelerating sustainable and inclusive growth for the world\n## A letter to all our stakeholders\n## We are catalyzing decarbonization\nIn 2022, 3,500 of our colleagues worked on more than 1,600 sustainability engagements with 600 clients across nearly 60 countries and in every industry. We are unashamed to say that this includes working with heavy emitters—because that’s where the emissions are. We also continue to make progress against our own net-zero goals (including the introduction of a carbon fee on all air travel) while convening leaders and other organizations to embark on fresh solutions like Frontier, an advance market commitment for carbon removal, and Catalyst Zero, for calculating carbon footprints.\nThe events of 2022—the start of a tragic war, food and energy crises, severe climate events, global supply chain issues, and continuing market volatility—challenged governments, businesses, and citizens alike, requiring the world’s immediate and focused attention. As always, we partnered with our clients and our communities to respond—remaining ever committed to our firm’s long-term aspiration: accelerating sustainable and inclusive growth for the world.\nWe have done the analysis to assess how we are actually doing against this aspiration. I am incredibly proud of how—together with our clients— we are driving measurable, society-wide impact. Our clients contribute 20 percent to global GDP growth, create one million jobs per year, and make up 80 percent of reported $\\mathtt { C O } _ { 2 }$ emissions reductions. While we are excited by this, we are even more motivated by it.", "chunk_word_count": 432, "section_path": "2022 ESG Report > Creating a more sustainable, inclusive, and growing future for all", "document_id": "McKinsey 2022 ESG Full Report", "page": 2, "page_start": 2, "page_end": 3 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 1, "chunk_text": "# 2022 ESG Report\n## We are accelerating inclusive growth\nLast year, our Leap by McKinsey colleagues helped our clients build nearly 200 new businesses—creating more than 20,000 jobs and $\\$ 140$ billion in value. Our 10 Actions toward racial equity, launched in 2020, have accelerated change within our firm and are helping combat racism worldwide. Among the many advances this year: we’ve engaged more than 67,000 Black, Asian, Hispanic, and Latino professionals in our Connected Leaders Academy and published 30 insight pieces through the newly established McKinsey Institute for Black Economic Mobility. And, to ensure we are doing what we can to create a more inclusive economy, we have committed $\\$ 2$ billion to social responsibility efforts by 2030 and have so far contributed nearly $\\$ 620$ million in cash and in-kind support toward that commitment (more than $\\$ 275$ million this year). Individually, our colleagues have spent nearly a half million hours on volunteering, board service, and pro bono engagements.\nSeeing the measurable impact in the societies where we live and work is what compels us to accelerate. We are continually raising our sights, with every client engagement, every day: How can we engage even more deeply with our clients on decarbonizing? How many more people can we help reskill or upskill? How can we drive even more economic growth and innovation?\n## Hear more from Bob:\nIn our own firm, we are doubling down on diversity, tripling our number of Black hires, and electing twice the number of women partners in five years. Our global workforce is 48 percent women, and 52 percent of our client-serving colleagues in the US are from racial or ethnic minority groups. We take great pride in our progress, but we want to make sure we are distinctively diverse and have more than tripled our talent recruitment sources from 540 in 2021 to more than 1,700 this past year to ensure that everyone with the skills and talent has a shot at our firm.\nOur firm’s purpose is to help create positive, enduring change in the world. We aspire to do this by accelerating sustainable and inclusive growth through direct and measurable impact in partnership with our clients. Throughout this report, we have shared stories about the many ways in which we are doing just that. We are sharing them not only because we are proud of what we have achieved so far, but because we hope that they are a source of inspiration for even bolder aspirations and innovations in the years ahead. For us, this work is never really done.\nKey highlights from our 2022 ESG Report", "chunk_word_count": 437, "section_path": "2022 ESG Report > We are accelerating inclusive growth", "document_id": "McKinsey 2022 ESG Full Report", "page": 3, "page_start": 3, "page_end": 4 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 2, "chunk_text": "# 2022 ESG Report\n## We are setting the standard on accountability and compliance\nAccountability and compliance are deeply embedded in our processes, mindsets—and in our culture. Since 2018, we have spent nearly $\\$ 700$ million on strengthening our risk management teams, capabilities, and processes as part of our ambition to lead our industry—and we have recruited some of the world’s best talent to help (from companies like Apple, Walmart, Microsoft, and Uber). Among other enhancements, we introduced an industry-leading client service framework (CITIO), which helps us vet each new client and guides our approach to engagements. Our commitment extends to our suppliers and internal systems, where we have improved cybersecurity controls, data and document retention, and process management. Annually, our colleagues participate in a rigorous Professional Standards and Risk training program, and we have a 100 percent completion rate. We will never rest in our pursuit to set the standard.\nBob Sternfels Global Managing Partner, McKinsey & Company\n## About McKinsey\n45,000+ colleagues globally\n## 1926 Founded by James O. McKinsey\nSince 1926, McKinsey has been united by a strong set of values and the drive to deliver positive, enduring change. In a world facing growing inequality and the impact of climate change, our aspiration is to accelerate sustainable and inclusive growth everywhere we operate.\n130+ cities\n65+ countries\n### We partner for impact\n### We are proudly global\n\\$15B+ in revenue\n3,000+ clients served\nWe strive to be more than advisers to our clients; we are partners. Together, we aspire to go beyond financial and operational results. Working alongside our clients, we identify potential for growth, lead with transformative technologies, innovate to net zero, and build workforces that will thrive for this generation and the next.\nToday’s biggest challenges don’t stop at borders, and solutions require global collaboration. Therefore, we operate as a single global partnership, with nearly 160 nationalities represented across our firm. More than two-thirds of our client engagements draw on teams working across multiple countries. This assures we bring clients the world’s best assets and solutions, wherever they may be.\n### We are inclusive and distinctive\n### We are setting the standard for our profession\nWhen it comes to our people, we value potential more than pedigree. We create opportunities for roles and advancement based on skills and demonstrated impact, not just a college degree. Today, 50 percent of our new members are experienced professionals, and we sourced talent from 1,700 institutions in 2022, up from 540 in 2021.\nWe also apply the best of our insights and client counsel to our own efforts to create a more sustainable and inclusive world. This includes our efforts on accountability and compliance as we continue to invest in our internal risk, legal, and compliance functions. To learn more, visit our Governance webpage .\n### This is our moment to accelerate sustainable and inclusive growth\nWhat does it mean to accelerate sustainable and inclusive growth? McKinsey partners from around the world weigh in.", "chunk_word_count": 495, "section_path": "2022 ESG Report > 1926 Founded by James O. McKinsey > We partner for impact", "document_id": "McKinsey 2022 ESG Full Report", "page": 4, "page_start": 4, "page_end": 6 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 3, "chunk_text": "# 2022 ESG Report\n## 1926 Founded by James O. McKinsey\n### Starting with growth, creating value for all\nWe always begin with growth. Growing companies and economies are resilient. They spur prosperity, which provides the resources necessary to address climate change and lift up communities through economic opportunity.\nLeaders today have a rare opportunity. By tackling defining challenges of our time—the net-zero transition and global inequality—they can shape the future for generations to come.\nOur ambition is to help bold leaders seize this moment in measurable ways. This report shares progress on our aspirations:\nTo be the leading private sector catalyst for decarbonization, through our sustainability work with over 600 clients, our investment of more than $\\$ 400$ million in the last two years, and our firm’s progress toward reaching net zero by 2030.\n### Embracing the “and”\nFor many organizations, the simultaneous pursuit of growth and sustainability and inclusion presents trade-offs. We believe leaders today can and must pursue all three in concert. So, every day, around the world, we partner with our clients to embrace the “and” for the benefit of people, planet, and organizational health.\n— To fuel economic growth and prosperity for all, through more than 5,000 annual growth engagements, engaging more than 67,000 Black, Asian, Hispanic, and Latino professionals in our Connected Leaders Academy, and diversifying our firm’s own recruiting, adding more than 1,000 new sources of talent in 2022.\n### We’re helping our clients1 lead on sustainable and inclusive growth. They have:\nContributed 20% to global GDP growth\nCreated 1M jobs per year\nContributed 80% of reported $\\mathrm { C O } _ { 2 }$ emissions reductions\n### Our approach to impact\n### To achieve holistic impact, we help leaders:\n— Pinpoint the strategy that will reshape tomorrow. Together, we find new opportunities for growth, reimagining organizations for success, and designing, building, and scaling new businesses.\nOur clients are always pushing forward. Striving for the change that changes everything.\nWe partner with bold leaders every step of the way. We help them improve financial and operational performance—and create lasting stakeholder benefits that can be measured across customers, employees, the environment, and investors.\nTransform through technology. Artificial intelligence (AI) and technology suffuse all our work, forming the engine for sustainable and inclusive growth. Today, nearly 40 percent of our consultants are digital practitioners.\n### We call this holistic impact.\n— Harness innovation to reach net zero. We help clients set their net-zero strategy and reach it by building new green businesses, investing sustainably, and applying the latest in climate technology.\nDevelop skills and capabilities across their organization. Collaborating side by side with our clients from idea to impact, we help build the teams, skills, systems, and culture needed to thrive.\nBy partnering in this way with our clients, who include the world’s boldest and most influential leaders, we’re accelerating toward a more sustainable, inclusive, and growing future for all.\n### Read more about sustainable inclusive growth\n» Toward a sustainable, inclusive, growing future: The role of business\n» The path to sustainable and inclusive growth", "chunk_word_count": 512, "section_path": "2022 ESG Report > 1926 Founded by James O. McKinsey > Starting with growth, creating value for all", "document_id": "McKinsey 2022 ESG Full Report", "page": 6, "page_start": 6, "page_end": 8 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 4, "chunk_text": "# 2022 ESG Report\n## 1926 Founded by James O. McKinsey\n### Our client capabilities\nWe continually strengthen our capabilities to anticipate and meet our clients’ evolving needs. Here, we highlight four areas of client service we are rapidly scaling up and two critical ways we collaborate to improve outcomes for our clients. These are core to the way we partner with clients, and to accelerating sustainable and inclusive growth.\n### McKinsey Sustainability\n### People & Organizational Performance\n### Collaborating for impact\nMore than 3,500 colleagues spent over 30 percent of their time on sustainability work.\nOur Client Capability Network includes more than 5,000 dedicated people around the world who work alongside our consultants to bring top expertise and proprietary tools to our clients every day.\nIn five years, we’ve helped ${ 9 , 0 0 + }$ clients engage and enable their talent, reshape organizations, and change behaviors at scale.\n$1 , 6 0 0 +$\n### 1.25M+\nA dynamic ecosystem of alliances and acquisitions enables us accelerate and scale our impact.\npeople have been up/reskilled through our client work and pro bono programs.\nsustainability-related engagements with $6 0 0 +$ clients.\nThis ecosystem comprises the following:\n### McKinsey Digital\n### McKinsey Transformation\n— Collaborations with more than 500 external companies, including key alliances with Amazon Web Services, Google, Microsoft, Salesforce, SAP, and Workday.\nWe have supported 80 percent of the largest tech companies in digital and AI transformations.\nNearly 1,000 of our colleagues are experts in holistic transformation, including experienced chief transformation offices and restructuring specialists.\n— Tech-forward acquisitions that span cloud, data, analytics, sustainability, and implementation and change acceleration, including five new acquisitions in 2022: Caserta, IncepTech, LOBO, SCM Connections, and S4G.\n### 500+\n### 1,200+\nclients partnered with us on tech delivery in 2022, and Forrester ranked us a Leader for our work in digital transformation and AI.\nsuccessful, at-scale, end-to-end transformations across 93 countries and over 30 industries.\n### Our purpose\n### Our mission\n### Our aspiration\n### Our values\nAdhere to the highest professional standards \nImprove our clients’ performance significantly \nCreate an unrivaled environment for exceptional people\nTo help create positive, enduring change in the world\nTo help our clients make distinctive, lasting, and substantial improvements in their performance and to build a great firm that attracts, develops, excites, and retains exceptional people\nTo accelerate sustainable and inclusive growth that can be measured in the societies in which we operate\nLearn more about our purpose, mission, and values on our website\n### Our approach to ESG\nTo accelerate sustainable and inclusive growth\nAt McKinsey, our commitment to accelerating sustainable and inclusive growth informs and guides our Environmental, Social, and Governance (ESG) agenda.\nEnvironmental\nGovernance\nSocial\n### Sustainability\n### Responsible practices\n### Inclusive growth\nBecome the largest private sector catalyst for decarbonization\nBuild inclusive economies, institutions, and workforces that reflect our communities\nLead with integrity and set the standard for accountability and compliance in our profession\nOur ESG priorities, identified through periodic materiality assessments , are integral to the firm’s broader sustainable and inclusive growth strategy, all of which is underpinned by our commitment to responsible business practices.", "chunk_word_count": 523, "section_path": "2022 ESG Report > 1926 Founded by James O. McKinsey > Our client capabilities", "document_id": "McKinsey 2022 ESG Full Report", "page": 8, "page_start": 8, "page_end": 10 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 5, "chunk_text": "# 2022 ESG Report\n## 1926 Founded by James O. McKinsey\n### How we bring our strategy to life\nSustainable and inclusive growth is our “North Star” for articulating and delivering on our ESG priorities. We use our insights to inform how we manage our firm, which in turn impacts how we serve clients and guides how we contribute to communities.\nWe partner with clients to accelerate sustainable and inclusive growth that can be measured in the societies in which we operate.\nWe develop research and insights that help leaders pinpoint strategies that will reshape tomorrow.\nWe implement our best insights and client counsel to manage our firm responsibly and make progress toward our commitments.\nWe support high-impact \norganizations through pro bono \nservice, board membership, \nvolunteering, capacity building, and \ncharitable contributions.\n### The United Nations Sustainable Development Goals\n### Accountability and transparency", "chunk_word_count": 142, "section_path": "2022 ESG Report > 1926 Founded by James O. McKinsey > How we bring our strategy to life", "document_id": "McKinsey 2022 ESG Full Report", "page": 10, "page_start": 10, "page_end": 10 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 6, "chunk_text": "# 2022 ESG Report\n## 1926 Founded by James O. McKinsey\n### Our governance\nMcKinsey operates as “one firm”—united globally by our collective purpose, mission, and values. We are led by our global managing partner, our elected board of directors known as the Shareholders’ Council, a global leadership team known as the Acceleration Team, and the leaders of our offices and practices. Learn more about our leadership .\nWe are committed to continually enhancing our transparency and accountability—to our clients, our colleagues, and our stakeholders. We support the World Economic Forum’s Stakeholder Capitalism Metrics initiative and serve as a member of the World Business Council for Sustainable Development (WBCSD). We also participate in CDP’s environmental impact measurement program and receive annual ratings from EcoVadis, the leading sustainability ratings organization. Our climate reporting is aligned with the Task Force on Climate-related Financial Disclosures (TCFD) and with the four recommendations for Limited Disclosures as outlined by Accounting for Sustainability. Read our TCFD index .\nMcKinsey is committed to advancing the United Nations Sustainable Development Goals (UN SDGs), the global framework for driving progress toward a more sustainable future. Advancing the SDGs is critical to our firm’s strategy to accelerate sustainable and inclusive growth.\nThe Shareholders’ Council includes the managing partner and 30 senior partners who are elected by their peers to serve three-year terms. Its committees cover topics such as client service; firm finance and infrastructure; our People model; risk, audit, and governance; and our technology, knowledge, and capabilities.\nThrough our client service, our research and insights, our pro bono activities, and on-the-ground support for communities, we are contributing in varying degrees to all 17 SDGs. However, we believe we can make the most sustainable and scalable impact in the SDG areas that reflect McKinsey’s unique strengths and capabilities. These goals represent where we have the greatest capacity for impact and action.\nIn addition to their technical competencies across a range of domains and industries, our Shareholders’ Council members include experts on environmental sustainability; inclusive economic growth; diversity, equity, and inclusion; and other environmental, social, and governance topics.\nOur voice and platform can also help inform public debates on environmental and social issues. To do this, we take an approach that is guided by our purpose, mission, and values. Drawing on our research and insights, we contribute to debates on pressing issues and support broad-based solutions while maintaining our professional independence and objectivity.\nThe Acceleration Team, composed of the managing partner and firm leaders representing regions, industries, client capabilities, finance, people, technology, legal, reputation, and risk functions, aims to support and accelerate the execution of our strategies.\nWe also convene an External Advisory Group composed of senior leaders from various industries to provide diverse and objective perspectives to inform the overall strategy of the firm, help identify macro risks, and guide our efforts of continuous improvement.\n[IMAGE CAPTION] Our contribution to the UN SDGs\n### ESG oversight", "chunk_word_count": 485, "section_path": "2022 ESG Report > 1926 Founded by James O. McKinsey > Our governance", "document_id": "McKinsey 2022 ESG Full Report", "page": 11, "page_start": 11, "page_end": 11 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 7, "chunk_text": "# 2022 ESG Report\n## 1926 Founded by James O. McKinsey\n### Global governance bodies: diversity, equity, and inclusion data2\nThe McKinsey ESG Council consists of senior firm function, client service, and regional leaders across sustainability, people, risk, communications, and legal. The ESG Council provides oversight of our agenda by defining our priorities, setting our direction, and monitoring progress. In 2022, the ESG Council met periodically to review progress against our ESG commitments and initiatives, approve updates to our Human Rights Policy and human rights program, and provide guidance on how to prepare the firm for compliance with upcoming ESG regulations.\n[IMAGE CAPTION] Shareholders’ Council (firm’s board)\nAt the board level, the Risk, Audit, and Governance Committee of the Shareholders’ Council (RAGC) provides strategic direction to and oversight of our ESG priorities and commitments, including our environmental sustainability strategy and climate-related efforts, our social responsibility program, and our risk, ethics, and compliance programs. Our Global Managing Partner and several members of the RAGC and ESG Council review and approve the content of our annual ESG Report.\n[IMAGE CAPTION] Acceleration Team (Executive Committee)4\n### Read more about ESG\n» Why ESG matters\n» How to make ESG real\n## 2022 progress highlights\n## \\$140B\n## \\~\\$700M\n### $1 , 6 0 0 +$\n### 100%\n### 48%\n### 100%\nof our air travel is subject to a global internal carbon fee to support our transition to net zero by $\\scriptstyle 2 0 3 0 ^ { 7 }$\nin value and ${ 2 0 , 0 0 0 + }$ jobs created by the $1 9 0 +$ new businesses imagined, scaled, and built through Leap by McKinsey\nglobal workforce were women, and $5 2 \\%$ of clientserving US colleagues were from racial or ethnic minority groups8\nsustainability engagements worked on by ${ 3 , 5 0 0 + }$ colleagues with $6 0 0 +$ clients across nearly 60 countries and in every industry\ninvested in strengthening our risk management teams, capabilities, and processes since 2018\nof new clients were vetted against our industry-leading CITIO client service framework10\n## \\~\\$620M\n99% pay equity for men and women colleagues globally9\n### $80 \\%$\n### Launched\n### 1M\nof reported $\\mathsf { C O } _ { 2 }$ emissions reductions were driven by our clients6\ncontributed in cash and in-kind support since 2020 toward our $\\$ 2$ billion commitment to social responsibility by 2030 $( \\$ 275+$ million this year)\njobs created and $2 0 \\%$ of global GDP growth contributed by our clients annually6\nFrontier, an advance market commitment to purchase permanent carbon removal with fellow founders Alphabet, Meta, Shopify, and Stripe\nof our colleagues completed comprehensive training on our policies and professional standards11\n### Our response to the war in Ukraine\n### Our people and firm\n### Pro bono support", "chunk_word_count": 471, "section_path": "2022 ESG Report > 1926 Founded by James O. McKinsey > Global governance bodies: diversity, equity, and inclusion data2", "document_id": "McKinsey 2022 ESG Full Report", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 8, "chunk_text": "# 2022 ESG Report\n## \\~\\$620M\n### Employment and reskilling\n— Connecting more than three million refugees to an online job platform, resulting in 17,000 jobs posted and 65,000 job applications submitted.\nWe launched several pro bono projects in which more than 50 colleagues participated, including:\nRussia’s invasion of Ukraine in February 2022 ushered in a humanitarian crisis in Europe of a scale not seen since World War II and generated social and economic shocks to countries and sectors around the world. We responded quickly to relocate our more than 580 Ukraine- and Russia-based colleagues and their families, helping them settle into new locations and workplace roles. By May 13, 2022, we had exited the Russian market entirely.\n### Refugee relief\n— Launching Together , an online platform that has helped more than 4,000 Ukrainian women in Europe gain access to jobs, language programs, mentorship, support groups, and professional development opportunities.\n— Supporting short-term refugee relief, including services for up to 30,000 refugees across more than 25 reception centers, as well as a survey analysis of 7,000 refugees to help prioritize support measures.\n— Assisting with identifying 90,000 available places in schools, capacity for 200,000 people to receive healthcare, and 70,000 housing opportunities, and matching them to refugee needs.\n### Giving\n### Read more about the war in Ukraine\nSimultaneously, we coordinated resources that helped the broader humanitarian efforts of agencies providing support for refugees, including the relocation of families, strategic plans for economic recovery, and solutions for damaged supply chains.\n### Economic recovery\n» Twelve disruptions changing the world Rising risk of a global food crisis The net-zero transition in the wake of the war in Ukraine\n— Conducting workshops to support private sector recovery and investment.\nWorking to restore food supply chains and solve critical deficits through the launch of a business-to-business marketplace, demand–supply model, and other measures.\nWe contributed $\\$ 28$ million to relief efforts, including $\\$ 18$ million in donations from our colleagues and firm to more than 1,600 organizations and $\\$ 10$ million in pro bono support.\n$5 8 0 +$ Ukrainian and Russian colleagues relocated\nMay 13, 2022 \nexited the Russian \nmarket entirely\n\\$28M contributed to relief efforts\n530,000 reads of our Ukraine insights\n### Sustainability\nIn this chapter, we share our progress toward achieving net-zero climate impact and how we partner with clients to catalyze and accelerate decarbonization globally.\nIn this chapter \n16 Sustainability at a glance \nOur clients \n17 Our approach \nOur insights \n22 Key publications \nOur actions \n24 Our path to net zero\n### Sustainability at a glance\n### Creating a more sustainable, inclusive, and growing future for all is the defining issue of our time. Addressing climate change is a crucial part of the equation.", "chunk_word_count": 455, "section_path": "2022 ESG Report > \\~\\$620M > Employment and reskilling", "document_id": "McKinsey 2022 ESG Full Report", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 9, "chunk_text": "# 2022 ESG Report\n## \\~\\$620M\n### Key highlights\nPartnered with Alphabet, Meta, Shopify, and Stripe to found Frontier, a new $\\$ 1+$ billion advance market commitment to purchase permanent carbon removal before 2030\nOur sustainability agenda comprises two main priorities. We aspire to be the leading private sector catalyst for decarbonization through our work to help accelerate the transition to net-zero greenhouse gas (GHG) emissions. We are also committed as a firm to achieving net-zero climate impact by 2030, in line with validated, near-term, sciencebased targets as an important milestone on the pathway toward stabilizing global warming temperatures at $1 . 5 ^ { \\circ } \\mathrm { C }$ .\nIntroduced a global internal carbon fee on all air travel to accelerate decarbonization and generate funding for carbon reduction efforts\n[IMAGE CAPTION] Coral and schools of fish swimming in Fiji; photographed by Rodolphe Holler for Conservation International.\nLaunched a Global Decarbonization Hub in Houston to accelerate the energy transition for our communities and clients, successfully delivering ${ 3 0 + }$ client engagements, including a roadmap to abate up to 50 mega-tons of carbon over 10 years for a major oil and gas company\nEarned a spot on CDP’s Climate Change A List for our transparency and leadership\nEngaged 1, $^ { 2 0 0 + }$ colleagues across our 120 Green Teams to reduce our environmental footprint globally\n## \\$400M+\n1,600+ sustainability-related client engagements in 2022\n$^ { 3 , 5 0 0 + }$ colleagues spent more than $3 0 \\%$ of their time on sustainability topics\n97% renewable electricity toward our goal of $1 0 0 \\%$ by 2025 reduction in absolute Scope 1 and Scope 2 emissions in 2022 (vs. 2019 baseline)\n$30 \\%$\n48%\ninvested in the past two years toward our $\\$ 1$ billion commitment by 2025 to help our clients tackle the climate crisis\nreduction in Scope 3 emissions from travel per colleague in 2022 (vs. 2019 baseline)\nOur clients\n### We serve all industries—and go where the emissions are.\n### Our approach\n[IMAGE CAPTION] McKinsey-hosted panel on creating a clean, secure, and affordable energy future at COP27, November 2022.", "chunk_word_count": 359, "section_path": "2022 ESG Report > \\~\\$620M > Key highlights", "document_id": "McKinsey 2022 ESG Full Report", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 10, "chunk_text": "# 2022 ESG Report\n## \\$400M+\n### We partner with leaders to accelerate sustainability and growth.\nMcKinsey Sustainability partners with clients to decarbonize and seize growth opportunities in the energy transition. We serve emitters because that is where the emissions are, and we are accelerating our goal of helping all industry sectors halve carbon emissions by 2030 and reach net zero by 2050.\nMore than 3,000 companies have made net-zero commitments. Faced with the twin imperatives of advancing climate solutions and ensuring growth, some leaders could be tempted into either/or choices.\nWe aspire to be the largest force for decarbonization in the private sector and the preeminent partner in achieving impact across key topics: hyperscaling green businesses, driving brown to green decarbonization, carbon markets, nature and biodiversity, and sustainable finance. Our McKinsey Platform for Climate Technologies works to scale a suite of 10 critical technologies ranging from hydrogen and battery storage to alternative proteins and nature-based solutions.\nWe believe that the best response to this moment is to create strategies that square the dual needs for growth and a climate transition. That’s why we are driving sustainable innovation that unlocks the next horizon of growth. By pursuing net-zero and nature commitments, the private and public sectors can address the climate crisis while ensuring the net-zero transition is affordable, secure, and reliable.\n### We bring distinctive people and technology to accelerate the net-zero transition.\nWe are powered by distinctive people and thought leadership. McKinsey Sustainability has grown to more than 3,500 colleagues in just two years, and our work now touches nearly a quarter of our clients. Our research provides leading-edge insights into topics at the top of the CEO agenda, starting with the publication of our carbon abatement curves 15 years ago, continuing with our climate risk and response report in 2020, and our newest research on the global energy transition.\n1,600+ sustainability-related client engagements in 2022\n### Our key actions in 2022\n### Accelerating decarbonization transformations with Microsoft and Catalyst Zero\n### Convening leaders to catalyze climate action\nMicrosoft and McKinsey have partnered to create a technological solution that can calculate an organization’s carbon footprint and build and execute a robust decarbonization plan, supporting businesses in their energy transitions.\nMcKinsey works side by side with leading institutions to convene global partnerships that tackle problems that any one institution alone could not. In 2022, McKinsey launched a new series of global Green Business Building summits with a flagship convening in Stockholm that brought together more than 300 C-suite executives from green tech disruptors, incumbents with ambitious green growth agenda, and sustainability investors.\nPowered by Microsoft’s Cloud for Sustainability, the digital platform uses Microsoft’s Sustainability Manager to automate and scale the collection of companies’ sustainability-related data and help establish an emissions baseline. Once generated, McKinsey’s Catalyst Zero solution provides a holistic gauge of emissions at company, product, and value chain levels, helping leaders create detailed decarbonization plans.\nAs the Opening Ceremony Partner for Climate Week NYC, McKinsey led conversations on progress toward net-zero goals amid economic uncertainty.", "chunk_word_count": 506, "section_path": "2022 ESG Report > \\$400M+ > We partner with leaders to accelerate sustainability and growth.", "document_id": "McKinsey 2022 ESG Full Report", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 11, "chunk_text": "# 2022 ESG Report\n## \\$400M+\n### Fueling the Gulf Coast’s transition to green technologies\nMcKinsey’s Houston office has been accelerating the net-zero transition by collaborating with the Greater Houston Partnership’s Houston Energy Transition Initiative and Center for Houston’s Future. Support includes a pro bono study on ways to catalyze the energy transition and a roadmap whitepaper detailing the actions required to see the area deliver on this opportunity.\nAt COP27 in Egypt, McKinsey Sustainability hosted a series of in-person and live-streamed events that reached more than 100,000 people. These events focused on the practical steps leaders can take to achieve sustainability and growth across key areas such as energy, nature, materials, adaptation, and finance.\nDuring delivery, the two systems monitor data feedback against the forecasted impact to calculate performance. An ongoing progress report can help to build transparency and stakeholder confidence.\n[IMAGE CAPTION] McKinsey and Microsoft’s Catalyst Zero solution helps companies build and execute a robust decarbonization plan.\nThese partnerships culminated in 2022 with the launch of the Global Decarbonization Hub , a joint effort between McKinsey Sustainability and the Global Energy and Materials Practice to unlock opportunities for the community and our clients.\nReplay these discussions on our website .\nThe hub aims to accelerate the Gulf Coast’s transition to green technologies by investing $\\$ 100$ million over the next decade into decarbonization programs that will scale climate technologies and build new businesses across the energy and materials value chains. By 2050, the hub seeks to remove 100 million tons of emissions annually and create 500,000 new jobs.\nImpact story\n### Enduring Earth: Advancing global conservation efforts\n[IMAGE CAPTION] A hummingbird in Colombia, one of the countries where Enduring Earth is helping conserve ocean, lands, and freshwater. ©Jonny James/Unsplash\nThat means the commitments of one stakeholder can leverage the commitments of others, like philanthropists or the private sector, and vice versa. Early community buy-in and involvement are critical elements of the process, and this approach ensures communities can be in the driver’s seat every step of the way.\nIn 2022, McKinsey joined the Enduring Earth initiative to help accelerate ocean, land, and freshwater conservation and support community development worldwide.\nMcKinsey is contributing to this model through the analysis and optimization of socioeconomic impact, identifying sustainable financing mechanisms, and enabling access to carbon markets. To date, nearly 90 million hectares across five nations have been conserved with the goal of protecting another 600 million hectares across 20 nations by 2030.\nThe effort brings together governments, local communities, Indigenous peoples, and funders to develop accountable, actionable, and science-based conservation plans that create opportunities for sustainable economic growth.\nEnduring Earth uses Project Finance for Permanence—also known as a PFP—an innovative and proven model that fully funds conservation efforts to ensure durable and scalable impact. The approach closely follows the project financing methodology commonly used in large infrastructure projects. It ensures all funding and pre-conditions for success are committed in a single-deal moment before funding is released.\n\\~90M hectares conserved across five nations\nImpact story", "chunk_word_count": 503, "section_path": "2022 ESG Report > \\$400M+ > Fueling the Gulf Coast’s transition to green technologies", "document_id": "McKinsey 2022 ESG Full Report", "page": 18, "page_start": 18, "page_end": 20 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 12, "chunk_text": "# 2022 ESG Report\n## \\$400M+\n### Africa Carbon Markets Initiative: Accelerating sustainability and job creation across the continent\nACMI’s ambition is to grow African carbon credit retirements approximately 19-fold from 2020, reaching around 300 metric tons of carbon dioxide equivalent per annum by 2030 and up to 1.5 to 2.5 gigatons of carbon dioxide equivalent by 2050. It also seeks to create and support 30 million jobs by 2030 and more than 100 million jobs by 2050 through the carbon project’s development, execution, certification, and monitoring.\nMcKinsey helped to design the Africa Carbon Markets Initiative (ACMI) in partnership with Sustainable Energy for All, the Global Energy Alliance for People and Planet, and the Rockefeller Foundation.\nACMI, which launched 13 action plans to accelerate progress in the run-up to COP28, also looks to raise the quality and integrity of African carbon credits to mobilize up to $\\$ 6$ billion by 2030 and more than $\\$ 100$ billion per annum by 2050. This effort will ensure equitable and transparent distribution of carbon credit revenue, with a significant portion of the revenue going to support local communities.\nThe initiative, launched at COP27, aims to dramatically expand Africa’s participation in voluntary carbon markets. McKinsey has supported ACMI from its inception, working with the Global Energy Alliance for People and Planet, through shaping and refining the initiative’s ambition, developing its strategy and operating model, and defining and implementing processes to increase efficiencies.\n100M jobs supported by 2050\nImpact story\n### ALDI SOUTH: Creating a retailer-led sustainable global packaging ecosystem\nTo ensure that ALDI SOUTH could deliver on these goals, we helped them design a new organizational structure dedicated to sustainable packaging. This also included a capability-building effort that ALDI SOUTH launched, upskilling employees, with a focus on product packaging optimization, packaging design, partner management, recycling, and waste management.\nA leading European grocery retailer with a growing global footprint, the ALDI SOUTH Group uses a range of packaging materials, the majority of which are plastics.\nAs sustainable packaging becomes an increasingly challenging topic for consumer goods companies and retailers alike, these efforts will help the ALDI SOUTH Group—which has more than 7,100 stores in 11 countries—capture opportunities, become a leader in this space, and create value for customers who want to make more sustainable choices.\nMcKinsey partnered with ALDI SOUTH to create a more sustainable packaging ecosystem, allowing the organization to secure greater access to recycled materials—and meet the demands of their customers, who had expressed a desire for less waste and more recycled packaging in surveys.\nTogether, we built a $3 6 0 ^ { \\circ }$ view of the company’s plastic packaging footprint—across countries, polymers, and packaging formats. This information informed a value chain strategy that allowed ALDI SOUTH to see which aspects they should own—and where to partner—on their journey to more sustainable packaging. This will unlock a measurable reduction on plastic packaging, including significant reduction of $\\mathsf { C O } _ { 2 }$ emissions for plastic packaging, for the company globally.\nOur insights\n### Key publications", "chunk_word_count": 507, "section_path": "2022 ESG Report > \\$400M+ > Africa Carbon Markets Initiative: Accelerating sustainability and job creation across the continent", "document_id": "McKinsey 2022 ESG Full Report", "page": 20, "page_start": 20, "page_end": 22 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 13, "chunk_text": "# 2022 ESG Report\n## \\$400M+\n### We are accelerating the journey to net zero, publishing in-depth, factbased insights that meaningfully advance progress and problem-solving on the global energy transition.\nDecarbonization is at the top of the leadership agenda—but the drive to net zero is also at an inflection point. The imperative to transition to an energy system that is clean and sustainable and at the same time affordable and secure presents leaders with a “devilish duality” that makes decision-making fraught with risk.\n### The net-zero transition: What would it cost, what it could bring\nDelivering the climate technologies needed for net zero\nSpotting green business opportunities in a surging net-zero world\nNature in the balance: What companies can do to restore natural capital\nWe help leaders navigate this dilemma through publications covering a range of topics: physical climate risk, sustainability, decarbonization, and approaches to addressing global, regional, and sector-specific energy challenges. Through our research and insights, we seek to generate new thinking, identify practical solutions, and inspire the bold action necessary to realize a safer and more sustainable future. Here are some highlights from our collected sustainability insights in 2022.\nGovernments and companies are pledging to achieve net-zero emissions of GHGs. What would it take to fulfill that ambition? In this report, we look at the economic transformation that a transition to net-zero emissions would entail.\nDeveloping and deploying climate technologies is critical for the world’s net-zero agenda. Growth could await businesses willing to innovate quickly and to collaborate across value chains.\nExplore how eight industries may transition to a net-zero world, and how organizations can respond with green businesses that create value along the way.\nThis article is the summary of a full report in which we examine the state of natural capital, the economic sectors depending on and affecting it, and the opportunities for companies to help reduce those demands.\nOur insights\n### Key publications (continued)\n### Playing offense to create value in the net-zero transition\nThe energy transition: A region-by-region agenda for near-term action\nA devilish duality: How CEOs can square resilience with net-zero promises", "chunk_word_count": 349, "section_path": "2022 ESG Report > \\$400M+ > We are accelerating the journey to net zero, publishing in-depth, factbased insights that meaningfully advance progress and problem-solving on the global energy transition.", "document_id": "McKinsey 2022 ESG Full Report", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 14, "chunk_text": "# 2022 ESG Report\n## \\$400M+\n### Six characteristics define the net-zero transition\nDecarbonising India: Charting a pathway for sustainable growth\nThe raw-materials challenge: How the metals and mining sector will be at the core of enabling the energy transition\nDecarbonization will reshape the economy, opening new markets and imperiling others. Now is the moment for companies to spot green growth opportunities and move boldly to take advantage.\nOur analysis of the net-zero transition suggests that it would be universal, significant, and front-loaded, with uneven effects on sectors, geographies, and communities, even as it creates growth opportunities.\nThis article highlights a range of near-term actions that countries and regions around the world could take to ensure they transition their energy system while maintaining focus on the immediate needs of energy reliance and affordability.\nAmid turbulence on the path to net zero, leaders will have to be much nimbler to balance resilience with an energy future that is secure, affordable, and clean. Five actions can help.\nThis will be a decisive decade. With intentional action, India can accelerate decarbonization at scale while pursuing economic growth.\nAs the world gears up for net zero, demand for raw materials is set to soar. The energy transition presents unique challenges for metals and mining companies, which will need to innovate and rebuild their growth agenda.\nOur actions\n### Our path to net zero\n### In 2022, McKinsey made CDP’s Climate Change A List\nHealthy societies depend on a healthy planet. That’s why, in addition to serving clients and sharing insights, McKinsey has committed to achieving net-zero climate impact by 2030.\nWe are committed to transparency and accountability in our actions. In 2022, McKinsey made CDP’s Climate Change A List—the gold standard for climate disclosure—for our transparency and leadership.\nThe Risk, Audit, and Governance Committee (RAGC), a sub-committee of McKinsey’s Shareholders’ Council (our board), provides strategic direction, oversight, and accountability for climate-related issues. Performance ratings, which inform bonuses for the leaders of our Shareholders’ Council, Acceleration Team (our global leadership team), and Sustainability Growth Platform, are connected to the attainment of the firm’s goals, including our sustainability goals.\n### Our approach\nBecoming the largest private sector catalyst for decarbonization begins with our own actions.\nOur approach to achieving net-zero climate impact by 2030 is informed by our insights and built on three pillars:\n1. Cutting our own emissions to achieve our validated, sciencebased targets to reduce Scope 1, 2, and 3 emissions in line with a 1.5-degree pathway. This is our top priority.\n2. Compensating for remaining emissions that we have not yet been able to eliminate. We have been carbon neutral since 2018.\n3. Catalyzing climate action now by working closely with clients, nonprofits, suppliers, and peers to protect nature, accelerate new technologies, and ensure crucial financing.\n### Net-zero climate impact roadmap\nWe are committed to achieving net-zero climate impact by 2030, with interim science-based targets as an important milestone.\n2019\n2025\n## 2030 Our baseline\nOur validated science-based targets12\nOur commitment\n30% reduction in Scope 3 business travel emissions per colleague (vs. 2019)\n25% reduction in absolute Scope 1 and 2 emissions (vs. 2019)\nNet-zero climate impact\n### How we are getting there\n### Compensating for remaining emissions\n### Catalyzing climate action now", "chunk_word_count": 540, "section_path": "2022 ESG Report > \\$400M+ > Six characteristics define the net-zero transition", "document_id": "McKinsey 2022 ESG Full Report", "page": 23, "page_start": 23, "page_end": 25 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 15, "chunk_text": "# 2022 ESG Report\n## 2030 Our baseline\n### Cutting our own emissions\nScope 1 and 2: Scope 3:\n• Natural climate solutions • Permanent carbon removal technologies • Carbon neutral since 2018\n• Multi-year initiatives to protect nature, accelerate new technologies, and ensure financing\n• Fleet electrification • Virtual events • Renewable electricity • Hybrid working models • Sustainable office space • Sustainable aviation fuel\n### On track to meet our science-based targets\n### ALDI SOUTH: Creati2022 progress toward retailer-led sustnet-zero impactimpact\n### Target\n$2 5 \\%$ absolute reduction in Scope 1 and 2 GHG emissions by 2025 $30 \\%$ reduction vs. 2019 (vs. 2019 baseline)\n$30 \\%$ reduction in Scope 3 GHG emissions from internal and client-related $48 \\%$ reduction vs. 2019 business travel per colleague by 2025 (vs. 2019 baseline)\nCutting our own emissions\nLaunched an internal carbon fee on all air travel\nSourced $9 7 \\%$ renewable electricity\n### Shifting to $50 \\%$ carbon removals by 2025 to reach $100 \\%$ by 2030\nInvested in a portfolio of natural climate solutions projects , for example:\n— The Delta Blue Carbon project in Pakistan has restored and protected ${ 2 2 4 , 0 0 0 + }$ hectares of mangroves, benefiting 10, $4 0 0 +$ people.\n— The Southern Cardamom REDD $^ +$ Project in Cambodia has helped 16, $0 0 0 +$ people build more sustainable livelihoods by protecting 442,000 hectares of forests home to 35 threatened species.\n— The CO2OL Tropical Mix reforestation project in Panama has planted 7.5 million trees and helped local residents benefit from increased employment, higher wages, and health and pension benefits.\nCompensating for TH remaining emissions\n### Launched Frontier with Alphabet, Meta, Shopify, and Stripe, a new $\\$ 1+$ billion advance market commitment to purchase permanent carbon removal before 2030\n— We signed multi-year offtake agreements with multiple carbon removal providers worth $\\mathord { \\sim } \\$ 10$ million for our own footprint as part of our commitment to scale the tech-based carbon removal market and compensate for our remaining emissions.\nJoined the Enduring Earth initiative to accelerate ocean, land, and freshwater conservation\nCatalyzing climate action now\nContinued to partner with the LEAF Coalition to scale jurisdictional carbon credits and with the Sustainable Aviation Buyers Alliance to scale the sustainable aviation fuel market\n\n### Electrifying firm-owned vehicles (Scope 1 and 2 emissions)\nTo decarbonize our fleet of vehicles, we are working toward making electric vehicles (EVs) the default for lease renewals. We have introduced EV-only vehicle policies in Germany, Austria, Belgium, Luxembourg, the Netherlands, and Switzerland—effectively covering more than 50 percent of our global car fleet. Our use of hybrid and EV cars has increased threefold globally since 2019—from 9 percent in 2019 to 27 percent in 2022.\nWe account for our GHG emissions on an annual basis and have them independently verified to ensure they align with the Greenhouse Gas Protocol and best measurement practices.13 In 2022, our total GHG emissions decreased by 28 percent from 2019 due to adopting new ways of working and reducing our internal and client-related travel.", "chunk_word_count": 514, "section_path": "2022 ESG Report > 2030 Our baseline > Cutting our own emissions", "document_id": "McKinsey 2022 ESG Full Report", "page": 25, "page_start": 25, "page_end": 27 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 16, "chunk_text": "# 2022 ESG Report\n## 2030 Our baseline\n### Green Teams\nMore than 1,200 colleagues were members of our 120 Green Teams in 2022—representing nearly every office. The teams helped build awareness, reduce the firm’s environmental footprint, and mobilize our more than 45,000 colleagues to invest their time and effort in local activities to reduce our collective footprint. These ranged from eliminating single-use plastic and improving water efficiency to educating teams about sustainable travel options.\n### Making our office spaces more sustainable (Scope 1 and 2 emissions)\nSixty-one percent of our global office space is in LEED certified (or equivalent) commercial interiors or office buildings; 49 percent of our global office space is in LEED Gold or Platinum (or equivalent) certified commercial interiors or office buildings. Many of our colleagues work remotely or have a hybrid working model, which has shifted some of our electricity consumption from our offices to colleagues’ homes. We capture this transition in our Scope 3 emissions.\nOur Go Green Awards recognize Green Teams who have gone above and beyond to make their McKinsey locations more environmentally sustainable. This year, we recognized five outstanding Green Teams— Manila, Mexico, Brussels, Tampa, and Detroit—that spearheaded initiatives to accelerate recycling, support local urban farms, reduce food and plastic waste, plant trees, and clean up local beaches.\n### Data in thousand $\\mathsf { t C O } _ { 2 } \\mathsf { e }$\n### Water and waste\nGiven the nature of our operations, our environmental footprint is not water intensive. Therefore, we do not measure our water withdrawals globally. In 2022, 61 of our 189 operating locations were in areas of high or extremely high baseline water stress. To date, 24 of these 61 locations have achieved green building certification. We will continue to minimize our water consumption while contributing to structural solutions—for example, by supporting the UN Water Resilience Coalition as a knowledge partner and adviser.\n1,200+ colleagues are members of our 120 Green Teams globally\n61% \nLEED certified (or equivalent)15 \nglobal office space\n## 9 offices\n10,000+ trees planted by six offices\nhave received ISO 14001 environmental management system certification to date\n[IMAGE CAPTION] McKinsey’s London office, one of several that have received ISO 14001 environmental management system certification.\n### Transitioning to renewable electricity (Scope 2)", "chunk_word_count": 380, "section_path": "2022 ESG Report > 2030 Our baseline > Green Teams", "document_id": "McKinsey 2022 ESG Full Report", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 17, "chunk_text": "# 2022 ESG Report\n## 9 offices\n### Reducing travel, driving sustainability in aviation, and encouraging hybrid working models (Scope 3)\nAs part of our commitment to the RE100 climate group , we source renewable electricity aligned with RE100 criteria in every country where it’s currently available. This means we have shifted 97 percent of our total consumed electricity to renewable sources and aim to reach 100 percent by 2025. Of our 2022 electricity consumption, 0.5 percent originated in Russia. In light of the war in Ukraine, we did not procure electricity certificates for Russia. We have since suspended operations in Russia.\nAir travel is the largest component of our carbon footprint (82 percent of our 2019 baseline for our science-based targets). Building on the approach adopted during pandemicrelated restrictions, we are reimagining our travel and making necessary travel more sustainable by:\nEmbracing new ways of working: Our teams are implementing hybrid and remote working models that are more sustainable, inclusive, and productive. For example, we introduced a new event planning tool that optimizes travel by identifying the location and transportation options with the lowest carbon footprint. To ensure lasting change, we launched two major initiatives in 2022:\n[IMAGE CAPTION] Electricity consumption from renewable sources %\n• Driving action through accountability: We have designated a Senior Partner Science-Based Target Leader per region. Each is accountable for delivering our Scope 3 science-based target and regularly reports progress to our Acceleration Team.\n• Launching an internal carbon fee: As of January 1, 2023, we introduced a global internal carbon fee on all air travel to accelerate decarbonization and generate funding for carbon reduction efforts. The fee allows us to continue investing in emerging sustainability technologies, like carbon removal and sustainable aviation fuels, and strengthens colleague awareness of our environmental footprint and commitments. The funds will also be used to continue compensating for our remaining emissions to fund our net-zero transition.\nWe introduced a global internal carbon fee on all air travel", "chunk_word_count": 329, "section_path": "2022 ESG Report > 9 offices > Reducing travel, driving sustainability in aviation, and encouraging hybrid working models (Scope 3)", "document_id": "McKinsey 2022 ESG Full Report", "page": 28, "page_start": 28, "page_end": 29 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 18, "chunk_text": "# 2022 ESG Report\n## 9 offices\n### Reducing our supply chain emissions (Scope 3)\n— Recruiting in a digital environment: The use of technology throughout our recruiting process allows for greater accessibility and convenience for applicants. In 2022, we held more than 115,000 virtual interviews and recruiting events, allowing potential candidates to learn more about us and the work we do from their homes, reducing our carbon footprint.\nWe are committed to engaging with our suppliers to help them improve the social and environmental impact of the goods and services they offer. Because indirect emissions from travel account for more than 90 percent of our carbon footprint, we have made engaging with our travel-related suppliers on sustainability issues a focus of our sustainable procurement efforts.16\nDriving sustainability in aviation: We are committed to helping scale up the use of sustainable aviation fuel (SAF). We are founding members of the Sustainable Aviation Buyers Alliance and signatories to the World Economic Forum’s Clean Skies for Tomorrow 2030 Ambition Statement , targeting 10 percent SAF by 2030. We are partnering with clients to enable SAF production and offtake.\nIn 2022, we launched the CDP Supply Chain program with suppliers accounting for more than 80 percent of our Scope 3 business travel emissions. Engaging our suppliers through the CDP Supply Chain program will enable us to more easily identify risks and opportunities related to emissions reductions in our own supply chain and will support and encourage our suppliers to reduce their own emissions.\nWe continue to discuss opportunities with our suppliers to provide our colleagues with more sustainable options. Learn more about driving supplier environmental sustainability .\n### Compensating for remaining emissions\n### Innovating the next frontier of carbon removal technologies\nThe primary drivers to meet the 1.5-degree pathway set by the Intergovernmental Panel on Climate Change are carbon emissions avoidance and emissions reductions. Increasingly, however, atmospheric carbon removals are being identified as a crucial method in limiting global warming.\n[IMAGE CAPTION] Compensating for remaining emissions: By the numbers\nWe have been carbon neutral since 2018, compensating for all emissions we have not yet been able to eliminate, including those from travel. We achieved this by investing in high-quality carbon reduction projects certified by international standards such as Gold Standard and Verified Carbon Standard in conjunction with Climate, Community & Biodiversity Standards $\\mathsf { V C S + C C B S }$ . With the support of thirdparty due diligence, we continually monitor, reassess, and adjust our portfolio of projects.\nMcKinsey Sustainability has partnered with Alphabet, Meta, Shopify, and Stripe to found Frontier , a new more than \\$1 billion advance market commitment to purchase permanent carbon removal before 2030. By guaranteeing future demand, Frontier seeks to accelerate the development of permanent carbon removal technologies and expand their global supply and accessibility.", "chunk_word_count": 470, "section_path": "2022 ESG Report > 9 offices > Reducing our supply chain emissions (Scope 3)", "document_id": "McKinsey 2022 ESG Full Report", "page": 29, "page_start": 29, "page_end": 30 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 19, "chunk_text": "# 2022 ESG Report\n## 9 offices\n### Investing in natural climate solutions\nWe are investing in natural climate solutions to address the dual climate and nature crises and in technology solutions to help scale the carbon removal market to meet global demand. As we accelerate toward our 2030 net-zero goal, we will transition to 100 percent carbon removals to permanently remove carbon from the atmosphere.\nIn 2021, McKinsey joined the Lowering Emissions by Accelerating Forest finance (LEAF) Coalition as an initial participant—one of the largest ever public-private efforts to protect tropical forests through an innovative approach to large-scale financing. We continue to be an active member both in shaping the emerging jurisdictional approach and through our purchasing commitments.\n### Catalyzing climate action now\n### This includes our support for:\nWe work with our clients, nonprofits, and other peer organizations around the world on multi-year conservation initiatives that help protect nature and reduce biodiversity loss. To amplify our impact, we work with these groups to scale the solutions we need to limit global warming to $1 . 5 ^ { \\circ } \\mathrm { C }$ .\nThe World Business Council for Sustainable Development and its efforts to accelerate a net-zero, naturepositive, and equitable future\nLEAF Coalition rgent\nThe LEAF Coalition , a public-private partnership to protect tropical forests through large-scale financing\nImproving recycling programs and livelihoods\nFrontier , a $\\$ 1+$ billion advance market commitment with fellow founding members Alphabet, Meta, Shopify, and Stripe to purchase permanent carbon removal before 2030\nThe Sustainable Aviation Buyers Alliance (SABA), which is working to scale and standardize high-quality SAF\n### Frontier\nDelterra is an independent nonprofit founded and supported by McKinsey that is redesigning waste management and recycling systems in Argentina, Brazil, and Indonesia. Up to 70 percent of participants in its flagship program, Rethinking Recycling, now separate their waste, leading to improved material recovery and the diversion of thousands of tons of waste. Delterra has established a second program, Plastic IQ, to help companies rethink their packaging strategies, and is piloting a material traceability tool in Argentina to enable ethical, transparent supply chains. Delterra plans to scale its operations across Asia, Latin America, and Africa in the coming years and is on track to reach 1.5 million people by the end of 2023.\nThe World Economic Forum and its Clean Skies for Tomorrow Coalition , which works toward reforming the aviation industry\nNatural Climate Solutions Alliance , which aims to increase private sector investment in natural climate solutions by 1 gigaton of $\\mathsf { C O } _ { 2 } \\mathsf { e }$ per year by 2025\nRE100 , a coalition of ${ 3 8 0 + }$ organizations committed to using $1 0 0 \\%$ renewable electricity\nDelterra , which is building rapidly scalable, self-sustaining recycling ecosystems in emerging economies to help communities redirect waste to productive uses\ndelterra:", "chunk_word_count": 481, "section_path": "2022 ESG Report > 9 offices > Investing in natural climate solutions", "document_id": "McKinsey 2022 ESG Full Report", "page": 30, "page_start": 30, "page_end": 31 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 20, "chunk_text": "# 2022 ESG Report\n## 9 offices\n### Inclusive growth\nIn this chapter, we share how we’re accelerating inclusion and growth as we aspire to bring about an economy that works better and for more people.\nIn this chapter \n33 Inclusive growth at a glance \nOur clients \n35 Our approach \nOur insights \n43 Key publications \nOur actions \n45 Our approach to people \nOur giving \n52 Our approach to advancing social responsibility\n### Inclusive growth at a glance\n### Economic growth is at its best when it is inclusive.\n### Key highlights\nLaunched McKinsey Sciences for Growth, bringing together the best tech-enabled capabilities and people to help the boldest leaders accelerate their growth ambitions\nGrowth has the power to accelerate inclusion. Top-performing companies can uplift communities, create jobs, and expand markets in ways that generate more opportunity for everyone. And inclusion can be a driver for lasting growth. When leaders include people from all walks of life in their search for exceptional talent and new customers, they tap a source of enduring advantage.\nReceived Brandon Hall Group HCM Excellence Awards for reducing biases in our recruiting processes and for our sourcing and assessment strategy\nWe partner with our clients on both sides of this equation, leaving their organizations stronger, more productive, and more resilient. The result? Inclusive economies, institutions, and workforces that reflect our communities.\nEnhanced support for our firmwide support network for colleagues with visible and invisible disabilities, Access McKinsey, in close consultation with colleagues\nReached 100,000 learners from $^ { 6 0 + }$ countries across Africa, the Middle East, and beyond through our Forward program, a free fivemonth online learning journey equipping the next generation with the skills necessary to succeed in the future of work\nAs a firm, we strive to foster an environment that is distinctive and inclusive. We create opportunities based on skills and demonstrated impact, and we encourage self-authorship, challenging colleagues to reach their fullest potential in an empowering, caring meritocracy.\n## \\$140B\n## \\~\\$620M\n67,000+ Black, Asian, Hispanic, and Latino leaders have enrolled in our Connected Leaders Academy to date\n### 48%\n### 1,700\n5,000+ growth engagements completed per year globally institutions we sourced talent from globally in 2022, up from 540 institutions in 2021\nin value and ${ 2 0 , 0 0 0 + }$ jobs created by the $1 9 0 +$ new businesses imagined, scaled, and built through Leap by McKinsey\ncontributed in cash and in-kind support since 2020 toward our $\\$ 2$ billion commitment to social responsibility by 2030 $( \\$ 275+$ million this year)\nof our global workforce were women and $5 2 \\%$ of client-serving US colleagues were from racial or ethnic minority groups17\nReporting approach", "chunk_word_count": 450, "section_path": "2022 ESG Report > 9 offices > Inclusive growth", "document_id": "McKinsey 2022 ESG Full Report", "page": 32, "page_start": 32, "page_end": 34 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 21, "chunk_text": "# 2022 ESG Report\n## \\~\\$620M\n### Our 10 Actions toward racial equity\nIn 2020,we publicly committed to support anti-racism initiatives and racial equity, outlining how we plan to accelerate change within our firm and help combat racism around the world.18\nDrawing on our areas of core expertise, we focused on short-, medium-, and long-term actions to build Black leadership within McKinsey and beyond, conducting data-based research to identify barriers and solutions, and investing in greater racial equity and inclusion for Black communities in the United States and around the globe.\nWe are proud to support the leaders, businesses, and communities working for a more just, inclusive, and equitable society. While we are making progress, having achieved half of our actions, we—and the rest of the world—still have a long way to go.\nFind out more about the impact we are having through our 10 Actions initiative throughout this report and read more about our commitment to diversity, equity, and inclusion for details on other actions we are taking to advance diverse and inclusive workplaces.\nOur clients\n### Our approach\nBuilding on our expertise and research, we employ proprietary assessments, analytics-powered digital solutions, and facilitated programs to deliver results for our clients that accelerate inclusive growth. Examples include:\nWe build strategies that unlock the potential of our clients’ people and open the way to new markets.\n### McKinsey Academy\nBy strengthening our clients in this way, we strive to advance and accelerate long-term, inclusive growth globally. Our approach focuses on:\nOur capability-building programs unlock potential across all levels of an organization—from the executive team to middle management to frontline employees—to support broad transformation efforts and add value to their bottom lines.\nFostering greater inclusion in customer bases\nExpanding inclusion in skilled workforces\nSeeing new potential for growth\n### Organizational Health Index (OHI)\nWe apply analytical rigor to organizational health management. Our quantitative diagnostics and proven recipes for success empower senior leaders to measure and achieve the organizational health required to sustain long-term performance.\nGrowth is the oxygen that organizations and economies need to thrive. Leaders who build companies that grow help to empower households, promote equitable opportunity, and serve a wide range of stakeholders.\nGrowth opportunities lie in underserved markets at home and abroad. We bring people and technology together to help new enterprises—and new customers—thrive.\nThe best leaders find ways to put the right people to work in the right ways. We help our clients unleash the power of inclusive workforces, translating strategy into action through technology.\n### Digital Capability Centers\nThese advanced tech-enabled innovation and learning hubs guide the realization of an organization’s digital future, allowing companies to experience the latest digital and analytics opportunities and build the skills they need to apply them.\n### Our key actions in 2022", "chunk_word_count": 462, "section_path": "2022 ESG Report > \\~\\$620M > Our 10 Actions toward racial equity", "document_id": "McKinsey 2022 ESG Full Report", "page": 34, "page_start": 34, "page_end": 36 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 22, "chunk_text": "# 2022 ESG Report\n## \\~\\$620M\n### McKinsey Health Institute\nSince it was founded in 2022 on the conviction that humanity could add up to 45 billion additional years of high-quality life, the McKinsey Health Institute (MHI) has established itself as a global leader in health. MHI rapidly achieved impact at scale by publishing industry-leading research in areas like brain health, employee health, and healthy aging, and collaborating with partners to build momentum for health as an all-sector priority. Among its accomplishments, MHI co-founded the World Wellbeing Movement, a coalition of global leaders advancing well-being in the public and private sectors; deployed training to help educators around the world better understand child trauma, reaching approximately 30,000 students; and supported the scaling of 988, a nationwide suicide and crisis hotline that saw calls increased by 47 percent, reaching nearly five million people in need. Learn more about MHI’s work to catalyze progress .\n### McKinsey Center for CEO Excellence\nCompanies have only one truly peerless role—that of the CEO. As much as 45 percent of what drives a company’s performance falls into the chief executive’s hands. Today, the role demands increasing ethical accountability, social responsibility, and environmental stewardship. The decisions a CEO is responsible for have grown twice as predictive of a company’s overall performance over the last 50 years. Launched in 2022 after the publication of our bestselling book—CEO Excellence: The Six Mindsets That Distinguish the Best Leaders from the Rest— the McKinsey Center for CEO Excellence seeks to provide leaders with meaningful support and guidance to help them perform at their highest level, maximize their potential, and successfully navigate a complex and constantly evolving world.\n### QuantumBlack, McKinsey’s integrated AI arm", "chunk_word_count": 282, "section_path": "2022 ESG Report > \\~\\$620M > McKinsey Health Institute", "document_id": "McKinsey 2022 ESG Full Report", "page": 36, "page_start": 36, "page_end": 36 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 23, "chunk_text": "# 2022 ESG Report\n## \\~\\$620M\n### Supporting social, healthcare, and public entities\nQuantumBlack, a London-based startup we acquired in 2015, has been an accelerating force for our work in analytics. In 2022, it entered a new chapter by officially becoming the integrated AI arm of McKinsey. The QuantumBlack community has achieved a number of feats: building then donating Kedro, an industry-leading developer tool, to the opensource community; being named a Leader in AI; and supporting women in technology through community efforts and mentorship. Two years ago, most of our AI work was single-use cases. Today, roughly half is transformational—and delivered by QuantumBlack’s more than 1,000 technical practitioners across the globe.\nFor more than 70 years, we have worked alongside many of the world’s leading social, healthcare, and public sector organizations, enabling those who do so much good in the world to operate at the highest level. We are humbled to have the opportunity to support tackling some of the most pressing challenges of our time and are proud of the impact that our clients deliver.\nWe approach each engagement holistically, conscious that our clients often make complex choices that have far-reaching consequences. We invest in research on critical economic, government health, and social, economic, and government topics through dedicated research centers, including the McKinsey Center for Government and the Center for US Health Systems Reform.\nOur mission is central in everything that we do and informs every choice we make. The institutions and topics we engage with are determined by whether our partnership can improve lives, livelihoods, and health. We choose to invest knowledge, research, and capabilities where we believe the most significant opportunities exist for such improvements.\nAll of this supports leaders to help them make good decisions that drive the positive changes—across their organization, operations, technology, and other capabilities—necessary to deliver against their mission.\n### Advancing racial equity\n[IMAGE CAPTION] Jim Lowery, right, the first Black consultant at McKinsey, at the Black Economic Forum with Princeton University’s Dr. Eddie S. Glaude, Jr.\n### Connected Leaders Academy\nFollowing the murder of George Floyd in 2020, we shared our 10 Actions toward racial equity as our plan to accelerate change within our firm and to help combat racism across the world. One of the actions was to launch our Black Leadership Academy, which we achieved the same year. Responding to participant feedback, the initiative grew the following year to become the Connected Leaders Academy and welcomed Asian, Latino, and Hispanic cohorts. More than 67,000 participants have enrolled in the academy, and in 2022 we added a program for early career leaders to support selfidentified people of color as they advance to managerial roles from entry-level jobs. More than 18,000 participants have enrolled in this program, which is available at no cost to attendees.", "chunk_word_count": 464, "section_path": "2022 ESG Report > \\~\\$620M > Supporting social, healthcare, and public entities", "document_id": "McKinsey 2022 ESG Full Report", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 24, "chunk_text": "# 2022 ESG Report\n## \\~\\$620M\n### Black Economic Mobility\nOur annual Black Economic Forum event convenes Black leaders from the public, private, and social sectors, partnering to increase economic mobility in US Black communities and support the next generation of Black businesses and entrepreneurs. In 2022, the forum celebrated its fifth anniversary, with more than 200 leaders attending. We are deeply committed to accelerating Black economic growth. The McKinsey Institute for Black Economic Mobility, for example, is a research institute and think tank dedicated to advancing racial equity and inclusive growth. Its mission is to help private-, public-, and socialsector leaders accelerate Black economic development by providing in-depth research, convening with stakeholders, and translating research into practical assets and capabilities.\n### Tearing the “paper ceiling”: Driving upward mobility for millions of workers\nWe then took what we learned from our own work to our engagements with clients, building data-driven solutions that help other employers implement new ways of screening for knowledge, skills, and capacity to learn.\nOne of the ways we brought our strategy to life in 2022 was by taking a full system view of one of inclusive growth’s key elements—broadening the talent pool.\nTo accelerate progress beyond our firm, in 2022 we began providing pro bono data and analytics support to Opportunity@Work for a national campaign with the Ad Council to “Tear the Paper Ceiling ,” the invisible barrier that keeps millions of Americans from jobs that allow upward mobility—an advance into higher economic and social positions. By partnering to demonstrate the value and transfer of skills developed through work experience, we encourage more employers to reimagine their hiring practices and build better ways to screen for talent and create opportunities for STARs.\nBased on our insights and extensive research on skills-based hiring and human capital , we cast a spotlight on a talent pool that employers may overlook—the more than 70 million workers in the US who are STARs, or workers “skilled through alternative routes.” While STARs have the skills for higher-wage work, many are often automatically screened out from job postings that require college degrees.\nWe first applied these insights to our own firm, making significant investments in recruiting, hiring, and growing STARs through a comprehensive approach that recognizes candidates’ skills and experience, problem-solving ability, and intrinsic capabilities. For example, by moving from traditional case studies to a gamebased assessment, nearly 150,000 candidates over the past two years have been able to demonstrate their critical-thinking and leadership traits even if they don’t have prior business or casestudy experience.\n“We know there are better ways to screen for talent and now we have the research and tools to back that up.”\nCarolyn Pierce, McKinsey partner\nOur People & Organizational Performance technology organization led by McKinsey Partner, and a STAR, Carolyn Pierce, is at the forefront of putting outdated systems to the test, with many entry-level roles already open to STARs who have the relevant experience and skills.\nImpact story", "chunk_word_count": 493, "section_path": "2022 ESG Report > \\~\\$620M > Black Economic Mobility", "document_id": "McKinsey 2022 ESG Full Report", "page": 37, "page_start": 37, "page_end": 39 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 25, "chunk_text": "# 2022 ESG Report\n## \\~\\$620M\n### JobsOhio: Revitalizing the state’s economy through innovative solutions\nIn 2020, as COVID-19 began to spread, McKinsey again partnered with JobsOhio to create Ohio to Work, to assist displaced workers. The partners also designed a program through which JobsOhio pays tuition costs for technical degrees. Enrollees who secure jobs paying good wages gradually repay JobsOhio through a marginal percentage of their income. JobsOhio then reinvests the funds in its next enrollee group.\nAfter the Great Recession, Ohio’s economy needed help to counter deep losses in manufacturing jobs. In 2011, using profits from the beverage industry, the state formed JobsOhio, a first-of-its-kind nonprofit to stimulate economic growth through new industries. To date, Ohio has seen nearly one million jobs created or protected.\nA decade of growth and economic investment in Ohio has helped to attract the largest single private sector company investment in the state. In 2022, Intel announced that it would open a new chip manufacturing plant in Central Ohio, creating 3,000 new jobs at the plant with an average salary of $\\$ 135,000$ .\nAs a key early partner, McKinsey helped develop JobsOhio’s growth plan. Ten sectors were identified for their employment potential. These included aerospace and aviation, healthcare, logistics and distribution, and technology.\n“We’ve valued McKinsey’s partnership over the last several years. Their data-driven approach, combined with creative thinking, led to solutions that supported our success in creating hundreds of thousands of jobs.”\nIn 2018, McKinsey partnered with JobsOhio to evaluate performance. Insights informed the growth strategy for JobsOhio 2.0, which broadened its focus to building innovation districts in Cleveland, Columbus, and Cincinnati. These multi-organization partnerships created 60,000 jobs and established Ohio as a global leader in healthcare, life sciences, and technology.\nJP Nauseef, President and CEO of JobsOhio \\~60,000\nImpact story", "chunk_word_count": 300, "section_path": "2022 ESG Report > \\~\\$620M > JobsOhio: Revitalizing the state’s economy through innovative solutions", "document_id": "McKinsey 2022 ESG Full Report", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 26, "chunk_text": "# 2022 ESG Report\n## \\~\\$620M\n### Manufacturing Africa: Strengthening Africa’s manufacturing sector and creating jobs for a fastgrowing population\nAs part of Manufacturing Africa, McKinsey has worked closely on efforts to develop and support various manufacturing sectors, including global health and vaccine manufacturing, food security and agri-processing, and ESG and sustainability efforts.\nThis work has expanded the capacity of investment promotion agencies, which has contributed to manufacturing deals. For example, Manufacturing Africa worked with a major East African waste management company to update and test its model for business expansion, refine its investment thesis, and focus on developing innovative products to drive revenue.\nAfrica’s population is growing faster than any other continent’s and is set to double by 2050. New generations of young people will require economic opportunities—an estimated 18 million new jobs will be needed annually until 2035.\nA competitive manufacturing sector would help address this gap and also provide Africa with a clearer strategic role in the global economy. Yet across the continent, many countries have struggled to develop their manufacturing base and move into high-value services due to a lack of investment resources.\nThrough additional foreign investment and strategic expansion, the company plans to increase the amount of organic waste collected and treated annually from 12,000 tons to one million. The waste will then be converted into valuable products like animal feed, fertilizer, and biomass fuel briquettes.\nManufacturing Africa is a multi-year program created by the UK government’s Foreign, Commonwealth & Development Office. It seeks to bring $\\pm 1 . 2$ billion in foreign investment to Africa’s manufacturing sector, creating 90,000 new jobs and enabling an inclusive economic transformation across five countries—Ethiopia, Kenya, Nigeria, Senegal, and Rwanda.\nNow in its third year, Manufacturing Africa has helped to close 26 manufacturing deals, attracting more than $\\$ 800$ million in foreign direct investment, which has the potential to create more than 14,000 jobs.\n## \\$800M+\nImpact story", "chunk_word_count": 319, "section_path": "2022 ESG Report > \\~\\$620M > Manufacturing Africa: Strengthening Africa’s manufacturing sector and creating jobs for a fastgrowing population", "document_id": "McKinsey 2022 ESG Full Report", "page": 40, "page_start": 40, "page_end": 41 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 27, "chunk_text": "# 2022 ESG Report\n## \\$800M+\n### DRNSW: Upskilling in rural corners of Australia\nAnother core element of the DRNSW Digital Skills Program is the “skills hub,” critical for engaging the broader DRNSW organization and ensuring sustained impact as the program scaled. This new operational unit consists of a DRNSW squad with capability-building specialists, human-centered designers, instructional designers, and program delivery experts.\nUpskilling and reskilling today’s workforce—in non-degree, skillbuilding programs—is critical to attracting and retaining talent while driving market competitiveness. One organization that understands this is Australia’s Department of Regional New South Wales (DRNSW), a government agency supporting regional communities through agriculture, local infrastructure projects, soil conservation, environmental stewardship, economic development, and more .\n“Other agencies couldn’t believe we built, piloted, and started scaling this entire new approach to capability building in six months when this can typically take two or three years in government,” says Donna Mcleod, director of workforce capability and talent at DRNSW. “It was a phenomenal delivery.”\nAt the onset of the pandemic, DRNSW took stock of its employees’ digital capabilities. The department uncovered a range of opportunities to increase the team’s digital fluency and partnered with McKinsey to do so.\nThe program won the Best in Class award in the public sector category from Good Design Australia, one of the most prestigious design awards in the world. But the biggest testament to its success is the difference it has made in the careers of the employees.\nThe first step was to reframe DRNSW’s transformation from a learning and development opportunity to skills training—which does not happen in a classroom but while employees are on the job and able to immediately operationalize it. McKinsey created a program rooted in human-centered design, informed by a deep study of the individual’s and organization’s needs, addressed in small groups and individual coaching.\n80% of learners reported productivity improvement and increased capability within their role\n92% employee satisfaction with the skills program\nImpact story", "chunk_word_count": 324, "section_path": "2022 ESG Report > \\$800M+ > DRNSW: Upskilling in rural corners of Australia", "document_id": "McKinsey 2022 ESG Full Report", "page": 41, "page_start": 41, "page_end": 42 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 28, "chunk_text": "# 2022 ESG Report\n## \\$800M+\n### Minuto de Dios University: Bridging the education access gap for thousands of Colombian students\nThis includes setting up a National Center for Innovative Pedagogy and a portfolio of national virtual and hybrid courses, which ensures students from remote regions across the country have access to the best educators at the university. In its pilot phase, these courses are already benefiting over 25,000 students. The university has also worked to improve their information systems to bolster operational efficiency, and capability-building programs for the organization to execute a sustainable transformation.\nMcKinsey is supporting the transformation of Colombia’s leading university, Minuto de Dios. An institution with more than 100,000 students, Minuto de Dios has historically targeted underserved communities throughout the country to tackle profound inequalities in education access.\nThrough the effort, the university aims to increase its student population by 41 percent to 140,000 students over the next two years, improve its standing in Colombia’s national standardized tests, and achieve positive financial impact of more than $\\$ 30$ million. In the first period under the implementation, 16,400 new students joined the university, representing 14 percent growth versus the previous cycle.\nThe engagement has advanced the university’s mission of providing affordable higher education for all Colombians, offering additional and better programs to more people, in more places. The transformation has included over 140 impact initiatives to simultaneously strengthen the quality of the academic programs and enhance the overall financial performance of the organization to foster sustainable growth.\nThe transformation has been underpinned by an ambitious endeavor to cultivate the university’s talent. Over 2,000 people have benefited from McKinsey’s Ability to Execute program, which is designed to build individuals’ capabilities at scale to drive and sustain transformational change.\n2,000+\nOur insights\n### Key publications\n### We’re helping to build an economy that works for all, publishing original research and analysis to grow, broaden, and sustain prosperity for all segments of society, in populations across the globe.\nAchieving a more equitable and inclusive economy is an imperative of our time. Economic mobility depends on growth—and according to our research, growth is at its best when it propels broad-based prosperity, increasing well-being and reducing inequality across all strata of society. Our reports and articles enable leaders to support and expand inclusive growth, including by creating and improving access to jobs, advancing equity for diverse demographics, and equipping workers with the skills they need for our fast-changing future. Through actionable insights and data-driven solutions, we aspire to create an economy that not only works better but, vitally, that works better for everyone. Here are some highlights from our inclusive growth insights in 2022.", "chunk_word_count": 442, "section_path": "2022 ESG Report > \\$800M+ > Minuto de Dios University: Bridging the education access gap for thousands of Colombian students", "document_id": "McKinsey 2022 ESG Full Report", "page": 42, "page_start": 42, "page_end": 43 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 29, "chunk_text": "# 2022 ESG Report\n## \\$800M+\n### Women in the Workplace 2022\nHybrid work: Making it fit with your diversity, equity, and inclusion strategy\nAddressing employee burnout: Are you solving the right problem?\nThe Titanium Economy: How to overcome the challenge of filling high-quality jobs\nConducted in partnership with LeanIn.Org, this is the eighth edition of the largest study of women in corporate America.\nNew research details what empowered employees love about hybrid work models and the risks to diversity, equity, and inclusion if managers get the evolving flexible workplace wrong.\nEmployers have invested unprecedented resources in employee mental health and well-being. With burnout at alltime highs, leaders wonder if they can make a difference. Our research suggests they can.\nThriving industrial technology companies use apprenticeships, upskilling, and upward mobility to staff and retain their workforces.\nOur insights\n### Key publications (continued)\nThe childcare conundrum: How can companies ease working parents’ return to the office?\nMeeting the challenge of moms’ “double double shift” at home and work [Podcast]\nThe economic state of Latinos in the US: Determined to thrive\nThe overlooked contributions and hidden challenges of Asian Americans [Podcast]\n### What is diversity, equity, and inclusion?\nClosing the racial wealth gap by investing in Black consumers [Podcast]\nCompanies that are diverse, equitable, and inclusive are better able to respond to challenges, win top talent, and meet the needs of different customer bases.\nThe status quo work culture no longer works for most families— particularly those with very young children. But companies’ support for childcare can turn worker attrition into attraction.\nAs the United States emerges from the pandemic, how can businesses build a more inclusive working environment to improve outcomes for women in the workforce?\nUS Latinos are a driving force of the US economy and account for the fastest-growing portion of US GDP.\nAsian Americans play a key role in creating a more sustainable and inclusive economy. This report explores the challenges this group faces and how companies can better support them.\nOrganizations that incorporate racial equity into their strategic agenda can promote growth and advance Black economic mobility. How can business leaders realize this transformative growth?\nOur actions\n### Our approach to people", "chunk_word_count": 365, "section_path": "2022 ESG Report > \\$800M+ > Women in the Workplace 2022", "document_id": "McKinsey 2022 ESG Full Report", "page": 43, "page_start": 43, "page_end": 45 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 30, "chunk_text": "# 2022 ESG Report\n## \\$800M+\n### Building a distinctive and inclusive workforce\nDuring COVID-19, the workeremployer contract fundamentally and permanently changed.\nWe operate as a single global partnership, united by a common purpose, shared values, and a two-part mission that includes creating an unrivalled environment for exceptional people. Our values reflect our expectation that every colleague works to make our firm both distinctive and inclusive. Those values are:\nThese trends led us to reexamine our talent model in 2022 and revitalize our People mission. We established new foundational pillars: the personalization of work to encourage flexibility and “self-authored” career paths, skills development, and demonstrated impact. The result is a diverse, inclusive, and caring approach to people in which individuals can pursue their own ambitions.\nWe are deeply committed to examining and reinvigorating our People approach to create inclusive opportunities for people of all backgrounds to both serve clients and run our firm.\n— be nonhierarchical and inclusive \n— sustain a caring meritocracy \n— develop one another through apprenticeship and mentoring \n— uphold the obligation to engage as well as dissent \n— embrace diverse perspectives with curiosity and respect \n— govern ourselves as a “one firm” partnership\nOur People strategy touches every aspect of how we recruit, motivate, develop, and retain exceptional talent. Using a rapidly growing number of cutting-edge tools and techniques, we are assessing for exceptional skills, regardless of academic background. Our formal and informal skills-development systems increasingly aim to help participants succeed in a growing range of roles. We are placing more emphasis on coaching and daily feedback.\nDuring COVID-19 and since, we and our clients have seen three workplace trends accelerate : the search for meaning, the desire for flexibility, and the pace of technological transformation.\n### Attracting top talent\n## 2022 progress highlights\n— Almost half our new joiners today were experienced professionals.\n### Our approach to attracting talent is central to McKinsey’s dual mission—to help our clients substantially improve their performance, and to build a firm that attracts, develops, excites, and retains exceptional people.\n— $4 9 \\%$ of new hires were women.\n— $5 3 \\%$ of US new hires and $4 7 \\%$ of our US workforce were from racial or ethnic minority groups.20\n— In North America, we launched the Business Insights Leadership Development Program (BUILD), a two-year rotational program offered to students from New York public colleges and universities created to support our commitment to the New York Jobs CEO Council.", "chunk_word_count": 411, "section_path": "2022 ESG Report > \\$800M+ > Building a distinctive and inclusive workforce", "document_id": "McKinsey 2022 ESG Full Report", "page": 45, "page_start": 45, "page_end": 46 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 31, "chunk_text": "# 2022 ESG Report\n## 2022 progress highlights\n### Diversifying our talent sources\n— In Latin America, we supported colleagues in developing their English proficiency through classes and coaching offered in programs like our Women Tech Academy in Brazil.\nWe look at talent differently. We don’t assess potential candidates by where they are or where they studied—but rather by their skills and their potential. The exceptional people we need may come from anywhere, and we are dedicated to attracting distinctive and diverse talent to our teams. We want those teams to reflect the diversity of our clients, the communities in which we work, and society.\n— We tripled our recruitment sources from 540 to 1,700 institutions globally.\nBuilding a firm of colleagues from different backgrounds and profiles is critical for us to deliver distinctive client service while making our firm a richer and better place. We are expanding our talent pools and evolving our recruiting and assessment processes while continuously working to mitigate the potential for bias.\nRanked 1# in Germany and #4 in the US on Glassdoor’s Best Places to Work list 2023\n49% of new hires were women\n[IMAGE CAPTION] Alberto, an engagement manager and leader of the McKinsey Black Network in Brazil, at the Juntos Conference he helped found.\n### Reaching talent of the future", "chunk_word_count": 218, "section_path": "2022 ESG Report > 2022 progress highlights > Diversifying our talent sources", "document_id": "McKinsey 2022 ESG Full Report", "page": 46, "page_start": 46, "page_end": 47 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 32, "chunk_text": "# 2022 ESG Report\n## 2022 progress highlights\n### Being consciously inclusive in our hiring process\nTo understand and overcome personal biases and to ensure fairness in our hiring processes, we employ a full suite of consciously inclusive solutions. Our job descriptions emphasize skills, and our improved résumé screening process is more inclusive of a diverse set of experiences and skills.\nWe want individuals from all backgrounds to get to know us, engage with us, and explore what it takes to help our clients succeed. We run:\n— learning programs customized for women and racial/ethnic minority populations in management consulting, such as The First Year Leadership Academy\nTo combat potential biases, we provide inclusion training for all of our assessors to ensure evidence-based hiring decisions, in conjunction with a trained and dedicated inclusion adviser. We are also expanding the use of Solve , our game-based assessment that allows candidates to demonstrate their critical-thinking and problemsolving skills in an environment that is less likely to lead to typical job assessment biases.\n— the Proud Leaders speakers series in Europe, creating connections across the LGBTQ+ community, sharing research, and highlighting trans and nonbinary voices\nA Place for You , a program aimed at connecting underrepresented talent to careers in management consulting through training and webinars\npreparation for students studying at Historically Black Colleges and Universities (HBCUs) for a meaningful start in consulting and building leadership skills for top Black, Hispanic, and Latino candidates in MBA programs in the United States\nIn 2022, we received Brandon Hall Group HCM Excellence Awards for reducing biases in our recruiting processes and for our sourcing and assessment strategy.\nWe also partner with external organizations to move conversations, actions, and commitments forward around diversity, equity, and inclusion. These include AfroTech , the Society of Hispanic Professional Engineers , Reaching Out MBA , HeForShe , New York Jobs CEO Council , and MAKERS , to name a few. Additionally, we continue to convene the Juntos Conference in Brazil, designed for young Black talent to connect, meet Black professionals, develop new skills, engage with large companies, and learn about career opportunities.\n## 2022 DEI progress\nWe foster an environment that is distinctive and inclusive, and measure our progress toward building teams that reflect the diversity of our clients, the communities in which we work, and society.\n49% new hires were women\n48% global workforce were women\nQ C 28 % leadership were women21\n33% Acceleration Team (Executive Committee) were women22\n47% US workforce were from racial or ethnic minority groups23\n52% US client-serving colleagues were from racial or ethnic minority groups23\n### Diversity, equity, and inclusion\nSecond, we aim to better serve our clients with diverse teams, convening key stakeholders to advance the DEI agenda globally. We build capabilities along with our clients’ diverse populations and advise them on their own DEI journeys.\nToday, women represent nearly half of our colleagues and new hires globally. By our 100th anniversary in 2026, we aspire for half of all firm members to be women. For more information, review our detailed DEI data .", "chunk_word_count": 512, "section_path": "2022 ESG Report > 2022 progress highlights > Being consciously inclusive in our hiring process", "document_id": "McKinsey 2022 ESG Full Report", "page": 47, "page_start": 47, "page_end": 49 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 33, "chunk_text": "# 2022 ESG Report\n## 2022 DEI progress\n### McKinsey has long been committed to advancing diversity, equity, and inclusion (DEI) in our own firm, for our clients, and in broader society.\nThird, we aim to highlight the importance of taking a role in societal change by leading the knowledge agenda on DEI, building valueadding partnerships, and contributing toward a more just and equitable society through supplier diversity, pro bono work, and more. Learn more about our DEI client work , supplier diversity and pro bono work .\n### Delivering on our DEI talent ambition\nOur DEI leadership is driving a comprehensive program to:\nThis commitment is integral to building a firm that attracts, develops, and excites exceptional people. It is also key to our client service strategy. Our research underscores that diversity and inclusion are connected to better business performance and talent retention. We understand that advancing DEI requires long-term commitment and dedication and that progress can be slow. Like many of our peers, we are not where we aspire to be. Yet we are proud of the progress we have made to date and are determined to continue our journey.\n— have senior leaders who are visible, committed role models and who hold themselves accountable for DEI progress \n— set clear and ambitious DEI aspirations and track progress to permit course correction when necessary \n— find and attract the most exceptional and diverse talent \n— drive programmatic solutions tailored to root causes and integrate them into existing processes and colleagues’ journeys\n### Driving measurable progress\nAcross McKinsey, led by our own research, we have increased our leadership accountability for our change efforts, created greater data transparency,24 and advanced various programmatic efforts to tackle key obstacles. Since launching our 10 actions in June 2020, we’ve more than tripled the number of Black hires in the US. Our pro bono efforts, including our partnerships with Homeboy Industries , and the Greater Washington Partnership in the US and Black Equity Organisation in the UK, have made a great impact on local communities.\n### Championing DEI within our firm and with our clients\nFirst, we aim to deliver on our talent ambition by attracting, developing, and retaining exceptional people from racial or ethnic minority groups. We support this work by creating and maintaining a caring meritocracy where all colleagues feel included and can thrive. We seek to foster an inclusive culture in which colleagues representing a vast range of diverse backgrounds and perspectives can find meaning in their work experiences, team collaboration, and professional development opportunities.\n### Select recognition for our support of $\\mathbf { L G B T Q + }$ colleagues\nOur groups and communities continue to grow and include, among many others, the McKinsey Black Network, Hispanic and Latino Network, Asians at McKinsey, GLAM (for LGBTQ $^ +$ colleagues), Access McKinsey (for colleagues with disabilities, chronic illnesses, and mental health challenges), and PRISM (Progressing Representation and Inclusion in Social Mobility).\n### Creating accountability\n### Acting to tackle bias", "chunk_word_count": 499, "section_path": "2022 ESG Report > 2022 DEI progress > McKinsey has long been committed to advancing diversity, equity, and inclusion (DEI) in our own firm, for our clients, and in broader society.", "document_id": "McKinsey 2022 ESG Full Report", "page": 49, "page_start": 49, "page_end": 49 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 34, "chunk_text": "# 2022 ESG Report\n## 2022 DEI progress\n### Building inclusion and allyship\nWe know from research that senior leaders play critical roles in creating inclusive environments and configuring teams that will benefit from a diversity of perspectives, experiences, and expertise. To encourage such developments, we have embedded in every employee’s evaluation specific expectations, tailored to roles, for inclusive behavior. We have equipped evaluators with individualized performance reports on inclusive leadership performance where relevant.\nWe strive to follow the best practices that we champion in our research and we are diligently minimizing unconscious bias across our people processes. Learn more about our approach to being consciously inclusive in our hiring process .\nWe believe that inclusion is every individual’s responsibility as well as a critical leadership skill. We continue to embed this expectation in our systems and culture by integrating inclusion principles into learning programs and offering focused training for colleagues at all levels. Learn more about colleague development and talent attraction .\n### Supporting colleagues with disabilities, chronic illnesses, and mental health challenges\nAlmost 14,000 colleagues are part of our Inclusion Allies program, designed to develop, connect, and activate a global cohort of inclusive leaders through training, initiatives, mentoring, and research. In 2022, we launched our “Inclusion Champions Badges” program that formally acknowledges and makes visible our most active allies contributing to building a more inclusive firm.\nIn 2022, we enhanced support for Access McKinsey—a group founded to support colleagues with disabilities, chronic illnesses, and mental health challenges. In close consultation with some Access McKinsey members, we assembled a broad task force, which included Access McKinsey members, to identify and implement accessibility enhancements and increase firm awareness of issues central to the community. Early initiatives included creating a centralized website for accessibility resources and extending tailored learning programs to colleagues in the group. We sought to improve colleagues’ experience with the accommodations process and the Human Resources team consolidated general accommodations process guidelines, which are being adapted to local legal conditions, to support colleagues more consistently. In 2022, McKinsey celebrated International Day of Persons with Disabilities, with colleagues joining panel discussions to better understand disability and accessibility needs, and how to be better accessibility allies. Learn more about how we are caring for our colleagues .\n### Building careers through sponsorship\nOur research also highlights that formal sponsorship and actively working to create opportunities significantly improve the chances for advancement success. We approach sponsorship rigorously by measuring each colleague for how much and how well they perform as sponsors. We then design individual interventions to ensure all colleagues receive the support they need to be successful.\nWe aim to be distinctive and inclusive, and we value potential more than pedigree\nAdditionally, we have tailored training and professional development programs focused on sponsorship for women and diverse colleagues. These include role-based programs, like Pathway to Partner, and programs designed to support specific groups, like Women’s Leadership Workshop and the McKinsey Black Network sponsorship program. These programs focus on skill building, creating robust support networks, and providing tailored personal coaching and training.\n## 2018 hired our first Chief Diversity and Inclusion Officer\n### Taking a role in societal change", "chunk_word_count": 528, "section_path": "2022 ESG Report > 2022 DEI progress > Building inclusion and allyship", "document_id": "McKinsey 2022 ESG Full Report", "page": 50, "page_start": 50, "page_end": 50 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 35, "chunk_text": "# 2022 ESG Report\n## 2018 hired our first Chief Diversity and Inclusion Officer\n### Better serving our clients\nOur Women Matters series continued to bring focus to different markets, for example, investigating the progress of gender parity in Mexico . We went beyond gender parity to examine how successful French companies have been in their search for executives with diverse national origins and socioeconomic backgrounds .\nWe are committed to being role models for the prioritization of DEI efforts. We hope that others will follow and ultimately drive positive societal change. Our collective DEI efforts include producing cuttingedge knowledge, building value-adding partnerships, ensuring supplier diversity, and conducting pro bono work. With our best-inclass partners across the globe, we share a commitment to expand economic opportunity and support communities. Learn more about our supplier diversity and pro bono work .\nThe business case for DEI is growing stronger. An increasing number of companies recognize diverse teams and leadership as critical for enabling talent acquisition, enhancing innovation, and improving customer insights.\n### Partnering to drive impact\nWe strive to serve our clients by example. We make a priority of bringing diverse perspectives to our clients through our teams. We also convene experts and key stakeholders to advance DEI thought leadership globally. By helping our clients build the next generation of diverse leaders and advising them on their DEI efforts, we support our clients’ efforts to make substantial, lasting performance improvements.\nWe collaborate with partners, such as HeForShe, Women’s Forum, Aspen Institute, and The Trevor Project, to expand our impact. In 2022, we teamed up with Openly , a global news platform dedicated to underreported global news for and about LGBTQ $^ +$ people. We also partnered with the World Economic Forum to launch the Global Parity Alliance , a cross-industry group of companies taking action to accelerate DEI in the workplace and beyond.\n### Developing insights to accelerate action\nOur broad portfolio of DEI research continues to be a leading voice on the subject and catalyzes change across industries. In 2022, our Women in the Workplace report was the largest study on the state of women in corporate America and was one of our top three most read reports of the year globally.\n### Convening LGBTQ+ leaders\nAfter two years of the global pandemic, we were finally able to bring together a record number of global LGBTQ $^ +$ senior leaders for The Alliance in Athens, Greece. This gathering focused on LGBTQ+ inclusion in the workplace. It featured McKinsey’s research on transgender/nonbinary inclusion; intersectional identities in the US, the UK, and Brazil; and the condition of LGBTQ $^ +$ individuals in highrisk geographies (concentrating on LGBTQ $^ +$ refugees).\nWe have deepened our research focus on the experience of racial or ethnic minority groups in North America, and possible ways to maximize their economic opportunities. Recent work includes the economic state of Latinos in the US , the invisible challenges faced by Asian Americans in the workplace , and a series of detailed articles on the Black consumer experience .", "chunk_word_count": 509, "section_path": "2022 ESG Report > 2018 hired our first Chief Diversity and Inclusion Officer > Better serving our clients", "document_id": "McKinsey 2022 ESG Full Report", "page": 51, "page_start": 51, "page_end": 51 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 36, "chunk_text": "# 2022 ESG Report\n## 2018 hired our first Chief Diversity and Inclusion Officer\n### Read more about accessible leadership\n» How parenting through a medical diagnosis inspired a new way to lead and live\n» Leadership lessons from the world’s best CEOs [Podcast]\n[IMAGE CAPTION] Senior LGBTQ+ leaders from around the world gathered in Athens, Greece, to discuss inclusion in the workplace.\nWe plan to expand our global research. In 2022, we were proud to present research on socioeconomic Diversity Matters in Latin America , as well as our latest report in Germany on how new careers can potentially enable more diverse leadership .\nOur giving\n### Our approach to advancing social responsibility\nWe are committed to creating a more inclusive economy by enabling people to meet their basic needs, access opportunities, and achieve economic empowerment through access to essentials, quality jobs, and skilling.\n### Driving at-scale efforts to increase inclusive growth\nWe have committed $\\$ 2$ billion to social responsibility efforts by 2030 and have so far contributed nearly $\\$ 620$ million in cash and in-kind support toward that commitment (more than $\\$ 275$ million this year). Through our social responsibility strategy, we seek to:\n### Fund for Social Good\n— drive our social responsibility investments toward at-scale efforts that increase inclusive growth\nWe support and fund multi-year partnerships with leading institutions around the world, tackling complex problems and finding creative solutions that advance and accelerate sustainable and inclusive growth. Established in 2020, the Fund for Social Good has committed to multi-year support of diverse projects, including:\n— engage our colleagues through giving and volunteering, and support all colleagues to participate in and serve their local communities\nA dedicated committee of senior leaders is responsible for advising on giving in line with our firmwide Social Responsibility Policy. Regional and local pro bono work is guided by local committees.\n— African Agricultural Transformation Initiative (AATI): This project aims to drive inclusive agricultural transformation in Africa. Co-founded by partners including the Alliance for a Green Revolution in Africa , the Bill & Melinda Gates Foundation , the International Fund for Agricultural Development (IFAD), and McKinsey.\n\\~\\$620M 2020 toward our $\\$ 2$ billion commitment to social responsibility by 2030 $\\$ 275+$ million this year)\n4,000+ nonprofits supported through pro bono engagements, McKinsey Gives, and McKinsey Grants\n488,500 hours dedicated to social responsibility through volunteering, board service, pro bono engagements, and fellowships at nonprofits\n## \\$28M\n### 100%\ncontributed to Ukraine war relief efforts, including $\\$ 18$ million in donations from our colleagues and firm to more than 1,600 organizations and $\\$ 10$ million in pro bono support\nof McKinsey offices in $6 5 +$ countries volunteered with local organizations for our third annual Day of Service", "chunk_word_count": 455, "section_path": "2022 ESG Report > 2018 hired our first Chief Diversity and Inclusion Officer > Read more about accessible leadership", "document_id": "McKinsey 2022 ESG Full Report", "page": 51, "page_start": 51, "page_end": 52 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 37, "chunk_text": "# 2022 ESG Report\n## \\$28M\n### Examples of pro bono efforts around the world\n[IMAGE CAPTION] The Akanksha Foundation, one of the nonprofits we support through our capacity-building programs.\nAATI builds on McKinsey’s impact on agriculture and food systems across Africa, including work to increase food production that helped contribute to 11 million fewer undernourished people, 150,000 fewer deaths from hunger, and 100,000 new jobs. AATI launched support to its first wave of countries to accelerate effective and sustainable food system changes based on country needs, priorities, and existing infrastructure. Learn more about the AATI partnership .\n### Forward\nIn 2022, we were proud to celebrate the landmark achievement of reaching the first 190,000 learners through the Forward program—our free, five-month online learning journey. Forward, which targets those with fewer than five years of work experience, is designed to equip the next generation of talent with the tools necessary to succeed in the working world. Digital courses and sessions are focused on transferable skills like adaptability, problem-solving, communication, and being digitally savvy. In the initial 18 months of the program, we reached learners in more than 70 countries across Africa and the Middle East, as well as in Pakistan, Türkiye, and Azerbaijan.\n— Conservation: Through our work with partners like Blue Nature Alliance and Enduring Earth , over the next few years we will conserve more than one billion hectares of land and create or protect over 200,000 jobs through the implementation of 30 mega conservation projects around the world.\nIn 2022 alone, our conservation work helped implement three mega conservation projects, creating 10,000 direct jobs and protecting 78 million hectares. A critical component of this collaboration is creating jobs for remote and Indigenous communities in places around the world where nature conservation is particularly important. Such communities are incredibly hard to reach with standard stimulus or other growth measures. They’re more dependent on intact natural capital, and they are the first to benefit from jobs created directly in nature conservation or as a by-product of conservation.\n### McKinsey.org\nIn 2022, McKinsey launched McKinsey.org as a philanthropic initiative to bring the firm’s capability-building solutions at no cost to nonprofits that are accelerating inclusive growth around the world. By sharing the best of McKinsey’s programs to nurture leaders and foster more effective organizations, McKinsey.org aims to unlock the full potential of nonprofits. It offers programs designed to uplift entire organizations, including:\nLearn more about the Blue Nature Alliance .\n— Ability to Execute (A2E) for Nonprofits: Designed to empower employees with a new way of working, and build the capabilities needed to drive and sustain organizational change.\n### 78%\n### 15M\nof Forward graduates who completed the full program experienced career or role growth due to applying the new skillsets and attitudes learned\nbeneficiaries reached through 100 nonprofits in 60 countries participating in McKinsey.org programs\nOrganizational Health Index (OHI) for Nonprofits: Helps an organization align around a common mission, execute with excellence, and continually renew itself to serve its mission more effectively.\n### Generation", "chunk_word_count": 504, "section_path": "2022 ESG Report > \\$28M > Examples of pro bono efforts around the world", "document_id": "McKinsey 2022 ESG Full Report", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 38, "chunk_text": "# 2022 ESG Report\n## \\$28M\n### Juntos\nIn 2018, we created the Juntos Conference in Brazil to address the disparity between the representation of Black Brazilians in senior roles in the private sector compared to the general population. It works to create a platform for networking and professional development in partnership with other large companies committed to racial justice. Through training, panels, and career fairs, the annual Juntos Conference supports the creation of an inclusive environment to help Black professionals succeed.\nIn 2014, we founded Generation , an independent nonprofit organization that transforms the education to employment system to prepare, place, and support people into life-changing careers that would otherwise be inaccessible. Our continued support for Generation is one of the ways we’re helping foster a more inclusive economy. Together, we’re enabling people to meet their basic needs, access opportunities, and achieve economic empowerment through quality jobs and skilling. In 2022, 22,000 participants graduated from Generation, a 185 percent increase from 2021. In partnership with about 11,000 nonprofits, governments, and employers, Generation has helped train and place more than 75,000 people into jobs across 35 professions in 17 countries. Its global graduates have earned $\\$ 630$ million in wages to date.\nOur 2022 conference was the largest to date, offering virtual and in-person sessions for the first time. In total, over 4,000 participants registered for the conference, with over 1,000 in attendance at our in-person events in São Paulo, Salvador, and Porto Alegre in Brazil. The conference is supported year-round by the Juntos Ecosystem , an online platform that offers further development solutions.\n### Ownership Works\nAlong with more than 60 organizations across the private, public, and social sectors in the United States, McKinsey helped to launch Ownership Works . This nonprofit is dedicated to implementing broad-based employee programs to generate at least $\\$ 20$ billion of wealth for working families by 2030.\nThe initiative aims to improve awareness of shared stock ownership programs and equip more organizations with the necessary tools to implement these for their employees. As a result, Ownership Works provides low- and moderate-income households and people of color with access to the single largest source of wealth in America: stock ownership.\n75,000 people across 17 countries trained and placed in jobs through Generation\n### Responsible practices\nIn this chapter, we describe how we’re meeting our commitment to lead with integrity and set the standard for accountability and compliance in our profession.\nIn this chapter \n56 Responsible practices at a glance \n57 Developing and caring for our colleagues \n62 Ethics and compliance \n65 Risk management \n66 Working with clients \n67 Working with suppliers \n70 72 Human rights Data privacy and information security\n### Responsible practices at a glance\n### Our aspiration at McKinsey is to lead with integrity and set the standard for accountability and compliance in our profession—and then to keep raising it.", "chunk_word_count": 478, "section_path": "2022 ESG Report > \\$28M > Juntos", "document_id": "McKinsey 2022 ESG Full Report", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 39, "chunk_text": "# 2022 ESG Report\n## \\$28M\n### Key highlights\nAt least three hours of ethics, integrity, and/or compliance learning completed per colleague\nShared our new global parental leave policy, which extends firmwide parental leave (in most regions) and includes a reintegration program to support colleagues’ career growth upon their return to work\nTo achieve this, we are proactively building and maintaining a culture of responsible practices, informed by our values. Our values are integral to everything we do—from how we assess risks and ensure data privacy, to the buying choices and practices we employ to drive positive impact across our supply chain. We have built and refined a model of ethical business that blends global best practices with the best of McKinsey’s high standards for client-service professionalism, including improvements to our professional standards, client service policies, and firm culture.\nAchieved our 10 Actions goal to double our spending with diverse suppliers within three years\nEstablished a cross-functional Human Rights Working Group to operationalize our approach to human rights due diligence and management\nUpdated our Acceptable Use of Technology Policy and implemented enhanced cybersecurity measures and controls\n## \\~\\$700M\n### 100%\n99%\ninvested in strengthening our risk management teams, capabilities, and processes since 2018\nof new clients were vetted against our industry-leading CITIO client service framework25\nof colleagues completed annual Professional Standards and Risk training26\npay equity for men and women colleagues globally27\n### Developing and caring for our colleagues\nWe aspire to be the gold standard for an inclusive and distinctive performance culture. One that celebrates, supports, and cares for all colleagues in ways that empower them to grow personally and professionally.\n### Fostering a development culture\n### Unlocking growth through continuous learning\nWe believe that firm members have a collective responsibility to foster our development culture. Our annual Mentorship, Apprenticeship, and Sponsorship Survey provides insight into how well each colleague’s needs are being met and helps shape our development priorities. These are embedded into our culture through our Way We Work (WWW) function, a single operating system focused on the elements critical to achieving distinctive client impact and a great team experience.\nWe provide development opportunities for every role, allowing peers to focus on working toward skill proficiency and meeting performance expectations in a connected, collaborative environment. Our programs are designed to balance leadership skills, capabilities for client service, technology acumen, and risk management awareness. Core programs may be:\n— universal in content yet local in delivery, such as our One Firm Onboarding curriculum for new colleagues\n### Developing our colleagues\nTeam leaders encourage development habits and track them via a bi-weekly team survey. Best practices are incorporated into the WWW’s core team rituals. Our research shows that teams who practice these rituals have higher team feedback scores on development and apprenticeship. Team rituals include:\n— modular and hybrid, such as our Business Essentials program for client-facing colleagues with diverse educational and professional backgrounds", "chunk_word_count": 485, "section_path": "2022 ESG Report > \\$28M > Key highlights", "document_id": "McKinsey 2022 ESG Full Report", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 40, "chunk_text": "# 2022 ESG Report\n## \\~\\$700M\n### We are building a culture that supports and encourages continual, self-authored growth to create unparalleled leadership development.\nWe help our people develop through formal and informal learning opportunities. Through programming, apprenticeship, and on-the-job experiences with world-class teams, colleagues build and apply skills, deepen their expertise, advance toward their aspirations, and create unrivaled impact for our clients.\n— digital and self-directed, such as our Tech Week, created to empower colleagues from any background to raise their proficiency in those skills\n— Joint client–team kickoffs: Colleagues share their development goals and create a plan for how to grow together.\n— customizable and facilitated, such as content tailored for specific regions, interest or practice areas, role transitions, or affinity groups\n— 1:1s: Individuals who work most closely together share development feedback regularly.\nWe have created more than 2,500 learning offerings and provide access to tens of thousands more from external content providers.\n\\$850M+ invested in knowledge development, capability building, and learning\n— Retros: Teams discuss how the collaboration is going and if the team is meeting the bar on apprenticeship, developmental feedback, and other development topics.\nIn 2022, our Learning Research and Innovation Lab developed a contemporary apprenticeship model for “intentional” learning— making the “invisible,” such as an individual’s thought processes, visible—and nonhierarchical learning and teaching.\nHigh-impact handovers: Every colleague receives a formal end-of-engagement feedback conversation before they transition to a new engagement.\n### Self-authored journeys\n### Mobility and global expertise\nWe have reimagined Leadership Growth Plans for each colleague to provide them with an evolving set of aspirations, next steps, and support partners that will grow as they grow. We are also restructuring our career paths to encourage more flexibility using rotations and global mobility, as well as the ability to leave for, and return from, external growth opportunities.\nWe encourage growth and development by providing opportunities for professional experiences across our client practices, firm functions, and geographies. Mobility offers colleagues the chance to experience new cultures and client contexts, expand their networks, and develop global mindsets within our one-firm community.\nWe work closely with leaders across our firm to identify needs and move partners with relevant expertise. In 2022, five percent of our firm moved internationally across more than 65 countries. Our mobility programs provided nearly 300 early-tenure colleagues with shortterm global experience and apprenticeships.\nWe empower our colleagues to personalize their jobs and their development in ways that support flexibility and well-being, so they may find success through building skills, deepening expertise, and achieving impact.\n### Skills and impact-based advancement", "chunk_word_count": 427, "section_path": "2022 ESG Report > \\~\\$700M > We are building a culture that supports and encourages continual, self-authored growth to create unparalleled leadership development.", "document_id": "McKinsey 2022 ESG Full Report", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 41, "chunk_text": "# 2022 ESG Report\n## \\~\\$700M\n### Growing after McKinsey\nWe are moving to a model of professional advancement based on demonstrated skill proficiency and impact. Our leadership model is rooted in a universal skill taxonomy that sets clear expectations, recognizes experience, and gives colleagues in every role opportunities to identify strengths and next steps. At the same time, our technological competency models offer a map for deepening expertise in specific areas.\nWhen colleagues choose to grow beyond our firm, we provide extensive help. We also celebrate the increasing number of alumni rejoining our firm with new skills and expertise.\nToday, our alumni network includes more than 50,000 former colleagues across 140 countries. Nearly 1,000 are CEOs or C-suite leaders in leading private, public, and social sector organizations globally, and one in four have founded their own companies—including nearly 50 technology “unicorns.”\nPairing the two models, plus learning and applying skills in the course of work, empowers colleagues to develop their unique profiles and advance, based on development inputs and outputs rather than tenure.\nEvery year, tens of thousands of alumni and firm members engage and collaborate through our alumni website, career services, communications, and knowledge and connectivity events.\n2,500+ McKinsey-created learning offerings available\n## 62 average annual training hours per consulting colleague\n100% of colleagues had access to career- or skills-related training\n### 100%\n23\naverage annual training hours per nonconsulting colleague\nof our people received regular performance and career development reviews\n### Caring for our colleagues\nWe are also members of One Mind At Work and the MindForward Alliance . These organizations provide access to guides, toolkits, and resources, as well as events and networking opportunities, to develop and implement a gold standard for mental health and well-being in the workplace.\n### As the effects of mental and emotional stress have become more prominent elements of every organization’s workplace, we demonstrate care for our people and promote a culture of supportive, diverse, and empowering meritocracy.\n### Promoting resilience and well-being\nWe approach health and well-being holistically—with benefits and programs that support mind, body, and financial well-being. We ask for feedback around different People topics in our weekly, firmwide Pulse survey, leveraging text analytics on anonymized data to improve the design of our initiatives for the populations that need them most.\nWe equip colleagues with skills, mindsets, and behaviors to build resilience through balanced well-being and personal health. We established a global well-being initiative to help individuals manage their well-being through a focus on mind, body, and purpose. These concepts have now been formally integrated into our learning programs and embedded in day-to-day activities via our WWW operating system. Our well-being offerings span a range of topics, including basics such as nutrition, physical fitness, meaning, and connection to others.", "chunk_word_count": 460, "section_path": "2022 ESG Report > \\~\\$700M > Growing after McKinsey", "document_id": "McKinsey 2022 ESG Full Report", "page": 58, "page_start": 58, "page_end": 59 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 42, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Championing mental health\nOur Mind Matters program aims to advance the discussion about mental health and provide support for colleagues where and when they need it. The program is designed to support our people by proactively managing mental health disorders and challenges. Colleagues and their families can access early intervention and clinical resources, such as free, independent, and confidential support from trained professionals through an Employee Assistance Program.\nThese topics appear in our flagship programs, office learning and function-specific initiatives, and through designated learning days. Well-being is also a core part of our leadership framework for team leaders and partners.\nTo care for our people, we devote long-term focus on well-being and tracking organizational health through metrics. Our WWW function drives team habits and rituals for well-being. We believe that these approaches make a real difference in an individual’s experience and, by extension, have a positive impact on serving our clients.\nWe have appointed contacts in all our locations to address mental health issues, creating a safe option for discreet initial discussions and to find internal and external resources. Additionally, multiple learning programs and an ongoing storytelling campaign serve to increase awareness, remove taboos, and destigmatize mental health topics across the firm.\n### Ensuring colleagues’ safety\nOur bi-weekly engagement team survey serves to take the pulse of our team’s performance and individual well-being. For example, at the beginning of a project, we test whether team members have a shared understanding of how they will set boundaries and manage their wellbeing, and how they will foster a sense of belonging for all team members.\nWe believe that all colleagues should always feel safe and secure. From our offices in metropolitan areas to remote or higher-risk work sites, McKinsey proactively seeks to safeguard the well-being and personal security of colleagues.\nOur ongoing research shows that teams who practice WWW rituals enjoy lifestyles that are significantly more sustainable, a factor we believe is critical to well-being. Sustainability benefits our clients as well. Evidence points to the fact that McKinsey teams reporting the highest sustainability scores are more likely to report higher client satisfaction scores. Finally, we also see a correlation between the WWW rituals and an individual’s sense of connectivity, care, and respect.\nOur Firm Security Team (FST), staffed by experienced professionals across the globe, partners with our offices and our Human Resources, Real Estate, Travel, and Technology teams. Together, they build internal resiliency and respond to incidents. Typically, the security team focuses on four contexts: workplaces, travel, client service, and events. We partner with leading providers in the industry to help ensure that colleagues can get security, medical, and counseling support, regardless of location.\nWe embrace hybrid work. For most of our firm members and teams, hybrid work offers the ideal balance to achieve the best outcomes. We continue to research hybrid work, including encouraging teams to learn what works well in remote versus in-person settings. By leveraging data and input from our teams around the world, we can make better co-location decisions, refine models, and better inform workplace practices and team experiences that work for client, team, and individual needs.", "chunk_word_count": 533, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Championing mental health", "document_id": "McKinsey 2022 ESG Full Report", "page": 59, "page_start": 59, "page_end": 60 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 43, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Providing competitive compensation and benefits\nOur compensation decisions are guided by a total rewards philosophy to provide competitive pay and valuable benefits.\nEnsuring that compensation and benefits are equitable is central to our People strategy. Our Compensation Policy Committee supports the strategy through the design and implementation of compensation, by overseeing our benefits, and by ensuring integrity and compliance with tax legislation and local requirements.\nWe are committed to equal pay for equal work; we have processes in place to help ensure pay equity. We are proud to report a 2022 weighted pay ratio of 99 percent, which represents the ratio of female to non-female colleagues based on total compensation by employee grouping and level by country.28 Employment decisions, including compensation matters, are based on legitimate business needs, job requirements, and individual qualifications. Each colleague is compensated based on relevant skills and experience, performance in the role, and location.\nWe offer generous benefits to colleagues and their families across our diverse population spanning more than 65 countries. Our colleagues’ health and well-being are at the core of our benefits philosophy. We aim to deliver comprehensive benefits that help colleagues feel empowered and engaged in their personal and professional lives. Learn more about well-being initiatives and habits .\n### Our benefits\n### McKinsey’s holistic benefits package for colleagues and their families includes:29\n### Our parental leave program\n### Health and well-being\n» Medical, dental, and vision coverage » Mental health » Business travel emergency protection\nWe launched a re-boarding program at the firm for partners returning from parental leave that is now being extended around the world. This includes extended time to bond with and care for a new infant for parents, re-boarding benefits, coaching, and support for a phased return to client work.\nCentral to our pay equity approach are objective benchmarking and market insights from multiple external sources, as well as robust audit processes that ensure all colleagues are paid equitably throughout their careers. These efforts are led by our Global Compensation function. In partnership with the Legal team for the People function, we use third-party pay equity audit tools to provide an objective evaluation of and feedback on McKinsey’s compensation structures. We actively monitor pay equity reporting laws in all countries where we operate, such as the Gender Pay Gap, the reporting requirement in the UK. McKinsey is committed to paying all colleagues a living wage; our lowest compensation ranges are above the applicable minimum wage, including for entry-level positions.\n### Financial protection\nThe program inspired a newly expanded global parental leave policy for all colleagues that we shared in 2022. This policy extends firmwide parental leave (in most regions) and includes a reintegration program to help ensure returning colleagues can maintain their career growth.\n» Life and accident insurance » Disability insurance » Retirement programs\n### Family and personal support\n» Personal leave policies and support » Parental leave policies » Adoption and surrogacy assistance » Elective egg preservation\n### Ethics and compliance\n### McKinsey has a proud history as a professional services firm committed to our values.", "chunk_word_count": 525, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Providing competitive compensation and benefits", "document_id": "McKinsey 2022 ESG Full Report", "page": 60, "page_start": 60, "page_end": 61 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 44, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Governance and oversight\nThe Ethics and Compliance team works closely with key stakeholders across our firm globally to ensure our risk-based programs are effective and sustainable. At the board level, these efforts are overseen by the Risk, Audit, and Governance Committee of McKinsey’s Shareholders’ Council.\nBuilding and maintaining a culture of integrity are the responsibilities of every firm member. Our ethics and compliance program is led by our global chief ethics and compliance officer and an Ethics and Compliance team dedicated to:\nWe aim to lead our profession with a world-class Ethics and Compliance program that builds and maintains the trust of our clients and colleagues and society more broadly. We believe that the trust we earn enables our firm to drive impact for our clients and our communities. We continually invest in a culture that educates and supports our colleagues to do what’s right and that inspires a shared commitment to ethics, integrity, and professionalism in our daily actions. We do this by maintaining and proactively building a culture of ethics, integrity, and compliance across our firm.\nOther global committees and groups are in place to support our governance structure, including our Professional Standards Committee, which addresses potential violations of firm policies or values by partners, and a network of trained professionals who manage and review personal conduct issues.\n— fostering a firmwide culture of ethics and integrity — identifying, analyzing, and addressing legal and regulatory risks — establishing proper governance and controls for those risks — developing and delivering relevant and risk-based learning in conjunction with dedicated risk learning experts — monitoring compliance with policies and controls and continuously improving our program\n### Our Code of Professional Conduct and policies\nOur Anti-Corruption Compliance program, overseen by our Ethics and Compliance team, is designed to effectively address our risks and incorporates regulatory guidance and best practices. We educate our firm members on our policies and procedures and provide them with multiple avenues for escalation, including seeking guidance from our Ethics and Compliance and Legal professionals, our Got a Concern? helpline and our Ask Risk system. Any violation of policy or law must be reported and carries appropriate consequences.", "chunk_word_count": 373, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Governance and oversight", "document_id": "McKinsey 2022 ESG Full Report", "page": 62, "page_start": 62, "page_end": 63 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 45, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Ethics and compliance programs\nOur Code of Professional Conduct (Code) defines a set of behavioral expectations for all firm members. It helps colleagues understand the core elements of our policies and how those elements are anchored in our values. We expect all colleagues to comply with, and others working on our behalf—such as contractors, advisers, and other suppliers—to act in a manner consistent with, our Code.\nMcKinsey’s ethics and compliance programs are designed to address the risks that reflect the breadth and complexity of our clients’ needs, the scope and scale of our operations, and our commitment to the highest standards of integrity and professionalism. Risk areas addressed by our programs include:\nWe work to build and maintain the trust of our clients, the communities in which we operate, and the talented colleagues who join our firm. We also expect our suppliers to adhere to our Supplier Code of Conduct, which includes standards related to anti-corruption. We have embedded risk-based anti-corruption due diligence procedures in third-party onboarding processes. Learn more about working with suppliers .\nWe do not offer, accept, solicit, or pay a bribe, in any form or of any value, to any person—including to get business or secure any advantage in connection with our business—and we never ask a third party to do so on our behalf. Our firm is committed to compliance with the anti-corruption laws of all jurisdictions in which we operate, including the US Foreign Corrupt Practices Act and the UK Bribery Act. Our Code and Global Anti-Corruption Policy reflect our commitment and hold our firm members, and the third parties we engage, accountable for maintaining those standards.\n» anti-corruption and bribery \n» antitrust and competition \n» civil rights \n» conflicts of interest \n» data protection and privacy \n» immigration \n» information security \n» personal investments \n» recruiting and hiring\n### Raising concerns", "chunk_word_count": 322, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Ethics and compliance programs", "document_id": "McKinsey 2022 ESG Full Report", "page": 63, "page_start": 63, "page_end": 63 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 46, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Training and compliance certification\nAll active McKinsey colleagues are required to participate in Professional Standards and Risk training and certify compliance with firm policies on an annual basis. Some of the topics covered in annual mandatory learning include anti-corruption, conflicts of interest, information security, anti-harassment, workplace conduct, environmental sustainability, and human rights.\nEvery firm member has the obligation to raise concerns about values, ethics, and professional conduct without the fear of retaliation. We aspire to create an environment where everyone feels comfortable seeking advice or raising concerns directly with a colleague.\nWe support our firm members through training and communication efforts to keep our commitment to ethics, integrity, and compliance top of mind. Upon joining the firm, all new hires are required to:\nIn 2022, 100 percent of our active colleagues were assigned and completed the annual learning and certification. $^ { 3 0 } \\ln$ addition to firmwide training, colleagues receive additional learning tailored to their functions and roles. Our annual Values Day, a celebrated global event for all colleagues, is an opportunity for us to reflect on what it means to live our values.\nHowever, we recognize there are times when colleagues may feel the need for an opportunity to raise a concern or ask a question without coming forward directly to a colleague. For those instances, our Got a Concern? global helpline allows colleagues to raise concerns in a confidential manner and, where legally permissible, anonymously.\n— understand and adhere to McKinsey’s Code and policies — participate in an in-person or virtual onboarding session where they learn about our firm values and what’s expected of them as colleagues\nAll good faith allegations of violations of the firm’s standards are subject to review. Violation of our Code or policies can lead to disciplinary action, up to and including termination. To increase transparency and build trust, firm members are provided information on the types of concerns submitted and the discipline imposed for violations.\n100% \nof colleagues completed annual Professional Standards and Risk training and certified compliance with firm policies and McKinsey Code30\n### Risk management\n### Engaging our colleagues", "chunk_word_count": 364, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Training and compliance certification", "document_id": "McKinsey 2022 ESG Full Report", "page": 64, "page_start": 64, "page_end": 64 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 47, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### McKinsey assesses risks to our firm in the short, medium, and long term across many areas.\nOur collective risk management functions cover a broad spectrum of risks facing our firm and include groups focused on:\nOur risk management program’s success depends greatly upon colleagues understanding what is expected of them in terms of protecting our clients, our people, and our firm. To ensure such understanding, we also have a team dedicated to making risk management efficient and effective. We support this effort with technology and process and through the work of colleagues in our firm learning group dedicated to creating engaging and comprehensive risk training. Colleagues receive regular messaging from the global managing partner, the chief risk officer, the chair of the RAGC, and regional leaders on what is expected of them and where and how to seek guidance in complex situations, including reaching out to our internal “Ask Risk” helpline.\n— Client Service Risk \n— Enterprise Risk Management, Cyber and Data Risk \n— Geopolitical Risk, Ethics & Compliance \n— Physical Security\nThis includes risks in areas such as legal, regulatory environment, market, and technology, as well as those arising from the physical impact of climate change. We also continually seek opportunities to better identify, analyze, and mitigate risk. Central to our approach is our risk framework, which provides the insight, controls, and technology we need to anticipate and proactively address risks.\nMcKinsey’s chief risk officer oversees these groups. Our Internal Audit group provides an independent assessment of the effectiveness of our controls in mitigating important risks, reporting its findings directly to the Risk, Audit, and Governance Committee (RAGC) of the Shareholders’ Council.\nWe routinely and systematically undertake risk assessments. These assessments incorporate diverse qualitative and quantitative inputs, as well as external benchmarks, to produce a comprehensive view of risk by considering our potential exposure to elements of our Risk Taxonomy.31 The Risk Taxonomy is itself regularly refreshed to ensure that we have an up-to-date view on new or emerging risk types. Risk assessments help us to understand the nature of the risks we face and what policies and controls we have in place to mitigate those risks. Assessment outcomes are shared with firm leadership, including the Shareholders’ Council, our elected board of directors, and provide insights as to where further efforts or investment in risk mitigation would be most important.\n### Read more about risk management\nSeizing the momentum to build resilience for a future of sustainable inclusive growth » How Europe’s CEOs can build resilience to grow in today’s economic maelstrom\n### Working with clients\nAs we seek to create positive, enduring change in the world, we are committed to living the values on which our firm was founded almost 100 years ago.\n### Client and engagement selection\nWithin each of these dimensions, we have defined criteria that our colleagues must apply when assessing a potential client or engagement to ensure we consider potential unintended consequences of the work.", "chunk_word_count": 505, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > McKinsey assesses risks to our firm in the short, medium, and long term across many areas.", "document_id": "McKinsey 2022 ESG Full Report", "page": 65, "page_start": 65, "page_end": 66 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 48, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Internal frameworks (CITIO)\nWe have policies and guidelines governing what work we will and will not do. In 2022, we updated our Client Service Policy. This strengthened and clarified the expectations and responsibilities of partners regarding client and engagement selection, and enhanced roles for practice and office leaders in engagement review and approval.\nSome criteria describe “bright lines”—work we will not perform under any circumstances—while others require discussion and special approval, or extra oversight related to scope and delivery.\nTo that end, we regularly evaluate and update our processes to systematically identify and manage risk before committing to a client project.\nIn the government sector, we do not serve defense, intelligence, justice, or police institutions in nondemocratic countries (for which we base our assessment on the Economist Intelligence Unit’s Democracy Index), with limited exceptions for international aid and humanitarian work approved by our firm’s risk leadership. We also do not serve political parties, political advocacy groups, legislatures, or individual legislators’ offices; nor do we take part in political advocacy or lobbying on behalf of our clients.\nOur Client Service Policy requires that we evaluate the clients we serve and the likely impacts of our work before committing to any new client engagement. The policy includes five interrelated dimensions (referred to as “CITIO”): Country, Institution, Topic, Individual, and Operational considerations.\nRead more about our client and engagement selection on our website .\n### Dedicated oversight and decision-making support\nClient service matters that require consideration beyond our standard processes are reviewed by our Client Service Risk team, with a subset of the most complex cases escalated to a global decision-making body, the Client Service Risk Committee (CSRC). Composed of senior firm leaders and supported by risk, legal, and communications professionals, the CSRC provides advice and makes decisions on the most complex risks we face in our client service.\n[IMAGE CAPTION] Our CITIO dimensions\n100% of new clients were vetted against our industry-leading CITIO framework, which also guides our approach to engagements\nThis process is designed to ensure we offer transparent and independent advice and decision-making and uphold our firm’s high professional standards. For engagements that fail to meet these standards, the firm declines the work.\n### Working with suppliers\n### As a global firm with offices in more than 65 countries, we have a significant opportunity and responsibility to drive positive social and environmental impact through our procurement operations and buying decisions.\n### Supplier standards and values", "chunk_word_count": 419, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Internal frameworks (CITIO)", "document_id": "McKinsey 2022 ESG Full Report", "page": 66, "page_start": 66, "page_end": 66 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 49, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Supplier due diligence\nMcKinsey’s global Sustainable Procurement and Responsible Buying Policy outlines our ambition to deliver positive social and environmental impact through our selection, purchase, use, and disposal of products and services, and through how we work with our suppliers to improve the social and environmental impact of the goods and services they offer.\nOur supplier due diligence process is part of a risk-based approach to identify, prevent, mitigate, account for, and support remediation of any adverse ESG impacts in our supply chain. It supports McKinsey’s commitment to the UN Guiding Principles on Business and Human Rights.\nAs one component of our due diligence process, during supplier sourcing and selection stages the standard request for proposal templates used by our sourcing team includes questions used to screen potential suppliers on practices and policies in areas including environmental sustainability, diversity, and data privacy. New suppliers go through an onboarding process that includes riskbased screening to ensure the supplier follows applicable laws and meets our standards.33 This process includes additional questions for suppliers with potentially higher ESG risk based on considerations such as spend level, country risk, and category risk. Our process is to carry out periodic diligence checks to assess changes in suppliers’ circumstances at intervals determined by the suppliers’ risk profile.\nSince we strive to partner with suppliers that share our values and commitment to responsible conduct, we ask suppliers to agree to our Supplier Code of Conduct.32 This code sets the standards and values we expect of all our suppliers and is embedded in our standard contract template. The code is available to download on our Supplier Standards webpage in 12 languages.\nWe enable this by striving to source from and partner with suppliers that share our values and commitment to responsible conduct.\n### Our approach\nMcKinsey’s Sustainable Procurement program sits within our Responsible Buying program, which is led by our Optimize team with oversight from our chief financial officer and input from a range of firm leaders. Optimize enables our Responsible Buying program through various services covering travel, events, real estate, sourcing, technology, purchasing, and more.\nThe Responsible Buying program integrates ESG, risk, and operations requirements into our procurement processes. It includes training for our colleagues and engagement with our suppliers on key topics. The program is designed to be holistic and to make it easy for colleagues and suppliers to make more responsible buying decisions.", "chunk_word_count": 412, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Supplier due diligence", "document_id": "McKinsey 2022 ESG Full Report", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 50, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Advancing supplier diversity\nIn 2022, we strengthened our supplier due diligence processes by adding a supplementary ESG-specific risk analysis tool and launching collaboration with a third-party supplier assessment platform. The supplier assessments conducted through this platform require document verification and review by an independent third party against globally recognized standards and frameworks. Moving forward, based on assessment results, McKinsey may request corrective actions from suppliers to address ESG improvement areas.\nBeyond our procurement practices, we use McKinsey’s unique capabilities and resources to help strengthen diverse-owned businesses. Since 2020, the McKinsey Inclusive Business Accelerator has supported Black-owned businesses, convening over 1,100 Black business leaders via conferences and networking events, delivering over 500 hours of capability building, and touching more than 3,000 employees through impact partnerships.\nWe believe that our supply chain should reflect the diversity of the communities in which we live and work. In 2020, as part of McKinsey’s 10 Actions, we announced Action 7: the goal to double spending with diverse suppliers34 within three years. In 2022, we are proud to have surpassed this goal.35\nTo make progress toward our Action 7 goal, we built and implemented category-specific strategies, grew our network of supplier diversity champions, expanded the integration of supplier diversity considerations into our sourcing processes, increased external engagement with diverse suppliers and nonprofit certification agencies, and more.\nMoving forward, we will continue to grow and strengthen our supplier diversity efforts globally, including in geographies that are currently less represented in our program.\n### Training for procurement colleagues\nIn 2022, we deployed a training program to all colleagues on our procurement team. The mandatory training covered information on sustainable procurement fundamentals and expectations of our procurement colleagues related to our Sustainable Procurement and Responsible Buying Policy. By the end of the year, 100 percent of eligible Optimize colleagues had completed this training.\n[IMAGE CAPTION] Inside McKinsey’s Denver office, furnished by Corporate Concepts, a woman-owned business that creates better workplace experiences.\nWe continue to identify opportunities to expand our engagement of diverse-owned businesses through our outreach with advocacy and community-based diverse supplier organizations. We are proud corporate members of nine nonprofit organizations dedicated to supporting diverse suppliers. Our membership and outreach better position us to identify and engage diverse suppliers, participate in valuable programming, share in best practices, and maintain awareness about the needs of diverse suppliers. For a full list of our nonprofit partners, please visit our Supplier Diversity Program webpage .\n### We doubled our spending with diverse suppliers within three years, achieving our Action 7 goal\n25%+ total spend with diverse suppliers achieved with Black-owned businesses of eligible Optimize colleagues completed Sustainable Procurement and Responsible Buying Policy training\n### 100%\n### 15+\nof our nondiverse suppliers reported on their own spend with diverse suppliers in collaboration with McKinsey\n### Driving supplier environmental sustainability", "chunk_word_count": 481, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Advancing supplier diversity", "document_id": "McKinsey 2022 ESG Full Report", "page": 68, "page_start": 68, "page_end": 69 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 51, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Read more about supply chain management\nWe are committed to engaging with our suppliers to promote environmental sustainability. Because indirect emissions from travel typically account for more than 80 percent of our carbon footprint,36 we have made engaging with our travel-related suppliers a priority. For example, in 2022, we launched the CDP Supply Chain program with suppliers accounting for more than 80 percent of our Scope 3 business travel emissions. Engaging our suppliers through the CDP Supply Chain program will enable us to more easily identify risks and opportunities related to emissions reductions in our own supply chain and will support and encourage our suppliers on their own emissions reduction journeys. In addition to our CDP Supply Chain launch, we also hosted our first supplier summit, attended by representatives from more than 25 suppliers, to share our expectations and explore areas for further collaboration and innovation on environmental sustainability. Finally, our Green Hotels program engages over 1,000 hotel properties on sustainability topics annually, using information collected from the process to encourage our colleagues to select environmentally sustainable properties.\n» Expand diversity among your suppliers—and add value to your organization\n» Future-proofing the supply chain\nTop 1% EcoVadis Sustainable Procurement score in our industry\n$1 , 0 0 0 +$ hotel properties engaged on sustainability\nA- score on CDP’s Supplier Engagement Rating, reflecting our commitment to engaging suppliers on climate change\n### Human rights\nWe strive to create a work environment that supports, inspires, and respects all colleagues, applicants, clients, and our suppliers and their employees.\n### Our policies and governance\nMcKinsey’s ESG Council oversees our approach to respecting human rights across the value chain. In 2022, we established a cross-functional Human Rights Working Group made up of representatives from Ethics and Compliance, Client Service Risk, Global Social Responsibility, Legal, People, and Procurement functions to operationalize our approach to human rights due diligence and management.\nWe adhere to the principles set forth in the United Nations Global Compact (UNGC), the Universal Declaration of Human Rights, the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work, and the United Nations Guiding Principles on Business and Human Rights.\nOur Human Rights Statement affirms our commitment to respecting human rights across our entire value chain. We stand against the use of child, forced, or exploited labor, as well as forced or exploitative working conditions. We will not assist clients in such practices in any way in any part of the world.", "chunk_word_count": 423, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Read more about supply chain management", "document_id": "McKinsey 2022 ESG Full Report", "page": 69, "page_start": 69, "page_end": 70 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 52, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Human rights due diligence\nAs a firm, we have processes in place to identify, assess, and address potential human rights violations—whether among our colleagues, in our client work, or in the supply chain. Learn more about ethics and compliance , working with clients , and working with suppliers , at McKinsey.\nOur Code of Professional Conduct defines a set of expectations for the behavior of all firm members and for those working on our behalf.\nOur Workplace Conduct Policy outlines our commitment to and expectation that all firm members be able to work in an environment free from harassment and discrimination. Our Recruiting and Hiring Policy establishes the requirement for all personnel processes to be merit-based and applied without discrimination.\n### In our own operations\nOur Workplace Conduct Policy enables reporting of all incidents of discrimination, harassment, or retaliation, regardless of the offender’s identity or position, via clearly designated reporting channels. Individuals found responsible for harassment, discrimination, or retaliation will be subject to disciplinary action, up to and including termination of employment.\nWe expect all suppliers to comply with McKinsey’s Supplier Code of Conduct , which prohibits all forms of forced labor, child labor, and human trafficking and requires compliance with all laws regarding discrimination, harassment, and retaliation.\n### In our client work\n### In our supply chain\nWe support our human rights-related policies with regular awareness building and training. New colleagues must adhere to our Code of Professional Conduct and participate in an onboarding session on the firm’s values, including inclusion, anti-discrimination, and anti-harassment. Annually, all colleagues must certify compliance with the firm’s core policies and complete Professional Standards and Risk training.\nWe will not perform client work that supports or enables human rights violations. As outlined in our client service approach , our commitment to human rights informs whom we serve and on what topics. All work undertaken by the firm, including new and existing clients, undergoes a CITIO risk review in which human rights are embedded in every aspect of the following:\nOur supplier due diligence process supports McKinsey’s commitment to the UN Guiding Principles on Business and Human Rights. This report contains the full description of our supplier due diligence process .", "chunk_word_count": 380, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Human rights due diligence", "document_id": "McKinsey 2022 ESG Full Report", "page": 70, "page_start": 70, "page_end": 71 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 53, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Raising concerns\nEvery firm member has the right to report human rights concerns without fear of retaliation. We do not tolerate retaliation of any kind against anyone who, in good faith, reports potential or actual ethical or legal violations. In addition to clearly defined internal channels, we have a global Got a Concern? helpline that enables colleagues to raise concerns relating to any human rights issues confidentially and, where legally permissible, anonymously.\nAs a UNGC participant, we uphold the freedom of association and the effective recognition of the right to collective bargaining. We adapt our practices to different locations based on local legislation. Learn more about our commitment to diversity, equity, and inclusion and compensation and benefits .\n— Country (of work), for example, does the country in question have specific human rights concerns we need to consider?\n— Institution (client), for example, has the institution been associated with enabling or engaging in human rights violations in any form?\n— Topic (scope of work), for example, does the topic create any risk of human rights impact (that is, impact on vulnerable populations)?\nIn addition, external parties—in particular, our suppliers and those working with them—can report any human rights concerns. We review all complaints and ensure that further inquiry and review are handled in accordance with applicable laws. For additional information, please see the Ethics and compliance section of this report and McKinsey’s Human Rights Statement .\n— Individual (within the client with whom we’ll be working), for example, do any of the individuals with whom we would work have an association with human rights concerns?\n### — Operational considerations (consistency with firm policies)\nShould we identify red flags based on initial diligence research, we can undertake supplemental diligence that may include more in-depth public record research, a review of an entity’s policies and procedures, and communications with the entity to solicit more information.\n### Data privacy and information security\n### Our approach to data privacy\n### Our approach to information security\nWe are committed to meeting high standards of data privacy and information security, whether the data belongs to our clients, partners, or firm members.\nWe follow regulatory requirements and best practices to meet our data privacy obligations. Our approach is governed by our Data Protection and Privacy Policy, which builds on the requirements of the European General Data Protection Regulation and other data protection laws globally.\nOur strategy focuses on the people, processes, and technology that we have in place to maintain our clients’ trust and protect their information. We have had no reportable cybersecurity incidents resulting in a data breach or loss event since 2020. Our program takes a risk-based approach to implement strong defenses built upon:", "chunk_word_count": 463, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Raising concerns", "document_id": "McKinsey 2022 ESG Full Report", "page": 71, "page_start": 71, "page_end": 72 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 54, "chunk_text": "# 2022 ESG Report\n## 62 average annual training hours per consulting colleague\n### Read more about data privacy and information security\nThis policy applies to all our data processing activities. It is reviewed annually, and all firm members are required to confirm their compliance yearly. The policy requires that personal data is:\n— industry-leading technologies \n— regular training for our people \n— designing products and systems with built-in security\nWhy digital trust truly matters » Creating a technology risk and cyber risk appetite framework\n— only collected, accessed, used, and shared strictly as necessary to support the firm’s and our clients’ fair and lawful processing purposes — deleted when there is no longer a legitimate purpose for retaining them, in accordance with applicable laws\nOur Security Operations Center offers best-in-class security incident detection, analysis, containment, and mitigation. All systems and controls are designed to meet International Organization for Standardization/International Electrotechnical Commission 27001 standards and are assessed annually by an independent third party.\nIn 2022, we improved our data archival and retention programs to enhance our client data and document management policy. We also updated our Acceptable Use of Technology Policy and improved cybersecurity measures and controls.\n### Assessing vendor security\n100% of colleagues completed cybersecurity and data privacy training37\nWe also assess third-party vendors to confirm they apply adequate measures to protect the personal data they process on behalf of McKinsey. Contracts with appropriate protections are ensured by our Legal team.\nAs part of our annual Professional Standards and Risk training, all colleagues must complete data privacy training and certify compliance with our policies. Our cyber awareness program provides ongoing training and best practice reminders, including phishing detection.\n### Reporting approach\nIn this chapter, we share our approach to reporting, from engaging our stakeholders to creating value.\n### In this chapter\n74 75 Report scope \nStakeholder engagement \n80 Materiality assessment \n81 How we create value \n82 Performance data \n88 GRI content index \n93 WEF IBC index \n95 TCFD index \n101 Independent assurance \nstatement\n### Report scope\n## WE SUPPORT\nMcKinsey & Company’s 2022 Environmental, Social, and Governance (ESG) Report (“the Report”) is our annual report detailing our commitments, programs, and performance on ESG priorities. All information reflects McKinsey & Company’s worldwide operations, covering the period from 1 January 2022 to 31 December 2022, unless otherwise noted.\nOur GHG emissions inventory and renewable energy use data as well as select social responsibility contributions data were independently verified by Grant Thornton at a limited assurance level. See Grant Thornton’s Report of Independent Public Accountants on page 101.\nFor questions about this report, please contact us at social_responsibility@mckinsey.com\nThe Report has been prepared in accordance with the Global Reporting Initiative (GRI) Standards for this reporting period. It also includes our disclosure against World Economic Forum International Business Council’s (WEF IBC) Stakeholder Capitalism metrics, and serves as our fifth Communication on Progress (CoP) to the UN Global Compact alongside—for the first time this year—the CoP questionnaire. We are also reporting in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).", "chunk_word_count": 511, "section_path": "2022 ESG Report > 62 average annual training hours per consulting colleague > Read more about data privacy and information security", "document_id": "McKinsey 2022 ESG Full Report", "page": 72, "page_start": 72, "page_end": 74 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 55, "chunk_text": "# 2022 ESG Report\n## WE SUPPORT\n### Stakeholder engagement\nOur firm, and the decisions that we make, affect a range of external and internal stakeholders. We use information from engaging these stakeholders to inform our firm’s strategy, practices, and external reporting.\nThese tables summarize the most common ways we engage our stakeholders, what we heard from them in 2022, and how we responded.\n### Clients\n### Engaging our stakeholders\n### Ongoing\n• Client request for proposals (RFPs) • Client engagements • Client impact survey • Industry collaborations • Client requests/inquiries • Virtual events and webinars\n\n### Regularly\n• Pulse survey (weekly) • People survey (annually) • All-colleague survey on priority ESG topics for the firm\n• Recruiting engagements\n### Efforts from Bob Sternfels, Global Managing Partner\n• “What’s on your mind” sessions (bi-monthly) • “What’s on your mind” emails (monthly) • Dedicated sessions with partners and colleague meetings around the world\n### Suppliers\n\n• Supplier RFPs \n• Qualification and onboarding (ESG risk screen) \n• Supplier Code of Conduct expectations \n• ESG supplier assessments \n• Capability conversations with diverse suppliers \n• Tier 2 reporting from select nondiverse suppliers\n### Select suppliers\n• Quarterly business reviews • Supplier summits/training • ESG supplier assessments • Science-based target expectations\n### What we heard McKinsey should do in 2022\n\n### How we responded\n\n### Giving back\nContinue to equip colleagues to give back to their local communities Increased efforts to educate colleagues about company donation matching and paid volunteer time off , resulting in global increases\n• Local McKinsey office engagement in $^ { 1 3 0 + }$ cities • Partnership with $4 \\mathsf { K } +$ nonprofits • Webcasts, in-person and virtual events for alumni • Alumni newsletters/emails for affinity groups • Global monthly alumni newsletter, including alumni features and recent McKinsey research\n### Community presence\nShared more stories about work with community partners, such as Homeboy Industries and Greater Washington Partnership\nIncreased transparency around work in communities and with nonprofit partners\n### Humanitarian crises\nncreased efforts to deliver longer-term support to refugees of the war in Ukraine\nContinue to step up to support humanitarian crises beyond support for those affected by the war in Ukraine\nDeveloped a global crisis response framework to improve ability to provide effective and fast support for humanitarian crises in the future\n### ESG leadership\nPrioritized ESG content in alumni communications and events strategy to help them serve as ambassadors and change agents in their organizations and communities\nContinue playing a leadership role in ESG and advancing conservation, engaging alumni in these efforts\n### Civil society\n\nContinued engagement with various organizations on topics including:\n• gender equality • responsible business practices • climate change and environmental sustainability • economic inclusion\nVisit our website for a list of our key memberships .\n### Materiality assessment", "chunk_word_count": 468, "section_path": "2022 ESG Report > WE SUPPORT > Stakeholder engagement", "document_id": "McKinsey 2022 ESG Full Report", "page": 75, "page_start": 75, "page_end": 79 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 56, "chunk_text": "# 2022 ESG Report\n## WE SUPPORT\n### Our world is constantly evolving— as must our approach to our impacts as a company, in line with our purpose, mission and values.\nWe conduct periodic materiality assessments to identify and prioritize ESG topics, both those that are most significant to our stakeholders and those where we can have the greatest positive impact. The results inform our ESG priorities and reporting.\nIn 2020, we conducted a comprehensive assessment to refine our understanding of internal and external stakeholder expectations of us as a firm, and to drive meaningful progress on our ESG priorities. Below is a summary of our 2020 materiality assessment methodology. For full details, read our 2020 Social Responsibility Report .\nWe continue to perform light-touch materiality updates annually to capture any shifts in stakeholder expectations. In 2022, we conducted a survey asking our colleagues to prioritize the ESG topics that matter most to them. The results informed this report.\nOur materiality assessment process at a glance\n### Topic identification\n### Engagement\nPrioritization\nReview and finalization\nReviewed and finalized the material topics, generating the 18 topics in our final materiality matrix\nIdentified 23 significant issues through external research, industry benchmarking, a review of leading global reporting standards, and a review of internal documents\nConducted interviews and surveys with internal and external stakeholders\nDefined the issue weighting by stakeholder groups, which generated our preliminary materiality matrix\nReviewed emerging trends to understand how these topics may evolve and help inform how we address the boundaries for these topics\n### How we create value\n### Our impact\n### Our guideposts\n### Clients\nSustainably enhance clients’ financial performance, growth, organizational health, and capabilities\n### Purpose\nCreate positive, enduring change in the world\n### By realizing our ambition to accelerate sustainable and inclusive growth for the world, we will create value for our stakeholders and our firm.\n### Mission\nSupport those connected to client work, including clients’ customers, workforces, and communities\nHelp our clients make distinctive, lasting, and substantial improvements in their performance and build a great firm that attracts, develops, excites, and retains exceptional people\n### Colleagues\nSupport well-being and foster a culture of continuous learning and a diverse and inclusive workplace\nAs a global professional services firm, our client service is where we have the greatest opportunity for impact. To enable client impact, our more than 45,000 colleagues around the world work with organizations across the private, public, and social sectors to solve complex problems and create positive change for all their stakeholders.\n### Communities\nStrengthen communities through giving back, pro bono activities, and other social responsibility efforts", "chunk_word_count": 434, "section_path": "2022 ESG Report > WE SUPPORT > Our world is constantly evolving— as must our approach to our impacts as a company, in line with our purpose, mission and values.", "document_id": "McKinsey 2022 ESG Full Report", "page": 80, "page_start": 80, "page_end": 81 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 57, "chunk_text": "# 2022 ESG Report\n## WE SUPPORT\n### Climate\nOur partnership-based business model along with McKinsey’s unique capabilities, technology assets and external collaborations all contribute to how we create holistic impact with clients. Our research and insights help shape public debate, accelerate action, and enable solutions across the most pressing issues, including ESG topics.\nSupport environmental sustainability and a just transition to a net-zero economy\nWith our clients, lead a wave of innovation and growth to reach net zero by 2050\nPursue our own decarbonization to achieve net zero by 2030\nAt the same time, we create value as a firm by attracting, developing, exciting, and retaining exceptional people. We do this by thoughtfully recruiting and training colleagues, by creating opportunities to support local communities through volunteerism and pro bono work, and by providing resources and support for employee well-being. All of this is underpinned by our commitment to lead with integrity and set the standard for accountability and compliance for our profession.\nOur foundations\nClient service and relationships\nCapabilities, insights, and technology assets\nExpertise of our colleagues\nExternal collaborations\n“One firm” partnership model\n### Performance data\n### Our firm\n### Sustainability\n### Inclusive Growth\nDiversity, equity, and inclusion44\nGlobal governance bodies\nWe allow colleagues to self-identify as women, men, or nonbinary (used to indicate a gender identity other than exclusively man or woman, recognizing an individual may identify with another term to best express their identity). The share of women’s representation describes the number of colleagues identifying as women out of the total population of colleagues identifying as women, male, or nonbinary. The current percentage of nonbinary colleagues is less than 1%.\n### Turnover\n### Responsible Business Practices\nEthics and compliance\n### Supplier environmental sustainability\n### Training\n### GRI content index\nMcKinsey & Company has reported in accordance with the GRI Standards for the period January 1, 2022 to December 31, 2022.\n### WEF IBC index\nMcKinsey has signed on to the Stakeholder Capitalism Metrics defined by the World Economic Forum’s International Business Council. \nThese metrics are designed to encourage comparable disclosures related to governance, planet, people, and prosperity.\n### People\n### TCFD index\nThe Task Force on Climate-related Financial Disclosures (TCFD) recommendations are designed to help companies disclose information about the risks and opportunities presented by climate change. Developed around four core elements—governance, strategy, risk management, and metrics and targets—the recommendations enable a company to show how it is responding to change and the resilience of its strategies. The disclosure below is based on information reported in McKinsey’s 2021 CDP Climate Report (submitted in 2022). For our full 2021 CDP Climate Report, see our policies, statements, and disclosures section on our 2022 ESG Report page .", "chunk_word_count": 448, "section_path": "2022 ESG Report > WE SUPPORT > Climate", "document_id": "McKinsey 2022 ESG Full Report", "page": 81, "page_start": 81, "page_end": 95 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 58, "chunk_text": "# 2022 ESG Report\n## WE SUPPORT\n### Strategy\nWe consider climate-related risks and opportunities in the short $_ { ( 0 - 2 }$ years), medium $( 2 - 5$ years), and long $5 +$ years) term as part of our business strategy.\nC2.1a, C2.3, a. Describe the \nC2.3a, C2.4, climate-related risks \nC2.4a and opportunities the organization has identified over the short, medium, and long term\nIn our climate-related risk assessments, we have considered current regulation, emerging regulation, legal, market, technological, and reputational risks, as well as acute and chronic physical risks Based on input from McKinsey’s internal functions, sustainability practice experts, and others, we have not identified inherent climate-related risks with the potential to have a substantive financia or strategic impact on the firm.\nPhysical risks: As a global firm that operates in $6 5 +$ countries, we have offices that are likely to be exposed to both acute and chronic physical risks in the near, medium, and long term. In our analysis, we assessed the impact of physical risks, including riverine and coastal flooding, extreme heat, and hurricanes, aligned to different climate pathways (1.5 and 2 degrees Celsius). We used McKinsey Climate Resilience Analytics downscaled CMIP5 models, as well as data from the World Resources Institute (WRI) and WindRisk Tech. The forecasted future impacts do not represent a substantive safety, financial, or strategic impact above the $4 \\%$ threshold on revenues.\nTransition risks: We have assessed current regulation, emerging regulation, legal, market, reputational, and technological risks across short, medium, and long-term horizons and different scenarios (including the UN Principles for Responsible Investment’s (UNPRI) Inevitable Policy Response’s “Required Policy Scenario”) where relevant. We do not expect the cost of the transition risks to have a substantive financial or strategic impact on our business as they do not cross the materiality threshold of $4 \\%$ of overall revenues.", "chunk_word_count": 309, "section_path": "2022 ESG Report > WE SUPPORT > Strategy", "document_id": "McKinsey 2022 ESG Full Report", "page": 96, "page_start": 96, "page_end": 96 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 59, "chunk_text": "# 2022 ESG Report\n## WE SUPPORT\n### Opportunities\nIn April 2021, we launched McKinsey Sustainability, our new client service platform to better support all industries as they undergo the transformation needed to cut carbon emissions by half by 2030 and reach net zero by 2050. We anticipate further opportunities to deliver sustainability consulting to clients across industries (for example, energy and finance) and geographies (for example, US and Europe) as decarbonization fundamentally reshapes the economy. As we continue to partner with our clients on their climate transition journeys, we believe that sustainability consulting represents $\\$ 1+$ billion per year for us over the next three years. In 2022, McKinsey Sustainability supported clients on their climate transition journey on 1 ${ , } 6 0 0 +$ engagements. More than 3,500 colleagues spend ${ 3 0 \\% + }$ of their time on sustainability-related engagements, including green business building, decarbonization, and nature-based capital. Learn more about how we supported clients on sustainability in 2022 .\nelated risks Products and services: In 2021, we launched our new client service platform, “McKinsey Sustainability,” with the goal of helping all industry sectors transform to reach net zero by 2050 along with unities on the other sustainability goals and tailored to regional contexts. We use our thought leadership, innovative tools and solutions, top talent, and a vibrant ecosystem of industry associations and knowledge n’s businesses, platforms focused on innovating to net zero. Our plans focus on four key levers of decarbonization: helping clients drive a “brown to green” transition of the global economy’s installed base; building d financial new green businesses and innovations; retiring and repurposing the highest carbon intensity assets; and scaling nature-based solutions.\nSupply chain and/or value chain: Climate-related risks and opportunities—including reputational (for example, expectations of colleagues and clients), regulatory (for example, carbon tax), and physical (for example, risk to our buildings due to severe weather)—have influenced our strategy. These risks and opportunities will continue to impact our supply chain strategy in the short, medium, and long term. Because indirect emissions from travel typically account for more than $8 0 \\%$ of our carbon footprint,57 we have made engaging with our travel-related suppliers a priority. Learn more about our supplier engagement in 2022 .\nInvestment in research and development (R&D): We believe that the climate crisis is a defining issue of our time, so in 2021, we committed to investing $\\$ 1$ billion in our capabilities over the next five years to help our clients lead a wave of innovation and growth to safeguard our planet. We work with leading institutions to develop distinctive thought leadership and convene partnerships tha tackle problems that institutions cannot tackle alone.\nOperations: As a global firm, we have set 2025 validated SBTs and committed to net-zero climate impact by 2030. Each region has an SBT regional leader (senior partner level) who is accountabl for achieving our 2025 near-term SBTs to ensure we meet our commitments.", "chunk_word_count": 490, "section_path": "2022 ESG Report > WE SUPPORT > Opportunities", "document_id": "McKinsey 2022 ESG Full Report", "page": 96, "page_start": 96, "page_end": 97 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 60, "chunk_text": "# 2022 ESG Report\n## WE SUPPORT\n### Opportunities\nClimate change is leading companies to manage risks and seize opportunities, driving increased demand for management consultancy and advisory services on sustainability. This increased demand for our expertise has a positive impact on our client service and revenue. The impact is currently moderate and is expected to increase in line with the global transition to a low-carbon economy, although it has not been deemed to have a substantive financial or strategic impact on the firm. This is evaluated in short-term financial planning. We are actively engaged with this challenge every day. In 2022, ${ 3 , 5 0 0 + }$ colleagues partnered with $6 0 0 +$ clients on 1 ${ , } 6 0 0 +$ sustainability-related client engagements across nearly 60 countries.\nAssets: As an advisory firm, our “assets” are not physical locations or business units in the traditional sense, but our proprietary knowledge and our reputation. We continue to make a substantial investment in research and knowledge building. This is factored into our financial planning, in developing an understanding of a wide range of sustainability and resource productivity topics with the aim of informing and progressing the debate with an independent fact base, tools and frameworks, and analysis of risks and opportunities. The impact of these activities is low in comparison to the company-wide financial planning process and has not been deemed to have a substantive financial or strategic impact on the firm in the short term.\nCapital expenditure: We have committed to 2025 SBTs and net-zero climate impact by 2030. We have also been carbon neutral since 2018. Therefore, capital expenditures and investments energy-efficient buildings are included in the financial planning process.\nAcquisitions and divestments: McKinsey acquired Sweden-based Material Economics, experts in sustainability and circularity in December 2021. In March 2021, McKinsey acquired Vivid Economics and Planetrics to help clients navigate climate change, bringing us significant additional analytical capabilities.\n### TCFD recommendation\n### CDP reference\n### Disclosure\nC3.2, C3.2a, c. Describe the resilience of \nC3.2b the organization’s strategy, taking into consideration different climate-related scenarios, including a $2 ^ { \\circ } \\mathsf { C }$ or lower scenario\nIn 2022, a cross-functional team composed of McKinsey climate scientists, consultants, economists, leaders in the sustainability practice, and risk and finance professionals conducted climaterelated scenario analysis to project the financial and strategic implications of evolving physical and transition impacts of our firm’s strategy and business model (using 2021 data). Our choice of climate scenarios weighed alignment to temperature pathways and policy actions. These scenarios were assessed across multiple timeframes to capture near-, medium-, and long-term impacts.", "chunk_word_count": 438, "section_path": "2022 ESG Report > WE SUPPORT > Opportunities", "document_id": "McKinsey 2022 ESG Full Report", "page": 97, "page_start": 97, "page_end": 98 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 61, "chunk_text": "# 2022 ESG Report\n## WE SUPPORT\n### rameters and assumptions used in our climate-related scenario analysis depending on temperature alignment of scenario included:\n• The $1 . 5 \\%$ scenario, which uses UNPRI’s Inevitable Policy Response “Required Policy Scenario,” capping warming to 1.5 degrees Celsius over pre-industrial levels by 2100. It quantifies strong impacts from transitional risks (for example, carbon prices) and innovation, and is included to reflect the net-zero pathway many governments and companies have publicly committed to.\nThe $1 . 6 ^ { \\circ } C - 2 ^ { \\circ } C$ scenario, which uses UNPRI’s “Forecast Policy Scenario,” capping warming to 1.8 degrees Celsius over pre-industrial levels by 2100. This is based on a high-conviction forecast of forceful policy in response to climate change and related implications for energy, vehicles, and carbon prices.\n### Results of the climate-related scenario analysis\nMcKinsey has developed a suite of climate risk analysis tools and capabilities that assisted in our climate scenario analysis:\nCost of emissions change: Based on evolving carbon prices globally, carbon emissions are likely to become increasingly expensive over time. Our scenario analysis included three point-in-time calculations in 2025, 2030, and 2050. The main source of these emissions is business travel (approximately $8 0 \\%$ of firm emissions in 2019). As part of our analysis, forecasted carbon prices from UNPRI’s “Required Policy Scenario” were weighted across geographies based on our emissions. According to UNPRI’s, “Required Policy Scenario”, carbon prices of $\\$ 45-85$ per ton and $\\$ 87-175$ per ton will be needed by 2030 and 2050 respectively. Carbon pricing from regulations are not likely to have a substantive financial or strategic impact on our business as we do not operate in an emissions-intensive industry and we have committed to reaching net zero by 2030.", "chunk_word_count": 298, "section_path": "2022 ESG Report > WE SUPPORT > rameters and assumptions used in our climate-related scenario analysis depending on temperature alignment of scenario included:", "document_id": "McKinsey 2022 ESG Full Report", "page": 98, "page_start": 98, "page_end": 98 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 62, "chunk_text": "# 2022 ESG Report\n## WE SUPPORT\n### Climate Resilience Analytics\nClimate Resilience Analytics is McKinsey’s core team of experts who analyze and generate insights from the quantitative impact of climate change for our clients. The team works across nearly all sectors at McKinsey that are being impacted by climate change, such as the public, energy, and financial sectors.\nPeople and physical assets most exposed: As a global firm that operates in $6 5 +$ countries, we have offices that are likely to be exposed to both acute and chronic physical risks in the near, medium, and long term. In our scenario analysis, we assessed the impact of physical risks, including riverine and coastal flooding, extreme heat, and hurricanes, aligned to different climate pathways (1.5 and 2 degrees Celsius). We used McKinsey Climate Resilience Analytics downscaled CMIP5 models, as well as data from WRI and WindRisk Tech. Our analysis found that approximately 31.5K colleagues are based in metropolitan areas that may be exposed to severe flooding globally and approximately $1 2 . 5 1$ to hurricanes, especially in the Eastern US and Western Pacific. Despite these exposures, our investments in business continuity planning and the nature of our business mean these acute physical events do not present a substantive safety, financial, or strategic impact on our business.\nEffect on sectors we serve: We work with clients across sectors, sizes, and geographies. To assess the climate transition and physical impacts on the companies we serve, we conducted scenario analysis using Planetrics, our climate analytics suite. The analysis evaluated the impacts of decarbonization on the average valuations of companies in the sectors and regional industries that we serve. The analysis included three scenarios: the Required Policy Response (to limit warming to 1.5 degrees Celsius above pre-industrial levels by 2100), the Forecasted Policy Response (to limit warming to 1.8 degrees Celsius above pre-industrial levels by 2100), and Network for Greening the Financial System’s (NGFS) “Hot-house World,” where little policy action is taken. We found downside risk from carbon pricing and demand destruction to be mostly concentrated in hard-to-abate sectors after 2040. However, we believe that our work in decarbonization, climate resilience, and in helping grow new green industries may help our clients identify opportunities and take bold action.\n### Vivid Economics\nVivid Economics is a strategic economics consultancy with broad sustainability and macroeconomics capabilities McKinsey acquired in 2021.\nPlanetrics\nThe Planetrics team, part of McKinsey Sustainability, is a specialist in the design of climate-change risk and opportunity modeling at the level of regions, sectors, and assets.\n### Independent assurance statement\n### Report of independent certified public accountants\nWe are required to be independent and to meet our other ethical responsibilities in accordance with relevant ethical requirements related to the engagement. The procedures we performed were based on our professional judgment and consisted primarily of analytical procedures and inquiries. In addition, we obtained an understanding of McKinsey & Company’s business processes relevant to the review in order to design appropriate procedures.\nGRANT THORNTON LLP New York, New York June 7, 2023", "chunk_word_count": 507, "section_path": "2022 ESG Report > WE SUPPORT > Climate Resilience Analytics", "document_id": "McKinsey 2022 ESG Full Report", "page": 98, "page_start": 98, "page_end": 101 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 63, "chunk_text": "# 2022 ESG Report\n## WE SUPPORT\n### Management McKinsey & Company\nWe have reviewed management of McKinsey & Company’s assertion that the environmental and social responsibility metrics set forth in Appendix 1 are presented in accordance with the criteria set forth therein. McKinsey & Company’s management is responsible for its assertion. Our responsibility is to express a conclusion on management’s assertion based on our review.\nThe preparation of the Subject Matter requires management to evaluate the criteria set forth in Appendix 1, make determinations as to the relevancy of information to be included, and make estimates and assumptions that affect reported information.\nMeasurement of certain amounts, some of which may be referred to as estimates, is subject to substantial inherent measurement uncertainty. Obtaining sufficient appropriate review evidence to support our conclusion does not reduce the inherent uncertainty in the amounts and metrics. The selection by management of different but acceptable measurement techniques could result in materially different amounts or metrics being reported.\n## GRANT THORNTON LLP\nOur review was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the review to obtain limited assurance about whether any material modifications should be made to management’s assertion in order for it to be fairly stated. The procedures performed in a review vary in nature and timing from, and are substantially less in extent than, an examination, the objective of which is to obtain reasonable assurance about whether management’s assertion is fairly stated, in all material respects, in order to express an opinion. Accordingly, we do not express such an opinion. Because of the limited nature of the engagement, the level of assurance obtained in a review is substantially lower than the assurance that would have been obtained had an examination been performed. We believe that the review evidence obtained is sufficient and appropriate to provide a reasonable basis for our conclusion.\n## 757 Third Ave., 9th Floor New York, NY 10017-2013\nD +1 212 599 0100 \nF +1 212 370 4520\nBased on our review, we are not aware of any material modifications that should be made to management of McKinsey & Company’s assertion that the environmental and social responsibility metrics set forth in Appendix 1 of McKinsey & Company for the year ended December 31, 2022, are presented in accordance with the criteria set forth therein, in order for it to be fairly stated.", "chunk_word_count": 408, "section_path": "2022 ESG Report > WE SUPPORT > Management McKinsey & Company", "document_id": "McKinsey 2022 ESG Full Report", "page": 101, "page_start": 101, "page_end": 101 }, { "report": "McKinsey 2022 ESG Full Report.pdf", "chunk_idx": 64, "chunk_text": "# 2022 ESG Report\n## GT.COM\n### Appendix 1: McKinsey & Company management assertion\nManagement of McKinsey & Company is responsible for the completeness, accuracy, and validity of the performance metrics included in the tables below as of or for the year ended December 31, 2022 (the reporting year). The metrics have been rounded to the nearest whole number unless otherwise indicated.\nManagement asserts that the metrics reported in the tables are presented in accordance with the assessment criteria set forth below.\nIn 2022, a total of 488,526 hours were contributed to pro-bono and social responsibility activities.\nManagement is responsible for the selection of the criteria, which management believes provide an objective basis for measuring and reporting on these performance metrics. The preparation of the metrics requires management to establish the criteria, make determinations as to the relevancy of information to be included, and make estimates and assumptions that affect reported information. McKinsey & Company bases its estimates and methodologies on historical experience, available information, and various other assumptions that it believes to be reasonable. Emissions data presented are subject to measurement uncertainties resulting from limitations inherent in the nature and the methods used for determining such data. The selection of different but acceptable measurement techniques can result in materially different measurements. The precision of different measurement techniques may also vary.\nIn 2022, a total of 532 thousand $\\mathsf { t C O } _ { 2 } \\mathsf { e }$ of carbon offsets were purchased to cover the firm’s total emissions reported for the year and achieve carbon neutrality.\nData relied upon in reporting on performance metrics was obtained from financial reporting systems, time-tracking systems, accounts payable records, and other internal records.", "chunk_word_count": 284, "section_path": "2022 ESG Report > GT.COM", "document_id": "McKinsey 2022 ESG Full Report", "page": 102, "page_start": 102, "page_end": 102 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 0, "chunk_text": "# 2023 Sustainability Report\nH\nFor a Better Reality.\n## 03 Leadership letter\n## 04 About\nTable of Contents\n### )7Our sustainability vision\n## 09 How we operate\nPath to net zero \nResponsible supply chain \nWorkplaces \nData centers \nRisks and opportunities \nBiodiversity\n## 35 How we collaborate\nEmployee engagement Carbon removal partnerships Water positive in 2030 Climate policy Sharing climate insights\n## 29 What we create\nProduct circularity Elevating accurate information Small businesses sustainability\n## 42 Looking ahead\n## 43 Data index\n## A MESSAGE FROM\n### Rachel Peterson\n## VICE PRESIDENT, DATA CENTER STRATEGY\nAs of 2020, our global operations reached net zero emissions and are supported by $100 \\%$ renewable energy. We are now reaching toward the goals of net zero emissions across our value chain and becoming water positive throughout our operations, aiming to achieve both of these milestones in 2030.\ndecarbonization, extends beyond our data centers and offices, including emissions from the server components our suppliers manufacture to our employees' commutes.We do not have all of the answers yet, but we commit to continuing to share our journey with you through this annual report.\nOperating sustainable data centers is foundational to our sustainability strategy. Our strategy is anchored by three components - how we operate,what we create and how we collaborate.\nWe know that reaching net zero emissions across our value chain will not be an easy task. Right now, our Scope 3 emissions are increasing and will continue to do so as we work to support the global demand for the services we provide.\nWithin our global footprint, our data centers generate the highest percentage of our energy use, water use and GHG emissions, which is why increasing their efficiency is critical in maintaining net zero operations and striving for a net zero value chain.\nOur size and global reach give us the opportunity - and the responsibility - to drive sustainable change across our industry. Our work to reduce emissions will drive market availability for other companies to do the same.\nThis report details our progress in 2022 and looks to the challenges facing us in 2023 and beyond. Follow our journey by visiting our sustainability homepage 7.\nMeta's net zero in 2030 goal focuses on embedding sustainability into everything we do, whether designing products,commuting,selecting construction materials or working with suppliers to set their own net zero targets. For example, through our Net Zero program, we work closely with suppliers to determine their Scope 1, 2 and 3 emissions, set reduction targets and promote strategic action.\nWe see our role as protecting people and the planet through responsible operations 一 minimizing our emissions and the energy and water used to power our data centers that enable users to access our products and the workplaces where those products are built and managed - while protecting workers and the environment in our supply chain.\nOur approach to data center sustainability focuses on using less - less energy, water, unnecessary infrastructure,and waste - and building the most efficient buildings we can. We further reduce our environmental impact through renewable energy, water stewardship, circularity, and low-carbon alternatives.\nOur challenge, to transform our ambition into rapid\nGiving people the power to build community and bring the world closer together.", "chunk_word_count": 540, "section_path": "2023 Sustainability Report > 03 Leadership letter", "document_id": "Meta 2023 Sustainability Report", "page": 1, "page_start": 1, "page_end": 4 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 1, "chunk_text": "# 2023 Sustainability Report\n## VICE PRESIDENT, DATA CENTER STRATEGY\n### About Meta\nMETA BUILDS TECHNOLOGIES THAT HELP PEOPLE CONNECT,BUILD COMMUNITIES AND GROW BUSINESSES.\nWhen Facebook launched in 2004,it changed the way people connect. Apps like Messenger, Instagram,and WhatsApp further empowered billions around the world. Now, Meta is moving beyond 2D screens toward immersive experiences like augmented and virtual reality (AR/VR) to help build the next evolution in social technology.\nWe have offices in more than 90 cities across North America, Europe,the Middle East, Africa, Asia Pacific and Latin America. We also own 21 data center locations globally.\n### About this report\nIn line with TCFD recommendations,we conduct climate-related risk and opportunity assessments to help us take the right measures to build our company's resilience. We disclose emissions annually based on the Greenhouse Gas (GHG) Protocol and update our GHG emissions as we increase the accuracy of our data. Our environmental metrics and methodology can be found in the index of this report. In 2022,our external auditor, Apex Companies,LLC,audited our environmental data. You can access our audit certifications here ス. Our full data index can be found here ≥.\n## 2023 environmental sustainability progress\nthe Sustainability Accounting Standards Board (SASB), Internet and Media Services Industry Standards; the United Nations (UN) Global Compact, the UN Sustainable Development Goals (SDGs); and the Task Force for Climate-Related Financial Disclosures (TCFD).", "chunk_word_count": 227, "section_path": "2023 Sustainability Report > VICE PRESIDENT, DATA CENTER STRATEGY > About Meta", "document_id": "Meta 2023 Sustainability Report", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 2, "chunk_text": "# 2023 Sustainability Report\n## 2023 Responsible Business Practices Report ≥ and immediately follows our 2021 Sustainability Report 7.\nMeta's 2023 Sustainability Report reflects our work during the 2022 fiscal year (January 1-December 31, 2022) unless otherwise noted.It builds on topics outlined in our\nThis year's report was prepared in reference to the Global Reporting Initiative (GRI) standards with guidance from\n### Our sustainability vision\nWe are in the business of building better realities and not just virtual ones.\nWe envision a just and equitable transition to a zero-carbon economy and are working in partnership with others to scale inclusive solutions that help create a healthier planet for all, ensuring that no one is left behind.\nthe energy and water used to power our data centers that enable users to access our products and the workplaces where those products are built and managed - while protecting workers and the environment in our supply chain.\ncommunity members, climate action leaders and scientists to innovate beyond what is possible today. We are leveraging our core apps and services to enable access to climate science information and to accelerate action-oriented resources for tomorrow.\nWe see our role as protecting people and the planet through responsible operations - minimizing our emissions and\nAt the same time, we acknowledge we will not realize this vision on our own. We continue to collaborate with\n### For a better reality\n### What we create\n### How we operate\nWe push the boundaries of what is possible, creating solutions where none existed and building apps and services that enable change.\nWe are committed to protecting what is truly important: The well-being of people and our planet.\n·Take bold climate action by minimizing our footprint, championing renewable energy, restoring water resources, engaging our suppliers and supporting climate justice. ·Respect human, labor and civil rights in our operations and supply chain. ·Cultivate diversity and inclusion in our operations. ·Boost energy and water efficiency in our data centers.\n· Provide access to new ideas,accurate information and ways to take action via content on our platforms. \n·Amplify content from scientists and climate action leaders. \n· Design new apps and services with diverse needs and values in mind. \n·Elevate small businesses and spur economic growth. \n· Integrate circular practices in our facilities and hardware.\n· Engage experts to guide our sustainability and social impact initiatives. · Connect researchers with insights. · Join forces with non-governmental organizations (NGOs) and community organizations to create and implement locally beneficial environmental initiatives.\n· Work with local power utilities to enable our facilities and local businesses to procure renewable energy. ·Share our environmental learnings and practices throughout the tech industry and beyond.\nHow we collaborate We tackle the important issues by creating partnerships and joining established initiatives.\nTo create a better reality, we must start by improving our own practices, processes and culture.\nTo be good stewards of our planet and maintain the trust of shareholders, employees, suppliers,customers and partners,we must operate sustainably, responsibly and ethically and communicate transparently in everything we do.\n### Path to net zero", "chunk_word_count": 510, "section_path": "2023 Sustainability Report > 2023 Responsible Business Practices Report ≥ and immediately follows our 2021 Sustainability Report 7.", "document_id": "Meta 2023 Sustainability Report", "page": 6, "page_start": 6, "page_end": 9 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 3, "chunk_text": "# 2023 Sustainability Report\n## SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS.\n[IMAGE CAPTION] Meta's 2022 carbon footprint\nWe know that achieving net zero value chain emissions in 2030 is going to be difficult, and this challenge requires material shifts in how we build infrastructure and operate our business. Our approach to reaching our goal will evolve over time as we transform our business and explore climate solutions that will scale with varying degrees of success.\nTo get there,we reduced our operational emissions by $9 4 \\%$ from a 2017 baseline, primarily by supporting our data centers and offices with $100 \\%$ renewable energy. Our renewable energy commitments have reduced our GHG emissions by more than 12.3 million metric tons of carbon dioxide equivalent ( $C O _ { 2 } \\Cup$ since 2018.\nBut reaching net zero emissions in our operations is not enough. Meta's responsibility to decarbonize our footprint extends beyond our data centers and offices. To align with the Paris Agreement 7,we have set a goal to reach net zero emissions across our value chain in 2030.\nWe removed 80,000 tons of CO2 through carbon removal projects to cover our Scope 1 and 2 emissions.\n### Path to net zero\nEarly in this decade, we do not expect decarbonization and business growth to be in harmony.In fact, our emissions increased $4 6 \\%$ in 2022 due to Meta employees returning to offices and because our business growth accelerated at a faster pace than we can scale decarbonization measures.\n$3 9 \\%$ smaller than our locationbased emissions in 2022, reflecting significant emissions reduction from initiatives such as our procurement of $100 \\%$ renewable energy. In the coming years,we will build upon the strong foundation for emissions reduction we have set in 2022 with our suppliers and across our value chain as detailed throughout the rest of this report. More details on our path to net zero can be found here 7.\n### Total location- vs. market-based emissions\nOur 2022 market-based emissions were $3 9 \\%$ smaller than our location-based emissions (14 M tons COe). Our market-based emissions adjust for emissions reductions from purchasing decisions we have made. This includes our contracting of more than 10,000 megawatt (MW) of renewable energy and purchase of more than 1 million gallons of sustainable aviation fuel for business travel, which has an up to $80 \\%$ lower carbon footprint than traditional jet fuel.\nThis reality underscores the need for us to drive innovative solutions across our business and in collaboration with our suppliers today, so that growth can happen sustainably. We are already seeing tangible results in our push to decarbonize our operations. Particularly, our market-based emissions were\n\n### Reducing our emissions", "chunk_word_count": 454, "section_path": "2023 Sustainability Report > SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS. > Path to net zero", "document_id": "Meta 2023 Sustainability Report", "page": 10, "page_start": 10, "page_end": 12 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 4, "chunk_text": "# 2023 Sustainability Report\n## SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS.\n### The core principles guiding our approach to emissions reduction include:\nReducing GHG emissions across our global operations and value chain is a top priority and the most effective strategy to reach net zero. Failure to reduce emissions today will lock in high-carbon intensity business tomorrow. Rapid decarbonization is our best chance to limit the worst impacts of climate change, which is critical to sustain healthy and equitable communities.\nWe are setting a sciencealigned emissions reduction target in line with what is necessary to transition to a zero-carbon future,and we have roadmapped our strategy to systematically transform the way we do business.\nDesigning with less and reducing the volume of materials in construction and hardware, extending the life of hardware components and reducing waste.\nChoosing better and incorporating principles of circularity into our supply chain, construction and purchases.\nEmbracing low-carbon technology and finding alternatives such as low-carbon fuels and innovative new materials.\n### Path to net zero\n### SUPPORTING EFFORTS TO DECARBONIZEELECTRICITY GOESWELL BEYOND THEPROCUREMENT OF RENEWABLE ENERGYFOR OUR OWN OPERATIONS.\n### Enabling renewable energy\nSupporting our operations with $100 \\%$ renewable energy is critical to our net zero strategy and is no small task as our business continues to grow.\nWe partner with many of the largest utilities in the U.S. to add renewable energy onto their systems in ways that work for both Meta and other customers. Not all utilities offer electric rates (or tariffs,as utilities call them) that allow customers to support their facilities with new renewable energy projects.When this is the case, we work with utility partners to create green tariffs that provide our facilities, and other energy customers,with the\nopportunity to pursue renewable energy projects via their retail electricity service and address their own sustainability goals.\nOur renewable energy projects represent an estimated $\\$ 14.2$ billion of capital investment in new infrastructure, supporting an estimated 74,0o0 one-year jobs throughout the U.S.over the 10-year construction phase (averaging 7,40o jobs per year).\nOur portfolio of more than 10,0o0 MW of contracted renewable energy projects makes Meta one of the largest corporate buyers of renewable energy globally,and the corporation with the largest operating portfolio7_ in the U.S., with more than 5,500 MW online.\n\n### Putting emissions first\n### Engaging our suppliers to drive net zero progress\nencourage companies to purchase an amount of renewable energy equal to that of the electricity purchased.\n### Capacity building\n6\nDeliver capacity-building content to enhance suppliers' sustainability maturity.\nMeta is part of the Emissions First partnership,a coalition of like-minded companies that created a set of objectives and principles aiming to update purchased electricity GHG emissions accounting systems to better drive carbon reductions.\nTo help us reach net zero emissions across our value chain in 2030, we are partnering with our suppliers to commit to science-aligned GHG reduction targets and to use $100 \\%$ renewable energy for Metarelated production and services.", "chunk_word_count": 494, "section_path": "2023 Sustainability Report > SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS. > The core principles guiding our approach to emissions reduction include:", "document_id": "Meta 2023 Sustainability Report", "page": 12, "page_start": 12, "page_end": 14 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 5, "chunk_text": "# 2023 Sustainability Report\n## SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS.\n### Accounting\nThis approach has driven hundreds of new renewable energy projects onto grids around the world. Since 2012, Meta's corporate procurement has galvanized more than 10 gigawatts (GW) of new renewable energy, enough to power more than 750,000 homes.\nGather annual GHG emissions and help suppliers understand the material activities leading to those emissions.\n### Silicon Ranch Solar\nWe've partnered with Silicon Ranch, one of the largest independent power producers in the U.S., on 16 projects totaling approximately 1,500 MW of new solar energy, including 720 MW contracted in Georgia and Tennessee in 2022. Silicon Ranch's model of land management colocates renewable energy production with regenerative agriculture practices.\n### Target setting\nEngage collaboratively with suppliers to set GHG reduction targets for 2025 and 2030 in alignment with the science and the context of our business together.\nGHG accounting standards provide the framework companies use to ensure the climate solutions they pursue are credible and will meet the criteria to be included in corporate climate goals.\nBy the end of 2026, we intend to engage with suppliers that represent at least two-thirds of our supplier spend budget through:\n### Execution\nFocusing on the emissions impact of electricity generation rather than comparing megawatt-hours used vs megawatt-hours purchased is critical to unlocking decarbonization at scale.\nWork directly with suppliers to create accountability, partnerships and executable action plans in a supplier-specific, prioritized manner.\nTo reduce emissions from purchased electricity (Scope 2),accounting standards and emissions calculation programs\n### Path to net zero\n[IMAGE CAPTION] Photo courtesy of Western Rivers Conservancy\nNature-based carbon removal projects are available now and begin sequestering carbon within the first years of implementation. These projects also address the multifaceted nature of climate change beyond carbon sequestration and can provide positive local impacts such as supporting community resilience or increasing the ecological health of a region.\nmitigation potential. These technologies can offer durable carbon storage,especially geologic storage that is less vulnerable to reversal. Supporting a wide range of projects today aligns with the urgency needed to address climate change.\n### Our carbon removal projects:\n· Demonstrate additionality. \n· Are designed and monitored for durable carbon storage. \n· Support local livelihoods to enable climate justice and equity. \nBenefit the environment by supporting biodiversity, habitat or water resources. \n· Are quantified using existing standards and verified by a third party.", "chunk_word_count": 403, "section_path": "2023 Sustainability Report > SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS. > Accounting", "document_id": "Meta 2023 Sustainability Report", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 6, "chunk_text": "# 2023 Sustainability Report\n## SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS.\n### Removing what we can't eliminate\nOur strategy seeks to expand the voluntary carbon market toward the types of high-quality projects we value and that align with the highest environmental and social standards.In 2022,we supported agroforestry, improved forest management and ecological\nEmerging technologies like direct air capture will be a necessary complement to emissions reduction and nature-based removals in order for the world to reach a zero carbon future. These projects will require early demand signals to scale and are in various stages of research, development, and deployment; nevertheless, many have a high global climate\nrestoration projects in California, Australia and Mexico. You can read more about our carbon removal projects here 7.\nWhile our climate strategy prioritizes achieving significant emission reductions, some emissions from hard-to-abate sectors will remain difficult to eliminate by 2030. Any residual emissions we cannot eliminate will require carbon removal projects to reach our net zero goal.\nSupporting a diverse portfolio of natural and technological carbon removal projects is essential to maximize near-term climate impact while supporting necessary carbon removal solutions for the future.\n### Responsible supply chain\nOur approach begins with establishing clear expectations with our suppliers through our standards and policies.The Responsible Business Alliance (RBA) Code of Conduct ≥, Meta's Anti-Slavery and Human Trafficking Statement 7 and Meta's Conflict Minerals Policy 7 form the basis of our RSC program.We work closely with our suppliers to help them build internal capabilities to meet our requirements and improve their overall sustainability performance.\nMeta is part of a complex value chain that touches lives and communities around the globe. Our Responsible Supply Chain (RSC) ≥ program strives to empower workers and protect the environment - through open and frequent communication with our suppliers; deep understanding of core sustainability issues; and initiatives that support safe, healthy and fair working conditions. Focusing on social and environmental responsibility within our supply chain enables us to protect workers; promote circularity; proactively identify, assess and mitigate risks to our business; and drive responsible manufacturing practices.\n\n### Developing our suppliers\nOur approach to supplier development is based on a continuous improvement model, working closely with suppliers to help them understand,prevent and mitigate risks in and to their business.\nquestionnaires and other types of on-site assessments. For any identified areas of concern, we work with suppliers to understand root causes, develop corrective action plans, and assess closure.\nWe use a risk-based methodology to regularly assess suppliers' social and environmental risks, then engage with them to build their capabilities to meet Meta's expectations.We assess supplier conformance to the RBA Code of Conduct and other Meta standards via independent third-party audits, supplier\nThroughout this process, ongoing supplier dialogue and engagement are key. We engage with suppliers in an array of programs that aim to improve working conditions, support worker well-being,maximize resource efficiency, reduce environmental risks,and lead to sustained progress.\n\n### Improving worker well-being", "chunk_word_count": 493, "section_path": "2023 Sustainability Report > SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS. > Removing what we can't eliminate", "document_id": "Meta 2023 Sustainability Report", "page": 15, "page_start": 15, "page_end": 17 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 7, "chunk_text": "# 2023 Sustainability Report\n## SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS.\n### Ensuring health & safety\nWe are focused on safe process chemical management by leveraging the RBA Industry Focus Process Chemicals Policy ≥. Working with key data center hardware and Reality Labs supplier sites,we assessed policies and procedures in place to protect worker safety. Surveying tools, desktop reviews and in-person facility-level assessments also support our suppliers in developing corrective actions and improvement plans.\nEffectively protecting workers and the environment in our supply chain means understanding and focusing on ways to mitigate the environmental, health and safety (EHS) risks associated with the activities our supply chain partners undertake on our behalf.\nWe are committed to improving the working conditions and sustained performance of Meta's hardware supply chain by keeping workers at the core of what we do.\nMeta provides a variety of training programs for our suppliers as a way to directly support them and further enable the business. For example, in 2022,we enlisted the help of third-party experts to design and launch the Building a Respectful Workplace training program. This program builds suppliers' and workers' understanding of harassment and discrimination in the workplace, including gender-based vulnerabilities,and supports their capacity to identify and address these issues.\nBuilding on risk assessment work conducted with suppliers, in 2022 we also worked with a third-party consultant to evaluate how gender is integrated into our core RSC standards and tools and developed programming and engagement opportunities with partners to bring more focus to this issue. Making our RSC program more gender-responsive aligns with the United Nations Guiding Principles on Business and Human Rights 7 and the Organisation for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises 7. By investing in programs centered on equity and justice,we support a more resilient supply chain for all.\nThrough our Worker Well-being program, we use surveying tools,worker engagement,and training and capability building to understand workers' needs and perspectives.We engage directly with workers through mobile surveys that provide insights into key worker sentiment.\nIn 2022,we conducted an indepth questionnaire and onsite EHS risk assessment for selected supplier sites based on a prioritization exercise. This led to the development of practical toolkits to help suppliers and Meta's sourcing managers implement best practices for managing the most common EHS issues.\nBuilding a Respectful Workplace engages all functions and levels of employees and cultivates employee empowerment by creating peer coaches who share learnings with their coworkers.\n### Responsible supply chain\n### Responsible sourcing", "chunk_word_count": 417, "section_path": "2023 Sustainability Report > SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS. > Ensuring health & safety", "document_id": "Meta 2023 Sustainability Report", "page": 18, "page_start": 18, "page_end": 18 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 8, "chunk_text": "# 2023 Sustainability Report\n## SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS.\n### Addressing forced labor risks\nWe also partner with external organizations to support holistic approaches to address the root causes of forced labor in global supply chains.\nMeta recognizes that the extraction of raw materials - including cassiterite, columbite-tantelite (coltan), wolframite and gold, and their derivatives tin, tantalum and tungsten (known as “3TG\"or“conflict minerals\") - may contribute to armed conflict and human rights abuses in certain high-risk contexts. We are committed to the responsible sourcing of minerals used in our consumer hardware products and expect our suppliers to share this commitment. Meta's Conflict Minerals Policy Z guides our responsible minerals sourcing practices and expectations for our suppliers.\nMeta is opposed to all forms of human trafficking, slavery, servitude, forced labor and all other trafficking-related activities as noted in our 2023 Anti-Slavery and Human Trafficking Statement 7. Our statement includes information on preventing forced labor risks in our supply chain, including risk assessment and due diligence processes. In 2022,we launched a new course for Meta employees to increase internal awareness of Meta's commitment, policies and practices to prevent forced labor risks in our business operations and supply chains.\n### Collaborating for supply chain excellence\nCollaborating with external partners to develop solutions helps us advance our own responsible supply chain work and amplify positive impact beyond our industry. Our key responsible supply chain partnerships include the Responsible Business Alliance 7, the Responsible Labor Initiative 7, the Responsible Minerals Initiative Z,and the Open Compute Project 7.\n### Creating healthy, sustainable workplaces\nWhile the way we look at the traditional office culture has changed drastically, our commitment to providing workplaces that are healthy, safe and sustainable will not change. We focus equally on the people inside our workplaces as the natural environment around them.\nWe are targeting a $50 \\%$ reduction in workplace carbon emissions in 2030 (from a 2019 baseline), which we aim to achieve through the following reduction goals:\nOur workplace sustainability program is focused on the following priorities:\nS\n· $32 \\%$ reduction in office energy consumption.\nCircularity\nClimate\n$50 \\%$ reduction in waste generated in office operations.\nOur approach to workplace sustainability is driven by climate action as well as promoting the health and wellbeing of our employees.\n· $35 \\%$ reduction in employee commute emissions.\nBiodiversity\nCommitment\n· $40 \\%$ reduction in embodied carbon of building materials and furniture.\n$54 \\%$ reduction in carbon intensity of culinary offering.", "chunk_word_count": 415, "section_path": "2023 Sustainability Report > SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS. > Addressing forced labor risks", "document_id": "Meta 2023 Sustainability Report", "page": 19, "page_start": 19, "page_end": 20 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 9, "chunk_text": "# 2023 Sustainability Report\n## SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS.\n### Creating healthy, sustainable workplaces\nWe target third-party sustainability certifications across our global office portfolio to ensure high-performance design and operations targeted at resource efficiency and occupant health.\nMeta has offices certified by the following third-party certification programs:\nLEED rating system 7 provides a framework for healthy, efficient and cost-saving green buildings. All Meta offices over 100,000 square feet are required to be LEED Gold or higher.\nFitwel Z provides a framework for healthy buildings focused on sustainable sites, exercise, healthy foods, health programming, safety and emergency preparedness.\n· WELL Health-Safety Rating7 provides a framework for facility operations and management focused on preparing real estate assets for critical health-safety issues.\nGreenStar 7 is an Australian green building rating system that provides a framework for reducing climate change, enhancing health and quality of life,protecting biodiversity and fostering resilience.\n### ISO 50001 standard 7\nspecifies requirements for establishing,implementing, maintaining and improving an energy management system.\n## 62 Meta office buildings are LEED Certified (as of December 31, 2022).\n## 4 Meta offices are ISO 50001 Certified (as of December 31, 2022).\n## 10 Meta office buildings are Fitwel Certified (as of December 31, 2022).\n## 9 Meta offices received LEED Certifications in 2022.\n## 177 Meta offices were WELL Health-Safety Rated in 2022 (certification valid January 2022-January 2023).\nMeta's Sydney office is GreenStar Certified (as of December 31, 2022).\n### Setting the standard for data center sustainability\n4. Eliminate waste. Use less stuff to begin with and promote a zero-waste culture by reusing and recycling as much as we can.\n## 7. Support electric vehicles. Provide infrastructure to encourage carbon-free transportation.\n### Meta's top 10 sustainability priorities for data centers\nconserve energy and water, reduce waste, treat our land and communities with respect, responsibly source materials, and provide healthy workspaces for our people. Together, this comprehensive approach has led to $100 \\%$ of our operational data center buildings earning, at minimum,LEED Gold certification.\n## 1. Push efficiency first. Aim to drive energy and water efficiencies with advanced IT and mechanical, electrical and plumbing design.\n## 8. Measure and report our impact. Track and report our environmental impacts linked to data center construction and operations.\n5. Buy better products. Improve visibility into our construction materials supply chain and source building products that have a low GHG footprint and safe chemistry.\n## 2. Use renewable energy. Continue supporting our data centers with $100 \\%$ renewable energy.\nGHG emissions. Also responsible for the highest percentage of Meta water use, operational data centers rely on water for evaporative cooling during summers and humidification during winters.\nMeta's data centers are part of the global infrastructure that brings our current technologies to life and supports immersive experiences in the metaverse. And, supported by $100 \\%$ renewable energy, they are among the most advanced and efficient in the world. Our data centers generate the highest percentage of our energy use anc", "chunk_word_count": 498, "section_path": "2023 Sustainability Report > SINCE 2O2O,WE HAVE MAINTAINED NET ZERO EMISSIONS IN OUR GLOBAL OPERATIONS. > Creating healthy, sustainable workplaces", "document_id": "Meta 2023 Sustainability Report", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 10, "chunk_text": "# 2023 Sustainability Report\n## 9. Drive innovation. Experiment with new technologies and build social value by sharing our successes with the world.\nAs we look to the future, we have streamlined our approach to data centers to a new architecture that we believe will be more cost-efficient and more flexible. This pivot in design will set us up to support both artificial intelligence (Al) and non-Al workloads at our data centers.\n3. Be a good neighbor. Minimize our impact to the land, air, water, noise and atmosphere, and prioritize sustainability strategies most important to a region's unique character.\n## 6. Boost wellness. Create healthy, delightful workspaces that foster employee wellness and productivity.\n## 10. Focus on impact. Stay true to these principles.\nWe have a strong track record incorporating design and construction strategies that\n### Setting the standard for data center sustainability\nIn our data centers,we're focused on reducing the embodied carbon, defined as the COze generated by the manufacturing and transporting of building materials and the construction process.To support efforts to scale the use of sustainable construction materials such as low-carbon concrete, Meta became a sponsoring member of the American Concrete Institute's Center of Excellence for Carbon Neutral Concrete 7 in 2022. This partnership will enable us to vet low-carbon concrete options based on standardized criteria and help us integrate these options into our data center design and construction program.\n### Data center water efficiency\nWater is a key resource used in operating our data centers and is used primarily for evaporative cooling during summers and humidification during winters. Relative humidity, temperature and airflow are three key factors to maintaining an ideal operating environment for servers.\nTo date, we have certified 34 LEED Gold or better data center buildings, totaling over 22 million square feet. We are also a platinum member of the U.S. Green Building Council. In 2022, six of our new construction data center buildings,in the following locations,were awarded LEED Gold certification, totaling over 5 million square feet:\n· One in Altoona, lowa.\n· One in Papillion, Nebraska.\nIn 2022, we tested increasing our data hall temperature from $8 5 ^ { \\circ } \\mathsf { F }$ to $9 0 ^ { \\circ } \\mathsf { F }$ at select pilot campuses. The preliminary results indicate a reduction of over $50 \\%$ of our water use over the summer season, with little to no impact Z to our data center operations.\n· One in North Huntsville, Alabama.\n· One in Eagle Mountain, Utah.\n· Two in Newton County, Georgia.\n### Setting the standard for data center sustainability\n### Integrating circularity\nTo enable greater circularity within our supply chain, we focus on eliminating the use of hazardous substances and prioritizing the responsible takeback, reuse,and recycling of electronic equipment. Our Materials of Concern Standard and Electronics Reuse and Recycling Standard support safe and healthy environments for anyone who manufactures, uses or recycles Meta hardware.\nIn our data centers,we prioritize the use of post-consumer recycled (PCR) plastics and recycled metal in our hardware and system design to enable a more circular supply chain,and thus,reduce the embedded carbon in our hardware.", "chunk_word_count": 522, "section_path": "2023 Sustainability Report > 9. Drive innovation. Experiment with new technologies and build social value by sharing our successes with the world.", "document_id": "Meta 2023 Sustainability Report", "page": 22, "page_start": 22, "page_end": 24 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 11, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\nWe believe evolving from linear to circular production and consumption is critical for a better reality, which is why we have integrated circularity into our net zero emission strategy. Limiting the use of new materials helps us prevent waste and avoids upstream emissions. Beyond our operations,we see it as our responsibility to use our consumer hardware products, family of apps and knowledge to catalyze circularity in our industry and beyond.\nAvoiding emissions in our upstream supply chain means using less,where possible.To achieve this,we are investing in systems that will extend the life of our hardware and reusing as many components as possible in our data center production.\nSince 2021, we have been validating the reliability and quality of reused components through a rigorous evaluation process and have landed hundreds of new racks containing reused components within our fleet. The quality of the reused components continues to show excellent results,with some of the oldest racks with the reused components already at two years of age and continuing to perform well under real-world production workloads. We expect to closely monitor the hardware health for all the racks and iterate on our practices moving forward.We have also extended the estimated average useful life of a majority of our servers from four to five years.\n### Setting the standard for data center sustainability\n### Understanding the life cycle impact of data center components\nembodied carbon estimates at the scale of the hundreds of millions of components in our data center hardware.\nWe cannot reduce what we do not measure. In 2022, we conducted Life Cycle Assessments (LCAs) on several data center hardware products and developed internal visualization tools to identify the highest carbon emitting components of each product.\nIn 2022, the teams reached more than $90 \\%$ coverage, meaning there is primary data,an LCA, or a modeled Z value assigned to each asset. This dataset lays the foundation for value chain carbon reductions by helping us use less or choose low-carbon options, engage suppliers,and drive value chain and system-level interventions in line with Meta's net zero strategy.\nAt the data center fleet level, the Sustainability, Physical Modeling, and Meta Al Systems and Machine Learning teams have partnered on a large-scale project to develop and scale a dataset containing the best available\n### Understanding risks and opportunities\nPartnerships.Meta amplified its climate resilience initiatives at COP27 7 by launching the PREPARE Call to Action on Adaptation 7 in partnership with the U.S. State Department and U.S.Agency for International Development alongside Microsoft, Google, Mastercard and others. We also supported the Resilience Hub 7 and organized a panel about the role of technology ス in building climate resilience.\n· Supply chain. We work with our supply chain partners to ensure they have the tools to identify and manage the climate risks they may face. Assessing resilience to climate change is crucial to guiding our efforts to ensure the people and communities within our supply chain are prepared for climate risks.", "chunk_word_count": 507, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > Setting the standard for data center sustainability", "document_id": "Meta 2023 Sustainability Report", "page": 24, "page_start": 24, "page_end": 26 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 12, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\n### Meta's commitment to action on climate adaptation and resilience includes:\nOperations. We integrate climate risk and resilience assessment findings into key business decisions such as site selection and infrastructure development and partner with local communities to enhance climate resilience.\n· Apps and services. We worked with partners to help launch our first Climate Science Literacy Initiative. Its goal is to pre-bunk climate misinformation by running ads across our apps and services that feature five of the most common techniques used to misrepresent climate change.\n### Building climate resilience\nMany of our emissions, energy, water and biodiversity initiatives promote community climate resilience. And by sharing the insights we gain with our local partners - and vice versa - we can further increase opportunities for communities to build resilience for themselves.\nBuilding community is at the heart of accelerating resilience and adapting to climate change. Meta technologies reach 3 billion people globally, including some of the communities most on the frontlines of climate change.\nPeople. We also integrate climate risk and resilience into our employee preparedness programs to provide proactive actions employees and their households can take to be more prepared for climaterelated, natural and other hazards we may face.\nWe conduct ongoing climaterelated risk and opportunity assessments to help us take the right measures to build our company's and our world's resilience to changes that are already happening.\n### Respecting biodiversity\nWe promote biodiverse habitats in all phases of data center development through minimizing our footprint, consolidating construction to preserve sensitive or ecologically unique habitats, and intentionally restoring and enhancing native habitats in landscape design. To date, we have preserved and planned over 3,400 acres of native habitat across 2O North American data centers - representing $5 8 \\%$ of our existing data center fleet footprint.In addition to habitat benefits, these landscapes provide inexpensive carbon sink, soil stabilization, as well as waterefficient and climate-resilient solutions over traditional sod or ornamental landscape options.\nRapid climate change threatens the rich variety of living organisms on our planet. The loss of biodiversity has critical implications for humanity, from the collapse of food chains and health systems to the disruption of entire supply chains.\nA 40-acre native polinator habitat restoration project at our Huntsville, Alabama, data center got underway in early 2023. This project includes a native genome rare plant nursery, in which we will grow our own seeds to expand the restoration.", "chunk_word_count": 414, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > Meta's commitment to action on climate adaptation and resilience includes:", "document_id": "Meta 2023 Sustainability Report", "page": 26, "page_start": 26, "page_end": 28 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 13, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\n### Protecting wildlife\nMeta's policies help prevent illegal wildlife trafficking from happening on our platforms.Our Community Standards 7 strictly prohibit content depicting, admitting or promoting criminal acts including poaching or selling endangered species or their parts.\nCross-sector collaboration and industry partnerships are crucial in our efforts to combat illegal wildlife sales online. Since 2018, we have belonged to the Coalition to End Wildlife Trafficking Online Z,working with external organizations to help scale our impact in this area, including the World Wildlife Fund (WWF) 7, the International Fund for Animal Welfare (IFAW) 7, TRAFFIC フ, and other leading businesses.\nMeta's Commerce Policies 7 prohibit the sale of live animals or animal parts.We rely on a combination of community reports, technology and human review to remove violating content. These policies align with the Convention on International Trade in Endangered Species (CITES)7 Appendix I.\nWhen a user searches a hashtag associated with harmful behavior to animals, such as #tigerselfie or #elephantivory,an advisory will warn them about these dangers and provide an opportunity to learn more.We will sometimes permanently block specific hashtags on Instagram known to be related to endangered species to prevent users from searching for or creating them on the platform.\nAlthough we have made significant progress in recent years, this is a rapidly evolving space,with traders constantly adapting and obfuscating their tactics to circumvent our policies and fool detection systems.\nMeta was born to innovate, ask questions and build products that enable people to change and grow.\nWe create solutions that connect people not only with each other but also with resources,information, tools and opportunities.\n### Product circularity\n· Completing LCAs for our products and accessories - including Meta Quest 2, Meta Quest Pro, and Ray-Ban Stories - to find opportunities for improvement so that we can quantify and reduce the carbon footprint of the next generation of these products even further.\n· Increasing the use of sustainable materials in our products and packaging.\n### In 2022,we advanced the sustainability of our products by:\n· Transitioning segments of our logistics network to lower-carbon modes of transit, such as ocean freight, leading to over 47,000 metric tons of carbon emissions reduction compared to the transportation impact of total Quest 2 units shipped in 2021.\n· Extending the life of products, parts and equipment through refurbishment, reuse and our extended warranty program offering.\nA refurbished Quest 2 is estimated to produce $\\textless 5 \\%$ of the GHG emissions of manufacturing, packaging and shipping versus a new Meta Quest 2.\nWe have operationalized our product sustainability targets by embedding sustainability requirements into the product development process for all new devices and accessories. These requirements support and ensure that we are designing devices that take sustainability considerations into account, such as being easy to repair\nand recycle; using sustainable materials; having extended lifespans; and using low-carbon manufacturing and transportation methods. As we develop new technologies that will help people connect and explore in the metaverse,we are focused on approaches that prioritize emissions reductions through the concepts of circularity.", "chunk_word_count": 518, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > Protecting wildlife", "document_id": "Meta 2023 Sustainability Report", "page": 28, "page_start": 28, "page_end": 30 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 14, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\n### Minimizing the environmental impact of consumer hardware\nOcean freight produces about 97% fewer carbon emissions 7 transporting the same weight and distance traveled than air freight does. Going forward, we aim to increase ocean freight volumes even further.\nWe leverage the capabilities of our platforms to drive climate action through our core products.We create solutions that connect people not only with each other but also with resources, information, tools and opportunities.\n· Prioritizing the use of PCR, bio-based plastics, elastomers and recycled metal in our products.\n### Elevating accurate information\nMisinformation thrives in the absence of good information. We focus on slowing the spread of misinformation by amplifying reliable content and directing users to authoritative information.\nWe take any misinformation on our platforms seriously, which is why we partner with our industry-leading network of more than 9O independent factchecking organizations to review and rate climate-related content in more than 6O languages.\ndiscussions across our apps. Much of that expression and debate is essential to building consensus and finding solutions to climate change. That's why we take a comprehensive approach to climate-related content 7 that educates and informs people with accurate information while addressing misinformation.\nOur platforms extend access to information and empower users to take action through tools like the Climate Info Finder Tool and the Climate Science Center. We have fully expanded the Climate Science Center to all countries, attracting more than 18 million followers.\nWe don't recommend content or approve ads that have been rated false by one of our fact-checking partners,and we take action 7 against Pages, Groups,accounts and domains that repeatedly share false claims about climate science.\n· Launched the Climate Info Finder 7 tool enables people to search for trusted information about climate change and link to this content directly in comment threads\nCritical challenges like climate change lead to complex\nPartnered with Monash Climate Change Communication Research Hub 7,Cambridge Social Decision-Making Laboratory 7 and Yale Program on Climate Change Communication 7 on our new Climate Science Literacy Initiative 7 .\n### Elevating the facts about climate change\nOur fact-checking partners review and rate a wide range of climaterelated claims,including false information that outside experts say undermines the existence or impacts of climate change, misrepresents scientific data and mischaracterizes mitigation and adaptation efforts.\n### How we fight climate misinformation\nThe Climate Science Center 7 is a dedicated space on Facebook for factual resources from the world's leading climate organizations and actionable steps people can take in their everyday lives to combat climate change.In 2022, we:\nMisinformation makes up a small amount of the overall climaterelated content on our apps,and climate change misinformation makes up a very low percentage of total misinformation. Still, that misinformation can spike when the conversation about climate change is elevated, such as during extreme weather events.\nWhen fact-checkers rate content as false, we add a warning label and reduce the visibility of that content so fewer people see it.\n· Fully expanded the Climate \nScience Center globally, \nattracting more than 18 \nmillion followers from 243 \ncountries and territories.\n\n### Recognizing the recipients of our climate misinformation grant", "chunk_word_count": 532, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > Minimizing the environmental impact of consumer hardware", "document_id": "Meta 2023 Sustainability Report", "page": 30, "page_start": 30, "page_end": 32 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 15, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\n### Science Feedback (France)\n### Verificat (Spain)\n### PolitiFact (United States)\nwill kickstart a new African Wikipedia Task Force on Climate Disinformation to debunk climate denialism and delayism.\nThe organization will create a portal where fact-checkers are able to submit claims, content or topics for expert verification and input.\nFact-checkers Verificat, solution providers Kinzen, and experts from the C3 Centre for Climate Change at Rovira and Virgili University will join forces to increase the capacity to understand and expose climate misinformation in podcasting.\nIn partnership with MediaWise and Climate Nexus, PolitiFact will create an information loop that starts with Climate Nexus to surface possible misinformation.\nIn partnership with the International Fact-Checking Network (IFCN) and an independent six-member judging panel of climate domain experts,we launched the $\\$ 1$ million Climate Misinformation Grant Z to fund partnerships and proposals from fact-checkers, climate organizations and solution providers working to combat false and misleading information about climate change. We received applications from around the world. Of the 30 global semifinalists, representing 71 entities, nine grantees were selected in 2022:\n### Demagog Association (Poland)\n### Fact Crescendo (India)\n### USA Today (United States)\nIn partnership with Crazy Nauka, Defence24 sp. z o.o. and Energetyka24.com, Demagog Association's project features a chatbot created by experts and journalists working to address climate misinformation.\nIn partnership with the Water, Climate and Hazard (WATCH) Division of Aaranyak, Fact Crescendo will debunk myths and translate explanations of environmental misinformation into local languages.\nUSA Today is collaborating with the Society Library to enhance the work of fact-checkers by introducing the companion discipline of context-checking as part of a dedicated, open-source training program.\n### elDetector de Univision Noticias (United States)\nIn partnership with López-Wagner Strategies, Univision Noticias' elDetector will combat misinformation about climate change for Spanish-language speaking audiences.\n### Factual.ro (Romania)\n### Code for Africa/PesaCheck (Kenya)\nIn collaboration with InfoClima.ro and REPER21, Factual.ro is launching a framework that brings the resources,experience and expertise of an IFCN signatory and five different environmental organizations together.\nDriven by a team of dedicated Wikipedians-in-Residence, who will be embedded with partner newsrooms, PesaCheck", "chunk_word_count": 360, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > Science Feedback (France)", "document_id": "Meta 2023 Sustainability Report", "page": 32, "page_start": 32, "page_end": 32 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 16, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\n### Helping small businesses grow sustainably\nSMBs make up $9 9 . 7 \\%$ of all EU enterprises7,and $6 6 \\%$ of total EU employment. Although SMBs drive economic growth and development, they also have a high environmental footprint, accounting for up to $70 \\%$ of EU industrial pollution 7.\nMeta provides many resources to help small and medium-sized business (SMB) owners build customer relationships and reach new audiences on our platforms. Meta Boost Guide to Green 7 helps these businesses grow sustainably.\nFrom on-demand training to tips for sharing their unique sustainability story, Guide to Green is designed to help SMBs drive climate change while growing their business.\nThe Guide expanded further across Europe in 2022.In collaboration with the SME Climate Hub7,Legambiente ス and Giovani Imprenditori Confcommercio 7, the Guide to Green helps SMBs take climate action and reduce their carbon footprint, with a particular focus on restaurants, hotels and food producers.\nGiven that $7 7 \\%$ of EMEA consumers consider how sustainable a brand is before trying it,embracing the green transition is an important step for the future of small businesses.\n\n### Elevating climate creators\nCreators are at the forefront of a movement that allows more individuals to make an impact with their content. More and more, people create and consume culture through the individual creators they follow, including their favorite influencers, artists, video creators, public figures, journalists and athletes.\na business,and earn a living. Our investments empower creators with the cutting-edge tools, education and resources needed to build creative and financial success 一 now and in the future.\nMeta Sustainability has worked with climate creators since 2021, beginning with the Climate Talks podcast, hosted by climate advocate Sophia Li. In 2022, Meta hosted the first-ever Climate Talks Salon for climate creators in New York City.\nMeta is uniquely positioned to support the growing creator community by helping all types of creators tell their stories, build\nPartnerships enable us to scale positive impact.\nIt will take everyone working together to make the systemslevel changes required for a better reality: world-class experts in sustainability and social issues, climate leaders,academic\nresearchers, local utilities, community nonprofits, suppliers and every one of our thousands of employees.\n### Employee engagement\nThe success of our sustainability program depends on having our Metamate voices at the table. We invite all employees to join our year-round efforts by participating in executive Q&A sessions, educational training, local Green@ chapters or climatefocused hackathons.\n### Enabling employees to track their climate action\nIn 2022, Meta piloted a partnership with Climate Club 7 to enable Scope 3 GHG emissions reductions program with the support of employee advocates.\nIn January 2023, we launched an app to track office food and waste reductions to a group of 5O0 employees. This program helped our employees understand the collective impact individual actions can have.\n### Carbon removal partners for impact", "chunk_word_count": 491, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > Helping small businesses grow sustainably", "document_id": "Meta 2023 Sustainability Report", "page": 33, "page_start": 33, "page_end": 36 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 17, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\n### AMONG THE WAYS WE ARE DRIVING CARBON REMOVAL IS THROUGH COLLABORATION WITH LIKE-MINDED COMPANIES TO CREATE RAPID CHANGE AT SCALE.\nIn 2022,we announced a joint \\$925 million commitment 7 alongside Stripe, Shopify, McKinsey Sustainability, and Alphabet to accelerate the development of carbon removal technologies by guaranteeing future demand.\nThrough 1t.org, the National Indian Carbon Coalition Z and Meta are joining together in a pledge 7 to support land restoration and promote a model of carbon projects that centers on the leadership, traditional ecological knowledge, and vision of Indigenous Peoples for themselves and the land they care for. Such an approach uses these elements as the compass to develop projects that not\nonly protect and sequester carbon, reduce climate impacts, and increase climate resilience but also honor and center the relationship between Indigenous communities and their land.\nWe are engaged with the Business Alliance to Scale Climate Solutions7，which provides a platform for us to meet with other businesses and climate experts and act together to improve climate solutions.\n[IMAGE CAPTION] Photo courtesy of TIST\n### Collective action to reach water positive in 2030\nIN 2022, OUR WATER RESTORATION PROJECTS RETURNED 621 MILLION GALLONS OF WATERTO HIGH AND MEDIUM WATER STRESSED REGIONS.\nMinimizing water use, being transparent with our water data, and restoring water in high waterstressed regions are key pillars of our water stewardship program.\nWe are committed to becoming water positive by 2030,when we will restore more water to the environment than we consume for our global operations.To achieve this goal, Meta will restore $200 \\%$ of the water we consume in high water-stressed areas, and $100 \\%$ of the water we consume in medium water-stressed areas. Our water restoration projects in water-stressed regions always have a hydrological connection to the source water consumed in our operations and are verified by independent third-party experts,applying industry standard methodologies.Working with local organizations and utilities, we invest in water restoration projects in water-stressed regions that also provide co-benefits such as supporting local water supply or restoring local habitats and wildlife.\nSince 2O17, we have funded or supported more than 25 water restoration projects in eight watersheds where we operate. Once all projects are online and fully implemented, they will restore 1.9 billion gallons of water annually. In 2022, the operational restoration projects returned 621 million gallons (2,351,562 cubic meters) of water to high and medium water stressed regions.\n\n### Jicarilla Apache Nation\n### Wildcat Marsh", "chunk_word_count": 418, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > AMONG THE WAYS WE ARE DRIVING CARBON REMOVAL IS THROUGH COLLABORATION WITH LIKE-MINDED COMPANIES TO CREATE RAPID CHANGE AT SCALE.", "document_id": "Meta 2023 Sustainability Report", "page": 37, "page_start": 37, "page_end": 39 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 18, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\n### Colorado River Indian Tribes Drip Irrigation Project\nThe Jicarilla Apache Nation (the Nation), located in northcentral New Mexico, has more than 45,O00 acre-feet of settled water rights in the San Juan River basin that are used for cultural practices, domestic supply, environmental uses,and economic development. For the last several decades, the Nation leased water to coal fired power plants that are now facing closure. This transition presented a new opportunity for the Nation, the New Mexico Interstate Stream Commission, and The Nature Conservancy to work together.\nWetlands like Wildcat Marsh southeast of Dallas are home to a variety of wildlife and provide many benefits such as erosion control, flood control and improved water quality. For this project, Meta is supporting Ducks Unlimited and the Texas Parks and Wildlife Department to create a new wetland spanning 63 acres within the Richland Creek Wildlife Management Area. This will improve fish and wildlife habitat as well as improve the quality of water being released back to the Trinity River. The Wildcat Marsh project is expected to restore 12.9 million gallons of water per year.\nThrough Bonneville Environmental Foundation, Meta contributed funding toward an historic Water Sharing Agreement that allows the New Mexico Interstate Stream Commission to lease up to 20,000-acre feet of water per year (for 10 years) from the Nation to benefit threatened and endangered fish and increase water security for New Mexico.\nScarce water and increasing federal cutbacks fuel the need to optimize water efficiency in Arizona, where agriculture is critical to the economy of the Colorado River Indian Tribes (CRIT). We are partnering with CRIT and N-Drip Technology to replace flood irrigation with drip irrigation that reduces water usage,evaporation and runoff by providing water directly to the soil slowly. A pilot project resulted in water savings from $30 \\%$ to $52 \\%$ and is predicted to restore 96.5 million gallons of water per year.\n### Collective action\nIn 2022, Meta joined the UN CEO Water Mandateス,a UN Global Compact initiative that mobilizes business leaders on water, sanitation, and UN SDG 6, Clean Water & Sanitation,as well as\nthe Water Resilience Coalition 7, a cross-sector initiative to raise the ambition of corporate water stewardship and foster collective impact in priority basins.", "chunk_word_count": 386, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > Colorado River Indian Tribes Drip Irrigation Project", "document_id": "Meta 2023 Sustainability Report", "page": 39, "page_start": 39, "page_end": 39 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 19, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\n### Driving climate policy\ncooperation at COP 7 is critical, which is why we have prioritized our engagement on the global stage,and Meta is proud of its longstanding relationship with the United Nations Framework Convention on Climate Change (UNFCCC).\nClimate action is critical to achieving a sustainable economy and protecting our planet.We are working internally to decarbonize our operations and supply chain and reduce our overall environmental footprint.\nMeta also acknowledges that comprehensive and well-designed climate and clean energy policy is central to transitioning to a future that avoids the worst impacts of climate change. We actively work with policy makers, partner organizations, trade groups and industry peers to advance climate and clean energy policies.\nThis includes membership in the Clean Energy Buyers Alliance (CEBA), Advanced Energy United (AEU), American Council on Renewable Energy (ACORE), Center for Climate and Energy Solutions (C2ES), European Climate Pact,and Asia Clean Energy Coalition (ACEC). Our memberships should not be\nviewed as an endorsement of every policy position that individual organizations or their leadership take.\nWe believe that for Meta to reach our own net zero emissions goal in 2030,we need governments around the world to move toward a net zero economy. Global\n### Sharing climate insights\nIn addition to elevating climate experts' voices across our platform,we also invest in proprietary research that helps inform our approach to amplifying climate content.In 2022, we completed our biggest ever global survey analyzing public views toward climate change in partnership with researchers at the Yale Program on Climate Change Communication 7.", "chunk_word_count": 268, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > Driving climate policy", "document_id": "Meta 2023 Sustainability Report", "page": 40, "page_start": 40, "page_end": 41 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 20, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\n### The survey found:\n· People everywhere think climate change should be a high priority for their government. Majorities in most countries in North and South America say it should be a“very high” priority.\nWe hope the findings will be used to inform policy decisions and priorities for governments, especially in many countries where surveys of this sort have not taken place before.\n· The majority of people in nearly all countries said that they were “somewhat worried”or“very worried” about climate change.\nThe findings should also be valuable for researchers around the world,as well as a resource to inform public information or awareness raising campaigns by activists and NGOs, and help journalists with nationally relevant data.\n· Most people say their country should reduce pollution causing climate change, either on their own or if other countries also do so. However, people have different views on who is primarily responsible for reducing pollution - majorities in 43 countries said their government is responsible,42 countries said individual people,and 25 said businesses.\n· A majority in almost all areas surveyed think action to reduce climate change will either improve or have no negative impact on the economy.\nThe survey asked more than 100,000 Facebook users from nearly 200 countries and territories about their knowledge of - and attitudes and behavior toward 一 climate change issues, and what should be done to address them.\n· People support using more renewable energy and less fossil fuels. About 9 in 10 people in Hungary, Portugal and Spain think their country should use somewhat or much more renewable energy.\nAlready, the Social Progress Imperative Z has used data from the 2022 survey to develop a new Climate Perception Index, which will serve as a tool to better understand the societal implications of climate change and enable policy makers to deliver tangible positive outcomes for their citizens.\nLooking ahead\nOur mission is to give people the power to build community and bring the world closer together. We build tools to empower people to create positive change in their lives and in the lives of others. We invite you to stay connected and join us on about.meta.com/actions/responsiblebusiness-practices 7, sustainability.fb.com 7, facebook.com/sustainability 7 on Facebook and @metasustainability 7 on Instagram.\n### Data index", "chunk_word_count": 388, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > The survey found:", "document_id": "Meta 2023 Sustainability Report", "page": 41, "page_start": 41, "page_end": 43 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 21, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\n### Forward looking statements\nThis report covers only Meta's business and does not address the performance or operations of our suppliers, contractors or partners. Statements regarding targets, goals and commitments are aspirational and may also be based on estimates and assumptions under developing standards that may change in the future. As such, no guarantees or promises are made that they will be met or successfully executed, and actual results may differ, possibly materially. In addition,data, statistics and metrics included in this report are non-audited estimates, not necessarily prepared in accordance with generally\naccepted accounting principles, continue to evolve, and may be based on assumptions believed to be reasonable at the time of preparation but may be subject to revision. This report has not been externally assured or verified by an independent third party unless otherwise noted. This report represents Meta's current policy and intent and is not intended to create legal rights or obligations.\ntopics that reflect Meta's significant economic, social and environmental impacts or that substantially influence the assessments and decisions of a diverse set of stakeholders. We are not using these terms as they are used under the securities or other laws of the United States or any other jurisdiction or as these terms are used in the context of financial statements and financial reporting. This report is not comprehensive,and for that reason, should be read in conjunction with our most recent Annual Report on Form $1 0 { \\cdot } \\mathsf { K } ,$ our subsequent reports on Forms 10-Q and 8-K and other filings made with the Securities and Exchange Commission (SEC).\nThis report contains forwardlooking statements. All statements contained in this report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans,and our objectives for future operations,as well statements regarding targets, goals and commitments,are forward-looking statements. The words“believe,”\"may,” \"will,”\"estimate,”\"continue,” \"anticipate,”“intend,”“expect,” and similar expressions are intended to identify forwardlooking statements.We have based these forward-looking\nstatements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations,business strategy, short-term and longterm business operations and objectives, and financial needs.\nAny one of those factors, including as the result of changes in circumstances,estimates that turn out to be incorrect, standards of measurement that change over time,assumptions not being realized, or other risks or uncertainties,could cause our actual results,including the achievement of targets, goals or commitments, to differ materially from those expressed or implied in writing in any forward-looking statements made by Meta or on its behalf.\nEspecially with respect to the matters discussed in this report, many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved.\nIn this report, our use of the terms“material,”“materiality\" and other similar terms is consistent with that of GRl, SASB, TCFD and other standards referenced in the preparation of this report, or refers to", "chunk_word_count": 527, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > Forward looking statements", "document_id": "Meta 2023 Sustainability Report", "page": 44, "page_start": 44, "page_end": 44 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 22, "chunk_text": "# 2023 Sustainability Report\n## SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS\n### Forward looking statements\nWe also caution that the important factors referenced therein may not include all of the factors that are important to readers. Our forward-looking statements speak only as of the date of this report or as of the date they are made,and we undertake no obligation to update this report to reflect subsequent events or circumstances,except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.\nWe describe these risks and uncertainties in our SEC filings, including our most recent Annual Report on Form 10-K and our subsequent reports on Forms 10-Q and $8 – 1$ as well as, with respect to targets, goals and commitments outlined in this report or elsewhere, the challenges and assumptions that are either identified in this report or that we are unable to foresee at this time.We cannot assure that the results reflected or implied by any forward-looking statement will be realized or, even if substantially realized, that those results will have the forecasted or expected consequences and effects.\nSuch links or references are not incorporated by reference to this report,and we can provide no assurance as to their accuracy. The use or inclusion of the information is also not intended to represent endorsements of any apps and services.\nThis report may contain links to other internet sites or references to third parties.\n### Environmental footprint\n### 1.1 GHG emissions 1,2,3,4,5\n### Greenhouse gas intensity\n### Total GHG emissions\nMarket-based (in metric tons CO2e)\nPrior to 2021,values were rounded and totals were calculated before rounding throughout this report.\n2.\"Otherdataceterrelatedcilis\"nesfaciswhe etadlsstafectricitieprtyah warehousesorcolocationfacilities.Owned,onlinedatacentersarealwaysreportedbysite,evenif theywerebelowthisthreshold.", "chunk_word_count": 287, "section_path": "2023 Sustainability Report > SIMPLIFIED VIEW OF META'S APPROACHTO CIRCULARITY IN OUR DATA CENTERS > Forward looking statements", "document_id": "Meta 2023 Sustainability Report", "page": 45, "page_start": 45, "page_end": 46 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 23, "chunk_text": "# 2023 Sustainability Report\n## 3. Meta's methodology for calculating greenhouse gas emissions can be found on page 5\n4.Priorto28ossoidlsistrelplomtedosructioetasisfroeant categories in Scope 3 for reporting years 2019 to the present.\nn the 2022 reporting year,several updates to reporting were applied to the 2O21 and later inventories.\n(a) Data fromlife cycle assessments for our hardware and sold products were used to calculate our Scope 3 emissions. \n(b) 2021 category 1,2,8,& 11emisions were recalculated with higher quality data inputs to improve accuracy. \n(c)AllScope3Categorieswerebrokenoutindividuall toimprove transparencyandeliminatethepreviouslyreported“OtherApplicable Categories” \n(d)Emisionsaocatedithtid-partynstructio-elatedeeyusagewererecategordntoCategynsteadofCategrytobetter align with the GHG Protocol Scope 3 Category Boundaries. \n(e)misionsasociatedwitoverheadelectricityladatlaseddatacentersasrecategorizedintoCategory8InsteadofCategorytobter align with the GHG Protocol Scope 3 Category Boundaries. \n(f)2021Categrmsiosereecacatedtopoatemoreaccateandtranspantmetodologiesfopplingsustaableavatifuel emissions reductions. \n(g)2021TotalFuelandEergConsumptionwererecalculatedtoeliminatethird-partypartyconstruction-relatedfueluseoutsideofMeta’s Operational Control.\n### Environmental footprint\n### Operational GHG emissions\n6.In the 2019 reporting year,three updates to reporting were applied to 2017(baseline year)and later inventories:\n(a)VehiclesperatedbytheTransportatioTeaminsupportofcommutingndinter-campustravelwerepreviouslyountedinSope3-Employee commute.Afterre-vsiting Meta’soperationalcontrolofthesevehicles,itwasdeterminedthattheyshouldbeaccountedforinScope1. \n(b)ItwasdeterminedthatMetaoverestimatednaturalgasemisionsbyincludingestimatesforoficesthatdonotinfactusenaturalgas. \nRecalculations have been applied to the inventory to remove these inaccuracies. \n(c)Fugitive emissionsfromrefrigerant Iosses atofficesnotunder Metaoperationalcontrolwere movedfrom Scope2to Scope 3.\n### Environmental footprint\n### Value chain GHG emissions\nPrior to 2O21, values were rounded and totals were calculated before rounding throughout this report i. In the 2022 reporting year,several updates to reporting were applied to the 2O21 and later inventories.\n(a) Data from life cycle assessments for our hardware and sold products were used to calculate our Scope 3 emissions. \n(b) 2021 Category 1,2,8,& 11 emissions were recalculated with higher qualitydata inputs to improve accuracy. \n(c)AllScoe3categries werebrokenoutindividualytoimprove transparencyandeliminate thepreviouslyreported“Other Applicable Categories.\" \n(d)Emisionsaoatedithtid-partyonstructio-elatedeeusagewererecategordntoCategryinsteadofCategrytobetter align with the GHG Protocol Scope 3 Category Boundaries. \n(e)misionsassociatedwitoverheadelectricityloadatlaseddatacenterswasrecategorizedintoCategory8InsteadofCategorytobetter align with the GHG Protocol Scope 3 Category Boundaries. \n(f)2021Categymsioserecalatedtcopoatemreaccateandtraspantmethodologefolingsustaableaviatiofuel emissions reductions. \n$\\mathfrak { ( g ) }$ 2021TotalFuelandEnergyConsumptiowereecalculatedtolminatethird-partyconstruction-relatedfueluseoutsideofMeta'sOperatial Control.\n7.Sustainable Aviation Fuel was purchasedin 2022 and associated emisions reductions are reflected in theinventory.", "chunk_word_count": 283, "section_path": "2023 Sustainability Report > 3. Meta's methodology for calculating greenhouse gas emissions can be found on page 5", "document_id": "Meta 2023 Sustainability Report", "page": 46, "page_start": 46, "page_end": 50 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 24, "chunk_text": "# 2023 Sustainability Report\n## 8. In the 2022 reporting year, the following updates to the methodology were applied:\n(a)A new Category 5 estimation methodology was developed to improve completeness across alloperations. \n(b) Employee commuting now includes emissions calculations on a well-to-tank basis. \n(c)anewCategyndCategry2methodolywasdevelopedtmprovethompleteessaccuacydeabityfteunderlictiity and financial data.\n### Environmental footprint\n### 2.1Electricity\n### Electricity consumption\n### Energy consumption (in GJ)5\n### Environmental footprint\n### 2.3 Fuels\n(a) Data fromlife cycle assessments for our hardware and sold products were used to calculate our Scope 3 emissions. \n(b) 2021 Category 1,2,8,& 11 emissions were recalculated with higher quality data inputs to improve accuracy. \n(c)AllSopeategorsereboknoutdiualltimprovetrasparendliatetheprevislyeportdOtrApableCategrie\" (d)EmisionsassociatedwithrdpartyonstructioelatdenegusagewererecategoriedintoCategryinsteadofCategorytobtealin with the GHG Protocol Scope 3 Category Boundaries \n(e)EmiionsassociatedwitoverheadelectricityldatlaseddatacentersasrecategorizedintoCategory8IsteadofCategorytobter align with the GHG Protocol Scope 3 Category Boundaries \n(f)2021Categyemiserecaatedtcopoatemreaccateadtranspatmetodologiefoligsustableavtiofuel emissions reductions \n(g)021TotalFuelandEergConsumptiowereecalculatedtoeliinaterdpartyostructioeatedfueluseutsideofMeta’satial Control\n### Fuel consumption 5\n### Renewable fuels\n### Power usage effectiveness (PUE)\n### Sustainable design\nreen building standards for data centers and offices ( $\\%$ of sq ft covered by green building standards and/or EnM i. In the 2O22 reporting year,several updates to reporting were applied to the 2021 and later inventorie\n### Environmental footprint\n### 3.1 Water withdrawal 9\n### Water withdrawal\n### Water withdrawal by source\nWater withdrawal by source (in cubic meters)\n### Environmental footprint\nWater withdrawal intensity (in cubic meters/unit of key performance indicators)\n### Water withdrawal from areas with water stress (in cubic meters)\n### 3.3 Water discharge\nRecycled water (in cubic meters)\n### 3.2Water consumption\nWater consumption (in cubic meters)\n### Environmental footprint\n### 3.4 Water stewardship\nWater restoration (in cubic meters)\n### Progress on 2o30 net positive water goal (in cubic meters)\n### Environmental methodology\nAt Meta,our sustainability work helps us to operate eficiently and responsibly in our mission to build community and bring the world closer together. As a global company, we recognize the tech industry's environmental impact and role to play in addressing climate change.We embrace the responsibility to understand the full scope of our footprint and be transparent and accountable in our mission to reduce our emissions.\nldentifying the source of our emissions on an annual basis enables us to prioritize emissions reduction where we can make the most meaningful progress on our path to net zero emissions across our value chain in 2O30.Similarly, minimizing our water use,being transparent with our water data,and restoring water in the same watersheds where our data centers are located are vital to reach our commitment to restore more water than we use by 2030.\nIn 2020, Meta reduced our operational emissions by $9 4 \\%$ from a 2O17 baseline and addressed the residual emisions with high-quality carbon removal projects. As a result, Meta's operations have produced net zero emissions since then.\n### Meta's GHG emissions\nMeta's GHG footprint includes the emissions associated with running our business and data centers,as well as the indirect emissions upstream and downstream of our operations.These emissions correspond to Scope 1, Scope 2 and Scope 3 emissons as defined by the World Resources Institute (WRl) Greenhouse Gas Protocol7. Meta uses the operational control approach when calculating our GHG footprint, in which we account for $100 \\%$ of the GHG emissions over which we have operational control.", "chunk_word_count": 522, "section_path": "2023 Sustainability Report > 8. In the 2022 reporting year, the following updates to the methodology were applied:", "document_id": "Meta 2023 Sustainability Report", "page": 50, "page_start": 50, "page_end": 56 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 25, "chunk_text": "# 2023 Sustainability Report\n## FULL VALUE CHAIN EMISSIONS\nScope 3emissions come from sources within our ful value chain beyond our operations and comprise the largest component of our footprint. Scope 3 includes:\n## 1. Upstream emissions,such as the emissions from manufacturing our data center servers or emissions from employee commutes; and\n## OPERATIONAL EMISSIONS\nScope 1and 2 emissions are considered our operational emissions.Scope 1 emissions come from our direct operations,such as combustion of natural gas to heat our offices and the fuel burned in our employee shutles.Scope 2 includes indirect emissons from purchased energy,such as the electricity powering our data centers.We consider purchased electricity for construction and overhead electricity within leased data centers outside of our operational control and therefore report these in Scope 3.\n2.Downstream emissions,such as the emissions associated with people using our Portal or Quest devices.\n### Environmental methodology\n### How we calculate our GHG emissions\n## SCOPE3EMISSIONS\n### Upstream:\nOur value chain emissions upstream and downstream of our operations\nMeta is aligning our emissions reduction targets with the Science Based Targets initiative7 and takes a scientific,standardized approach to calculating its GHG emissions in accordance with the GHG Protocol7. Furthermore, Meta's GHG emissons data and methodologies undergo third party verification each year. This is completed annuall to ensure that only the most accurate and up-to-date data is publicly reported.\n· Purchased goods and services (e.g., upstream emissions from purchased office supplies) Capital goods (e.g., server hardware) \n· Fuel and energy-related activities \n· Upstream transportation and distribution (e.g.,emissions associated with the transportation of AR/VR-related consumer hardware) \n· Waste generated from our operations \nBusiness travel \n· Employee commuting (including telecommuting) \n· Upstream leased assets (lncluding leased data center overhead electricity use)\nWe quantify our $\\mathsf { G H G }$ emissions via activity data, LCAs and financial data.We prioritize calculating our emissions through activity data that directly measures an activity that results in GHG emissions,such as kilowatt hours (kWh) of electricity. Due to the complex nature of our business and value chain,we use other methods to help calculate our emissions when activity data is not available.\nWe measure our emissions by metric tons of carbon dioxide equivalent, or $C O _ { 2 } O$ ,units. $C O _ { 2 } O$ is used to standardize the emissions from different GHGs based on their global warming potentials.\n### Downstream:", "chunk_word_count": 392, "section_path": "2023 Sustainability Report > FULL VALUE CHAIN EMISSIONS", "document_id": "Meta 2023 Sustainability Report", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 26, "chunk_text": "# 2023 Sustainability Report\n## ACTIVITYDATA\n· Downstream transportation and distribution · Direct use of our AR/VR-related consumer hardware · End-of-life treatment of our AR/VR-related consumer hardware\nFor activity data,we take the quantity of a specific measured activity and multiply it by an associated emissions factor to calculate the total emissions from that activity.For example,the kWh of electricity consumed at a Meta site is multiplied by the appropriate country-specific or regional-specific,publicly availableemissions factor to calculate the total emissions from that site's electricity use. We use activity data to calculate:\nScope 1and 2 emissions Fuel and energy-related activities Waste generated in operations Upstream transportation and distribution where supplier specific data is available\n·Business travel (including radiative forcing) \n· Employee commuting \nDirect use of our AR/VR-related consumer hardware\n### Environmental methodology\nWhere activity data is incomplete orunavailable for an operation that results in GHG emissions,existing activity data is used as a proxy to estimate these emissions.This ensures we are reporting a complete GHG inventory across allof our operations.For example,the weight of waste at several Meta sites is used as a proxy to estimate waste at other sites in the same region that do not have final waste weight data.", "chunk_word_count": 197, "section_path": "2023 Sustainability Report > ACTIVITYDATA", "document_id": "Meta 2023 Sustainability Report", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 27, "chunk_text": "# 2023 Sustainability Report\n## MARKET-BASEDINSTRUMENTS\nWe have publicly committed to supporting its global operations with $100 \\%$ renewable energy. We procure and retire one Energy Attribute Certificate (EAC)for every MWh of electricity used to power our global operations.Meta also procures and retires one EAC for every MWh of electricity use in select Scope 3 categories.A Additionally, Meta procures Sustainable Aviation Fuel (SAF) and applies the associated emissions reductions from SAF alocated in the reporting year as a market-based instrument to Category 6: Business Travel.\n### LCAs\nTo understand cradle-to-gate emissions and/or upstream emissions that are released before certain assets are used (e.g., the emissions released from the production of concrete before it is poured), we conduct third-party LCA studies or utilize LCA tools to measure our impact.This is applicable in our 2O22 inventory for the following emissions:\nA core focus of Meta's renewable energy program is adding new renewable energy projects to the electricity grids that support our data centers to drive the transition to renewable energy in our communities.In alignment with these principles, Meta adheres to the folowing EAC market boundaries:\n· Upstream emissions associated with the materials used in the construction of our data centers Upstream emissions of materials in office renovations and new construction Cradle-to-gate emissions of our augmented and virtual reality related consumer hardware, such as Portal and Quest devices Cradle-to-gate emissions in key data center hardware components, such as hard drives · End-of-life treatment of our AR/VR-related consumer hardware\n1. Owned data centersB: EACs from the same grid regionc 2.Leased data centersD: EACs from the same grid region or same geographic regionE 3. Other Scope 2 loads (offices,points-of-presence): EACs from same grid region or same geographic region\n4.Scope 3 loads: EACs from same grid region; once exhausted, EACs from same geographic region\nMeta's methodology aligns with the market boundaries set forth by the GHG Protocol for over $9 5 \\%$ of our Scope 2 emissions,including for all Scope 2 emissions from our owned data centers.A smallportion of our Scope 2 emissions are not covered by EACs within the GHG Protocol's market boundaries set forth,but are instead covered by EACs from within the same geographic region.", "chunk_word_count": 361, "section_path": "2023 Sustainability Report > MARKET-BASEDINSTRUMENTS", "document_id": "Meta 2023 Sustainability Report", "page": 58, "page_start": 58, "page_end": 58 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 28, "chunk_text": "# 2023 Sustainability Report\n## FINANCIAL\nOur Environmentall Extended Input Output (EEIO) method utilizes financial spend data and applies industry-specific emisson factors (e.g., kg COze per dollar spent on electronic manufacturing) published by the U.S.Environmental Protection Agency (EPA)7 to calculate“cradle-to-gate\" emissions.We apply the EElO method to the following:\n· Purchased goods and services \nCapital goods not related to data center and ofice construction,AR/VR-related consumer hardware, and key data center hardware components \n· Upstream transportation and distribution where supplier specific data is unavailable \n· Upstream leased assets\n### Environmental methodology\n### Improving our GHG methodology\n### Meta's water withdrawal\nAs Meta decarbonizes our value chain over the next decade,the data and methodology that drives our climate work willevolve and improve each year. We have disclosed our Scope 1 and 2 emissions for the last decade.We began reporting on some Scope 3 categories in 2015 and have reported on every relevant category defined by the GHG Protocol since 2019.As techniques to calculate our emissions improve,we will apply those methods to previous years to refine our GHG footprint.For example,in 2020 we used the EPA's updated EElO emission factors for our Scope 3 calculations and updated our 2019 data accordingly.\nThe water that we use in our ofices and at our data centers are withdrawn from our local water utilities or local aquifers.We report our water withdrawals based on data from our local water utilities or meter data,where available.We also report our water withdrawal during construction,based on reported data from our construction partners.Not included in Meta's 2O22 operational water withdrawal numbers are an additional 1,780,0oo cubic meters of water withdrawn for the construction of Meta data centers.\n### Meta's water consumption\nGoing forward, we wil focus on increasing accuracy and granularity of our data. For example,we rebaselined our 2O2O data based on updated LCA data for key data center hardware and our AR/VR-related consumer hardware.We willuse activity data for more emissions categories as methods to do so become available.We willcontinue reporting and updating our emissions boundaries as our business grows on our path to net zero emissions.\nFor our data centers,we determine our water consumption via two methods:\n## 1. Calculating the difference between water withdrawal and wastewater discharge\n2.Calculating consumption based on cycles of concentration from our cooling systems\nFor our ofices, we estimate our water consumption based on industry averages. Al of our wastewater is discharged to local wastewater facilities.", "chunk_word_count": 398, "section_path": "2023 Sustainability Report > FINANCIAL", "document_id": "Meta 2023 Sustainability Report", "page": 58, "page_start": 58, "page_end": 59 }, { "report": "Meta 2023 Sustainability Report.pdf", "chunk_idx": 29, "chunk_text": "# 2023 Sustainability Report\n## PUE/WUE\nEach year, we calculate the Power Usage Effectiveness(PUE) and Water Usage Effectiveness (WUE) of our data centers.PUE measures how eficiently our data centers consume the energy to operate our servers and network infrastructure.It is calculated by dividing the energy consumed at the data center by IT electricity load.The closer our annual PUEis to“1\" indicates how eficient ourdata centers are designed to consume electricity.\n### Water risk\nWe use water stress metrics in the WRl's Aqueduct tool7 to conduct initial assessments of our water risks.When appropriate, we increase the level of water risk based on additional local knowledge.\nAnnual WUE is calculated by dividing our water withdrawal,in liters,by IT electricity load,in kWh.The closer WUE is to $^ { * } 0 ^ { * }$ , the more efficient consumption of water to cool our IT-related infrastructure.\nThese metrics are calculated based on best available data,including internal meters,design estimates,and utility bills where applicable.", "chunk_word_count": 158, "section_path": "2023 Sustainability Report > PUE/WUE", "document_id": "Meta 2023 Sustainability Report", "page": 59, "page_start": 59, "page_end": 59 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 0, "chunk_text": "# 2022 Environmental Sustainability Report\nEnabling sustainability for our company, our customers, and the world\n## Contents\n## Microsoft sustainability\n## Global sustainability\n## Appendix\n## Overview\n## Customer sustainability\n## Waste\n## Ecosystems\n>600M Since its inception, Microsoft has allocated over $\\$ 600$ million of impact investment capital from our Climate Innovation Fund.\n1.4M We contracted 1,443,981 metric tons of carbon removal in FY22.\n12,159 We diverted 12,159 metric tons of solid waste from landfills and incinerators across our direct operational footprint in FY22.\n12,270 In FY22, we protected 12,270 acres of land in Belize. Another 4,998 acres in the United States is contracted.\n1M\nWe reached just under one million people with clean water and sanitation solutions by the end of the calendar year 2022.\nOverview\n## Reviewing our 2022 progress and learnings\nWe are focused on new ways to harness the power of technology, partnerships, investments, and policy to drive impact at scale and pace to help the world protect ecosystems and biodiversity.\nForeword 4 2022 progress How we work 8 About this report 9\n## Foreword\nMicrosoft’s approach to addressing the climate crisis starts with the sustainability of our own business. In 2020, we made a bold set of commitments: to be a carbon negative, water positive, zero waste company that protects ecosystems—all by 2030. Three years into this journey, we remain steadfast in our commitment. 2022 was a reminder that to mitigate the most severe impacts of climate change, our commitments need to extend beyond our four walls, and we must continue to accelerate investments that will enable progress for decades to come.\n## A closer look at 2022\n## Getting our own house in order", "chunk_word_count": 281, "section_path": "2022 Environmental Sustainability Report > Contents", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 1, "page_start": 1, "page_end": 4 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 1, "chunk_text": "# 2022 Environmental Sustainability Report\n## Enabling sustainability for our company, our customers, and the world\nMicrosoft’s own sustainability is our first sphere of influence, and we remain focused on getting our own house in order and delivering on our 2030 commitments. We made ambitious commitments in 2020 and we knew that progress would not always be linear. These commitments are rooted in science and take the necessary steps to protect our ecosystems and prevent the most severe impacts of climate change. We are firmly focused on achieving our 2030 commitments and making the right long-term investments that support the sustainability of our business for decades to come. In addition to our longterm focus, it’s important to pause and evaluate our progress in 2022.\n2022 marked the sixth warmest year in history. Extreme weather caused devastating droughts, wildfires, famine, floods, and heat waves with alarming frequency. We felt the effects of climate change like never before, and as the planet warms, we’ll continue to see and feel the negative impacts on ecosystems and communities around the world. The most recent report from the Intergovernmental Panel on Climate Change (IPCC) underscores the severity of the climate crisis, and the urgent need for global collective action.\nMeaningful climate action requires an enduring commitment from both government and business, with the private sector playing an increasingly important role in the transition from pledges to progress. As we reflect on the seriousness of the climate crisis, we have expanded our ambition to meet this urgent climate need by investing in a broad range of initiatives, technologies and approaches that support a net zero future.\nIn 2022 we launched Microsoft Cloud for Sustainability, a comprehensive suite of enterprise-grade sustainability management tools. We also helped to advance a set of global sustainability initiatives that aim to benefit every person and organization on the planet. These include accelerating the availability of new climate technologies through our Climate Innovation Fund, strengthening our climate policy agenda, helping to develop a more reliable and interoperable carbon accounting system, advocating for skilling programs to expand the green workforce, and working to enable a just transition for the vulnerable populations of the global south.\nIn 2022, our business grew by 18 percent and our overall emissions declined by 0.5 percent. This in part is a result of a reduction in our direct operational (Scope 1 and 2) emissions by 22.7 percent. At Microsoft, Scope 1 and 2 emissions account for less than four percent of total emissions, while indirect emissions, or Scope $^ { 3 , }$ account for more than 96 percent. Our Scope 3 reported emissions increased slightly in 2022, by 0.5 percent, despite a 25 percent increase in purchased goods and services due to business growth. The more positive outcomes in 2022 are the result of improvements in our operations, real-time device telemetry-based measurement, renewable energy investments, sustainable aviation fuel (SAF) purchases, and procurement of unbundled renewable energy certificates (RECs).\nAs we look toward 2030—and beyond—we remain optimistic about our collective ability to decarbonize the global economy while continuing to grow and prosper as a global community.", "chunk_word_count": 518, "section_path": "2022 Environmental Sustainability Report > Enabling sustainability for our company, our customers, and the world", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 2, "chunk_text": "# 2022 Environmental Sustainability Report\n## Enabling sustainability for our company, our customers, and the world\nWe believe that Microsoft has an important role to play in developing and advancing new climate solutions, but also recognize that the climate crisis can’t be solved by any single company, organization, or government. The global community needs partnerships, new innovations, policies, and global commitment to ensure a healthy future for all.\nBrad Smith, Vice Chair and President\n## Foreword (continued)\nWhile we continue to work to reduce our Scope 1 and 2 emissions to near zero, Scope 3 is the ultimate decarbonization challenge. It necessitates the coevolution of best practices for business, technology, and policy among thousands of global stakeholders. When we made our carbon negative commitment in 2020 it wasn’t just a challenge to support the sustainability of our business, it was also an invitation to the world to participate in this journey, translating ingenuity into action, and action into impact.\nCompanies can only manage what they can measure, and Microsoft is committed to helping our customers measure their environmental impact in a timely and accurate manner. In June 2022, we launched Microsoft Cloud for Sustainability, a comprehensive environmental sustainability management platform that includes Microsoft Sustainability Manager. These new digital tools can interoperate with virtually any business system and unify data intelligence for organizations at any stage of their sustainability journey. Sustainability Manager enables organizations to record, report, and reduce their Scope 1, 2, and 3 emissions.\n## Zero waste\n## Enabling and supporting a more sustainable world\nWe increased our reuse and recycle rates of all cloud hardware to 82 percent and continue to pace toward our 2030 reuse and recycle goal of 90 percent. We also reduced single-use plastics across all Microsoft product packaging to 3.3 percent and are on track to eliminate their use by 2025. In total, we have diverted 12,159 metric tons of solid waste from landfills.\nFinally, our third sphere of influence is to impact global sustainability. Just as the reach of Microsoft technology extends to almost every country in the world, so should the impact of our sustainability programs.\nIn November 2022, the world’s climate leaders convened for COP27. There were important conversations at COP27 focused on the uneven impacts of climate change and how the least developed countries in the world are disproportionately affected. For example, the nations of Africa together account for less than 5 percent of global emissions but have experienced far more than their share of the negative impacts of climate change. At Microsoft, we are focused on climate policies and programs that will have a positive impact on all eight billion inhabitants of planet Earth.", "chunk_word_count": 445, "section_path": "2022 Environmental Sustainability Report > Enabling sustainability for our company, our customers, and the world", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 4, "page_start": 4, "page_end": 5 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 3, "chunk_text": "# 2022 Environmental Sustainability Report\n## Ecosystem protection\nWe continue to maintain our commitment to protect more land than we use. In 2022, 12,000 of the over 17,000 acres of contracted land were officially designated as protected. The amount of land protected in 2022 exceeds the approximately 11,200 acres of land we currently use.\nIn addition to our carbon negative commitment, we’ve also made encouraging progress toward our 2030 commitments in water, waste, and ecosystems:\nMicrosoft Azure customers also benefited from significant upgrades to the Emissions Impact Dashboard (EID), which helps customers to understand the emissions impact that results from their use of the Microsoft Cloud. The EID estimates Microsoft’s direct and indirect emissions related to a customer’s cloud usage, as well as the emissions customers have avoided by running workloads in the cloud rather than on-premises.\n## Water positive\nWe contracted for replenishment projects that are estimated to provide more than 15.6 million $\\mathsf { m } ^ { 3 }$ in volumetric water benefits, increasing our running total of replenishment projects to 35 million $\\mathsf { m } ^ { 3 }$ . Additionally, we provided more than 850,000 people with access to clean water and sanitation solutions, including 163,000 in Brazil, India, Indonesia, and Mexico.\n## Amplifying our impact and helping our customers achieve more\nOur second sphere of influence is customer sustainability. As a technology company, we have a role to play with the thousands of corporate customers who put their trust in Microsoft technology. The majority of our customers have already made a climate pledge and Microsoft is working to help them move from pledges to progress.\n## Policy\nMicrosoft is deeply committed to using our voice to influence sustainability policies around the world. We support public policy initiatives to accelerate carbon reporting, reduction and removal, the transition to clean energy, water access and stress reduction, and the ability to measure, manage, and protect ecosystems. In 2022, we further committed to shaping public policy by releasing policy briefs on carbon and electricity.\nIn 2022, we also released a preview version of the Microsoft Planetary Computer to enable customers to measure, monitor, and subsequently to manage ecosystems that may be affected by their operations, and to make important decisions related to climate risk. The Planetary Computer draws on more than 60 petabytes of open-source geospatial data. This data, when combined with the analytic capabilities of our AI for Good Lab, delivers a new level of planetary insights to corporations and governments around the world.\nWe are firmly focused on achieving our 2030 commitments and making the right long-term investments that support the sustainability of our business for decades to come.\nWhile Microsoft’s emissions footprint is a tiny percentage of global emissions, we also have a role to play in helping reduce or remove the other 99.97 percent of global emissions. It’s important that our approach to sustainability extends beyond our own four walls and supports the sustainability needs of our customers.", "chunk_word_count": 495, "section_path": "2022 Environmental Sustainability Report > Ecosystem protection", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 5, "page_start": 5, "page_end": 5 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 4, "chunk_text": "# 2022 Environmental Sustainability Report\n## Carbon measurement and the Carbon Call\nIn February 2022, Microsoft, ClimateWorks Foundation, and over 20 leading organizations launched an important new initiative called the Carbon Call. The objective of this program is to unify the world around a carbon accounting system that is more reliable and interoperable. ClimateWorks Foundation is building this program to a global scale. The Carbon Call now has over 80 signatories, and released its initial roadmap at COP27.\n## Foreword (continued)\n## Climate Innovation Fund\n## A decade of innovation and decisive action\nWe believe that innovation is a critical component to solving the climate crisis, and that the investment of capital plays an important role in accelerating the availability of new solutions. Microsoft is investing in accelerating climate innovation through our $\\$ 1$ billion Climate Innovation Fund (CIF). We invest in innovative technologies and business models that have the potential for meaningful, measurable climate impact by 2030. Since the founding of the CIF in 2020, Microsoft has allocated more than \\$600 million into a global portfolio of more than 50 investments, including sustainable solutions in energy, industrial, and natural systems.\nAs we look toward 2030—and beyond—we remain optimistic about our collective ability to decarbonize the global economy while continuing to grow and prosper as a global community. We will continue investing in three key areas that will enable the scale of sustainability solutions needed to address the climate crisis:\nAdvancing AI solutions for greater climate impact .\nAccelerating the development of sustainability markets through investment .\n## Africa data lab\nIn November we announced an expansion of our AI for Good Lab into Egypt and Kenya, building a new team of data scientists on the ground in Africa that will work to improve climate resilience. The work of these data labs will be informed by a new Africa AI Innovation Council comprised of representatives from leading African organizations.\nCreating tools that advance emissions measurement and compliance .\nThis will be a decade of innovation and decisive action, from expanding the use of AI to address sustainability to forging new public and private sector partnerships. To move from pledges to progress, we cannot be deterred by near-term challenges, and must remain focused on developing innovative new solutions and in many cases, accelerating our actions. At Microsoft, we’re deeply committed to sustainability as a company, as a technology provider, and as citizens of planet Earth.\nmonitor, and manage ecosystems and make climate risk decisions.\n## Sustainability skills\nDelivering on the ambition of the Paris Agreement will require a global initiative focused on the proliferation of sustainability skills throughout the labor market. In November 2022, Microsoft and BCG released a new report, Closing the Sustainability Skills Gap: Helping Businesses Move from Pledges to Progress. This report reinforces the need for employers and governments to invest in upskilling the current workforce through learning initiatives focused on sustainability knowledge and skills, to prepare the next generation for sustainability jobs of the future. Microsoft is working with partners to develop and share new sustainability learning materials to accelerate the development of the sustainability workforce of the future.\nBrad Smith Vice Chair and President\nMelanie Nakagawa Chief Sustainability Officer\n## 2022 progress\n### Carbon\n### Water\n### Waste", "chunk_word_count": 542, "section_path": "2022 Environmental Sustainability Report > 2022 progress > Carbon", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 5, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2022 progress\n### Ecosystems\n1.4M metric tons\n15.6M m3\n12,270 acres\n12,159 metric tons\n### Microsoft Cloud for Sustainability\nThe Microsoft Cloud for Sustainability data model centralizes emissions data from disparate sources in a shared data language—streamlining data ingestion, integration, and calculations and enabling more accurate and reliable reporting. The Microsoft Cloud for Sustainability data model initially focused on carbon and was expanded in 2022 to include water data.\nWe contracted 1,443,981 metric tons of carbon removal in FY22. We also made first-of-a-kind multi-year forward offtake commitments to carbon removal, which we view as the model for scaling this industry.\nIn FY22, we contracted for replenishment projects that are estimated to provide more than 15.6 million $\\mathsf { m } ^ { 3 }$ in volumetric water benefit over the lifetime of these projects.\nIn FY22, we diverted 12,159 metric tons of solid waste from landfills and incinerators across our direct operational footprint.\nIn FY22, we protected 12,270 acres of land in Belize. We now protect more than the 11,206 acres of land that we use.\n### Advanced policy\n### 13.5 GW\n82%\nBig game migration program\n1M\nTo support our policy work, we published several briefs on carbon and electricity policy to share the priorities and principles that guide Microsoft’s policy advocacy work around the world.\nIn FY22, we signed new PPAs around the globe, bringing our total portfolio of carbon-free energy to over $1 3 . 5 \\mathsf { G W } ,$ including projects in 16 countries and more than 135 clean energy projects.\nBy the end of FY22, we provided more than 550,000 people with access to clean water and sanitation solutions in Brazil, India, Indonesia, and Mexico and reached just under one million people by the end of the calendar year 2022.\nOur reuse and recycle rates of servers and components across all cloud hardware reached 82 percent in FY22.\nThrough the NFWF Western Big Game Migration Program, we invested in projects in the American West that are vital for preserving the migration corridors of endangered and at-risk species, including mountain lions and grizzly bears.\n### $> 5 6 0 0 \\mathsf { M }$ in climate innovation\nSince its inception, Microsoft has allocated over $\\$ 600$ million impact investment capital from our Climate Innovation Fund into a global portfolio of investments, featuring sustainable solutions in energy, industrial, and natural systems.\n### Environmental justice\n29%\nEnvironmental justice is embedded in our water access target, and we are looking for ways to be more intentional about integrating environmental justice into our replenishment investments.\nWe reduced single-use plastics in our Microsoft product packaging by more than 29 percent, a decrease from 4.7 percent to 3.3 percent by weight (on average) of plastic per package in FY22.\nProtecting biodiversity\n### Sustainability skills gap", "chunk_word_count": 471, "section_path": "2022 Environmental Sustainability Report > 2022 progress > Ecosystems", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 7, "page_start": 7, "page_end": 7 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 6, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2022 progress\n### Scope 1 & 2\nTo better understand how to close the sustainability skills gap, Microsoft published the Closing the Sustainability Skills Gap report and LinkedIn published the Green Skills Report to provide insights into the demand and supply of talent with green skills.\nOur Scope 1 and 2 (market-based) emissions remained proportional with business growth in FY22.\nLast year, we contributed to the TNC Belize Maya Forest Project (BMF) to protect an additional 236,000 acres in a global biodiversity hotspot.\n### How we work\n## 1 Set commitments basedon science\n## 3 Establish sustainability as part of culture\n## 5 Ensure governance and accountability\nFor any organization’s environmental sustainability journey, it is critical to set commitments, develop a strategy, and build an operational roadmap—all while measuring progress and ensuring accountability. We’ve learned a lot over the last three years of Microsoft’s sustainability journey, and we hope that sharing our approach can help other organizations as they develop their own roadmap.\nSustainability science has been at the center of our commitments. In 2019, Microsoft took a step back to look at the science behind climate change and saw that our commitment to being carbon neutral was not enough. The world needs to reach net zero by or before 2050, and achieving it relies heavily on private sector partnership and action. This guided us to make our commitments to be a carbon negative, water positive, zero waste company by 2030.\nAt the heart of the Microsoft culture is the belief that for Microsoft to continue to do well, the world around us also needs to do well. As we continue to grow, we are pursuing opportunities that help solve the problems of people and the planet—and we have made sustainability core to our brand and our business. Our senior leadership team has a deep and enduring commitment to sustainability, which sets the tone across all levels of our organization.\nGovernance and accountability are critical to ensure cross-company alignment and prioritization of sustainability commitments. At Microsoft, we hold our business groups accountable for their carbon emissions via an internal carbon fee. Achieving our sustainability commitments is a core priority for every business group; we publish scorecards twice yearly and review progress quarterly. We established a Climate Council of senior leaders across the company to govern our sustainability progress and priorities.\n## 2 Consider all positions of influence\n### M Make it central to business", "chunk_word_count": 410, "section_path": "2022 Environmental Sustainability Report > 2022 progress > Scope 1 & 2", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 7, "page_start": 7, "page_end": 8 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 7, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\nTo move from pledges to progress, Microsoft set commitments and built sustainability into the strategy, operations, and roadmaps of each business group and every subsidiary across the globe. We are also working across our value chain on sustainability commitments and support our customers and partners by delivering capacity-building tools and solutions.\nAs a global technology leader, Microsoft has many opportunities to influence—as a customer, supplier, investor, employer, policy advocate, and innovation partner. We know it will take commitment across our entire value chain to reach our goals. We also focus on the larger impact that we can have with research, investments, innovation, strategic partnerships, policy, and advocacy.\nTransparency needs to be a component of any sustainability initiative. Microsoft is committed to sharing our progress, learnings, innovations, methodology development, and thought leadership through our annual sustainability report, white papers, blogs, and journal publications. We share playbooks from our successes, as well as learnings when we uncover new challenges or setbacks. These learnings also inspire us to champion global issues such as more reliable and interoperable global carbon accounting, a more systematic approach to building a multidisciplinary workforce of sustainability experts, and the development of innovative technology solutions for our customers and partners.\n### About this report\nWe think about Microsoft’s role in sustainability through three spheres of influence: Microsoft sustainability, customer sustainability, and global sustainability.\n### Microsoft sustainability Taking care of our own environmental footprint\n### Customer sustainability Delivering digital technology for net zero\n### Global sustainability Enabling a more sustainable world\n### Transparent and accountable reporting on progress\nA key principle of our work is transparency. This report, published annually, includes our strategy, progress against our goals, and key challenges and trends we see in this work. We also publish our environmental data, which is included in the separate Environmental Data Fact Sheet. Deloitte & Touche LLP performed a review relating to specified information within Section 1 of the Environmental Data Fact Sheet.\nOur sustainability work starts with getting our own house in order. We are taking accountability for our operational footprint and are committed to sharing learnings, accelerating markets, scaling solutions, and being transparent about our progress.\nWe are committed to providing the digital technology needed to help build a more sustainable world. We are delivering technology to help organizations measure and manage their environmental footprints and monitor the health of the planet’s natural ecosystems.\nWe understand that our actions alone will not solve the climate crisis. As a global technology leader, we are also committed to helping build the enabling societal conditions that will support a net zero economy.", "chunk_word_count": 444, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > About this report", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 8, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Taking care of our own environmental footprint\nOur sustainability work starts with taking accountability for our operational footprint. In 2020, Microsoft made industry-leading commitments to be carbon negative, water positive, and zero waste by 2030, and to protect more land than we use by 2025. This means taking accountability for our operational footprint across our campuses, datacenters, devices, software, and value chain. We look at our operations across the entire lifecycle of assets and products, from design to building, usage, and end of life. We are committed to sharing our learnings, accelerating markets, scaling solutions across our value chain, and being transparent about our progress.\n### Carbon\n### Water\nOur approach 11 \nReducing Scope 1 and 2 emissions 15 \nReducing Scope 3 emissions 17 \nTransitioning to carbon-free energy 20 \nRemoving carbon 22 \nKey trends and what’s next 24 \nOur approach 26 \nReducing our water footprint 30 \nReplenishing water 33 \nImproving access to water 34 \nKey trends and what’s next 35 \nOur approach 37 \nReducing our waste footprint 41 \nKey trends and what’s next 44\n### Waste\n### Ecosystems\nOur approach 46 Taking responsibility for our land footprint 48 Key trends and what’s next 50\n### Getting to carbon negative\nemissions from our supply chain, the lifecycle of our hardware and devices, travel, and other indirect sources. We saw a 0.5 percent increase in our Scope 3 emissions this year based on investments in real-time device telemetry-based measurement, improvements in our operations and supply chain, and purchases of renewable energy.\nAs the world transitions to a lower-carbon, clean energy economy, we’re using our purchasing and investing power to help advance innovation and the development of new solutions—helping us meet our own commitments while catalyzing the creation of broader market supply for others. We fund purchases of renewable energy, sustainable aviation fuel, and carbon removal through our internal carbon fee, which we established in 2012. The fee is designed to accelerate carbon reduction and allocate funding to projects that jumpstart and scale decarbonization technologies. In FY22, we redesigned and increased our carbon fee to accelerate Scope 3 emissions reduction, tying the fee to the costs abatement for different sources—electricity, fuel, and other emissions. We will continue to evaluate the carbon fee design to align our business operations and 2030 carbon commitments.", "chunk_word_count": 393, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Taking care of our own environmental footprint", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 10, "page_start": 10, "page_end": 11 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 9, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Our approach\nIn January 2020, Microsoft committed to be carbon negative by 2030. Operationally, we see this commitment as a journey that starts with reducing carbon emissions as much as possible, replacing our electricity consumption with carbon-free energy, and removing the emissions that remain.\nIn 2022, we were able to disaggregate and identify previously unreported electricity for some of our leased datacenters due to improvements in our ability to capture such data. We have revised FY20 and FY21 Scope 2 and Scope 3 Category 3 market and location values to include this additional information. In FY22, we included this activity in our results and procured unbundled renewable energy credits (RECs) to mitigate the increased emissions for FY22. Our year-over-year figures show a 23 percent reduction in Scope 1 and 2 market-based emissions, which is driven in part by our procurement of RECs for FY22. Without this revision, our Scope 1 and 2 market-based emissions would have remained proportional with business growth.\nIn FY22, our business grew by 18 percent and our overall emissions were down 0.5 percent. Our total company emissions were just under 13 million metric tons of carbon dioxide equivalents $( \\mathsf { m t C O } _ { 2 } \\mathsf { e } )$ (marketbased and management-defined criteria for Scope 3 Category 11). Taking into account our renewable energy purchases, our Scope 1 and 2 emissions were approximately $4 2 8 , 0 0 0 \\ \\mathrm { m t C O _ { 2 } e }$ . More than 96 percent of our emissions are in Scope 3, which includes\n### Carbon negative by 2030\n### Our commitment\n### Our progress\nWe are committed to being carbon negative by 2030 and by 2050 remove from the atmosphere an equivalent amount of all the carbon dioxide our company has emitted either directly or by our electricity consumption since we were founded in 1975.\n### Reducing direct emissions\n### Net zero Scope 1 and 2 emissions\nOur Scope 1 and 21 emissions remained proportional with business growth in FY22.2 More than 95 percent of our Scope 2 emissions were reduced by renewable energy from power purchase agreements (PPAs), green tariff programs, and unbundled renewable energy certificates.\nWe will reduce our Scope 1 and 2 emissions to near zero by increasing energy efficiency, decarbonization, and reaching 100 percent renewable energy by 2025.\n### Scope 3 emissions increased by 0.5 percent\n### Reducing value chain emissions\nBy 2030, we will reduce our Scope 3 emissions by more than half from a 2020 baseline.\nOur value chain or Scope 3 emissions increased slightly at 0.5 percent, despite a 25 percent increase in purchased goods and services due to business growth. This result was driven by improvements in our operations, telemetry-based measurement, renewable energy investments, sustainable aviation fuel purchases, and procurement of unbundled renewable energy certificates (RECs).3\n### Replacing with 100/100/0 carbon-free energy", "chunk_word_count": 498, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Our approach", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 10, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### 13.5 GW of carbon-free energy\nBy 2030, 100 percent of our electricity consumption will be matched by zero carbon energy purchases 100 percent of the time.\nIn FY22, we signed new Power Purchase Agreements (PPAs) around the globe, bringing our total portfolio of carbon-free energy to over $1 3 . 5 \\mathsf { G W } ,$ including more than 135 projects in 16 countries.\n### Removing the rest of our emissions\n### Over 1.4M metric tons of carbon removal\nWe contracted 1,443,981 metric tons of carbon removal in FY22. We also made first-of-theirkind multi-year forward offtake commitments to carbon removal, which we view as the model for scaling the industry.\nBy 2030, Microsoft will remove more carbon than it emits. By 2050, we will remove an amount of carbon equivalent to all our historical emissions.\n### Other achievements\n10th year of CDP A List for Climate Change Microsoft was named to the CDP A List for Climate Change for the 10th consecutive year.\nCarbon fee redesign\nWe redesigned our carbon fee, tying it to the costs of abatement of electricity, travel, and other emissions sources.\n[IMAGE CAPTION] Retirements from carbon removal\n[IMAGE CAPTION] Contracted carbon removal\n### Carbon Table 1\n### Carbon Table 2\n### Tracking our yearly progress toward carbon negative by 2030\n### Tracking our emissions across Scopes 1, 2, and 3\nMicrosoft’s overall emissions decreased by 0.5 percent in FY22. This was driven by improvements in our operations, telemetry-based measurement, renewable energy investments, sustainable aviation fuel purchases, and procurement of unbundled renewable energy certificates (RECs).\nIn FY22, we procured 1.44 million metric tons and retired 514,156 metric tons of carbon removal as part of our effort toward achieving our annual carbon commitment to be carbon neutral. Carbon removal contracted each year includes credits retired in the same year and to be retired in future years.\n### Microsoft emissions\nRetirements from avoided emissions\n[IMAGE CAPTION] Projected carbon removal\n### Learn more in the Environmental Data Fact Sheet\na. The chart has been updated to reflect the latest actual values which incorporate the latest methodology, management’s criteria metrics, and structural change adjustments. Scope 2 and 3 values are market-based and management’s criteria metrics. b. Carbon negative by 2030: A company is carbon negative when it removes more carbon than it emits each year.\na. Scope 2 and 3 values are market-based and management’s criteria metrics. \nb. Reported emissions for FY20 and FY21 have been recalculated for improved accuracy in accordance with our internal recalculation policy. We were able to disaggregate and identify previously unreported electricity for some of our leased datacenters due to improvements in our ability to capture such data.\n### Carbon Table 3\n### Tackling Scope 3", "chunk_word_count": 465, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > 13.5 GW of carbon-free energy", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 11, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Breaking down our FY22 Scope 3 emissions by source\nScope 3 represents 96 percent of Microsoft’s annual emissions in FY22. Our Scope 3 emissions result primarily from the operations of our tens of thousands of suppliers (upstream) and the use of our products across millions of our customers (downstream).\nMicrosoft’s Scope 3 emissions account for more than 96 percent of our total emissions, with the vast majority of these emissions coming from two categories upstream, Purchased Goods and Services (Category 1) and Capital Goods (Category 2), and one downstream, Use of Sold Products (Category 11).\nReducing Scope 3 emissions requires unprecedented scaling of corporate clean energy purchases across Microsoft’s value chain, to address both the electricity consumed by our products, like Xbox devices or Surface laptops, and used to manufacture everything from semiconductors to fiber optic cables. Moreover, tackling Scope 3 means decarbonizing hard-toabate industries, including the steel, concrete, and other building materials used in our datacenters, as well as jet fuel for business travel and logistics.\n### Scope 3 Categories\n### Learn more in the Environmental Data Fact Sheet\n### Reducing Scope 1 and 2 emissions\n### Ensuring energy efficiency\n### Innovating with thermal energy in our campuses\n### Designing energy efficiency into our campuses\nEnsuring our buildings are energy efficient is a key first step in reducing emissions.\nAs part of our Redmond Campus Modernization project, we built the Thermal Energy Center. Nine hundred deep wells are the foundation of a large system that heats and cools the new buildings. The wells will compose one of the largest geoexchange fields in the United States to take advantage of the temperature difference between sub-ground soil, which remains constant year-round, and that of ambient air, which changes with the seasons. More than 220 miles of piping will distribute 320,000 gallons of water as a heat-exchange medium across the wells and the new campus in a closed loop system. The Thermal Energy Center houses chillers, cooling towers, backup generators, solar panels, and 65-foot tanks that can store thousands of gallons of water as thermal energy. The system is expected to reduce energy consumption by more than 50 percent of a typical utility plant.\nOur global campus projects adhere to strict sustainability standards which have energy efficiency measures embedded in our design requirements. All major projects must achieve LEED Gold or Platinum certification, ensuring high energy efficiency design. Each of our campuses has a sustainability plan with energy efficiency projects planned each year to drive down our energy usage.", "chunk_word_count": 431, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Breaking down our FY22 Scope 3 emissions by source", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 12, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Building datacenters for optimum power usage effectiveness\nSustainability is a key priority across all phases of our campus and datacenter projects—from integrated design and construction through operations and decommissioning.\nThe power usage effectiveness (PUE) ratio is a metric of how efficiently a datacenter consumes and uses energy. We design and build Microsoft datacenters as close to a PUE of 1 as feasible. Our newest generation of datacenters have a design PUE of 1.12 and, with each new generation, we strive to become even more efficient. In addition, all future built datacenters will be LEED Gold certified. We are also investigating how to encourage transparency and efficiency improvements at leased sites.\n### Promoting grid stability via energy storage solutions\nWind farms generate more than 35 percent of Ireland’s electricity. As the supply of wind and other renewable energy increases, electric power grid operators need to ensure that they have resources available to balance variable power production. Banks of lithiumion batteries at our Dublin datacenter, typically used for backup power, will help grid operators provide uninterrupted service when demand exceeds renewable supply—reducing the need to rely on coal or natural gas to support a stable grid. The uninterruptible power supply for the Dublin datacenter includes new technology that enables real-time provision of services to the grid. We’re also researching and testing alternatives to lithium-ion batteries, to address the challenges of high demand for raw materials and end-of-life disposal.\n### Scopes explained\nScope 1 Direct emissions created by a company’s activities\nScope 2 Indirect emissions from a company’s activities\nScope 3\nIndirect emissions from all other activities up and down the value chain\nLearn more about GHG emissions\n100% which uses 100 percent renewable power.\n### Reducing Scope 1 and 2 emissions (continued)\n### Reducing fossil fuels\nThis year, Microsoft opened our first all-electric kitchen on our Redmond campus. The One Esterra food hall includes 12,200 square feet of all-electric cooking space, which supports more than 1,000 meals a day and uses 100 percent renewable hydro power.\nMicrosoft is committed to being diesel free in our datacenter operations by 2030, moving to all-electric kitchens, and electrifying our campus fleet.\n### Developing hydrogen fuel cells for datacenters\nThe decreasing cost of renewable sources, advancement of green hydrogen production technology, and increasing legislative focus are starting to show potential to reduce the datacenter industry’s reliance on fossil-based diesel fuels. Microsoft is demonstrating the application of green hydrogen at industrial scales— with a first of its kind, zero emission, 3 MW hydrogen polymer electrolyte membrane (PEM) fuel cell backup power generator piloted in July 2022. PEM fuel cell technology combines hydrogen and outside air in a chemical reaction that generates electricity, heat, and water. While hydrogen fuel cell technology has been commercialized at smaller scales, this is the first time it has been demonstrated for multi-megawatt generation needs at datacenters.\n### Implementing all-electric kitchens", "chunk_word_count": 492, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Building datacenters for optimum power usage effectiveness", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 13, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Electrifying our fleet\nThis year, Microsoft opened our first all-electric kitchen on our Redmond campus. The One Esterra food hall includes 12,200 square feet of all-electric cooking space, which supports more than 1,000 meals a day and uses 100 percent renewable hydro power. In collaboration with Jade Range, we created custom commercial grade electric cooking equipment. Moving forward, we intend to construct all new kitchens with all-electric equipment and are developing retrofit plans for existing operations. We released a new Dining All-Electric white paper sharing our lessons learned, technical details, and decision making. One Esterra is a preview of our Redmond Campus Modernization which will have over 77,000 square feet of all-electric dining operations and serve more than 10,000 meals a day.\nWe are committed to fully electrifying our global campus operations vehicle fleet of over 1,800 vehicles by 2030. To date, we have received five all-electric buses in Ireland and sites in China are running allelectric routes through service providers. In Redmond, Microsoft purchased land to build an eight-acre electric vehicle charging and maintenance facility for its internal and external commute fleet of electric buses and shuttles.\n### Reducing Scope 3 emissions\n### Improving Scope 3 measurement and methodologies\n### Advancing lifecycle assessments\nWe are using realworld, anonymized insights from users of Surface and Xbox devices who opt to share information with us to estimate how energy is consumed by those devices.\nMicrosoft is promoting circular design principles for the cloud hardware and devices communities. This year, we contributed to the “Life Cycle Assessment (LCA) Guidelines for Cloud Providers” and provided the guidelines to the Open Compute Project (OCP) to encourage other cloud hardware organizations to better understand and reduce their environmental impact. We are also evolving our approach to LCAs in our devices. The LCAs will feed into an advanced Carbon Data Platform to provide the most representative emissions profile possible for our devices. The platform will be used for reporting and improved decisionmaking with visibility into actionable and granular environmental impacts.\nAccurate measurement is one of the biggest challenges in Scope 3 emissions reduction. Microsoft has prioritized improving the methodologies we use for collecting data and calculating emissions for greater precision and granularity.\nOur Scope 3 commitment is our most powerful opportunity to help accelerate global decarbonization efforts by engaging suppliers and customers in our value chain and partnering to reduce emissions associated with the business we do together.\n### Increasing data quality from our supply chain\nSupply chain and capital goods are our biggest drivers of emissions, and we need better data in these categories to drive the right reduction strategies. In July 2022, we updated our Supplier Code of Conduct (SCoC) sustainability requirements to include independent third-party assurance of emissions data and to deliver a minimum 55 percent greenhouse gas (GHG) reduction by 2030.\nMicrosoft’s Scope 3 emissions account for more than 96 percent of our total emissions, with the vast majority of these emissions coming from three categories: Purchased Goods and Services (Category 1), Capital Goods (Category 2), and Use of Sold Products (Category 11).", "chunk_word_count": 525, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Electrifying our fleet", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 14, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Optimizing devices based on real-world data\nWe are using real-world, anonymized insights from users of Surface and Xbox devices who opt to share information with us to inform our carbon emissions assessments. The data provides an estimate of how energy is consumed by those devices based on factors such as battery drain and CPU utilization. We use this data to calculate high-quality estimates of the daily energy use in different geographies. In the future, we are exploring how to increase accuracy by shifting to hourly energy use tracking paired with more granular, impact-relevant grid emission rate data.\n### Improving accounting methodologies\nOverall, our Scope 3 emissions increased by 0.5 percent in FY22 compared to FY21. This is attributed to a few notable carbon reduction initiatives. First, we’ve extended the useful life of servers and network equipment from four to six years, resulting in a decrease in emissions related to Capital Goods. Second, we introduced a new telemetry-driven methodology to help us account for the energy consumption from our Surface devices and our rapidly growing base of Xbox users. This new data led us to purchase unbundled renewable energy certificates (RECs) to offset a portion of the emissions footprint from these devices. Just as is the case for Scope 2 reduction efforts, we plan to phase out the use of unbundled RECs in future years as programs to reduce emissions take effect, including substantial forward investments into new clean energy facilities yet to commence operation.\nFor capital goods, we are developing new methodologies to use product specific emissions factors for building materials from the Embodied Carbon in Construction Calculator (EC3). This methodology is under development (not yet reflected in Scope 3 reporting metrics) and, in combination with using EC3 in project decisions to track and reduce embodied carbon at each phase of construction, will enable us to reduce embodied carbon emissions on our construction projects as well as demonstrate those product-level reduction decisions in future reporting cycles.\nMicrosoft has prioritized improving the methodologies we use for collecting data and calculating emissions for greater precision and granularity.\n### Reducing Scope 3 emissions (continued)\n### Reducing emissions by consuming less\n### Reducing embodied carbon in buildings and interiors\n### Engineering carbon out of our cloud operations and hardware supply chain", "chunk_word_count": 391, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Optimizing devices based on real-world data", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 17, "page_start": 17, "page_end": 17 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 15, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Boosting efficiency of device usage\nSurface Pro 9 and Surface Laptop 5 are among the most energy efficient Surface computers, and both are ENERGY STAR® Certified, consuming less than half the recommended energy limit from the latest ENERGY STAR computer specifications.4 Surface Pro 9 5G, powered by ARM technology, combines the energy efficiency of modern mobile devices with the computing power of a traditional computer. We also use software to reduce carbon emissions associated with our devices’ use stage, such as with the energy-efficient Shutdown (energy saving) mode for Xbox, which cuts power use by up to 20 times when it is off, compared to Sleep mode.\nWe are focused on engineering carbon out of our value chain via the infrastructure equipment we use in the operation of our datacenters. Using LCAs and environmental product declarations, we partner with our suppliers to assess hotspots of embodied carbon in the equipment we purchase, so we can better understand how we can help reduce emissions in our supply chain.\nTo drive deeper reductions in embodied carbon, we are pursuing the use of transformational low-carbon materials. This year, we piloted a new concrete mix using recycled glass pozzolans, reducing embodied carbon for the slab structure by around half. We completed a lab-scale pilot of structural materials made from biogenic limestone and algae-based concrete, which have the potential to drive down embodied carbon of concrete installations to near zero. Microsoft also completed a study of embodied carbon emissions in furniture, carpeting, and other interior building features to establish the baseline for reduction in our design standards. These standards, using the Embodied Carbon in Construction Calculator (EC3), set thresholds for mineral wool insulation, cold-formed steel framing, carpeting, and gypsum.\nOur top priority for reducing Scope 3 emissions is to design efficiency and circularity into construction and purchasing from the start, so our supply chain uses less energy.\n### Improving efficiency to reduce the number of datacenters\nDatacenter resources are often designed and built for peak power usage, which can lead to underutilization and the need to build new datacenters. Microsoft is focused on improving datacenter efficiency by reducing peak power, safely harvesting unused power, and increasing server density in existing datacenters through intelligent utilization, service level agreement (SLA)-driven power harvesting, and power-aware virtual machine allocation. We use the inherent redundancy in Microsoft-internal software services to tap into datacenter capacity that is traditionally reserved for use only during power grid or infrastructure failures, so we can increase the number of servers in datacenters by up to 33 percent and, in turn, reduce the number of datacenters needed overall.\nIn FY22, our cloud hardware designers worked with material and component suppliers to design components that reduced dependency on virgin plastic, introducing up to 35 percent post-consumer recycled (PCR) plastic in select server components. We also redesigned certain rack components to drive material reduction, resulting in a reduction of plastic in those components by 12 percent.\n90% Our Circular Center", "chunk_word_count": 506, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Boosting efficiency of device usage", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 18, "page_start": 18, "page_end": 18 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 16, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Reimagining circularity of cloud hardware\nMicrosoft has taken an innovative approach by implementing Circular Centers in our datacenter campuses, aligning our end-of-life dispositioning processes with an integrated plan across the entire supply chain. Over the past year, we engaged new suppliers who can remanufacture assets and components, enabling new lifecycles for our assets. We have demonstrated takeback/buyback models with several of our original asset suppliers, closing the loop on assets and enabling suppliers to repurpose or reuse assets and components, resulting in emissions reduction and material recovery. Our Circular Center program will reuse or recycle 90 percent of datacenter decommissioned cloud computing hardware assets, contributing directly to emissions reductions.\n### Reducing Scope 3 emissions (continued)\n### Transforming the market through purchasing\nThrough our Supplier Code of Conduct (SCoC) and purchasing commitments, Microsoft is sending demand signals to our supply chain that we expect lower-carbon inputs and business models.\n### Roadmapping our supply chain\nSince 2020, our SCoC has required that suppliers disclose GHG emissions and plans to reduce those emissions. Last year, we met with our top suppliers to understand their sustainability objectives and establish a shared approach to how we measure emissions, establish baselines, identify difficult to reduce areas, and review commitments to align on the priorities. In the indirect purchasing space, including consultancies and marketing companies, suppliers are starting to consider policies for hybrid work and exploring options for how best to transition to renewable electricity.\n### Reducing emissions in our devices supply chain\n### Advancing sustainable aviation", "chunk_word_count": 264, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Reimagining circularity of cloud hardware", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 17, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Decarbonizing transportation\nIn FY22, we supported the avoidance of $2 8 , 0 0 0 \\mathrm { m t }$ of $\\mathsf { C O } _ { 2 } \\mathsf { e }$ savings in partnership with our suppliers by shifting cargo from carbon intense modes (air and truck) to lower-carbon modes (ocean and rail).\nWe partner with our transportation logistics ecosystem to implement decarbonization solutions across our logistics network. In 2022, our logistics teams explored new ways to mitigate sources of logistics emissions. Based on the Global Logistics Emissions Council (GLEC) Framework and cutting-edge tooling, the new emissions approach will enable strategic investments and optimizations across Microsoft’s logistics operations in support of decarbonized transportation. In FY22, we supported the avoidance of $2 8 , 0 0 0 { \\mathrm { ~ m t C O } } _ { 2 } \\Theta$ in partnership with our suppliers by shifting cargo from carbon intense modes (air and truck) to lower-carbon modes (ocean and rail). We also launched the first alternative energy vehicle (AEV) pilots for trucking.\nMicrosoft is advancing efforts to increase the production of and accounting standards for sustainable aviation fuel (SAF). In 2022, we piloted the Roundtable on Sustainable Biomaterial’s (RSB) “book and claim” process, which will result in a SAF certificate for Microsoft in collaboration with United Airlines and AirBP. In July 2022 Microsoft announced a partnership with Alaska Airlines and Twelve, a Climate Innovation Fund investee, to operate the first demonstration flight using e-Jet, a low-carbon jet fuel produced from recaptured carbon dioxide, water, and renewable energy. Microsoft worked together with the Environmental Defense Fund to publish the High Integrity Sustainable Aviation Fuel Handbook.\nWe continue to work with our device suppliers on carbon reduction interventions, renewable energy alternatives, and manufacturing process improvements. These reductions include 12 suppliers switching to renewable energy, with six converting to 100 percent renewable energy as members of RE100. Learn more about our efforts in our FY22 Responsible Sourcing Report.", "chunk_word_count": 344, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Decarbonizing transportation", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 18, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Transitioning to carbon-free energy\nIn FY22, we signed new power purchase agreements around the globe, bringing our total portfolio of PPAs for carbon-free energy to over 13.5 GW. This includes deals across 16 countries including New Zealand, the Netherlands, Chile, Singapore, Austria, Ireland, and the United Kingdom. Globally, we have more than 135 renewables projects in our PPA portfolio and are positioned to continue to grow our renewable resource procurement to meet our goals.\nExamples of how we’ve worked to integrate equity and justice into our approaches include the following:\nThrough a justice-centered selection process led by the Just Transition PowerForce, we provided environmental justice grants to seven organizations that advance climate readiness, economic opportunity, and health and wellbeing in their communities: Native Renewables, Three Part Harmony Farm, Bridging the Gap in Virginia, West Atlanta Watershed Alliance, Pittsburghers for Public Transit, Harambee House, and Little Village Environmental Justice Organization.\nWe supported the development of two new community solar gardens in Illinois, which are expected to have a capacity of 4.75 MW with a focus on expanding access to renewable power to traditionally under-resourced populations. ENGIE and Microsoft are working with a leading community solar organizer and provider, Solstice, who engage directly with residents and community organizations in cities and counties across the United States to provide access to renewables for customers that cannot afford to install rooftop solar. Solstice pioneered EnergyScore, a unique solution that uses utility payment history and other customer data to provide a more accurate and inclusive prediction of an individual’s ability to pay an energy bill. Once fully subscribed, the two solar gardens could save Illinois subscribers more than $\\$ 100,000$ a year in total electricity costs, while also reducing carbon emissions equivalent to more than $1 { , } 0 0 0$ households’ average electricity usage.\nElectricity use accounts for the vast majority of Microsoft’s operational carbon emissions footprint. In parallel to energy reductions and efficiencies, our work supports the growth and adoption of more carbon-free energy.", "chunk_word_count": 346, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Transitioning to carbon-free energy", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 20, "page_start": 20, "page_end": 20 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 19, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Committing to environmental justice in carbon-free energy procurement\nOur long-term vision is to reach a state where, on all the world’s grids, 100 percent of electrons, 100 percent of the time, are generated from zero-carbon sources. On the path to reaching this vision, our commitment is to cover 100 percent of Microsoft’s load with renewable energy purchases by 2025, and by 2030 to ensure that we meet our 100/100/0 commitment, meaning 100 percent of Microsoft’s electricity consumption, 100 percent of the time, will be matched by zero-carbon energy purchases.\nIn addition to carbon-free energy, Microsoft has made commitments to diversity and inclusion, and to racial equity. An important point of intersection for these is environmental justice. To support environmental justice outcomes in a reimagined energy sector, Microsoft is in its third year of modeling approaches that link our carbon-free energy commitments with community-led clean energy and resiliency projects.\nTo support environmental justice outcomes in a reimagined energy sector, Microsoft is in its third year of modeling approaches that link our carbon-free energy commitments with community-led clean energy and resiliency projects.\nThrough partnerships, we have established new renewable energy procurement models that create new opportunities for frontline communities by equitably distributing the benefits of the clean energy economy. We’ve shared our lessons learned in a position paper with Volt Energy Utility, including an Environmental Justice Measurement & Evaluation Framework that guides our initiatives.\nIn FY22, we continued to work with industry-leading partners such as Shell, Constellation, and ENGIE to procure new carbon-free energy resources to meet our goals. To continue advancing the green energy economy in the United States and in recognition of the opportunity to proactively collaborate on driving a more reliable domestic solar module supply chain, Microsoft is collaborating with Hanwha to increase domestic green energy manufacturing through a first-of-its-kind initiative for major equipment and associated construction services. By partnering with Hanwha, Microsoft seeks to facilitate quicker adoption of domestic green energy equipment supply through its pipeline of domestic power purchase agreements (PPAs).\nWe supported a 6.6-MW solar facility in Panola County, Mississippi, which provides first-time solar access to consumers in a county with majority Black residents and a poverty rate that is double the United States average. By using emissions data to determine where new solar generation can displace the most carbon, Clearloop is collaborating with Microsoft to expand access to clean energy in a state that currently relies on fossil fuels to power nearly 90 percent of its electricity. Clearloop will also collaborate with local community programs to provide workforce development, training, and hiring opportunities.\n12%\nWe also redesigned rack components, resulting in a reduction of plastic by 12 percent for certain components.\n### Transitioning to carbon-free energy (continued)\nWe join national and local governments, businesses, foundations, and international civil society and youth organizations who", "chunk_word_count": 482, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Committing to environmental justice in carbon-free energy procurement", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 20, "chunk_text": "# 2022 Environmental Sustainability Report\n## 6 Report on everything, not just progress\n### Contribution to collective action to decarbonize the electric grid\nWe supported the purchase of “Peace RECs” (P-RECs) in Sub-Saharan Africa. These credits are generated through projects located in countries with high risk of conflict, high vulnerability to climate change, low levels of electrification, and limited access to renewable energy finance. In May 2022, Microsoft made the largest P-REC transaction to date, building on our first P-REC purchase in 2020. This first purchase funded the installation of public streetlights connected to Nuru’s 1.3-MW solar mini-grid in Ndosho neighborhood in Goma, Democratic Republic of the Congo. Our 2022 purchase also supports first-time electricity connections for households, businesses, and social institutions, and deploys additional streetlights that improve nighttime security and allow local businesses and markets to operate during evening hours. The purchase also contributes directly to the financing of Nuru’s new 3.7 MW solar metro-grid, which is anticipated to serve 5,000 customers and enhance more than 25,000 lives. Together, these projects are some of the largest off-grid minigrids operating in Sub-Saharan Africa, eventually benefiting 125,000 people and raising the average electricity rate from three percent to around 20 percent.\nThis year, with Sustainable Energy for All (SE For All), an organization that works in partnership with the United Nations, Microsoft committed to take actions that drive toward decarbonization of the electric grid to combat climate change. Energy Compacts were introduced in 2021 as a key outcome of the Highlevel Dialogue on Energy, which calls for affordable, reliable, sustainable, and modern energy for all by 2030. Microsoft joins national and local governments, businesses, foundations, and international civil society and youth organizations from every region who have submitted Energy Compacts, reflecting actions and finance commitments. Microsoft’s Energy Compact documents its 100/100/0 commitment to carbonfree energy.\n### Other projects\nWith PosiGen Louisiana Solar, we supported the reduction of electricity bills for low-to-moderate income residents through financing solar and energy efficiency projects that can also strengthen resiliency for homes in underserved communities.\nWe supported programs with California Rooftop Solar at Wildmind Science Center, which funds environmental engagement programs for 120,000 at-risk youth.\nWith Sustainable Energy for All, an organization that works in partnership with the United Nations, Microsoft committed to take actions that drive toward decarbonization of the electric grid to combat climate change.\n• Microsoft has purchased solar RECs from school districts that were supported by the California Bright Schools program. The program identifies energy saving opportunities for schools, saving general fund dollars and providing educational opportunities for students and teachers.\n### Removing carbon", "chunk_word_count": 432, "section_path": "2022 Environmental Sustainability Report > 6 Report on everything, not just progress > Contribution to collective action to decarbonize the electric grid", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 21, "page_start": 21, "page_end": 21 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 21, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2022 projects and results\nIn FY22, we contracted 1,443,981 metric tons of carbon removal. We also made multi-year commitments to carbon removal. These projects will provide around 300,000 metric tons towards our greater than five million metric ton goal in 2030. Projects include:\nWe are three years into our mission to build the carbon dioxide removal (CDR) capacity that the world will require to prevent the worst effects of climate change.\n### CarbonFuture\nTogether with Pacific Biochar, CarbonFuture is retooling lumber mills’ bioenergy plants to produce more biochar compared to energy—a process which can be scaled across the mill bioenergy fleet.\n### Neustark\nNeustark is removing carbon within the Swiss concrete recycling industry by carbonating demolished concrete with carbon dioxide from biogas production.\n### Acorn\nThis program from Cooperative Rabobank UA assists in the transition to agroforestry systems in the tropics— including in Colombia, Ivory Coast, Nicaragua, and Peru—and is replicating that financing model in additional areas.\nOver the past 18 months, we have developed the process and structures to create long-term carbon removal offtake agreements designed to get new projects built. This is how we can move past many of the quality challenges prevalent in the market today and take CDR to scale.\n### Our focus\n### Offtake agreements\nOur first offtake agreement with Climeworks was announced in July 2022 and we’ve followed up with several additional large investments of increasing scales. We are targeting multiple multi-year purchases of up to 250,000 tons per year to serve as a risk-diversified portfolio of projects meeting our needs in 2030 and beyond.\nOur offtake agreements are built on our experience procuring renewable energy, tailorable to the risks faced by diverse removal approaches, and structured to enable projects to gain outside financing. We are now building a portfolio with the goal of greater than five million metric tons a year in offtakes in order to hit our 2030 goals, balanced across low, medium, and highdurability solutions. We are moving into the next phase of our carbon removal journey.\n### Removing carbon (continued)\n### What’s next on carbon removal\n## 2023 carbon removal key projects\nLooking ahead, we’re focused on several exciting and necessary developments. First, taking high-quality and additional nature-based solutions to greater scale. Second, bringing in more demand for CDR after the landmark announcements of the First Movers Coalition and Frontier Climate. Third, trialing the emerging set of second wave, hybrid carbon removal solutions that are coming to market, such as Heirloom, which combines advantages of carbon mineralization and direct air capture (DAC) to amplify the natural ability of limestone to remove carbon dioxide from the air. Fourth, identifying the best ways to embed carbon removal solutions in an overall circular economy.\n### Climeworks offtake\n### Climate Robotics\n### O.C.O Technology", "chunk_word_count": 466, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > Climeworks offtake", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 22, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2023 carbon removal key projects\n### CommuniTree\nIn September 2022, we signed a deal for 25,000 metric tons of CDR from O.C.O’s mineralization technology, which takes industrial waste (like fly ash) and uses it as the core of manufactured limestone. That’s a neat bit of upcycling and a great way to work carbon removal into a circular-economy solution. Moreover, O.C.O showed pragmatic, long-term thinking by holding back some tonnage until empirical results clarify marginal carbon accounting uncertainty.\nIn July 2022, we signed a 10-year forward agreement with Climeworks to purchase DAC removals from their Orca and Mammoth plants, building on our earlier purchase commitment with Climeworks. This prototypical agreement is our model for taking carbon removal to scale and meeting our ambitious goals.\nEarly in 2022, we signed a small deal with Climate Robotics and we doubleddown in August with a four-year, 75,000 metric ton contract. We believe this is among the largest direct biochar CDR procurements to date. Climate Robotics’ novel approach to biochar production will eliminate the transport of biomass to central plants, instead taking pyrolizers to the fields where crop waste is processed and re-tilled.\nWe renewed our investment in the CommuniTree project in November 2022, signing for 700,000 metric tons in the form of ex ante credits over the next two years, which we project will deliver $> 1 0 0 , 0 0 0$ metric tons of ex post verified carbon in 2030 and subsequent years. CommuniTree engages smallholder farmers in Nicaragua to plant and maintain native trees alongside existing farming practices, restoring ecosystems and improving local livelihoods.\n### Key trends\n### Resources\n### Carbon removal lessons learned\n### $\\textcircled{1}$ Geopolitics are affecting supply chains\n### $\\textcircled{4}$ Corporate investment is needed to scale nascent markets\nMicrosoft’s carbon removal lessons learned from our first two years of corporate purchasing.\nGeopolitical implications of world conflict and the global pandemic have hit supply chains hard, with impact on renewable energy supply and suppliers’ ability to go beyond business as usual to deliver innovative new goods and services, such as decarbonization technologies.\nRead the 2022 paper\nRead the 2021 paper\nStakeholder expectations are increasing for corporate involvement in renewable energy, SAF, and carbon removal markets. While we are further along the trajectory toward higher-impact vehicles for renewable energy, we see creditbased mechanisms for funding SAF, green steel, green concrete, and carbon removal as critical for jumpstarting these nascent markets.\n### Sustainable aviation fuel guidance\nMicrosoft supported the Environmental Defense Fund in developing a handbook which provides expert guidance on using high-integration sustainable aviation fuel.\n### $\\textcircled{2}$ Emissions data quality needs to improve across the value chain\nRead the paper\n### All-electric kitchens\nData quality continues to be an area of need across the sustainability landscape—especially in supply chain, capital goods, and logistics. Our update to our SCoC to require suppliers to have their data assured aims to improve the quality of our supply chain data.\nMicrosoft released a new white paper, Dining All-Electric, where we share our lessons learned, technical details, and decision making for all-electric kitchens.", "chunk_word_count": 514, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > CommuniTree", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 23, "page_start": 23, "page_end": 24 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 23, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2023 carbon removal key projects\n### $\\textcircled{5}$ Lower embodied carbon in materials needs to be a focus\nRead the paper\nLower embodied-carbon solutions for key materials—such as semiconductors—have yet to be developed commercially or at scale. We are looking ahead to cross-sector partnerships to help jumpstart these strategies.\n### Environmental justice in renewable energy procurement\nMicrosoft and Volt energy shared lessons learned on environmental justice in renewable energy procurement.\n### $\\textcircled{3}$ Data methodologies will continue to evolve\nRead the paper\nMethodologies are evolving and will continue to do so for the next several years. Like other companies, we are focused on improving our calculation methodologies to lead the industry and improve the actionability of our data and opportunities.\n### Circular design principles for cloud hardware\nMicrosoft and WSP developed the paper, Life Cycle Assessment (LCA) Guidelines for Cloud Providers, and provided the guidelines to the Open Compute Project (OCP).\nRead the paper\n### What’s next\n### Scope 3 emissions reduction\nImproving measurement: We cannot manage what we cannot measure. We are developing improved Scope 3 data visibility and carbon accounting methodologies to better guide and reflect meaningful actions towards reducing carbon emissions.\nMany of the technology solutions needed to reduce Scope 3 emissions are either nascent or currently unavailable at scale. GHG accounting standards provide limited guidance on how to address Scope 3 emissions. For too long, the lack of a clear starting point has led to persistent inaction on Scope 3. The private sector needs a new approach; one that prioritizes learning by doing and innovation through experience. We are enacting a five-part Scope 3 strategy:\nAdvocating for policy: We will propose and endorse public policies that enrich markets, partnerships, and measurement activities, with a focus on “greening the grid,” by further opening the power sector to corporate clean energy purchases and upgrading electric transmission.\nIncreasing efficiency: We will design our products and infrastructure in ways that reduce energy and carbon intensity, minimizing both downstream and upstream carbon emissions.\nScope 3 is perhaps the ultimate decarbonization challenge, necessitating the co-evolution of commercial, technology, and policy best practices among thousands of global stakeholders. Our carbon negative commitment is an invitation to the world to participate in this journey, translating ingenuity into action, and action into impact.\nBuilding markets: Scaling sustainability initiatives, such as the Microsoft Climate Innovation Fund and carbon fee, position us to invest in and purchase from nascent technology providers, like Heirloom, to build supply chains for decarbonized materials and fuels.\nForging partnerships: Microsoft cannot achieve carbon negative alone. We will scale supply chain decarbonization by aligning financial and government leadership, to signal global market demand and infuse investment into infrastructure and technology solutions worldwide.", "chunk_word_count": 453, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > $\\textcircled{5}$ Lower embodied carbon in materials needs to be a focus", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 24, "page_start": 24, "page_end": 26 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 24, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2023 carbon removal key projects\n### Getting to water positive\nOur internal water fee, modeled after our carbon fee, plays a critical role in enabling our progress against our water commitment. The fee was established in FY20 and is used to fund replenishment and access projects around the globe. It is charged to business groups based on annual water consumption projections at a rate that was determined with historical data and guidance from experts on the cost of replenishment projects. The objectives of the fee are to incentivize businesses across Microsoft to take steps to reduce water use and to raise internal awareness of our water positive commitment.\n### Water\n### Our approach\nIn 2020, we made a commitment to be water positive by 2030 and co-founded the Water Resilience Coalition (WRC), an industry-driven, CEO-led coalition of the UN Global Compact CEO Water Mandate to reduce water stress by 2050. For Microsoft, being net water positive means we will reduce water consumption across our global operations, replenish more water than we use, provide people across the globe with access to water and sanitation services, drive innovation, and engage in water policy.\nWe are strengthening how we manage water within Microsoft, while working to improve the way the world evaluates and manages water today and for future generations.\n### Our commitment\n### Our progress\n### Replenishing more water than we use\n### 15.6 million $\\mathsf { m } ^ { 3 }$ of water replenishment\nBy 2030, we will replenish more water than we consume across our global operations in water-stressed regions where we work.\nIn FY22, we contracted for replenishment projects that are estimated to provide more than 15.6 million $\\mathsf { m } ^ { 3 }$ in volumetric water benefit over the lifetime of these projects. Since the inception of this program, we have contracted for projects that are estimated to provide more than 35 million $\\mathsf { m } ^ { 3 }$ in volumetric water benefit over the lifetime of these projects.\n### Water access for 1 million people\n### Increasing access to water\nWe will provide 1.5 million people with access to clean water and sanitation services by 2030.\nBy the end of FY22, we provided more than 550,000 people with access to clean water and sanitation solutions in Brazil, India, Indonesia, and Mexico and reached just under one million people by the end of the calendar year 2022.\n### Water Table 1\n### Water Table 2", "chunk_word_count": 418, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > Getting to water positive", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 25, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2023 carbon removal key projects\n### Measuring our annual water consumption to help inform our replenishment targets\nReplenishing more water than we consume on our journey to water positive by 2030\nIn FY22, we contracted for replenishment projects that are estimated to provide more than 15.6 million $\\mathsf { m } ^ { 3 }$ in volumetric water benefit over the lifetime of these projects.\nIn FY22, we consumed nearly 6.4 million $\\mathsf { m } ^ { 3 }$ of water from our operations. The increase in consumption was proportional to our business growth year-over-year. This data informs the amount of water we need to replenish to ensure we are making progress against our water positive commitment.\n[IMAGE CAPTION] Total water consumption\n[IMAGE CAPTION] Total contracted water replenishment\n### Learn more in the Environmental Data Fact Sheet\na. Reported replenishment values were updated to represent contracted impact over the lifetime of a project. This update in reporting was driven by our effort to improve our measurement methodologies.\n### Water Table 3\nelivering on our water positive commitment by enabling access to water and sanitation services, and through water replenishment projects\nIn FY22, Microsoft provided 552,058 people with water access across Brazil, India, Indonesia, and Mexico. From the program’s inception through December 2022, we have provided nearly one million people with water access across these regions.\nnce year one, we have contracted 27 replenishment programs in water-stressed basins, which are contracted to deliver more than 35 million $\\mathsf { m } ^ { 3 }$ of replenishment over their lifetime.\n### Reducing our water footprint\n### Designing for efficiency", "chunk_word_count": 275, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > Measuring our annual water consumption to help inform our replenishment targets", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 28, "page_start": 28, "page_end": 29 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 26, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2023 carbon removal key projects\n### Increasing efficiency in existing systems\nAs our datacenter business continues to grow, Microsoft is committed to reducing the intensity with which we withdraw from our resources, both water and energy.\nWater usage effectiveness (WUE) is a key metric relating to the efficient and sustainable operations of our datacenters and is a crucial aspect as we work towards our commitment to be water positive by 2030. WUE is calculated by dividing the liters of water used for humidification and cooling of the datacenter by the total annual amount of power (measured in kWh) needed to operate our datacenter IT equipment. There are variables that can affect WUE, many of which relate to the location of the datacenter. Datacenters in some parts of the world, like Sweden and Finland, operate in naturally cooler environments and require no freshwater for cooling, whereas warmer climates like Phoenix will require water for portions of the year. Our datacenter designs minimize water use through all climates. As our datacenter business continues to grow, Microsoft is committed to reducing the intensity with which we withdraw from our resources, both water and energy, focusing on being as efficient as possible while balancing the needs for power and water in the regions where we develop. All future built datacenters will be LEED Gold certified with an emphasis on water and energy conservation.\nMicrosoft employs a comprehensive lifecycle assessment methodology in our datacenters that goes beyond typical carbon-centric measurements and considers the GHG emissions, energy, water, and other environmental impacts of technology, from servers to full datacenters. Our approach accounts for the entire cycle of production, transport, use, and end of life in order to calculate the environmental burdens of these systems and identify opportunities for reductions. It is empowering our own teams to consider the full environmental impact of their designs—both today and in the future. In 2022 we formally shared our standard operating procedure (SOP) recommendations so that others in the datacenter industry can improve their own lifecycle assessment.\nWe take a holistic approach to water reduction across our campuses and datacenters from design to efficiency in existing systems, recycling and repurposing, and innovating new technologies. We measure and report the global water use of our campuses and datacenters to drive efficiency and reuse.\n## 5 Pillars of water positive\nReducing our water footprint across our direct operations\nIncreasing access to water and sanitation services\nReplenishing more water than we consume across our operations\nScaling water solutions through innovation and digitization\nAdvocating for effective and innovative water policy\n### Reducing our water footprint (continued)\n### Recycling and repurposing\n### Procuring reclaimed water from utilities", "chunk_word_count": 448, "section_path": "2022 Environmental Sustainability Report > 2023 carbon removal key projects > Increasing efficiency in existing systems", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 30, "page_start": 30, "page_end": 30 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 27, "chunk_text": "# 2022 Environmental Sustainability Report\n## 5 Pillars of water positive\n### Improving the quality of stormwater runoff\n13.9\nWhile availability of reclaimed water is limited, we procure reclaimed water from utilities where it is available to reduce our dependence on freshwater supply. We are procuring reclaimed water at our datacenters in Washington, Texas, California, and Singapore. We also continue to move forward on plans to access municipal recycled water for landscaping and plumbing at LinkedIn’s Mountain View headquarters. We are currently testing municipal recycled water quality to confirm on-site treatment requirements. This project is anticipated to save approximately $3 0 , 5 0 0 \\mathrm { m } ^ { 3 }$ of potable water annually when implemented, which we expect to be completed in 2023.\nOur Redmond Campus Modernization project is focused on improving the quality and quantity of stormwater runoff. We implemented an underground parking garage, removing approximately 13.9 acres of previous surface parking and roadways, and avoided copper and zinc coated metal panels in our campus to eliminate any toxicity to downstream aquatic life. The campus is also Salmon-Safe Certified, reducing the impacts it has on water quality and fish habitat.\nWherever possible, we look at recycling and repurposing water at our datacenters and campuses, including harvesting rainwater, procuring reclaimed water, and reusing water within our facilities.\nWe removed \n13.9 acres of surface parking and roadways at our Redmond \nCampus. Campus.\n### Recycling and reusing water\nWe measure and monitor reused water at datacenters and campuses across the globe and use meters to collect real-time data on usage, including recycling, for owned datacenters. We design our cooling systems to reduce consumption to address stressed areas, geographic locations, and poor water quality. For recycling, in our Arizona and Mexico datacenters we are treating the incoming water to maximize cycles and minimizing water discharge to drain. Our Johannesburg office greywater treatment plant is separately metered to track water reused monthly. At our Silicon Valley campus, which is pursuing net-zero water certification and is on track to be one of first tech campuses to secure this certification, we operate a water treatment plant to process on-site grey and black water for reuse and have established a water budget to quantify the amount of water captured, recycled, and reused on-site.\n### Harvesting rainwater\nWe incorporate rainwater harvesting and reuse at our campuses and datacenters around the globe. We are harvesting rainwater in our Netherlands, Ireland, and Sweden datacenters and have rainwater harvesting in the designs for new datacenters in England, Finland, Italy, South Africa, and Austria. At our Silicon Valley and Beijing campuses, harvested rainwater is used for toilet flushing, landscaping irrigation, road washing, and more. We also have plans for rainwater harvesting at our Redmond, England, Ireland, and Namibia campuses.\nWe incorporate rainwater harvesting and reuse at our campuses and datacenters around the globe.\n### Reducing our water footprint (continued)\n### Keeping datacenters cool with less water\n### Investing in air-to-water generation", "chunk_word_count": 493, "section_path": "2022 Environmental Sustainability Report > 5 Pillars of water positive > Improving the quality of stormwater runoff", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 28, "chunk_text": "# 2022 Environmental Sustainability Report\n## 5 Pillars of water positive\n### Innovating new water technologies\n37,850m3 37,850m3\nWe continue to integrate our standards in water reduction technologies where we use direct outside air most of the year to cool servers. We otherwise cool through direct evaporation that requires a fraction of the water compared to other, conventional waterbased cooling systems such as water-cooled chillers. By powering our datacenter with power from the Sun Streams 2 Solar Project owned by local partner, Longroad Energy, we are displacing the water needed in the traditional electricity generation process.\nAs climate change exacerbates water risks, air-towater generation is an important innovation that we are investing in, both within our own four walls and through our recent investment in SOURCE, a renewable water technology that is powered by solar. We are also investing in air-to-water generation across our operations. Four new air-to-water generators were installed at our Hyderabad campus in 2020 and 2021, each has an installed capacity of 500 liters. We installed an adiabatic cooling system at our Bengaluru campus, which has reduced our energy consumption, in line with our efforts to make our HVAC systems more efficient.\nInnovation is a critical component of our water reduction approach at campuses and datacenters. We are investing in water reduction technologies including thermal energy, cooling technologies, and air-to-water generation.\nThe Redmond Campus Thermal Energy Center is predicted to save over 37,850 m3 of water per year. year.\n### Saving water through thermal energy\nOur Thermal Energy Center in Redmond is predicted to save over $3 7 . 8 5 0 ~ \\mathrm { m } ^ { 3 }$ of water per year through several unconventional approaches to heat rejection. The geoexchange field transfers heat into the ground, which is approximately 50 degrees Fahrenheit. The system’s wells and tanks will store water as heat energy for future use, instead of expelling it through the cooling towers, which is expected to reduce water use by $3 0 , 2 8 0 ~ \\mathrm { m } ^ { 3 }$ a year or roughly the volume of 12 Olympic pools.\n### Pioneering liquid immersion cooling\nIn 2021, Microsoft was the first cloud provider to run two-phased liquid immersion cooling in a production environment. At the component level, we’re testing new biodegradable materials to empower greater circularity of our servers and exploring microfluidics to cool chips more efficiently. As Microsoft and the industry continues to advance immersion cooling technology, we’re also looking at ways to optimize the performance of chips beyond their pre-defined voltage, thermal, and power design limits, a concept called overclocking.\nAs Microsoft and the industry continues to advance immersion cooling technology, we’re also looking at ways to optimize the performance of chips beyond their pre-defined voltage, thermal, and power design limits, a concept called overclocking.\nAdvancing liquid immersion cooling technology helps to reduce water consumption in our operations.", "chunk_word_count": 484, "section_path": "2022 Environmental Sustainability Report > 5 Pillars of water positive > Innovating new water technologies", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 32, "page_start": 32, "page_end": 32 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 29, "chunk_text": "# 2022 Environmental Sustainability Report\n## 5 Pillars of water positive\n### Replenishing water\nIn FY22, we invested in six new projects, which are expected to replenish more than 15 million $\\mathsf { m } ^ { 3 }$ of water in the next decade. To date, we have contracted for 27 replenishment projects, totaling more than 35 million $\\mathsf { m } ^ { 3 }$ of potential volumetric water benefit and have invested $\\$ 7$ million in the program overall.\n### Restoring Sembakkam Lake and wetlands in Chennai, India\n### Improving precision agriculture in Santiago, Chile\nWe supported The Nature Conservancy (TNC) in improving water quality, storage capacity and groundwater recharge of Lake Sembakkam. The project is establishing a nature-based wastewater treatment system at the lake using a constructed wetland system that is estimated to treat $6 , 0 0 0 { - } 7 , 0 0 0 \\mathrm { m } ^ { 3 }$ of wastewater entering the lake per day and benefit approximately 10,000 people. These solutions will improve groundwater recharge, biodiversity habitat, and flood control. They will also create a waterfront to serve as a recreational site for community members.\nIn 2022, we contracted a project to improve agricultural water efficiency and overall water supply reliability in the Maipo Basin in Chile, the key watershed that Santiago depends upon. The project is expected to begin realizing benefits in 2023. Microsoft is partnering with Kilimo and using its IT platform to catalyze change by educating and supporting farmers in optimizing water use. The project aims to increase agricultural efficiency and productivity, reduce water demand, and protect ground and surface water resources. The project will support expanded applications of Internet of Things (IoT)-based satellite moisture and irrigation management systems on 360 hectares of private irrigated family farms to decrease water pumping and diversion.\nMicrosoft is committed to replenishing more water than we consume across our operations. We focus on investing in replenishment projects that protect watersheds, restore wetlands, and improve infrastructure in waterstressed regions where we operate. We use the Volumetric Water Benefit Accounting (VWBA) guidance to quantify the estimated volumetric water benefits that can be claimed from a range of different replenishment project types. We seek to align the project type with the unique needs of each location; for example, in a location with high water quality challenges, we will focus on projects that help to improve water quality in the basin.\nWe are building the infrastructure to ensure that we can scale to 40 priority water-stressed locations across the globe and are looking at a blend of traditional and more innovative replenishment projects. We are also partnering with companies and other key stakeholders to further define how organizations should account for benefits and the types of projects that should be prioritized in key locations.\nIn FY22, we invested in a range of different types of projects from agricultural water efficiency to groundwater restoration to watershed restoration, including the following:", "chunk_word_count": 496, "section_path": "2022 Environmental Sustainability Report > 5 Pillars of water positive > Replenishing water", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 33, "page_start": 33, "page_end": 33 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 30, "chunk_text": "# 2022 Environmental Sustainability Report\n## 5 Pillars of water positive\n### Supporting water infiltration and groundwater recharge in San Antonio\nIn 2021, we partnered with the Edwards Aquifer Authority to acquire a conservation easement and keep lands from being developed in San Antonio, Texas. The easement focuses on lands that are most likely threatened by rapid development or negativemanagement practices and ensure these lands are not developed to allow for water infiltration and groundwater recharge. Targeted acquisition of conservation easements and implementation of land management practices are projected to protect, on average, 0.6 acre-feet of recharge-per protected acre—with the potential to increase average recharge rates over time through the establishment of landmanagement practices.\nWe have contracted for 27 replenishment projects, totaling more than 35 million $\\mathsf { m } ^ { 3 }$ of potential volumetric water benefit and have invested $\\$ 7$ million in the program overall.\n### Improving access to water\nIn FY22, Microsoft’s contribution has provided more than 550,000 people with access to clean water and sanitation services in Brazil, India, Indonesia, and Mexico. This project reached just under one million people by December 2022.\nWe continue to make progress towards our commitment to provide 1.5 million people with access to safe drinking water and sanitation solutions by 2030. One in four people across the globe do not have access to clean water and this is expected to increase as water challenges are exacerbated by climate change. In 2020, we committed to providing Water.org with $\\$ 3$ million over three years to provide micro-loans to cover a range of solutions, such as installation of household taps and toilets, rainwater harvesting, storage and well restoration for communities and schools.\nWe are also helping to develop resources to support organizations in understanding the different types of accessibility projects they can invest in, as well how to quantify the benefits and impacts from these investments across different types of water, sanitation, and health (WASH) solutions.\n### Increasing water access in Mexico\nMexico is facing extreme water challenges as a result of increasing demands on water resources. In peri-urban towns outside of Mexico City, the local government subsidizes water for their residents. This is a common approach to help improve household access to water; however, it is not holistic. Patty, a healthcare worker, was unable to get the amount of water her family needed through the program. She used to wait hours each month to receive her household ration of water, taking time away from work and earning income. To supplement the water she did receive, Patty bought bottled water and saved rainwater in a makeshift bucket to use for cooking, laundry, and bathing. Contigo, a local partner of Water.org, allowed Patty to affordably finance a rain storage solution with a large tank, gutters, and a cistern to cover her household water needs. This represents one of the roughly 150,000 micro-loans that Microsoft’s funding has supported across the globe.\nWe are helping to develop resources that support organizations in understanding the different types of accessibility projects they can invest in across different types of water, sanitation, and health (WASH) solutions.\n### Key trends\n### Resources\n### Water Action Hub 4.0\n### Water requires a collective approach", "chunk_word_count": 536, "section_path": "2022 Environmental Sustainability Report > 5 Pillars of water positive > Supporting water infiltration and groundwater recharge in San Antonio", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 31, "chunk_text": "# 2022 Environmental Sustainability Report\n## 5 Pillars of water positive\n### Innovation is a critical piece of the puzzle\nIdentify organizations to partner with in specific basins and use a wide range of tools and case studies. A new tool allows companies to evaluate their water management maturity and compare progress against peers.\nWorking collectively to solve challenges at the basin scale is critical. Water is a resource that every person and business on this planet needs to survive. We can use as little water in a location as possible and replenish more than we use, yet that basin can still be highly stressed and not provide local communities with what they need.\nWater challenges will become more extreme in the years to come. If we continue with the status quo, we will not protect freshwater resources for future generations. Organizations need to innovate within their own operations, supply chain, and the communities in which they operate by investing in solutions that maximize efficiency and reduce dependence on freshwater resources. There is also an important role for organizations and investors to play in providing the capital to scale water technologies needed to tackle water scarcity, quality, and access.\nUse the tool\n### Volumetric Water Benefit Accounting (VWBA)\nThis guidance document provides corporate water stewardship practitioners with a standardized approach and set of indicators to quantify and communicate the volumetric water benefits and complementary indicators of water stewardship activities.\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\nRead the guidance\n### Water Risk Monetizer\nReplenishment is a nascent market with limited guidance on what it means, how to account for benefits, how to make credible claims, and how to ensure replenishment investments are having a significant impact in high-stressed basins. Furthermore, the supply of replenishment projects in many global markets is limited or non-existent. Cultivation of credible partners to manage and implement replenishment projects, as well as investment in innovative replenishment projects with non-governmental organizations (NGOs) and private sector entities, are critical to scale the market and collective impact.\nThe free tool, built by Microsoft and Ecolab, allows you to assess the true value of water and risk exposure you face.\nUse the tool\n### WRI Aqueduct Tool and WWF’s Water Risk Filter\nUnderstand the local water stress and scarcity concerns where you operate.\nUse the WRI tool\nUse the WWF tool\n[IMAGE CAPTION] increase access, and reduce our water footprint.\n### What’s next\n### Investing in innovative replenishment projects", "chunk_word_count": 418, "section_path": "2022 Environmental Sustainability Report > 5 Pillars of water positive > Innovation is a critical piece of the puzzle", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 32, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Scaling our efforts to reduce water use across operations\nWe anticipate increasing the number of innovative replenishment projects that we invest in between now and 2030. We will look at projects with innovative funding mechanisms, such as revolving or low-interest loans. We also plan to look at projects where we procure volumetric water benefit from private sector entities, including start-ups, that offer a unique solution to the water challenges we face today, for example leak detection projects in distribution networks and transmission mains. As we invest in these projects and track learnings, we remain committed to sharing those with others.\nInvestment in reduction is a critical component of our water positive commitment and one we are focusing on as we get closer to 2030. While we continue to maximize our efficiency for our datacenters and campuses, we will also continue to look for opportunities to invest in innovations that will help us to further reduce our dependence on freshwater sources.\n### Investing in projects that will increase access to water and sanitation solutions\nWe are looking for ways to scale our investments in new and existing locations where people lack access to water and sanitation services. Micro-loans are a unique solution and fill a need in many locations across the globe. There are also many people across the globe who can’t afford a loan and thus are not supported through the types of investments we have made thus far. As we move towards 2030 and beyond, we will be looking for ways to support populations that are not being reached.\n### Integrating environmental justice into replenishment\nEnvironmental justice is embedded in our water access target, and we are looking for ways to be more intentional about integrating environmental justice into our replenishment investments as well. This includes looking at ways we can ensure our replenishment investments support disadvantaged communities, as well as the potential unintended consequences of projects that could cause harm to disadvantaged communities in the locations where we operate.\n### Getting to zero waste\nTo reach our commitment to become a zero waste company by 2030, Microsoft is taking an increasingly circular approach to materials management to reduce waste and carbon emissions. Our strategy goes beyond waste diversion as we work across our value chain, beginning with design and material selection. Wherever possible, we reduce the amount of materials needed. We responsibly source materials for our operations, products, and packaging. We are increasing the use of recycled and recyclable content, reducing hazardous substances, and designing out waste. We aim to keep products and materials in use longer through reuse and repair. We reduce waste generation at end of life with recycling and composting programs.\n### Waste", "chunk_word_count": 470, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Scaling our efforts to reduce water use across operations", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 33, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Our approach\nEvery year, people consume 100 billion tons of materials, and in 2020 only 8.6 percent of those materials were cycled back into the economy after use, according to the 2022 Circularity Gap Report. Linear take-make-waste systems and existing infrastructure are not adequate to maintain, collect, and redistribute materials effectively for a global circular economy.\nWe are taking an increasingly circular approach to materials management to reduce waste and carbon emissions.\nWe recognize the urgent need to reduce carbon emissions associated with the lifecycle of these materials. As a company that manufactures devices, builds campuses and datacenters, and uses manufactured goods in our operations, we have committed to responsibly design and source materials and build a more circular approach into our work and the world.\n### Zero waste by 2030 across our direct waste footprint\n### Our commitment\n### Our progress\n### Driving to zero waste operations\n### 12,159 metric tons of operational waste\nIn FY22, we diverted 12,159 metric tons of solid waste from landfills and incinerators across our owned datacenters and campuses. In FY22, we renewed Zero Waste certifications for our San Antonio, Texas; Quincy, Washington; Boydton, Virginia; and Dublin, Ireland datacenter locations. Our Redmond campus has been Zero Waste certified for six consecutive years.\nWe will achieve 90 percent diversion of operational waste at datacenters and campuses, and 75 percent diversion for all construction and deconstruction projects by 2030.\n### Increasing reuse and recycling of servers and components\n### $82 \\%$ reuse and recycling\nOur reuse and recycle rates of servers and components across all cloud hardware reached 82 percent in FY22. We opened four new Circular Centers in FY22 in Boydton, Virginia; Chicago, Illinois; Dublin, Ireland; and Singapore. We are launching our next Circular Centers in Quincy, Washington in FY23 and in Texas in FY25.\nBy 2025, 90 percent of servers and components for all cloud hardware will be reused and recycled with support from our Circular Centers.5\n### Eliminating single-use plastic\n### More than $29 \\%$ plastic reduction\nBy 2025, we will eliminate single-use plastics in all Microsoft primary product packaging and all IT asset packaging in our datacenters.\nWe reduced single-use plastics in our Microsoft product packaging by more than 29 percent, a decrease from 4.7 percent to 3.3 percent by weight (on average) of plastic per package in FY22.\n### Making fully recyclable products and packaging\n### Devices\nDevice recyclability We are in the process of switching to a new methodology to assess product and packaging recyclability, consistent with the EN 45555 standard, to increase the accuracy of our recyclability reporting.\n### Recycled materials in devices", "chunk_word_count": 456, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Our approach", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 37, "page_start": 37, "page_end": 38 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 34, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Repairability\nWe will design Surface devices, Xbox products and accessories, and all Microsoft product packaging to be 100 percent recyclable in OECD countries by 2030.\nWithout compromising on our design and quality, we constantly evaluate any opportunities for recycled materials. For example, many of our PC accessories contain recycled materials, including the new Microsoft Adaptive Accessories and Audio Dock, both made with at least 30 percent post-consumer recycled plastic resin.\nThe new Surface Laptop 5, Surface Pro 9, and Surface Laptop Go 2 are the most repairable devices in their product lines with more replaceable components and repair options than ever before.\n### Other achievements\n### Improving data on construction and demolition waste\nZero waste campuses\nIn FY22, we piloted a durables-first campaign in Dublin and Puget Sound, focusing on replacing items such as single-use cups and takeaway containers with reusable solutions.\nWe are partnering with our vendors to improve data collection processes and tools to gather high-quality construction and deconstruction waste data. We’ll use this data to inform innovative construction processes to reduce waste throughout our entire lifecycle and supply chain.\n### Waste Table 1\n### Waste Table 2\n### Working towards our target to divert 90 percent of operational solid waste from landfills and incinerators across our owned datacenters and campuses\n### Ensuring 90 percent of servers and components for all cloud hardware will be reused and recycled by 2025\nIn FY22, Microsoft’s diversion rate increased to 84.9 percent and we diverted more than 12,100 metric tons of waste from being landfilled or incinerated.\nIn FY22, Microsoft increased reuse and recycling of servers and components to 82 percent. Additionally, to align with upcoming definitions in circular economy regulations and more accurately describe the steps we are taking operationally to meet our commitment, in 2022 we adjusted our terminology to “reuse and recycling”. The operational scope, strategy, and metric has not changed. Expansion of our Circular Centers program and investments in systems and policy changes will further enable us to achieve our 90 percent reuse and recycling target of servers and components by 2025.\n[IMAGE CAPTION] A Reused B Recycled\nLearn more in the Environmental Data Fact Sheet\na. Starting in FY22 we transitioned to a methodology with improved accuracy in mass accounting and standardized recycling efficiency coefficients.\nDesigning our product packaging for circularity\nIn FY22, we achieved a rate of over 94 percent recyclability and decreased single-use plastics to just over three percent across all Microsoft product packaging.\n[IMAGE CAPTION] Waste Table 3\n### Reducing our waste footprint\n### Developing technology to drive a circular cloud", "chunk_word_count": 450, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Repairability", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 38, "page_start": 38, "page_end": 41 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 35, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Reducing waste in our cloud hardware\nOur Circular Center approach starts with sustainable design and responsible sourcing of an asset. Microsoft designs a growing portion of its own hardware portfolio, and we make sustainability considerations a key part of the entire Microsoft Azure hardware design process—including energy efficiency, repairability, upgradability, and durability.\nA critical piece of achieving our zero waste goal is managing cloud hardware at our growing fleet of datacenters. We have taken an innovative approach towards designing and implementing circularity into our datacenters by launching Circular Centers to optimize reuse.\n### Defining design requirements for cloud hardware\nTo meet our commitment to being zero waste by 2030, we are reducing, reusing, and recovering waste in our campuses and datacenters. We are focused on keeping our products and packaging in use longer.\nIn 2022, Microsoft published ecodesign requirements for cloud hardware. This specification outlines the sustainability guidelines, including energy and material efficiency requirements, that suppliers must follow when designing hardware for the Microsoft Cloud, such as the use of post-consumer recycled (PCR) plastics and use of recycled content requirements in some packaging. In the same timeframe, we began collecting material content and sustainability data for transport packaging materials. Using our current hardware data collection process, we can now digest data such as weights, material type, and recycled content that can be used for regulatory purposes and to enable our suppliers to deliver energy and material efficient hardware contributing to carbon and waste reduction.\nReusing and recycling cloud hardware In FY21, we piloted our new approach to asset reuse by building a Circular Center within our Amsterdam datacenter campus, which represented seven percent of our server capacity globally. We process decommissioned cloud hardware to service strategic routes, secondary markets, and suppliers using intelligent routing software. Our Amsterdam Circular Center model achieved reuse and recycle of 82 percent of all decommissioned assets in FY22. Our Circular Centers also achieved a four percent reduction in carbon per server. Based on the success of the Amsterdam location, we opened four new Circular Centers in FY22 in Boydton, Virginia; Chicago, Illinois; Dublin, Ireland; and Singapore. We are launching our next Circular Centers in Quincy, Washington in FY23 and in Texas in FY25. This model enables suppliers to reuse assets and components, resulting in significant carbon emissions reduction and material recovery.\nTo enact these principles at scale, we developed a patent-pending Intelligent Disposition and Routing System (IDARS) that establishes and executes a zero waste plan for our cloud hardware assets. IDARS is an end-to-end system that identifies the most sustainable disposition path for every part at any point in its lifecycle across the supply chain. Paired with Microsoft Dynamics 365 Supply Chain Management and Microsoft Power Platform, IDARS utilizes the bill of materials of assets, inventory, and demand to optimize the sustainable path, and provides Circular Center technicians with precise instructions on how to steward the asset onto its next phase. This technology, along with our close collaboration with both upstream and downstream partners, offers a model for the technology industry.", "chunk_word_count": 528, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Reducing waste in our cloud hardware", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 36, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Designing and building circular devices\n### Designing for and enabling repair\n29.8%\n### Reducing plastic packaging waste\nRepairability can offer significant carbon emissions and waste reduction benefits. Microsoft continues to invest in this important space and the findings will aid in our product design and plans for expanding device repair options for our customers that are safe, effective, and sustainable. Our latest Surface products feature a host of replaceable components.\nMicrosoft is committed to making fully recyclable packaging for our products by 2030. We are focused on eliminating single-use plastics in our device packaging and for cloud hardware in our datacenters.\nOver the past year, we have continued our work to reduce the environmental impacts of Microsoft devices by increasing circularity and reducing carbon intensity across the entire product lifecycle.\nIn FY22, we reduced single-use plastics in our Microsoft device packaging by 29.8 percent.\n### Reducing single-use plastics in device packaging\n### Designing for lower-carbon and circular devices use\nRepairability goes beyond design. This year, we piloted the sale of spare parts on Microsoft.com and began expanding our network of local Authorized Service Providers who are qualified to repair Microsoft devices. Microsoft has spent the past several years investing in local repair hubs in major geographies that are equipped to repair a customer's Microsoft device instead of replacing it.\nIn FY22, we reduced single-use plastics in our Microsoft device packaging by 29.8 percent, a reduction from 4.7 percent to 3.3 percent by weight (on average) of plastic per package. We made significant progress on our journey to eliminate single-use plastic packaging, introducing several 100 percent plastic-free packages during the year including the Surface Adaptive Kit and Microsoft Ocean Plastic mouse. This packaging is made from 100 percent renewable materials and fully recyclable. In FY22, our product packaging was on average 94.4 percent recyclable in OECD countries. Our most recent wave of Surface Laptop 5 and Pro 9 retail packages use less than one percent plastic (by weight) and are over 99 percent recyclable. All virgin paper/fiber used for these packages is certified as responsibly sourced.\nOur accessory devices have shorter development cycles, making them a great vehicle to test new circular materials. We test new materials in individual products and, if successful, expand their use across a broader product portfolio. Circular design must also account for a future in which products can easily be returned, repaired, refurbished, and resold. Microsoft devices are also built to last, which helps increase circularity by keeping materials in use longer. The Microsoft Authorized Refurbisher Program gives new life to used and returned devices—repurposing over three million devices in FY22.", "chunk_word_count": 457, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Designing and building circular devices", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 37, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Designing for recyclability\nAs we make progress towards our goal of 100 percent recyclability of Surface devices and Xbox consoles and accessories, we are engaged with the electronics recycling industry to learn about and improve how our products are recycled at end of life. Our research showed a gap between the processes used at electronics recycling centers and the tools available for us to calculate the recyclability of our products. To address this, we are in the process of switching to a new recyclability methodology, consistent with the EN 45555 standard, to increase the accuracy of our recyclability reporting.\n### Innovating with suppliers on materials\nWe are partnering with suppliers on more sustainable material innovations. In our hardware supply chain, we are working on using 100 percent recycled tin solder paste and 100 percent recycled gold in our printed circuit boards. We are phasing out single-use plastics in battery packs by reusing packs multiple times. We are also reducing waste in our software supply chain by eliminating physical cards and enabling digital downloads for games, apps, and gift cards.\nWe have spent the past several years investing in local repair hubs in major geographies that are equipped to repair Microsoft devices.\nDesigning for repairability reduces waste by keeping hardware in use longer.\n### Reducing operational waste\nAchieving zero waste datacenters Microsoft has a goal to achieve 90 percent reuse or recycle of our cloud computing hardware assets by 2025. In FY22, we renewed Zero Waste certifications for our San Antonio, Quincy, Boydton, and Dublin, datacenter locations.\n### Reducing construction and deconstruction waste\nAs we pursue our zero waste and circularity goals, we also look for opportunities to provide community co-benefits where we operate.\nGetting to zero waste at our campuses and datacenters requires more ambitious efforts to reduce as much waste as we can, reuse products to extend use life, and recycle or compost wherever possible. We're thinking through everything from durable serviceware to air filters with circularity in mind.\nMicrosoft is approaching the design, construction, and deconstruction of the buildings in our datacenter and campus portfolio with circularity in mind and identifying ways to prevent waste from the offset.\nIn FY22, we invested in enhancing the program's business intelligence using a suite of waste data tools, including Microsoft Power Apps and Power BI, to track the waste performance of our datacenters.\n### Innovating the construction process", "chunk_word_count": 419, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Designing for recyclability", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 42, "page_start": 42, "page_end": 43 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 38, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Transforming to zero waste campuses\nWe are innovating our construction processes to reduce waste throughout our entire lifecycle and supply chain. In FY22, we developed a playbook that standardized our internal processes for diverting construction waste. We implemented a construction and deconstruction waste app to collect data from our general contractors globally to increase transparency and traceability. We also implemented a new database that stores, displays, and analyzes real-time global waste diversion data. Moving forward, priority strategies including construction circularity, upstream design considerations, a steel scrap take-back program, repurposing of excess concrete, and mitigation of hard-to-recycle materials, are all becoming standard elements of our datacenter construction projects.\nOur Puget Sound campus has been Zero Waste certified since 2016. LinkedIn has been collecting annual waste data from most of its high impact sites and plans to continue expanding the collection to other sites in the next two to three years. The goals are to reduce preand post-consumer food waste, avoid waste collection contamination, reduce packaging in kitchen deliveries, transition all parts of the program to 100 percent reusable dishware, and eliminate single-use packaging in micro kitchens.\n### Going beyond our operations\nAs we pursue our zero waste and circularity goals, we also look for opportunities to provide community co-benefits where we operate. Atlanta's Zero Waste Westside initiative, sponsored with Microsoft grant funding, shows the power of justicecentered community-led sustainability enterprises. The collaboration brings food waste collection and recovery, composting services, and education to the Westside Atlanta community. The concept was also informed by the Environmental Justice Measurement and Evaluation Framework, co-created by Microsoft and the Just Transition PowerForce. The enterprise is run by three local organizations led by Black women with longstanding commitments to social and environmental justice. With Microsoft's support, the collective secured farm equipment to improve composting processes and more than double output at their community compost lab. It is poised to scale service offerings to businesses.\n### Improving our diversion rates\nWe have a goal of 75 percent construction and deconstruction waste diversion for all projects, including tenant improvement, and 90 percent diversion for core and shell projects over 75,000 square feet.\n### Zero waste\nSan Antonio, Quincy, Boydton, and Dublin datacenter locations all renewed their zero waste certifications in FY22.\n### Key trends\n### Resources\n### Microsoft Circular Centers\n### •1 Circularity can reduce embodied carbon", "chunk_word_count": 411, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Transforming to zero waste campuses", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 43, "page_start": 43, "page_end": 43 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 39, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Replenishment needs to evolve and scale if companies are going to meet their goals\n### Data methodologies must be standardized\nLearn how Microsoft Circular Centers are designing and implementing circularity into our cloud.\nAs industries like design and construction align around embodied carbon measurement tools, significant opportunities open up to reach not just circularity and waste reduction goals but also carbon reduction goals. Implementing responsible materials management and circular practices with technologies allows for optimized reuse and recycling of materials.\nWatch the video\nTo effectively use information from across the value chain, industry standards must be introduced to ensure consistency of measurement and interpretation of data. Circularity will be accelerated through global benchmarking, coordinated efforts to track progress, and cross-industry accountability.\nSustainability benefits of Microsoft device repair\nRead the paper\nRepair your Microsoft Surface\nLearn how\n## 2 Innovation in data acquisition must be prioritized\n### A circular transition should be a just transition\nEnd-of-life programs for devices, batteries, and packaging\nLearn more\nFurther strides are needed to improve waste data. Currently, downstream systems are dependent on estimation of material volume and weight. Systemic investment is needed across the value chain to provide actual and real-time data, which includes data points from collection, processing, and material availability. Improvements in data accuracy will provide critical insight into an organization's footprint, informing immediate next steps and driving long-term innovation.\nEngagement with underrepresented and under-resourced communities is imperative to ensure a holistic approach to circularity. People are at the center of any economic transformation and ensuring accessibility and equity must be prioritized. Alongside any mitigation efforts for environmental impact, community engagement and investment are paramount to any circular economy.\n### Reducing packaging waste\nMicrosoft participated in the development of a cross-industry white paper on stretch wrap alternatives.\nRead the paper\n### Circular economy vision\nFind out more about the circular economy and the vision for an economic system that's better for the people and the environment.\nLearn more\n### Circularity Gap Report 2022\nUnderstand the systemic benefits of a transition toward a circular economy and learn more about the status of circularity globally.\nRead the report\n### Circular Electronics Roadmap\nThe Circular Electronics Partnership has developed a cross-industry strategy to accelerate the circular transition in a collaborative way.\nRead the report\n[IMAGE CAPTION] Designing for circularity accelerates our path to zero waste by 2030.\n### What’s next\n### Accelerating progress towards zero waste by 2030\n### Growing the scope and impact of our environmental justice initiatives\nMicrosoft will use roadmaps across the company to enable key activities that result in zero waste outcomes that center circularity. We will continue to scale our programs, including Circular Centers, design for circularity in buildings and hardware, and the elimination of single-use plastics from packaging for Microsoft products and across our cloud hardware supply chain.\nAs we learn from our existing partnerships, we are building out the framework to integrate environmental justice into our activities. We will continue to build on existing community partnerships, such as our partnership with Zero Waste Westside, and explore new ones in communities we operate in to create opportunities for economic inclusion and community well-being.\n### • Redesigning cloud rack packaging", "chunk_word_count": 536, "section_path": "2022 Environmental Sustainability Report > 2 Replenishment needs to evolve and scale if companies are going to meet their goals > Data methodologies must be standardized", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 44, "page_start": 44, "page_end": 45 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 40, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Innovation in data acquisition must be prioritized\n### Expanding our circular strategy across Microsoft\nTo further our progress towards our zero waste objectives, our Cloud Logistics Team has undertaken a deeply collaborative process with stakeholders from across the enterprise to source and design world class reusable solutions for the safe and sustainable transportation of Microsoft's server racks. Today, the transportation of each server rack from integration to our datacenters results in over $1 0 0 \\mathsf { k g }$ of packaging waste. We're aiming to reduce this to zero with our new solutions, enabled by a circular supply chain and logistics network design.\nIn efforts to further accelerate progress towards our zero waste and Scope 3 carbon reduction commitments, we are working across the enterprise and with external partners to prioritize actions that align with our circular strategy. By taking a coordinated approach, we will use the expertise of our team to unlock key barriers and further drive innovation at scale.\n### • 3 Streamlining our collection systems\nWe are engaging with industry collaborators on piloting new electronic collection systems. These new systems will allow for better data such as weights, material type, and recycled content, ensuring regulatory compliance and supporting decision making around driving circular economy initiatives.\n### Protecting more land than we use\n### Our approach\nMicrosoft directly operates on approximately 11,000 acres of land around the world, and we recognize that our own land footprint has an impact on ecosystems. We have made a commitment to permanently protect more land than we use by 2025. We are also committed to being good stewards of the land we use – as well as going beyond our own operations and actively working to protect the environmental health of the communities that host our datacenter operations and where our employees live and work.\nWe have contracted to protect 17,268 acres of land, which is over 50 percent more than the land we use to operate.\n### Ecosystems Chart 1\n### Our commitment\n### Our progress\n### Achieving our target of protecting more land than we use by 2025\n### Taking responsibility for our land footprint\n### Protecting acres of land\nAs of FY22, Microsoft has contracted to protect 17,268 acres of land, which is over 50 percent more than the land we use to operate, and 12,270 acres were designated as permanently protected.\nIn FY22, we protected 12,270 acres of land in Belize. Another 4,998 acres in the United States are contracted for protection in future years. We now have funded more land to be protected than the 11,000 acres of land that we use.\nWe will take responsibility for the ecosystem impacts of our direct operations by protecting more land than we use by 2025.\n\n### Protecting the Belize Maya Forest\n### Investing in the NFWF Western Big Game Migration Program", "chunk_word_count": 480, "section_path": "2022 Environmental Sustainability Report > 2 Innovation in data acquisition must be prioritized > Expanding our circular strategy across Microsoft", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 45, "page_start": 45, "page_end": 47 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 41, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Innovation in data acquisition must be prioritized\n### Local engagement\nThe Trust is working with communities in the area to build a strong local alliance to maintain the integrity of these vital forests and safeguard their biodiversity. They are building trust among community stakeholders by identifying issues of mutual interest such as water quality and availability, and determining critical gaps and needs of communities like education and livelihoods to further invest in.\nLast year, we contributed to the TNC Belize Maya Forest Project (BMF) to protect an additional 236,000 acres in a global biodiversity hotspot. In December 2021, these acres were placed under declaration of trust by the Belizean government, putting nine percent of Belize's land under permanent protection.\nThrough the NFWF Western Big Game Migration Program, we invested in projects in the American West that are vital for preserving the migration corridors of endangered and at-risk species, including mountain lions, grizzly bears, and Canada lynx. We are continuing to monitor the progress of these projects in Montana, Colorado, New Mexico, and Nevada, which are on track to be protected through conservation easements by the end of 2023.\nSince our commitment in 2020, Microsoft has partnered with the National Fish and Wildlife Foundation (NFWF) within the United States and The Nature Conservancy (TNC) globally to permanently protect more land than we use by 2025. We used a data-informed approach to invest in projects that are working to protect more than 17,000 acres of ecosystems most at risk. We are tracking each of these projects through the process of placing the land under a legal designation of protection, as well as ongoing conservation and management.\nThe designation of land protection is just the first important step for the long-term conservation and management of BMF. The Belize Maya Forest Trust was established as a local nonprofit, trustee, and steward to create a globally recognized, locally relevant model of healthy, biodiverse forest protected for and by all Belizeans and to be a global benchmark for effective and lasting conservation. The following programs have been put in place:\n### Ranger program\nTo help legally enforce forest protection, there are currently 10 local rangers patrolling BMF. The Trust has also partnered with the British Army Training Support Unit Belize to resource more than 400 troops to assist with security and help train BMF rangers.\n### Conservation Action Plan\nWith the University of Belize's Environmental Research Institute, the Trust developed a Conservation Action Plan that provides a strategic framework for management over the next five years. The forest and aquatic ecosystems, wild cats, critically endangered Central American river turtle, and Sacred Pools of Cara Blanca have been identified as the main conservation targets. Anti-poaching and fire protection measures will be implemented to address threats in the region.\nWe used a data-informed approach to invest in projects that are working to protect more than 17,000 acres of ecosystems most at risk.\n### Regenerative agriculture\nBMF was acquired to halt the continued expansion of large-scale mechanized agriculture. TNC has committed to working with the Government of Belize to invest in regenerative agriculture in the buffer zones neighboring the BMF.", "chunk_word_count": 528, "section_path": "2022 Environmental Sustainability Report > 2 Innovation in data acquisition must be prioritized > Local engagement", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 48, "page_start": 48, "page_end": 49 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 42, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Innovation in data acquisition must be prioritized\n### Being good stewards of the land we use\n### Going beyond our operations\nMicrosoft is committed to supporting strategic communities that host our datacenter operations and where our employees live and work. Through our Community Environmental Sustainability program, we partner with global and local organizations to identify priority environmental issues, and actively participate in sustainable solutions to protect and restore our communities' natural environments. We support localized nature-based solution projects with a flexible, multi-functional, and adaptable approach to simultaneously improve human well-being, social equity, and environmental health.\nAs we expand our footprint with new datacenters, we are measuring, designing, and piloting solutions that are regenerative. In nature, healthy ecosystems clean the air, filter the water, sequester carbon, and support biodiversity, among other benefits. Using the tools of biomimicry, we are assessing the impact of our datacenters and identifying opportunities to enhance the ecosystems around us.\nThis year, we launched our first pilot in North Holland. After researching how resilient landscapes function in an area, we identified a series of landscape solutions that could be incorporated into the existing datacenter campus. The first phase included the planting of 150 native trees and 2,300 square meters of shrubs, grasses, and groundcovers around the campus. As the landscape matures, the datacenter facility will begin to blend into the surrounding environment. As we roll out additional phases of this project, we will measure the impact on air quality, soil health, and biodiversity both on the direct campus and for the surrounding area.\nOver the past four years, we have launched over 40 community projects across our global portfolio of datacenter locations. This year, we supported several urban forestry projects, including holistic street, park, and school tree projects in locations including Sydney, Des Moines, Phoenix, and Santiago. Working with local communities and councils, these projects will provide much needed shade, habitats, and measurable stormwater benefits to heat-affected urban areas and vulnerable residents. We are also launching a suite of ecological restoration projects to assist in the recovery of ecosystems, contribute to increased biodiversity of native species, and improve green spaces for all.\nAs we look to incorporate these strategies across our footprint, we have assessed the ecosystem performance benchmark for several other datacenter regions and are developing tools to standardize and design to this measurement. Modeled results suggest that ecosystem performance can be restored to as much as 75 percent (where we are able to successfully recreate 75 percent of the function of the untouched ecosystem).\n### Key trends\n### Resources\n### Maya Forest in Belize\n### Taking a science-based approach to land protection\nLearn more about the project to protect the Belize Maya Forest, supported by Microsoft.\nLearn more\nMicrosoft is using the Last Chance Ecosystems framework to prioritize our selection of land protection projects and partner with the UN Biodiversity Lab and the Group on Earth Observations Biodiversity (GEO BON) on developing conservation management tools.\n### NFWF land protection\nLearn more about the Microsoft and NFWF partnership to protect natural habitats and sustain wildlife populations vital to maintaining biodiversity.\nLearn more", "chunk_word_count": 523, "section_path": "2022 Environmental Sustainability Report > 2 Innovation in data acquisition must be prioritized > Being good stewards of the land we use", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 43, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Innovation in data acquisition must be prioritized\n### Identify ecosystems to protect\nFind out more about the tool that Microsoft used to make a science-based decision on the most important places to protect.\nUse the tool\n### See the land where Microsoft directly operates\nView an interactive map by biome.\nView map\n### What's next\n### Protecting more land than we use by 2025\nMicrosoft will continue to monitor the progress of our remaining land protection investments. The NFWF projects we invested in are on track to be protected by the end of 2023. We will also track how much land Microsoft directly operates on, to ensure we are protecting more land than we use.\n## 2 Being good stewards of the land we use\nAs we look to incorporate regenerative strategies across our footprint, we have assessed the ecosystem performance benchmark for several other datacenter regions and are developing tools to standardize and design to this measurement. Modeled results suggest that ecosystem performance can be restored to as much as 75 percent.\n### Centering environmental justice in our ecosystems work\nWe will support localized nature-based solution projects with a flexible, multi-functional, and adaptable approach to simultaneously improve human well-being, social equity, and environmental health for vulnerable communities.\n### Delivering digital technology for net zero\nMicrosoft is committed to providing the digital technology needed to help build a more sustainable world. From managing environmental footprints with Microsoft Cloud for Sustainability to accelerating 'innovation for new climate technologies, we’re working to empower our customers and partners across industries. We are advancing greener software and reducing carbon intensity to improve device sustainability, and helping organizations measure 'and manage the health of the planet’s natural ecosystems by building a Planetary Computer.\nCommitments and progress 53 \nMicrosoft Cloud for Sustainability 54 \nGreen software 56 \nSustainable devices 59 \nPlanetary Computer \nand AI for Good 63\n### Customer sustainability\n### Our commitment\nWe are committed to providing the digital technology needed to help build a more sustainable world. We are delivering technology to help organizations measure and manage their environmental footprints and monitor the health of the planet's natural ecosystems.\n### Empowering customers and partners\n### Building a Planetary Computer\nWe are working to help our customers, partners, and suppliers around the world to reduce their carbon footprints, understand water-related risks, and make environmental decisions through our learnings and with the power of data, AI, and digital technology.\nWe are planning to aggregate environmental data from around the world and put it to work through computing and machine learning in a Planetary Computer.\n### Our progress\n### Expanding Microsoft Cloud for Sustainability", "chunk_word_count": 443, "section_path": "2022 Environmental Sustainability Report > 2 Innovation in data acquisition must be prioritized > Identify ecosystems to protect", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 50, "page_start": 50, "page_end": 53 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 44, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Advancing climate aware software engineering\nIn 2022, we expanded the breadth of Microsoft Cloud for Sustainability capabilities beyond carbon emissions to include methods to centralize water data and added new functionality to Microsoft Sustainability Manager, including new Scope 3 calculation methodologies. We released the Emissions Impact Dashboard for Microsoft 365 and introduced Environmental Credit Service.\nIn 2022, we improved the efficiency of Microsoft Azure, decreased the carbon intensity of Microsoft 365 cloud services, and launched the world's first “carbonaware” updates in a PC operating system in September as part of the Windows 11 launch. We also enabled Xbox games to be played on Samsung 2022 Smart TVs via the Xbox app, reducing the need for standalone hardware.\n### Improving device repairability and energy efficiency\n### Delivering digital technology for climate action\nOur latest products, including Surface Pro 9, Surface Laptop 5, Surface Laptop Go 2, and Surface Studio $^ { 2 + }$ all feature a host of replaceable components serviceable by an expanding Authorized Service Provider and in-region repair network.\nAs of 2022, the Planetary Computer has over 80 data sources containing over 50 petabytes of data.\nIn 2022, we expanded our AI for Good Lab into Egypt and Kenya to improve climate resilience and launched Global Renewables Watch, a first-of-its-kind living atlas aiming to map and measure all utility-scale solar and wind installations on Earth.\nThe Surface Pro 9 and Surface Laptop 5 are among Microsoft's most energy efficient Surface computers. Both devices are ENERGY STAR® Certified, consuming less than half the recommended energy limit set by the latest ENERGY STAR® computer specification.\n### Microsoft Cloud for Sustainability\n### Understanding emissions impact of cloud services and devices\nSharePoint, OneDrive, Teams, Word, Excel, PowerPoint, and Outlook. These applications estimate Microsoft's direct and indirect emissions related to a customer's cloud usage, as well as the emissions customers have avoided by running workloads in the cloud rather than on-premises.\n### Centralizing sustainability data\nThe Microsoft Cloud for Sustainability data model centralizes emissions data from disparate sources in a shared data language—streamlining data ingestion, integration, and calculations and enabling more accurate and reliable reporting. The data model is available for use across organizations and value chains.6 The Microsoft Cloud for Sustainability data model initially focused on carbon and was expanded in 2022 to include water data.\nThe Microsoft Emissions Impact Dashboard applications for Azure and Microsoft 365 provide transparency into the emissions that Microsoft generates based on a customer's use of Microsoft cloud services, empowering organizations to more accurately report this aspect of their Scope 3 emissions.", "chunk_word_count": 441, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Advancing climate aware software engineering", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 45, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Empowering customers to manage their environmental footprints\nThe Surface Emissions Estimator enables commercial customers to gain insight into the carbon footprint of their entire Surface device fleets. The Estimator uses state-of-the-art carbon assessment technologies and lifecycle assessments to enable customers to get more accurate estimations of the carbon impact of the Surface devices they purchase from us.\nMicrosoft's work to meet our own sustainability goals made clear that there is an urgent need for better data and intelligence to enable organizations to track and report progress on sustainability pledges. Our learnings have informed the solutions we're building to help our customers. Microsoft Cloud for Sustainability enables organizations to manage their environmental footprint, embed sustainability through their organization and value chain, and make strategic business investments to help them meet their sustainability commitments.\nThe Emissions Impact Dashboard for Azure has been available since 2020. In 2022, we released the Emissions Impact Dashboard for Microsoft 365 to help Microsoft customers track datacenter emissions related to their use of Microsoft Exchange Online,\n### Enabling sustainability management and reporting\nMicrosoft Sustainability Manager unifies data intelligence and enables environmental sustainability management for organizations at any stage of their sustainability journey. It can be integrated with virtually any business system. It breaks down data silos using the Microsoft Cloud for Sustainability data model and increasingly automates data connections and calculations, reducing reliance on manual processes. Sustainability Manager allows organizations to gain continuous visibility into their emissions activities, report their impact and progress more reliably, and access the intelligence required to help reduce their environmental footprint and transform their business.\nMicrosoft Cloud for Sustainability enables organizations to manage their environmental footprint, embed sustainability through their organization, and make strategic business investments to help them meet their sustainability commitments.\n### Increasing transparency and promoting trust in environmental claims and credits\nSupporting Australia's digital growth In July 2022, Telstra and Microsoft expanded their long-term strategic partnership, which includes the intention to help advance sustainability in Australia and drive growth. Microsoft will support Telstra in achieving its own sustainability goals with Microsoft Cloud for Sustainability which will provide data insights into sustainability performance. The strategic partnership brings together the best strengths of the two organizations. In 2020, Telstra was certified carbon neutral in their operations, and both Microsoft and Telstra have ambitious climate targets and share a commitment to a net zero carbon future.7\n### Customers\n>2,400 TerraPraxis and Microsoft entered a strategic collaboration to repurpose over 2,400 coal-fired power plants around the world to run on carbon-free energy.", "chunk_word_count": 435, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Empowering customers to manage their environmental footprints", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 46, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Transforming the energy industry\nTerraPraxis is a nonprofit focused on actionable solutions for climate and prosperity. In 2022, TerraPraxis and Microsoft entered a strategic collaboration to repurpose over 2,400 coal-fired power plants around the world to run on carbon-free energy. TerraPraxis will combine its deep expertise in energy with Microsoft technology to build and deploy a set of tools to automate the design and regulatory approval process to decarbonize coal facilities with advanced small modular nuclear reactors (SMRs). The partnership will help to accelerate the transition of one of the world's largest sources of carbon to zero emissions. TerraPraxis and Microsoft will develop a software application to analyze the existing coal fleet to determine the best approach for the retrofit, saving coal plant owners time and money while giving the communities around them a new lease on life for decades to come. The partnership started with Microsoft's 2021 Hack for Sustainability when Microsoft employees worked with TerraPraxis to develop the winning project, “Beyond Coal.”7\nIn October 2022, we introduced Environmental Credit Services, delivering common, open-standards infrastructure and a shared process and data standard to help track the origination process for carbon credits and other environmental assets. The service provides transparency into the provenance and quality of environmental claims and credits by digitizing and streamlining the origination workflow for environmental project developers, claim verifiers, credit-issuing registries, and marketplaces. This can yield more credible, scalable credit offerings to support growing global demand.\n### Enabling partner solutions\nMicrosoft provides the technologies and platform to guide digital transformation. Our efforts are supported by our global ecosystem of partners, who provide a broad range of capabilities to unlock data and build industry-specific solutions to improve sustainability outcomes.\nWe have an ecosystem of global advisors and system integrators who are helping organizations plan, design, and implement strategies to enable sustainable growth. Our independent software vendor partners bridge gaps and add value to our technologies with a growing set of off-the-shelf and custom sustainability solutions and services.\n### Green software\n### Developing standards, tools, and best practices\n### Improving Azure efficiency\n### Improving cloud resource utilization\nWe use resource oversubscription and harvesting techniques to optimize the utilization of energyconsuming cloud resources. We address oversubscription by using statistical analysis to predict when additional virtual machines can be deployed on underutilized hardware. Our approach to oversubscription is enabled by a technique called harvesting. It enables us to opportunistically create a new type of virtual machine to apply underutilized resources to oversubscribed situations. We are currently applying oversubscription and harvesting to Microsoft internal virtual machines for CPU resources, and will be expanding this capability into other energy-intensive resources such as memory, networking, and storage. This initiative has the potential to reduce datacenter hardware needs, and the associated embodied carbon, by more than 30 percent.\nAzure efficiency requires a close collaboration between the platform and the workloads running on Azure.\nWe are committed to green software standards, tooling, and best practices, as defined by the Green Software Foundation (GSF). Microsoft is a founding member of GSF and contributes to several climate aware software tools and standards.", "chunk_word_count": 531, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Transforming the energy industry", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 55, "page_start": 55, "page_end": 56 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 47, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Advancing greener software and reducing carbon intensity\n### Helping customers and partners optimize Azure workloads\nGreen software engineering is an emerging discipline at the intersection of climate science, software practices, architecture, electricity markets, hardware, and data-centered design. We are making ongoing investments to help reduce the carbon intensity of our applications in the cloud and on the edge.\nMicrosoft developed new technical guidance in partnership with the GSF to help customers and partners with optimizing Azure workloads with the Well-Architected Framework (WAF). The framework is part of a broader initiative to help customers plan for and meet evolving sustainability requirements and regulations in the development, deployment, and operations of IT.\nThe Software Carbon Intensity (SCI) Specification provides an industry standard for calculating the rate of carbon emissions in a software system to help users and developers make informed choices about which tools, approaches, architectures, and services they use.\nThe Carbon Aware SDK, an open-source tool codeveloped by Microsoft and UBS and released by the GSF, provides recommendations on when and where to run workloads that take advantage of the lowest-carbon sources of energy possible. UBS is deploying the SDK in a time-shifting application to make a computationallyintensive risk modeling platform carbon-aware.\n### Improving cloud energy efficiency\nWe are reducing idle power consumption of servers when they are not actively being used or hosting customer virtual machines. In these cases, server performance requirements are relaxed, enabling reduced power consumption with lower-power states. We expect up to a 25 percent reduction in energy usage for these unallocated servers, with a corresponding reduction in Scope 2 emissions. This capability has been deployed to a subset of general-purpose compute servers and will continue to expand across the Azure fleet.\n### Developing sustainable Artificial Intelligence (AI)\nThe Green Software Principles focus on energy reduction, hardware efficiencies, and carbon aware software. The GSF's Design Patterns catalog provides the latest patterns and best practices for building software that can enable energy efficiency and thereby reduce carbon emissions.\nAzureML and Microsoft Research partnered with researchers from Allen Institute for Artificial Intelligence, Huggingface, Carnegie Mellon, Hebrew University, and the University of Washington to publish a paper in the Association for Computing Machinery (ACM) Conference on Fairness, Accountability, and Transparency (FAccT). The paper uses the principles of carbon aware software and applies them to building carbon measurement baselines and reduction strategies for AI systems.\n25% We are reducing idle power consumption of servers when they are not actively being used and expect up to a 25 percent reduction in energy usage for these unallocated servers.\nWe are committed to advancing greener software to help reduce the carbon intensity of our applications in the cloud and on the edge.\n50%\n### Decreasing the carbon intensity of Microsoft 365\n### Optimizing Azure Compute demand for Teams services", "chunk_word_count": 481, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Advancing greener software and reducing carbon intensity", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 48, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Optimizing performance of Microsoft 365 client-side applications\nTeams services were transitioned to optimized cores with approximately 50 percent lower memory requirements. This led to a reduction\nFor online Teams meetings, the most critical datacenter resources are compute cores and main memory consumption. In 2021, the Teams product group transitioned services to run on optimized cores with approximately 50 percent lower memory requirements. This led to a reduction in total datacenter resources during a period of time in which the volume of Teams active users increased.\nMicrosoft Teams has optimized performance to achieve PC power usage declines of up to 50 percent between June 2020 and December 2021.\nMicrosoft 365 applications are powered by Azure datacenters, so customers benefit from their significant energy and resource efficiencies. As disclosed in this white paper, we use the data powering the Emissions Impact Dashboard for Microsoft $3 6 5 ^ { 8 }$ to estimate that the datacenter carbon intensity per gigabyte of data stored in SharePoint and OneDrive per month decreased by more than 30 percent9 over the course of FY22. We also estimate that the datacenter carbon intensity of a device joining a one-hour Teams call fell by a similar amount, even as Teams delivered new value like AI-based speech enhancements.10\n[IMAGE CAPTION] energy and resource efficiency benefits.\n### Optimizing peak CPU resource usage for Teams\nToday, cloud infrastructure capacity is planned based on our need to satisfy peak customer traffic. A service that has not optimized its peak utilization will increase the number of servers Microsoft has to procure. Net decreases in capacity purchases can directly lead to emissions avoidance. Over the past several years the Teams service improved peak utilization by more than 30 percent, leading to reductions in the volume of hardware needed to support growth in usage.\n### Customer experience prioritization for SharePoint and OneDrive\nOneDrive and SharePoint implemented standardized headers that require first-party applications to tell the service if a given operation must be prioritized or can be deferred. This has allowed the team to run services at higher utilization while prioritizing customeraffecting operations, contributing to reductions in the number of servers required to support file editing and management workloads.\n### Reducing carbon intensity of devices and gaming\n### Empowering game developers to improve power performance\n### Digital design for sustainability in web experiences\nGaming activity represents approximately half of the usage-based carbon footprint of Xbox devices. To support first and third-party publishers who design and build games for our Xbox platform, we launched new developer tooling in 2022 to monitor and reduce the power consumption of their games. Our goal is to support game publishers' sustainability goals as we build solutions to lower carbon intensity on console gaming.\nWe focus on the sustainability of web experiences that Microsoft delivers, including ads, search, maps, news, commerce, and more. We have enabled front-facing solutions to reduce the carbon footprint of our web services, including Sleeping Tabs and Efficiency Mode performance optimizations in Microsoft Edge browser.\nWe are empowering users with options for managing their usage and developers with the tools to improve power performance in games.", "chunk_word_count": 534, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Optimizing performance of Microsoft 365 client-side applications", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 49, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Improving the carbon awareness of devices\nWith the Windows 11 2022 update, Windows Update is now more carbon aware. When devices are plugged in, turned on, and connected to the internet, and regional carbon intensity data is available, Windows Update will schedule installations at times of the day when a higher proportion of electricity is coming from lower-carbon sources on the electric grid. We also made changes to the default power setting for Sleep and Screen Off to help reduce carbon emissions when PCs are idle.\nXbox Series X developer kits now include real-time power performance feedback on front panel displays. Performance Investigator for Xbox (PIX), the go-to developer tool for Xbox game and app performance analysis, now includes power utilization counters. Xbox certification labs have started preliminary feedback to our publishing partners on power analysis in their test reports.\n### Reducing emissions with cloudpowered computing\nIt is estimated that by 2025, Microsoft Azure will run on 100 percent renewable energy. As such, cloud-based approaches to IT infrastructure, like Microsoft Windows 365, can reduce operating emissions by transitioning end-user computing workloads to Microsoft datacenters, increasingly powered by renewable energy.\nGaming activity represents approximately half of the usage-based carbon footprint of Xbox devices. Our solutions empower game developers to improve power performance.\nIn 2022, Microsoft launched our Xbox app on Samsung 2022 Smart TVs, enabling users to play hundreds of cloud-enabled Xbox Game Pass games like Halo Infinite, Forza Horizon 5, and Microsoft Flight Simulator without the need for a console, and soon benefiting from the impressive renewable energy commitments in Azure.\n### Sustainable devices\nHardware is only one piece of the story. Microsoft is in a unique position to promote sustainability improvements across the full devices stack: hardware, software, and games. Last year, we released Shutdown (energy saving) mode for Xbox, which became the default power experience in November 2021 and has been adopted by 39 percent of our consoles. In September 2022, Windows Update became carbon aware, making it easier for our devices to reduce carbon emissions. When devices are plugged in, turned on, and connected to the internet, and regional carbon intensity data is available, Windows Update will schedule installations at specific times of the day when doing so may result in lower carbon emissions because a higher proportion of electricity is coming from lower-carbon sources on the electric grid.\n### Building a data-driven carbon platform", "chunk_word_count": 414, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Improving the carbon awareness of devices", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 58, "page_start": 58, "page_end": 59 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 50, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Testing lower-carbon, circular design\nEach device we sell is a complex amalgamation of new and recycled materials, manufacturing and assembly processes, distribution, lifetime product usage, and eventual disposition. We quantify the lifecycle environmental impacts of each product and publish summarized results from our LCAs in our product EcoProfiles.\nOur accessory devices have shorter development cycles, making them an ideal way to test new circular materials. We trial new materials in individual products, and if successful, we expand their use across our broader portfolio—such as in Windows Dev Kit 2023, an ARMbased developer kit featuring 20 percent recycled ocean plastic11, a material first proven in our Ocean Plastic Mouse. Circular design must also account for a future in which products can easily be returned, repaired, refurbished, and resold.\n### Reducing environmental impact in our devices\nOver the past year, Microsoft has continued our work to reduce environmental impacts of our devices by increasing circularity and reducing carbon intensity across the entire product lifecycle. For example, we have revamped our Surface product development process to define sustainability targets on our product roadmaps for every major future launch.\nWe are building an advanced carbon data platform that combines advancements in LCA, product usage telemetry, and real-time distribution data to get the most representative emissions profile possible for our devices. This data will be used for reporting and to provide visibility into actionable and granular environmental impacts to continue improving decisionmaking at all levels. This year alone, we more than doubled the percentage of the total carbon footprint calculated based on suppliers' primary LCA data.\n### Incorporating recycled materials in devices\nWithout compromising on our design and quality, we routinely evaluate opportunities for the use of recycled material content. For example, many of our PC accessories contain recycled plastic, including our new Adaptive Accessories and Audio Dock, which are both made with at least 30 percent post-consumer recycled plastic resin.\n### Designing for sustainability\nImproving the sustainability of our devices starts with hardware design. Informed by lifecycle assessments (LCAs), we set explicit carbon and repairability targets during product design to ensure year-over-year improvement. Designing with circularity in mind— keeping materials and products in use longer—is key to achieving these goals. And we strive to meet rigorous third-party ecolabels and ecostandards—all of our newest laptops and tablets are registered EPEAT® Gold and are ENERGY STAR® Certified.\nWe continue to work to reduce environmental impacts of our devices by increasing circularity and reducing carbon intensity across the entire product lifecycle.\n### Designing for repairability\n### Manufacturing", "chunk_word_count": 436, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Testing lower-carbon, circular design", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 59, "page_start": 59, "page_end": 59 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 51, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Circular product lifecycle\nMicrosoft devices suppliers' GHG emissions reduction amounted to approximately $9 0 , 0 0 0 \\mathrm { m t C O } _ { 2 } \\Theta$ in FY22, roughly equivalent to 17,000 homes' average annual energy usage. This was achieved through supplier carbon reduction interventions, renewable energy alternatives, and manufacturing process improvements. These reductions resulted from 12 suppliers switching to renewable energy, with six converting to 100 percent renewable energy. You can find more detail and individual supplier case studies in the Microsoft Responsible Sourcing Report.\nRepairability can offer significant carbon emissions and waste reduction benefits. Microsoft continues to invest in this important space and the findings will aid in our product design and plans for expanding device repair options for our customers that are safe, effective, and sustainable. Our latest computer products, including Surface Pro 9, Surface Laptop 5, Surface Laptop Go 2, and Surface Studio $^ { 2 + , }$ all feature a host of replaceable components.\nImproving the sustainability of our devices starts with hardware design. We set explicit carbon and repairability targets during product design to ensure year-over-year improvement. Designing with circularity in mind keeps materials and products in use longer and is key to achieving these targets.\nRepairability goes beyond design. This year we piloted the sale of certain spare parts on Microsoft.com and began expanding our network of local Authorized Service Providers (ASPs) which are qualified to repair Microsoft devices. We are also improving our capability to deliver broader availability of spare parts for independent repairers and consumers, targeting the first half of 2023. We continue to make our Service Guides available at Microsoft.com and repair videos available online. Through the ASP network, we are able not only to reduce waste but also to save on GHG emissions by shortening the distance that a device travels to a repair center.\n### Empowering and financing decarbonization\nMicrosoft realizes that financing is a common barrier to decarbonization and has partnered with the International Finance Corporation (IFC), the private sector arm of the World Bank Group, to stand up a program for the IFC to offer financing solutions to eligible suppliers to support decarbonization efforts. IFC also offers eligible Microsoft suppliers its advisory services to identify technical solutions for reducing GHG emissions in the manufacturing process. Learn more about our sustainability advisory and financing services.\nMicrosoft has also spent the past several years investing in regional repair hubs in major geographies that are equipped to make same-unit repairs. We are onboarding authorized repair partners across Surface markets to expand our authorized repair network and bring repair options closer to our customers. Enabling these localized repair hubs has led to quantifiable reductions in reverse logistics emissions (over 10 percent in some cases).\nMicrosoft continues to invest in repairability. Our latest computer products all feature a host of replaceable components.\n### Ensuring traceability of materials sustainability", "chunk_word_count": 498, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Circular product lifecycle", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 60, "page_start": 60, "page_end": 60 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 52, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Innovating materials with suppliers\nMicrosoft is a supporter and, as of the end of 2022, the only consumer electronics member in the Global Battery Alliance (GBA), a public-private platform organization founded to help establish sustainable battery materials throughout the supply chain. GBA is also leading the development and implementation of a battery passport that conforms to new EU regulations. We are also involved in partnerships such as IMEC with silicon manufacturers.\nWe are partnering with suppliers on more sustainable material innovations. For example, in our hardware supply chain, we are working on using 100 percent recycled tin solder paste and 100 percent recycled gold in our printed circuit boards. We are also working to reducing waste in our software supply chain by eliminating physical cards and enabling digital downloads for games, apps, and gift cards.\n### Advancing packaging, purchasing, and distribution\n### Reducing distribution footprint\n### Increasing packaging sustainability\nIn FY22, our devices supply chain organization engaged in key optimization projects, resulting in over $6 , 3 0 0 \\mathrm { m t C O } _ { 2 } \\mathrm { e }$ avoidance from the global network. Key network adjustments enabled a shift to sea freight, resulting in $3 , 2 0 0 \\mathrm { m t C O } _ { 2 } \\mathrm { e }$ savings. We optimized our inbound containerized freight processes to allow for increased container utilization. Outbound freight consolidations for one US retailer yielded $9 0 0 ~ \\mathrm { m t C O _ { 2 } e }$ and collaborated cross-functionally to reduce over $8 0 0 ~ \\mathrm { m t C O _ { 2 } e }$ within our customer network through order optimization and consolidation.\nWe are using innovation and design rigor to make progress on our journey to eliminate single-use plastic packaging by 2025. We introduced several 100 percent plastic-free packages in FY22, including the Surface Adaptive Kit and Microsoft Ocean Plastic mouse. This packaging is made from 100 percent renewable materials and fully recyclable. Our most recent wave of Surface Laptop 5 and Pro 9 retail packages use less than one percent plastic (by weight) and are over 99 percent recyclable. All virgin paper or fiber used for these packages is certified as FSC responsibly sourced.\nOnce our products have been manufactured, Microsoft embeds sustainability goals into nearly every logistics step to get them to our customers. Our global logistics network is optimized to reduce carbon intensity. And we inform our customers about how they can achieve more sustainable purchase and use decisions when buying or using Microsoft products. Our packaging is also designed to minimize plastic waste.\n100%\nOur key European and American distribution centers now produce over two million kWh of solar energy and are 100 percent powered by renewable energy.", "chunk_word_count": 485, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Innovating materials with suppliers", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 60, "page_start": 60, "page_end": 61 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 53, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Purchasing responsibly\nWith investments in on-site solar generation, our key European and American distribution centers, which handle over half of all Microsoft devices sold, now produce over two million kWh of solar energy and are 100 percent powered by renewable energy. In Europe, our parcel deliveries are via electric or carbon neutral vehicles, where the capability is available. Less-thantruckload networks deliver via electric vehicles on the final mile transport with identified customers.\nWe're also focused on eliminating single-use plastics beyond our 2025 commitment for product packaging. For example, we are implementing reuse for plastic shipping trays in our battery pack supply chain and will proliferate such improvements to other systems. Additionally, we're researching the potential use of lower-carbon footprint plastic alternatives for these trays.\nMicrosoft is committed to helping customers understand how to purchase devices that pose fewer environmental impacts. For example, we engaged with PC makers across the industry to drive sustainability best practices and provided guidance to channel partners and our sales team on how to select more sustainable PCs through our “Featured Devices” program.\nWe provide in-depth detail on Microsoft device sustainability and repairability through our EcoProfiles and Repair Guides. We provide clarity to consumers on how to reduce their shipping emissions through ground shipping. And for commercial customers, we provide full-fleet visibility into the carbon impact of a purchase at point of sale through the Surface Emissions Estimator.\nOur global logistics network is optimized to reduce carbon intensity. And we inform our customers about how they can achieve more sustainable purchase and use decisions when buying or using Microsoft products.\n### Reducing the impact of product usage\n### Improving efficiency through hardware\n### Designing for recyclability", "chunk_word_count": 296, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Purchasing responsibly", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 61, "page_start": 61, "page_end": 61 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 54, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Partnering to remove consumer recycling barriers\nThe Surface Pro 9 and Surface Laptop 5 are among Microsoft's most energy efficient Surface computers. Both devices are ENERGY STAR® Certified, consuming less than half the recommended energy limit set by the latest ENERGY STAR® computer specification. In particular, Surface Pro 9 5G, powered by ARM technology, combines the energy efficiency of modern mobile devices with the computing power of a traditional computer.\nAs we make progress towards our goal of 100 percent recyclability of Surface devices and Xbox consoles and accessories, we have engaged with the electronics recycling industry to learn about and improve how our products are recycled at end of life. Through research, we noticed a gap between the processes used at electronics recycling centers and the tools available for us to calculate the recyclability of our products. To address this, we are in the process of switching to a new methodology, consistent with the EN 45555 standard, to increase the accuracy of reporting the recyclability of our packaging and products.\nIn February 2022, Microsoft partnered with three original equipment manufacturers (OEMs)— Amazon, Dell, and Google—to launch a consumer electronics collection and recycling pilot in Denver, Colorado. The goal of this pilot, incubated through our participation in Corporate Eco-Forum (CEF), was to identify barriers that consumers face during the disposal of their end-of-life electronics—including nostalgia, lack of convenience, uncertainty around data security, and cost. Based on the pilot, the OEMs plan to take a data-driven approach to formulate strategies to overcome these barriers. Microsoft also participates in the Circular Electronics Partnership (CEP) to help drive industrywide improvements in circularity.\nReducing carbon emissions associated with the use stage of our devices presents a massive opportunity for carbon reduction. Microsoft starts by designing and engineering our devices to be more energy efficient and then uses software to further reduce emissions that may result from device usage.\n### Gaining insights from usage data\nThis year, we released a limited run of enhanced Xbox Series X|S consoles with power supply energy monitoring, which provides anonymized insights into console power consumption. This telemetry helps us gather additional insights across a wide range of user setups and usages in the field, such as power consumption from SSD, USB devices, networking, and power regulation efficiency losses. We are partnering with Carbon Trust and other global tech companies to develop a common methodology for tracking the usage emissions associated with connected devices.\n### Repurposing and recycling at end of life\nThis change helps to ensure that future assessments will be representative of the electronics recycling industry, backed by quality data, and repeatable through a stepby-step process, and will address both the qualitative and quantitative aspects of device recyclability. For transparency, we will recalculate the recyclability of products mentioned in previous sustainability reports.\nWherever possible, we look to reuse our hardware with new customers. We start with Microsoft Authorized Refurbisher and Trade-In programs. Where refurbishing and trade-in are not possible, we recycle as much of each device as possible as part of our commitment to achieve 100 percent recyclable devices by 2030.", "chunk_word_count": 529, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Partnering to remove consumer recycling barriers", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 62, "page_start": 62, "page_end": 62 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 55, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Closing the loop with customers\nMicrosoft offers multiple programs that repurpose or recycle used devices. Our Authorized Refurbisher Program gives millions of PCs a second life each year, including over three million devices in 2022. Our Trade-In Program, expanded to 10 countries in 2022 and offers cash incentives for eligible older devices, which are then either reused or recycled responsibly. And the consumer mail back recycling program also allows customers to recycle their devices through Microsoft in 39 countries.\n### Boosting efficiency through software\nIn addition to hardware, software (both our operating systems and the applications and games that run on top of them) and a shift towards more cloud computing have a major role to play in reducing use-phase emissions. See our section on green software.\nTelemetry helps us gather additional insights across a wide range of user setups and usages in the field.\n### Planetary Computer and AI for Good\n### Building a Planetary Computer\n### Partnering on the Planetary Computer\nThe Planetary Computer aggregates and stores spatiotemporal datasets, creating a fully indexed data estate for Earth's natural systems, using the power of data and AI for environmental good.\nMicrosoft has been working with Esri, the global leader in geospatial analytics, to enable users to access up-todate information from public satellite imagery programs for both the Planetary Computer and the Esri Living Atlas. We are also jointly working towards empowering users of Esri's advanced geospatial analytic tools with data powered by the Planetary Computer.\nWe live in a new era of big data which includes an abundance of high-resolution satellite imagery and remote sensing (IoT) data. Millions of sensors provide near real-time updates on the state of Earth's natural ecosystems. One such data type is called spatiotemporal data, which includes the information collected about all the locations on Earth indexed in both space and time.", "chunk_word_count": 323, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Closing the loop with customers", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 62, "page_start": 62, "page_end": 63 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 56, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Delivering digital technology for climate action\nMicrosoft is committed to delivering digital technology that helps organizations around the world – from nonprofits to research institutions, NGOs, governments, and corporations – with environmental decision-making, which relies on a systematic understanding of the Earth's natural systems. Microsoft has deep expertise in aggregating and analyzing the data that can help organizations understand the planet's ever-changing ecosystems, and how to adapt to these changes. Through our Planetary Computer data platform and AI for Good Lab, we are using the power of data and AI for environmental good.\nMicrosoft has also been working with Impact Observatory, which utilizes the Planetary Computer as a primary data source for powering their AI to derive land use and land cover data. Their annual mosaic of land use and land cover data is available on the Planetary Computer for all users to better understand Earth's ever-changing landscape.\nThe Planetary Computer aggregates and stores spatiotemporal datasets, creating a fully indexed data estate for Earth's natural systems. This data enables predictive models to forecast the effects of changing climate. Examples include land use data that can detect changes in urbanization or forest biomass, demographic exposure data that shows where populations are most in need of climate adaptation, and biodiversity data that can help monitor the effectiveness of conservation efforts and support the sustainable use and management of natural resources.\n### What's next for the Planetary Computer\nMicrosoft will continue to scale the Planetary Computer to provide access to all the world's most important spatiotemporal datasets. This will enable the Planetary Computer and the power of Azure to address the increasingly urgent adaptation needs across the globe. The Planetary Computer will provide a collaborative data storage and access system that uses open standards and enables open data. This approach is critical for integrating the growing community of collaborators from industry, governments, and academia as they look for new solutions to adapt to climate change.\nThe Planetary Computer contains over 50 petabytes (PB) of data in multiple cloud-optimized formats and based on open-source standards. With these rich datasets and the power of Azure we have enabled spatiotemporal analytics at scale, unlocking new insights and innovations.\n### Improving climate resilience with the AI for Good Lab", "chunk_word_count": 388, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Delivering digital technology for climate action", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 63, "page_start": 63, "page_end": 63 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 57, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Mapping the world's solar and wind energy\nThe Global Renewables Watch (GRW) is a first-ofits-kind living atlas aiming to map and measure all utility-scale solar and wind installations on Earth using AI and satellite imagery, allowing users to evaluate clean energy transition progress and track trends over time. It is being built as a publicly available renewable energy atlas with country-by-country insights into production progress and development trends. As of November 2022, mapping is complete for Germany, India, Brazil, and Egypt. The GRW aims to show a country's renewable energy capacity, bring new understanding to that capacity, and recognize patterns about the potential impact of the renewable energy in the landscape over time. The first full global inventory is expected to be completed in 2023 and will undergo both scientific and technical validation. The GRW is a joint program between Microsoft, Planet Labs PBC, and The Nature Conservancy.\nThe Microsoft AI for Good Lab uses data from the Planetary Computer and other organizations around the globe with AI, machine learning and statistical modeling to improve climate resilience around the world. By offering the technology and expertise of the AI for Good Lab, we are helping to advance the local development of scalable solutions, including the following.\n### Bridging the climate data divide\nAt COP27, we announced that we have expanded our AI for Good Lab into Egypt and Kenya, building a new team of data scientists on the ground in Africa that will work to improve climate resilience. The work of these data labs will be informed by a new Africa AI Innovation Council comprised of representatives from leading African organizations.\n### Understanding the impact of weather patterns\nThe Global Renewables Watch (GRW) is a first-of-its-kind living atlas aiming to map and measure all utility-scale solar and wind installations on Earth using AI and satellite imagery, allowing users to evaluate clean energy transition progress and track trends over time.\nAlong with an AI for Humanitarian Action grant, Microsoft partnered with the Sustainable Environment and Ecological Development Society (SEEDS) to build an AI model that can forecast the impact of cyclones on the most vulnerable populations in India. The model utilizes high-resolution satellite imagery of areas likely to fall under a cyclone's path and applies advanced data analytics and machine learning to identify the most vulnerable houses. This enables SEEDS and its on-the-ground partners to pinpoint those at the highest risk of the cyclone and focus their outreach to those communities.\nGlobal sustainability\n### Enabling a more sustainable world\n' Microsoft’s actions alone will not solve the climate crisis. As a global technology leader, we are also committed to helping build the enabling societal conditions that will support a net zero economy. 'We’re focused on accelerating the availability of new climate technologies, strengthening our climate policy agenda, helping to develop a more reliable and interoperable carbon accounting system, advocating for skilling programs to expand the green workforce, and working to enable a just energy transition.\n### Global sustainability\n### Our commitment", "chunk_word_count": 516, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Mapping the world's solar and wind energy", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 64, "page_start": 64, "page_end": 65 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 58, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Our progress\nWe understand that our actions alone will not solve the climate crisis. As a global technology leader, we are also committed to helping build the enabling societal conditions that will support a net zero economy.\n### Using our voice on climate-related public policy issues\n### Advanced policy\nTo support our policy work, we published several briefs on carbon and electricity policy to share the priorities and principles that guide Microsoft's policy advocacy work around the world.\nWe will support new public policy initiatives to accelerate carbon reporting, reduction and removal, the transition to clean energy, water access and stress reduction, and the ability to measure, manage, and protect ecosystems.\n### Investing in climate innovation\n### Invested $> 5 6 0 0 \\mathsf { M }$ in climate innovation\nWe have created a \\$1 billion Climate Innovation Fund to accelerate the global development of carbon reduction and removal technologies, as well as related climate solutions to reduce water and waste.\nSince its inception, Microsoft has allocated over \\$600 million impact investment capital from our Climate Innovation Fund into a global portfolio of investments, featuring sustainable solutions in energy, industrial, and natural systems.\n### Driving collective action\n### Drove collective action\nWe will partner with others to drive deeper engagement to help the world reach net zero, focused on rigorous and consistent carbon accounting and innovation, water access and stress reduction, and the circular economy.\nIn 2022, we supported broad global action towards net zero by joining several coalitions including the Carbon Call, the First Movers Coalition, the IMEC Sustainable Semiconductor Technology and Systems, and WASH4Work.\n### Empowering our global workforce\n### Focused on the sustainability skills gap\nWe recognize that our employees are the most important asset and resource in advancing innovation in sustainability and are creating opportunities for them to contribute to our efforts.\nTo better understand how to close the sustainability skills gap, Microsoft published the Closing the Sustainability Skills Gap report and LinkedIn published the Green Skills Report to provide insights into the demand and supply of talent with green skills.\n### Other progress\nCatalyzed solutions through sustainability science and research We launched AI4Science and the Microsoft Climate Research Initiative (MCRI) to advance the computational foundations, partnerships, and tools needed to achieve a carbon negative future globally.\n### Science and research\n### Enabling industry breakthroughs\n### Predicting microclimates", "chunk_word_count": 408, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Our progress", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 66, "page_start": 66, "page_end": 66 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 59, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Modeling carbon flow\nRegions of the world have multiple microclimates, and accurately predicting the behaviors of these microclimates leads to better sustainability outcomes. We are now able to fuse historical weather forecasts with local sensor data to more accurately predict weather parameters in a specific microclimate. We originally developed this technology to help farmers make better operational decisions, such as when to plant or spray, especially in the face of changing weather patterns. This technology is included in FarmVibes.AI, but is broadly applicable to other industries that must adapt to climate change. For example, logistics and supply chains can be affected by hyperlocal weather events, causing ripple effects throughout many industries, such as retail, manufacturing, and transport. Renewable energy production forecasts are also highly dependent on loca weather, affecting renewable energy operators as well as managers of electricity grids.\nCarbon capture and storage (CCS) involves extracting carbon dioxide from sources like industrial emissions, then liquefying and storing it underground or undersea. CCS relies on equation-based models that predict the suitability of a storage site, such as its storage capacity and risk of leakage. Using traditional numerical simulation to maximize storage capacity and minimize leakage is time-consuming and costly. Reducing the cost of these simulations can help realize the full potential of CCS. Using Fourier Neural Operators with a 4D deep learning (AI) model, we built a carbon flow surrogate model that produces good approximations from 1,000 to 10,000 times faster than traditional simulators, enabling solutions to problems that would otherwise be prohibitively costly to solve, such as storage capacity maximization. We have validated our simulator with industry partners, including Northern Lights and Schlumberger, and made it available as open source software for use by other researchers.\nMicrosoft ensures that all our work is grounded in science, and we extend this approach to our work with customers and partners. As sustainability has become a pressing concern across all industries, our Research for Industry (RFI) program uses our advanced data platforms and technologies for cloud and edge processing, Internet of Things (IoT) connectivity, robotics, and AI to contribute to new solutions in multiple industries, including agri-food, energy, retail, and financial services.\n### Catalyzing solutions through science and research\nThe goals of our sustainability science and research programs are to help us achieve our own sustainability commitments, help our partners and customers achieve theirs, and catalyze solutions to key global sustainability problems. In collaboration with global experts in science and policy, we identify critical sustainability problems and mobilize the worldwide scientific community to address them.", "chunk_word_count": 438, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Modeling carbon flow", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 60, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Enabling more sustainable decision making in agriculture\nData-driven and precision agriculture solutions enable more sustainable decision making for farmers. To inspire the research and data science community in this domain, we made FarmVibes.AI available as an open source toolkit. FarmVibes.AI brings the power of AI to heterogeneous data combined from multiple sources, including satellites and ground sensors. This approach enables lower-cost and higher-accuracy predictions of soil carbon dynamics by automatically generating inputs to common prediction models, such as COMET and DNDC, instead of relying on sometimes faulty and costly-to-obtain historical records. The result is a “what if” analysis tool that can help to estimate how different farming practices will affect the amount of carbon sequestered in the soil, potentially creating new opportunities for farmers to participate in carbon markets.\nWe develop advanced computational techniques and tools to accelerate breakthroughs on fundamental scientific bottlenecks that exist within complex, longterm technological and industry transformations required to address climate change. We use approaches from our global AI4Science team, launched in June 2022, to advance the state-of-the-art in scientific discovery by using simulations of natural phenomena to produce training data for large-scale AI models. These advances have greatly sped up the discovery of solutions to critical scientific problems, such as predicting where undersea hydrates will form—a critical factor in safe long-term carbon storage—1,000 times faster than before. These and other computational approaches feed into our programs on sustainability research with industry and academic partners, including Research for Industry and the Microsoft Climate Research Initiative.\nScience and research (continued)\n### Advancing sustainability initiatives with partners\n### Improving carbon accounting\n[IMAGE CAPTION] The Microsoft Climate Research Initiative aims to advance the computational foundations, partnerships, and tools needed to achieve a carbon negative future globally.\nMicrosoft convened a global team of experts to identify and overcome the biggest constraints to reliable carbon accounting. The results were published in Nature. One key issue identified is the difficulty of accurately assessing the effects of decarbonization policies and investments. In many parts of the world, monitoring the effect of carbon reduction policies is hampered by the lack of real-time, localized carbon emissions measurements. Last year, we reported on our university collaboration that used neural networks (AI models) to develop more accurate and significantly faster simulations of the complex, nonlinear relationship from historical carbon emissions to atmospheric carbon concentrations. With funding from MCRI, we have expanded these efforts to make the data and technology improvements needed to develop an AI model to predict localized carbon emissions from abundant data on atmospheric carbon concentrations. This AI-based inverse method reduces computation time from weeks to hours, while still maintaining accuracy.\nPartnerships with external experts are critical to catalyzing Microsoft's work to address key global sustainability problems. We partner with sustainability experts, scientists, and academics around the globe to advance our sustainability work.", "chunk_word_count": 485, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Enabling more sustainable decision making in agriculture", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 67, "page_start": 67, "page_end": 68 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 61, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Pursuing climate solutions through computational foundations\nThe Microsoft Climate Research Initiative (MCRI), launched in June 2022, aims to advance the computational foundations, partnerships, and tools needed to achieve a carbon negative future globally. Together with external sustainability experts, Microsoft scientists identified fundamental bottlenecks to mitigating and adapting to the climate crisis. To pursue solutions, researchers then narrowed their focus to bottlenecks for which computational approaches, such as those pursued by AI4Science, could be transformative. From this analysis, researchers selected three priority focus areas: reliable accounting of carbon emissions, materials engineering for carbon removal and reduction, and climate risk assessment. MCRI now supports projects in these three areas with collaboration between Microsoft researchers and external academics and is establishing a global community of research partners to complement Microsoft's internal computational expertise and infrastructure. A complete list of MCRI projects is available on our website.\n### Engineering materials for carbon removal and reduction\n### Strengthening nature-based solutions for climate", "chunk_word_count": 173, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Pursuing climate solutions through computational foundations", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 68, "page_start": 68, "page_end": 68 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 62, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Assessing climate risk\nWe are collaborating with scientists and research institutions around the world to improve measurement and accounting methods for climate solutions.\nMost climate risk assessments today do not adequately reflect the true exposure of society and businesses to climate-related risk, as explained by Microsoft and global experts in a Nature Communications paper. The development and applications of emerging science and technologies can help drive a step change in climate risk assessments. We have partnered with the UK Met Office to build the world's most powerful supercomputer for weather and climate, and with CSIRO to build a science-based climate intelligence platform for Australia. We are also partnering with climate researchers to use AI to improve the assessment and management of climate risks. We have advanced subseasonal forecasting by incorporating machine learning, which we are also using to better understand the cause-and-effect relationships between physical and societal risks. Researchers at Microsoft, the Universitat de Valencia, and the University of Reading are collaborating to demonstrate the usefulness of causal machine learning methods for climate risk assessment, in the context of food security in Africa. The project plans to blend expert domain knowledge from NGOs working in the Horn of Africa with advances in causal machine learning techniques and tools, such as the CAUSEME web platform and the EconML software package, to better understand the impact of humanitarian interventions on food security in this region.\nDirect capture of carbon from ambient air is a technology with great promise, but scaling it requires efficiency and cost improvements. We're using AI to identify materials that can lead to such improvements. Metal-organic frameworks are a class of materials that can balance the tradeoff between adsorbing significant amounts of carbon dioxide from the atmosphere and the energy required to release the adsorbed molecules for cost-effective storage or reuse. Researchers at Microsoft and the University of California, Berkeley are collaborating to use AI methods to find optimal metal-organic materials that balance this tradeoff and offer other properties required for economic and safe carbon removal.\nRestoring and protecting nature is vital to reaching net zero, while building resilience to climate change is already underway. However, it can be difficult to properly measure and account for the climate benefit of investments in nature. We are collaborating with scientists and research institutions around the world to improve measurement and accounting methods for nature's contribution to climate solutions. For example, through collaborations with researchers at Concordia and Simon Fraser universities, we demonstrated that temporary carbon stored in nature can lead to permanent climate benefits by reducing peak warming, as long as it is pursued as a complement to emissions reductions. This work was published in Nature's Communications Earth and Environment journal.", "chunk_word_count": 466, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Assessing climate risk", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 63, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Climate Innovation Fund\nWe think broadly about the impact of our CIF investments. We invest to help Microsoft achieve our own operational needs, accelerate the development of technologies that will help our customers and partners, and rapidly increase the scale of the global sustainability market. Microsoft has a unique perspective in the market for climate technologies. In addition to investments made through CIF, we are also a buyer in carbon, water, and waste solutions, and a donor of grant capital. We have enabled a portfolio of climate innovations that have a collective potential for climate impact that we believe is far greater than any individual approach can achieve by itself.\n### Investing to scale carbon and renewable energy markets\n### Supporting commercialization with blended capital\nOur commitment to climate innovation extends through our $\\$ 100$ million grant to the Breakthrough Energy Catalyst platform. Catalyst both funds large demonstration projects and invests in first-of-their-kind projects that use key emerging climate technologies, such as clean hydrogen, direct air capture, long duration energy storage, sustainable aviation fuel, and manufacturing to decarbonize cement, steel, and plastics. The focus is on accelerating the scaleup of these technologies which will be required for an economywide net zero transition.7\n### Scaling carbon removal\nWe are investing in the development and growth of carbon markets. Our investment in Heirloom will support the deployment of durable, scalable carbon removal, which combines the advantages of carbon mineralization and direct air capture. We have also selected Heirloom as part of our portfolio of carbon removal purchases. With the combination of investment and purchasing, we're enabling Heirloom to scale its ability to sequester tens of millions of tons of carbon by the end of the decade.7\n### Investing in climate innovation\nMicrosoft is investing to accelerate climate innovation through our $\\$ 1$ billion Climate Innovation Fund (CIF). In 2021, we also made a $\\$ 100$ million grant to Breakthrough Energy's Catalyst platform. With the CIF, we invest in innovative technologies and business models that have the potential for meaningful, measurable climate impact by 2030.", "chunk_word_count": 358, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Climate Innovation Fund", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 70, "page_start": 70, "page_end": 70 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 64, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Investing in water and resilience\nVerifying carbon-free energy consumption We have invested in FlexiDAO to reliably track and verify carbon-free energy consumption. Its tool traces electricity and its carbon footprint every hour of the day, providing the transparency customers need. FlexiDAO will also accelerate Microsoft's ability to reach our 100/100/0 clean energy commitment by enabling us to transparently verify granular carbon-free energy consumption for datacenters. FlexiDAO is currently tracking around 1.5 million tons of carbon dioxide equivalents per year across 14 customers in Europe, North America, and South America.\n[IMAGE CAPTION] Our investments are accelerating climate breakthroughs.\nEvery community deserves an opportunity to prosper in this new world, and many of the negative effects of climate change will be a result of water scarcity. That's why we've invested in SOURCE Global, PBC to help scale its hydropanel water system, which works entirely off the grid and provides clean drinking water in a variety of climates and conditions, including arid, remote locations.\nOur investments are more than a financial transaction. We help to unlock the financial bottlenecks holding back climate entrepreneurs from achieving significant scale at a price point that can compete with more carbon intense alternatives. Our flexible investment approach allows us to fund climate innovators through a variety of investment vehicles, matching the type of capital that is most suitable to a given technology and stage of maturity. We also work across Microsoft to identify operational partnerships, such as procurement contracts, that drive commercial traction and growth.\nFor example, in Navajo Nation, 40 percent of homes have no running water. To date, Navajo Nation leaders have installed SOURCE Hydropanels on more than 540 homes, bringing these families clean, safe drinking water, often for the first time.7\n### Advancing carbon transformation\nThis year, we announced a partnership with Alaska Airlines and Twelve in which our travel procurement team will use Twelve's sustainable aviation fuel (SAF) to reduce carbon emissions from Microsoft business travel. The partnership follows our investment in Twelve last year to develop new carbon transformation pathways for SAF production.7\nMicrosoft has allocated over $\\$ 600$ million into a global portfolio of more than 50 investments, including sustainable solutions in energy, industrial, and natural systems. Our investments are selected based on four principles: the technology's potential for climate impact, the company's inclusion in an otherwise underfunded market, the investment's impact on climate equity, and the investment's alignment with Microsoft's own operational needs.\nClimate Innovation Fund (continued)\n### Our 2022 learnings\n[IMAGE CAPTION] solutions benefit underserved communities and markets.", "chunk_word_count": 435, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Investing in water and resilience", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 70, "page_start": 70, "page_end": 71 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 65, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### What's next\nBlended capital partnerships unlock new markets Microsoft's approach to investing in blended capital instruments, such as the Eversource Capital managed Green Growth Equity Fund in India, has enabled us to effectively deploy capital in emerging markets alongside both public and private sector capital providers.\nAs we continue to invest in the innovative technologies and businesses to scale carbon reduction and removal globally, we are particularly interested in investment opportunities which expand our geographic focus and ensure underserved markets and communities benefit from climate solutions. Our investing themes will continue to evolve to address the rapidly changing challenges of climate change.\nEarly adoption catalyzes a virtuous cycle Combined capital and demand during the early commercialization stages of innovation trigger a positive feedback loop of scale and cost reduction. As both an investor and a buyer of sustainable products, Microsoft is advancing climate solutions along the commercialization curve to make them affordable and scalable for others.\nInnovation spans geographies \nThe collective action of technology developers, capital providers, policymakers, and enterprise customers offers a path to international prosperity in decarbonization.\n### Policy and advocacy\n### Key projects\nIn the European Union, we supported a comprehensive decarbonization plan with ambitious measures to scale uptake of renewable energy, and informed Europe's emergency measures to face the energy crisis. We actively engaged in the development of the regulatory framework for the certification of carbon removals, calling for strict standards for high-quality, accountable, and long-lasting carbon removals. As Europe leads the way on upgraded transparency and disclosure of environmental, social, and governance information across global value chains, we have endorsed the buildout of a level playing field for corporate sustainability reporting. We have also engaged and supported the drive to increase\nthe circularity of devices, boost transparency and efficiency in waste management policies, and empower consumers with better information.\n### Advocating for robust policy in carbon, electricity, water, waste, and ecosystems", "chunk_word_count": 332, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > What's next", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 71, "page_start": 71, "page_end": 72 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 66, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Using our voice to advocate for net zero\nGlobally, Microsoft advocated for public policies to accelerate climate action; invest in mitigation, adaptation, and a just transition; and align international climate reporting and disclosure rules. At COP27, Microsoft called on countries to remain committed to the target of limiting global warming to $1 . 5 ^ { \\circ } \\mathsf { C }$ . In response to the UN Secretary-General's call to action to develop early warning systems for all within the next five years, Microsoft joined global leaders in support of this initiative while highlighting the fundamental role that technology can play in these efforts.\nOver the past year we have deepened our policy engagement on carbon, electricity, waste, and ecosystems.\nWe believe that Microsoft and the broader private sector have an important role to play in advocating for effective and innovative sustainability policies. When we announced our commitment in 2020 to become carbon negative by 2030, we pledged to use our voice on public policy issues to help advance global decarbonization efforts.\nIn the United States, we advocated for climate and energy investments as part of the recent US infrastructure and climate laws, including the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. In addition, we shared our support for a robust and consistent framework for climate disclosure requirements by the US Securities and Exchange Commission and provided comments to the requests for information climate disclosure for US federal procurement. Microsoft continued to encourage tree planting and reforestation efforts through our support of the Trillion Trees $\\mathsf { A c t } ,$ as well as efforts to improve the health of old-growth forests by supporting the Save Our Sequoias Act. At the state level, we supported legislative and regulatory efforts to accelerate the clean energy transition by encouraging the integration of zero-emission generation and improving the resilience of the electric grid.\nWe understand that public policies will play a critical role, both in creating signals to spur the economic and social transition required to address climate change and in building the foundations of markets to develop and deliver innovative goods, services, and skills to achieve that transition. However, there is a growing gap between the pace of desired policy outcomes and economic and scientific indicators that show accelerating climate impacts. To help close this gap and support communities and companies in their efforts to achieve their climate pledges, governments around the world need to accelerate policy action.\nWe continue to use our voice on public policy issues to help advance global decarbonization efforts.\nPolicy and advocacy (continued)\n### Sharing principles that guide our policy work in carbon and electricity", "chunk_word_count": 459, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Using our voice to advocate for net zero", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 72, "page_start": 72, "page_end": 73 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 67, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Making green jobs, skills, and entrepreneurship central to climate action\nUsing its Economic Graph insights, LinkedIn embarked on a major research initiative focused on the rise and proliferation of green skills throughout the labor market. The 2022 Global Green Skills Report brings this research into focus through two key findings: 1) demand for green skills is on track to outpace supply, and 2) not only are green jobs growing, but also green skills are becoming increasingly common across existing jobs that are not traditionally thought of as green. At COP26, LinkedIn announced it would be one of the founding partners on the U.S. State Department's Connecting Climate Entrepreneurs initiative, through which the US government will catalyze resources to support job growth by climate entrepreneurs in the global south.\nTo support our policy work, we published briefs on carbon and electricity policy to share the priorities and principles that guide Microsoft's policy advocacy work around the world. The principles we set forth are grounded in our focus on achieving tangible results, enabling a flexible rather than one-sizefits-all approach, and recognizing the important role that digital technologies will play as we expand market opportunities for all. We developed these two policy briefs together to underscore the integral and complementary role that electricity policy plays in addressing climate change. We also recognize that there are critical energy issues that go beyond climate change such as the availability of electricity for all, affordability, and environmental justice. Similarly, there are carbon issues that go beyond energy. As we tackle these issues in parallel, we are mindful that our policy work will need to expand in the future and consider these policy briefs as foundations for future work on issues like water and waste.\nLinkedIn embarked on a major research initiative focused on the rise and proliferation of green skills throughout the labor market.\n### Strategic partnerships\n### Carbon Call\n### Green Software Foundation", "chunk_word_count": 334, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Making green jobs, skills, and entrepreneurship central to climate action", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 73, "page_start": 73, "page_end": 73 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 68, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### Green activation in games\nMicrosoft is a founding member and participating organization of the Carbon Call, a multiple stakeholder initiative focused on advancing more reliable and interoperable global carbon accounting. The initiative accelerates work to improve measurement, reporting, and verification of GHG emissions and removal. It uncovers and addresses gaps in existing carbon accounting systems, focusing on carbon removal and land sector, methane, and indirect emissions.\nMicrosoft is a founding member of the Green Software Foundation, which is focused on building a trusted ecosystem of people, standards, tooling, and best practices for building carbon aware software. The foundation is creating carbon aware software industry standards, driving awareness, growing advocacy, and accelerating innovation to enable developers to reduce the carbon emissions of the software platforms that they build.\nMicrosoft believes that we have the responsibility to inspire generations about sustainability through green activation in our games. Some highlights include partnering with Ubisoft to deliver Project Rebirth, the Riders Republic in-game tree-planting campaign and climate march. Mojang Studios provides free educational Minecraft content for players and schools globally, created with partners including the Nobel Peace Center, UK Environment Agency, and C40 Cities. The team launched a series of Minecraft maps with BBC Earth based on the new documentary series Frozen Planet II to teach players about the impacts of climate change. Minecraft added mangroves and created the “Rooted Together” campaign with documentary videos about mangroves, a free map, and charity livestreams that with the company donation raised $\\$ 227,000$ for The Nature Conservancy.\n### Driving deeper engagement on climate action\nGetting to net zero is going to take more than investments, technology, and commitments. We'll need to use all those together in multiple sectoral and stakeholder organizations that drive full ecosystem change. Microsoft spearheads and participates in many of these efforts.\n### First Movers Coalition", "chunk_word_count": 319, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > Green activation in games", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 74, "page_start": 74, "page_end": 74 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 69, "chunk_text": "# 2022 Environmental Sustainability Report\n## 2 Being good stewards of the land we use\n### IMEC Sustainable Semiconductor Technology and Systems (SSTS)\nMicrosoft is supporting development of new markets for high-quality durable carbon dioxide removal through participation in the First Movers Coalition. The coalition is a global initiative harnessing the purchasing power of companies, along with innovative carbon removal technologies, to decarbonize seven “hard to abate” industrial sectors that currently account for 30 percent of global emissions: aluminum, aviation, chemicals, concrete, shipping, steel, and trucking.\nIn 2022, Microsoft joined the SSTS initiative to tackle one of the largest contributors to Microsoft's Scope 3 carbon emissions—the silicon chips that power our Windows PCs, Xbox devices, and datacenter servers. SSTS is an industrywide initiative aimed at creating a detailed emissions profile of the semiconductor fabrication process, which will deliver insights about the electricity, materials, and water required to manufacture each chip that we purchase. This in-depth look at chip manufacturing will allow us to identify the biggest sources of emissions, not only at the fabrication facilities, but deeper in the supply chain, helping us target reductions where it matters most. We will also incorporate this data into our lifecycle assessment frameworks, ensuring that every hardware project at Microsoft can make the right tradeoffs to maximize sustainability.\nMicrosoft is a founding member and participating organization of the Carbon Call, a multiple stakeholder initiative focused on advancing more reliable and interoperable global carbon accounting.\n### Transform to Net Zero (TONZ)\nMicrosoft is a founding member of TONZ, a crosssector initiative to accelerate the transition to an inclusive net zero global economy. The group's 2025 goal is for the world's largest 1,000 companies to have targets backed up by transformation plans to achieve net zero no later than 2050. The initiative develops and delivers research, guidance, and implementable roadmaps to enable all businesses to achieve net zero emissions.\n### Playing for the Planet\nXbox is a founding partner of Playing for the Planet, a UN Environment Programme facilitated initiative focused on reducing the impact of the gaming ecosystem on the environment through better carbon accounting and educating gamers everywhere on sustainable causes.\n### CEO Water Mandate and Water Resilience Coalition\n### WASH4Work\n### Circular Electronics Partnership (CEP)", "chunk_word_count": 373, "section_path": "2022 Environmental Sustainability Report > 2 Being good stewards of the land we use > IMEC Sustainable Semiconductor Technology and Systems (SSTS)", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 74, "page_start": 74, "page_end": 74 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 70, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\nRecognizing the importance of quantifying the volumetric water benefits of WASH investments, Microsoft is a member of WASH4Work and an active participant in developing an accounting method to measure WASH activities. This work is organized through WASH4Work, a UN initiative facilitated by the Pacific Institute in collaboration with LimnoTech and Water.org. The new volumetric water benefit accounting (VWBA) for WASH will more effectively account for a variety of different types of water access and sanitation projects (ranging from well restoration to toilet installation).\nCEP unites leaders in technology, consumer goods and waste management, to identify how to improve circularity. CEP aims to reimagine the value of electrical products and materials using a lifecycle approach, reducing waste from the design stage through to product use and recycling. As a member, Microsoft contributed to the development of CEP's Roadmap, which provides clear action pathways in the form of key interventions. Acting as a guide, the Roadmap identifies vital players such as industry leaders, partner organizations, research institutes, and NGOs, and suggests how to overcome challenges and enable scalable circularity.\nLast year the Healthy Country AI Digital Training program was launched in collaboration with North Australian Indigenous Land and Sea Management Alliance (NAILSMA), CSIRO, the Australian government's National Environmental Science Program (NESP) Resilient Landscapes Hub, Women in STEM and Entrepreneurship program, Charles Darwin University, the Telstra Foundation, and Microsoft. With a focus on Indigenous digital inclusion, the Indigenous-led and co-designed program aims to provide on-ground digital skills that will deliver environmental, cultural, and economic benefits for local Indigenous communities and Indigenous land and sea management practitioners in remote regions of northern Australia.\nAcknowledging the importance of collective action and collaboration to solve shared water challenges, Microsoft has endorsed the United Nations Global Compact CEO Water Mandate, an initiative in cosecretariat with the Pacific Institute, since 2018. In 2020, Microsoft and six other companies, together with the UN Global Compact CEO Water Mandate, spearheaded the establishment of the industry-driven Water Resilience Coalition (WRC). Microsoft serves as a coalition leader and has pledged its commitment to collective action, net positive water impact, resilient value chain, and global leadership.\n### Ellen MacArthur Foundation\n### Group on Earth Observations Biodiversity Observation Network (GEO BON)", "chunk_word_count": 374, "section_path": "2022 Environmental Sustainability Report > CSIRO > Ellen MacArthur Foundation", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 75, "page_start": 75, "page_end": 75 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 71, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\n### WRI Aqueduct\nMicrosoft is a Network Partner of the Ellen MacArthur Foundation, which is focused on developing and promoting the idea of a circular economy. We are elevating opportunities for Microsoft employees to learn and engage on topics of the circular economy through community platforms, workshops, events, courses, and collaborative projects.\n[IMAGE CAPTION] Strategic partnerships are critical to accelerating climate action.\nWorld Resources Institute's Aqueduct is preparing new projections on water stress, demand, and supply, expected by early 2023, supported by inaugural Aqueduct Pro Sponsors Microsoft. These will be among the first water projections using the latest CMIP6 climate forcings from the IPCC Climate Change 2022: Impacts, Adaptation and Vulnerability report. Microsoft Azure was used in every step of the project from hydrologic modeling to data processing to indicator visualization. The future projections will equip Aqueduct users with the best available information on climate-related water risks that they can then factor into internal water strategies, sustainable water management plans, ESG ratings, and contextual water targets.\nFostering global connections and collaboration will be critical to address biodiversity change and the action required to protect and restore ecosystems. In the past year, Microsoft broadened our work with GEO BON to connect with a worldwide network of scientists to enable a scalable approach to expand the global network of biodiversity observation networks and the use of essential biodiversity variables to support access to robust biodiversity information and insights.\n### Capital Equipment Coalition North America\nMicrosoft is a founding member of the Capital Equipment Coalition North America. We continue to work with the coalition to support the capital equipment industry's acceleration to a closed loop model that preserves and recovers the value of materials across a product's lifecycle, leading to reduced waste and carbon emissions. As a group, we're working towards circularity standards and methodology that measures the environmental impacts of $^ { \\prime \\prime } \\mathsf { X }$ as a Service” models compared to traditional ownership models.\n9,000 \nThe Sustainability \nConnected \nCommunity now \ntotals more than \n9,000 Microsoft \nemployees worldwide who volunteer their \ntime for sustainability initiatives.\n### Employee engagement and green skilling\nEnabling learning for our employees In 2021, we launched a Microsoft all-employee training effort, the Sustainability in Action badge. As of July 2022, more than 13,500 employees around the world completed this foundational training. This year, we launched role-specific sustainability training that provides more targeted content. For Earth Day 2022, hundreds of SCC members contributed to a crowd-sourced “Employee's Guide to Sustainability,” with recommendations employees can use to make sustainability part of their jobs.\n### Employee engagement\nMicrosoft employees around the world, not just those with jobs focused on environmental sustainability, are core to our sustainability mission and we are committed to helping our global workforce integrate sustainability into their roles. We do this by providing learning opportunities and creating channels for them to actively contribute to our sustainability work.", "chunk_word_count": 489, "section_path": "2022 Environmental Sustainability Report > CSIRO > WRI Aqueduct", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 75, "page_start": 75, "page_end": 76 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 72, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\n### Scaling impact through employees and green skilling\nFostering our employee community Since 2018, Microsoft employees have self-organized into a volunteer-led sustainability community, the Sustainability Connected Community (SCC), and found creative ways to take advantage of their diverse experience, skills, and passion to help the company achieve its sustainability commitments. The SCC's mission is to make sustainability part of everybody's job. The SCC now totals more than 9,000 employees with 37 local chapters and counting.\nThe world is at a tipping point of a global transition to focus on environmental sustainability. Microsoft recognizes that our employees play a critical role in advancing our climate innovation. To support our own work in sustainability and the needs of businesses around the globe, we see the need to dramatically change the landscape of green jobs and skilling across industries.\nEmpowering employees to innovate We tap into the ingenuity of our employees by sponsoring a Hack for Sustainability during our annual Microsoft Global Hackathon. In 2021, 787 hackers worked on 143 different sustainability projects. The winning team worked with the nonprofit organization, TerraPraxis, which has since evolved into a strategic partnership with Microsoft. TerraPraxis launched the Repowering Coal EVALUATE solution at COP27.\n[IMAGE CAPTION] The Microsoft SCC has 37 local chapters and counting.\nThis year, our SCC chapters across the globe hosted dozens of volunteer events to drive upskilling and community involvement. Employees partnered with local stakeholders to improve waste management in offices, ran Hackathons to protect and preserve Indigenous languages, and donated time and money to local nonprofits, all while working to ensure environmental justice was factored into the work we do every day. Our LinkedIn community kicked off the fiscal year with a refresh of the Go Green program and onboarded 30 new leads across the globe.\nIn 2022, we saw a 50 percent increase in participation with 1,185 participants, who worked on 206 projects. These projects include providing tools for web developers to use more environmentally conscious engineering practices and creating a tool to generate heat maps for any location, which is critical for protecting vulnerable populations in extreme heat events. The winning project improves the recyclability of hard disk drives by automating the disassembly process and sorting each component for recycle or reuse.\nMicrosoft employees around the world are core to our sustainability mission.", "chunk_word_count": 391, "section_path": "2022 Environmental Sustainability Report > CSIRO > Scaling impact through employees and green skilling", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 76, "page_start": 76, "page_end": 76 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 73, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\n### Green jobs and skilling\nOur LinkedIn team is already providing critical actionable insights into the demand and supply of talent with green skills via the LinkedIn Economic Graph. LinkedIn Learning also offers a growing catalog of sustainability skills. This year, LinkedIn's Economic Graph team published the Global Green Skills Report, including interactive data and a related LinkedIn Learning course, “Closing the Green Skill Gap to Power a Greener Economy”, featuring key insights from the report for policymakers and corporate leaders. To act on the learnings from the reports, we are engaged in the following programs.\nThe gravity of climate change has led more than 3,900 companies, including Microsoft, to announce climate pledges. As we work internally and with other companies, it's clear that the impact on business will be significant and will require a workforce equipped to work on a broad range of sustainability projects. The International Labour Organization (ILO) estimates 18 million net-new jobs will be created by 2030 as a result of meeting the goals of the Paris Agreement.\nTo better understand how to close the sustainability skills gap, Microsoft and Boston Consulting Group studied the work of 15 companies at the forefront of sustainability innovation and change—including across Microsoft itself. Our teams interviewed and surveyed nearly 250 employees whose jobs have sustainability commitments incorporated into their role. We identified new jobs that have emerged, studied the impact on jobs that already exist, and identified in-demand knowledge and skills.\n### Delivering sustainability training\nLinkedIn Learning delivered 11 new courses for members to build in-demand sustainability skills over the past year: Closing the Green Skills Gap to Power a Greener Economy and Drive Sustainability; 34 Things to Know About Carbon and Climate; Green Jobs for Sustainable Careers; Sustainability as an Innovation Opportunity; Daily Habits to Live Sustainably; Introduction to ESG: Environmental, Social, and Governance; Including Sustainability in Your Cloud Strategy; Corporate Finance: Environmental, Social, and Governance; AWS Well-Architected Framework: Sustainability Pillar; Sustainable and ESG Supply Chains; How Tech Drives Sustainability.\nTo meet these sustainability commitments, a vital effort is needed to equip companies and employees with a broad range of new skills needed for sustainability transformation. We published the Closing the Sustainability Skills Gap report to share what we have learned.\n### Linking green jobseekers to employers\nThe LinkedIn platform links green jobseekers to employers looking for green talent. For Earth Month 2022, LinkedIn featured equitable access to green jobs and a new green jobs collection to make it easy for green jobseekers and employers looking for green talent to connect on the LinkedIn platform.", "chunk_word_count": 434, "section_path": "2022 Environmental Sustainability Report > CSIRO > Green jobs and skilling", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 77, "page_start": 77, "page_end": 77 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 74, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\n### Appendix A\nOur Reports Hub available at microsoft.com/ transparency provides a consolidated, comprehensive view of our ESG reporting and data ranging from our carbon footprint to workforce demographics to political donations. This Environmental Sustainability Report is an important part of that overall set of disclosures. For this and other reports, we inform our disclosure strategies with careful consideration of commonly used global standards. We have reported to CDP Climate Change since 2004, and for the last 10 years have made it into the A-list leadership group by earning the highest score band of A for our responses. Additionally, we have reported to CDP Water Security since 2011, and since 2016 have earned A and A- scores for our responses. On climate-related issues, we are committed to fully aligning with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and in FY22 we published our first TCFD report.\n### ESG materiality\n### Forward-looking statements\nOur ESG reporting describes the topics we consider to be the most important to stakeholders when evaluating environmental, social, and governance issues at Microsoft. Therefore, ESG materiality in our reporting does not directly correspond to the concept of materiality used in securities law. A listing of what we currently identify and categorize as our top ESG issues can be found on our website. In 2020, Microsoft conducted a materiality assessment focused on environmental sustainability, which can be accessed in the 2020 Microsoft Sustainability Report.\nThis report includes estimates, projections, and other “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, section 27A of the Securities Act of 1933, and section 21E of the Securities Exchange Act of 1934. These forward looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in our reports filed with the Securities and Exchange Commission. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.\n### How we report\n### Reporting principles and external standards\nMicrosoft works to conduct business in ways that are principled, transparent, and accountable. We annually publish this Environmental Sustainability report to provide information on our strategy, our performance and progress against our goals, and key challenges and trends we see in this work. We also publish our environmental data, which is included in the separate Environmental Data Fact Sheet. We presented greenhouse gas emissions in accordance with the GHG Protocol and management's criteria and select environmental metrics that both reference the Global Reporting Initiative (GRI) Standards and are reported in accordance with management's criteria as of and for the fiscal year ended June 30, 2022 (FY22). Microsoft's environmental data reporting covers global wholly owned and partially owned subsidiaries over which Microsoft has management and operational control, including Microsoft owned and leased real estate facilities and datacenters.", "chunk_word_count": 536, "section_path": "2022 Environmental Sustainability Report > CSIRO > Appendix A", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 79, "page_start": 79, "page_end": 79 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 75, "chunk_text": "# 2022 Environmental Sustainability Report\n## CSIRO\n### Governance\nThe Environmental, Social, and Public Policy Committee of Microsoft's Board of Directors provides oversight and guidance on Microsoft's environmental sustainability strategy and commitments. During at least one meeting each year and on an as-needed basis, our President and Vice Chair and our Chief Environmental Officer present to this committee on our overall sustainability agenda, including our climate-related work, and solicit high-level input on new and emerging initiatives. Additional information on Microsoft's corporate governance is available at microsoft.com/investor.\n### Working together with stakeholders\nWe know that the decisions we make affect our employees, customers, partners, shareholders, suppliers, and communities, and we take their voices into account. Microsoft receives input from millions of people each year—from individual customers to policymakers and global human rights specialists. We bring outside perspectives into the company and inform our business decisions through a variety of feedback channels. We go beyond formal channels, proactively engaging with key stakeholders, advocacy groups, industry experts, corporate social responsibility (CSR) rating agencies, CSR-focused investors, and many others. We also share our learnings and practices thereby generating industry dialogue, informing public debate, and advancing greater progress.\n### Appendix B\n### Endnotes\n1. The market-based method includes consideration of contractual arrangements under which Microsoft procures power from specific suppliers or sources, such as renewable energy.\n9. This carbon intensity estimate was calculated by dividing the monthly datacenter emissions associated with usage of SharePoint and OneDrive (including compute, bandwidth, and storage) for each month in Microsoft's 2022 fiscal year by the volume of data stored in these tools as of the end of each month.\n2. Reported emissions for FY20 and FY21 have been recalculated for improved accuracy in accordance with our internal recalculation policy. We were able to disaggregate and identify previously unreported electricity for some of our leased datacenters due to improvements in our ability to capture such data.\n10. Our internal term for this is a “Teams meeting device hour,” which represents a specific device joining a Teams call for an hour. This means that if a given individual dials into a one-hour Teams meeting via their phone for audio and simultaneously via their laptop for screensharing, their participation adds up to two Teams meeting device hours.\n3. The market-based method includes consideration of contractual arrangements under which Microsoft procures power from specific suppliers or sources, such as renewable energy. Management's criteria represents criteria selected or developed by Microsoft which provide an objective basis for measuring and reporting metrics as specified in section 1.10 of our Environmental Data Fact Sheet.\n11. Recycled ocean plastic is made from plastic waste that is recovered from oceans and waterways, cleaned, and processed into recycled plastic resin pellets.\n## 4. ENERGY STAR® estimated annual energy consumption.\n5. To align with definitions in emerging circular economy regulations and more accurately describe the steps we are taking operationally to meet our commitment, in 2022, we adjusted our terminology to “reuse and recycling”. The operational scope, strategy, and metric has not changed.\n## 6. Microsoft Dataverse is required to use the publicly available Microsoft Cloud for Sustainability data model.", "chunk_word_count": 520, "section_path": "2022 Environmental Sustainability Report > CSIRO > Governance", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 79, "page_start": 79, "page_end": 80 }, { "report": "Microsoft 2022 Environmental Sustainability Report.pdf", "chunk_idx": 76, "chunk_text": "# 2022 Environmental Sustainability Report\n## 7. This information has been self-reported by the organization and has not been verified by Microsoft.\n8. The underlying methodologies and emissions findings generated from the Emissions Impact Dashboard (EID) for Microsoft 365 differ from those reflected elsewhere in this corporate disclosure. The figures reported here could change in the future due to better data reporting calculation methodologies or because of enhancements to the Emissions Impact Dashboard. The calculations are limited to Microsoft's datacenter emissions associated with commercial customer usage of Microsoft 365 applications; they do not include usage associated with national cloud deployments such as Microsoft US Government clouds and Office 365 operated by 21Vianet.\n### Stay up to date on our progress\nLearn more about our sustainability journey and sign up for news and updates.", "chunk_word_count": 133, "section_path": "2022 Environmental Sustainability Report > 7. This information has been self-reported by the organization and has not been verified by Microsoft.", "document_id": "Microsoft 2022 Environmental Sustainability Report", "page": 80, "page_start": 80, "page_end": 81 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 0, "chunk_text": "# Environmental Social Governance Report 2022\n## Introduction\n## Table of contents\nA Letter From our co-CEOs 03\nAbout Netflix 04\nOur Approach to ESG 05\nOur Progress 06\n## Environment 09\nSustainability Strategy 10 \nSustainability in Our Operations and Value Chain 13 \nNetting Remaining Emissions to Zero 28 \nSustainability in Storytelling 31 \nClimate Risk 33\n## Social 36\nInclusion and Diversity 37 \nResponsible Products 50\n## Governance 54\nCorporate Governance 55\nEnterprise Risk 60\nIP Protection and Data Piracy 60\nEthics and Compliance 61\nAppendix 62\n## A letter from our co-CEOs\nOver the last 25 years, we’ve worked hard to create long term value for our stakeholders — in particular members, shareholders and the creative community. While we’ve made good progress, there’s still more to do. For example, most of our carbon emissions come from our productions, which require a lot of power — often in remote locations — and are still heavily fossil fuel dependent. But we’re investing in the technology innovations today that can optimize and electrify this energy use tomorrow.\nAt Netflix, we aspire to entertain the world — and to do so sustainably and responsibly. You can read the full details of how in our fourth Environmental, Social and Corporate Governance (ESG) Report published today. But we wanted to highlight three areas upfront:\nWe are excited about the great entertainment coming this year — from returning favorites like our Emmy award winning series The Crown and recently released hit action sequel Extraction 2, starring Chris Hemsworth, to must-watch new films and TV shows such as Heart of Stone, Rebel Moon, Griselda and 3 Body Problem. Our north stars remain the variety and quality of our entertainment — and, as always, we welcome your feedback.\nFirst, the environment: The next decade is critical if we’re to manage climate change sustainably. It’s why Netflix has committed to halving our emissions by 2030. We will do this by optimizing our energy use, then electrifying it and decarbonizing the rest.\nSecond, inclusion: Netflix is becoming more representative of the members we serve. We now have offices in over 25 countries. Almost half of our employees are women and, in the US, $50 \\%$ are from historically excluded ethnic and/or racial backgrounds. We’re also seeing increased representation on and off screen — with significantly more female directors and showrunners, and more people of color in leading roles.\nThird, governance: Our business model is well proven and Netflix is a leader in streaming entertainment in terms of engagement, revenue and profit. So we’re evolving to a more standard large-cap governance structure, including the phased declassification of our board, the elimination of supermajority voting provisions and changes to our executive compensation program from 2023 onwards.\nTed Sarandos co-Chief Executive Officer and President of the Company and Director\nGreg Peters co-Chief Executive Officer and President of the Company and Director\n## About Netflix\nAt Netflix, we aspire to entertain the world — so whatever your taste, and wherever you live, we’ll have something great to watch or play, all in one subscription.", "chunk_word_count": 510, "section_path": "Environmental Social Governance Report 2022 > Introduction", "document_id": "Netflix ESG Report 2022", "page": 2, "page_start": 2, "page_end": 4 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 1, "chunk_text": "# Environmental Social Governance Report 2022\n## Our Approach to ESG\nOur Environmental, Social and Governance (ESG) framework is informed by relevant reporting frameworks — including Sustainability Accounting Standard Board (SASB), Global Reporting Initiative (GRI) and Task Force on Climate-Related Financial Disclosures (TCFD).\nThe Netflix Board of Directors oversees the Company’s ESG efforts and receives regular updates from management in these areas. For this report, we focus on the following topics: Environment, Social and Governance.\n## Environment\n## Social\n## Governance\nSustainability Strategy Climate Risk Sustainability On and Off Screen\nInclusion and Diversity Supporting our People Responsible Products\nCorporate Governance \nEnterprise Risk Management \nEthics and Compliance \nIntellectual Property Protection\n## Our Progress\nSee below for a glimpse, or “highlights reel”, of our continued progress in 2022 on environmental, social and governance topics.2\nWe are on track to meet our public sustainability commitments — including to: (1) halve our emissions by 2030 from a 2019 baseline; and (2) bring our remaining net emissions from 2022 onwards to zero.\n● We’ve used clean technologies on over $60 \\%$ of the productions Netflix manages directly; and\nWe’ve committed to use at least one electric vehicle (EV) on screen in all of our directly managed productions, and our “Everybody In” partnership with GM will also help promote their use.\nWe upgraded our Scope 3 target to reduce these emissions $55 \\%$ per million USD of value added3 by 2030.\n● Starting in 2022, we’ve brought net Scope 1, 2 and 3 emissions to zero by investing in nature-based solutions that retain and capture carbon.\nWe support creators who choose to incorporate sustainability into their storytelling. 165 million households around the world — over $70 \\%$ of our members — have chosen to watch one or more stories highlighting climate and/or sustainability. And we spotlight these stories during moments like Earth Month.\nWe continue to focus on decarbonizing film and series production. Over the course of 2022:\nSee below for a glimpse, or “highlights reel”, of our continued progress in 2022 on environmental, social and governance topics.\nAs our third Inclusion Report showed:\nIn addition, we continue to invest in the Netflix Fund for Creative Equity, which helps increase opportunities within the entertainment industry.\nWomen have the highest gender representation at Netflix; and\nOur employee giving program provides a 2:1 match on employee donations. In 2022, Netflix and our employees donated $\\$ 34$ million to over 5,000 charities worldwide.\nOver $50 \\%$ of our US employees are from one or more historically excluded ethnic and/or racial backgrounds.\nIn April 2023, the USC Annenberg Inclusion Initiative published their latest study into representation behind and in front of the camera for Netflix’s US films and series. It showed notable improvements for women and people from historically underrepresented racial and ethnic groups4 between 2020 and 2021.\nWe have now added disclosures about product accessibility to our ESG Report given the importance of ensuring that all of our members — regardless of language, device, connectivity or ability — can enjoy our entertainment.\nSee below for a glimpse, or “highlights reel”, of our continued progress in 2022 on environmental, social and governance topics.", "chunk_word_count": 523, "section_path": "Environmental Social Governance Report 2022 > Our Approach to ESG", "document_id": "Netflix ESG Report 2022", "page": 5, "page_start": 5, "page_end": 8 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 2, "chunk_text": "# Environmental Social Governance Report 2022\n## Governance\nAt our 2022 annual meeting, stockholders approved a board proposal to make significant changes to our corporate governance, including:\nWe’ve also adopted a majority voting standard in uncontested director elections and evolved our co-CEO compensation program for 2023. This includes: a CEO salary cap; performance-based annual cash bonus; and a minimum $50 \\%$ of compensation allocated to stock options with one year vesting.\nA phased declassification of our board beginning in 2023. From 2025, our entire board will stand for annual elections; The elimination of supermajority voting provisions in our articles of incorporation and bylaws; and The ability for shareholders to call special meetings.\nIn the last year, Netflix executives have met shareholders representing around $51 \\%$ of our outstanding shares to solicit their feedback. Independent directors participated in a majority of these meetings.\n## Environment\nTo entertain the world, we need a habitable planet to entertain. We’re working to make our operations more sustainable, including behind the camera, and to support creators who want to highlight sustainability on screen.\n## Sustainability Strategy\n## Our Public Climate Targets\nKey is decarbonizing our operations and value chain, which includes the making of our films and series. To help us meet this challenge, we created an advisory group, including scientists and other experts. This group is unpaid and entirely independent (full list available at sustainability.netflix.com).\nThe science is clear — the next decade is critical if we are to manage climate change sustainably. In March of 2021, we set two near-term climate targets aligned with consensus climate science that can be measured in years, not decades:\nReduce our emissions by roughly half by 2030; and\nBring our remaining net emissions from 2022 onwards to zero, in support of global net zero goals, by investing in nature-based solutions that retain and capture carbon.\nWhen we first set our emissions targets, we aligned to the Science Based Targets Initiative (SBTi) standard for Scope 3 “supplier engagement” targets5 . After working to improve our Scope 3 data, we submitted an upgraded quantitative “intensity” target6 aligned to current SBTi standards for validation in 2022. The new target, which has now been approved by the SBTi, is to reduce Scope 3 emissions $5 5 \\%$ per million USD of value added7 by 2030.\n## Decarbonization Target", "chunk_word_count": 387, "section_path": "Environmental Social Governance Report 2022 > Governance", "document_id": "Netflix ESG Report 2022", "page": 8, "page_start": 8, "page_end": 11 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 3, "chunk_text": "# Environmental Social Governance Report 2022\n## Alignment with ISO NetZero Guidelines\nNetflix’s Sustainability Strategy is music to our ears. We are delighted to see Netflix apply the same positive disruption to sustainability that they’ve applied to their business, upping the ambition for achieving near-term net zero targets and harnessing the power of storytelling to educate and entertain citizens.\nOur sustainability strategy is aligned with the ISO Net Zero Guidelines (IWA 42:2022) developed by the International Organization for Standardization, which recently published a testimonial about Netflix. These guidelines, which are designed to be universally applicable, were developed with input from over 1,200 global experts from $1 0 0 +$ countries11, and among other criteria, require:\nChristiana Figueres, Diplomat and Architect of the U.N. Paris Agreement\n$\\textcircled{0}$ Emissions Reduction: Taking immediate action to maintain the climate at 1.5 degree celsius — i.e., approximately halving global emissions by the end of the decade and achieving global net zero by 2050 at the latest.\nCounterbalancing Residual Emissions: Investing in nature-based solutions that retain and capture carbon12 from the atmosphere, proportional to a company's “residual” emissions13. Learn more about how we are aligned in our carbon credit investments here.\nThe Carbon Trust, a respected think tank, found these ISO Net Zero Guidelines to be the most comprehensively aligned to to the goals of COP27.\nWider Impact: Engage value chain stakeholders, collaborate and share knowledge, and participate in relevant advocacy on behalf of bringing global emissions to zero and promoting a just transition. Learn more about how we are aligned on the broader societal impact here.", "chunk_word_count": 261, "section_path": "Environmental Social Governance Report 2022 > Alignment with ISO NetZero Guidelines", "document_id": "Netflix ESG Report 2022", "page": 12, "page_start": 12, "page_end": 12 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 4, "chunk_text": "# Environmental Social Governance Report 2022\n## Sustainability in Our Operations and Value Chain\nWe approach these four levers using an OED framework — i.e., first optimizing energy use, then electrifying it and decarbonizing the rest.\n● Optimize (O): We are conducting energy efficiency audits, including for our stages, studios and offices, so we can optimize vehicle fleet operations, right-size vehicles and mobile power and give preference to more efficient equipment.\nClimate Transition Plan\n● Electrify (E): We are working to electrify the equipment that uses the most fuel, like vehicles, buildings and generators. Where available, we use electric motors, which are more efficient and because electricity is more easily decarbonized. We’ve successfully piloted the use of mobile batteries and hydrogen-battery powered generators in lieu of fossil-fuel powered generators in our productions. And we are also replacing fossil-fuel vehicles with electric, plug-in hybrid and hybrid vehicles.\nTo meet these objectives we are focused on four key levers:\nEnergy Efficiency: Identifying cost-effective efficiency improvements for energy used in our offices and studios;\nVehicle Electrification: Transitioning from vehicles that use fossil fuels to fully electric and/or hydrogen powered alternatives;\n● Decarbonize (D): When optimization and electrification aren’t possible, we decarbonize the remaining emissions by installing and purchasing renewable energy. This means matching renewable electricity to any grid-connected power that isn’t carbon-free and shifting to lower-carbon or zero-carbon fuel options when that isn’t possible. Last year, we procured renewable electricity to match our global electricity demand and we’re exploring more direct investments.\nClean Mobile Power: Using alternatives to diesel generators on productions; and\nRenewable Energy: Using renewable electricity and fuels.\nMaximizing the solutions available today, while accelerating the market for tomorrow’s solutions, is also imperative. While energy efficiency and renewable energy solutions are cost-effective and can be deployed at scale now, clean mobile power and EVs are more nascent technologies. As a result they will deliver most of their respective emissions reductions for Netflix in the latter half of this decade. Refer to the Energy Efficiency, Renewable Energy and Clean Mobile Power sections below. Each year, we continually develop and further refine our 2030 Science-Based Target transition strategy. The following chart illustrates our current planned path to our Scope 1 and 2 target, and the decarbonization levers that will get us there.\n[IMAGE CAPTION] 150,000\n## Our Carbon Footprint\nWe measured our 2022 greenhouse gas emissions (i.e., carbon footprint) using the Greenhouse Gas Protocol14. This helps us understand our largest sources of emissions and the biggest opportunities we have to reduce them. Our independent accountants, Ernst & Young (EY), reviewed our 2022 Scope 1, 2 and 3 greenhouse gas emissions (location- and market-based). Their report and assurance letter is here.\nOur footprint, reductions and related data are represented in four separate tables throughout the environment section of this report:\nGreenhouse Gas Inventory including our corporate greenhouse gas data from 2019 through 2022.\n2022 Emission Reductions Summary Table shows our quantified reductions from the range of measures we have put in place to track progress towards our science-based target.\n## 2022 Carbon Credit Portfolio shows the carbon credits we purchased and retired for 2022.\n## 2022 Electricity Consumption Summary shows our electricity consumption and renewable electricity.\n## BIOGENIC EMISSIONS\nRenewable Fuels (e.g., renewable diesel, sustainable aviation fuel)", "chunk_word_count": 543, "section_path": "Environmental Social Governance Report 2022 > Sustainability in Our Operations and Value Chain", "document_id": "Netflix ESG Report 2022", "page": 13, "page_start": 13, "page_end": 16 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 5, "chunk_text": "# Environmental Social Governance Report 2022\n## 2019 MTCO2e: 0\n## 2020 MTCO2e: 0\n## 2021 MTCO2e: 1,007\n## 2022 MTCO2e: 2,033\n## CARBON FOOTPRINT COMPONENTS\n### Emissions Reductions\n## TRACKING PROGRESS AGAINST OUR 2030 SCIENCE-BASED TARGET\nOver half of our emissions (all scopes) are related to the production and licensing of films, series and games (“production”). The second largest source of emissions is in our corporate operations (“corporate”), followed by our data center providers (“streaming”).\nWe track progress against our Scope 1 and 2 emissions target using target-based emissions figures noted in the carbon footprint table above. Target-based emissions only account for emissions reductions resulting from specific decarbonization actions and those related to direct renewable energy supply (e.g., onsite generation, utility and landlord supply, power purchase agreements or direct investments), but not for emissions reductions resulting from our annual purchase of renewable energy certificates (or environmental attribute certificates).\n● 2022 Scope 1 and 2 emissions are $12 \\%$ lower15 year-overyear, though they remain slightly higher than our 2019 baseline year due to growth in the business. \n● The combined impact of our emissions reductions initiatives across our four priority levers in 2022 resulted in a $30 \\%$ lower Scope 1 and 2 footprint value than would have otherwise been reported. \n● The vast majority of our emission reductions still come from renewable energy and renewable fuels. Transitioning from diesel to electric will take time to scale to a level that will have a measurable impact on emissions reductions.\n### Reducing Emissions in the Workplace\n## ENERGY EFFICIENCY\nIn 2022, we completed energy efficiency audits at our major facilities across North America. Except for Albuquerque Studios in New Mexico and the Egyptian Theater in Los Angeles, Netflix does not own the facilities in which we operate. This makes the immediate implementation of the audit recommendations more challenging. So we engaged with our landlords in the US and have begun to implement projects within our control at several of our offices and studios including: window replacements, temperature setbacks, lighting improvements and controls, heat pump installs, plug load controls, daylight sensor installs and equipment upgrades. We will replicate this approach across priority facilities in EMEA in 2023.\n## RENEWABLE ENERGY (ELECTRICITY AND FUELS)\nIn 2022, as in previous years, we have matched our global operations with $100 \\%$ renewable electricity, covering all electricity consumption in our offices and for productions we directly manage. This was achieved through a range of approaches that include utility-supplied clean electricity, landlord-supplied clean electricity, and renewable energy certificates (RECs).\nWe recognize that not all renewable energy supply is the same in terms of its positive impact. So we’re working to increase the proportion of onsite generation, utility and landlord-supplied clean electricity and direct sourcing from offsite projects.\n### powertrust\n### Below are some of the highlights of our partnership with Powertrust in 2022:\nMon, Nagaland: This project has connected three villages in the state of Nagaland to solar mini-grids. These villages are the first demonstration sites of a larger plan to connect 40 villages across the province over the next three years.", "chunk_word_count": 515, "section_path": "Environmental Social Governance Report 2022 > 2019 MTCO2e: 0", "document_id": "Netflix ESG Report 2022", "page": 17, "page_start": 17, "page_end": 20 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 6, "chunk_text": "# Environmental Social Governance Report 2022\n## POWERTRUST PARTNERSHIP\nThis year we partnered with Powertrust to bring high-impact distributed renewable energy projects to rural areas of India for the first time. This work is funded through distributed renewable energy certificates (D-RECs), a market instrument aligned to the International REC (I-REC) standard. These investments bring renewable energy to regions where it is needed most, thereby delivering maximal social and environmental benefits. Many of the projects we have invested in are bringing electricity to communities, and enabling others to rely less on small-scale fossil fuel generators.\nDr. Shroff’s Charity Eye Hospital, Uttar Pradesh: This organization operates multiple centers for high-quality, low-cost eye care serving the rural poor and low-income communities across India. The combined network sees more than 250,000 patients and performs nearly 30,000 surgeries every year. This branch in Uttar Pradesh experienced daily power cuts lasting multiple hours, and relied on diesel generators to provide backup power. Now, a photovoltaic system reduces diesel consumption by up to $70 \\%$ .\nVellore Institute of Technology, Andhra Pradesh: The institute is a higher educational facility in Andhra Pradesh. A 700kWp rooftop system now spreads across several buildings on the institute’s campus, including several student accommodation and service buildings.\nSolar Irrigation Pumps, Uttar Pradesh: “Irrigation-as-a-Service” enables farmers to transition from diesel-based pumping to solar irrigation. The tariffs are set to be $2 0 { - } 4 0 \\%$ cheaper than the running cost of diesel groundwater pumping (including fuel, maintenance, and rental), and users only pay for the volume of water consumed for irrigation.\n### Reducing Emissions in the Workplace (continued)\nlower emissions than conventional fuels such as diesel and Jet-A. In select markets, we fueled both production vehicles and mobile generators with over 185,000 gallons of renewable diesel, an important bridge fuel as we work towards longer-term decarbonization of these activities. Similarly, we have secured over 100,000 gallons of Sustainable Aviation Fuel (a Jet-A fuel replacement blended fuel with lower emissions) to help fuel Netflix aircraft.\n## RENEWABLE FUELS\nWe strive to implement zero-emissions solutions where we can. But we can also achieve meaningful reductions in the near-term through the adoption of renewable fuels that have significantly\n### Reducing Emissions in Productions\nProduction-related emissions account for $60 \\%$ of our overall footprint, so we are focusing our efforts on: (1) using clean mobile power equipment versus diesel generators; and (2) using EVs and other low emissions vehicles. Over the course of 2022 we implemented these clean technologies on over $60 \\%$ of the productions Netflix manages.\nWe employ sustainability experts who regularly visit production sites to identify opportunities to reduce emissions and we maintain a production resources website that contains tools and resources to introduce our productions to the latest clean technologies. This video showcases some of these technologies operating on multiple Netflix sets and partner locations, together with testimonials from crew and producers about their experience:", "chunk_word_count": 485, "section_path": "Environmental Social Governance Report 2022 > POWERTRUST PARTNERSHIP", "document_id": "Netflix ESG Report 2022", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 7, "chunk_text": "# Environmental Social Governance Report 2022\n## CLEAN MOBILE POWER\n### Clean Mobile Power Spotlights:\nBatteries: Virgin River Season 5 built on their experience from Season 4 to expand their use of batteries to power set and ancillary power needs, reducing the season’s diesel generator fuel use by $44 \\%$ . The Union, filmed around London, leveraged batteries to power the set and lighting, resulting in generators only being needed for $5 \\%$ of filming hours, saving over 1,800 gallons of fuel.\nUsing diesel generators has been an entertainment industry standard for a long time and effective cleaner alternatives have not been available at scale. Cleantech solutions are starting to emerge and they can replace some generators, or at least reduce the number of hours they need to run each day — saving fuel and reducing air and noise pollution on set.\nIn the past year, over $50 \\%$ of the productions Netflix manages incorporated clean mobile power solutions including grid tie-ins, mobile batteries, battery-hybrid generators, and hydrogen power units, resulting in fuel reductions that lowered emissions by 1,179 MTCO2e. This included the deployment of over 100 pieces of clean mobile power equipment and battery-hybrid generators deployed for the first time. Netflix also expanded the geographic reach of these solutions, deploying solutions in and around Atlanta, Austin, Dublin, Lisbon, London, Los Angeles, New York, Paris, Toronto and Vancouver. Here are a few examples of clean mobile power in our 2022 productions.\nHydrogen Power Units (HPUs): Hydrogen Power Units using green hydrogen were deployed on UK productions that required supplemental power at studios or long term locations. For the filming of Damsel, two large hydrogen power units were used to provide supplemental power at a studio, replacing diesel generators, saving over 4,200 gallons of fuel and reducing emissions by 44 MTCO2e. The Diplomat Season 1 employed equipment to bring clean power to a rural location in the English countryside. We partnered with a local production equipment supplier to conduct the first mobile hydrogen pilot in France on Lupin Part 3, while filming on location outside of Paris.\nHybrid Generators: Bodkin Season 1 was the first ever production in Ireland to use a hybrid generator and to use renewable diesel. We also piloted hybrid generators for the production of the films Irish Wish, Unfrosted and Rebel Moon, the latter using a hybrid generator plus solar technology to provide remote power to construction crews and wardrobe trailers.", "chunk_word_count": 404, "section_path": "Environmental Social Governance Report 2022 > CLEAN MOBILE POWER", "document_id": "Netflix ESG Report 2022", "page": 22, "page_start": 22, "page_end": 22 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 8, "chunk_text": "# Environmental Social Governance Report 2022\n## VEHICLE ELECTRIFICATION\nFilm and series productions take thousands of vehicles that until recently have been universally fossil-fuel powered. In the past year, over $30 \\%$ of the productions Netflix manages incorporated electric, plug-in hybrid, and hybrid vehicles, totaling more than 120 vehicles piloted in 2022 (a 3X increase in vehicles from 2021), resulting in fuel reductions that lowered emissions by 158 MTCO2e (a 5X increase in reductions from 2021). These vehicles were deployed on productions in Los Angeles, London, New York, Toronto and Vancouver.\nFrom our pilots, we have learned that EV passenger vehicles can save productions money and fuel when provided to crew that have high daily mileage, and that plug-in hybrids and regular hybrids are good transition vehicles that reduce emissions without range anxiety. As we prepare to pilot larger vehicles, including electric trucks, we know that charging infrastructure, including mobile charging, is key to the successful integration of EVs into production operations. Therefore we have begun to build out charging infrastructure at studios where we frequently produce series and films. We are installing faster level 2 stations (dispensing 16-19 kW vs the standard $6 { - } 7 \\ k W$ ) and have purchased DC fast chargers that will be installed in Los Angeles and at our owned studio in Albuquerque in 2023.", "chunk_word_count": 224, "section_path": "Environmental Social Governance Report 2022 > VEHICLE ELECTRIFICATION", "document_id": "Netflix ESG Report 2022", "page": 23, "page_start": 23, "page_end": 23 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 9, "chunk_text": "# Environmental Social Governance Report 2022\n## INDUSTRY COLLABORATION\n### Sustainable production industry groups:\nNetflix is a member of several industry groups globally (e.g., Sustainable Production Alliance (global), BAFTA’s Albert (UK and global), Reel Green/On Tourne Vert/Ontario Green Screen (Canada), Green Motion (Germany), Sustainable Screens Australia, etc.) to help bring transparency (e.g., Close Up: Carbon Emissions of Film & Television Production) and public advocacy for sector transformation (e.g., hydrogen hub).\nThe film and television industry is over a century old and has been traditionally powered by fossil fuels. While we have set Netflix-specific climate targets, we can’t transition entertainment to a cleaner, low carbon industry alone. This is why we partner with other studios to ensure progress made by one benefits everyone — and because we believe collective actions will yield positive outcomes, faster. We do this through:\n### Clean Mobile Power Initiative:\nBy co-founding the Clean Mobile Power Initiative (CMPI) with support from non-profit Rocky Mountain Institute and its climate accelerator, we aim to identify and deliver cost-competitive zero emissions mobile power at scale for the entertainment industry. The long term goal is to eliminate diesel generators in top production markets.\nWe also actively partner with other key business and non profit consortia to: (1) further our understanding of climate representation on screen, including through BAFTA’s Albert, SPA and the Climate Entertainment Stakeholders Roll Call, a group organized by the Television Academy, Academy of Motion Picture Arts & Sciences , Creative Artists Agency, and PGA to connect the companies and organizations working in climate entertainment; and (2) advocate for more sustainable policy solutions, including CERES, C2ES, the Business Roundtable and Motion Picture Association.\n### Sustainable Aviation Buyers Alliance:\nMaking a film or series requires air travel. To accelerate progress towards lowering the greenhouse gas emissions associated with burning jet fuel, Netflix co-founded the Sustainable Aviation Buyers Alliance (SABA). SABA sends market signals to producers of Sustainable Aviation Fuel (SAF) to grow supply, facilitates coordinated procurement activity, and ensures the environmental integrity of their claims.\n### Sustainability Across the Value Chain\nThis is what industry leadership looks like. Netflix is raising the bar by aligning operations with science, pioneering approaches to protect nature, and sending new demand signals to suppliers that sustainability is a measurable priority. Not only do we see progress against ambitious near-term goals, Netflix is also leveraging their platform for positive change. It’s clear that Netflix is taking climate action seriously.", "chunk_word_count": 404, "section_path": "Environmental Social Governance Report 2022 > INDUSTRY COLLABORATION", "document_id": "Netflix ESG Report 2022", "page": 24, "page_start": 24, "page_end": 25 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 10, "chunk_text": "# Environmental Social Governance Report 2022\n## SCOPE 3 EMISSIONS\nPurchased goods & services17 (PG&S) emissions, i.e., goods and services we buy from others, made up the majority of our 2022 Scope 3 footprint, primarily related to film and series production. The next biggest Scope 3 Category in 2022 was business travel emissions18, which includes air travel, hotel stays and travel-related transportation, and accounts for $< 1 0 \\%$ of our total Scope 3 emissions. Compared to last year, our overall Scope 3 emissions decreased by about $25 \\%$ . These emissions reductions can be attributed in part to a smaller volume of productions in 2022 compared to 2021, which experienced a jump as COVID shutdowns eased. The reductions were also driven by significant renewable energy consumption and procurement by AWS (refer to Data Centers and Content Distribution Network), and (to some degree) by EPA emissions factor changes19 .\nElizabeth Sturcken, Managing Director, Environmental Defense Fund\nSince a big part of these emissions are driven by the productions that other studios make on our behalf, as noted above, we partner closely with our peers and industry partners to engage our suppliers and shift the entertainment industry towards a more sustainable filmmaking approach. As we begin to track against our new Scope 3 targets, we will share our progress along the way.", "chunk_word_count": 221, "section_path": "Environmental Social Governance Report 2022 > SCOPE 3 EMISSIONS", "document_id": "Netflix ESG Report 2022", "page": 25, "page_start": 25, "page_end": 25 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 11, "chunk_text": "# Environmental Social Governance Report 2022\n## DATA CENTERS AND CONTENT DISTRIBUTION NETWORK (CDN)\nWhen it comes to distributing our content to our members, Netflix invests heavily in making this process as efficient as possible with our Open Connect program. We make 18,000 servers available for free to Internet Service Providers who operate them in their data centers across 6,000 locations in over 175 countries21. So when our members press play, instead of the film or series being streamed from halfway around the world, it’s streamed from around the corner — increasing efficiency for operators while also ensuring a high-quality, no-lag experience for consumers. On top of that, we’ve developed encoding technology to reduce file sizes and optimize bandwidth use while maintaining high video quality for consumers. Over the past five years, we have been able to cut our bit rates by roughly $50 \\%$ . This is in addition to the significant efficiency gains the telecom industry has achieved within their own networks21.\nCarbon Trust’s white paper on the Carbon Impacts of Video Streaming determined that the use-phase emissions associated with data center and CDN operations are small $( < 1 \\% )$ compared to the rest of the video streaming value chain.\nNetflix partners with Amazon Web Services (AWS) for our data storage and cloud computation needs. AWS has a goal of using $100 \\%$ renewable energy by 2025. In 2022, AWS reported via their customer carbon footprint tool that our carbon footprint was reduced by approximately $98 \\%$ compared to last year. This is due to AWS’s renewable energy usage and purchasing, and energy efficiency initiatives.\nWe are encouraged by the strong energy efficiency and renewable energy usage trends of both AWS and our own Open Connect program, and are committed to continually decarbonizing these processes over time. Refer to our recent blog post Energy Efficiency in Streaming: Innovation Reaping Rewards to learn more.\nThis trend is consistent with research findings, which show that the energy intensity of global data centers has decreased by $20 \\%$ annually since 2010. This is a notable improvement compared with recent annual efficiency gains in other major demand sectors (e.g., aviation and industry), which are an order of magnitude lower20.", "chunk_word_count": 369, "section_path": "Environmental Social Governance Report 2022 > DATA CENTERS AND CONTENT DISTRIBUTION NETWORK (CDN)", "document_id": "Netflix ESG Report 2022", "page": 26, "page_start": 26, "page_end": 26 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 12, "chunk_text": "# Environmental Social Governance Report 2022\n## INTERNET TRANSMISSION AND USER DEVICE ENERGY USE\nBecause internet infrastructure (including data centers) are so widely shared by so many consumers across so many services, the energy consumption of this infrastructure for individual video streams is relatively efficient (i.e., $\\sim 1 0 \\%$ of total use-phase streaming emissions). By contrast, the physical devices used by our members (wifi routers, streaming sticks, set top boxes, and displays) drive the most energy consumption and emissions $( \\sim 8 9 \\% )$ . Even so, the total carbon footprint of streaming one hour of video is approximately 55 gCO2e (grams of carbon dioxide equivalents). This equates roughly22 to the emissions associated with microwaving four bags of popcorn, or three boils in an electric kettle23.\nBased on globally accepted greenhouse gas accounting standards24, internet- and device-related emissions fall outside of the formal carbon footprint boundary for Netflix. Even so, we still think it is important for us to contribute to industry-wide decarbonization efforts.\nThrough our participation in DIMPACT, we collaborate with Internet Service Providers (ISPs), device manufacturers, and academic and industry experts to stay up-to-date on the latest research about digital service emissions and contribute to cross-sector policy suggestions that will help decarbonize video streaming globally. We’ve summarized the main takeaways here.\nAdditionally, we are part of the DIMPACT Device Manufacturers working group, where we support research related to device energy efficiency. We are also encouraged by work with the Carbon Trust, in collaboration with companies like Amazon, Meta, Microsoft, Samsung and Sky, to tackle the emissions of connected devices.\n[IMAGE CAPTION] $100 \\%$ of this value chain relies on electricity\n### Netting Remaining Emissions to Zero\nShort film by the makers of Our Great National Parks on how carbon credits work, illustrated using Netflix’s contribution to a Kenyan forest conservation project next to Tsavo National Park (episode 3)\nTo supplement our decarbonization work, we delivered on our promise to net all remaining emissions to zero, across all three scopes, in 2022. We did this by investing in nature to retain and remove carbon (nature-based carbon credits) and match remaining electricity use to like-for-like renewable energy credits.\nOur 2022 carbon credit portfolio spans four continents, six countries, and $\\pmb { 2 5 + }$ on-the-ground partners, with $100 \\%$ third-party certification for carbon measurement. Netflix does extensive due diligence before including a project in our portfolio, using a rigorous five step evaluation process to select the highest quality credits, all of which need to demonstrate their value beyond the carbon, including social impact, community and biodiversity benefits. We review transparency and integrity work from groups like VCMI and ICV-CM, and stay abreast of methodologies from third party credit standards bodies to continually refine our vetting process.", "chunk_word_count": 459, "section_path": "Environmental Social Governance Report 2022 > INTERNET TRANSMISSION AND USER DEVICE ENERGY USE > Netting Remaining Emissions to Zero", "document_id": "Netflix ESG Report 2022", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 13, "chunk_text": "# Environmental Social Governance Report 2022\n## INTERNET TRANSMISSION AND USER DEVICE ENERGY USE\n### Nature-Based Carbon Credits\nWe align with the latest guidance from nine research, NGO and multilateral government institutions who conclude that, “in addition to cutting greenhouse gas emissions in company operations and across value chains, to help get the world on track for halving global emissions by 2030, all companies need to invest in protecting, managing and restoring nature, for example by buying high-quality nature-based carbon credits.” Relative to our work to decarbonize, purchasing carbon credits comes only after we have made efforts to reduce emissions at the speed prescribed by climate science. But per the science (Intergovernmental Panel on Climate Change25 , Nature), this needs to be done in parallel and cannot come later26.\nNature-based projects make up $64 \\%$ of our portfolio because of their ecosystem benefits and potential to bring economic value to the region, including indigenous people or those disproportionately affected by climate change.\n[IMAGE CAPTION] Mycorrhizal Inoculation Accelerated Reforestation Carbon Removal\n[IMAGE CAPTION] Scott River Improved Forest Management\n[IMAGE CAPTION] Chyulu Hills REDD+ Project\n[IMAGE CAPTION] ICOCO Community Based Reforestation\n## RENEWABLE ELECTRICITY CREDITS\nFor any electricity we weren’t able to decarbonize in 2022, we used like-for-like credits by retiring Energy Attribute Certificates (e.g., Renewable Energy Certificates (RECs) in the US, Guarantees of Origin (GOs) in Europe) to cover all non-renewable electricity use in over 150 countries.\n### Sustainability in Storytelling\nIn 2022, 165 million, or more than $70 \\%$ of our members, chose to watch at least one story on Netflix that highlighted sustainability. We’ve curated over 200 of these series, films and specials into a Netflix collection: Sustainability Stories. The collection includes comedies like Don’t Look $U p$ , documentaries like the Academy Award® winning The Elephant Whisperers and Our Great National Parks, to the mystery film Glass Onion: A Knives Out Mystery, fantasy sci-fi Sweet Tooth and political drama Borgen - Power and Glory, inspiring solutions in Down to Earth with Zac Efron, and family fare like The Sea Beast and Spirit Rangers. Visit the Netflix sustainability webpage for more.\n### EVs ON SCREEN\nNetflix has committed to expanding the use of EVs in shows and films we produce ourselves — and announced this in a 2023 Super Bowl ad with GM starring Will Ferrell. These titles will start to hit the service in 2023, including Murder Mystery 2, Virgin River Season 5 and more that will prominently feature EVs.\nYoung people like myself view Netflix as a cherished form of entertainment but also as a source of education and inspiration. As more and more of our generation recognizes the implications of the climate crisis on our daily lives we feel hopeful when shows like The Crown tackle coal pollution, or when Zac Efron’s Down to Earth highlights new green technologies. I’m proud of Netflix for being serious about tackling the climate crisis both in-house and on-screen.\n### Xiye Bastida, Indigenous youth climate activist and winner of the Spirit of the UN Award", "chunk_word_count": 505, "section_path": "Environmental Social Governance Report 2022 > INTERNET TRANSMISSION AND USER DEVICE ENERGY USE > Nature-Based Carbon Credits", "document_id": "Netflix ESG Report 2022", "page": 28, "page_start": 28, "page_end": 32 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 14, "chunk_text": "# Environmental Social Governance Report 2022\n## STRATEGY AND RISK MANAGEMENT\n### Climate Risk\nWe conducted an initial climate risk assessment at the end of 2021. This evaluation looked at a range of climate risks as defined by the Task Force on Climate-Related Disclosures, including physical, regulatory, reputational, market, legal, and transitional risks. We also referenced the ESG-Specific Committee of Sponsoring Organizations’ (COSO) framework and Intergovernmental Panel on Climate Change (IPCC) research to build a climate risk framework to assess Netflix risk.\nRefer also to the TCFD index in the appendix to this report\n## GOVERNANCE\nBoard: The Netflix Board oversees the Company’s ESG efforts, which includes sustainability, with the assistance of the Nominating and Governance Committee. They regularly receive updates on sustainability and enterprise risk management at Board meetings.\nManagement: Our Chief Financial Officer (CFO) oversees management decisions related to our sustainability programs, which are led by our Netflix Sustainability Officer. Our Internal Audit team performs an annual company-wide enterprise risk assessment, in which climate risks are considered, and the findings of this assessment are shared with the Board annually.\nWe identified the following risks and opportunities, and mapped them against current strategies:\n## METRICS AND TARGETS\nWhile the assessment was a useful exercise, the climate risks we identified were all mapped to risk mitigation strategies already in place or underway. The output of this climate risk assessment was also used as an input into our enterprise risk management (ERM) assessment. When evaluated using our ERM methodology, no standalone climate-related risks were identified as significant for the company.\nRefer to our public climate targets and Scope 1, 2 and 3 greenhouse gas emissions data above. Measuring our performance against these targets over time helps to inform our climate risk assessment process, in particular our transition risks.\n### Social\nWe are focused on a number of areas, including diversity and inclusion within Netflix, representation both behind and in front of the camera and the accessibility of our service.\n### Inclusion & Diversity\nIf we are to serve audiences globally, we want an employee base that reflects our membership and a culture that enables those employees to do the best work of their lives. Our first inclusion report, published in 2021, looked at “representation within the company, how we plan to increase it and how we cultivate a community of belonging and allyship” — and we’ve been working to build on that over the last two years.\n### Global Gender Identity\n### Representation Today\n## GENDER (GLOBAL)27\nAcross gender identities, women make up $4 9 . 6 \\%$ of our workforce and have the highest representation at Netflix, compared to $5 1 . 7 \\%$ in 2021. Women leadership (Directors and above) remained steady at $5 1 . 4 \\%$ (vs. $5 1 . 2 \\%$ in 2021). Men and additional gender identities28 remained flat at $45 \\%$ and $1 . 3 \\%$ respectively, compared to 2021.\n## SENIOR LEADERSHIP\nOf the 23 leaders in our senior leadership team in 2022, $4 3 . 5 \\%$ (10) are women.\n### Representation Today", "chunk_word_count": 511, "section_path": "Environmental Social Governance Report 2022 > STRATEGY AND RISK MANAGEMENT", "document_id": "Netflix ESG Report 2022", "page": 33, "page_start": 33, "page_end": 38 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 15, "chunk_text": "# Environmental Social Governance Report 2022\n## RACE/ETHNICITY (US)29\nThe number of US employees who identify as Asian accounts for $2 7 \\%$ of our workforce, an increase from $2 5 . 8 \\%$ in 2021— and $1 8 . 4 \\%$ of our leadership (directors and above), compared to $1 8 . 6 \\%$ in 2021.\nOver half of our US workforce $( 5 2 . 9 \\% )$ is made up of people from one or more historically excluded ethnic and/or racial backgrounds, including Asian, Black, Hispanic or Latino/a/x, Middle Eastern or North African, Native American, and Pacific Islander30 .\nThe number of US Black employees accounts for $1 0 . 7 \\%$ of our workforce, a decrease from $1 1 . 7 \\%$ in 2021 — and $1 2 . 9 \\%$ of our leadership (directors and above), a decrease from $1 3 . 6 \\%$ in 2021.", "chunk_word_count": 151, "section_path": "Environmental Social Governance Report 2022 > RACE/ETHNICITY (US)29", "document_id": "Netflix ESG Report 2022", "page": 39, "page_start": 39, "page_end": 39 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 16, "chunk_text": "# Environmental Social Governance Report 2022\n## SENIOR LEADERSHIP\nThe number of US Hispanic or Latino/a/x employees accounts for $1 1 . 3 \\%$ of our workforce, relatively flat from last year $( 1 1 . 2 \\% )$ — and $7 . 3 \\%$ of our leadership (directors and above), an increase from $6 . 8 \\%$ in 2021.\nOf the 23 leaders in our senior leadership team in 2022, 34.8% (8) self-identify as belonging to one or more historically excluded ethnic and/or racial backgrounds.\n### US Race/Ethnicity\n[IMAGE CAPTION] US Race/Ethnicity Refer also to our EEO-1 reports from 2014-2021 here.\n[IMAGE CAPTION] All Job Levels\n### Deepening our Culture of Inclusion and Belonging\nIncreased representation is only part of the journey. People need to feel included and valued within an organization if they are to stay long term — and while we’ve made steady progress, we have much more to do. Key is building an inclusion lens so that employees at every level can move from awareness about diversity, equity and inclusion to action and impact more quickly. In the last year, over 600 of our leaders globally have participated in small group workshops on Leading Inclusively. We also have groups of inclusion advisors in all regions and functions helping to develop best practices in hiring, compensation, onboarding, feedback, growth and development.\nOn recruiting and development, we have expanded the number of Hispanic Serving Institutions (HSI), Historically Black Colleges and Universities (HBCU), and Minority Serving Institutions (MSI) represented in our Pathways Bootcamp. This immersive 12-week program provides technical skills development to students from historically underrepresented groups. Since the program's inception in 2020, 276 students have participated in the Pathways Bootcamp.\nOn building a more inclusive working environment, we now have 18 Employee Resource Groups (ERGs) — with over 8,000 employees in 84 chapters globally. These ERGS help to: create a positive and welcoming environment for employees from historically underrepresented communities at Netflix; raise our collective consciousness around diversity and inclusion issues; and support recruitment, retention and employee engagement.\nWe conduct pay equity analyses at least annually. These are designed to help ensure that employees from historically underrepresented groups are not being underpaid based on gender (globally) and race (US) relative to others doing the same or similar work under comparable circumstances. We aim to rectify pay gaps that we find. In addition, we will increase transparency around employee retention and pay equity in our inclusion updates and ESG reporting starting in 2024.\n80+ERG chaptersacross the globe\n## 276 Students have participated in Pathways Bootcamp\n### Benefits Highlights:", "chunk_word_count": 429, "section_path": "Environmental Social Governance Report 2022 > 276 Students have participated in Pathways Bootcamp > Benefits Highlights:", "document_id": "Netflix ESG Report 2022", "page": 39, "page_start": 39, "page_end": 41 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 17, "chunk_text": "# Environmental Social Governance Report 2022\n## 276 Students have participated in Pathways Bootcamp\n### Culture and Engagement\nPhysical Health: Medical benefits work differently by country. No matter what the case is in each location, we make sure our employees and their families are covered. Additionally, we focus on accommodations and workplace adjustments to enable employees with one or more disabilities to be productive and successful.\nAt Netflix, we seek excellence in everything we do — our product, our entertainment and our culture. To help us succeed, we’ve created an employee culture that’s focused on continuous improvement so we can better serve our members and build our business. Our publicly available Culture Memo outlines our approach, which we update as needed to ensure we remain flexible in our approach. And we focus on employee engagement and feedback, including through regular town halls, business reviews and memos (which we often share broadly, including comments).\nMental Health: Mental health is important to overall health so we offer various programs to support employees and their dependents. Globally, we provide access to mindfulness resources, as well as free therapy and coaching sessions. In 2022, we introduced a formal Wellbeing $^ +$ Resilience strategy to manage issues related to anxiety and workplace stress. Our primary goal is to enhance productivity by focusing on integrating wellbeing into our operations.\n### Benefits and Wellbeing\nFamily Benefits: Netflix offers a global family forming and fertility health benefit to support employees during their fertility health, surrogacy, adoption and family forming journey. This benefit is available to employees and their spouse/domestic partner, regardless of marital status, gender identity or sexual orientation. We also recognize that one of the most important events in many of our employees’ lives is the birth or adoption of a child, and our parental leave policy is “take care of your baby and yourself.”\nWe offer benefits through four pillars: physical health, mental health, family and financial. On the right are a few highlights of our offerings:\nFinancial Benefits: We provide employees the opportunity to prepare for their futures through our retirement-savings benefits, which vary by country.", "chunk_word_count": 351, "section_path": "Environmental Social Governance Report 2022 > 276 Students have participated in Pathways Bootcamp > Culture and Engagement", "document_id": "Netflix ESG Report 2022", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 18, "chunk_text": "# Environmental Social Governance Report 2022\n## 276 Students have participated in Pathways Bootcamp\n### Employee Giving Program\nPhilanthropy at Netflix is driven by employees through our Employee Giving Program. Consistent with our culture of freedom and responsibility, we enable employees to donate to causes that are meaningful to them through a 2:1 employee match. When an employee donates to a charitable organization (from over 2 million eligible charitable organizations in 200 countries), Netflix matches that with 2X the donation amount, with an upper limit of $\\$ 20,000$ per employee per year for all donations and matches. This democratizes giving decisions, and incentivizes employees to support causes they’re passionate about.\nIn 2022, we expanded our giving options and ways to get involved. We added a new volunteer match program in which Netflix employees can donate time by volunteering. For every hour an employee volunteers with an eligible cause, Netflix donates $\\$ 50$ to the same cause as part of each employee’s annual match maximum.\nTotal giving as part of the Netflix Employee Giving Program in 2022 was approximately $\\$ 34$ million supporting over 5,000 charities worldwide. Nearly $30 \\%$ of our employees participated in the Employee Giving Program in 2022.\n### Gender Equality in Leading Roles\n### More People of Color in Leading Roles\n### Progress in Film/Series and Productions\nBetter representation on-screen starts with representation behind the camera and in the office. But we know that driving real change in film and TV, not only at Netflix but industry-wide, means continuing to think about whose voices are still missing and discovering the next generation of storytellers.\nIn 2020 to 2021, nearly half of Netflix films and series featured a lead or co-lead from an underrepresented racial/ethnic group.\nMore than half of all Netflix films or series from 2018-2021 featured a girl or woman as the lead or co-lead.\n## USC ANNENBERG INCLUSION REPORT\nWe partner with Dr. Stacy L. Smith and the USC Annenberg Inclusion Initiative to examine several inclusion metrics (e.g., gender, race/ethnicity, LGBTQ+, disability) in our US-commissioned films and series. In 2021, we released our first-ever study and committed to publicly releasing our progress every two years through 2026 to help keep us accountable and effect lasting change in our industry.\n### More Women Behind the Camera\n### Women of Color Behind and In Front of the Camera\nThis April we shared the latest round of research looking at Netflix US films and series from 2020 to 2021. The new findings showed notable gains year-over-year for women and people from underrepresented racial/ethnic groups.\nIn 2021, $2 6 . 9 \\%$ of directors on Netflix films were women, compared to $1 2 . 7 \\%$ across top-grossing films across the industry that same year. And $38 \\%$ of show creators in 2021 were women, substantially higher than $2 6 . 9 \\%$ in 2018.\nWomen of color increased significantly as series directors from $5 . 6 \\%$ in 2018 to $1 1 . 8 \\%$ in 2021, with similar growth for writer and creator roles. Nearly a third of films $( 2 7 . 7 \\% )$ ) and more than half of series $( 5 4 . 7 5 \\% )$ ) in 2021 had women of color as leads/co-leads.", "chunk_word_count": 543, "section_path": "Environmental Social Governance Report 2022 > 276 Students have participated in Pathways Bootcamp > Employee Giving Program", "document_id": "Netflix ESG Report 2022", "page": 43, "page_start": 43, "page_end": 44 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 19, "chunk_text": "# Environmental Social Governance Report 2022\n## FUND FOR CREATIVE EQUITY\nFrom our work with USC, we have learned that more inclusion behind the camera leads to better representation on screen. So in 2021, we established the Netflix Fund for Creative Equity, a commitment of $\\$ 100$ million over five years towards building new opportunities for underrepresented communities within entertainment. Through the fund, Netflix supports external organizations that are committed to creating more equitable opportunities in the TV and film industries, as well as bespoke Netflix programs that help us to identify, train and provide job placement for up-and-coming talent globally.\nIn just two years, we have committed $\\$ 29$ million towards these initiatives, supporting over 4,500 up-and-coming creatives and partnering with more than 80 organizations around the world. We’ve also placed 395 creatives from our programs on Netflix productions in a variety of roles, ranging from line producers and associate editors to casting assistants and grips. Read the latest update on the Fund for Creative Equity here.\nInvested more than $\\$ 29$ million in programs over the past 2 years\nPartnered with over 80 organizations across the globe\nEstablished more than 100 programs in over 35 countries from the United Kingdom to Brazil and Spain to India\nSupported more than 4,500 creatives including directors, producers, writers, visual effects artists and more", "chunk_word_count": 222, "section_path": "Environmental Social Governance Report 2022 > FUND FOR CREATIVE EQUITY", "document_id": "Netflix ESG Report 2022", "page": 45, "page_start": 45, "page_end": 45 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 20, "chunk_text": "# Environmental Social Governance Report 2022\n## PROGRAM AND CREATOR SPOTLIGHTS\nHere are a few highlights of programs and creators we supported in 2022.\n### Paula Garcas Graduate from the Netflix Series Directors Development Program in the US\n### Korede Azeez Winner of the African Folktales, Reimagined Short Film Competition, Nigeria\n“The Netflix Series Directors Development Program helped me pivot my career - the team looked beyond my career as an actor, and saw the potential in me to grow as an artist. The program gave us access to major talent and a front row seat to the inner workings of directing. Thanks to Lauren Iungerich, I directed an episode on two Netflix shows as part of this. Training with Lauren has been invaluable to my career. She gave me all the time, tools and encouragement to truly succeed, while testing me and challenging me to grow along the way. Because of her, I’m prepared to tackle any opportunity that comes my way.”\n“I learned so much from day one. It was the most tasking project I have ever worked on, but it was also the most rewarding. I got to work with some of the best talent in my country, which was an amazing experience. They treated me with so much respect and I am grateful for the immense support I got from Netflix and my mentor. I also learned a lot about how a world class production is managed, and this is definitely something I’ll be taking into future work. I have grown tremendously as a filmmaker and I feel more ready to take on the world.”\n### Mirwais Sarwary Participant in the New Producers Academy Fellowship in the Netherlands\n### Aditi Sharma Graduate of the Netflix x Film Companion Take Ten Initiative, India\n“Through the Take Ten program, I got to learn about writing a screenplay, creating characters, directing actors, along with many other filmmaking lessons. We had the opportunity to do this under the guidance of Film Companion, and being mentored by professionals who are not only good at what they do, but also truly invested in the process of teaching, was extremely helpful. There aren’t any grant opportunities in India to speak of, and to have a platform like Netflix to showcase your film was a huge deal for a first time filmmaker like me. For the first time, me and my team believed that we had a real shot at this.”\n\"Through the NPA masterclasses and networking events, I’ve had the opportunity to meet and discuss ideas with key players in the film industry. Above all, I have had the time, space, and tools to develop my vision as a producer. In a short period of only six months, the New Producers Academy has allowed me to position myself in the Dutch film industry on my terms. What has been most rewarding is to be in a position where I can work together with emerging creators that find my fresh approach as a producer valuable and essential.\"\n### Progress in Partnerships", "chunk_word_count": 507, "section_path": "Environmental Social Governance Report 2022 > PROGRAM AND CREATOR SPOTLIGHTS", "document_id": "Netflix ESG Report 2022", "page": 46, "page_start": 46, "page_end": 46 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 21, "chunk_text": "# Environmental Social Governance Report 2022\n## SUPPLIER DIVERSITY\nWe’re working to ensure that our suppliers and vendors come from a diversity of backgrounds. This helps create jobs and opportunities in communities where we do business for people who’ve often been marginalized historically. In 2022, we spent $\\$ 700$ million with underrepresented suppliers, a $9 \\%$ year-over-year increase.\n## SUPPORTING BLACK BANKS AND FINANCIAL INSTITUTIONS\nIn 2020, we announced that we would plan to allocate $2 \\%$ of our cash holdings — initially up to $\\$ 100$ million — into Black banks and similar financial institutions to help create economic opportunities for Black communities in the US. In 2021, we fulfilled our initial pledge and in 2022, we continued to expand that investment to $2 \\%$ of our cash and short-term investment holdings $\\$ 106$ million has been committed as of December 31, 2022).\n## PARTNER SPOTLIGHTS\nBlack Economic Development Fund\nNetflix’s anchor investment of $\\$ 25$ million has been instrumental in the creation of the Black Economic Development Fund, enabling us to invest in the Black community in a bold way. Without the support of visionary partners like Netflix, this transformative initiative may have never come to fruition. We are deeply grateful for their partnership and look forward to continuing to drive positive change together.\nWith a catalytic seed investment of $\\$ 25$ million, Netflix collaborated with LISC Fund Management (LFM) to create the Black Economic Development Fund (BEDF). The Fund launched in 2020 to address economic challenges in the Black community and to help close the racial wealth gap. Since then, BEDF has grown into a $\\$ 250$ million mission-driven fund investing in Black-led developers, financial institutions, anchor organizations and businesses, with the goal of growing these organizations and strengthening their contributions to the Black community. From inception to the end of 2022, Netflix contributions supported BEDF’s investment of $\\$ 158$ million in black-led transactions: $\\$ 12$ million in deposits to Black-owned banks; $\\$ 18$ million to Black-owned businesses; and $\\$ 128$ million in Black-led real estate developers.\n### Michelle Spivak, Senior Director, LISC Fund Management\n[IMAGE CAPTION] Episode 2\n[IMAGE CAPTION] Episode 3\n[IMAGE CAPTION] Episode 1\nHope Credit Union was one of the first investments in the Netflix commitment to build economic opportunity in Black communities. The investment in HOPE is supporting the financing of more than 2,500 entrepreneurs, homebuyers and consumers of color. To learn more about these investments and their impact, check out the YouTube web series “Banking On Us.”\n### CNote\nAs a women-led B-Corp, we’re delighted to collaborate with Netflix, a leader in promoting racial justice, in our shared goal of reimagining how corporations invest in Communities of Color. Hand in hand, we’re charting a new course for corporate responsibility.\nNetflix leverages CNote’s technology solution to support cash management into diversified deposits targeting social impact. Deposits are deployed with a network of impact-driven depository institutions that support Black, Indigenous, People of Color (BIPOC) and low-to-moderate income communities and individuals, as well as women entrepreneurs.", "chunk_word_count": 502, "section_path": "Environmental Social Governance Report 2022 > PARTNER SPOTLIGHTS > CNote", "document_id": "Netflix ESG Report 2022", "page": 47, "page_start": 47, "page_end": 49 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 22, "chunk_text": "# Environmental Social Governance Report 2022\n## PARTNER SPOTLIGHTS\n### Catherine Berman, CEO of CNote\nRacial Equity and Disability Loans: A Netflix fixed income commitment of $\\$ 16$ million focused on racial equity and disability has supported loans to 7 community development financial institutions (CDFIs) as of the end of 2022. These CDFIs provide funds to support individuals with physical disabilities, those suffering from mental illness, those recently released from incarceration or recovering from substance abuse issues and members of BIPOC communities that have been denied access to capital or services.\nCash Deposits: Netflix has committed $\\$ 6$ million to CNote Impact Cash® funds to be deposited with mission-driven depository institutions (DIs). Investments from Netflix have supported collective lending for over $\\$ 1.9$ billion in auto loans, over $\\$ 4.2$ billion in commercial loans and over $\\$ 1.5$ billion in housing loans.\n### Privacy\n### Responsible Products\nOur service has always been subscription-based, and when members sign up for any plan, we ask for very little information: email, name and method of payment. Our Personal Information Handling Principles ensure our engineering and business teams are aligned on our approach to privacy. Our Privacy Statement provides a detailed explanation of our privacy practices to our members, including: the information Netflix collects or receives from each member; information from our partners; how we use and disclose it (including advertising that we conduct off Netflix to promote our service); and the controls each member has in relation to this information.\nEmpowering people to easily choose and experience films, series and games they love is critical to a member’s joy every time they go to Netflix. We design our products to protect the privacy and security of our members, and to be inclusive and accessible to everyone.\nIn November of 2022, Netflix introduced an ad-supported plan which allows members to enjoy our service at a lower price with limited ads. For those signing up for our ad-supported plan, we also ask for date of birth and gender. Members have the ability to opt-out of the selection of ads based on third party behavioral advertising (i.e., ads selected based on use and/or interactions with unaffiliated third party websites and apps over time). We offer members the ability to exercise such opt-outs through a simple in-service control — and we do not share what individual members watch with advertisers.\n### Information and Cybersecurity", "chunk_word_count": 397, "section_path": "Environmental Social Governance Report 2022 > PARTNER SPOTLIGHTS > Catherine Berman, CEO of CNote", "document_id": "Netflix ESG Report 2022", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 23, "chunk_text": "# Environmental Social Governance Report 2022\n## PARTNER SPOTLIGHTS\n### Government Requests Related to Content\nWe strive to protect sensitive information through various means, including: technical safeguards; procedural requirements and policies; a program of monitoring to detect and address unauthorized modification or misuse; continuous testing of aspects of our security internally and with outside experts; and a robust incident response program.\nWe offer creators the ability to reach audiences all around the world. However, our catalog varies from country to country, including for rights reasons (i.e., we don’t have the rights to every title in every country where we operate). In a few cases, we’ve had to remove specific titles or episodes of titles in specific countries to comply with government demands. Below are the titles we removed in 2022 — three in total. We report these takedowns annually.\nWe regularly assess what areas of vulnerability there are, how we detect issues, how we respond and then how we let people know. We also have a Responsible Vulnerability Disclosure program, launched in 2018, that allows security researchers around the world to find and report security vulnerabilities in Netflix products and systems in exchange for compensation.\nIn August 2022, we complied with a written demand from the Radio and Television Supreme Council (RTUK) in Turkey by removing one episode - episode 9 of Season 5 - of the series Jurassic World Camp Cretaceous in Turkey.\nThe Vice President (VP) of Security, Privacy, Assurance and Corporate Engineering oversees a team of employees dedicated to information security. Cybersecurity is discussed at every audit committee meeting and is also a board-level issue. Our VP regularly attends audit committee meetings and provides updates on cybersecurity matters.\nIn September 2022, we complied with a written demand from the Singapore Infocomm Media Development Authority (IMDA) to remove the series How to Change Your Mind in Singapore.\nIn October 2022, we complied with a written demand from the Ministry of Information and Communication (MIC) in Vietnam and removed the series Little Women in Vietnam.\n### Product Accessibility\nWe believe incredible stories and games should be enjoyed by all of our members, regardless of language, device, connectivity, or ability and that accessibility is just as important as the aesthetics, speed and stability of our service.\nneeds is continually expanding. All Netflix-owned films and series support SDH for the language in which they were originally produced. We have also started expanding SDH and AD to nearly 20 languages, including Spanish, Portuguese, and French. Netflix members can browse titles with English audio descriptions in the gallery on our website, and by selecting “Audio Description” under the Categories menu in our mobile apps. We also introduced new badge icons for our shows and films that have AD and SDH on web, TV, iOS and Android so members can more easily discover stories suited to their needs, eliminating the inconvenient need to play a title first.", "chunk_word_count": 483, "section_path": "Environmental Social Governance Report 2022 > PARTNER SPOTLIGHTS > Government Requests Related to Content", "document_id": "Netflix ESG Report 2022", "page": 51, "page_start": 51, "page_end": 52 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 24, "chunk_text": "# Environmental Social Governance Report 2022\n## MAKING OUR SERVICE MORE ACCESSIBLE\nWe have designed features like assistive listening systems, brightness controls, keyboard shortcuts, screen readers, larger font size and voice commands into our products. We also conduct research with current and prospective members aimed at identifying barriers to perceiving, navigating, and interacting with Netflix, and design solutions to remove those barriers. We take advantage of device-specific assistive technologies (e.g., native features on Apple iOS and Android platforms) as much as possible. We also create our own accessibility options, such as the ability to change the font, size, shadow, and background color of closed captions and subtitles on TV, and adjust playback speed on mobile.\nWe partner with vendors across the globe who are dedicated to working with the blind and low vision community in many different capacities, from hiring blind or low vision narrators, quality controllers and co-author/editors to working with the community and local organizations to gather feedback through focus groups. Guidelines for the creation of AD, timed text style guides, gaming accessibility and minimizing photosensitivity issues – flashes or patterns that could cause ill-effects in our audiences, are also publicly available to share best practices amongst industry peers.\nOur catalog of titles with subtitles for the Deaf and Hard of Hearing (SDH), and audio descriptions (AD) for our members with vision", "chunk_word_count": 224, "section_path": "Environmental Social Governance Report 2022 > MAKING OUR SERVICE MORE ACCESSIBLE", "document_id": "Netflix ESG Report 2022", "page": 52, "page_start": 52, "page_end": 53 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 25, "chunk_text": "# Environmental Social Governance Report 2022\n## MAKING OUR SERVICE MORE ACCESSIBLE\nOver the past year, we kicked off our first tour of barrier free accessible screenings in New Orleans, Los Angeles, London, New York City, and Seoul. Audiences came together to experience the thrill of The Gray Man, Stranger Things S4, and Jung_E in theaters with open AD and SDH.\nThere is more to be done. That’s why Netflix is committed to working with the industry, community and policymakers to deliver more inclusive and accessible entertainment to the world.\n### Governance\nFrom our earliest innovation of DVD-by-mail to becoming one of the world’s leading entertainment services, we’ve managed our business for the long term and focused on pleasing our members. This approach has served our members, employees and shareholders well over the past 25 years.\n### Corporate Governance\nOur corporate governance structure31 was built to find the right balance of rights and responsibilities among shareholders, the board and management, and ensure that there are appropriate checks and balances in place. With the rapid evolution of technology and the changing media landscape, we are continually adjusting our service to meet the needs and desires of our consumers. Our governance structure has been deliberately constructed to help us to do that.\n### Board Composition and Structure\nOur board is composed of 12 highly experienced, talented and qualified directors with experience as board members and executives at some of the world’s most successful companies. We believe that the board is well situated to navigate the changing competitive terrain that Netflix operates within. The board has led Netflix through its evolution from a US-only DVD business to a leading global streaming service and from a licensor of second run content to one of the biggest producers of films and series in the world, while effectively managing risk and overseeing management performance. We believe that a diverse mix of skills, experience, perspectives and backgrounds contribute to an effective board. The composition of our board has evolved over the past several years, and when looking to fill board positions, we will continue to evaluate potential candidates who we believe complement and augment our current board. The Nominating and Governance Committee considers a number of factors, including those depicted below, as well as characteristics such as gender, ethnic or racial background, and national origin when evaluating potential board candidates.", "chunk_word_count": 393, "section_path": "Environmental Social Governance Report 2022 > MAKING OUR SERVICE MORE ACCESSIBLE", "document_id": "Netflix ESG Report 2022", "page": 53, "page_start": 53, "page_end": 55 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 26, "chunk_text": "# Environmental Social Governance Report 2022\n## STRATEGY ALIGNMENT\nOur board has the experience and expertise that aligns with these important facets of our long-term strategy\n### Executive Directors\n### Independent Directors\nReed Hastings Executive Chairman of the Board\nJay C. Hoag Lead Independent Director, Nominating and Governance Committee (Chair)\nTimothy Haley Independent Director, Compens Committee (Chair)\nAnn Mather Independent Director, Audit Committee (Chair)\n### Ted Sarandos\nBrad Smith Independent Director, Nominating and Governance Committee\nRichard Barton Independent Director, Audit Committee\nAnne Sweeney Independent Director, Compensation Committee\nco-Chief Executive Officer and President of the Company and Director\n### Greg Peters\nStrive Masiyiwa Independent Director, Nominating and Governance Committee\nMathias Döpfner Independent Director, Compensation Committee\nLeslie Kilgore Independent Director, Audit Committee\nco-Chief Executive Officer Company and Director\nAs of the end of 2022, women made up $33 \\%$ of our independent directors and $2 7 \\%$ of our overall board. One independent director comes from a historically excluded ethnic and/or racial background. We maintain our current board diversity matrix on our investor relations website32 .\n### Board Oversight\n## THE BOARD\nThe board’s role in our risk oversight process includes reviewing and discussing with members of management areas of material risk to the company, including overall enterprise, strategic, operational, financial and legal risks. The board oversees the company’s ESG efforts, which includes human capital management, inclusion, diversity, sustainability and other matters. The board also oversees succession planning. The board receives regular updates from management typically in the form of an interactive memo, where directors ask questions to management, and further discuss matters at meetings. Each of the committees oversee various ESG matters, depending on the specific issues. Committees report to the full board regarding their respective considerations and actions.\nThe board as a whole oversees matters related to enterprise, strategic, operational, financial and legal risk and the company’s ESG efforts.\n## NOMINATING AND GOVERNANCE COMMITTEE\n## AUDIT COMMITTEE\n## COMPENSATION COMMITTEE\nOversees matters of financial and legal risk, including cybersecurity risk\nOversees risks related to compensation issues\nPrimary committee responsible for board structure, governance and director independence, as well as assisting the board in overseeing ESG matters\n## COMPANY MANAGEMENT\nThe executive team, led by our co-Chief Executive Officers, supervises day-to-day risk management processes, including identifying, assessing, monitoring, managing and mitigating significant business risks. Company management reports to the board on an annual basis, or more frequently if needed, top areas of risk.", "chunk_word_count": 402, "section_path": "Environmental Social Governance Report 2022 > STRATEGY ALIGNMENT", "document_id": "Netflix ESG Report 2022", "page": 55, "page_start": 55, "page_end": 57 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 27, "chunk_text": "# Environmental Social Governance Report 2022\n## COMPANY MANAGEMENT\n### Governance Structure\nOne share, one vote: We have a single class of shares with each share entitled to one vote.\nStreaming is now an established business, Netflix is self-funding and expects sustained positive free cash flow, and we’ve substantially scaled our revenues, operating profit and margins. As such, we have recently evolved to a more standard large-cap governance structure. At our 2022 annual meeting, the Netflix Board proposed and stockholders approved significant changes to our corporate governance structure. We implemented a phased-in declassification of our board, with directors elected at this year’s annual meeting serving one-year terms and the entire board standing for annual elections beginning in 2025 and beyond. We also eliminated supermajority voting provisions in our Amended and Restated Articles of Incorporation (the “Charter”) and our Amended and Restated Bylaws (the “Bylaws”), provided shareholders with the ability to call special meetings, and adopted a majority voting standard in uncontested director elections. We also adopted a market standard director resignation policy. Here is a summary of our corporate governance best practices and stockholder rights:\nMajority voting standard: We have a majority voting standard in uncontested director elections. Any incumbent director who fails to receive a majority of votes cast in an uncontested election must tender their resignation to the board. The Nominating and Governance Committee would then make a recommendation to the board about whether to accept or reject the resignation or take other action.\nAnnual director elections (fully declassified by 2025): We have phased-in the declassification of our board with directors elected at this year’s annual meeting serving one-year terms and the entire board standing for annual elections beginning in 2025 and beyond.\nElimination of supermajority voting: We eliminated supermajority voting provisions in our Charter and Bylaws.\nProxy Access: A group of up to 20 stockholders, owning at least $3 \\%$ of shares continuously for at least three years may nominate up to two directors or $20 \\%$ of the Board (whichever is greater) for inclusion in our proxy statement.\nStockholder right to call a special meeting: Stockholders holding a not less than $20 \\%$ net-long position in the Company continuously for at least one year may call a special meeting.", "chunk_word_count": 373, "section_path": "Environmental Social Governance Report 2022 > COMPANY MANAGEMENT > Governance Structure", "document_id": "Netflix ESG Report 2022", "page": 58, "page_start": 58, "page_end": 58 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 28, "chunk_text": "# Environmental Social Governance Report 2022\n## COMPANY MANAGEMENT\n### Shareholder Engagement\nWe strive to stay in tune with our ownership base. Our board and our management team engage directly and regularly with our shareholders, and our board and its committees consider shareholders’ feedback in assessing our governance structure, including our compensation program. Since our 2022 annual meeting, we have invited 26 shareholders, representing approximately $57 \\%$ of our shares outstanding to participate in calls to discuss our executive compensation program and other matters that are top of mind33. We conducted two rounds of investor outreach – one in the summer of 2022 and one in early 2023, to ensure we fully understood shareholder feedback, concerns and perspectives. Members of the Netflix legal and investor relations teams met with 19 shareholders, representing approximately $51 \\%$ of our shares outstanding. Independent directors of the board participated in a majority of these engagements, meeting with shareholders representing approximately $45 \\%$ of our shares outstanding. We also engaged with the proxy advisory firms, Glass Lewis and Institutional Shareholder Services (ISS). These engagements provide a direct opportunity to exchange information and perspectives, and the input from our shareholders will continue to inform our ongoing ESG programs as we evolve and grow.\n### Enterprise Risk\n### IP Protection & Data Piracy\nWe review enterprise risks on an ongoing basis and seek ways of managing risk to help create, preserve and realize value for our members and shareholders. Our approach to enterprise risk management (ERM) is consistent with the COSO framework which defines ERM as “the culture, capabilities, and practices, integrated with strategy-setting and performance, that organizations rely on to manage risk in creating, preserving, and realizing value”. On an annual basis, our Internal Audit team facilitates an enterprise risk assessment. We gather insights from a number of internal and external sources, including discussions with executives for their views on enterprise risks that the company is facing and compile an inventory of risks across the business. The findings of this assessment, including mitigation approaches, are presented to the board for their input and oversight. We also report these risks in our annual report.34\nWe regard our trademarks, service marks, copyrights, patents, domain names, trade dress, trade secrets, proprietary technologies and similar intellectual property as important to our success. We use a combination of patent, trademark, copyright, trade secret laws and confidentiality agreements to protect our proprietary intellectual property. We employ a variety of methods to monitor potential infringement of our intellectual property, including searches conducted internally and by external vendors. A particular focus is preventing uses of our intellectual property that may lead to consumer fraud.", "chunk_word_count": 440, "section_path": "Environmental Social Governance Report 2022 > COMPANY MANAGEMENT > Shareholder Engagement", "document_id": "Netflix ESG Report 2022", "page": 59, "page_start": 59, "page_end": 60 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 29, "chunk_text": "# Environmental Social Governance Report 2022\n## COMPANY MANAGEMENT\n### Ethics and Compliance\nWe are committed to managing our business ethically and with integrity. Our Code of Ethics sets out our expectations for conduct among our employees and board members. We encourage reporting of breaches of our code or any unethical or inappropriate conduct to our Chief Legal Officer or, in the case of misconduct by a senior financial officer, to the Chair of our Audit Committee. We also provide access to a third-party operated service where reports of misconduct can be made confidentially and, if desired, anonymously, 24 hours a day, seven days a week, 365 days a year in local languages. Reports made through this service are elevated and investigated until they are resolved, and updates are provided annually to the Audit Committee.\nOur Global Anti-Corruption Policy requires our employees and contractors to abide by global anti-corruption and anti-bribery laws. We provide regular training on compliance with this policy, in addition to conducting regular and ongoing risk assessments. A copy of our practices and policies, which includes the Global Anti-Corruption Policy and Code of Ethics, has been translated into numerous languages and remains available to all employees throughout their employment with us.\nOther areas of focus include commitments to compliance with applicable government mandated sanctions regimes (with leadership provided by a designated Sanctions Compliance Officer) as well as compliance with human rights legislation (e.g., the UK Modern Slavery $\\mathsf { A c t } ^ { 3 5 }$ ).\nAs part of our commitment to managing our business ethically and with integrity, we seek to identify and mitigate risks that could lead to potential legal and/or regulatory violations through an annual compliance risk assessment process.\nAppendix", "chunk_word_count": 289, "section_path": "Environmental Social Governance Report 2022 > COMPANY MANAGEMENT > Ethics and Compliance", "document_id": "Netflix ESG Report 2022", "page": 61, "page_start": 61, "page_end": 62 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 30, "chunk_text": "# Environmental Social Governance Report 2022\n## COMPANY MANAGEMENT\n### About This Report\nThis report covers the calendar year 2022 and all data included in the report is from that time period unless otherwise noted. Refer to data tables in this appendix for a summary of ESG data for 2022 as well as published data from previous years. This report is also reflective of global Netflix operations unless otherwise noted. This report is informed by external ESG reporting frameworks including the Sustainability Accounting and Standard Board (SASB) “Internet Media & Services” and “Media & Entertainment” standards, as well as the Task Force on Climate-related Financial Disclosures (TCFD). SASB and TCFD indices are provided in this appendix.\nThese forward-looking statements are subject to risks and uncertainties that could cause actual results and events to differ, including any failure to meet stated ESG goals and commitments, and execute our strategies in the time frame expected or at all, as a result of many factors, including changing government regulations or stakeholder expectations, and our expansion into new products, services, technologies, and geographic regions.\nMore information on risks, uncertainties, and other potential factors that could affect our business and performance is included in our filings with the SEC, including in Item 1A: “Risk Factors” section of the company’s most recently filed periodic reports on Form 10-K, Form 10-Q and subsequent filings. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to revise or publicly release any revision to any such forward-looking statement, except as may otherwise be required by law.\n## FORWARD-LOOKING STATEMENTS\nThe information covered by the report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not limited to, statements regarding our ESG programs, activities, plans, policies, goals, targets, objectives, commitments, projections, expectations and strategies that are not historical in nature.\n## ESG DATA TABLE\n## NETFLIX\n### Social\n### Social (continued)\n### Governance5\n## SASB INDEX\n### SASB INDEX (continued)\nIntroduction Environment Social Governance Appendix About This Report ESG Data Tables SASB Index TCFD Index Resources GHG Inventory Methodology Carbon Credit Project Screening Criteria\n## TCFD INDEX\nIntroduction Environment Social Governance Appendix About This Report ESG Data Tables SASB Index TCFD Index Resources GHG Inventory Methodology Carbon Credit Project Screening Criteria\n### Resources\n## ESG REPORT ARCHIVE\nEnvironmental Social Governance Report 2021 \nEnvironmental Social Governance Report 2020 \nEnvironmental Social Governance Report 2019", "chunk_word_count": 413, "section_path": "Environmental Social Governance Report 2022 > COMPANY MANAGEMENT > About This Report", "document_id": "Netflix ESG Report 2022", "page": 63, "page_start": 63, "page_end": 72 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 31, "chunk_text": "# Environmental Social Governance Report 2022\n## ENVIRONMENT\nAbout Netflix - Sustainability \nOur Progress on Sustainability: Two Years In \nWhat the Latest Research on Streaming Emissions Tells Us \nGeneral Motors and Netflix Partner to Give EVs the Stage they Deserve \nFlip the Script on Sustainability Storytelling \nEarth Month Collection Celebrates Our Planet and Its Heroes \nCarbon Impact of Video Streaming \n2022 Greenhouse Gas Emissions Inventory Assurance Letter \nAbout Netflix - Inclusion \n2022 Inclusion Report Update \nNetflix Fund for Creative Equity l 2023 Update \nInclusion in Netflix Original Films & Series - Executive Summary \nInclusion in Netflix Film & Series - Full Report \nNetflix EEO-1 Reports \nPolitical Activity Disclosures \n2023 Proxy Statement \nNetflix Approach to Corporate Governance l Study by Stanford Graduate \nSchool of Business Corporate Governance Research Initiative \nNetflix Governance Documents \nLeadership & Directors\nNetflix’s greenhouse gas (GHG) emissions reporting is consistent with the “operational control” approach as set out by the GHG Protocol Corporate Accounting and Reporting Standard: Revised Edition. The organizational and operational boundary applies to the global company including its subsidiaries, the office and studio facilities we own and operate (e.g., Albuquerque Studios) as well as facilities we lease from others but over which we have meaningful operational control (e.g., corporate and studio offices and stages).\n### Greenhouse Gas Emissions (GHG) Inventory Methodology\nNetflix reports its emissions following the World Resources Institute (WRI) / World Business Council for Sustainable Development’s (WBCSD) Greenhouse Gas Protocol Corporate Standard, as amended by the GHG Protocol Scope 2 Guidance, as well as WRI / WBCSD’s Greenhouse Gas Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard and Technical Guidance for Calculating Scope 3 Emissions (collectively, the GHG Protocol). Netflix GHG emissions reporting follows the operational control approach set out by the GHGP.", "chunk_word_count": 292, "section_path": "Environmental Social Governance Report 2022 > ENVIRONMENT", "document_id": "Netflix ESG Report 2022", "page": 72, "page_start": 72, "page_end": 73 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 32, "chunk_text": "# Environmental Social Governance Report 2022\n## OUR FOOTPRINT BOUNDARY\nScope 1 and 2: Our emissions include all Scope 1 (direct) and Scope 2 (indirect emissions) from the following: our corporate operations (offices, etc); the production of our films, series and games; and the storage and delivery of our content. Scope 2 emissions are calculated using market-based and location-based emissions accounting methods defined by the GHG Protocol Scope 2 Guidance. Location-based estimates are calculated based on the emissions intensity of the locations where the electricity consumption occurs. The market-based method incorporates electricity procurement decisions that are chosen within the local electricity market, including zero-carbon electricity supply from utilities (i.e., opt-in “green tariff” rates) and contractual instruments such as renewable energy certificates (RECs).\nOur reported emissions account for all GHGs covered by the UNFCCC Kyoto Protocol (Annex A) relevant to Netflix activities and are converted into metric tons of carbon dioxide equivalents (MTCO2e) as specified by the GHG Protocol. All emission factors are applied to the data and updated annually to reflect the latest guidance and factors published by US EPA Emission Factors for Greenhouse Gas Inventories (2022), US EPA eGRID2021 Electricity Grid Emission Factors (2023) and UK DEFRA Greenhouse Gas Reporting Conversion Factors (2022). Additionally, where data is not available or of sufficient quality, Netflix uses proxy data, industry-average figures, or expert assumptions. In such instances, we use third-party sources for reliability and completeness.\nSome of these data sets such as the average building energy use intensity values from the DOE Commercial Building Energy Consumption Survey (2016), are held constant to maintain consistency across years.\nWe include all Netflix-branded content productions, whether we manage the production directly (like The Sea Beast, Spirit Rangers, Don’t Look Up, Our Great National Parks), or through a third-party production company (like Glass Onion: A Knives Out Mystery, The Elephant Whisperers) as well as all content that we license that is Netflix-branded (like Octonauts: Above and Beyond, Captain Nova, Down to Earth with Zac Efron). Activities outside of our operational control present challenges to measuring and reducing emissions, but because so much of production infrastructure, crew and equipment are shared across studios, we believe that holding ourselves accountable for all emissions from Netflix-branded content (wherever it is produced) will create a positive ripple effect across our own emissions as well as the entire industry.\nWe also use a target-based emissions accounting method relative to our science $=$ based targets, which is custom to Netflix. Target-based emissions incorporate direct renewable energy supply (e.g., onsite generation, utility $\\&$ landlord supply, power purchase agreements or direct investments) but do not account for emissions from contractual instruments such as renewable energy certificates (RECs).\nScope 3: Netflix also estimates and reports relevant Scope 3 categories, which therefore includes activities outside of our operational control. Our Scope 3 boundary was established in alignment with the GHG Protocol Corporate and Scope 3 Standards. Netflix includes all relevant and material sources of emissions including categories 1-4, 6-8 and 11. In the future, we aim to include category 5 (emissions related to waste in operations) by improving our direct data collection. For now, most estimated waste-related emissions in our footprint are captured in category 1 (purchased goods & services) using spend-based estimates on facilities management and production operations.", "chunk_word_count": 544, "section_path": "Environmental Social Governance Report 2022 > OUR FOOTPRINT BOUNDARY", "document_id": "Netflix ESG Report 2022", "page": 73, "page_start": 73, "page_end": 74 }, { "report": "Netflix ESG Report 2022.pdf", "chunk_idx": 33, "chunk_text": "# Environmental Social Governance Report 2022\n## OUR FOOTPRINT BOUNDARY\n### Data Management\nWe maintain a Greenhouse Gas Inventory Management plan to ensure consistency of calculating and estimating emissions from year to year, and to provide to our 3rd party assurance providers as a basis for their audit of our emissions. We maintain documentation as evidence to support our emissions inventory and follow Netflix retention policies for these records. In 2022, we began implementing a carbon accounting software solution to help streamline and mature our data collection processes, and to help maintain related documentation.\nScope 3 emissions use location-based emissions factors except where individual suppliers provided supplier specific emissions that are market-based (e.g., AWS) or through application of RECs to Scope 3 emissions where information on the specific energy consumption by location was available (e.g., for the Open Connect network) in order to match the contractual instrument to known energy consumption in accordance with GHG Protocol Scope 2 Guidance. Netflix works with individual suppliers, wherever possible, to determine that any renewable contractual instruments applied to their emissions are appropriately attributed.\n### Carbon Credit Project Screening Criteria\n### Screen 1: Competitive selection\ndeeper understanding of the unique circumstances and conditions that surround a particular carbon credit project and how and why it came to be. We also conduct additional screens for: local community ownership and direct benefit sharing; job creation and training; women and girls empowerment; biodiversity and habitat restoration and protection (e.g., Verra Climate, Community & Biodiversity certified projects); and climate resilience impacts.\nOur competitive requests for proposals (RFPs) are issued widely, to over 75 project developers, non-profits, brokers and credit retailers across many project types and geographies.\n### Screen 2: Meet core quality criteria\nAny credits that we purchase must meet globally recognized core quality criteria: they must be additional, verified, based on a realistic baseline, not double counted and issued by a credible standard that has robust provisions in place to address permanence (the risk of reversal) and leakage (the risk of displacing emissions from one location to another). We only purchase credits that have been third-party verified and registered on a trusted registry, including – Verra, Gold Standard, Climate Action Reserve and American Carbon Registry – or have demonstrated an equivalent level of rigor.\n### Screen 4: Use digital tools and resources to improve visibility\nWhere feasible, we use technology to enhance project validation and verification, such as AI-powered satellite imagery, machine learning and remote sensing analysis.\n### Screen 5: Seek additional expert advice\nNetflix relies on its expert advisory group to provide additional insight and guidance on an ongoing basis across a range of key issues, including our carbon credit portfolio. This helps us identify things we may have missed.\n### Screen 3: Deep project- level diligence and impact screening\nOur team then conducts due diligence on the projects and holds live interviews directly with the project developers and/or trusted project partners. This includes research on the projects, their proponents and other local stakeholders. Engaging directly with the project hosts enables a\nN", "chunk_word_count": 507, "section_path": "Environmental Social Governance Report 2022 > OUR FOOTPRINT BOUNDARY > Data Management", "document_id": "Netflix ESG Report 2022", "page": 74, "page_start": 74, "page_end": 76 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 0, "chunk_text": "# K N D\n## Sustainability Report\nSeptember 2023\nForeword 3\nExecutive Summary 4\nIntroduction 7\nPillar 1 - Responsible Business 9\nPillar 2 - Responsible & Circular Product 18\nPillar 3 - Inclusive Culture 24\nPillar 4 - Positive Local Impact 31\nGovernance 37\nAppendices 39\nSustainability Accounting Standards Board Disclosure (SASB) 43\n## Foreword\nThis has resulted in a reduction in surplus product and waste, supporting both improved profitability and lower environmental impact activities.\nI am passionate about ensuring that our ‘Kind to our Core’ strategy plays an increasingly important role in all of our business decisions.\nI am particularly proud to report that we have submitted our Science Based Targets for approval, which is expected in late October. Our teams across the business also successfully raised £936,000 for our charity partners, including over £550,000 for regional charity partners and Dougie Mac near our distribution centre.\nWe recognise the urgency of addressing climate change and are focused on achieving our target of being climate positive 1 by 2040, aligning with international, UK, and industry targets.\nOur purpose is to “Inspire That New Look Feeling”, and we know that the only way to achieve this is by making clothes that look good but also feel good, and creating lower impact fashion is key to this.\nLooking ahead, we have a number of plans in place to help us achieve our near-term targets, including how we use data to improve our traceability. We also welcome the new regulations planned, particularly on climate-related financial disclosures, which will hold our sector accountable and ensure customers can make informed choices.\nOver the last year, the retail industry has faced ongoing external challenges including a high inflationary environment. Despite these challenges, we continued to progress our sustainability agenda and remain on target with our materials pledges, though we acknowledge that there are areas where we need to speed up our progress.\nWhile we are pleased with our progress over the last year, we remain laser-focused on maintaining our progress and delivering towards our sustainability goals.\nAs part of our omnichannel focus, and in line with our sustainability strategy, we are now operating with a tighter stock model and improved distribution efficiencies.\n## Helen Connolly, CEO\n## Executive Summary\nIn FY23 we have primarily focused our efforts on Carbon, Transparency, Inclusion and Circularity initiatives across our four key pillars of responsible business, responsible and circular product, inclusive culture, and positive local impact. As ever, we’re accountable to our customers and our staff, so are glad to be providing this update on our sustainability progress.\nWe’re proud of the progress made in the past year, particularly in setting our Science Based Targets, but know there will always be more for us to do.", "chunk_word_count": 457, "section_path": "K N D > Sustainability Report", "document_id": "New Look sustainability report", "page": 1, "page_start": 1, "page_end": 4 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 1, "chunk_text": "# K N D\n## Responsible Business\nе We have improved the quality of data for our carbon emissions in preparation for SBT submission and are now working to ensure detailed data is available for all products е Our scope 1 and 2 emissions have reduced by $1 8 \\% ,$ while our scope 3 emissions have reduced by $2 2 \\%$\nA significant milestone for us this year was the submission of our Science Based Targets (SBTs) in February 2023, which was only possible thanks to business-wide engagement and input. We are now awaiting approval and should have confirmation in October. We’re excited to begin this process, which will be driven and owned by New Look’s senior leadership team. This team will also have ownership of our decarbonisation roadmap, which we are currently finalising.\nе This year we have achieved ‘progressive level’ with the Sustainable Apparel Coalition (SAC), one year earlier than expected:\nOur overall environmental score increased from $4 0 . 4 \\%$ to $5 6 . 3 \\%$ and our social score increased from $5 6 . 4 \\%$ to $6 6 . 6 \\%$ 2\nThis past year has also seen us significantly strengthen our sustainability strategy with better data, allowing us to create a more detailed road map to drive action. We’ve also been busy listening to stakeholders and engaging with policy makers, regulators, and circularity innovators, allowing us to gather new perspectives that have since informed our decision making.\nA further 27% increase in adoption of Higg FEM: $58 \\%$ of our tier 1 facilities $7 4 \\%$ of production) and $36 \\%$ of our lower tiered facilities $3 0 \\%$ of production) completed the FEM module\nе We initiated multiple projects to support an enhanced Human Rights Due Diligence approach to our social sustainability ambitions including a project with GoodWeave in Bangladesh and a ongoing project with the International Transport Workers Federation (ITF).\nWe also recognise the need for transparency and traceability as we progress our sustainability strategy, which is why we’re working hard to acquire as much data as possible. Transparency, particularly on a product level, is also something that we know our customers and our regulators expect from us.\n## Responsible & Circular Product", "chunk_word_count": 373, "section_path": "K N D > Responsible Business", "document_id": "New Look sustainability report", "page": 4, "page_start": 4, "page_end": 5 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 2, "chunk_text": "# K N D\n## Inclusive Culture\nе Switching to more lower impact materials has reduced our footprint. Clothing with lower impact attributes increased from $53 \\%$ to $63 \\%$ and footwear and accessories products from $20 \\%$ to $3 5 \\%$\nе Our visibility of colleague demographic data has grown from $2 4 \\%$ to $80 \\%$\nе Inclusion and Wellbeing Ally Groups have been created with over 100 team members across the business now involved. These Ally Groups include our PRIDE (LGBTQIA $^ +$ ), Cultural Awareness (Faith and Ethnicity), Accessibility, Men’s Health, Women’s Health, Good Vibes Clubs, and our Wellbeing Allies е Our Retail Junior Leadership Team continue to influence decision making across our Retail Estate, and we will also be building a cross-functional reverse mentoring group by the end of this financial year\nе We have now achieved $100 \\%$ lower impact cotton through investing in Better Cotton. Relatedly, we have also started a REEL cotton programme in India with CottonConnect, with an expected yield of 185 metric tonnes, allowing traceability right through to farm е We continue to test and learn on all aspects of the circular economy: durability, recyclability, reuse, and repair, including through cross sector collaboration projects such as Automatic-sorting for Circular Textiles Demonstrator and Leeds Institute of Textiles and Colour (LITAC) durability project\nе $85 \\%$ of New Look colleagues say they feel comfortable being themselves at work, and are working to make this $100 \\%$\nе We were proud to be recognised as a Leader in Diversity 2023 by The Financial Times and Statista\nе We have embraced the increased regulation on packaging, through supply chain engagement and the development of enhanced data ingestion tools from our suppliers. This sets us up to accurately report, and meet upcoming legislation\nе We achieved our FY23 target to have fully transparent policies and procedures. These are available to all our colleagues through our online support hub, and as part of our Group Policy Governance Board, all policies are now reviewed through an Inclusion lens as standard\nе We have introduced a tightened stock model within the business, to reduce the size of the buy and therefore reduce surplus inventory е In November 2022, New Look worked with Compare Ethics to pilot the way in which transparent supply data could be verified and communicated at scale across 600 products online. Lessons learnt during this pilot are now informing our future data architecture and communication plans\nе Inclusive culture continues to shape our service promise , our loyalty programme and planning for our Store of the Future programme and the enhancement of our digital platforms\nе Leading up to Christmas, we teamed up with 53% of our clothingour charity partner Tree-Nation to create an eGift Card which planted a tree in the New Look Forest for every card bought. 5,400 trees were planted, and we were awarded Biggest Industry Contribution at the Blackhawk summit.\nе We are continuing to support The Retail FY22 with sustainable attribuTrust, acknowledging the support, tools, and resources they produce and how our staff benefit from their services\nе We are increasing our dialogue with landlords, identifying those with net zero targets to focus on decarbonisation opportunities within our store estate", "chunk_word_count": 540, "section_path": "K N D > Inclusive Culture", "document_id": "New Look sustainability report", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 3, "chunk_text": "# K N D\n## Positive Local Impact\nе Following the success of our size extension collections, we now offer $8 5 \\%$ of New Look’s core clothing to a size 22, equating to $5 \\%$ of our sales\nе Our customers told us that they want us to ‘show’ representation, so we are consciously selecting models and influencers that of our clothing in 2018 had sustarepresent our customers, and we are trialling size inclusive mannequins\nе We raised £936,000 for our charity partners, over half of which was raised for regional charities, chosen by our retail teams and aligned to our Kind values\n100% lower impact cotton by 2022\n100% lower impact viscose by 2023\n50% recycled synthetics by 2024", "chunk_word_count": 121, "section_path": "K N D > Positive Local Impact", "document_id": "New Look sustainability report", "page": 6, "page_start": 6, "page_end": 6 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 4, "chunk_text": "# K N D\n## Introduction\nNew Look’s sustainability strategy is all about caring for the planet and people, while still providing our customers with high-quality, good value fashion. We know we have a responsibility to the people involved in making our products and running our business.\nTransparency also plays a major role in our Human Rights Due Diligence approach, which we have been developing alongside suppliers and external partners. Through greater transparency of our value chain, we can comprehensively assess our risks and take a proactive approach, both of which are key requirements of Human Rights Due Diligence (HRDD) and align to the Unite Nations Guiding Principles (UNGPs).\nTo support our goal of being a more customer-led business, as well as using improved data to support our decision making, we conducted comprehensive research and worked closely with our community. We commissioned sustainability insights to best understand what is important and relevant to our customer, allowing us to prioritise our direction and communication approach.\nWe want to be part of a circular business model that’s good for the environment. We are ensuring that we are collaborating with the industry, actively engaging with the British Fashion Council, the Institute of Positive Change, UKFT, Textiles 2030, and more to drive the circularity agenda within the UK, which needs to be supported by strong policy and funding. We have also continued to test and learn on take-back schemes and circular business models.\nWe have developed a decarbonisation roadmap with stakeholders across the business and external support. With $62 \\%$ of our total carbon emissions coming from the manufacturing of our products, we know we need to lay the foundations within our supply chain for long-term impact reduction. As such, we are investing in traceability systems, which will allow us to understand our value chains in even greater detail. By also incorporating data gathered through other systems such as Sedex, Higg and ZDHC, we can identify hotspots and make strategic decisions while integrating just transition thinking. In addition, the increased regulatory requirements in the US, UK and Europe are also requiring more detailed information at product level to empower consumers and create positive change.\nOur strategy has developed over the course of the year through a mix of gaining greater knowledge of our impacts, regulatory change, and external pressures which we have not been able to predict or mitigate. This has meant some of our targets have been revised to reflect our new direction or have been extended to accommodate current trading conditions. These changes are discussed in this report and amends / new targets will be amended in the Strategy Refresh document, as they are established. To be reported against in future reports.\n## Kind to our Core: Sustainability Vision, Principles and Priorities", "chunk_word_count": 460, "section_path": "K N D > Introduction", "document_id": "New Look sustainability report", "page": 7, "page_start": 7, "page_end": 8 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 5, "chunk_text": "# K N D\n## Our Key Priorities\nOur key priorities have been developed by assessing our values, our materiality, accepting our role in helping our industry reduce its overall impact and our ability to influence.\nAs a fashion brand we understand more than ever, the social and environmental impacts across our business, our value chain and our products. We have refreshed our strategy in line with latest developments, being bold where we feel we can be, being mindful of who we serve, and making sure our actions are transparent, universally understood and that everyone is included.\nEmbed ‘Kind to Our Core’ principles across our value chain and product е Be climate-positive by 2040\nHave our GHG-reduction targets approved by the Science Based Targets initiative and roadmap aligned to TCFD methodology\nDeliver fair wages and safe working conditions for everyone\n## Our Sustainability Principles\nOur sustainability principles were borne out of our company values and culture.\nIncrease transparency and provide comparable data by SASB reporting\nWe respect human rights\nRecognise and address the needs of the communities we serve\nWe prioritise equity and inclusivity\nEnsure inclusivity runs through everything we do\nWe have a positive impact on our local communities\nе We are reducing our climate change impact\nWe deliver ‘Kinder’ products\nWe embrace circularity\n## Pillar 1 Responsible Business\n## Overarching Aim\nTo prioritise our people and our environmental impacts and do so with growing transparency.\n## Key Impacts\nEnvironmental: \nAir Pollution \nEnergy \nGHG \nHazardous waste \nMarine impacts \nSoil health \nWaste Management \nWater quality \nWater use \nMarine impacts \nSocial: \nHuman Rights risk \nWorking Conditions \nWages \nWorker Voice \nGender equity \nModern slavery\n## Pillar 1: Responsible BusinessT\nIn an era where the fashion industry has a profound impact on the environment and society, it has become increasingly crucial to adopt more sustainable practices that mitigate the impacts of fashion. Within our Responsible Business pillar, we have set targets across both people and planet, demonstrating our commitment to improving the lives of everyone in our value chain and lowering our environmental impact.\n## Agency workers and Vulnerable Groups\nIn 2022, we put in place enhanced data requests as part of our factory registration process, including worker demographics such as gender, agency workers, migrant workers etc. This, paired with overall visibility through social audit data – linked to the factories we work withPillar 1 Responsible Business on the Sedex platform – has allowed us to build a more comprehensive picture of worker profiles and how they vary by country.\n## Transparency", "chunk_word_count": 419, "section_path": "K N D > Our Key Priorities", "document_id": "New Look sustainability report", "page": 8, "page_start": 8, "page_end": 10 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 6, "chunk_text": "# K N D\n## Value Chain\nWe have continued to engage with our value chain, mapping the lower tiered sites that make our clothes. We have increased visibility to Tier 2 from $70 \\%$ to $87 \\%$ and Tier 3 from $65 \\%$ to $78 \\%$ . We have also driven the adoption of Higg FEM within our Tier 1 and 2s with now over $5 2 \\% ^ { 3 }$ providing environmental data4 (within the latest full reporting cycle). Through collaborative work across teams and working closely with our key suppliers, we have achieved nearly full visibility of our cotton, viscose, and synthetics supply chains down to Tier 3.\nAs shown in the below table, $58 \\%$ of our Tier 1 facilities $( 7 4 \\%$ of production) and $36 \\%$ of our lower tiered facilities ( $30 \\%$ of production) completed the FEM module.\nBased on our current audit data, we have observed that within our value chain $9 7 \\%$ of workers are permanent, $2 \\%$ are temporary and $1 \\%$ are agency workers. We are leveraging this data to refine our risk framework, applying it across different tiers and product areas to prioritise our efforts. This process will continue into the new financial year, to support a more targeted approach that’s focused on specific risks and considerations where vulnerable groups have been identified.\nSupply chain transparency and traceability continue to grow as a priority within the industry, providing an opportunity for greater impact as visibility goes from a previous unknown to an expected norm. We understand that our current mapping methodology has limitations, and that purchase order level data is required. As such this year, New Look has been exploring the many opportunities within the market to support this challenge. Internally we have invested in IT systems to support regulatory data requirements in the short term, and at the time of publishing, have now committed to a full traceability solution.", "chunk_word_count": 326, "section_path": "K N D > Value Chain", "document_id": "New Look sustainability report", "page": 10, "page_start": 10, "page_end": 11 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 7, "chunk_text": "# K N D\n## THE HIGG INDEX\n### 3rd Party Brands\nis a suite of tools used widely by the apparel and footwear sector to standardise the measurement of value chain sustainability.\nAfter hitting our 2021 target on improving engagement and support for concession brands on transparency (through collecting Tier 1 information), in 2022 we have focused on streamlining processes. Currently, we have 72 active third-party brands and concessions, which has increased by $64 \\%$ from April 2022 – driven by a shift in our trading strategy.\n### SAC and Higg\nWe have been a member of the Sustainable Apparel Coalition (SAC) since 2019. The SAC is committed to creating collective action efforts that enable positive social and environmental impact at scale. New Look achieved the Progressive Level for the SAC Membership Requirements for 2022 – a year earlier than projected. The SAC membership requirements provide a roadmap for members to advance through four levels: foundational, progressive, strategic, and leader. New Look is motivated to continue our journey with the SAC, to improve sustainability performance and achieve increased environmental and social transparency within our value chain.\nOver one third of these brands have shared their Tier 1 site lists this year, and we will continue to increase this transparency over the coming financial year. Working across the brands, operations, and sustainability teams, we are taking a more proactive approach to gather more valuable data, support our goals, and capacity build where needed.\nWe have continued to use Self-Assessment Questionnaires (SAQs) to gather visibility on how brands manage their supply chains and mitigate risk. Our current focus is on providing enhanced due diligence and guidance to third-party brands and concessions. This effort will continue as a priority in the coming financial year, especially as certain brands grow within our business. We aim to encourage brands with limited supply chain engagement to adopt a more risk-based and action-oriented approach with their factories, even if they have longstanding relationships. This is part of our broader concessions plan.\n## BRM\nWe completed the Higg Brand Retail Module (BRM) 5 again this year, verifying our scores through a third party for the second time. We increased our scores across all lifecycle stages with our overall environmental score increasing from $4 0 . 4 \\%$ to $5 6 . 3 \\% ,$ and our social score increasing from $5 6 . 4 \\%$ to $6 6 . 6 \\%$ . This year we will again complete the BRM, however, as there have been significant updates, there will be no verification available and therefore we are not able to report against scores next year.\nFEM\nIn 2022, we continued to assess the environmental performance of our facilities using the Higg Facility Environmental Module (FEM). We have seen a $2 7 \\%$ increase in adoption of the FEM within the 2021 cycle (the latest full reporting period), compared to the previous (2020) cycle.\nIn 2022, we used the Critical Risk chart (within the Higg analysis tool), to identify any facilities that were non-compliant with legal requirements, such as invalid operating licences and expired environmental permits, and ensure they were remediated.", "chunk_word_count": 523, "section_path": "K N D > THE HIGG INDEX", "document_id": "New Look sustainability report", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 8, "chunk_text": "# K N D\n## FSLM\nTowards the end of 2022, the Sustainable Apparel Coalition brought UK Brands together to discuss the Facilities Social and Labour Module (FSLM) within the SAC UK Brands Forum.\n### Internal Performance Indicators (Governance)\nIt was agreed between six brands, including New Look, that we would collectively share lower tiered sites to SAC to understand where we have shared suppliers and therefore greater influence. We have since agreed to collectively engage with these facilities to complete and verify the FSLM selfassessment. Once collected, we will analyse the data to understand the risk profiles within these shared facilities to inform our future strategy for FSLM.\nIn 2022, as part of a wider initiative to engage, develop, and support senior leadership, the Sustainability and People teams hosted an Environmental Social Governance (ESG) and Equity and Inclusion (ED&I) day of engagement. This was focused on bringing the CEO, C-Suite Directors, Heads of, and Senior Managers together to facilitate connections across teams around sustainability and ED&I, and how these impact all teams. It created opportunities for both frank and insightful conversations, and energy in the business’ leadership to take back to their teams.\nFor 2023 (2022 FEM cycle), we aim to use the findings from the Higg FEM (including the Critical Risk chart), to work with key factories to identify and prioritise opportunities for environmental performance improvements, including water and energy use/efficiency.\nAs shown in the below table, we saw an increase in average scores across all sections (using verified data) from FEM 2020 to FEM 2021, with an average overall score increase of $6 \\%$ .", "chunk_word_count": 268, "section_path": "K N D > FSLM > Internal Performance Indicators (Governance)", "document_id": "New Look sustainability report", "page": 12, "page_start": 12, "page_end": 12 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 9, "chunk_text": "# K N D\n## FSLM\n### Hazardous Chemicals\nOur established Restricted Substance List (RSL) programme operates through a combined testing and STANDARD 100 by OEKO-TEX $\\textcircled{8}$ certification approach with $100 \\%$ compliance with our standards. We continue to monitor the chemical management performance of our value chain through Higg FEM, however, we recognise that this is a high level overview. To meet our Manufacturing Restricted Substance List (MRSL) commitments, we must introduce a more robust management programme. As such, this year we became Friends of Zero Discharge of Hazardous Chemicals (ZDHC). This means that we will have access to the ZDHC gateway, enabling us to view supplier Incheck (chemical inventory) and ClearStream (wastewater testing) reports to measure ZDHC MRSL compliance levels.\nESG is now included within our company values; these are defined for all directors, senior managers, and managers within our Living and Leading Behaviour Programme. Although these are considered in employees’ performance reviews, we will be setting more specific individual targets for teams, which will be formed from our Science Based Target (SBT) roadmap.\nThe focus for the coming financial year is to continue to engage senior leaders in critical sustainability areas, such as Taskforce on Climate Related Financial Disclosure (TCFD) and SBTs. We will be working to utilise finance and other teams to integrate targets into normal business activities. This will help to drive our agenda, as well as set New Look up for future regulatory compliance.\n\\*Using data from facilities that are verified and have shared their module with New Look via the Higg platform. FSLM\nOur focus for the coming year will be to onboard our strategic suppliers, representing $60 \\%$ of our total production, onto the approved ZDHC gateway platforms. We will then begin monitoring performance of these wet processors, establishing a base level of conformity, and implementing this throughout our whole value chain. Once this programme is established, we will set targets and KPIs to monitor and report.\n### Climate Change\nClimate change is a complex global issue that is already impacting people across the world. It also poses a significant risk to businesses and their supply chains, both through physical risks such as extreme weather events, and transitional risks such as reputational damage for not acting. As such, we take our responsibility for minimising our carbon footprint seriously and have demonstrated this with our commitment to Science Based Targets. In order to understand our impacts and prioritise our reduction efforts, New Look calculates the carbon footprint from all business activities across Scopes $1 , 2 \\& 3$ .\nDue to the nature of our business, the largest proportion of our emissions fall outside of our direct control –in Scope 3 and specifically within the manufacturing of our products. Our Scope 3 emissions account for the full lifecycle of our products including raw materials, processing, transport, customer use, and end of life.\n### Science Based Targets", "chunk_word_count": 483, "section_path": "K N D > FSLM > Hazardous Chemicals", "document_id": "New Look sustainability report", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 10, "chunk_text": "# K N D\n## FSLM\n### Own Operations\nThis year, New Look submitted targets to the Science Based Targets Initiative (SBTi) and are awaiting approval after the review process which is scheduled in late October.\nScope 1 remains a very small percentage of our total carbon output and therefore is a lower priority within our carbon strategy. In the last year we have introduced some electric and hybrid vehicles to our company car offering, with all new cars on order being either hybrid or fully electric. Due to capital availability, HVAC replacements are currently planned in – in line with legislation changes in 2030. However, this will be reviewed as necessary to speed process and transition to the lowest carbon F-gas option.\n### Targets:\n• Scope 1, 2 & 3 Near term SBT ( $1 . 5 \\%$ pathway) by 2030\n• Scope 1, 2 & 3 Long term Net Zero SBT by 2040\nWe engaged with Anthesis – a global sustainability consultancy – to support our submission and are continuing this relationship to build a comprehensive roadmap to decarbonisation. During the initial submission to SBTi, Anthesis recalculated our FY22 emissions, ensuring a more accurate view of fibre data as well as including all required categories for the SBT submission to set our baseline year. We had significant learnings from this process, largely centred around total fibre weight calculations, which has required systemic change to transition our data to meet requirements.\nOur Scope 2 emissions are presented as both location-based and market-based, with market-based emissions showing the purchase of renewable energy. We have purchased renewable energy across almost all our portfolio since 2019. However, this year, due to the increase in price of Renewable Energy Guarantees of Origin (REGO), it has become financially unviable to continue doing so and in September 2022 we made the decision to remove these. As a business, we have chosen to offset the emissions from our electricity use and have purchased carbon credits through verified schemes.\nThe roadmap has involved many of our internal teams and leveraging existing partners to develop plans to meet our targets. Scope 3 purchased goods and services (fibre), as the largest proportion of our emissions as well as the most complex, will be a priority for our roadmap. We expect that the continued transition to lower impact materials, as well as utilisation of Higg FEM data to determine supply chain impacts and identify opportunities for reduction, will be material for both near and long-term targets.\nReducing electricity consumption is a key area to target. Again, capital constraints along with lease agreements mean our LED replacement strategy is complex. Next year, we plan to engage with all store landlords that have a net zero target, to collaborate on switching to LED lighting as well as look for opportunities for onsite renewables. In addition, we continue to explore where onsite renewable energy generation is feasible within our owned property portfolio.\n### Scope 3 emissions", "chunk_word_count": 493, "section_path": "K N D > FSLM > Own Operations", "document_id": "New Look sustainability report", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 11, "chunk_text": "# K N D\n## FSLM\n### Procurement (GNFR)\nDuring this year, all Goods Not for Resale (GNFR) suppliers were categorised into Leveraged, Strategic, or Critical suppliers, enabling us to send focused ESG questionnaires to each group. We had a relatively low response rate of only $2 9 \\% ,$ noting that larger companies were less likely to fully respond and rather refer us to view their company website statement. Of the data that was gathered, we were then able to further categorise the supply chain, identifying where we have greater risk. This information is being used to inform procurement strategies and ensure due diligence is carried out.\nPurchased goods and services (fibre) remain our highest emissions, representing $62 \\%$ of our total footprint. The reduction from last year’s emissions shows a reduction in overall product purchased, as well as our continued increase in better raw materials. Over the coming year, we will continue to switch to lower impact materials and work with our supply chain to reduce emissions from the manufacturing stage. To monitor this we will be working to include data gathered through the Higg FEM, utilising the actual footprint data of our facilities.\nOur recent health check revealed that $9 5 \\%$ of vessels used are covered by approved ITF collective bargaining agreements (CBAs), marking a $5 \\%$ increase from last year. To address vessels without approved CBAs, we have engaged with internal teams and logistics providers, and collaborated with ITF to monitor progress. ITF have provided us with the tools to review the ITF vessel approval status and any vessel not approved will be identified to our Supply Chain Manager.\nReductions in the use of sold product category and end of life treatment is accounted for through a change of methodology. We have chosen to use the WRAP Textiles 2030 Footprint Tool Methodology which uses data gathered by WRAP to understand the impact of product use. The reduction in homeworking can also be explained through methodology changes, as this year DEFRA published an emissions factor which has been applied. Finally, the use of sold product reductions are reflective of our business decision to only purchase batterypowered electrical goods, rather than direct power products. Any sales this year of direct-use products come from legacy stock.\nOver the course of the year, 7 RFI/RFPs were conducted containing enhanced ESG questions. Of these, only one was escalated through our scoring system, meaning additional weighting was given to the ESG section, as well as answers being reviewed and scored by the sustainability team. We expect this number to rise over the next financial year when the process is fully embedded and risk scores have been applied to all categories.", "chunk_word_count": 449, "section_path": "K N D > FSLM > Procurement (GNFR)", "document_id": "New Look sustainability report", "page": 15, "page_start": 15, "page_end": 15 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 12, "chunk_text": "# K N D\n## FSLM\n### Gender Equity\nAcross the sector, the fact remains true - most workers within garment supply chains are women, but most supervisors and management are men. While we set a target of increasing the number of women workers in leadership positions in Tier 1 factories by FY24, we are now revising this to FY26. This new target reflects the need for more detailed data to allow effective targeting and selection of programmes for desired outcome. This year, we will take a data-focused approach through disaggregated data collected through third-party audits; self-assessment questionnaires; quarterly reporting; and visits by our partner, The Reassurance Network. Once we establish a baseline, we will identify priorities and research relevant programmes to engage with, collaborating with key suppliers to address leadership opportunities for women in our supply chain.\nAll new contracts now include sustainability add Key Performance Indicators (KPIs) and Service Level Agreements (SLAs). Due to resource constraints, we have been unable to review all legacy contract sustainability clauses and are now taking a new approach, focusing on contract categories where we have a higher risk and greater opportunity. As such, we have identified property contracts as an area of high impact and we will be working to add KPIs and SLAs into those existing contracts this year.\n### Freight and Logistics\nInbound and outbound logistics represent $7 \\%$ of our total emissions. Over the course of the year, we have continued to discourage using air freight, overall we have reduced emissions from freight by $2 1 \\% ,$ on top of the $18 \\%$ reduction in FY22.\nRecognising the social impacts associated with the movement of goods, we have collaborated with freight partners and industry bodies to tackle modern slavery risks. Since early 2022 we have engaged with the International Transport Workers’ Federation (ITF), with the aim of mapping the vessels used by our logistics providers to verify if they comply with ITF standards of working conditions and treatments of seafarers.\n### Working Conditions\nof potential human rights risks and work collaboratively to find solutions.\n### Purchasing Practices\nTo monitor progress and address modern slavery risks, we hold internal bi-monthly Modern Slavery Working Group meetings. Representatives from various departments participate in these meetings to track sector-specific KPIs and targets including our own operations, goods-for-resale, goods-not-for-resale, and partners.\nWe recognise the impact of purchasing practices on wages and have implemented the Action Collaboration Transformation (ACT) framework, addressing the impact of purchasing practices on wages in global supply chains. This includes regular ACT trainings and updates to our teams.\nRecently we launched the ACT bi-annual Purchasing Practices Assessment surveys to promote responsible practices and benchmark progress against objectives. Additionally, we integrated labour costs into our Open Costing Sheets, leading to increased transparency and accountability.\nOur updated Modern Slavery Statement focuses on three priority areas: goods-for-resale, goods-not-for-resale, and brands and concessions. This enables us to prioritise and address modern slavery risks in these specific sectors.\nGoing forward, we plan to review our buying model, focusing on waste and sampling, and conduct a baseline assessment of audit data on wages to identify priority areas for improvement.", "chunk_word_count": 523, "section_path": "K N D > FSLM > Gender Equity", "document_id": "New Look sustainability report", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 13, "chunk_text": "# K N D\n## FSLM\n### Human Rights Risk and Moder Slavery\nAs per our commitment to developing an enhanced Human Rights Due Diligence (HRDD) approach in alignment with the UN Guiding Principles on Business & Human Rights (UNGPs), we have now established several programmes which take a beyond audit approach, as well as developing enhanced risk-monitoring tools. This approach aims to proactively address and resolve any human rights issues that may arise, and monitor progress over time. To ensure the effective implementation of this HRDD approach, we will actively engage key partners and stakeholders. By involving these important parties we can enhance our understanding\n### Myanmar Case Study- ETI Report\nThe military takeover of Myanmar’s government in February 2021 raised questions as to whether businesses could continue in the country, whilst meeting international standards and responsible business guidelines. To understand the responsibility of businesses, New Look along with seven other brands, collaborated with the ETI to commission an independent assessment on human rights and responsible business conduct within Myanmar.\nLooking ahead, we are engaging stakeholders to establish long-term solutions and empowering workers’ voices through independent grievance mechanisms. Our priority this year is to select and trial a solution within our supply chain that provides sustainable access to remedies. We will continue collecting data on grievances raised through partners to track and report against our targets and KPIs.\nFrom the assessment, which was viewed in line with the UNGPs, it was concluded that normal human rights due diligence could no longer be carried out. As such, New Look along with other brands, worked with IndustriALL and the Industrial Workers Federation of Myanmar to develop a framework of principles for a responsible exit process, which mitigates the impacts on workers. We anticipate a complete withdrawal from the country by November 2023.\n### Worker voice\nAs a business, we support workers’ right to freedom of association and their ability to share concerns. By collaborating with suppliers, we aim to create an enabling environment that supports worker representation and access to grievance mechanisms in our supply chain.\nTo support our target of enhanced accessibility to effective grievance mechanisms and the associated KPIs, we have first taken a review of our audit data to inform our approach. Our review of audit data revealed 196 findings related to freedom of association and collective bargaining. The data indicates the main issue relates to the lack of communication channels for workers to raise issues with management. To address this, we have been working with our partners to offer short term corrective actions to enable workers to confidently raise concerns to factory management. This is monitored by follow up visits to track implementation and progress.\n### Pillar 2 Responsible & Circular Product\n### Overarching Aim\nTo improve the environmental impacts and circularity of our products from design stage to product end of life", "chunk_word_count": 476, "section_path": "K N D > FSLM > Human Rights Risk and Moder Slavery", "document_id": "New Look sustainability report", "page": 16, "page_start": 16, "page_end": 18 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 14, "chunk_text": "# K N D\n## FSLM\n### Key Impacts\nEnvironmental: \nAir Pollution \nBiodiversity \nChemical impacts \nDeforestation \nEnergy \nGHG \nHazardous waste \nMarine impacts \nSoil health \nWaste Management \nWater quality \nWater use\nWe recognise the need to move to a circular economy, valuing resource efficiency, minimising waste and promoting the longevity of our products. Within this pillar we demonstrate how we are implementing the principles of circularity and supporting innovation within the sector to drive positive change throughout our value chain.\nOverall, our product footprint accounted for $62 \\%$ of our total carbon emissions and will be a focus of our reduction activities. We also recognise that carbon emissions are not the only impact our production has, and we must also consider wider impacts on biodiversity, water scarcity, and communities.\n### Raw materials\n### Product footprint\nNew Look have continued to transition sustainable fibres. By the end of FY23, $6 3 \\%$ of our clothing had a lower impact attribute increasing a further $10 \\%$ compared to last financial year.\nWe continue to report into the WRAP Textile 2030 (T2030) Footprint Tool, calculating our water and carbon impacts from clothing to support our target of a $50 \\%$ reduction in GHGs and $30 \\%$ reduction in water by 2030. However, we have also applied additional product footprint data which incorporates all products’ full lifecycle emissions and is essential in our Science Based Target commitments. These have been calculated by conducting product footprints of representative products, utilising activity data and secondary data e.g., Life Cycle Assessment (LCA) factor, Higg Index factors etc. This data allows us to view improvement actions across a greater number of categories and provides a more detailed impact report.\n### Cotton\nCotton remains our second most used fibre, making up $26 \\%$ of our total fibre use this year. In $\\mathtt { Q 4 }$ of this reporting year, we reached our target of sourcing $100 \\%$ lower impact cotton. Lower impact cotton includes Better Cotton, recycled cotton, and organic cotton, with Better Cotton representing $9 9 \\%$ of our lower impact cotton this year.\nEarlier this year, in partnership with 2 other UK brands, we committed to a REEL cotton programme in India to diversify our cotton sources. The REEL Cotton Code by CottonConnect provides farmers with training on sustainable cotton farming practices. These practices aim to reduce the use of water, chemical pesticides, and fertilisers, thereby reducing environmental impact. This year will act as a pilot year, so we are only working with a small number of farmers producing approx. 500 metric tonnes of traceable, lower impact cotton. If the programme is successful, we plan to expand the project, inviting other brands to join the collaboration, reaching more farmers and producing more traceable cotton.\n[IMAGE CAPTION] 63% of our clothing for FY23, $53 \\%$ of our clothing for FY22, 2% of our clothing in 2018 with lower impact attributes\nincreased from $20 \\%$ in the previous year. The price of recycled polyester and other synthetics remains a challenge, however, we are making progress with our target and this year, $36 \\%$ of our synthetic clothing contained recycled materials – an increase of $6 \\%$ on last year.", "chunk_word_count": 530, "section_path": "K N D > FSLM > Key Impacts", "document_id": "New Look sustainability report", "page": 18, "page_start": 18, "page_end": 20 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 15, "chunk_text": "# K N D\n## FSLM\n### Polyurethane (PU)\nThis year we increased our use of waterbased polyurethane, (PU) from 7,000 to over 70,000 units being made with the lower impact coating. This is still a small percentage of our total PU footwear and price remains a challenge in this area, as such we are having to move our target of $50 \\%$ reduction in conventional polyurethane out to FY27. In addition, we will be monitoring the performance of our water-based footwear, as durability challenges have been identified.\n### Viscose and other MMCF\nViscose represented $10 \\%$ of our total fibre percentage. This year, New Look’s goal is to source $100 \\%$ lower impact viscose. For New Look, this means that for any viscose-rich products $5 5 0 \\%$ viscose content) we will be purchasing lower impact, branded fibres such as Lenzing™ Ecovero™ viscose and Livaeco Viscose by Birla. For all other products containing viscose, we will ensure that only viscose from green shirted producers on the Canopy Hot Button report are used. This year, $7 2 \\%$ of our viscose-rich clothing was made with lower impact viscose, an increase of $48 \\%$ compared to last year.\n### Product Circularity\nWe continue to implement key principles of the circular economy and have engaged in several projects and workshops with Textiles 2030 and other organisations, developing knowledge internally, implementing new ways of working and supporting the wider UK fashion industry.\n### Durability and Longevity\nWe have run two durability and longevity projects this year, one on Back to School (BTS) products and the other on pilling within our knitwear. For both projects, we benchmarked our products against key competitors, carrying out tests to compare durability, reviewing construction and completing wearer trials. In BTS we made improvements across the seam, collar, hem and thread quality. Within knitwear, we substituted our core yarns to alternatives\n### Polyester and other synthetics\nPolyester is our most used fibre, representing $3 6 \\%$ of our total fibre use with acrylic and polyamide representing an additional $9 \\%$ . Our target is to have $50 \\%$ of our synthetic clothing product to be made with recycled content by the end of 2024. Our current minimum to call out recycled content in products is $2 5 \\% ,$\nwith better testing performance and have implemented across all lines.\nAlongside other brands and fibre-to-fibre recyclers, the workshops aimed to accelerate design for recyclability activity in the textiles industry, maximising potential feedstock for current and emerging fibre-to-fibre technologies when textiles reach the end of their useable life. The insights gathered during the day will be used to inform the development of WRAP’s Design for Recyclability Toolkit for members of Textiles 2030.\nWe are also taking part in WRAP and the Leeds Institute of Textile and Colour’s (LITAC) Durability Research Project. The project aims to expand the textile industry’s understanding of physical and emotional durability. It will also help to develop world-first industry benchmarks and testing protocols for durability, as well as productspecific minimum durability standards.", "chunk_word_count": 505, "section_path": "K N D > FSLM > Polyurethane (PU)", "document_id": "New Look sustainability report", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 16, "chunk_text": "# K N D\n## FSLM\n### Returns\nWe have seen a continued increase in returns which have negative economic and environmental impacts. Whilst we want to serve our customers, increasing the convenience of shopping, we also need to ensure we are supporting responsible buying. We have formed a returns team to understand the drivers for this in more detail, focusing on product, service, and communication to nudge customer behaviours and reduce returns and the associated carbon impact.\n### 3D design and fitting\nThis year, we conducted a small pilot program to extend the use of 3D technology in collaboration with two of our key suppliers. The results of the pilots were encouraging in the two areas that were trialled, with the prime objective of reducing sampling. Our plan for the upcoming year is to expand the utilisation of this technology to additional areas of the business.\n### Facilities – Water, Energy\nHaving identified water and energy use as key areas to monitor within our supply chain, it is a requirement for all Tier 1 and Tier 2 facilities within New Look’s supply chain to purchase and complete the Higg FEM. This year we have been using the verified Higg FEM data from our last full reporting period (FEM 2021) to create Higg Results Dashboards that we can use to monitor and visualise the data collected within the FEM module.", "chunk_word_count": 230, "section_path": "K N D > FSLM > Returns", "document_id": "New Look sustainability report", "page": 21, "page_start": 21, "page_end": 21 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 17, "chunk_text": "# K N D\n## FSLM\n### Designing for Circularity\nWhilst we have a designing for circularity working group and we are testing and learning, this must go hand in hand with developing scalable recycling schemes and technologies. As such we continue to capacity build with our internal teams, collaborating where there is opportunity.\nNew Look attended WRAP’s Textiles 2030 Design for Recyclability Workshops, cofacilitated by the University of the Arts London (UAL) and the Circular Textiles Foundation.\nWithin the Higg Dashboards we can monitor our key priority areas, broken down by supplier, country, and tier. We have a view of the\ndifferent energy and water sources our facilities are currently using, as well as what proportion of facilities that are tracking and setting targets to reduce the amount of energy and water they are using.\nunnecessary and have now removed these entirely.\nWe have also undertaken significant work within our supply chain packaging. Exceeding compliance with the plastic packaging tax, our suppliers have now moved to minimum $50 \\%$ recycled polybags and are working to move any other plastic packaging to recycled. In addition, $\\dot { 7 } 3 \\%$ of swing tickets are made with FSC paper and we are on track for that to be $100 \\%$ in the next 6 months.\nWithin the last full reporting period, 87 Tier 1 facilities independently verified and shared their FEM module. Out of these verified modules, $85 \\%$ facilities set a target for reducing energy use, $60 \\%$ had an energy improvement plan in place, and $69 \\%$ had set a target for reducing water use.\nNew Look have recognised the value of reviewing end-to-end packaging compliance and this year formed cross-department working groups to establish optimum packaging and logistics in our DC. The focus is on evaluating costs holistically and making informed business decisions to improve performance. The objective is to ensure that the suppliers are delivering in compliance with requirements established in the Supplier Manual to avoid double handling and creation of additional packaging waste.\nFor 2023 (2022 FEM cycle) we aim to use the Higg data and the dashboards that we have created to continue to monitor, identify, and prioritise areas of opportunity within our supply chain to improve environmental performance.\nWe are also monitoring and driving energy and water reduction through our Kind 6products. Within our Kind product criteria, we have set minimum requirements for water and energy use per kg of product for styles using Eco Mills.\n### Packaging\n### Customer use & end of life\nAll our internal packaging is now either sourced through certified schemes (such as FSC) or includes recycled material. However, we know there is always more that can be done, therefore we have worked closely with our suppliers and internal teams to re-engineer packaging within our own operations. We have reduced the micron thickness within our ecommerce mailers and transit shrouds, saving 65 tonnes of plastic annually. In addition, we identified card inserts used in ecommerce orders for presentation of garments were", "chunk_word_count": 503, "section_path": "K N D > FSLM > Designing for Circularity", "document_id": "New Look sustainability report", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 18, "chunk_text": "# K N D\n## FSLM\n### Improved Forecasting\nDuring this financial year we made the active decision to change our business strategy, buying on a tighter stock model, with a view to reduce mark down. Through this strategy we have reduced the amount of product bought by $28 \\%$ compared to last year. In addition, this model has increased our sell-through and we ended the year with 2.5 million less reducedto-clear units. This is an example of a joint commercial and sustainable initiative which\nhas had a significant positive impact, reducing over-production and therefore waste, as well as increasing profitability.\nCompliant claim language was automatically created based on the product data that was verified. The compliance technology assured its Impact Widget outputs, which means we are able to communicate at scale with confidence. The Compare Ethics Impact Widget sat on all verified product pages on our website, identifying Kind products with lower impacts. The Impact Widget simplified our environmental claims into easily understood information with visual icons.\nthe initiative since 2019, we have seen declining donations and we are now taking the decision to close the relationship. We will be continuing to explore other options, testing and learning how best to encourage our customers to donate good quality clothing they no longer need.\n### Customer engagement\nCustomer engagement over the course of this year has not only focused on product care and donation, but has also tried to educate our customers on our wider sustainability strategy – focusing on the impacts of our products and the changes we have made to reduce these. The introduction of the Green Claims Code last year added another level of scrutiny to marketing, increasing the emphasis on clear and accurate communication – something we have embraced. Last year we ran 9 individual Kind campaigns, reaching over 6.5 million customers.\n### End of life\nFibre to fibre recycling of end-of-life garments is the ultimate goal for the fashion industry, and although some small-scale facilities are producing recycled fibres, we are still a way off from a solution to meet the demand.\nThis pilot positioned us well to be able to develop, at scale, a validation and communication process.", "chunk_word_count": 364, "section_path": "K N D > FSLM > Improved Forecasting", "document_id": "New Look sustainability report", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 19, "chunk_text": "# K N D\n## FSLM\n### Customer Insights\nThis year we joined a consortium bid for government funding, through Innovate UK, for a 2-year project to develop a demonstrator for a national textile recycling scheme. The consortium led by the UK Fashion and Textiles Association consists of industry experts representing sorters, technology companies, manufacturers, recyclers, and brands. The ambition of the consortium is to create a world class, stateof-the-art blueprint for an Automated Sorting and Pre-processing (ATSP) demonstrator for waste textiles. Integrating the latest technologies, that post demonstrator can be deployed regionally by 2025.\nLast year we commissioned a large piece of custome insight centred around our ESG proposition, Kind. We spoke to 1,635 customers to investigate what is important and relevant to them with regards to sustainability, using both qualitative and quantitative methodologies. Previous research on sustainability was carried out in 2020 making it necessary for us to refresh our understanding. The following five areas emerged as key issues for our customers: protecting the planet, reducing clothing impact, transparency, inclusivity, people, and community. The insight is being used to inform our direction and communication to our customers.\n### New Look X Compare Ethics Making Accurate Environmental Claims at Scale\nNew Look identified the need to demonstrate our verified data to back up claims we share with our customers and others interested in our product impacts. The evolving regulatory landscape in the UK, EU, and USA means this is something of a challenge to do alone at scale, without significantly increasing resources. To succeed in making environmental claims with speed and accuracy, we partnered with Compare Ethics, an impact compliance technology company.\nIn addition, we are continually exploring other end-of-life partners, currently working with one entity who is downcycling products no longer fit for wear into an inert polymer. This is then used to make a variety of products that can be resold into the market. We are also exploring a new footwear recycler whose new technology is able to break down any type of footwear into six raw materials, which are then reusable in footwear manufacture.\n### Customer Take-back\nDuring the trial, over 5000 data points from 648 products were analysed through Compare Ethics’ technology, which uses Artificial Intelligence (AI) to extract and rank data from the supply chain – such as purchase orders linking to certifications. The platform then verifies and authenticates thousands of data points at speed against the legislative requirements.\nThis year over 4,400 customers ordered take back bags from Refashion, increasing by $2 5 \\%$ from last year. We also opened our first ever vintage concession, selling second hand products with Refashion. The first store opened in Coventry in November, and we subsequently opened five more stores in January, selling a total of 1,451 items. In addition, our partnership with Hospice grew with 246 hospice stores and 121 New Look stores paired through the partnership. Despite the success of\n### Pillar 3 Inclusive Culture\n85% of New Lookers say they can be themselves at work\n### Overarching Aim\nTo become an employer of choice, presenting a positively distinct and diverse culture, successfully engaging our employees, and recognised for our inclusivity.\nM", "chunk_word_count": 527, "section_path": "K N D > FSLM > Customer Insights", "document_id": "New Look sustainability report", "page": 23, "page_start": 23, "page_end": 24 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 20, "chunk_text": "# K N D\n## FSLM\n### Key Impacts\nEquity \nDiversity \nInclusion \nEmployee engagement \nProductivity\nOur Mission at New Look is to live and lead by our values, which in turn will ensure that we’re seen as an Employer of Choice.\n### Understanding our colleague communities\nVisibility of our colleagues’ demographic data has improved from $2 4 \\%$ to $80 \\%$ this year. We had a clear focus on engaging our teams as to why this was important, and how it would fully support and underpin positive actions.\nAs a brand with broad appeal equity, diversity, inclusion, and belonging have always been integral to who we are, but we recognise that even more is needed, and authentic action is required to make an even greater difference.\nAlongside this, we also captured customer demographic data, affording us the opportunity to identify where we have clear opportunities to better represent our customers, and better align and support our teams.\n$85 \\%$ of our colleagues continue to feedback that they feel comfortable being themselves at work. Although something we are incredibly proud of, this is just one piece of a much bigger picture around inclusion, and we are making solid progress in moving things forward through our ED&I Roadmap: ’Our Kind of Inclusive’.\nWe have also recruited over 100 team members, business wide, for our Inclusion and Wellbeing Ally Groups. These Ally Groups include our PRIDE (LGBTQIA+), Cultural Awareness (Faith and Ethnicity), Accessibility, Men’s Health, Women’s Health, Good Vibes Clubs, and our Wellbeing Allies.\nOur roadmap touches all areas including culture, brand, talent attraction, and development, with a key focus on driving wellbeing. We have also been able to make data driven decisions, for the first time, based on the now-captured demographics of our teams and customers. Focusing on our colleagues’ and customers’ experiences and internal ways of working, it’s gaining great traction and driving engagement. Leading in an authentic way will further improve inclusion, positive local impact, and better represent our customers.\nThese Ally Groups have enabled team members from all locations, and at every level, the opportunity to start influencing, challenging, and shaping business decisions, alongside under-pinning the shape and focus of our ED&I and Wellbeing Calendars. Understanding what forefront in their minds is key.\n26", "chunk_word_count": 375, "section_path": "K N D > FSLM > Key Impacts", "document_id": "New Look sustainability report", "page": 24, "page_start": 24, "page_end": 26 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 21, "chunk_text": "# K N D\n## FSLM\n### Resource groups\nLeader in Diversity 2023 by The Financial Times and Statista.\nGiving our teams a stronger voice is one of our main six Inclusion ambitions. Creating an environment where diverse business decision-making is championed is also critical to our business’ success.\nListening to our teams effectively is a critical component in our roadmap, and whilst underpinning our actions, it also provides a clear view from all our colleagues as to whether what we are doing is making a difference for them.\nWe’re proud that our teams have a more powerful ‘’voice’’ than 12 months ago. This has been achieved through our Ally Groups and by broadening our ‘’Your Voice’’ functional groups across all business functions and locations. We’ve made considerable progress in our Distribution Centre and London Support Centre, in particular. Our Retail Junior Leadership Team continue to influence decision making across our Retail Estate, and we will be building a cross-functional reverse mentoring group, by the end of this financial year. There is much to be gained from our senior leadership attaining critical insight from our diverse colleague base and partnering with them.\nWe are delighted to now be partnering with Maru/Matchbox to build out an engagement and wellbeing survey that will not only provide bi-annual insight, but also an emotional signature as well as support for more targeted and data-driven action for our leadership.\nWe will continue to share and monitor our authenticity response alongside our team’s overall engagement. More excitingly however, will be our ability to start predicting opportunities and supporting far more effective and consistent actions across New Look.\nOver the past 12 months, we have also developed our external resource group partnerships These include the LGBT Foundation, British Retail Consortium (BRC), The Princes Trust, Retail Trust, DiR/WiHTL, Includability, Think Inclusive, Reward Gateway, and Your D+I drawing on the knowledge of experts, and ED&I leads from other businesses and sectors, is actively supporting our strategic plan and ED&I development.\nWe are also proud that our Inclusion Team have taken part on panels for The Princes Trust, Think Inclusive, Retail Trust and BRC. Our efforts and approach are being recognised externally and leveraged upon. We also were recognised as a\n### Board and leadership\nOur commitment to living, leading, and role-modelling our values at all levels remains unchanged. Our General Counsel is sponsoring our Inclusion Team, alongside our People Director, following the departure of the previous director lead.", "chunk_word_count": 409, "section_path": "K N D > FSLM > Resource groups", "document_id": "New Look sustainability report", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 22, "chunk_text": "# K N D\n## FSLM\n### Recruitment processes\nBroadening our Talent pool and ensuring that we are an accessible Employer of Choice sits firmly within our ED&I and Talent Attraction plans.\nAll our Directors and Heads of were coached and introduced to our ED&I roadmap ’Our Kind of Inclusive’ this year by Your D+I. This further supported our broader ESG aspirations and further under-pinned our Leadership Development programme. This education will continue throughout this coming year as ED&I constantly evolves. Our values and development programmes fully support behavioural and empathetic leadership, focusing on team dynamic, collaboration, valuing diverse perspectives, resilience, and wellbeing.\nWe have created partnerships to bring in new colleagues from marginalised groups via the Department for Work and Pensions (DWP) and His Majesty’s Prison and Probation Service (HMPPS) within our Distribution Centre. These early partnerships are part of the foundations of our ED&I and recruitment strategy for FY24.\nWe will also have our first Minority Group Development Program starting via DiR/WiHTL. Our Future Talent plans focus on partnerships with Further Education institutions, such as The Princes Trust and our Apprenticeship provider. These offer opportunities for both insight for candidates who may be exploring their future and career pathways, and for those who have a destination in mind and need technical expertise to support that journey.\nWe set ourselves the target to have fully transparent policies and procedures by the end of FY23, which we have achieved. They are available to all our colleagues through our online support hub, and as part of our Group Policy Governance Board, all policies are now reviewed through an Inclusion lens as part of business as usual.\nWe also focused on internal talent opportunities and filled $45 \\%$ of our Support Centre and Retail management positions with internal colleagues, offering career progression. We also offered 148 secondment opportunities across the business.\nWe have also challenged ourselves as to what should be policy vs. a leadership support guide. We were delighted to migrate our Menopause Policy, over to a new support guide. This was developed through partnering with our Women’s Health Ally Group, who also supported launching it to the whole business.\nWe’ve developed our corporate careers website, our internal careers site, and rebranded our external advertising materials to reflect our customers and give greater insight into our organisation. This ensures that potential candidates can see themselves reflected within our organisation. We have continued to review our candidate to colleague experience and are working through the outputs to ensure that we are transparent, welcoming, and support any additional requirements, be they accessibility or otherwise.\nA key target for the end of Q4, this financial year, is to have set our first ED&I data-based targets for FY25.This will support how we further review our behavioural leadership capabilities vs. performance measures.\nour external resource partners for engaging content and representation.\nA particular success has been our 50-strong Wellbeing Ally Group, and the education received via The Retail Trust’s Togetherfest and Wellbeing Conference. Our Inclusion Team are also building upon last year’s ’Nothing Off Limits’ and have developed ’Let’s Talk About…’ which provides a platform for our team members to share their personal wellbeing experiences; this is definitely resonating with our teams.", "chunk_word_count": 536, "section_path": "K N D > FSLM > Recruitment processes", "document_id": "New Look sustainability report", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 23, "chunk_text": "# K N D\n## FSLM\n### Flexible working and wellbeing\nOur flexible and hybrid working models continues to evolve, and we have had a crossfunctional group of our leadership working on this collaboratively. Our key aim is to better support work-life balance and colleague engagement, whilst further supporting talent attraction, retention, and performance.\nFurther support this year will be provided by newly appointed Mental Health First Aiders. Our initial group will be developed this year, with a view to increase resource further next year. We are also introducing the JAAQ platform, which will be easily accessible to all our colleagues via our internal platform, Runway.\nWe recognise that we need to have measures in place to support this, and whilst the responses to our bi-annual survey will validate what we’re doing, we need to have further measures in place to pin-point progress and potential further opportunities. We will be working on these metrics as part of our KPI identification for FY25 and to inform our 1-page ED&I dashboard.\nOur wellbeing calendar engagement continues to grow, and we can see that wellbeing interactions on our colleague hub have increased $1 1 9 \\%$ vs. the prior year. This has been helped by greater socialisation of the content, rebranding the site, simplifying access, and continuing to create more engaging and relevant content for our teams. We continue to collaborate with The Retail Trust, Reward Gateway, BRC, and AXA on webinar and workshop content. We have also leveraged\n### Inclusion\nOur ED&I Roadmap, ’Our Kind of Inclusive’, fully underpins all our focus and actions to support New Look being fully recognised as an Employer of Choice.\nWe have also focused heavily on broadening our regular colleague listening forums, ’Your Voice’ and these are now active business wide. Focused listening groups have also helped us to target actions and drive improvements, whilst supporting significant periods of change within the business. Building upon these listening forums, we are also committed to introducing reverse mentoring for our Leadership.\nBuilding upon Retail Week’s ‘Be Inspired’’ the previous year, we have now established ourselves as members of DiR/WiHTL, and partner regularly with your $\\mathsf { D } { + } \\mathsf { I }$ , Think Inclusive, Includability, BRC, The Retail Trust, LGBT Foundation, and The Princes Trust. All these partners are helping us to promote diversity across all levels of the business. We encourage everyone to fulfil their career aspirations and be the very best version of themselves. We remain signatories of Business in the Community’s Race at Work Charter and the Halo Code, alongside being signatories of the BRC Inclusion Charter.\nOur Retail Junior Leadership Team have proactively informed and delivered change over this past year. We will now build on this across all our functions in FY24, also providing career development opportunities for our diverse talent. Leveraging our external partnerships expertise will also fully support this important next step in further progressing a truly open culture.\nOur People Experience and Inclusion Team are working actively with external groups, and also sharing insight into what we are doing to promote inclusion and develop a true sense of belonging. Learning and sharing with our peers, cross-sector, ensures that we keep up to date, relevant, and evolve our thinking.", "chunk_word_count": 542, "section_path": "K N D > FSLM > Flexible working and wellbeing", "document_id": "New Look sustainability report", "page": 28, "page_start": 28, "page_end": 29 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 24, "chunk_text": "# K N D\n## FSLM\n### Career development programmes\nWe are clear that living and leading by our values must be role modelled at every level, and talent development opportunities are available to all New Look colleagues. As part of our ED&I roadmap and Talent Development plans, Senior Leadership will continue to complete Leadership Development workshops throughout the rest of FY24.\nLast year, our engagement survey, told us that $7 6 \\%$ of our team were engaged with New Look, which is ahead of the external benchmark, while $8 5 \\%$ of our team felt that they could be themselves at New Look. These statistics are encouraging, but we can always be better.\nThe Talent Development strategy for FY24 will introduce Leading@NewLook, a development pathway for managers to support in creating an inclusive environment with attention on the importance of behaviours, values, wellbeing support for teams, resilience, and inclusive and empathetic leadership.\nWe have taken the decision to further evolve our engagement survey this year, and are working with a new provider. Our new platform will not only capture statistics and real time feedback, but will also be able to understand our teams’ emotional footprint, which will support us to better predict future opportunities and focus areas.\nearly careers has been focused on through our continued partnerships with The Princes Trust and Fashion Retail Academy. These work placements focus on leadership and behavioural development, which are firmly anchored around our core values and have supported hundreds of young people over the past few years.\nWe also continue to build our data capabilities and visibility during this financial year, and this will under-pin our ED&I Roadmap in delivering improved processes and measures. This data will help us to effectively set targets to further support our teams and the business.\nMinority Group career development is a key focus within our ED&I Roadmap, and we’ll be enrolling some of our key talent for the first time this year with DiR/WiHTL. Partnering with schools in targeted areas will also further support attracting new talent into New Look.\nED&I objectives will be included in all our functional plans for the coming financial year, supported by our company values and behavioural framework. This follows successfully building out wellbeing actions in Q3 and Q4 FY23 at functional and leader level.\nAligning our Talent Attraction and Talent Development plans to our ED&I Roadmap this year is ensuring that we’re making significant progress. We’re achieving this through robust and targeted actions, based on our data insight, and what we’re hearing from our teams. This is ensuring that we’re aligned to clear team goals that all our teams feel a part of, whilst further building out our Employer brand and making New Look a true Employer of Choice.\nOur online Academy continues to be developed, and our teams have thousands of learning resources available, encouraging them to drive self-development and ownership. Our teams have access to an online tool which enables them to capture achievements and collate feedback on their performance and development opportunities. This is now evolving into a much more dynamic tool, which enables regular conversations, and fully supports our talented and motivated teams to discuss their performance more regularly.", "chunk_word_count": 533, "section_path": "K N D > FSLM > Career development programmes", "document_id": "New Look sustainability report", "page": 29, "page_start": 29, "page_end": 30 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 25, "chunk_text": "# K N D\n## FSLM\n### Career development programmes\nWe continue to encourage our teams to move around our business cross functionally to broaden their knowledge, and we actively look to recruit our store team members into our support and distribution centres.\nLeveraging the knowledge and customer facing insight into other areas of the business, has added enormous value. Supporting\n### Pillar 4 Positive Local Impact\n### Overarching Aim\nCommitted to being a force for good in Fashion and our Communities: A Customer obsessed brand we will always represent the full diversity of our customers and our communities.\n### Key Impacts\nLocalisation Community Equity Diversity Inclusivity Education\nSupporting local charities in 30 r egions\n### HAPPY Hanukkah!\nNew Look are proud to be customer-obsessed and want to serve our diverse customers in the most inclusive and equitable way possible. We strive to actively encourage and support our customers in adopting more sustainable lifestyles, and we believe that collectively making responsible choices will accelerate benefits for people and the planet.\n### Our customer communities\nIn FY22, New Look used third party data to identify opportunities to modify stock packages based on customer and market demographics. Each store type was clearly defined considering its role, the customer journey it addresses, the target customers, the range of products offered, and the local market characteristics. We have used the learnings from this to inform our allocation strategy; reviewing sales performance and key performance indicators such as footfall, conversion, and average spend.\nWishing youand yourspeace andlightthiscelebrationseas\nLast year, we used insights to better understand our customers sustainability preferences and priorities, these insights have helped shape our activities and will better direct our communication efforts to drive future positive local impacts.\nAdditionally, across our stores we are actively working to reduce carbon impacts, support appropriate charitable causes and provide choices that help customers live more sustainably. This includes offering lower impact products and encouraging circular and repurposing habits.\nOur “Kind to Our Core” philosophy extends beyond our products and services. We actively engage with local communities, aiming to understand their unique needs and supporting causes that align with their values. By fostering meaningful relationships with the communities we operate in, we aim to empower and support more sustainable lifestyles and offer lower impact choices to create a positive and lasting impact.\nBeyond physical stores, we extend our commitment to offering that unique “New Look feeling” and making a positive local impact across all channels. To do this, our digital teams are leveraging insights to understand and cater to the local and inclusive needs of our online and cross-channel shoppers.\nNew Look remains committed to being a force for good in the fashion industry and within the communities we serve. Our sustainability report showcases our progress, challenges, and ongoing efforts to create a positive impact. We will continue to keep our customers informed throughout this journey.\nAs part of our roadmap to represent the diversity of customers, our retail and digital teams have aligned trade and product to different local activities and calendar moments, regionally and culturally. We will continue to monitor the success of these activities and develop our programmes in an authentic way.\nThisDiwali, celebrateinstylewith dresses&accessories thatlight uptheroom", "chunk_word_count": 534, "section_path": "K N D > FSLM > Career development programmes", "document_id": "New Look sustainability report", "page": 30, "page_start": 30, "page_end": 33 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 26, "chunk_text": "# K N D\n## FSLM\n### Representing Our Customers\nDue to improved data, we have gained a more comprehensive visibility of our customers’ preferences at a local level. This invaluable data enables us to tailor our products and services to better meet customer needs and support local causes effectively.\nFor our customers representation is important, and they want to be shown this through our models, our staff, and our product. We continue to learn that inclusivity means diversity that is authentically and consistently represented, using models of all sizes and skin colours as well as normalising disability.\n### Supporting Local\nOur customers continue to value supporting local communities and over the last year our employees and customers raised more than £936K for our charity partners.\nWe have consciously selected models and influencers who represent a wide range of our customers and ensure they are visible throughout our customer-facing touchpoints.\nWe have continued to support our three selected national partners who align to our sustainability goals: The Princes Trust, LGBT Foundation, and Tree-Nation. Additionally, we have committed to continue our engagement and support of the Retail Trust. Our relationship with the Trust goes back many years, they provide support, tools, and resources to empower everybody involved in retail to take control of their wellbeing and lead a healthier, happier life. Many of our own staff have benefitted from the services.\nLast year, we launched an extended size range in collaboration with our brand ambassador Gemma Collins. We ran a successful size extension trial throughout our stores, with $85 \\%$ of our core collection now extending to size 22, representing $5 \\%$ of all sales. In addition, we also trialled size inclusive mannequins across several stores and ecommerce product was shown on multiple size models.\nTo diversify our fundraising, this year we trialled adding a donation to bag at customer check out. Our first trial was with Tree-Nation, where customers were able to add a tree to their purchase. So far this has culminated 44,527 trees being planted by our customers. We have also utilised this activation for other charity partners and to support specific moments in the calendar such as International Women’s Day.\nWe are consulting with experts in accessibility and adaptable clothing to understand how we can offer authentic solutions to real challenges for our diverse customers. For example, we now understand that many of our styles are in fact adaptable for some disabilities, and small adjustments could extend that offer. We will be working with designers, technologists, and suppliers, as well as training our retail and digital teams, increasing awareness on how best we can offer more equitable clothing and help customers find what they need.\n### Localising Charitable Giving\nAt a local level, the election and establishment of 30 local charitable partnerships, chosen by our regional retail teams and aligned to our Kind values, continued to be a huge success. Through their efforts our customers generously donated over half a million pounds, offering a much-needed post pandemic boost for the chosen charities, together with powerful awareness raising opportunities which the charities have told us offers real value and a positive local impact.", "chunk_word_count": 525, "section_path": "K N D > FSLM > Representing Our Customers", "document_id": "New Look sustainability report", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 27, "chunk_text": "# K N D\n## FSLM\n### The Princes Trust Million Makers\nNew Look are committed to promoting Million Makers which is an innovative entrepreneurial challenge which sees teams of employees competing to raise as much as possible from an initial seed funding investment. Our team, named Team NINE (Nine Inspiring Newlook Entrepreneurs), designed bespoke Million Makers product, supported by an omnichannel marketing and trade plan. This was kickstarted by utilising their seed funding to create unique instore POS to promote their product. The team also ran fundraising initiatives such as car boot sales, half marathons, and prize draws, leaning on the wider New Look team to support. Incredibly, Team NINE raised £222k in just 6 months!\n\"Your fundraising this year has gone a significant way to funding an additional helpline member of staff and news that this relationship will continue means that we can continue to extend those additional temporary hours. You have made our helpline manager Michelle very happy!\" Juno's Women's Aid\n\"Huge thanks for allyour support! The generous donation of £9471.62 is currently paying for a peer support group to run for 6 months and has allowed 37 LGBTQ+ people to have a 12-week series of counselling sessions which is incredible!\" Mind Out\n### Bringing communities closer\nWe have supplied toolkits to enable our store teams to react to local events to drive trade, maximise footfall, and have a truly local impact, with 105 local events run across our stores last year. Part of these toolkits ensured we included and celebrated all Kind and inclusive moments with our teams through Team Talks and Activity Packs, supporting different cultural celebrations, supported by the ED&I team.\nNew Look donated over 2,500 items of no longer used IT equipment to Socialbox.biz last year. Socialbox.biz is a community interest company, improving the local community by providing innovative technology solutions to support vulnerable groups such as the homeless and refugees.\nThe devastating earthquake in Turkey in February 2023 struck the heart of our supply partners in the region. As one of our principal sourcing countries, we have significant links with those effected, and in line with our principles of supporting all communities that we engage with, we made a substantial contribution to the British Red Cross DEC Turkey and Syria earthquake appeal, supporting the mobilisation of relief efforts.\n### Working with Local Partners\ncustomers, supporting them with lower impact choices in how and what they shop.\nDuring FY23, New Look have continued to work with landlords towards improving environmental performance where it is viable across our c.414 stores.", "chunk_word_count": 426, "section_path": "K N D > FSLM > The Princes Trust Million Makers", "document_id": "New Look sustainability report", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 28, "chunk_text": "# K N D\n## FSLM\n### Climate Positive: Thinking Local\nNew Look research indicates a notable shift in customer concerns and mindsets regarding sustainability. Pressures from health and financial challenges in the last year have led to a decline in personal concern for sustainability issues.\nThrough work with our procurement teams, we identified property as a high-risk ESG area and are now ensuring ESG clauses are incorporated into our lease agreements.\nWe currently have around 20 landlords/agents that proactively request data on energy, water, and waste as part of their ESG reporting. We expect this to increase going forwards as more landlords set their own sustainability targets.\nHowever, customers are becoming more aware of their environmental impact, particularly as they make increasing links between climate and their choices. As well as continuing to view fair and ethical labour practices as an expectation. Emphasizing local community support and promoting sustainable actions resonate strongly with our consumers.\nIn addition, we have seen an increase in the number of landlords reaching out to the sustainability team to discuss ESG strategies, and New Look have plans to do the same over the course of the year. We have already identified 9 large landlords with net zero strategies, aligned to our own who we will focus our initial efforts with.\nNew Look know we have a responsibility to make sustainability more accessible. New Look seeks to simplify sustainability for its customers by providing clear information and supporting them in making cost-effective, lower impact choices.\nWithin our regional teams, New Look continue to contribute towards 37 Business Improvement Districts, which aim to provide additional or improved services such as extra cleaning, public realm works, and promotion.\nIn addition, in the last year we have progressed, and have as much as possible attempted to balance lower impact materials and other targets with offering value. Please see our Responsible Business and Responsible product sections on how we are doing this.\nThis year we engaged an external consultant to work with our teams to create our ‘store of the future’. One focus of the project was to establish how our stores can serve our customers in a kinder way, incorporating the fabric of the stores, the product assortment, our omnichannel services, and how best we can help inform\nTo align with the growing demand, New Look are increasingly embedding sustainability into our customer-facing services, by incorporating it into customer service promises, loyalty programs, and digital platform development.\nThe final statement on our customer service promise is ‘We show we care’ which encompasses everything we are doing within our sustainability strategy. Our store teams are kept informed on our progress through monthly updates, training, and toolkits.\nNew Look recognises that adopting circularity principles will reduce environmental impact and contribute to the reduction of fashion industry waste. However, seeking to do so at scale demands co-operation across the sector. We are committed to being a part of the dialogue and policy discussions to drive this.", "chunk_word_count": 495, "section_path": "K N D > FSLM > Climate Positive: Thinking Local", "document_id": "New Look sustainability report", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 29, "chunk_text": "# K N D\n## FSLM\n### Climate Positive: Thinking Local\nNew Look continue our longstanding partnership with New Life. The charity provides thousands of items of equipment each year to terminally ill and disabled children across the UK. We know they have had an increased demand for their service during lockdowns, and operational challenges. New Look donated more than 130 tonnes of returned products that can’t be sold in our stores to New Life for repurposing and fundraising.\nOur loyalty programme, using gift cards, allowed customers to give a little extra in support of our chosen charity partners and our commitments to sustainability, and this was recognised with awards for these initiatives. Our Pride charity e-Gift card (June – September 2021) was ranked the 2nd most popular after Happy Birthday, donating £1 for every Gift Card bought in support of LGBT foundation. In the six weeks leading up to Christmas, we teamed up with Tree Nation to create an e-Gift card which planted a tree in the New Look Forest for every card bought. This was an overwhelming success, with 5,400 trees planted, and New Look received an award for Biggest Industry Contribution at the Blackhawk summit.\nWe are determined in our efforts to reduce local waste and minimise our carbon impact. As $62 \\%$ of our carbon emissions lie in sourcing countries, this is where most of our efforts will be targeted, understanding the local impacts on people and planet. We operate takeback schemes with our waste, and within store, reduced locally-disposed waste by $44 \\%$ compared to last year. We also operate a reuse and recycling warehouse to avoid waste from store closures and refurbishment going to landfill. Where possible, equipment is cleaned and refurbished to allow reuse within our store portfolio to avoid new manufacture.\nIn our digital platforms, we have created the Kind hub to educate our customers and promote better post-purchase behaviours including care, repair, and end of use. We also ensure we are communicating through our other channels, weaving Kind into key messaging across socials.\nNew Look also partnered with Remade with Hope (RwH) An innovative social enterprise who took 251 tonnes of our unsold products to provide prisoners with training and employment opportunities that benefit them and wider society. RwH work closely with the Ministry of Justice to provide purposeful activity during sentence, and offering post-release opportunities contributing to the rehabilitation of offenders and a reduction of victims of crime. RwH are committed to zero landfill from all our reprocessing activities. Clothing and footwear products are repaired, upcycled, and given new life.\n### Supporting circularity\nWe are delighted to witness a growing alignment between customer perceptions of sustainability and our commitment to circularity; recycled fabrics, reducing waste, avoiding landfill, and embracing second-hand are becoming increasingly important to our customers. Finding the right mechanisms for New Look to support these remains priority and important components of our sustainability strategy.", "chunk_word_count": 486, "section_path": "K N D > FSLM > Climate Positive: Thinking Local", "document_id": "New Look sustainability report", "page": 36, "page_start": 36, "page_end": 36 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 30, "chunk_text": "# K N D\n## FSLM\n### Governance\nNew Look fulfils its reporting requirements through our Annual Report. The directors have considered The Companies (Miscellaneous Reporting) Regulations 2018 and have applied the Wates Corporate Governance Principles for Large Private Companies. The policies by which we govern our business are outlined and available on our corporate site.\nIn addition, and related to sustainability, New Look’s ESG Steering group was formed during FY22. The group is focused on providing dedicated senior leadership with an opportunity to feed directly into our ESG Targets and proprieties. Over this coming financial year, the steering group will be joined by an ESG Junior Leadership team to increase the diversity of the group.\nOur CEO is committed and accountable for all our sustainability targets and ambitions. In conjunction with oversite from the board as well as the C-Suite, New Look leadership are driving progress.", "chunk_word_count": 147, "section_path": "K N D > FSLM > Governance", "document_id": "New Look sustainability report", "page": 37, "page_start": 37, "page_end": 37 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 31, "chunk_text": "# K N D\n## FSLM\n### Task Force on Climate-related Financial Disclosures (TCFD) reporting\n1. Raw materials – Increased temperature, water shortages, deforestation, and crop failure will impact the cost of raw materials across our key fabrics. This is likely to be higher in Scenario 1 where climate change has greater effect, at lower warming the impact will be lessened. Currently, our raw material sourcing strategy is focusing on lower impact fibres, including $100 \\%$ lower impact cotton and $100 \\%$ lower impact viscose; these measures are contributing to the overall reduction of impact from raw material production. Likely cost increases of raw materials could be mitigated through increased prices for customers.\nWe have been exploring the TCFD framework to ensure we are ready for full reporting when it becomes a regulatory requirement at the end of the financial year. Whilst many of the elements expected through TCFD reporting are included within our sustainability reporting, we acknowledge the value of using the TCFD lens to analyse potential risk to our business.\nе Scenario 1: Worst case, emissions rise and the planet warms by $4 ^ { \\circ } \\mathsf { C } .$\nе Scenario 2: Current trajectory, emissions decline slowly, and temperature rises between 2 and $3 ^ { \\circ } \\mathsf { C }$ .\nе Scenario 3: On target, meet emissions reductions and limit warming to less than $2 ^ { \\circ } \\mathsf { C }$ .\n2. Impact of extreme weather – Flooding, extreme temperatures, and other weather events are likely to impact key sourcing regions, potentially reducing productivity and disrupting supply chain distribution. These risks will be higher in a Scenario 1 as climate change manifests in greater environmental impacts, but lower if we meet climate targets. New Look works with strategic suppliers across geographies, providing flexibility and resilience to mitigate this risk.\nThrough our initial review of the reporting framework, and for each scenario, we are considering the following risks and anticipate that they are likely to impact New Look in the medium and long term.\nIn 2020, New Look created a board sub-committee: the Environmental, Social & Governance (ESG) Steering Group, which is chaired by the Chief Executive Officer (CEO). This Steering group is tasked with the delivery of the ESG programme.\n3. Regulation & Levies – Regulations and levies such as carbon taxes will be imposed on businesses to limit the impacts of climate change. More stringent strategies will take effect earlier in Scenario 3 to meet targets, increasing transitional impacts, whilst in Scenarios 1 and 2 transitions will be slower. To mitigate this risk, New Look will continue to meet regulations and monitor new regulations. In addition, we will work to achieve Science Based Targets (SBTs) which will reduce risks of increased costs associated with new regulations.\nNew Look has established a risk management framework that is detailed in the Risk and Uncertainties section of our Group Annual Report on page 16. This process also considers the impact of climate change on the business.\nNew Look are committed to aligning with the TCFD reporting, and in 2023, will engage third party expertise to analyse the following scenarios against the risks below, considering short, medium, and long term time horizons to assess these risks.", "chunk_word_count": 544, "section_path": "K N D > FSLM > Task Force on Climate-related Financial Disclosures (TCFD) reporting", "document_id": "New Look sustainability report", "page": 38, "page_start": 38, "page_end": 38 }, { "report": "New Look sustainability report .pdf", "chunk_idx": 32, "chunk_text": "# K N D\n## FSLM\n### Task Force on Climate-related Financial Disclosures (TCFD) reporting\n4. Customer Behaviour – As customers become more aware of climate change either through increased regulation in Scenario 3 or through the more tangible impacts of climate change scenario 1, we expect a higher demand on businesses to demonstrate sustainability in operations and products, as well as a possible reduction in buying new product. To mitigate this, we actively communicate our sustainability strategy, have a lower impact product brand ‘Kind’, and report annually against targets and recognised standards.\n### Sustainability Accounting Standards Board Disclosure (SASB)", "chunk_word_count": 100, "section_path": "K N D > FSLM > Task Force on Climate-related Financial Disclosures (TCFD) reporting", "document_id": "New Look sustainability report", "page": 38, "page_start": 38, "page_end": 44 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 0, "chunk_text": "# 2022 Global Impact Report\nTransforming digital payments to create economic opportunity\n## Table of Contents\nPlease visit our Global Impact website and Additional Resources section of this report for further public information on our ESG-related strategies, practices and policies. We are committed to transparent communication with our stakeholders and welcome feedback on this report and other ESG matters. Questions or requests for additional information can be directed to ESG@paypal.com.\n## Employees & Culture\n## Message from Our President & CEO\n## Responsible Business Practices\nManaging Risk & Compliance11\nManaging Our Global Workforce\nEnabling Effective Cybersecurity Management\n28\nLeading With Diversity, Inclusion, Equity & Belonging\nAbout PayPal\n14\nEnriching Our Global Data Management & Privacy Practices\n## 31 Empowering Employee Community Impact\n## 6 Upholding Business Ethics\nLinking Our Business & ESG Strategy\n### Appendix\n06\nAssessing & Prioritizing Our ESG Topics\nSupporting the U.N. Sustainable Development Goals\nEnvironmental Sustainability\n07\nMaintaining Strong Corporate Governance & ESG Oversight\n### Social Innovation\nTask Force on Climate-Related Financial Disclosure (TCFD) Summary\n## 34 Mitigating Our Climate-Related Risks\nPromoting Economic Opportunity for SMBs & Entrepreneurs\nESG Performance Metrics Table\n## 6 Managing Our Natural Resources\n## 2022 Highlights\nIndependent Limited Assurance Statement\nAdvancing Financial Health & Consumer Convenience\nAdditional Resources\nMaintaining a Safe Platform for Customers\nCreating More Ways to Give\nForward-Looking Statements\n### Message from Our President & CEO\nOur PayPal community is committed to democratizing financial services and empowering millions of consumers and merchants to join and thrive in the global economy. This purpose is the foundation on which our business and strategy are built, and it guides our efforts today. We believe operating with a strong sense of purpose helps drive long-term, sustainable growth by inspiring our employees and creating value for our shareholders, customers and other stakeholders.\n### Enabling Customers and Employees to Give More Easily\nWe are continually inspired by the generosity of our broader PayPal community. For the first time in our history, our customers donated more than \\$20 billion in a single calendar year to nonprofits and charitable causes through our platform. Recognizing the essential role PayPal plays in times of need, we have further integrated giving opportunities through Give at Checkout and Venmo Charity Profiles product solutions.", "chunk_word_count": 372, "section_path": "2022 Global Impact Report > 2022 Highlights > Message from Our President & CEO", "document_id": "PayPal Global Impact Report 2023", "page": 1, "page_start": 1, "page_end": 3 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 1, "chunk_text": "# 2022 Global Impact Report\n## 2022 Highlights\n### Prioritizing Our Employees’ Total Wellness\nFostering an engaged, diverse and resilient workforce is critical to achieving our mission. Through our Employee Financial Wellness Initiative, launched in 2019, we continued to provide tools and resources for our employees to build their financial wellness. We are proud to have exceeded our goal for our employees globally to have at least $\\scriptstyle 2 0 \\%$ of their discretionary income remaining after taxes and typical expenses are paid. This is an ongoing focus for PayPal and will continue to be an essential part of our approach to total wellness.\nIn our 2022 Global Impact Report, we share some of our efforts to help customers and communities thrive, provide innovative solutions to unlock greater opportunity for all and forge a path towards having a sustainable impact for our stakeholders in line with our commitments. Some highlights include:\nIn response to the devastating violence in Ukraine, we helped to facilitate more than \\$1.2 billion to support those impacted, including through donations made to nonprofits, person-to-person payments and money transfers. We continue to mobilize our platform and customers to respond to global crises, including after destructive natural disasters such as the earthquakes in Turkey and Syria, flooding in Pakistan and Hurricane Ian in Florida.\nIn my final year as president and CEO, I am proud of the enormous impact PayPal’s global community has created — and I am grateful to all our investors, customers, employees and partners who have championed this work. Over the past eight years, I have seen first-hand how our mission, vision and values reinforce the strength of the business and help create value for all of the stakeholders we serve.\n### Creating Economic Opportunity for Our Customers\nWe continue to work towards having a workforce that reflects the communities and customers we serve. Over the past year, we have expanded our talent pipeline, once again achieved global gender and U.S. ethnic pay equity and continued to support the development of diverse leaders across the company. Our ongoing efforts have led to an $1 1 \\%$ increase in diversity in leadership roles since we became an independent company in 2015.\nIn an increasingly digital economy, our products and services have never been more critical. For our merchants, we offered new tools to create efficient and flexible checkout experiences, including the launch of the Zettle Terminal in the U.S. and Tap to Pay in new markets. For consumers, our digital wallet continued to provide a secure and easy way to manage their daily financial lives. Last year, we introduced PayPal Rewards and interest-bearing savings accounts in the U.S. to help consumers achieve their financial goals faster.", "chunk_word_count": 450, "section_path": "2022 Global Impact Report > 2022 Highlights > Prioritizing Our Employees’ Total Wellness", "document_id": "PayPal Global Impact Report 2023", "page": 3, "page_start": 3, "page_end": 3 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 2, "chunk_text": "# 2022 Global Impact Report\n## 2022 Highlights\n### Responsibly Managing Our Environmental Footprint\nWe continue to concentrate our efforts on managing our environmental impacts and exploring sustainable innovations across our products and services. To reach our goal of achieving net-zero greenhouse gas emissions across our value chain by 2040, we are focusing on efficient and renewable energy use, partnering with our largest vendors (by spend) to manage emissions across our supply chain and considering ways to make digital commerce more convenient and sustainable. We are proud to increase our total renewable energy use to $90 \\%$ in 2022, while maintaining $100 \\%$ renewable energy for our global data centers.\nSignificant work remains to upgrade the financial system and democratize financial services so that more people and businesses can improve their financial health and pursue economic opportunity. I am confident that PayPal will continue to play a central role in this effort and, in turn, will drive long-term impact and sustainable growth going forward.\nOur employees are passionate about their communities and actively seek out opportunities to make a positive impact. In 2022, PayPal employees volunteered nearly 100,000 hours to nonprofits around the world. Community impact is an essential part of our culture that not only helps advance our mission but also engages and empowers our employees.\nWe continue to focus on enabling equitable access to capital for entrepreneurs from underserved communities, including facilitating more than \\$4 billion to small- and medium-sized businesses globally in 2022. In addition, our Economic Opportunity Fund investments in 19 minorityled venture capital funds deployed nearly \\$300 million in capital to over 250 portfolio companies globally, and for the second year in a row, we honored the legacy of Maggie Lena Walker by recognizing women who are creating opportunities for economic advancement in underserved communities.\n### Dan Schulman\nPresident and CEO, PayPal Holdings, Inc.\n### About PayPal", "chunk_word_count": 312, "section_path": "2022 Global Impact Report > 2022 Highlights > Responsibly Managing Our Environmental Footprint", "document_id": "PayPal Global Impact Report 2023", "page": 3, "page_start": 3, "page_end": 3 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 3, "chunk_text": "# 2022 Global Impact Report\n## 2022 Highlights\n### Putting Our Values into Practice\nPayPal Holdings, Inc.1 is a leading technology platform that enables digital payments and simplifies commerce experiences on behalf of merchants and consumers worldwide.\n“In 2022, we worked to optimize \nPayPal’s cost structure while \ncontinuing to invest in our high \nconviction initiatives and deliver on \nour mission. Our commitment to \nserve our customers and support \ntheir financial health ties directly \ninto our business performance. We \nbelieve PayPal’s combination of \nscale, profitability and stability is a strategic A \nadvantage as we \nnavigate this dynamic \nenvironment.”\nOur core values of Inclusion, Innovation, Collaboration and Wellness are driving forces for our Company and are part of our operating philosophy. They are an integral part of the decisions we make and the way we lead, inside and outside of the PayPal community. We believe they help stimulate the creativity and engagement of our global workforce to deliver products and services designed to meet the diverse needs of our customers.\nPayPal is committed to democratizing financial services to help improve the financial health of individuals and to increase economic opportunity for entrepreneurs and businesses of all sizes around the world. Our goal is to enable our merchants and consumers to manage and move their money anywhere in the world in the markets we serve, anytime, on any platform and using any device when sending payments or getting paid. We believe that effective management of non-financial risks and opportunities, including environmental, social and governance (ESG) topics, helps to create value for our stakeholders and deliver on our strategy and mission.\nWe operate a global, two-sided network at scale that connects merchants and consumers with 435 million active accounts — consisting of 400 million consumer active accounts and 35 million merchant active accounts — across more than 200 markets as of December 31, 2022.\n### Building on Our Values through Leadership Principles\nIn 2022, resulting from more than 2,000 conversations across our business, we developed 12 Leadership Principles based on our core values that establish a common set of expectations for all employees. We aim to continue integrating these principles across our business, talent and operations strategies. See Employees & Culture for more details.\nFor more than 20 years, we have remained focused on our mission to make financial services and commerce more affordable, convenient and secure for all. Our goal is that PayPal continues to be a trusted, everyday app for consumers and an essential tool to help merchants, including small- and medium-sized businesses (SMBs), marketplaces and large enterprises, manage and grow their business.\n### Gabrielle Rabinovitch\nActing Chief Financial Officer and SVP, Investor Relations and Treasurer San Jose, CA, U.S.\n### PayPal’s Payment Solutions2\n### Our Leadership Principles\nConsumers use PayPal for financial products and services and shopping tools\nMerchants integrate with PayPal to manage their business", "chunk_word_count": 475, "section_path": "2022 Global Impact Report > 2022 Highlights > Putting Our Values into Practice", "document_id": "PayPal Global Impact Report 2023", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 4, "chunk_text": "# 2022 Global Impact Report\n## 2022 Highlights\n### Linking Our Business & ESG Strategy\nStudies have shown that key non-financial risks and opportunities can impact the long-term value and growth of businesses.3 Our ESG strategy reflects how PayPal considers these topics across the organization and categorizes them across four core dimensions — Responsible Business Practices, Social Innovation, Employees & Culture and Environmental Sustainability. We remain focused on making progress to address financial and non-financial risks, including ESG priorities, in support of our business.\nFranz Paasche SVP, Chief Corporate Affairs Officer New York, NY, U.S.\n### Our Business Priorities\n### Our Stakeholder Value Creation\nOur 2022 Global Impact Report highlights not only “ the progress we have made on our focus areas and key metrics, but also the many ways in which we have unlocked new opportunities for our stakeholders. We believe that profit and purpose go hand in hand and that aligning our business with our mission and values is important to creating shared value and maintaining trust. This trust is critical to delivering innovation and impact at scale during times of change.\nCreating value for PayPal and our stockholders by prioritizing and investing in growth opportunities and managing risk.\nDriving and protecting brand value through strong governance, ethics and compliance across our value chain, including with suppliers and partners.\nGrowing our core business\nEnhancing our consumer and merchant value propositions\nForming and expanding strategic partnerships\nSeeking new areas of growth and innovation\nDemonstrating competitive advantage by providing customers with superior products that make financial services and commerce more affordable, convenient and secure.\n### Our ESG Focus Areas\nThis year’s report demonstrates the ways in which we bolstered our foundation to make our platform more secure, supported the economic resiliency of our customers, invested in the wellness of our employees and strove to reduce our impact on the planet. Our employees worked together to improve their communities, deliver innovative solutions for our customers and instill our mission to democratize financial services into everything we do.\nPositioning PayPal as an employer of choice by fostering a diverse workforce and collaborative, inclusive culture where employees can engage with each other and their communities.\nResponsible Business Practices Our commitment and approach to operating ethically and responsibly\n### Social Innovation\nOur work to realize our mission and build a more inclusive global economy\nEngaging with, and positively contributing to, the local communities in which we live and work around the world.\nEmployees & \nCulture \nOur embodiment of our \ncore values from the \ninside out\nEnvironmental Sustainability Our efforts to manage our footprint and advance sustainability\nWhile we are proud of the progress we have made, we also recognize how much work remains to ensure that every individual can participate fully and fairly in the global economy. We are committed to delivering long-term, sustainable impact for all stakeholders and invite you to join us in this effort.”\nMitigating environmental impacts to our business, and meeting regulatory requirements and investor and other stakeholder expectations.\n### Assessing & Prioritizing Our ESG Topics\nOur ESG strategy is based on the periodic significance4 assessment and prioritization of non-financial risks and opportunities identified by our business and our stakeholders as important for PayPal’s long-term success.\n### Engaging Our Stakeholders", "chunk_word_count": 540, "section_path": "2022 Global Impact Report > 2022 Highlights > Linking Our Business & ESG Strategy", "document_id": "PayPal Global Impact Report 2023", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 5, "chunk_text": "# 2022 Global Impact Report\n## 2022 Highlights\n### Key ESG-Related Engagement Topics\nAn essential aspect of effectively managing our key ESG topics, as well as informing our significance assessment, is our strategic approach to stakeholder engagement.\nBuilding on our ESG significance assessment conducted in 2020, we annually review our ESG significance map. In 2022, we reaffirmed our 18 key ESG topics, including eight designated as priorities5 for PayPal to drive long-term business performance and impact based on stakeholder feedback.\nInvestors: Succession planning, executive compensation, intersection of ESG and business strategies, data privacy, cybersecurity, Board and risk oversight\n### 4.38 2022 ESG engagement rating from investors out of 5 ( $+ 2 3 \\%$ from 2019) 6\nThe findings from our ESG significance assessment serve as an important input to inform how we strategically deploy resources across the enterprise and refine our ESG-related programs.\nCustomers: ESG approach, product education, business ethics, climate change, supplier diversity\nEmployees: Business strategy, product innovation, sustainability, workplace inclusion, community engagement\nWe value the regular input we receive from our global workforce, customers, investors, regulators, partners, suppliers and other stakeholders in seeking to continuously refine our ESG program. In late 2022, we completed our second investor-focused perception study to understand how investors view PayPal’s ESG strategy, investment case and communication efforts. We observed notable improvements since our inaugural study in 2019. The feedback helped inform our latest ESG significance assessment and reinforced the importance of aligning our financial and non-financial disclosures.\n[IMAGE CAPTION] 2022 ESG Significance Map\nRegulators: Cybersecurity, risk oversight, ESG strategy, climate change\nPartners: Civic engagement, small business support, employee wellness, climate change\nSuppliers: Business ethics, climate change, diversity\n### Reporting on Our Progress\nThis Report covers ESG strategies, activities, progress, metrics and performance from calendar year 2022, unless otherwise noted. In addition to findings from our latest ESG significance review and ongoing stakeholder engagement, we also conducted an annual benchmarking and review of industry peers and leading issuers to enhance and refine our disclosures based on best practices and emerging regulatory requirements.\nThis report is aligned with the Global Reporting Initiative standards, relevant SASB industry standards, the Ten Principles of the United Nations (U.N.) Global Compact, the Stakeholder Capitalism Metrics and U.N. Sustainable Development Goals (SDGs). See the Appendix for specific reporting to these frameworks and a Task Force on Climate-Related Financial Disclosures (TCFD) summary.\n### Maintaining Strong Corporate Governance & ESG Oversight\n### Prioritizing Diverse Perspectives in Our Board & Leadership\n## 2022 Corporate Governance Highlights Highlights\nWe seek to ensure our Board is composed of directors who have highly relevant skills, professional experiences and backgrounds, bring diverse\nIndependent Board Chair with significant responsibilities\nPayPal ranked on Fortune’s Modern Board 25 list of the most innovative boards of directors\n[IMAGE CAPTION] Board of Directors Diversity", "chunk_word_count": 463, "section_path": "2022 Global Impact Report > 2022 Highlights > Key ESG-Related Engagement Topics", "document_id": "PayPal Global Impact Report 2023", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 6, "chunk_text": "# 2022 Global Impact Report\n## 11 of 12 directors are independent and all directors stand for annual election\nRobust corporate governance practices are critical to executing our business strategy and driving long-term, sustainable value creation. Our overall governance framework is designed to drive strong oversight, create Board and management accountability and demonstrate PayPal’s commitment to transparency, independence and diversity. We seek to apply the same approach to the oversight, management and implementation of our ESG strategy.\nviewpoints and perspectives and effectively represent the long-term interests of our stockholders.\nDirector service limited to no more than four public company boards, including the PayPal Board\nThe Board conducts in-depth reviews on business strategy and engages with leaders on key topics of interest, including business objectives, the competitive landscape, capital allocation and ESG matters.\nDiverse characteristics considered in assessing Board composition including sexual orientation, ethnicity, nationality and cultural background\nThe Board values succession and refreshment as critical components of promoting and supporting the Company’s long-term strategy. The Corporate Governance and Nominating Committee (Governance Committee) regularly oversees and plans for director succession and Board refreshment, in addition to reviewing executive succession planning at least annually.\nCommitted to actively seeking highly qualified women and individuals from underrepresented communities to include in the initial pool from which director nominees are chosen\nOur commitment to strong corporate governance is detailed in our Proxy Statement, which provides extensive disclosure on our Board structure and composition, strategy and risk oversight, stockholder engagement, executive compensation and other key governance topics.\n[IMAGE CAPTION] Executive Leadership Diversity\nAnnual performance self-evaluations by the full Board and each committee\n“At PayPal, we believe that sound ESG governance \nand oversight is integral to our business and our \nability to drive company performance, deliver on our \nmission and uphold our values. Our enterprise-wide \napproach to responsible business management \nhelps us drive and protect brand value, \nmanage risk, demonstrate competitive \ndifferentiation, position PayPal as \nan employer of choice and support \nfuture opportunities for growth \nand innovation.” Brian Yamasaki\n### Incorporating ESG-Related Performance into Our Executive Compensation Program\nMajority vote standard for uncontested director elections\nStockholder right to call a special meeting\nBuilding on the long-standing risk and compliance ratings for each executive and the incorporation of diversity, inclusion, equity and belonging (DIE&B) considerations as part of our executive compensation program beginning in 2021, we continued to incorporate DIE&B actions and outcomes in our 2022 Annual Incentive Plan.\nProxy access for qualifying stockholders\nStrong stockholder engagement practices\nVP, Legal & Corporate Secretary San Jose, CA, U.S.\nRobust stock ownership requirements for our executives and directors", "chunk_word_count": 428, "section_path": "2022 Global Impact Report > 11 of 12 directors are independent and all directors stand for annual election > Incorporating ESG-Related Performance into Our Executive Compensation Program", "document_id": "PayPal Global Impact Report 2023", "page": 7, "page_start": 7, "page_end": 7 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 7, "chunk_text": "# 2022 Global Impact Report\n## 11 of 12 directors are independent and all directors stand for annual election\n### Adopting Sound ESG Governance\nWe believe our approach to ESG management is linked to long-term value creation for our stakeholders, including stockholders, employees, customers and the communities and markets where we operate.\nThe Governance Committee, comprising entirely independent directors, oversees PayPal’s ESG program and regularly reports out to the Board. In addition, the Compensation Committee and Audit, Risk and Compliance Committee (ARC Committee) are responsible for oversight of ESG issues associated with their respective areas of responsibility.\nOur cross-functional ESG program is directed and managed in collaboration with executives, including our Chief Financial Officer and Chief Corporate Affairs Officer, and implemented by cross-functional working groups with guidance and direction from the ESG steering committee.\nRepresentatives from the ESG steering committee brief Board committees and executive leadership on ESG issues quarterly and meet with a subcommittee of the Enterprise Risk Management Committee at least annually to review current and emerging ESG-related risk topics.\nKristina Friedman Head of Global ESG Strategy New York, NY, U.S.\n### Oversight\n### Management\nOur Board of Directors is actively engaged on ESG matters that impact business strategy.\nOur executive management directs and manages the execution of our enterprise-wide ESG strategy to help ensure non-financial risks and opportunities are appropriately integrated across the enterprise, including through the Enterprise Risk and Compliance Management Program (ERCM Program)\nGovernance Committee: Oversight of PayPal’s management of ESG topics, including overall ESG strategy, risks and opportunities, stakeholder engagement and programs and initiatives in social innovation and environmental sustainability\n• ARC Committee: Oversight of the Company’s risk framework and enterprise-wide compliance program, including cybersecurity and privacy matters\n### Implementation\nAn ESG steering committee and crossfunctional working groups with representatives from more than 20 functions are responsible for overall program implementation\nCompensation Committee: Oversight of the Company’s strategies and responsibilities related to human capital (global talent) management, including diversity and inclusion, pay equity efforts and corporate culture\n## 2022 Highlights\n### Key Financial & Operational Metrics9\n### Key ESG Metrics 9\n## RESPONSIBLE BUSINESS PRACTICES\n## EMPLOYEES & CULTURE\nin revenue (+8% spot basis and +10% FXN10 from 2021)\n26% minimum eNDI globally\n56% diverse workforce representation13 active accounts (+2% from 2021)\nIntroduced enhanced \npasswordless \nauthentication for \nour customers and \nemployees \nparticipated in \nData Week, double \nthe engagement \nfrom last year\nreaching $4 4 \\%$ global \ngender diversity \nand $54 \\%$ U.S. ethnic \ndiversity14\nby all employees in 2022 annual training cycle achieving our goal to reach at least $\\pmb { 2 0 \\% }$ PayPal-defined eNDI for our employees globally12\nvolunteered by employees across our workforce \\$1.36T\n## SOCIAL INNOVATION", "chunk_word_count": 447, "section_path": "2022 Global Impact Report > 11 of 12 directors are independent and all directors stand for annual election > Adopting Sound ESG Governance", "document_id": "PayPal Global Impact Report 2023", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 8, "chunk_text": "# 2022 Global Impact Report\n## ENVIRONMENTAL SUSTAINABILITY\ntotal payment volume (+9% spot basis and +13% FXN10 from 2021)\n\\$4.2B+ in access to capital\n2.9% average international remittance rate\n$80 \\%$ \noperational emissions \nreduction15\n22.3B\n### to nonprofits and causes\nfacilitated for smalland medium-sized businesses11\ndonated by 55M customers through the PayPal Giving Platform\ndemonstrating progress toward our science-based targets\nincluding $100 \\%$ \nrenewable energy \nsourcing for our data \ncenters globally\nmaintaining an average international remittance rate below $3 \\%$ , aligned with the U.N. SDG 2030 target\nhave set or committed to science-based climate targets16\npayment transactions (+16% from 2021)\n29.9K global employees\n### Select Awards & Recognitions\nAmericas Europe & Middle East Asia-Pacific\nJUST Capital America’s JUST 100\n### Newsweek America’s Most Trusted Brands\n### Forbes World’s Best Employers\n### Fortune World’s Most Admired Companies\nCDP Climate Rating A-\n14 Ethnically diverse includes U.S. EEO-1 defined categories American Indian or Alaska Native, Asian, Black or African American, Hispanic or Latino, Native Hawaiian or Other Pacific Islander or Two or More Races.\n12 The PayPal-defined estimated net disposable income is the percent of discretionary income remaining for our employees after taxes and typical living expenses are paid. This metric is calculated through a thirdparty model that utilizes independent data on market-based costs across selected geographies. The model was enhanced from prior periods to incorporate best practices and methodological improvements.\n## 13 Global women and U.S. ethnically diverse men.\n15 From 2019 baseline. Operational greenhouse gas emissions include those emission sources covered by Scope 1 and Scope 2 market-based method (MBM) as defined by the Greenhouse Gas Protocol and the Science-Based Targets initiative. While we observed operational GHG reductions exceeding our 2025 goal, we recognize that in future years this may change as employees continue to return to the office and the Company continues to grow.\n## 2022 Summary Highlights\n### Responsible Business Practices\n• Introduced enhanced passwordless authentication for our customers and employees. \n• Revised our enterprise risk categories to reflect our latest risk assessment. \n• Established five principles for Responsible Artificial Intelligence (AI).\n“The industry faces pressure to prioritize \nspeed and efficiency over effectiveness \nand safety. At PayPal, we know that \nour biggest currency is trust — with \ncustomers, regulators, employees and \nother stakeholders — and now is the time \nto focus on continuing to invest in our risk \nmanagement practices and \nprioritize safe and secure \nproducts for all.”\nSafeguarding customer trust and operating in a consistent and ethical manner are vital to achieving the Company’s long-term business strategy. These efforts are underpinned by our approach to risk management and oversight, including policies and standards to protect our customers and platform.\n4K+ employees attended\n50+ sessions\nAcross our enterprise, we are committed to the goal of responsibly managing our infrastructure, protecting customer data, efficiently managing our supply chain and advocating for policies that promote the interests of our customers, employees and communities.\nduring our third annual Data Week\n### Andrea Donkor\nSVP, Global Regulatory Relations and Consumer Practices, PPI Chief Compliance Officer New York, NY, U.S.\n100% training completion\nby all employees in 2022 annual training cycle", "chunk_word_count": 519, "section_path": "2022 Global Impact Report > 2022 Summary Highlights > Responsible Business Practices", "document_id": "PayPal Global Impact Report 2023", "page": 9, "page_start": 9, "page_end": 10 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 9, "chunk_text": "# 2022 Global Impact Report\n## 2022 Summary Highlights\n### In This Section\n$\\bullet$ Managing Risk & Compliance \n$\\bullet$ Enabling Effective Cybersecurity Management \n$\\bullet$ Enriching Global Data Management & Privacy Oversight \nUpholding Business Ethics\n### Managing Risk & Compliance\nWe apply the Three Lines of Defense model for risk management, which consists of management, oversight and independent assurance. Our executives are responsible for assessing and managing risk with independent guidance and oversight from our company-wide Risk and Compliance Oversight function. Our Board of Directors is responsible for overall risk assessment and management oversight, with the ARC Committee overseeing and reviewing our overall risk management framework. Our Internal Audit program seeks to provide independent assurance and is externally assessed by the Institute of Internal Auditors (IIA) to conform with the IIA Code of Ethics and Standards.\nIn addition, we formally mapped and integrated key ESG topics and programs into our enterprise risk taxonomy and strive to continually enhance our risk management approach globally. For example, in 2022, in collaboration with our teams across Europe, we identified an initial set of risk metrics to evaluate environmental risk management in the region, in accordance with legal requirements.\n### Setting Strong Business Resiliency Practices & Policies\nWe take an enterprise-wide approach to business resiliency in order to manage and minimize the impacts of a disaster or other incidents that may disrupt PayPal business functions, IT systems, customers and the broader financial sector. Our PayPal Resiliency Program is designed to reduce continuity of operations risk, enable mitigation of potential impacts, prepare teams to respond effectively, maintain operations during periods of disruption and safeguard employee welfare. This program applies across PayPal and its subsidiaries, as well as to third parties acting on our behalf.", "chunk_word_count": 288, "section_path": "2022 Global Impact Report > 2022 Summary Highlights > In This Section", "document_id": "PayPal Global Impact Report 2023", "page": 10, "page_start": 10, "page_end": 11 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 10, "chunk_text": "# 2022 Global Impact Report\n## 2022 Summary Highlights\n### Protecting the Health & Safety of Our People\nAligned with the ISO 22301 standard, the Federal Financial Institutions Examination Council and other governmental regulatory standards, our Enterprise Resiliency Policy outlines scenario planning procedures, functional roles and responsibilities, reporting expectations and documentation management for business continuity and disaster recovery at PayPal. This includes:\nOur Enterprise Risk and Compliance Management Program (ERCM Program) reflects PayPal’s programmatic approach to identifying, measuring, managing, monitoring and reporting key risks facing our Company. In 2022, we revised our enterprise risk categories to reflect our latest assessment.\nPayPal Global Safety and Security teams are tasked with monitoring, evaluating and responding to acute and chronic physical risks to our operations, including extreme weather and other events, as part of our incident response procedures.\nOur risk management committees oversee the implementation and execution of the ERCM Program, including the Enterprise Risk Management Committee (ERMC). The ERMC is the highest-level risk management committee and is co-chaired by PayPal’s Chief Risk and Compliance Officer and Chief Enterprise Services Officer, which regularly review and discuss the overall effectiveness of the ERCM Program with the ARC Committee and the full Board. To further reinforce the link between our governance of ESG matters and our risk management programs, we regularly report on emerging ESG trends to a subcommittee of the ERMC.\nWe also develop and implement risk management procedures and programs related to the personal safety of employees, including accident and injury prevention, wellness promotion and compliance with applicable environmental and health and safety laws and regulations. PayPal’s Environmental Health & Safety (EHS) Policy & Procedures align with the ISO 45001 standard, apply to all PayPal facilities and functional areas and detail the requirements, roles and responsibilities related to environmental health and safety risks, controls, monitoring, reporting and escalation. We are committed to continuing to improve our EHS program and regularly conduct reviews to facilitate compliance with relevant national and local EHS regulatory requirements.\n• Regular training for identified Incident Response Team members across business functions. • Requirements for at least annual tabletop exercises and testing to provide ongoing readiness. • Recovery and restoration protocols following an incident.\n### Enabling Effective Cybersecurity Management\nThe security of our customers and platform is one of our top priorities. We continue to implement a proactive security philosophy intended to provide strong oversight structures to achieve our security goals. Our Chief Information Security Officer (CISO) oversees our cybersecurity management function across our global enterprise, with Board oversight from the ARC Committee. As part of our ERCM Program, our Information Security Program is designed to support the Company in identifying, protecting, detecting, responding to and recovering from cybersecurity threats.\n### Securing Our Customers & Platform\nWe continue to invest our time and resources in strengthening the security of our products and services to remain one of the world’s most trusted payment platforms.\nIn 2022, PayPal implemented enhanced passwordless authentication for our customers through the introduction of passkeys and for employees accessing devices and applications that leverage corporatemanaged identities. See our Social Innovation section for more information.\n### PayPal’s Collaborative Approach to Further Customer Protection", "chunk_word_count": 525, "section_path": "2022 Global Impact Report > 2022 Summary Highlights > Protecting the Health & Safety of Our People", "document_id": "PayPal Global Impact Report 2023", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 11, "chunk_text": "# 2022 Global Impact Report\n## 2022 Summary Highlights\n### Prioritizing External Validation & Engagement on Our Information Security Program\nPayPal’s unique two-sided network gives us the opportunity to enhance customer protection through a combination of sophisticated risk models, fraud detection and data security controls.\nOur commitment to security is evident in our efforts to adhere to industry best practices and alignment with top frameworks such as the NIST Cybersecurity Framework and ISO 27001 certification. Reinforcing our dedication to maintaining high standards, we have proudly served on the Board of Advisors for the Payment Card Industry (PCI) Security Standards Council since 2015.\nPayPal’s Incident Management process provides a coordinated approach to promote effective and timely risk response and management of highly impactful events. Our program aims to prepare us for a range of incidents we may encounter, including those pertaining to technology, fraud, cybersecurity, security and our brand. We focus on quick and effective mitigation of incidents, restoration of services, recovery of impacts, as well as communications and root cause and corrective feedback mechanisms.\nPayPal’s cybersecurity teams, in coordination with the Cyber Defense Center, defend against and mitigate risks to the availability of our systems, as well as protect the data we process and store. PayPal’s anti-fraud teams, in coordination with the Fraud Defense Cyber Center, focus on operationalizing fraud intelligence to proactively prevent fraud and abuse and mitigate risk to our products, services and customer data.\nPayPal’s internal audit and oversight testing functions regularly review our information security programs. In addition, our information security program is externally validated, including annual audits conducted by independent third parties covering ISO 27001, PCI-DSS, PCI-P2PE, PCI PIN, SOC-1 and SOC-2. We also actively contribute to security standards through PCI and remain engaged with governments worldwide to stay abreast of evolving threats and manage risk.\nProtecting our customers and platform is a joint effort of these crucial functions. Our security and fraud teams work alongside customer support to collaborate and share insights to empower internal and external partners to enhance PayPal’s customer and data protection capabilities. We perform 24/7 monitoring and measurement to promote system reliability and maintain the integrity of PayPal’s production and corporate environments.\n### Maintaining PayPal’s Thorough Cyber Attack Risk Response Process\nPayPal helps protect customers from phishing through security awareness initiatives, proactive phishing site takedowns and improved phishing detection across the ecosystem. For example, last year we published a new consumer awareness video tutorial on how to detect and report phishing to PayPal. In 2022, we also released findings from our two-year research project on new techniques to defend against advancements in phishing websites at the ACM Computer and Communications Security Conference.\nIn addition to cyber threat monitoring and quarterly cybersecurity risk assessments, we review and conduct exercises on our disaster recovery and business continuity plans at least annually. We have an established breach response process to protect the integrity of PayPal’s platform.\n### Safeguarding Our Platform & Customers from Illegal Activity\n### Partnering to Advance Security & Protection Capabilities", "chunk_word_count": 500, "section_path": "2022 Global Impact Report > 2022 Summary Highlights > Prioritizing External Validation & Engagement on Our Information Security Program", "document_id": "PayPal Global Impact Report 2023", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 12, "chunk_text": "# 2022 Global Impact Report\n## 2022 Summary Highlights\n### Delivering a Wide-Ranging Bug Bounty Program\nPayPal is actively involved with organizations to support the advancement of the security ecosystem and improve customer protection. Current memberships and sponsorships include the Anti-Phishing Working Group (APWG), Financial Services Information Sharing and Analysis Center, FIDO Alliance, Women in Cybersecurity, World Economic Forum’s Centre for Cybersecurity and National Cyber-Forensics Training Alliance.\nWe continuously work to combat and prevent the illicit use of our services and strive to make our platform safe and secure for all to use. We devote significant resources globally to financial crime compliance and refer cases to assist law enforcement officials in their efforts to identify, investigate and stop illegal activity.\nPayPal partners with HackerOne’s global community of independent security researchers, who help to make our products and services more secure. We hosted our third annual LiveHack Event in 2022, to bring together PayPal security engineers, external researchers and the HackerOne triage team to find and remediate vulnerabilities in real time within PayPal’s internal applications. We also held an internal Bugfest event, where PayPal engineers from across the globe collaborated in person and virtually to improve the security, functionality and user experience of our products.\nWe also seek to amplify our capabilities beyond PayPal through multisector partnerships and initiatives and look for new opportunities to utilize our data, relationships and investigation teams to further protect our customers and communities. We employ our expertise to identify, interrupt and enable prosecutions for those who traffic fentanyl, opioids and other drugs, launder money, defraud customers, engage in human trafficking and child exploitation and enable terrorist activities. For example, as a member of the Tech Coalition and ICMEC’s Financial Coalitions, we work collaboratively to protect children from online sexual exploitation and abuse. This partnership model will continue to be an important lever in contributing to the work of stopping global financial crimes.\nIn 2022, we contributed to continued research with leading research groups, peer companies and universities to support a more secure digital economy for all, including:", "chunk_word_count": 342, "section_path": "2022 Global Impact Report > 2022 Summary Highlights > Delivering a Wide-Ranging Bug Bounty Program", "document_id": "PayPal Global Impact Report 2023", "page": 13, "page_start": 13, "page_end": 13 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 13, "chunk_text": "# 2022 Global Impact Report\n## 2022 Summary Highlights\n### Promoting Awareness & Education for Employees\n• Finalizing research with Georgia Institute of Technology, resulting in the development of risk signals to help prevent fraud in a passwordless authentication environment.\nOur Information Security Training and Awareness program focuses on employee development and education, the needs of the enterprise and the shifting cyber-threat landscape. In addition to required annual information security compliance training for all employees and contractors, we offer ongoing learning opportunities to increase security awareness across PayPal, with specific educational programs for our engineers.\n• Partnering with the Official Monetary and Financial Institutions Forum to publish The Role of Data Science in Maintaining Trust and Responsible Innovation, underscoring how data can be used effectively to protect consumers from fraud and improve the quality of the user experience.\n• Continuing our work with the APWG and presenting findings on pervasiveness of scam websites and the protections that can be implemented to help prevent these sites from reaching users at the 2022 eCrime Conference.\nOur 2022 Cybersecurity Awareness Month included various activities, including our third annual internal Security Conference. We engaged with our employees globally throughout the month, providing a broad range of opportunities to expand their security knowledge and awareness.\n• Collaborating with North Carolina State University to improve customer protection by measuring and supporting the prevention of abuse of telecommunication infrastructure in phishing attacks and scams.\n### Enriching Our Global Data Management & Privacy Practices\n### Fortifying Our Approach to Data Hygiene", "chunk_word_count": 253, "section_path": "2022 Global Impact Report > 2022 Summary Highlights > Promoting Awareness & Education for Employees", "document_id": "PayPal Global Impact Report 2023", "page": 13, "page_start": 13, "page_end": 13 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 14, "chunk_text": "# 2022 Global Impact Report\n## 2022 Summary Highlights\n### Strengthening Our Global Privacy Program & Policy Infrastructure\nThe EDG Program aims to proactively drive consistent and standardized internal data management practices and processes to strengthen trust and confidence in PayPal’s data, support future business growth and achieve Company objectives. We deploy data quality measurements and monitoring to protect critical data identified across the Company.\nOur Global Privacy Program guides and supports the business based on our Data Management Principles and Privacy by Design practices and helps to ensure that our privacy program is in compliance with the evolving global privacy landscape and regulatory guidance. The Global Privacy Program includes the execution of the privacy risk assessment process, preparation of the Annual Privacy Plan, privacy monitoring and testing, issue management and training.\nWe work to embody a data- and privacy-aware culture that prioritizes responsible use of data through transparency, education, enterprise standards and innovation. PayPal has established a tiered governance structure to drive data management best practices and accountability across the Company. For information on how we empower and educate our customers on data privacy see Social Innovation.\nPayPal’s EDG Program supports end-to-end data management, from collection to disposal. The team collaborates with functions across the business and helps establish practices in accordance with our industry-aligned enterprise data management framework, which includes data quality, accountability, stewardship and risk management. Our Enterprise Data Governance Policy and associated documents align with this overarching framework.\nBased on our Data Management Principles, PayPal strives to maintain strong oversight and standards on central tenets of data privacy, including notice and transparency, choice and consent and data lifecycle management.17 Our program is focused on driving awareness and enabling our teams to consider these principles in strategies and decision-making processes related to the collection, use, minimization and sharing of data.18 All employees, contractors and third parties are required to follow the Enterprise Record Retention policy that defines our practices on the storage and retention of data. See our Legal Hub and Privacy Statement for additional information.\nOur Enterprise Data Governance (EDG) Program, included in the office of the Chief Information Officer, advances our enterprise data management and governance activities. Our EDG Program partners with the Global Privacy and Data Management Oversight function, led by our Chief Privacy Officer, which is independent from the business, provides oversight as part of the ERCM Program, and is ultimately overseen by the Board through its ARC Committee.\nOur Board and senior management review the Annual Privacy Plan and management provides periodic reporting to the ARC Committee, the ERMC and others as appropriate on the strategy, implementation and effectiveness of privacy risk management, including reports on emerging trends and topics, privacy-related audits and examination highlights and privacy impact assessment results and escalations.\nAlso in 2022, the Data Management Oversight function developed additional internal policies to enhance our data management risk oversight and regulatory compliance controls, including formalizing policies on open banking and data localization. The team also developed risk statements to identify, establish and document accountability, controls and risk mitigation practices on relevant data management risks.", "chunk_word_count": 514, "section_path": "2022 Global Impact Report > 2022 Summary Highlights > Strengthening Our Global Privacy Program & Policy Infrastructure", "document_id": "PayPal Global Impact Report 2023", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 15, "chunk_text": "# 2022 Global Impact Report\n## 2022 Summary Highlights\n### Strengthening Our Global Privacy Program & Policy Infrastructure\nPayPal’s internal audit function conducts independent reviews of the data management and privacy programs and assesses the effectiveness of governance, risk management and controls. Additionally, all PayPal employees and contractors are required to complete annual training on privacy and data management, and, in 2022, PayPal held its first annual data stewardship training.\n[IMAGE CAPTION] Data Management Principles\n### Executing Data Privacy Due Diligence on Third Parties\nPayPal seeks to conduct due diligence on third parties’ privacy policies and data protection safeguards, including for potential acquisitions and strategic investments, to help ensure the controls are consistent with PayPal policies and applicable laws. The process involves review of internal and public-facing policies and practices, internal systems that access or store data, data security reports, data processing registrations and submissions to relevant governmental bodies to understand past and current data practices.\n[IMAGE CAPTION] Five Principles of Responsible AI:\n### Committing to Responsible AI Practices\nAs industry moves toward adopting more Artificial Intelligence (AI) systems, PayPal is committed to promoting the responsible use of this technology across our business. We’ve established a Responsible AI Steering Committee consisting of cross-functional representatives who oversee AI-related developments and provide regular updates to our Chief Risk and Compliance Officer for appropriate escalation to our ERMC and Board.\n“To innovate responsibly means we must think deeply about the impacts of technology on our customers’ lives, so that more people reap the benefits of innovation, while providing governance and mitigating unintended risks and potential harm. At PayPal, we take an intentional and rigorous approach\nWe have established five principles of Responsible AI, which are aligned with global regulators’ guidance. We have taken a risk-based approach to adopt these principles by prioritizing potentially high-risk AI applications.\n### Partnering to Advance Privacy by Design\nPayPal’s Global Privacy team is collaborating with the Center for Financial Inclusion at Accion, an independent global think tank that uses research and advocacy to advance inclusive financial systems for low-income people around the world. Through this partnership, we are exploring the intersection of digital finance and data privacy and working to create a free, implementable toolkit for fintech companies to embed privacy principles into the design of their financial products and services.\nJean Chong VP, Financial and Model Risk Oversight New York, NY, U.S.\nPayPal ranked #38 on Newsweek’s America’s Most Responsible Companies list\n### Driving a Data-Responsible Culture\nIn 2022, PayPal employees hosted and attended our third annual Data Week, which helps build employee awareness of the latest advances in data topics and continues our culture of data responsibility, privacy and strong data governance. Over 4,000 employees participated live across 52 sessions around the world, double the engagement from 2021.\nFifty-five teams composed of 175 participants submitted their ideas to the Data Week hackathon showcasing their dedication to effective data management across the Company and to our core values of Innovation and Collaboration.\n### Upholding Business Ethics", "chunk_word_count": 499, "section_path": "2022 Global Impact Report > 2022 Summary Highlights > Strengthening Our Global Privacy Program & Policy Infrastructure", "document_id": "PayPal Global Impact Report 2023", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 16, "chunk_text": "# 2022 Global Impact Report\n## 2022 Summary Highlights\n### 100%\nOur Code of Business Conduct & Ethics (Code of Conduct), available in 14 languages, provides guidance for our employees, directors and everyone working for PayPal and its subsidiaries on ethical and responsible behavior. We refresh the Code of Conduct at least annually to reflect our latest programs, policies and expectations. Our most recent update incorporated our new Leadership Principles.\nOur Speak Up culture is espoused by our leadership and actively promoted by the Ombuds/Ethics team through outreach and awareness sessions. Our Chief Risk and Compliance Officer provides periodic updates to the ARC Committee on significant program metrics and investigations.\nIn 2022, we continued to build awareness of ESG considerations with internal stakeholders across the vendor lifecycle. We also conducted one-onone engagements with high-impact suppliers on climate change and continued our efforts to support supplier diversity. Read more about how we engage our vendors on diversity and climate change in Employees & Culture and Environmental Sustainability, respectively.\nemployee completion of 2022 annual training19\nWe require every employee and contractor to complete our annual training, which covers areas such as our Code of Conduct, anti-money laundering, information security awareness, data privacy, anti-bribery and corruption, safety and security and sexual harassment awareness and prevention. In addition, upon joining PayPal and annually thereafter, our employees must certify that they understand and will comply with the Code of Conduct.\n### Managing Our Supply Chain Responsibly\nDue to the digital nature of our business, our supply chain consists primarily of the procurement of various direct and indirect goods and services (such as IT infrastructure, marketing, real estate, consulting and labor) and corporate partnerships. We work with a small number of third parties to manufacture goods (e.g., Zettle card readers) and do not manufacture anything directly.\nOur Code of Conduct reinforces that we are all empowered to speak up or seek advice without fear of retaliation. Employees have multiple avenues to share their concerns or ask questions anonymously.\n### Committing to Political Transparency\nPayPal’s commitment to pursuing transparent disclosure and strong governance extends to our lobbying and political transparency policies and practices. We adopted many of the best practices put forth by the Center for Political Accountability in their Zicklin Index and in 2022, we maintained our “Trendsetter” categorization.20\nBeyond our Code of Conduct, we require all employees, third parties and other stakeholders such as contingent workers to abide by our enterprise policies, including our Conflict of Interest, Ethics Reporting and Whistleblower and Anti-Bribery and Corruption policies.\nWHEN to speak up:\nCulture\nWorkplace Safety\nMisconduct\nAcross our value chain, we seek to partner with third parties who share our commitment to business ethics. All third parties and subcontractors are expected to comply with our Third Party Code of Conduct & Ethics, which sets forth our expectations regarding human and labor rights, environmental responsibility, anti-bribery and improper payments, occupational health and safety, consumer protection, financial crimes compliance and other requirements.", "chunk_word_count": 493, "section_path": "2022 Global Impact Report > 2022 Summary Highlights > 100%", "document_id": "PayPal Global Impact Report 2023", "page": 16, "page_start": 16, "page_end": 16 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 17, "chunk_text": "# 2022 Global Impact Report\n## 2022 Summary Highlights\n### HOW to speak up:\nCall the confidential Integrity Helpline available 24/7 in multiple languages\nThe Governance Committee oversees our political contributions, lobbying expenditures and interactions with government officials. To provide consistency with the Company’s business objectives and public policy priorities, at least annually the committee reviews and discusses with management our political activities and expenditures, including those of the PayPal Political Action Committee, as well as Companyrelated guidelines and policies. To find out more about PayPal’s lobbying disclosures and political transparency practices, please visit our Government Relations website.\n### Respecting Human Rights\nEscalate concerns or questions with their manager or HR business partner\nOur Code of Conduct outlines our commitment to managing potential human rights risks and opportunities across the Company, which is informed by our initial human rights impact assessment completed in 2021. Additionally, our Joint U.K. and Australia Modern Slavery Statement highlights the steps we have taken to mitigate and prevent modern slavery and human trafficking practices across our Company and value chain.\nEmail the Ombuds/Ethics team directly using the dedicated Speak Up email alias\nOur third-party risk management program works to establish appropriate risk-based due diligence for new and existing suppliers based on the potential risks and impacts of their product or service to our business. We aim to hold our third-party partners to high standards of risk management and ethical behavior, and review and investigate potential noncompliance to determine appropriate next steps, which may range from control environment enhancements to termination.\nEngage a Business Ethics Officer in their local office\n### Social Innovation\n• Offered new products and services to help consumers save on everyday purchases and advance long-term financial goals through PayPal Rewards, PayPal Savings and responsible Pay Later solutions.\nFacilitated over 1.2 million loans to small- and mediumsized businesses (SMBs) since 2013, resulting in access to more than \\$25 billion in capital, including \\$4.2 billion in 2022.22\nEconomic opportunity is core to our mission at PayPal — it influences the products we create and the partnerships we form and enables us to create stakeholder value by expanding our services to meet our customers’ needs.\n1.2M loans\n• Through our Economic Opportunity Fund’s investments in 19 venture capital funds, we supported over 250 early-stage companies, many with diverse founders.\nWe are committed to transforming the digital payments ecosystem to advance the success of businesses and individuals around the world, driving opportunity for the underserved and underbanked to support our communities and leveraging our platform to promote global generosity. This year, we introduced and enhanced our product offerings to continue to provide merchants, entrepreneurs, consumers and nonprofits the tools they need to thrive in the digital economy.\nOver 1 million accounts enrolled in passkeys since launch in October 2022.\n• Expanded our automated self-service portal globally to customers in over 200 markets to help them exercise their individual right to manage their personal data and marketing choices, as applicable.21\nAssisted 55 million customers in donating over \\$20 billion in funds to nonprofits and causes globally.\n\\$20B+ customer donations\n• Enabled more than \\$600 million in humanitarian aid and refugee support in Ukraine through PayPal and our partner platforms.\n### SDGs Reflected in This Section", "chunk_word_count": 538, "section_path": "2022 Global Impact Report > 2022 Summary Highlights > HOW to speak up:", "document_id": "PayPal Global Impact Report 2023", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 18, "chunk_text": "# 2022 Global Impact Report\n## 2022 Summary Highlights\n### In This Section\n• Promoting Economic Opportunity for SMBs & Entrepreneurs \n$\\bullet$ Advancing Financial Health & Consumer Convenience \n$\\bullet$ Maintaining a Safe Platform for Customers \n• Creating More Ways to Give\n### Promoting Economic Opportunity for SMBs & Entrepreneurs\n### Facilitating Small Business Lending\n### Investing for Fintech Innovation\nThis year, we added to our credit offerings with the PayPal Business Cashback Mastercard, 23 which enables small business owners to get unlimited $\\mathfrak { 3 \\% }$ cash back on all PayPal purchases and ${ \\mathfrak { 2 } } \\%$ cash back on everything else with no annual fee, so they can earn rewards on purchases to reinvest in their business.24\nIn 2022, we reached a new milestone of facilitating access to over \\$25 billion in capital for SMBs since 2013 through more than 1.2 million loans as part of our merchant financing solutions, including PayPal Working Capital and PayPal Business Loans.26 To expand our reach and support SMBs in new markets, this year we launched PayPal Working Capital in France and the Netherlands.\nThrough PayPal Ventures, our corporate venture capital arm, we strategically invest in promising financial technology, commerce, infrastructure and blockchain startups to help bring transformative solutions to market. Since its inception in 2017, PayPal Ventures has made more than 65 investments totaling $\\$ 1.35$ billion. New investments in 2022 included the following:\nWe launched the Venmo Business Grant Program, an initiative designed to support emerging and small business owners using Venmo Business Profiles. Twenty finalists each received a $\\$ 10,000$ grant to use toward\nWe believe our platform, products and services can help to support the operations and growth of entrepreneurs and SMBs. Beyond providing SMBs with a suite of business-critical products and services, we also establish partnerships, conduct research and advocate to enhance opportunities for businesses globally, particularly those businesses from historically underserved and underbanked communities.\n• Forage builds payments infrastructure that processes government benefits, starting with SNAP EBT (food stamps) online, enabling 42 million Americans to spend their food benefits on the internet.\n## \\$4.2B+\\$25B+\n1.2M+\nbusiness expenses, as well as technical advice and mentorship from PayPal and Venmo employees and our partners Start Small, Think Big and Taproot Foundation.\n## 2 million+ Venmo Business Profiles25\n### loans to SMBs since 2013\nin access to capital for SMBs in 2022\nin access to capital for SMBs since 2013\n• Northstar makes it easier for employees to access affordable, personalized financial advice by working with leading companies to provide financial wellness tools.\nWe enhanced PayPal’s complete payments solution for SMBs, providing simplified checkout options and more payment choices to improve customer experience and help drive checkout completions.\n### Supporting Sun Market Through a Venmo Business Grant\n• Paymob develops financial technology solutions that power millions of transactions and fuel the growth of businesses of all sizes across the Middle East, Africa and Pakistan.", "chunk_word_count": 488, "section_path": "2022 Global Impact Report > 2022 Summary Highlights > In This Section", "document_id": "PayPal Global Impact Report 2023", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 19, "chunk_text": "# 2022 Global Impact Report\n## 2 million+ Venmo Business Profiles25\n### Supporting SMBs With New Products & Partnerships\nSun Market provides access to organic, locally grown and affordable produce for food-insecure communities. As a Venmo Small Business Grant recipient, founder Gabbie Atsepoyi will now be able to sell produce at half price to families, build another storage facility and create an online marketplace to extend\nWe expanded the global availability of select products to help deliver a flexible in-store checkout experience by:\nHappy Returns partnered with Shopify to launch Return Shopping, a free feature allowing Shopify merchants, many of whom are SMBs, to re-engage customers during the return process. Merchants can waive processing fees on returns and offer customers discounts to incentivize the purchase of new items from their websites. It also helps merchants simplify their accounting and financial reporting by keeping the transactions separate.\n• Xepelin created a financial services platform to help provide fair and efficient access to resources and capital for SMBs in Latin America.\n• Extending the availability of the Zettle Terminal mobile point-of-sale device to merchants in the U.S.\n• Launching Tap to Pay with Zettle by PayPal for SMBs in the Netherlands, Sweden, the U.K. and additional markets across Europe, enabling individual sellers and small businesses to accept contactless payments in person on their Android mobile devices with no additional fees.\n“While one in eight Americans receives government assistance to buy groceries, until recently, recipients were unable to use their benefits online. At Forage, our mission is to democratize access to government benefits, and PayPal Ventures’ funding will help us\naccess to fresh produce.\nGabbie Atsepoyi Founder, Sun Market Venmo Business Grant Recipient\nto expand the acceptance of SNAP EBT payments online for low-income Americans.”\n### Delivering Efficient Payments to Freelancers\nforage\nLearn more about SMBs that have found success with the help of PayPal products by visiting our Small Business Spotlight series.\nWith Mastercard, we introduced the Hyperwallet Original Credit Transaction, which supports large businesses and marketplaces in delivering quick and secure payments to contract workers, freelancers and others, helping payees receive earned money almost instantly. The service launched in select markets in Europe in 2022.\nOfek LavianCo-Founder & CEO, Forage\n### Championing Women’s Economic Equity\n### Enabling Opportunity for Underserved Businesses\n### Partnering to Drive Impact", "chunk_word_count": 385, "section_path": "2022 Global Impact Report > 2 million+ Venmo Business Profiles25 > Supporting SMBs With New Products & Partnerships", "document_id": "PayPal Global Impact Report 2023", "page": 18, "page_start": 18, "page_end": 18 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 20, "chunk_text": "# 2022 Global Impact Report\n## 2 million+ Venmo Business Profiles25\n### Celebrating the Legacy of Maggie Lena Walker\nWe believe we have a responsibility to promote the role of women in the financial system and advance economic equity through our resources, platforms and tools. As the private sector lead for the Economic Justice and Rights Action Coalition of the U.N. Women’s Generation Equality Forum, we made a commitment of \\$108 million to advance financial inclusion and economic empowerment for women and girls by 2026. In 2022, we made progress by:\n$\\ln 2 0 2 2$ , we began new partnerships and extended existing relationships to support underserved communities in the U.S., including:\nWe continue to build on our work to support small businesses, particularly those from underserved and underrepresented communities, including Indigenous, Black, Latinx and women-owned businesses globally.\nFor the second year, PayPal honored the legacy of Maggie Lena Walker, the first Black woman — and first woman — to charter and lead a U.S. bank, with the Maggie Lena Walker Awards, which acknowledge the achievements of women who work to provide economic opportunity in underserved communities.\n• Continuing to support The Southern Communities Initiative (SCI) in the deployment of corporate resources into communities across the southern U.S., home to over $50 \\%$ of all African Americans.", "chunk_word_count": 218, "section_path": "2022 Global Impact Report > 2 million+ Venmo Business Profiles25 > Celebrating the Legacy of Maggie Lena Walker", "document_id": "PayPal Global Impact Report 2023", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 21, "chunk_text": "# 2022 Global Impact Report\n## 2 million+ Venmo Business Profiles25\n### Working to Expand Access to Capital Through the Economic Opportunity Fund\n• Joining the Corporate Advisory Council of the National Center for American Indian Enterprise Development, which is focused on supporting Indigenous-owned businesses and tribes through access to economic opportunity.\nWe continue to make targeted investments through our Economic Opportunity Fund (EOF), a $\\$ 500$ million commitment to leverage treasury deposits and fund investments to increase access to capital for underserved communities. We have created a sustainable investment strategy focused on meeting our treasury requirements of preserving capital and generating returns, while supporting an enhanced flow of institutional capital toward traditionally underinvested communities and businesses. For example, in 2022, we:\n• Funding technical assistance and research with Women’s World Banking on topics such as identifying gender biases in credit scoring.\nAchievement Award recipient Connie Evans was the founding president of the Women’s Self-Employment Project, the first and largest urban microbusiness development organization in the U.S., and the first Black woman elected to serve on\n• Signing on to the U.S. Department of Commerce and the Office of the U.S. Trade Representative’s Indo-Pacific Economic Framework for Prosperity (IPEF) Upskilling Initiative and pledging to provide women and girls in the IPEF emerging economies with 500,000 or more upskilling opportunities in 10 years.\n• Participating as founding members of the Small Business Digital Alliance, a public-private co-sponsorship between the U.S. Small Business Administration (SBA) and the nonprofit Business Forward Inc. aimed at promoting America’s economic competitiveness by connecting entrepreneurs with critical digital tools and resources.\nConnie Evans Achievement Award Recipient\nthe Board of the Federal Reserve Bank of Chicago. Under her leadership, the Association for Enterprise Opportunity expanded to represent more than 2,600 microbusiness development practitioners and advocates for economic opportunity for underserved entrepreneurs.\n• Providing 11,000 employee volunteer hours in support of women and girls globally, surpassing our goal of 10,000 hours in the first year.27\n• Renewed \\$90 million in deposits to OneUnited Bank and Optus Bank, two Black-owned banks and Community Development Financial Institutions. • Invested in two new funds, including the BlackRock Impact Opportunities Fund.\n• Celebrating the 5th Annual PayPal Small Business Month by providing educational resources to entrepreneurs, including by leading discussions with SMB thought leaders and policymakers, and providing SMBs dedicated support through our Business Resource Center.\n• Utilizing the 2X Criteria in our treasury portfolio to identify investment funds and financial intermediaries that support women’s economic interests.\nTo read more, see Values in Action.\n• Collaborating with Reimagine Mainstreet and several Chambers of Commerce, conducting a survey of more than 2,500 SMBs and hosting a virtual panel discussion with the SBA on small business trust in financial institutions and expanding access to capital.", "chunk_word_count": 460, "section_path": "2022 Global Impact Report > 2 million+ Venmo Business Profiles25 > Working to Expand Access to Capital Through the Economic Opportunity Fund", "document_id": "PayPal Global Impact Report 2023", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 22, "chunk_text": "# 2022 Global Impact Report\n## 2 million+ Venmo Business Profiles25\n### Supporting Underrepresented Minority Founders & Investors\nEOF portfolio companies globally through our investments in venture capital funds\n$\\pmb { 2 5 0 + }$\nThe 19 minority-led and geographically diverse venture capital funds we invested in through our EOF deployed nearly $\\$ 300$ million in capital to over 250 portfolio companies globally, often benefiting minority and female-led businesses. Our fund-of-funds investment approach helps expand the reach of PayPal Ventures by geography, industry and market segments. We also launched a diversity survey with our general partners of EOF venture capital funds to understand how our investments help to advance a more diverse venture capital ecosystem.28\n$\\sim 5 5 \\%$ of portfolio companies with at least one ethnically diverse founder29\n$\\sim 5 0 \\%$ of portfolio companies with at least one woman founder30\n### Advancing Financial Health & Consumer Convenience\n### Offering Responsible Global Pay Later Solutions\nDemocratizing financial services means creating an inclusive digital economy where everyone can thrive, especially those traditionally underserved by the financial system. We’re using our platform and products to support financial flexibility so that consumers around the world can easily and efficiently save money and manage their finances.31\n### Helping Consumers Save\nConsumers faced a challenging economic environment in 2022. At PayPal, we’re working to help them save on everyday purchases and advance longterm financial goals through:\nTo help consumers more easily purchase the larger items they need and want, PayPal offers a suite of Pay Later products that allow customers to extend payments over weeks or months with no late fees.\n### • PayPal Rewards and PayPal Honey mobile Safari\nThrough Paidy, our Buy Now, Pay Later offering in Japan, we’ve expanded flexible spending options for consumers, including:\nIn 2022, we enhanced our platform with new and updated services that support individuals’ ability to save, make flexible payments and more conveniently make purchases.\nNearly 90% of PayPal Pay Later users selected ready funds37 for repayment.\nHoney users saved over \\$200 million in 202234 extension, 33 which enable consumers to earn points that they can apply at checkout, convert to cash, donate or transfer to their bank.", "chunk_word_count": 363, "section_path": "2022 Global Impact Report > 2 million+ Venmo Business Profiles25 > Supporting Underrepresented Minority Founders & Investors", "document_id": "PayPal Global Impact Report 2023", "page": 19, "page_start": 19, "page_end": 20 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 23, "chunk_text": "# 2022 Global Impact Report\n## 2 million+ Venmo Business Profiles25\n### Enabling Easier Checkout\nConsumers value secure options at checkout and we continue to build partnerships with some of the largest digital payments and ecommerce platforms to expand our network of in-person and online payment options.\n• Building on the success of the cash back features of the Venmo Credit Card, we launched the PayPal Cashback Mastercard® to provide more flexibility for consumers to make smarter purchases and maximize rewards when shopping on PayPal.\nPartnering with Amazon to launch 6-Pay, allowing consumers to split the cost of purchases into six interest-free monthly installments, and introducing Paidy as a payment method when checking out with Amazon Pay.\nPayPal digital wallet is accepted by 79% of largest retailers in North America and Europe. 32\n79%\n• We provided Amazon U.S. customers the ability to pay with Venmo, offering another checkout option and delivering the added benefit of the Venmo Purchase Protection Program.\n• PayPal Savings Account allows U.S. customers to earn significantly higher interest on savings than a traditional savings account,35 helping customers reach their financial goals faster.\n4.4M\nIntroduced the Paidy Real Card, which allows shoppers to pay in-store with Paidy, choosing the number of payments and\n• We extended our partnership with Live Nation so customers can continue to check out with PayPal or Venmo when purchasing tickets for sporting events, music festivals and more.\n“PayPal is really about giving people the power to manage their money, stretch their dollar further and make life simple by giving them a single destination to access their finances.”\nPaidy users in 2022 (+25% from 2021)\n• We expanded Xoom’s Debit Card Deposit feature, now available in 27 markets across Europe, Latin America, the Middle East and Asia, enabling more customers to make low-cost international money transfers to friends and family to use however they need, including paying bills or buying groceries.\nsettlement terms best for their financial needs.\n$2 . 9 \\%$ average international remittance cost in $\\scriptstyle 2 0 2 2 ^ { 3 6 }$\nLaunched a new feature, Pay Now, where customers can pay their next installment at a convenience store at any time.\nDerek Francom Senior Director, PayPal Debit Cards Scottsdale, AZ, U.S.\n### Protecting Consumers Against Bad Actors\n### Maintaining a Safe Platform for Customers", "chunk_word_count": 388, "section_path": "2022 Global Impact Report > 2 million+ Venmo Business Profiles25 > Enabling Easier Checkout", "document_id": "PayPal Global Impact Report 2023", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 24, "chunk_text": "# 2022 Global Impact Report\n## 2 million+ Venmo Business Profiles25\n### Helping Our Partners Advance Fraud Targeting Accuracy\nConsumers must navigate a growing digital landscape, with increasingly difficult-to-detect fraud threats. Our risk detection organization strives to continuously enhance the safety of our platform for our customers, protect against fraud attempts and manage transaction losses. We are also focused on educating consumers and, where possible, recovering funds when fraudulent events occur.\nThe Enhanced Decisioning Data platform launched by Capital One, in partnership with PayPal, helps fight online fraud by combining transaction information with Capital One’s internal data models, increasing the accuracy of fraud targeting as well as approval of legitimate transactions.\nWe strive to promote good habits to safeguard customer data through education and resources. With new threats emerging daily, we are focused on empowering consumers to manage their data and protect themselves from fraudulent activity.\nOur fraud risk management capabilities focused on preventing bad actors from entering our ecosystem aim to continuously evolve, including through continued enhancement of our Fraud Defense Cyber Center and protection of customer identity. Our buyer and seller protection programs protect merchants and consumers from fraud and counterparty nonperformance. These combined efforts helped us maintain our low transaction loss rate39 of $0 . 0 9 \\%$ in 2022.\n### Facilitating Transparent Consumer Protection\n### Strengthening Customer Control of Data\nWith online scams up $87 \\%$ since 2015,41 we believe it is critical to protect our customers from bad actors across our platforms. According to the BBB Institute for Marketplace Trust’s 2022 BBB® Online Scams Report, consumers who reported paying with PayPal were more likely to get their money back than other online payment systems.\nWe introduced new ways for consumers to take control of their data, including managing how people find them on PayPal, accessing what they’ve shared with other sites and more. We continue to update our Privacy Hub and Security Center to reflect best practices and help build customer awareness.\n### Enabling Passwordless Authentication\nWe enable secure, passwordless login to PayPal accounts across platforms and devices with passkeys, a new industry standard to replace passwords with cryptographic key pairs. Based on technology that is designed to be resistant to phishing and not permit any sharing of data between platforms, passkeys address one of the biggest security problems on the web: the weakness of password authentication from recycled passwords across online services. PayPal, as a founding member of the FIDO Alliance, is helping to champion this new authentication method and is one of the first in the industry to make it available to its customers.", "chunk_word_count": 431, "section_path": "2022 Global Impact Report > 2 million+ Venmo Business Profiles25 > Helping Our Partners Advance Fraud Targeting Accuracy", "document_id": "PayPal Global Impact Report 2023", "page": 21, "page_start": 21, "page_end": 21 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 25, "chunk_text": "# 2022 Global Impact Report\n## 2 million+ Venmo Business Profiles25\n### Protecting Against Elder Financial Abuse\nWe also continued to expand our automated selfservice portal globally, which is designed to enable our customers in over 200 markets to exercise their individual right to access, correct, modify, manage and delete their personal data and marketing choices, as applicable.38\n(% of Total Payment Volume)\nThrough the AARP BankSafe Initiative, we’re helping the financial industry better safeguard elderly consumers’ assets by preventing financial exploitation, educating individuals and caregivers and enabling easier access to banking tools. According to a Virginia Tech Center for Gerontology study, the financial institution employees that received BankSafe training prevented 16 times more in monetary losses from financial exploitation than the control group that was not trained.\n[IMAGE CAPTION] Annual Transaction Loss Rate39\n1M+ accounts enrolled in passkeys since launch in October 2022\nIn 2022, through our Risk-as-a-Service suite of products to help protect our merchants from fraud and reduce their financial losses of chargebacks, we helped save our customers more than \\$35 million across countries, including Australia, Brazil and the U.S.40 In addition, we are continuing to explore ways to help our merchants improve efficiencies and reduce costs through disputeautomation products.\nWe also partnered with AARP in support of the Stop Senior Scams Act by joining the Scams Against Older Adults Advisory Group, an alliance created to educate consumers, improve industry training on scam identification and prevention, and develop research on consumer and employee engagement to reduce fraud.\n### Extending Digital Solutions for Giving & Fundraising\n### Creating More Ways to Give\n## \\$20B+\n### 270M+\nIn 2022, we continued to enhance giving solutions for our customers across our products. For example, we facilitated over 23 million donations through our Give at Checkout solution, which provides customers the option to give a microdonation when they check out with PayPal.\nNumber of Nonprofits Supported YoY45,46\n[IMAGE CAPTION] Generosity by the Numbers44\nAt PayPal, we aim to promote generosity through the power of our technology. In 2022, we enhanced our platform and embarked on new partnerships to provide customers with more ways to support the causes they care about.\nin funds donated through PayPal\ndonations enabled\nIn addition, we supported donations to personal fundraising campaigns from more than 1.1 million people through PayPal Fundraisers, representing a $12 4 \\%$ increase from 2021.\n### Offering Multiple Channels to Make Giving Easier", "chunk_word_count": 400, "section_path": "2022 Global Impact Report > 2 million+ Venmo Business Profiles25 > Protecting Against Elder Financial Abuse", "document_id": "PayPal Global Impact Report 2023", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 26, "chunk_text": "# 2022 Global Impact Report\n## \\$20B+\n### Optimizing Grant Accessibility\nIn 2022, we partnered with \nNational Philanthropic Trust 1,400 charities supported and Vanguard Charitable to \nlaunch Grant Payments, a \\$25M in grants distributed new tool that enables donor \nadvised funds sponsors, \ncommunity foundations and others to deliver grants to charities electronically for faster and easier grantmaking.\n[IMAGE CAPTION] Funds Raised for Nonprofits YoY46\nWe launched several new giving tools in 2022, including the following:\nWe continued to leverage our technology and scale to provide organizations and customers with new ways to give. In 2022, we enabled more than 270 million donations through the PayPal Giving Platform, directly supporting nearly 1.4 million nonprofits and other causes, and surpassing $\\$ 20$ billion in funds donated for the first time in PayPal history.\n• We recently introduced Donate with Rewards in the U.S. to allow customers to donate the cash equivalent of their PayPal Rewards points to the cause of their choice. The addition of Donate with Rewards expanded donation options within the PayPal app is one of the many ways we helped customers raise over $\\$ 255$ million through the digital wallet in 2022, a $40 \\%$ increase from 2021.\n### Our Four Giving Channels\n“Grant Payments helps nonprofits focus on their charitable mission without the hassles of lost time and resources associated with legacy checks. This year, we were proud to help pilot this new solution from PayPal and found that the majority of NPT’s grants completed through Grant Payments were received in a charity’s account within 24 hours.”\n[IMAGE CAPTION] Funds Raised for Causes Through Personal or Business Fundraising\nNonprofit-Owned: Donations made directly on the nonprofit’s site.\n• To make it easier for customers to see the impact of their donations across PayPal, we also introduced an impact summary feature in the digital wallet to U.S. customers with plans to add it on the web platform in 2023.\n+71% in firsttime donors through the digital wallet in 2022\n$2$ Platform-Owned: Donations made indirectly to support causes on giving platforms or third-party sites.\n$3$ PayPal-Owned: Donations made on PayPalowned properties supporting charities and fundraisers.\n• We launched Venmo charity profiles, allowing charities to create their own Venmo profile to raise funds directly through the Venmo app, giving them access to the platform’s community of 90 million active customer accounts.4\nEileen Heisman President and CEO, National Philanthropic Trust\n10K Venmo charity profiles created since launch in October 202242\n[IMAGE CAPTION] Number of Donors\n$\\textcircled{4}$ Charity Payouts: Payouts from charities to individuals or from grant makers to other charities.\n### Using Our Scale to Facilitate Global Relief\n### Facilitating Generosity on Twitch\nWe partnered with Twitch to enable their 9 million monthly content creators to raise money for the charity of their choice through our Platform Fundraising product and PayPal Giving Fund in over 30 countries.\nPayPal’s platform and scale uniquely position us to quickly assist during global crises. In 2022, we facilitated aid for extraordinary events globally, including the humanitarian crisis in Ukraine, flooding in Pakistan and Hurricane Ian in U.S., enabling \\$624 million in donations from corporate, customer and employee contributions. Our rapid-response funding helped enable new proactive and timely partnerships including:", "chunk_word_count": 532, "section_path": "2022 Global Impact Report > \\$20B+ > Optimizing Grant Accessibility", "document_id": "PayPal Global Impact Report 2023", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 27, "chunk_text": "# 2022 Global Impact Report\n## \\$20B+\n### Coming Together to Provide Aid to Ukraine\nWhen the Ukraine conflict created a humanitarian crisis overnight, PayPal customers, employees and partners rapidly mobilized to help. In addition to quickly expanding our peer-to-peer payment and money transfer solutions for Ukrainians, we launched fundraising campaigns through the PayPal Giving Fund that enabled customers in 14 different markets to donate to support humanitarian aid in Ukraine and refugee support.\n### Enabling Holiday Season Generosity\n• Over 20 global humanitarian organizations supporting the relief efforts in Ukraine, including UNHCR, the International Rescue Committee, Save the Children, Doctors Without Borders and UNICEF, among others.\nThe PayPal Giving Platform continues to facilitate generosity around the holidays. Each year, we are inspired by our customers’ generous donations and 2022 was no different, with PayPal customers donating \\$2.6 billion during the season.47 On Giving Tuesday alone, more than 1 million customers donated \\$149 million across 194 markets.\nIn one of our largest and swiftest community responses, PayPal and our partners helped raise over \\$600 million for organizations providing relief efforts, including more than \\$18 million for Razom for Ukraine, which supported the delivery of tactical medicine, hospital supplies and tech-enabled emergency response materials.\n• The National Compassion Fund to support the families of victims in the Buffalo, NY and Uvalde, TX shootings.\n• World Central Kitchen and People’s Advocacy Institute to enable relief related to the flooding in Jackson, MS.\nWe also worked with merchant partners to create campaigns to facilitate support for impacted Ukrainian civilians. For example, we partnered with Uber to enable donations\n• The Governor’s Office and the First Lady of Florida to support Hurricane Ian relief by waiving all fees on donations to the Florida Disaster Fund.\nthrough the Uber app in support of the International Rescue Committee, which provided assistance to families displaced by the conflict.\nPayPal ranked #1 on the 2022 Fortune Change the World list in recognition of facilitating support to Ukrainian civilians and refugees.\nTogether, PayPal and our employees and customers supported rapid-response and relief efforts throughout 2022:\n## \\$620M+\n7\nto help communities48", "chunk_word_count": 352, "section_path": "2022 Global Impact Report > \\$20B+ > Coming Together to Provide Aid to Ukraine", "document_id": "PayPal Global Impact Report 2023", "page": 23, "page_start": 23, "page_end": 23 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 28, "chunk_text": "# 2022 Global Impact Report\n## 2022 Summary Highlights\n### Employees & Culture\nDesigned, built and implemented our new candidatecentric and inclusive Global Talent Acquisition strategy.\n“Innovating how we recruit, retain and develop talent fuels PayPal’s growth and our employees’ development — and is essential for attracting and retaining talent in this competitive landscape. One example is our new Leadership Principles, which provide a\nFor PayPal, our employees are one of our greatest assets and we believe effectively managing and investing in our global workforce is an important aspect of the long-term success of our business. We work to create a positive, supportive and collaborative workplace where all employees are encouraged to thrive and innovate.\n• Reached overall workforce diversity of 56%,49 including 44% global gender diversity and 54% U.S. ethnic diversity.50\nAchieved a 93 Remote Work51 score and 84 Work-Life Balance52 score on our annual global employee survey.\ncommon foundation of what we value in our people and how we work, distinguishing our culture and making clear that each of us is in a position to lead, no matter what our role is.”\nEmpowered employees to volunteer nearly 100,000 hours and support roughly 4,000 nonprofits worldwide.\nThrough frequent engagement, a robust talent management strategy, a strong focus on employee total wellness and an ongoing commitment to championing DIE&B, we strive to foster a dynamic workplace designed to attract and retain talent. We also provide opportunities for employees to apply their skills and experience to support and strengthen their local communities.\n1.4M total learning hours\nEncouraged learning and development with 1.4 million hours of learning courses accessed by employees.5 3\n### Ana Mendy\nVP, Talent Management and DIE&B Los Angeles, CA, U.S.\n26% minimum estimated net disposable income\nExceeded our goal to have at least 20% PayPal-defined estimated net disposable income (eNDI) for hourly and entry-level employees globally through our employee financial wellness initiative.54\n### In This Section\n### SDGs Reflected in This Section\n• Managing Our Global Workforce \n• Leading With Diversity, Inclusion, Equity & Belonging \n• Empowering Employee Community Impact\n### Managing Our Global Workforce\n### Annual Global Employee Survey57 Highlights\n29.9K employees (11.8K in U.S.)55\nUp four percentage points from 2021 and eight points above benchmark58\n83% Employee Participation\nAttracting, recruiting, developing and retaining diverse talent is crucial to delivering new products and services, and advances our mission to help customers access and thrive in the global economy. We are focused on creating a talent strategy that actively engages employees at every phase of their career at PayPal — from recruitment to offboarding.\n23.8% total turnover rate56 \\~150 total nationalities\nReflecting modest declines from our 2021 scores, in part due to the Company’s refocused efforts on organizational transformation and efficiencies and the macroeconomic environment\n## 79 Engagement Score59\n### Engaging with & Listening to Our Employees", "chunk_word_count": 469, "section_path": "2022 Global Impact Report > 2022 Summary Highlights", "document_id": "PayPal Global Impact Report 2023", "page": 24, "page_start": 24, "page_end": 25 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 29, "chunk_text": "# 2022 Global Impact Report\n## 78 Intent to Stay Score60\nEmployee feedback plays an important role in the ongoing development of our employee programs and resources. As we transitioned to a hybrid workplace model, we leveraged multiple channels to connect with and learn from our people, including individual surveys, peer-to-peer learnings, listening sessions and all-hands meetings. In 2023, we plan to continue to empower our leaders with the tools and resources needed to support our diverse and distributed teams, including Global Collaboration Days aimed at spurring in-person community and innovation.\n## 93 Remote Work Score61\n## 27 countries\nIndicating our hybrid model is giving employees the resources and flexibility they want and need\n## 84 Work-Life Balance Score62\n### Championing Our Leadership Principles Across the Business\nThe survey results help us understand how to improve our business, revealing opportunities we have to continue enhancing our employee efforts related to topics such as career development and linking day-to-day work to our mission.\nFrom revising our approach to performance management to launching new development opportunities, PayPal’s new Leadership Principles serve as the foundation and guide to enhancing our talent management strategy across the employee lifecycle. In 2022, we appointed 60 senior leaders across functions, geographies and backgrounds to serve as Leadership Principle “Ambassadors” — visible champions of the Leadership Principles to help incorporate them across the Company. For more on the Leadership Principles, see About PayPal.\nFor the fourth consecutive year, we conducted an employee engagement survey to help understand employee perspectives on the employee experience, DIE&B efforts and our Leadership Principles. In addition to the annual survey, we also released targeted surveys to gather employee feedback on our internal communications approach and evolving workplace preferences. This data, along with additional employee feedback, helps us refine our programs and gain insight into key areas of strengths and opportunities so that we can continue to work to foster an inclusive culture.\n“We use our Leadership Principles as a guide for how \nwe operate and what is expected of us. They provide \nclarity on what it takes to be a true customer champion, \nvalued teammate and effective leader. I have \nbeen incredibly inspired to see these \nprinciples come to life across the \ncompany in support of our business \nstrategies, our mission, our customers \nand each other.”\nIn 2022, we also launched a new DIE&B inclusion index consisting of 11 scores on topics such as mentorship, allyship, peer support and inclusive decision-making, which will provide helpful input to measure employee views on our multi-year DIE&B journey.\nVincent Belloc\nLeadership Principles Ambassador and VP and Managing Director, U.K. London, U.K.\n### Fostering Growth Throughout the Employee Lifecycle\n### Encouraging a Culture of Learning & Development", "chunk_word_count": 450, "section_path": "2022 Global Impact Report > 84 Work-Life Balance Score62 > Championing Our Leadership Principles Across the Business", "document_id": "PayPal Global Impact Report 2023", "page": 25, "page_start": 25, "page_end": 26 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 30, "chunk_text": "# 2022 Global Impact Report\n## 84 Work-Life Balance Score62\n### Partnerships to Help Expand Opportunities for Underrepresented Talent\nWe are committed to embodying our Leadership Principle to Learn, Every Day and providing varied opportunities for our employees to continue to grow at the Company. In addition to the existing instructor-led and self-directed learning opportunities available to all employees, in 2022, we:\nCreating candidate and employee experiences where people feel engaged, rewarded and championed is critical to ensuring top talent joins and remains at PayPal.\nTop 100 (#90) in Fast Company’s Best Workplaces for Innovators\n• In Manila, Philippines, we partnered with Thrive, our ERG for people with disabilities, to expand our hiring of disabled persons in our Venmo and PayPal Customer Solution teams.\nWe partnered with U.S. Historically Black Colleges & Universities (HBCUs) and Hispanic Serving Institutions to help build a long-term hiring pipeline for underrepresented talent.\n• Launched Career & Leadership Journeys, with over 5,500 employees participating, to support each employee’s individual career paths through three foundational elements of learning: core skills, business acumen and mindset and behaviors.\n### Enhancing Our Approach to Talent Acquisition\nIn 2022, we designed, built and implemented our new candidate-centric and inclusive Global Talent Acquisition strategy organized around:\n• In collaboration with Tent Partnership for Refugees, we founded a new U.S. mentorship program committed to helping refugees restart or advance their careers.\n• Continued our Emerging Leaders Program to provide development experiences for employees who seek to expand their responsibilities and boost their careers.\n• Creating a globally consistent, end-to-end hiring process with standardized and streamlined processes and tools.", "chunk_word_count": 266, "section_path": "2022 Global Impact Report > 84 Work-Life Balance Score62 > Partnerships to Help Expand Opportunities for Underrepresented Talent", "document_id": "PayPal Global Impact Report 2023", "page": 26, "page_start": 26, "page_end": 26 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 31, "chunk_text": "# 2022 Global Impact Report\n## 84 Work-Life Balance Score62\n### Investing in Inclusive Talent Pipelines\nThrough our continued partnership with organizations such as CodeHouse, NABA, Year Up and INROADS, we are working to identify and recruit talented Black and Latinx students for internships and full-time opportunities. For example, PayPal helped mentor and support participants of the CodeHouse Scholars Initiative summer academy, which welcomed nearly 40 students from five HBCUs in 2022.\n• We joined the Second Chance Business Coalition and became a new hiring partner with Next Chapter to train and hire formerly incarcerated citizens in software engineering.\n• Introduced Managing at PayPal Successfully, a manager development program for all newly promoted or newly hired leaders focused on skills such as providing consistent communication, leadership and motivation training.\n• Developing resources to create a more efficient and positive hiring process, including a new internal career hub to support internal mobility, HackerRank screening tools for engineers and mandatory training modules.\n• Reimagining our university recruiting strategy to focus on students rather than school rankings, use an objective rubric for evaluating skills and capabilities and broaden our talent pipeline through new partnerships.\n“Together with PayPal, we have been able to provide meaningful opportunities for formerly incarcerated individuals, enabling them to rebuild their lives and become active contributors to society. PayPal’s support has not only strengthened our mission, but has also inspired others. Together, we are redefining second chances and transforming lives, one story at a time.”\n1.4M\n27K+ total learning hours63\nemployees \nleveraged learning \nresources63\n“Partnering with PayPal has helped us significantly expand our organization’s reach to impact the lives of thousands of underrepresented students across the country. With their support, we’re confident that we can\n• Establishing accountability, consistent communication and training for our recruiting team focused on individual development.", "chunk_word_count": 300, "section_path": "2022 Global Impact Report > 84 Work-Life Balance Score62 > Investing in Inclusive Talent Pipelines", "document_id": "PayPal Global Impact Report 2023", "page": 26, "page_start": 26, "page_end": 26 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 32, "chunk_text": "# 2022 Global Impact Report\n## \\~98K\n45+ self-directed courses accessed64 average hours of learning per employee\nKenyatta Leal Executive Director, Next Chapter\n### Prioritizing Employee Total Wellness\n• Providing financial coaching and education to employees globally through new financial wellness webinars, one-on-one retirement planning and other financial planning tools and resources.\n• Provided PayPal employees and their families unlimited and free access to Calm, a wellness app to help improve sleep and manage stress. Last year, $7 5 \\%$ of those who signed up engaged with the app at least weekly.\n### Making Progress on Our Employee Financial Wellness Goal\nWellness is a core value at PayPal and we offer programs, benefits and initiatives that support each employee’s financial, mental and physical health. We seek to create a flexible, balanced work culture and take a holistic approach to leave and benefits.\nIn 2019, we established an enterprise-wide goal to reach at least 20% PayPal-defined estimated net disposable income (eNDI)69 for our employees globally, in an effort to help promote the financial wellness of our employees. Recently, we refined our evaluation methodology to better reflect the typical living expenses impacting our employees and the benefits and compensation they receive, such as equity grants, reduced healthcare costs and other subsidized benefits. In 2022, we achieved our goal, with all employees achieving an eNDI of at least 26% across our global locations. We will continue to perform periodic living wage assessments to measure and determine appropriate next steps to support our employees’ financial wellness.\n• Completing our Employee Financial Wellness Diaries research study, which found that participants improved their financial wellness since joining PayPal and that the EFW initiative supported their progress.67\nParticipants’ debt-toequity ratio was reduced by $20 \\%$ on average68\n• Enhanced our sabbatical program to better facilitate employee utilization of four weeks paid sabbatical upon their five-year anniversary.\nWe recently centralized our corporate wellness strategy and appointed a Global Wellness Lead to increase the cohesiveness of our program around the globe. We also created a new Global Wellness Council and reestablished our network of Wellness Ambassadors to promote and educate our colleagues on available benefits and resources.\n$83 \\%$ of respondents said they would now have an easier time covering an unexpected expense of \\$1,000\n• Expanded our “Mind Yourself” program to additional teams in 2022, encouraging employees to do a daily self-check and reduce the stigma around talking about mental health with coworkers and leaders.\nThe Mind Yourself program reached a net promoter score of $\\mathbf { 7 4 } ^ { 7 0 }$ in 2022.\n230+\n1,300+ financial coaching trainings delivered across 24 countries\n### Advancing Employee Financial Wellness\n### Supporting Employee Physical Wellness\nPayPal’s Employee Financial Wellness (EFW) initiative continues to be a cornerstone of our overall wellness strategy and, in 2022, we launched new programs and provided more resources to support employee financial security and literacy across our workforce. This included:\npersonalized financial coaching sessions conducted\nIn 2022, we updated our approach to physical wellbeing and introduced new resources and benefits for our employees and their families, including:\n## GOAL:", "chunk_word_count": 516, "section_path": "2022 Global Impact Report > \\~98K", "document_id": "PayPal Global Impact Report 2023", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 33, "chunk_text": "# 2022 Global Impact Report\n## 2022 PROGRESS:\n• Maintaining zero cost increase for U.S. health plans for the third consecutive year, with PayPal absorbing the premium cost differences.71 • Offering free parental support solutions, resources, training and 24/7 care for PayPal families through our partnership with RethinkCare.\n### Advocating for Our Employees\nReach $20 \\%$ eNDI for all hourly and entrylevel employees\n$\\sqrt { 2 6 \\% }$ minimum eNDI for global employees\n• Providing 2022 annual incentive plan payouts fully in cash to eligible65 employees to reduce the impact of recent stock price volatility.\nThroughout 2022, our Employee O Advocacy team offered specialized \naid to PayPal employees experiencing \ncrises. This support included \nassistance for employees affected by \nnatural disasters and the war in Ukraine. We also extended financial support through our Employee Relief Fund for team members experiencing \nmedical or financial hardship.\n• Continuing to distribute financial wellness grants to hourly and entry-level employees, and updating the vesting schedule to give employees more opportunities to access their vested equity.66\nThanks to resources provided by RethinkCare:\n### Promoting Mental Wellness\n29% of participants reported reduced stress or anxiety increase in employee participation in 2022\n$82 \\%$\n$78 \\%$\nIn a hybrid work environment, stress and burnout can go unnoticed, making it important that we provide resources and support for our employees to maintain positive mental health. In 2022, in addition to continuing our Global Wellness Days and providing access to free Employee Assistance Program counseling services, we also:\n• Giving U.S. employees access to Even, a financial wellness app that provides early access of up to $50 \\%$ of their next paycheck to cover unexpected bills and other\n\\$4M distributed through \\~15K early paycheck access requests\nof participants stated that their child’s behavior and/or skills improved\nexpenses, as well as save for future needs.\n### Leading With Diversity, Inclusion, Equity & Belonging\n### Other accomplishments in 2022 included:\n• Completing the U.N. Global Compact’s Target Gender Equality program to gain valuable skills and support for PayPal to expand diverse initiatives across the globe.\nAt PayPal, we are fueled by our diverse perspectives, backgrounds and experiences and are committed to embracing people of all racial, ethnic and cultural backgrounds, gender identity and expression, sexual orientation, veteran status and abilities. A strong and engaging culture where everyone can be their\nIn 2022, our sustained commitment to inclusion drove meaningful steps to enriching a workforce and culture that we believe reflects the communities where we work, live and serve. This included:\n• Maintaining our presence on the Disability:IN Procurement Council, which informs our efforts to drive inclusion of disability-owned business enterprises.\n• Enhancing our quarterly reporting to our DIE&B Business Council to provide insights on the intersection of our employee lifecycle and DIE&B strategy.\n• Participating in the Disabled Owned Business Enterprise Certification Committee that helps businesses negotiate the complex certification process.\nPayPal ranked #20 on the Forbes America’s Best Employers for Diversity list authentic selves and do their best work is important to generating stockholder value and to furthering our mission to democratize financial services for all.\n• Scaling development programs to strengthen the leadership pipeline for underrepresented populations, including piloting an enterprise-wide sponsorship program for global female leaders.", "chunk_word_count": 538, "section_path": "2022 Global Impact Report > 2022 PROGRESS: > Advocating for Our Employees", "document_id": "PayPal Global Impact Report 2023", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 34, "chunk_text": "# 2022 Global Impact Report\n## 2022 PROGRESS:\n### Achieving Pay Equity Across Our Workforce\n### Reimagining Product Design\nWe continue to focus on designing products that are equitable, accessible and inclusive to all PayPal customers. In response to emerging global regulation, including U.K. Financial Conduct Authority guidance on fair treatment of vulnerable customers and customer duty, we launched enterprise-wide initiatives to:\nWe are proud to achieve $\\pmb { \\mathbb { I } } \\pmb { \\mathbb { I } } ( \\pmb { \\mathbb { I } } ) \\pmb { \\mathbb { I } } ( \\pmb { \\mathbb { I } } )$ pay equity in overall total compensation72 for women globally as compared to male peers and for Black, Latino and Asian employees in the U.S. as compared to white peers. We also observed 100% pay\nOur dedicated global DIE&B team, led by our Head of Global DIE&B, in partnership with appointed business leaders on our DIE&B Business Council, continued to enhance our existing inclusion efforts and pilot new initiatives. We continue to work toward growing our women, Black and Latinx employee populations.\n• Incorporating inclusion-focused questions in our annual employee engagement survey to gain a deeper understanding of employee sentiment and experiences at PayPal. See Engaging with & Listening to Our Employees for more information.\nequity in overall total compensation in the U.S. for Black, Latino and Asian women, as compared to white male peers.\n$\\pmb { \\mathbb { m } } \\mathbf { 0 }$ global gender, U.S. ethnic and U.S. intersectional pay equity\nEmployees across PayPal also embarked on our expanded DIE&B Learning Journey, Inclusion@PayPal — a modular learning series launched in 2021 — to learn about DIE&B foundations, performance management best practices and the importance of effective\n• Proactively mitigate vulnerability in product design to facilitate equitable access for global customers with characteristics of vulnerability,73 including an inclusive content style guide for designers and equity-focused research for user experience teams.\n“The multi-dimensionality and diversity of our platform and products create impact for our customers and their communities that can break the generational curses of financial inequity. By advancing DIE&B at PayPal, we foster an environment where every employee can contribute to our success, find opportunity, belong and grow.”\nsponsorship. In 2023, we plan to include learning experiences on topics such as allyship.\n• Further PayPal’s delivery of a high standard of customer care and protection, helping consumers make informed decisions about PayPal products in line with their personal financial objectives.\n### Addressing Diversity in Our Supply Chain\n$\\sim 8 0 \\%$ of PayPal employees completed the “Inclusion@PayPal: Building Foundations” module\nWe remain committed to working with diverse businesses where appropriate and, in 2022, PayPal’s Global Sourcing team further enhanced our supplier diversity program by extending our focus to include Tier 2 suppliers. In 2023, we plan to launch an initiative to encourage priority vendors to subcontract opportunities to diverse businesses when working with PayPal.\nTo learn more about how we are investing in an inclusive talent pipeline, please see Fostering Growth Throughout the Employee Lifecycle.", "chunk_word_count": 513, "section_path": "2022 Global Impact Report > 2022 PROGRESS: > Achieving Pay Equity Across Our Workforce", "document_id": "PayPal Global Impact Report 2023", "page": 28, "page_start": 28, "page_end": 28 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 35, "chunk_text": "# 2022 Global Impact Report\n## 2022 PROGRESS:\n### Workforce Representation Metrics\nFostering a workforce that is representative of the merchants, consumers and communities we serve is an important component of our long-term DIE&B strategy. Our representation data74 provides one facet of measuring our performance and progress across our workforce. This information is used to help inform program enhancements across the employee lifecycle. We regularly review reporting best practices and continue to evaluate ways to enhance our disclosures to reflect our multifaceted workplace. We continue to make progress on improving the data quality and accuracy of additional employee data to meet our commitment to disclose employee lifecycle information by gender and U.S. ethnicity by 2024.\n### Diversity Trends by the Numbers\n[IMAGE CAPTION] 2022 Global Gender Diversity\n+2%\n+3%\nin diverse leadership (since 2021)78\n### in women in leadership (since 2021)\n+15% +6% in women in technical roles (since 2015)\nin U.S. underrepresented minorities hiring82 (since 2020)\n[IMAGE CAPTION] 2022 U.S. Ethnic Diversity83\n[IMAGE CAPTION] 2022 U.S. Ethnic Diversity by Role83 (% of Overall U.S. Workforce)\n[IMAGE CAPTION] U.S. Ethnic Diversity83 (Ethnically Diverse % of U.S. Population)\n[IMAGE CAPTION] U.S. Underrepresented Minorities82 (Underrepresented Minorities $\\%$ of U.S. Population)\n[IMAGE CAPTION] Global Gender Diversity (Female % of Global Population) 74 Workforce representation metrics are based on self-reported data. Due to rounding and exclusion of employees who do not self-identify, numbers presented may not reflect exact totals.\nVisit our website for access to our available EEO-1 reports.\n## 75 Technical roles include employees in engineering, information technology and technology operations.\n## 76 Professional is defined as Director roles and below.\n## 77 Leadership is defined as Senior Director roles and above.\n## 78 Diverse is defined as global women and U.S. ethnically diverse men.\n## 79 U.S. employees who have self-identified as “Non-Protected Veterans” and “Protected Veterans.”\n80 U.S. employees who have self-identified as LGBTQ+. Approximately 7% of U.S. employees responded as of December 31, 2022. This self-identify question is voluntary and the representation percent may vary based on adoption among U.S. employees.\n81 Global employees who have selfidentified as having a disability in countries where it is legally allowed or required to disclose.\n## 2022 Highlights from Our Employee Resource Groups\n### Promoting Equity & Inclusion through Civic Engagement & Advocacy\n### Aliados\n### Rise\nPan Asian @ PayPal\nLatinx @ PayPal\nOur eight Employee Resource Group (ERGs) serve a critical role in nurturing a sense of community and belonging, supporting talent recruitment and retention and furthering our DIE&B strategy. We are continuing to evolve our ERGs to support our business initiatives while fostering a culture of belonging through:\nIn advance of the 2022 U.S. Midterm Election, we relaunched our PayPal Votes initiative to encoura employee civic engagement and provided all PayPal employees four hours of paid time off to vote. We also expanded our Community Impact Time Off to allow our employees to volunteer as poll workers and hosted polling places at our headquarters in San Jose, CA, U.S. and our office in La Vista, NE, U.S.", "chunk_word_count": 507, "section_path": "2022 Global Impact Report > 2022 PROGRESS: > Workforce Representation Metrics", "document_id": "PayPal Global Impact Report 2023", "page": 29, "page_start": 29, "page_end": 30 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 36, "chunk_text": "# 2022 Global Impact Report\n## 2022 Highlights from Our Employee Resource Groups\n### Celebrating Latinx communities\nUplifting the Pan-Asian community Rise conducted its first mentorship program with 200 pairs of mentors and mentees and partnered with the PayPal Community Impact team to raise more than \\$28,000 for flood relief in Pakistan.\nAliados launched “Cafecito Connections” sessions to build connections internally and continued its focus on career building by offering a mentorship program with Latinx senior leaders.\n• Elevating the role of ERG leaders and equipping these individuals with professional development and mentorship opportunities. \n• Launching our inaugural ERG summit and ERG Academy series to promote collaboration, share best practices, build subject matter expertise and learn from senior leaders. \n• Creating and refining policies and processes to help improve the planning and implementation capacity of our ERGs. \n“By increasing representation, educating and \ncelebrating the diversity of our global workforce, \nPayPal’s ERGs enable connection across identities \nand experiences, inspire pride among \nour employees and ensure that we \nmaintain a values-driven culture that \nintegrates DIE&B into our day-to-day \nand empowers our employees and \ncustomers to thrive.” Ellen Hayes\n### Amplify\n### Serve\nBlack Employees @ PayPal\nVeterans @ PayPal\n### Inspiring Black employees\n### Supporting our military veterans\nAmplify hosted events on career growth, mental resilience and financial empowerment. They also partnered with the Global Talent Acquisition team at the Afrotech Conference to attract more than 1,000 job applicants.\nTo honor and support PayPal veterans and the military community, Serve recorded a reading for children with loved ones deployed and facilitated meet-ups for Serve members.\nWe also launched programs and supported initiatives to foster broader community civic engagement, including the following:\n• A consumer awareness campaign within the Venmo and PayPal apps before Election Day. \n• Underwrote and supported the Arizona Civic Spring initiative developed by the Institute for Citizens and Scholars. \nContinued leadership with Time To Vote, \nhelping the initiative to surpass 2,000 corporate supporters.\nBelieve Interfaith @ PayPal\nThrive Disability Community @ PayPal\n### Promoting the value of faith at work\nBuilding an inclusive community for the disabled \nThrive worked to implement Livestream Communication \nAccess Realtime Translation captions and American Sign Language (ASL) interpreters for PayPal Global All-Hands events.\nBelieve hosted interfaith events to promote understanding \nof the value of faith at work and provided faith education on global worldviews and mental health sessions focused on burnout.\nIn 2022, PayPal supported legislation with strong connections to our core value of Inclusion, including the Pregnant Workers Fairness Act, which requires additional accommodations and protections for pregnant workers in the workplace.\n### Unity\nWomen @ PayPal\nEmpowering LGBTQ+ employees Pride hosted inspiring internal discussions with intersectional leaders and $\\mathsf { L G B T Q + }$ rights advocates to drive awareness and empathy.\n### Driving gender equity at PayPal\nUnity developed initiatives to support working parents, provided financial literacy education and leadership development and released a second season of the Looking Up podcast series.\nVP, Employee Communications Culture and Community San Jose, CA, U.S.", "chunk_word_count": 503, "section_path": "2022 Global Impact Report > 2022 Highlights from Our Employee Resource Groups > Celebrating Latinx communities", "document_id": "PayPal Global Impact Report 2023", "page": 30, "page_start": 30, "page_end": 30 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 37, "chunk_text": "# 2022 Global Impact Report\n## 2022 Highlights from Our Employee Resource Groups\n### Empowering Employee Community Impact\nEmployees across PayPal actively seek opportunities to apply their personal knowledge, skills and passions to make a positive impact in their communities through volunteering, charitable giving and employee engagement programs.\n### Encouraging Employee Volunteerism\nIn 2022, PayPal employees demonstrated their generosity and desire to support their communities by volunteering nearly 100,000 hours ( $1 9 \\%$ increase from 2021) and donating more than \\$5.6 million (including matching funds).84 We continued working to make employee volunteer opportunities accessible, resulting in $1 9 , 0 0 0 +$ employees85 mobilizing to support their communities.\nPayPal was awarded the Best Community Involvement Award from the Fingal Chamber of Commerce for our employees’ commitment to volunteerism in Ireland.", "chunk_word_count": 132, "section_path": "2022 Global Impact Report > 2022 Highlights from Our Employee Resource Groups > Empowering Employee Community Impact", "document_id": "PayPal Global Impact Report 2023", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 38, "chunk_text": "# 2022 Global Impact Report\n## 2022 Highlights from Our Employee Resource Groups\n### Building Community in a Flexible Work Environment\nOur Community Impact program is an essential way we build our sense of culture and community among our teams. It provides a point of connection, inspiration and learning for our employees globally, further connecting them to our mission.\nExamples of initiatives, programs and events from our 2022 Community Impact Teams include:\nMexico: In support of the “Somos el cambio” (We Are the Change) program, 18 PayPal employees reviewed and evaluated 74 community impact projects developed by young people, identifying five outstanding projects.\nIndia: In coordination with the Indian Association for the Blind, PayPal 5 hosted stalls for partially blind entrepreneurs twice per month from July through September that sold baked goods and other snacks with proceeds benefiting $^ { 5 0 + }$ visually challenged families.\nWe have built a community of global volunteer leaders across the Company focused on enabling our employees to participate in Community Impact programs. They are equipped with leadership development training on influencing stakeholders, problem-solving, cultural sensitivity and other topics that can be leveraged in their capacity as a volunteer leader and in their day-to-day jobs.\nVirtual U.S.: Coached student entrepreneurs as part of the Network for Teaching Entrepreneurship (NFTE) StartUp Summer program, with two of the students winning the competition and receiving financial awards toward their business idea.\nPhilippines: In coordination with HOUSE Foundation, 32 employees 6 participated in a virtual social entrepreneurship coaching session featuring Fulfill Zero Waste Store and Messy Bessy Shop, helping entrepreneurs through business challenges and providing guidance on developing a successful small business.\n“Throughout the year, we’ve provided our employees \nwith even greater opportunities to connect with each \nother and their communities through virtual and \nin-person volunteering. This flexibility \nhelped spur deeper community \nengagement and skills-based support \nfor nonprofits and small businesses \naround the globe.”\nIn addition to our employee generosity, PayPal also supported its local communities by providing: \\$28M+\nU.K.: Expanded our relationship with Rewilding Britain, a 2022 Community 3 Impact Grant recipient, through a presentation to U.K. PayPal employees on the organization’s mission to restore and connect species-rich habitats across $30 \\%$ of Britain by 2030.\nSingapore: As part of TOUCH Community Services’ Digital Readiness program and “Back to School” initiative, 37 PayPal volunteers packed education kits that included laptops, backpacks, stationery and snacks for underprivileged children in Singapore.\nSweden: PayPal employees hosted a networking session in collaboration 4 with Right by Me to help strengthen social and professional opportunities for vulnerable young people.\nTo learn more about how our employees are engaging to help address climate change, please see Environmental Sustainability.\nin corporate charitable contributions86\nKenrick Fraser\n### Learning Through Skills-Based Volunteerism", "chunk_word_count": 457, "section_path": "2022 Global Impact Report > 2022 Highlights from Our Employee Resource Groups > Building Community in a Flexible Work Environment", "document_id": "PayPal Global Impact Report 2023", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 39, "chunk_text": "# 2022 Global Impact Report\n## 2022 Highlights from Our Employee Resource Groups\n### Providing Opportunities for Impact\nIn 2022, PayPal reintroduced in-person volunteering and continued offering virtual volunteer opportunities, including through our Team Up for Impact summer campaign. The campaign provided approximately 2,800 employees an opportunity to connect with each other and their communities. Employee volunteers contributed nearly 17,000 hours to 33 nonprofits across 10 countries during the campaign. First-time volunteers made up over $50 \\%$ of the participating PayPal employees.\n“Thanks to the outstanding skills-based volunteerism from PayPal employees in Japan and our 2022 grant, we have been able to create a mutually valuable\nIn 2022, PayPal employees contributed nearly 50,000 hours to skills-based volunteering through pro bono, coaching and leadership programs designed around a service-learning model. This approach combines learning objectives with volunteerism to provide employees with a practical and reflective learning experience while helping create economic opportunity and improve financial health in our communities.\npartnership between PayPal and Japanese social entrepreneurs and nonprofit organizations, and gained a great deal of insight from PayPal for our future programs.\n### Yuko Motoki\nBoard Member & Social Innovation Team ETIC. (Entrepreneurial Training for Innovative Communities)\nOver the past year, our Community Impact Grants program allowed nearly 11,000 employees to select 71 PayPal Community Impact grantees to further PayPal’s mission in their local markets. In 2022, we launched the Championing Possibilities Pro Bono program to build the capacity of PayPal’s Community Impact Grant initiative. Through this new program, we provide grantees pro bono services in technical areas, including legal, finance, communications, marketing, risk, technology, human resources and strategy.\nAcross PayPal, employees applied their skills to make a positive impact by:\n• During the Skills for Good campaign in October 2022, PayPal employees collectively volunteered more than 10,000 hours to local organizations and communities around the world, a $\\mathtt { 3 5 \\% }$ increase from 2021. • PayPal employees provided 5,800 hours of pro bono service to create economic opportunity for our communities, help small businesses grow and provide nonprofits with access to technical expertise. • PayPal employees provided coaching and mentorship to help the NFTE prepare more than 45,000 young people for career success.87 • PayPal employees volunteered to support currently and formerly incarcerated women through the Televerde Foundation’s PATHS programs to help develop the skills and confidence needed to support post-incarceration careers.\n### Partnering to Mentor Female Entrepreneurs\n62% of mentees \nreported improved \nbusiness performance \nafter program \nparticipation\nto mentorship and other services. Since 2018, 370+ mentors from PayPal across 26 countries supported 470+ women entrepreneurs.", "chunk_word_count": 428, "section_path": "2022 Global Impact Report > 2022 Highlights from Our Employee Resource Groups > Providing Opportunities for Impact", "document_id": "PayPal Global Impact Report 2023", "page": 32, "page_start": 32, "page_end": 32 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 40, "chunk_text": "# 2022 Global Impact Report\n## 2022 Highlights from Our Employee Resource Groups\n### Engaging Employees through Impact\nEmployee Community Impact is core to our business at PayPal, not only for helping those around us but also to empower our employees. We found that teams with a higher participation in community impact activities also had higher engagement scores and longer tenure at PayPal. Learn more about our employee engagement efforts in Employee Engagement.\n“One of the most effective ways we’ve found to provide learning opportunities is through skills-based volunteering, such as coaching a small business owner. Equally as beneficial is that these programs also help us advance our Ω mission, which is the foundation of our company and an evergreen reason why people love working at PayPal.”\nKendra Goldbas\n## 2022 Summary Highlights\n### Environmental Sustainability\n26% reduction in direct emissions compared to 2021.88 Undertook a climate risk assessment and scenario analysis as part of enhancements to risk management practices and TCFD disclosure.\n## 2022 Progress on Our Science-Based Climate Goals89\nAt PayPal, we work to mitigate our environmental footprint and advance sustainable practices in the communities where we operate, even with PayPal’s relatively small GHG emissions footprint compared to other companies.\n## GOAL:\n## 2022 PROGRESS:\nJoined the Climate Innovation for Adaptation & Resilience (CIFAR) Alliance as a founding member to support responsible innovation in digital finance for climate adaptation and resilience.\n$80 \\%$ operational emissions reduction from 2019 base year90\nReduce absolute operational GHG emissions88 by $\\pmb { 2 5 } \\%$ by 2025 (from a 2019 base year)\nOur Environmental Sustainability Policy and ISO 14001-aligned environmental management system help to guide our environmental sustainability strategy. This includes our science-based approach to mitigating greenhouse gas (GHG) emissions, efficiently managing our natural resources, exploring environmental innovations across our products and services and engaging our employees in sustainability.\n• Reached $\\textcircled { 9 } \\textcircled { 1 } \\textcircled { 1 }$ total renewable energy use.\nEngage $75 \\%$ of our suppliers, by spend, to set science-based targets (SBTs) by 2025\nApproximately $39 \\%$ of suppliers, by spend, have or committed to a SBT91,92\nEnabled customers to donate more than \\$1 million in natural disaster relief to impacted communities.\n“In 2021, PayPal achieved 100% renewable energy sourcing for our data centers, a tremendous milestone\nAchieve $100 \\%$ renewable energy for global data center operations by 2023\nMaintained $100 \\%$ of our global data center energy use with renewable generation sources\nPayPal is well positioned to help catalyze digital financial innovations to promote greater resilience among underserved communities, support relief efforts to those impacted by climate change and reduce our impact on the environment.\nfor the company. Building on this progress, we are continuing to find new ways to reduce and offset our carbon footprint, and advance sustainable practices in the communities where PayPal operates.”\nGreg Sly SVP, Infrastructure Sacramento, CA, U.S.\n### In This Section\n### SDGs Reflected in This Section\n$\\bullet$ Mitigating Our Climate-Related Risks $\\bullet$ Managing Our Natural Resources\n### Mitigating Our Climate-Related Risks\nWe’ve established a long-term goal of achieving netzero GHG emissions across our value chain by 2040, as well as medium-term science-based GHG emissions reduction targets as validated by the Science-Based Targets initiative (SBTi).93", "chunk_word_count": 539, "section_path": "2022 Global Impact Report > 2022 Highlights from Our Employee Resource Groups > Engaging Employees through Impact", "document_id": "PayPal Global Impact Report 2023", "page": 32, "page_start": 32, "page_end": 34 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 41, "chunk_text": "# 2022 Global Impact Report\n## 2022 PROGRESS:\n### Understanding & Managing Our Climate-Related Risks\nEnvironmental Performance by the Numbers\nWe recognize that climate change poses current and future physical and transition risks for PayPal, including the impact of extreme weather conditions on our facilities and the effect of existing and emerging global regulations across our value chain.\n### 0.5 grams CO2e per transaction97\nWe’re also exploring ways to help disadvantaged communities capture opportunities and adapt their lives to changing global climate conditions through partnerships and digital finance tools and services.\nConsistent with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, and building on the climate risk assessment we conducted in Europe, we began an enterprise climate risk assessment and scenario analysis using three scenarios from the Network for Greening the Financial System to evaluate potential short-, medium- and long-term climate risks and opportunities for PayPal. Initial results identified key risks for PayPal, including physical, operational, regulatory and reputational risk. See our TCFD Index and our CDP Climate Questionnaire for the latest information on our climate-related risks and opportunities.\nWe are currently on track to meet our SBT for reducing Scope 1 and 2 emissions $\\mathtt { 2 5 \\% }$ by 2025, with those emissions down $80 \\%$ relative to our 2019 base year.95,96 We continue to pursue cost-effective emissions reduction opportunities across our direct operations and our broader value chain, even with PayPal’s relatively small GHG emissions footprint compared to other companies.\n100% data center renewable energy use\n## 2022 Energy & Operational Emissions Trends\n-80%\nOur global energy use remained relatively flat $( + 1 \\%$ from 2021) as data center power use remained steady and office energy use increased moderately through 2022 as a result of post-pandemic workplace repopulation. At the same time, we reached $90 \\%$ total renewable energy use and maintained $100 \\%$ renewable energy sourcing for our data centers. This expanded approach to renewable energy procurement helped to further reduce our operational GHG emissions (Scope 1 and 2) by $2 6 \\%$ from 2021, even with our generally stable 2022 energy use.\noperational GHG emissions98 (since 2019)", "chunk_word_count": 355, "section_path": "2022 Global Impact Report > 2022 PROGRESS: > Understanding & Managing Our Climate-Related Risks", "document_id": "PayPal Global Impact Report 2023", "page": 34, "page_start": 34, "page_end": 34 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 42, "chunk_text": "# 2022 Global Impact Report\n## 2022 Energy & Operational Emissions Trends\n### GHG Emissions\n[IMAGE CAPTION] Energy Use & Renewable Energy 93 PayPal’s Science-Based Targets are informed by stakeholder consultation and validated by the Science-Based Targets initiative (SBTi). 94 Our 2022 energy and operational emissions include warehouse site activities associated with our recent acquisition of Happy Returns. Warehouse energy consumption represented less than 1% of our global energy consumption in 2022. 95 Operational greenhouse gas emissions include those emission sources covered by Scope 1 and Scope 2 as defined by the Greenhouse Gas Protocol market-based method (MBM) and the Science-Based Targets initiative. 96 In 2019, the base year for our operational emissions target, Scope 1 and 2 emissions totaled 53,100 metric tons.\n[IMAGE CAPTION] 97 Calculation includes operational emissions from all Scope 1 and 2 sources, including corporate jet. 98 Operational greenhouse gas emissions include those emission sources covered by Scope 1 and Scope 2 as defined by the Greenhouse Gas Protocol and the Science-Based Targets initiative. In 2019, the base year for our operational emissions target, Scope 1 and 2 emissions totaled 53,100 metric tons. While we observed operational GHG reductions exceeding our 2025 goal, we recognize that in future years this may change as employees return to the office and the Company continues to grow. 99 Scope 2 emissions data is calculated using the GHG Protocol market-based method (MBM), which includes purchases of off-site renewable energy.\nour supply chain, with vendor activities representing an estimated $\\mathfrak { g } _ { 5 } \\mathfrak { d } _ { 0 }$ of our Scope 3 footprint in 2022. This estimate helps to illustrate the importance of our efforts to engage $7 5 \\%$ of our suppliers, by spend, to set SBTs by 2025, a goal that we hope to primarily achieve by working with PayPal’s top 300 suppliers. We will also continue to educate our employees on sustainable business travel options and eco-friendly practices for remote working and commuting.\n### Supporting Digital Finance Solutions for Climate Resilience\n### Generating Economic Opportunity Through Clean Energy", "chunk_word_count": 347, "section_path": "2022 Global Impact Report > 2022 Energy & Operational Emissions Trends > GHG Emissions", "document_id": "PayPal Global Impact Report 2023", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 43, "chunk_text": "# 2022 Global Impact Report\n## 2022 Energy & Operational Emissions Trends\n### Prioritizing Efficient & Renewable Energy Use\nPayPal again earned the U.S. Environmental Protection Agency Green Power Partnership Top 100 rating, ranking among the country’s largest renewable energy procurers.\nPayPal is a founding member of the Climate Innovation for Adaptation and Resilience (CIFAR) Alliance, a global initiative working to provide climate adaptation and resilience tools and resources to 1 billion of the world’s most vulnerable people. The CIFAR Alliance evolved from the Digital Finance for Climate Resilience Task Force launched in 2021. The Alliance brings together over 40 members, funders and contributing organizations, representing expertise across digital innovation, economic development and climate.\nWe continue to invest in climate impact projects that promote renewable energy and improve living standards for those with limited means. Clean energy technologies for cooking and lighting help underserved families, women and children spend less time laboring and more time learning or generating income.107 In 2022, PayPal:\nOver the past two years, PayPal’s real estate, construction and facilities teams have installed energy-efficient LED lighting systems across\nnearly 1 million square feet (92,170 square meters) of PayPal workspace at 19 office locations globally. An estimated 9,900 long-life LED lamps will save 7.5 million kilowatt-hours of energy over their useful life, equivalent to the energy needed to power approximately 700 U.S. homes for one year.102 Where feasible, the LEDs are paired with smart control systems that sense occupancy and daylight to optimize energy efficiency and light quality for worker health and productivity.\nTo help meet our supply chain-focused SBT, we’re partnering with CDP to provide information and resources to help our largest vendors, by spend, develop GHG inventories and learn more about SBTs. In 2022, $3 9 \\%$ of our suppliers by spend have or committed to set an SBT (up from $30 \\%$ in 2021).105\n• Retired recent-vintage carbon credits representing 6,000 metric tons of avoided emissions from Project Shine, an efficient lighting initiative that, to date, has helped distribute 14.5 million LED bulbs to over 3 million households across India, preventing 1.3 million metric tons of CO2e.108 • Provided financial support for new clean cookstove projects in Mexico and Guatemala, where credit verification and retirement are underway. • Partnered with Gold Standard Foundation to offer PayPal employees the opportunity to purchase high-quality carbon credits, with PayPal matching those donations.109\nIn 2022, the Alliance:\n• Launched the Carbon Finance Opportunity Brief, which explores how the voluntary carbon market could help provide economic incentives for climate mitigation and adaptation in Africa. • Coached over 30 African entrepreneurs, including $50 \\%$ women, in blue carbon venture-building, helping to form seven climate impact start-ups across six countries.\nWe acknowledge that there are current limitations in our ability to influence GHG emissions outside of PayPal’s direct control. We continue to engage with vendors, industry peers, GHG accounting standard-setters and environmental non-governmental organizations to learn more about best practices in sustainable supply chain management and will use these findings to continue working toward our goal.\nIn 2022, PayPal joined $100 \\%$ renewable energy tariffs in San Jose, CA and Scottsdale, AZ, U.S. supporting the greening of local power grids.", "chunk_word_count": 528, "section_path": "2022 Global Impact Report > 2022 Energy & Operational Emissions Trends > Prioritizing Efficient & Renewable Energy Use", "document_id": "PayPal Global Impact Report 2023", "page": 35, "page_start": 35, "page_end": 35 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 44, "chunk_text": "# 2022 Global Impact Report\n## 2022 Energy & Operational Emissions Trends\n### Prioritizing Efficient & Renewable Energy Use\nWhile most of our computing occurs in PayPal data center premises, we continue to migrate to cloud service providers who either have achieved or are committed to achieving $100 \\%$ renewable energy.103 This transition supports improvements in computing and data storage efficiency, as well as energy consumption.\n### Working to Decarbonize Business Travel\n### Vendor Science-Based Target Progress\nIn 2022, we redeployed more than \\$300K of unused travel funds due to reduced travel during the COVID-19 pandemic to stimulate demand for sustainable aviation fuel (SAF). SAF represents an emerging low-carbon technology with the potential to significantly reduce the climate impacts of commercial air travel.106\n(% of supply chain by spend)105,110", "chunk_word_count": 129, "section_path": "2022 Global Impact Report > 2022 Energy & Operational Emissions Trends > Prioritizing Efficient & Renewable Energy Use", "document_id": "PayPal Global Impact Report 2023", "page": 35, "page_start": 35, "page_end": 35 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 45, "chunk_text": "# 2022 Global Impact Report\n## 2022 Energy & Operational Emissions Trends\n### Managing Emissions Across Our Supply Chain\nAs part of our commitment to continuous improvement, we’ve taken steps to share a preliminary estimate of our indirect (Scope 3) emissions from relevant 2022 value chain activities,104 please see Appendix to learn more. The majority of our value chain emissions come from\n104 Scope 3 emissions inventory methodologies are imprecise and presented as estimates. Purchased goods and services, capital goods and upstream transportation and distribution emissions estimates are determined using annual procurement spend and Economically Extended Input-Output emissions factors as published by the U.S. Environmental Protection Agency. Employee emissions are estimated using average office occupancy data, employee transportation survey data and estimated incremental household energy intensity due to working from home. As a software and services business, substantially all of PayPal’s products and services are digital. Our preliminary analyses show that downstream Scope 3 emissions categories are not currently a material source of emissions for PayPal. We will continue to assess the relevance and materiality of all Scope 3 emissions categories.\n105 We’ve restated prior period values based on refinements in assessment methodology to include vendor spend from relevant Scope 3 categories only, including purchased goods and services, capital goods, business travel and upstream transportation and distribution.\n106 According to the International Air Transport Association, sustainable aviation fuel has been shown to provide significant reduction in overall CO2 lifecycle emissions compared to fossil fuels, up to 80% in some cases. Source: Sustainable Aviation Fuels: Fact Sheet 5, Dec 2018.\n107 According to the Global Alliance for Clean Cooking, time poverty is the result of loss of time due to unpaid work such as collecting clean water and firewood. It is a global issue that carries widespread impacts on women, their families and their communities.\n108 We purchased and retired 6,000 metric tons of vintage 2021 carbon credits, which received independent verification and have been retired on a public carbon credit registry.\n109 Carbon credit purchases from eligible nonprofits by PayPal employees are eligible to be matched by PayPal for climate impact philanthropy. Climate impact philanthropy matching is subject to our existing match of \\$2,500, which includes giving and volunteering, per year per employee.\n110 To calculate the progress toward our goal of reaching 75% vendors by spend with a science-based target (SBT), we consider relevant annual spend with vendors who have set or committed to setting a SBT validated by the Science-Based Targets initiative (SBTi), or have publicly disclosed a greenhouse gas (GHG) emissions reduction goal that is aligned with the latest SBTi criteria, even if not validated by SBTi. For vendors with an SBT set or commitment to set an SBT, their targets have been verified against the latest SBTi v4.2 and v5 criteria.\n### Managing Our Natural Resources\n### Supporting Environmental Volunteerism in Our Communities\nWe aim to be responsible stewards of our planet’s resources and ecosystems, and endeavor to efficiently use water throughout our global operations, divert waste from landfills and execute our zero-landfill strategy for electronic waste (e-waste).", "chunk_word_count": 512, "section_path": "2022 Global Impact Report > 2022 Energy & Operational Emissions Trends > Managing Emissions Across Our Supply Chain", "document_id": "PayPal Global Impact Report 2023", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 46, "chunk_text": "# 2022 Global Impact Report\n## 2022 Energy & Operational Emissions Trends\n### Responsibly Retiring Electronic Waste\nPayPal employees around the world are passionate about sustainability. In 2022, we teamed up for impact through learning, volunteerism and individual action.\n### Saving Water at Our U.S. Headquarters\nIn 2022, our IT asset management teams retired 338 metric tons of IT hardware across our data center services, global office operations and workforce, $7 5 \\%$ of which was donated or sold for refurbishment and reuse and $\\mathtt { 2 5 \\% }$ was transferred to our secure disposal vendors for disassembly and recycling in accordance with responsible e-waste practices. We also donated 6 metric tons of computer peripherals to local nonprofits in Europe.\nWith leadership \nfrom our real \nestate team, we’ve \ninvested in intelligent \nflow-control \nand monitoring\nEnvironmental Volunteerism: Through a combination of grants and employee volunteering with organizations such as the SankalpTaru Foundation in India, Keep Austin Beautiful in the U.S., One Tree Planted in Ireland and United Way in Guatemala, PayPal supported tree planting and ecosystem restoration efforts across North America, Europe, South America and Asia.\n### Managing Our Water Use\nGiven the digital nature of our business, we consume relatively low volumes of water on a revenue intensity and per-employee basis.111 We maintain water efficiency standards, including low-flow faucets and fixtures, across our fully managed office locations globally and consider additional opportunities to support local water conservation efforts and appropriately manage this finite resource. As employees began to return to the office in 2022, we saw a ${ \\mathfrak { 2 \\% } }$ increase in water use across our facilities compared to 2021.\ntechnologies across our water systems. Campus irrigation systems use reclaimed water, helping to conserve Santa Clara Valley’s scarce drinking water resources. We’ve transitioned significant parts of our campus to native and no-water landscaping, resulting in estimated reclaimed water-consumption reduction of approximately 2.5 million gallons annually.112\nOur company-wide e-waste management procedure requires all IT asset disposal service providers to maintain certification to the R2, e-Stewards or WEEE standard for responsible e-waste management. We also verify that service providers maintain ISO-certified programs for environmental, health and safety, and quality management systems.\nGlobal Earth Day Activities: Nearly 10,000 employees completed 20,000 individual activities, such as signing up for paperless bills or taking public transit to work, that reinforced long-term sustainable working and living practices.\n• Company-Wide Environmental Footprint Survey: Over 9,000 employees voluntarily provided data to enhance the measurement and management of employee-related GHG emissions, including home energy use and transportation used for commuting.\n### Reducing Waste to Landfill Across Our Operations\nWaste recycling is available at nearly all PayPal offices globally and select sites also provide food waste composting. We are working with property managers, local waste-hauling providers and municipal jurisdictions to offer waste recycling in locations where it’s not currently available.\n[IMAGE CAPTION] IT Hardware Retired from Offices & Data Centers (Metric Tons)\n“Employees at PayPal really enjoy volunteering in the climate-focused events at PayPal, whether they are learning or hands-on. We are proud of working at PayPal, where environmental sustainability is one of our four key pillars in our ESG strategy and our goals are becoming reality sooner than expected.”", "chunk_word_count": 535, "section_path": "2022 Global Impact Report > 2022 Energy & Operational Emissions Trends > Responsibly Retiring Electronic Waste", "document_id": "PayPal Global Impact Report 2023", "page": 36, "page_start": 36, "page_end": 36 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 47, "chunk_text": "# 2022 Global Impact Report\n## 2022 Energy & Operational Emissions Trends\n### Supporting Rapid Response to Natural Disasters\nIn 2022, we helped concerned individuals donate more than \\$1 million to responding charities in the wake of deadly flooding in Pakistan and Hurricane Ian in Florida, U.S. We also helped people in Mississippi, U.S. through corporate donations to two charities working in the community to provide relief and build capacity following water outages triggered by severe flooding events.\nPatricia Ruiz Gomez Community Impact Lead and Administrative Manager Madrid, Spain\n### Appendix\n### ESG Framework Alignment\nOur ESG strategy and disclosures take into account input from our stakeholders, as well as industry best practices.\nWe annually report on the Company’s activities to advance the U.N. Sustainable Development Goals (SDGs) and include a table illustrating the contributions we’ve made to the seven Global Goals most relevant to our business.\nAdditionally, we have included a summary of climate-related disclosures aligned to the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, which provides an enhanced discussion of our governance, strategy, risk management, and key metrics and targets related to climate risk. Given the digital nature of our business, PayPal’s GHG emissions footprint is relatively small. Nevertheless, we aim to be responsible stewards of our planet’s resources and ecosystems and monitor related risks and opportunities pertaining to our business.\nOur reporting is aligned to the Global Reporting Initiative (GRI) standards, the IFRS Foundation’s SASB standards, the U.N. Global Compact (UNGC) Ten Principles and the Stakeholder Capitalism Metrics (SCM) framework. We conducted a preliminary review of our economic activities in the context of the EU Taxonomy114 and found that PayPal does not make substantial contributions to the EU’s climate and environmental objectives.\nAll references apply to PayPal’s global operations for the year ended December 31, 2022, unless otherwise noted.\n### Independent Limited Assurance Statement\nBureau Veritas UK provided an independent limited assurance opinion on select 2022 ESG metrics. We will continue to evaluate new data points for assurance in future reporting.\n### Additional Resources\n### Contents\nBeyond this report, we provide additional materials and documents that further illustrate our ESG strategies, activities, progress and performance, including a list of websites, policies and publicly available research.\nSupporting the U.N. SDGs \n• TCFD Summary \nESG Performance Metrics Table \nIndependent Limited Assurance \nStatement \n• Additional Resources", "chunk_word_count": 387, "section_path": "2022 Global Impact Report > 2022 Energy & Operational Emissions Trends > Supporting Rapid Response to Natural Disasters", "document_id": "PayPal Global Impact Report 2023", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 48, "chunk_text": "# 2022 Global Impact Report\n## 2022 Energy & Operational Emissions Trends\n### Supporting the U.N. Sustainable Development Goals\nThe United Nations (U.N.) Sustainable Development Goals (SDGs) are a set of 17 global goals and 169 targets that aim to achieve a better and more sustainable future for all. Across PayPal, we seek opportunities to align our business activities and priority impact areas with these goals. We annually assess our net contributions to the SDGs based on the degree of potential influence and a mapping to our core business and ESG activities and outcomes to the SDGs’ underlying targets. We found that PayPal makes a direct, positive contribution to 11 of the 17 goals, with the greatest impact on the seven goals highlighted below. As a member of the U.N. Global Compact (UNGC), we report on our contribution to the Ten Principles, which encourage adoption of sustainable and socially responsible policies aligned with the SDGs. For a complete set of ESG metrics that align to the UNGC, please see ESG Performance Metrics Table.\n### Task Force on Climate-Related Financial Disclosures (TCFD) Summary\nBoard, which is committed to market transparency and stability, established the Task Force on Climate-Related Financial Disclosures (TCFD) to develop recommendations for more effective climate-related disclosures. \nzes PayPal’s approach to addressing climate-related governance, strategy, risk management and metrics and targets in alignment with the TCFD recommendations. Our full TCFD Index is available here.\n### Risk Management\n### Governance\n### Strategy", "chunk_word_count": 242, "section_path": "2022 Global Impact Report > 2022 Energy & Operational Emissions Trends > Supporting the U.N. Sustainable Development Goals", "document_id": "PayPal Global Impact Report 2023", "page": 38, "page_start": 38, "page_end": 39 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 49, "chunk_text": "# 2022 Global Impact Report\n## 2022 Energy & Operational Emissions Trends\n### Metrics & Targets\nOverview of PayPal’s governance structure and oversight of climate-related risks and opportunities\nDiscussion of the actual and potential impacts of climate-related risks and opportunities on PayPal’s business, strategy and financial planning\nDescription of how PayPal identifies, assesses and manages climate-related risks\nDisclosure of the metrics and targets PayPal uses to assess and manage relevant climate-related risks and opportunities\n• The Corporate Governance and Nominating Committee of PayPal’s Board oversees ESG matters generally, including environmental sustainability management, with responsibilities such as reviewing progress in developing and implementing strategies for managing environmental topics (inclusive of climate-related risks and opportunities). • Management and designated internal leaders provide regular updates to the Board and relevant committees on climate- and ESG-related topics.\n• PayPal considers both transitional and physical risks in the short term (zero to three years), medium term (three to five years) and long term (five to 10 years).\n• ESG-related risks, including climate-related risks, are integrated in our enterprise risk assessment. We identify and prioritize ESG risks and opportunities through our significance assessment, refreshed annually.\n• PayPal discloses climate-related metrics related to total energy consumed, percentage renewable energy and Scope 1, 2 and 3 greenhouse gas (GHG) emissions.\n• The Company recognizes the potential physical and transition risks for its operations and supply chain, even as the overall risk to our business from climate change is likely low.\n• $\\ln 2 0 2 1$ , we established science-based emissionsreduction targets informed by stakeholder consultation and validated by the Science Based Targets initiative (SBTi) to demonstrate progress toward our long-term goal of reaching net-zero GHG emissions across our operations and value chain by 2040:\n• We apply the Three Lines of Defense model (management, oversight and independent assurance) to manage risks and our Enterprise Risk and Compliance Management Program sets PayPal’s programmatic approach to identifying, measuring, managing, monitoring and reporting key risks facing the Company.\n• As part of PayPal’s mission to democratize financial services, we are exploring opportunities for our digital payments technology to support an equitable transition to a global net-zero economy.\n• We began a climate risk assessment and scenario analysis using three scenarios to further understand potential short-, medium- and long-term climate risks and opportunities for PayPal.\n– Reduce absolute operational GHG emissions by $\\mathtt { 2 5 \\% }$ by 2025 (from a 2019 base year)\n• The Enterprise Risk Management Committee (ERMC), co-chaired by PayPal’s Chief Risk and Compliance Officer and Chief Enterprise Services Officer, and delegated subcommittees oversee the implementation and execution of our program.\n– Engage $7 5 \\%$ of our suppliers, by spend, to set science-based targets by 2025\n– Source $100 \\%$ of our data center energy use with renewable energy sources by 2023 (achieved in 2021)\n• An ESG Steering Committee consisting of senior leaders across PayPal regularly reports on emerging ESG risks that affect PayPal’s business, including climate-related risks, to a subcommittee of the ERMC.\nBureau Veritas UK provided an independent limited assurance opinion on select ESG metrics (those denoted with a ^). A full assurance statement including limitations and exclusions can be found on page 50-51.", "chunk_word_count": 532, "section_path": "2022 Global Impact Report > 2022 Energy & Operational Emissions Trends > Metrics & Targets", "document_id": "PayPal Global Impact Report 2023", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 50, "chunk_text": "# 2022 Global Impact Report\n## 2022 Energy & Operational Emissions Trends\n### ESG Performance Metrics Table\nIn the following table, we disclose our environmental, social and governance (ESG) programs, policies and metrics mapped to the following voluntary reporting frameworks and initiatives: The Global Reporting Initiative (GRI) standards; the IFRS Foundation’s SASB standards for the Software & IT Services and Consumer Finance industries;119 the Ten Principles of the United Nations Global Compact (UNGC); and the Stakeholder Capitalism Metrics (SCM).120 Disclosures are organized by our four ESG pillars — Responsible Business Practices, Social Innovation, Employees & Culture and Environmental Sustainability. The GRI disclosures in this table represent our GRI content index, prepared in accordance with the 2021 Universal Standards. We map our 2022 ESG performance metrics to the recommended SCM core metrics, as appropriate, with select inclusion of expanded metrics.121 We will continue to evaluate opportunities for future reporting enhancements.\n### Independent Limited Assurance Statement\n• Vendors with Science–Based Targets (% of vendors by spend)\n## INDEPENDENT ASSURANCE REPORT\n## 7. Summary of Work Performed\n### To: The Stakeholders of PayPal\n## 3. Reporting Criteria\ns part of our independent assurance, our work included:\nconducting interviews with PayPal personnel and PayPal’s external consultants responsible for the Selected Information; \nreviewing the data collection and consolidation processes used to compile Selected Information, including assessing assumptions made, and the data scope and reporting boundaries; \nreviewing documentary evidence provided by PayPal; \nagreeing a selection of the Selected Information to the corresponding source documentation; \nreviewing PayPal systems for quantitative data aggregation and analysis, including where applicable the underlying activity data, conversions, and emission factors applied; \nassessing the disclosure and presentation of the Selected Information to ensure consistency with assured information; \nreperforming [a selection of] aggregation calculations of the Selected Information; reperforming greenhouse gas emissions conversions calculations; \nevaluating the design of internal systems, processes and controls to collect and report the Selected Information;\nThe Selected Information has been prepared in accordance with internal definitions set for PayPal’s ESG Indicators and needs to be read and understood together with the footnotes and commentary on the approach and methodology taken, embedded in the Report. The GHG emissions data has been prepared taking into consideration The GHG Protocol Corporate Accounting Standard (revised edition).\n## 1. Introduction and Objectives of Work\nBureau Veritas UK Limited (Bureau Veritas) has been engaged by PayPal Holdings Inc (PayPal) to provide limited assurance of selected Environmental, Social and Governance (ESG) performance data for inclusion in the “2022 Global Impact Report” (‘GIR’)1 (the ‘Report’). The objective is to provide assurance to PayPal and its stakeholders over the accuracy and reliability of the reported information and data.\n## 4. Limitations and Exclusions\nExcluded from the scope of our work is assurance of information relating to:", "chunk_word_count": 458, "section_path": "2022 Global Impact Report > 2022 Energy & Operational Emissions Trends > ESG Performance Metrics Table", "document_id": "PayPal Global Impact Report 2023", "page": 40, "page_start": 40, "page_end": 50 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 51, "chunk_text": "# 2022 Global Impact Report\n## 2. Scope of Work\n▪ Activities outside the defined assurance period; Positional statements of a descriptive or interpretative nature, or of opinion, belief, aspiration or commitment to undertake future actions; and Other information included in the Report other than the Selected Information.\nThe scope of our work was limited to assurance over the following information included within the Report for the period January 1st, 2022 to December 31st, 2022 (the ‘Selected Information’)2: Employee & Culture:\nEngagement survey - Employee Participation Rate (%) \nEngagement survey - Employee Engagement Score \nEngagement survey - Intent to Stay Score \nOverall Workforce Diversity (%) \nGlobal Gender Diversity (%) \nUS Ethnic Diversity (%) \nTotal Turnover Rate (%) \nEstimated Minimum Employee Net Disposable Income, Global (%)\n### The following limitations should be noted:\nNo single overall data methodology / basis of reporting document was shared by PayPal however single KPI and/or KPI family methodologies were shared and/or demonstrated. \nThis limited assurance engagement relies on a risk based selected sample of sustainability data and the associated limitations that this entails. \nThe reliability of the reported data is dependent on the accuracy of metering and other production measurement arrangements employed at site level, not addressed as part of this assurance. \nThis independent statement should not be relied upon to detect all errors, omissions or misstatements that may exist.\nThe scope of a limited assurance engagement is substantially less than for reasonable assurance both in terms of the risk assessment procedures and in performing the procedures to address the identified risks.\n### Social Innovation:\nFunds raised for non-profits and personal causes (USD Billions) Number of donors who gave to non-profit and personal causes (millions) Total Capital to SMBs (USD Billions) in 2022 Total Capital to SMBs since 2013 (USD Billions) • Average International Remittance Costs (%)\nA 5% materiality threshold was applied to this assurance. It should be noted that the procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed.\n## 5. Responsibilities\nThis preparation and presentation of the Selected Information in the Report are the sole responsibility of the management of PayPal.\nBureau Veritas was not involved in the drafting of the Report or of the Reporting Criteria. Our responsibilities were to:", "chunk_word_count": 413, "section_path": "2022 Global Impact Report > 2. Scope of Work", "document_id": "PayPal Global Impact Report 2023", "page": 50, "page_start": 50, "page_end": 50 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 52, "chunk_text": "# 2022 Global Impact Report\n## 8. Conclusion\n### Responsible Business Practices:\nobtain limited assurance about whether the Selected Information has been prepared in accordance with the Reporting Criteria; form an independent conclusion based on the assurance procedures performed and evidence obtained; and \n• report our conclusions to the Management of PayPal.\nOn the basis of our methodology and the activities and limitations described above nothing has come to our attention to indicate that the Selected Information (a copy of which is contained in the table below) is not fairly stated in all material respects.\n• Annual risk and compliance training (%)\nEnvironmental Sustainability:\nSuch opinion is based on work undertaken and the limitations and exclusions defined in this statement.\n• Greenhouse Gas (GHG) Emissions Scope 1 (MT3 CO2e) Greenhouse Gas (GHG) Emissions Scope 2 (MT CO2e) \n• Greenhouse Gas (GHG) Emissions Scope 3 (MT CO2e) o Emissions from Business Travel o Fuel and Energy Related Activities (FERA) not included in Scope 1 & 2 – Location and Market 。 Emissions from Employee Commuting and Remote Working Global Energy Use (Renewable and Non-Renewable) (000’s kWh) Renewable Energy as a % of total energy use Renewable Energy as a % of data centre energy use \n• Progress of reduction target in operational GHG Emissions (% since 2019)\n## 6. Assessment Standard\nWe performed our work to a limited level of assurance in accordance with International Standard on Assurance Engagements (ISAE) 3000 Revised, Assurance Engagements Other than Audits or Reviews of Historical Financial Information (effective for assurance reports dated on or after December 15th, 2015), issued by the International Auditing and Assurance Standards Board.\nreau Veritas | C2 - Internal\n### Independent Limited Assurance Statement, cont.\nEstimated Minimum Employee Net Disposable Income, Global (%) 26 requirements, professional standards, quality reviews and applicable legal and regulatory requirements which we consider to be equivalent to ISQM 1 & 25.\nBureau Veritas has implemented and applies a Code of Ethics, which meets the requirements of the International Federation of Inspections Agencies $( { \\mathsf { I F I A } } ) ^ { 6 } ,$ across the business to ensure that its employees maintain integrity, objectivity, professional competence and due care, confidentiality, professional behaviour and high ethical standards in their day-to-day business activities. We consider this to be equivalent to the requirements of the IESBA code7. The assurance team for this work does not have any involvement in any other Bureau Veritas projects with PayPal.\n### Bureau Veritas UK Ltd\nRegistered in England & Wales, Company Number: 1758622 Registered Office: Suite 206 Fort Dunlop, Fort Parkway, Birmingham, B24 9FD\nLondon April 27th, 2023", "chunk_word_count": 440, "section_path": "2022 Global Impact Report > 8. Conclusion", "document_id": "PayPal Global Impact Report 2023", "page": 50, "page_start": 50, "page_end": 51 }, { "report": "PayPal Global Impact Report 2023.pdf", "chunk_idx": 53, "chunk_text": "# 2022 Global Impact Report\n## 9. Statement of Independence, Integrity and Competence\nBureau Veritas is an independent professional services company that specialises in quality, environmental, health, safety and social accountability with over 190 years history. Its assurance team has extensive experience in conducting verification over environmental, social, ethical and health and safety information, systems and processes.\nBureau Veritas operates a certified4 Quality Management System which complies with the requirements of ISO 9001:2015, and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical\n### Additional Resources\n8\n回\n### General Disclosures\n### Responsible Business Practices\n### Social Innovation\n### Employees & Culture\n### Environmental Sustainability\n• Global Impact Website \n• 2023 Proxy Statement & 2022 Annual Report \nInvestor Relations \n• About PayPal \nPayPal Newsroom \n• Corporate Governance \nPolicies and Other Disclosures \nMission, Vision & Values \nFamily of Brands \n• PayPal Global Markets \n• PayPal Ventures\n• Values in Action • Small Business Spotlight Series • MADE X PayPal Event Maggie Lena Walker Award • PayPal Small Business Month • About PayPal Products • PayPal Giving Platform • Business Resource Center • PayPal Case Studies\n• Employees & Culture \n• PayPal Careers \n• PayPal Global Benefits \nDiversity, Inclusion, Equity & Belonging \n• Supplier Diversity \n• U.S. EEO-1 Reports \n• PayPal’s Looking Up Podcast \n• PayPal Votes \n• Community Impact Teams\n• Environmental Sustainability \n• Environmental Sustainability Policy PayPal’s 2022 CDP Climate Change Response \n• TCFD Index\n• Responsible Business Practices \n• Security Center \n• Trust & Privacy \nHackerOne Bug Bounty Program \nPrivacy Statement \n• Privacy Hub \n• Data Management Principles \n• Code of Business Conduct & Ethics \n• Third Party Code of Conduct & Ethics \n• Joint U.K. and Australia Modern Slavery \nStatement \n• Government Relations \n• Political Engagement and Transparency \nPolicy \n• Political Spending and Lobbying Disclosures \n• Acceptable Use Policy \n• PayPal Law Enforcement Portal \n• PayPal Tax Policy \n• Legal Hub\n### Thought Leadership\n• The Role of Data Science in Maintaining \nTrust and Responsible Innovation \nProactively Protecting Users from Phishing by Intentionally Triggering Cloaking Behavior \n• Trust and Access to Capital \n• SME Economic Support in the Face of Inflation: Payment Options & Discounts \nSME Economic Opportunity in the Face of Inflation: Embracing Omnichannel Solutions \n• SME Economic Opportunity in the Face of Inflation: Access to Capital \nPayPal and the Financial Wellness Initiative \nPayPal Giving Experiments \n• Techniques to Defend Against Advanced \nPhishing", "chunk_word_count": 404, "section_path": "2022 Global Impact Report > 9. Statement of Independence, Integrity and Competence", "document_id": "PayPal Global Impact Report 2023", "page": 51, "page_start": 51, "page_end": 52 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 0, "chunk_text": "# Contents\nWe acknowledge the Traditional Custodians of the land on which we work, live and fly. We pay respect to Elders past, present and emerging.\nAboriginal and Torres Strait Islander readers are warned that this Report may contain images of deceased persons. All references to ‘First Nations’ throughout this document are intended to include Aboriginal and/or Torres Strait Islander peoples in Australia.\n[IMAGE CAPTION] Sustainability Framework\nport has been prepared for the purpose of providing investors, and other stakeholders, with information regarding our approach to sustainability issues related to our business. It has not been prepared as financial or investment advice o ce in relation to the future performance of Qantas.\nard-looking statements and statements of opinion. These may include statements regarding sustainability plans and strategies, the impact of climate change and other sustainability issues, energy transition scenarios, actions of t lers such as technology development and commercialisation (including with respect to sustainable aviation fuels), policy support, market support, and energy and offsets availability.\nare made only as at the date of this Report. Readers are cautioned not to place undue reliance on such statements, particularly in light of the long time horizon which this Report discusses and the inherent uncertainty in possible policy gical developments.\nNo representation or warranty is made regarding the accuracy, completeness or reliability of the forward-looking statements or opinions contained in this Report, or the assumptions on which either is based. All such information is, by its nature, subject to significant uncertainties outside of the control of Qantas, and actual results, circumstances and developments may differ materially from those expressed or implied in this Report. Except as required by applicable laws or regulations, Qantas does not undertake to publicly update or review any forward-looking statements, whether as a result of new information or future events. To the maximum extent permitted by law, Qantas and its officers do not accept any liability for any loss arising from the use of the information contained in this Report.", "chunk_word_count": 331, "section_path": "Contents", "document_id": "Qantas 2023 Sustainability Report", "page": 2, "page_start": 2, "page_end": 3 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 1, "chunk_text": "# Contents\n## Chairman’s message\nThis past year has seen the Qantas Group more than double the amount of flying compared to FY22, which is great for our customers and people. We know that brings with it a renewed focus on the steps the industry must take to reduce its impact on the environment.\nConstruction has begun on a new flight training centre in Sydney that will enable training for up to 4,500 Qantas and Jetstar pilots and cabin crew each year.\nSustainability is also about ensuring we help support and sustain the communities that we serve, which is why the Qantas Group has a long history of supporting wider social issues that impact our people and customers.\nAs our 2023 Sustainability Report details, this past year we took significant steps to support our long-term goal to decarbonise as we accelerate investment.\nThis includes Indigenous reconciliation, which we have supported for many years. We’ve been promoting First Nations culture and tourism since the 1960s. We supported constitutional recognition in 2014 and the Uluru Statement of the Heart in 2019. And that continues with our support for the Yes campaign in this year’s referendum on an Indigenous Voice to Parliament.\nOur fleet renewal program is the largest example of that. New, more fuel-efficient aircraft are one of the ways we will seek to achieve our interim goal of reducing net emissions by 25 per cent by 2030 and reach net zero by 2050.\nDuring FY23 we received 10 new aircraft, and in the year ahead we’ll receive another 14, including QantasLink’s first Airbus A220 aircraft, which uses 25 per cent less fuel than the aircraft it replaces.\nAs an airline founded in outback Queensland more than a century ago, we’re proud of the Group’s longstanding commitment to regional Australia.\nDuring the year we also built on our existing partnership with Airbus to establish a $\\$ 400$ million Climate Fund, which we’re using to accelerate the development of an Australian SAF industry and ensure access to high-integrity carbon offsets. We’ve already made our first investments in SAF — one in Queensland and another in Western Australia, both with partners — and have more in the pipeline.\nOur Regional Grants program, which was paused during COVID-19, returned this year and doubled in value. We had a record number of entries and made grants to 32 organisations across Australia.\nAs part of our commitment to inclusion and diversity, we also released our first Access and Inclusion Plan so that we can continue to improve the experience for people with disability who choose to fly or work with us.\nWe’re also increasing investment in our workforce to support both our future needs and that of the wider industry. We expect to create 8,500 new highly skilled jobs in Australia over the next decade and that’s going to require a significant investment in training.\nWhile there has been good progress on sustainability goals over the past 12 months, we also acknowledge shortcomings in how we have served our stakeholders. We know there is much more to be done and we look forward to keeping you updated on our progress.", "chunk_word_count": 523, "section_path": "Contents > Chairman’s message", "document_id": "Qantas 2023 Sustainability Report", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 2, "chunk_text": "# Contents\n## Chairman’s message\nAs part of this commitment, we announced a new Engineering Academy that will help us develop a more diverse pipeline of talent in a traditionally male-dominated area. We also nearly doubled the size of our Pilot Academy scholarship program for women and Aboriginal and Torres Strait Islanders with 50 places over five years.\nRICHARD GOYDER AO\n## FY23 sustainability milestones\n## March 2023\nQantas, Airbus and Queensland Government invest in Queensland biofuel facility, developed by Jet Zero Australia and Lanza Jet\n## December 2022\n## August 2022\n\n## November 2022\nRegional Grants program relaunched, $\\$ 10 m$ over five years\n## July 2022\nNew Sydney flight training centre announced\nSAF2 Coalition launched with five founding members\nQantas Group Modern Slavery Statement published\nJetstar marks arrival of first NEO1\n## May 2023\nREGENERATE oftravel\nAnnounced $\\$ 400 m$ Qantas Climate Fund — $\\mathsf { U S S 2 0 0 m }$ from jointly funded Qantas/Airbus SAF Partnership with remainder from Qantas\n## June 2023\nQantas Group announces 50 Pilot Academy scholarships to female and First Nations students\n\nQantas Group Access and Inclusion Plan released\nReGenerate environmental employee network launched\nJetstar begins phased resumption of inflight recycling\nQantas begins phased resumption of inflight recycling\n## About the Qantas Group\nFounded in the Queensland outback in 1920, Qantas has grown to be Australia’s largest domestic and international airline. Qantas has a range of subsidiary businesses that all, in one form or another, support the overall operations of the Group.\nThe Qantas Group’s main business is the transportation of customers using two complementary airline brands — Qantas and Jetstar — operating regional, domestic and international services. This also involves a range of operational functions, both in-house and contracted, including pilot and cabin crew operations, aircraft engineering and maintenance, catering and cleaning services, freight processing and other operational airline support services.\n## About this Report\n## PURPOSE\n## GLOBAL SUSTAINABILITY FRAMEWORKS AND COMMITMENTS\n### Task Force on Climate-related Financial Disclosures\nThe Financial Stability Board (FSB) created the TCFD to develop recommendations on the information companies should disclose related to climate change. In December 2017, Qantas Group publicly declared our support for the TCFD and its recommendations. Our response to the TCFD is included in the Climate action section of this report. More details on how the Qantas Group is aligned with the TCFD’s recommendations can be found in the Report appendix.\nThe purpose of this Report is to provide stakeholders with a comprehensive update on progress against our sustainability targets and on key actions undertaken in FY23 under each area of our Sustainability Framework. The Framework includes the social and environmental sustainability issues of most importance to Qantas and our stakeholders, and those where we can have the greatest impact.\n### Global Reporting Initiative\nThis Report has been prepared with reference to the Global Reporting Initiative (GRI) Standards. The GRI Content Index can be found in the Report Appendix (available on the Qantas Group Investor Centre website), which also includes our alignment with the United Nations (UN) Sustainable Development Goals (SDGs) and the Task Force on Climate-related Financial Disclosures (TCFD).", "chunk_word_count": 521, "section_path": "Contents > Chairman’s message", "document_id": "Qantas 2023 Sustainability Report", "page": 4, "page_start": 4, "page_end": 7 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 3, "chunk_text": "# Contents\n## REPORT SCOPE AND BOUNDARY\n### International Sustainability Standard Board\nUnless otherwise stated, this Sustainability Report (Sustainability Report or Report) covers the period 1 July 2022 to 30 June 2023 (FY23) for Qantas Airways Limited and its wholly-owned entities (unless stated otherwise). These entities form the Group’s respective business segments, including Qantas International (including Qantas Freight), Qantas Domestic (including QantasLink and Network Aviation), Qantas Loyalty and Jetstar Group (including Jetstar Airways and where specified Jetstar Asia). All financial data is in Australian dollars, except where explicitly stated.\nQantas is monitoring developments in global sustainability reporting, including the planned issuance of the International Sustainability Standard Board aligned standards in Australia by the Australian Accounting Standards Board. Qantas will respond to new reporting obligations as required.\n### United Nations Global Compact\nThe 10 Principles of UNGC are derived from the Universal Declaration of Human Rights, the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work, the Rio Declaration on Environment and Development, and the United Nations (UN) Convention Against Corruption. Qantas joined the UNGC in 2017 and is a member of the UNGC Network Australia.\n### Climate Action $1 0 0 +$\nClimate Action ${ \\mathrm { 1 0 0 + } }$ is an investor-led initiative, focused on companies it views as key to driving the transition to global net zero emissions. Qantas is one of 166 focus companies selected for engagement. Qantas engages with Climate Action ${ \\mathrm { 1 0 0 + } }$ and the climate change section of this Report is aimed at supporting Climate Active’s annual benchmark.\nIn this Report, the terms ‘Qantas’, ‘Qantas Group’, ‘the Group’, ‘our business’, ‘organisation’, ‘we’, ‘us’, ‘our’ and ‘ourselves’ refer to Qantas Airways Limited and its wholly-owned entities unless stated otherwise. This Report contains information for the Group as at the date of this Report.\n### United Nations Sustainable Development Goals\nThe 17 UN SDGs are key to the UN’s 2030 Agenda for a better future for people and the planet. Our Sustainability Framework aims to support the achievement of the UN SDGs. We recognise that there are some SDGs where we have a greater ability to influence environmental and social outcomes. These are included in the list of material sustainability topics on page eight and referenced at the beginning of each key section of the Report.\n## ASSURANCE\nMore Information: For more information or if you would like to provide feedback on this Report, please contact: sustainability@qantas.com.au\nKPMG has provided Limited Assurance over our materiality assessment and selected sustainability metrics for the period 1 July 2022 to 30 June 2023. The Assurance Statement can be found on page 75.\nUnited Nations Sustainable Development Goals\n### Sustainability Framework\nThe Qantas Group’s Sustainability Framework focuses on three key principles — valuing our planet, enabling our people and connecting customers and communities — to support our vision of driving sustainability to protect the future of travel. We have used this Framework to structure the FY23 Sustainability Report.", "chunk_word_count": 499, "section_path": "Contents > REPORT SCOPE AND BOUNDARY", "document_id": "Qantas 2023 Sustainability Report", "page": 7, "page_start": 7, "page_end": 8 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 4, "chunk_text": "# Contents\n## MATERIALITY ASSESSMENT\nOur Sustainability Framework and Sustainability Report contain information about the environmental, social and economic issues or impacts of most interest and importance to our stakeholders and to the Qantas Group.\nWe undertook a materiality assessment in FY23, with consideration of the GRI Standards on Material Topics 2021, to confirm we were reporting on the issues that matter to our stakeholders and to Qantas. To begin, we developed an overall list of topics by reviewing those included in the GRI (noting the GRI does not yet have airline-specific guidance), as well as those included in the Sustainability Accounting Standards Board’s Aviation Sector, the UNSDGs, and those reported on by nine airline peers.\n## A STRONG, ETHICAL SUSTAINABLE BUSINESS\nOur vision: Driving sustainability to protect the future of travel\nWe then asked stakeholders — Qantas and Jetstar customers, employees and investors — to rank the issues with consideration of Qantas’ ability to impact the issue as well as the impact of the issue on Qantas. We did not specify whether the impact was negative or positive. We also undertook a desktop review of topics covered in the media, those being discussed by government and regulators, those included in peer materiality assessments and reports, as well as relevant risks covered in our Group Risk Report.\nResults were discussed with key internal stakeholders and at an internal workshop. The final draft was presented to our Sustainability Management Board for endorsement. The table on the following page sets out and summarises the key issues.\nExemplary business practices\nSafety first | Strong governance and risk management | Drive ethics and integrity | Protect privacy and cyber security Responsible capital allocation | Transparent data and reporting | Sustainable supply chain | Human rights due diligence Education and awareness | Collaboration and partnerships\nThe table below sets out our key sustainability issues, as identified through the materiality assessment detailed on the previous page. For each issue, we have identified where it sits within our Sustainability Framework and also listed the UN SDGs with which each issue is most aligned.\n### Stakeholder engagement\nWe have a wide range of stakeholders who we engage with regularly in many different ways. The selection of stakeholders included below is based on their ability to impact Qantas, as well as our impact (or potential impact) on them.\n## KEY STAKEHOLDER GROUP\nRegular communication, including daily email updates, weekly \nnewsletters and specific updates from executives and managers; \nfrequent updates to intranet site, \ninternal social network and internal \nbroadcast system; company-wide \nlive-streamed town halls; employee \nnetworks; company-wide bi-annual executive roadshows. Direct interaction with crew, airport and contact centre teams. \nElectronic communication, including \nthrough email and text messages. The Qantas and Jetstar websites \nand apps. Research forums. Qantas magazine, both hard copy and \nonline. Advertising through a variety \nof channels. Social media platforms. Direct investor engagement \nthroughout the year, half-year and \nfull-year results announcements, \nAnnual General Meeting, annual reporting, investor roadshows and ASX releases.\nSupplier governance, site visits, audits and onboarding/ training (as applicable); Supply Chain Assurance program, Supplier Requirements and Supplier Code of Conduct; member of Supply Nation.", "chunk_word_count": 518, "section_path": "Contents > MATERIALITY ASSESSMENT", "document_id": "Qantas 2023 Sustainability Report", "page": 8, "page_start": 8, "page_end": 10 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 5, "chunk_text": "# Contents\n## HOW WE ENGAGE\n### CASE STUDY — Employee networks\nIn March 2023, we launched ReGenerate, our employee advocacy network for environmental sustainability, targeted at building a community of sustainability champions. Since the launch, more than 1,400 employees have joined.\nENABLED ENhancing ABilities and LEveraging Disabilities\n## ILLUMINATE\n## ALTITUDE\nOne of the aims of ReGenerate is to encourage employees to share their environmental ideas, which are then evaluated by the business.\nThe LGBTQI+ and Ally Employee Network\nThe Qantas Group Women’s Network\nAt the launch of ReGenerate, we announced a partnership with The Great Barrier Reef Foundation who will disperse 35,000 baby corals onto damaged reef in late 2023.\nDuring FY23, we also relaunched the Daramu and Altitude employee networks, and launched Enabled in July 2023. Illuminate was relaunched in May 2022.\nDARAMDARAMU The Qantas Group The Qantas Group First First Nation’s NetwoNation’s Network\nREGENERATE Protecting the future of travel\nSupport of community organisations, \nincluding not-for-profit groups and charitable partners. Support in times of natural disaster or crisis. \nConnecting communities, including through reduced fares to some regional cities.\nRegular engagement with aviation and tourism bodies (including national and state tourism \norganisations) and industry councils on key issues and collaborative \nopportunities to promote regional, \ndomestic and international tourism. \nRegular engagement with unions who represent our employees, noting the terms and conditions of approximately 84.5 per cent (offshore and onshore) of our employees are set through enterprise agreements. Qantas \nrecognises and supports the rights of freedom of association.\nRegular engagement on key issues impacting aviation and on other issues more broadly, either directly or through industry associations.\n### CASE STUDY — Advocating for a Jet Zero Council\nDuring FY23, we continued to engage with the Australian Government to advocate for the transition to lower-carbon flying and support the production of SAF in Australia.\nIn June 2023, the Australian Government announced the establishment of the Jet Zero Council as a cross-sector forum of senior stakeholders from across the aviation industry and its supply chains. The Jet Zero Council will inform the design of policy settings to encourage emissions reduction, provide senior industry leadership, and work with industry to promote, mobilise and galvanise industry efforts to decarbonise aviation.\nWe were selected as a member of the Council, with our Chief Sustainability Officer representing the Qantas Group. The Council’s first meeting was held in August 2023.\n## AVIATION INDUSTRY PARTNERSHIPS AND MEMBERSHIPS", "chunk_word_count": 400, "section_path": "Contents > HOW WE ENGAGE", "document_id": "Qantas 2023 Sustainability Report", "page": 10, "page_start": 10, "page_end": 11 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 6, "chunk_text": "# Contents\n## OTHER PARTNERSHIPS AND MEMBERSHIPS\nSustainability topics and issues are also addressed through the following industry partnerships and memberships.\nAsian Leadership Project \nAustralian Business Integrity Council \nAustralian Network on Disability \nAustralian Packaging Covenant Organisation \nAustralian Red Cross \nBeyond Blue \nBioenergy Australia \nBusiness Council of Australia \nCarbon Markets Institute \nChampions of Change \nClimate Leaders Coalition \nCorporate Mental Health Alliance \nConverge (Employee Assistance Program) \nDiversity Council of Australia \nIntegrity Health and Safety \nPride in Diversity (of which our CEO is a co-Patron) \nRoyal Aeronautical Society Australian Division \nThe Resilience Project \nUnited Nations Global Compact Network Australia \n(UN GCNA) \n— UN GCNA Bribery Prevention Network \n— UN GCNA Modern Slavery Community of Practice\n### International Air Transport Association\n### oneworld\nIn September 2020, the oneworld alliance became the first airline alliance in which all member carriers committed to net zero emissions by 2050.\nQantas is a member of the International Air Transport Association (IATA) and vice chair of its Operations Advisory Council which encompasses all operational activity, including safety, flight operations, engineering and operational safety audit. We actively contribute to the development of international standards and practices for global airlines, including in relation to human trafficking. We have leveraged IATA guidance when developing our human trafficking training program.\nWe are a member of oneworld’s Environmental Sustainability Board which comprises sustainability representatives from the oneworld alliance.\nWe also support IATA 25by25, an initiative to help address gender imbalance across the industry.\n## AIRLINES FORAUSTRALIA8NEW ZEALAND\n### International Civil Aviation Organization\n### Airlines for Australia and New Zealand\nInternational Civil Aviation Organization (ICAO) is a specialised agency of the United Nations that establishes internationally aligned aviation standards to realise safe, secure and sustainable air operations, including efforts to prevent human trafficking. We have participated in government consultation regarding proposed ICAO measures to combat human trafficking.\nAirlines for Australia and New Zealand (A4ANZ) is the peak airline industry group that represents airlines based in Australia and New Zealand. A4ANZ advocates on key public policy issues affecting the aviation sector, including sustainability.\n### Governance", "chunk_word_count": 339, "section_path": "Contents > OTHER PARTNERSHIPS AND MEMBERSHIPS", "document_id": "Qantas 2023 Sustainability Report", "page": 12, "page_start": 12, "page_end": 12 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 7, "chunk_text": "# Contents\n## CORPORATE GOVERNANCE\nIn May 2023, we announced that Vanessa Hudson had been appointed to the Qantas Board as an Executive Director, and in September 2023, we announced that she had been appointed Qantas Group CEO and Managing Director, succeeding Alan Joyce. In May 2023, we also announced that former American Airlines CEO and Chairman, Doug Parker, had joined the Qantas Board and that long-serving Qantas Director, Michael L’Estrange AO, would retire following the conclusion of the 2023 AGM. In August 2023, we announced that Dr Heather Smith had also joined the Qantas Board.\nThe Qantas Board of Directors is responsible for overseeing that Qantas has an appropriate corporate governance framework to enable the creation, protection and enhancement of shareholder value. Key to this are responsible, ethical and sustainable business practices.\nThe Qantas Business Practices provide an overview of our beliefs, values and business practices and highlight the standards to be upheld by all employees.\nThe Qantas Board oversees the adequacy and efficacy of environmental, social and governance (ESG) strategies and frameworks. The Board is assisted by four Board Committees, supporting the Board’s work across key ESG issues for the business.\nThe Qantas Group is committed to complying with all applicable laws and regulations, and to conducting business with the highest standards of ethics and integrity. We monitor global developments in governance, laws and business practices, and work collaboratively across our global footprint to ensure we continue to meet these standards.\nThe Qantas Board is responsible for overseeing that the Qantas Group has an appropriate corporate governance framework to ensure the creation, protection and enhancement of shareholder value. Key to this are responsible, ethical and sustainable business practices.\n## QANTAS BOARD\n### Safety, Health, Environment and Security Committee (CHESS)\n### Remuneration Committee\n### Audit Committee\n### Nominations Committee\nAssists the Board with matters relating to the remuneration framework for Non-Executive Directors, and the remuneration and incentive framework, \nand related recommendations and \ndecisions, for the CEO, Executive Management, Senior Executives and other Group employees.\nAssists the Board with matters \nrelating to Board appointments, \nDirector re-elections and \nperformance, the Group’s \ndiversity obligations, Directors’ \ninduction programs and continuing \ndevelopment, Board Committee \nmemberships and succession \nof the CEO.\nAssists the Board with matters relating to the integrity of the Group’s financial reporting, compliance with legal and regulatory obligations, the effectiveness of the Group’s \nenterprise-wide risk management \nand internal control framework \n(in conjunction with CHESS), and \noversight of the independence of \nthe external and internal auditors.\nAssists the Board with oversight of \nthe systems, policies and processes in place within its remit, including the performance of each, and \nundertaking the functions of a risk committee as set out in the ASX \nCorporate Governance Principles as \nthey relate to operational and other relevant non-financial risks.", "chunk_word_count": 461, "section_path": "Contents > CORPORATE GOVERNANCE", "document_id": "Qantas 2023 Sustainability Report", "page": 13, "page_start": 13, "page_end": 13 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 8, "chunk_text": "# Contents\n## SUPPLY CHAIN MANAGEMENT\nQantas Group policies including our Supplier Code of Conduct. Our policies are developed with regard to relevant legislation and internationally recognised standards such as the United Nations Universal Declaration of Human Rights.\nAustralia alleging breaches of the Australian Consumer Law in respect of Qantas’ approach to the cancellation of flights scheduled to operate between May and July 2022.\nOur Supply Chain Assurance (SCA) program is a risk-based framework aimed at assessing the potential compliance risks and ethical business conduct standards of third parties providing products or services to the Group.\n## ETHICAL BUSINESS PRACTICES\n## COMPETITION AND CONSUMER LAW\nThe Group is committed to complying with all applicable laws and regulations, and to conducting business with the highest standards of ethics and integrity.\nThe ongoing application of SCA supports decision-making relating to suppliers’ standards, practices and management across a range of risk areas, particularly where we have identified suppliers that may present an elevated risk in one or more of those risk areas.\nWe support the promotion of competitive markets and the protection of consumers by providing employees with the tools to understand their obligations under competition and consumer laws. The Qantas Group’s Competition and Consumer Law Compliance Policy (Compliance Policy) requires Directors, employees, contractors, consultants and agents of the Qantas Group and any person or organisation that acts for or represents it to comply with all Australian and local competition and consumer laws (including the Australian Consumer Law). This means that, as a matter of policy, all overseas employees must comply with Australian law even if this sets a higher standard than would otherwise apply in the local area.\nWe monitor global developments in governance, laws and business practices, and work collaboratively across our global footprint to ensure we continue to meet these standards. We review and update our Group Policies annually to ensure that they reflect relevant regulatory and legislative updates, as well as evolving practices and expectations that might affect our business and operating environment.\nThe program applies a combination of triage assessments, due diligence and third-party data to evaluate potential risks across seven key risk areas of our supply chain: antibribery; corruption; sanctions; modern slavery; illegal logging; workplace health and safety; privacy; and cyber security, including data and credit card protection.", "chunk_word_count": 381, "section_path": "Contents > SUPPLY CHAIN MANAGEMENT", "document_id": "Qantas 2023 Sustainability Report", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 9, "chunk_text": "# Contents\n## COMPETITION AND CONSUMER LAW\n### Code of Conduct\nThe Qantas Group Code of Conduct and Ethics (Code) and Qantas Group Business Practices Document and supporting policies, including our Supplier Code of Conduct, set out how we behave at the Qantas Group, including our expectations of our employees, contractors and those we do business with, to act in compliance with the law, ethically and with integrity.\nWe seek to regularly review the criteria we use to identify and assess supplier risk to ensure our methodology is reflective of the shifting global environment. If material risks are identified, we will work with suppliers to resolve the risks where possible, or otherwise to substantially mitigate them.\nThe Compliance Policy covers all aspects of Australian competition and consumer laws as set out in the Competition and Consumer Act 2010 (Cth) (the Act). This includes price fixing, market sharing, bid rigging, resale price maintenance and predatory conduct. The Compliance Policy also covers the consumer protection provisions as set out in the Act.\nThe SCA program applies to new and re-contracting suppliers managed through the Qantas Group central procurement system. Since the inception of the program, we have performed more than 10,000 SCA assessments across our supplier base. In addition, we apply a risk-based approach to prioritising the assessment of our existing unassessed suppliers. In FY23, we commenced a specialised program of work to prioritise the assessment of approximately 1,000 high-priority unassessed suppliers (prioritised on the basis of country of incorporation and the nature of the goods and services). FY24 is focused on the remaining unassessed suppliers.\nIn FY23, we revised our Code of Conduct and Ethics, expanding the scope to include anti-money laundering, sanctions and trade control law obligations to ensure we continue to be in line with our operational and current business integrity risks. Additionally, we updated our anti-bribery and corruption policy settings, including charitable donations, gifts, benefits, hospitality and conflicts of interest.\nThe Compliance Policy forms an integral part of Qantas’ Competition and Consumer Law Compliance program (Compliance program). This comprehensive program, endorsed by both the Board and Senior Management, supports Qantas in identifying any competition and/or consumer risks and putting procedures in place to avoid a breach occurring. All employees who have dealings with competitors, customers or suppliers must regularly complete mandatory competition and consumer law training which is offered in online and face-to-face classroom formats. All relevant employees must complete training within three months of commencement with Qantas and on a regular basis thereafter.", "chunk_word_count": 416, "section_path": "Contents > COMPETITION AND CONSUMER LAW > Code of Conduct", "document_id": "Qantas 2023 Sustainability Report", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 10, "chunk_text": "# Contents\n## COMPETITION AND CONSUMER LAW\n### Anti-bribery and corruption\nWe know that through our decisions and actions, we have the potential to enhance or diminish the Qantas Group brand, and we aim to foster a culture of always acting with uncompromised ethics.\nWe are committed to partnering with suppliers who share our commitment to compliance with the law and ethical business practices. Our expectations are reflected in relevant contractual arrangements, Supplier Requirements (which includes the Qantas Group Compliance Statement) and\nOn 31 August 2023, the Australian Competition and Consumer Commission commenced proceedings in the Federal Court of\nWe have a responsibility to meet expanding foreign and domestic anti-bribery legislation, and we take steps, including undertaking risk-based due diligence to help ensure that key business partners and those in our supply chain operate in a manner consistent with our anti-bribery program.\nDuring FY23, we delivered a number of compliance program improvements including:\n— Introduction of a new system functionality to perform enhanced sanctions screening of third parties designed to minimise our sanctions risk exposure Implementation of a new centralised system solution for the management of conflicts of interest and the development of associated guidelines and training to raise awareness of potential conflicts of interest Optimisation of third-party risk management, including establishing a dedicated project team to assess potential corruption, sanctions and modern slavery risks of our existing and previously unassessed supplier base and translation of our Supplier Code of Conduct into other key languages to ensure understanding of suppliers located in certain jurisdictions.\nAs outlined in our Code, the Qantas Group supports a zero-tolerance approach to crime and corruption. We prohibit our employees, contractors, agents or any persons acting on behalf of the Group from engaging in any form of bribery and corruption including conduct that creates the perception of bribery, or other economic or financial crimes. We have clear policies on gifts, benefits and hospitality, facilitation payments, charitable donations, sponsorships and conflicts of interest.\nWe have established channels to report issues of concern, including our independent, confidential Whistleblower hotline. It is accessible to Qantas Group employees as well as people external to the Qantas Group, including business partners, suppliers, contractors and their employees and relatives. We have processes in place to take appropriate action, including to investigate as necessary.\n### Training\nAll employees must regularly complete mandatory Standards of Conduct training which is offered in online and face-to-face classroom formats. Additional courses, including Competition and Anti-Bribery Law Compliance and Crime Awareness, are offered to employees and contractors based on their role in the organisation. All relevant employees must complete training within three months of commencement with Qantas and on a periodic basis thereafter.\nEmployees can also report concerns or seek advice and support from our Business Integrity and Compliance team.", "chunk_word_count": 462, "section_path": "Contents > COMPETITION AND CONSUMER LAW > Anti-bribery and corruption", "document_id": "Qantas 2023 Sustainability Report", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 11, "chunk_text": "# Contents\n## COMPETITION AND CONSUMER LAW\n### Business integrity and compliance\nThe Business Integrity and Compliance team reports to the General Counsel and is independent of the operative management of the Group. It is responsible for the Group’s anti-bribery, trade sanctions and modern slavery programs and supports the Group to manage compliance risks and regulatory obligations in the jurisdictions where we conduct our business.\nIn FY23, we developed a new online course, Acting with Integrity, which will be rolled out to employees early in FY24. The course is designed to better equip our people to navigate ethical dilemmas, guide and promote ethical decision-making, and builds on our existing training to strengthen employees’ awareness of bribery and corruption, including possible issues that may be connected to bribery and corruption like gifts, benefits and entertainment, conflicts of interest and modern slavery. We delivered the new course in a face-to-face training session to Singapore-based employees, and intend to continue face-to-face training for those considered to be in high-risk roles or jurisdictions to ensure understanding of the increased risk of corruption that may be relevant to their activity.\nThe function undertakes due diligence and risk assessments of our third-party relationships to minimise the reputational, financial and non-financial risks that may arise through the actions of third parties we engage with.\nThe Group’s corporate compliance program has been established to address the expectations of global regulators and the essential elements of a corporate compliance management system.\n## SUSTAINABILITY GOVERNANCE\nIn addition to Board governance of sustainability, there is also a robust management governance framework.\nustainability Officer (CSO) is a member of the Qantas Group Management Committee (GMC), which reports to the Group’s CEO. The CSO is responsible for strategy development and driving on across the business as well as our sustainability disclosures, including reporting.\ntainability Management Board, comprising the GMC and key managers responsible for sustainability, enables focused consideration and action on sustainability issues.\nSteps to strengthen environmental governance in FY23, included the establishment of a Carbon Offset Governance Forum, an Operational Efficiency Leadership team, and the Project Bowerbird Steering Committee, focused on meeting our waste targets. A SAF Futures Board was set up in FY22.\nThere is a diverse range of other committees and forums with a governance role. From a social perspective, in FY23 we enhanced governance around our Aboriginal and Torres Strait Islander Strategy, with three working groups — Customer, People and Procurement — reporting to the First Nations Internal Advisory Council. We also established an Access and Inclusion Committee, which oversaw the development of the Access and Inclusion Plan and will lead its implementation.", "chunk_word_count": 434, "section_path": "Contents > COMPETITION AND CONSUMER LAW > Business integrity and compliance", "document_id": "Qantas 2023 Sustainability Report", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 12, "chunk_text": "# Contents\n## NTEGRATING ESG CONSIDERATIONS INTO THE QANTAS GROUP’S FINANCIAL FRAMEWORK\nFollowing the launch of the Qantas Group Climate Action Plan in March 2022, an environmental, social and governance (ESG) perspective was incorporated into the Financial Framework, with the aim of targeting industry-leading ESG credentials and maintainable Earnings Per Share (EPS) growth over\nthe cycle. This reflects the importance of ESG considerations in the Group’s target of achieving Total Shareholder Returns (TSR) in the top quartile of the ASX100 and among a basket of global airlines.1 The Financial Framework is built on three clear priorities and associated long-term aims.\nThe Financial Framework recognises that achieving ESG outcomes will be critical to achieving our TSR targets in the future.\n## INTERNAL CARBON PRICE\n### Pillar one: Optimal capital structure\n### Pillar two: Return on invested capital\n### Pillar three: Capital allocation\nWe have incorporated a cost associated with decarbonisation1 into business cases, such as that used to support the investment to retrofit winglets that support fuel efficiency to some of the 737 fleet (see case study on page 27). We see this as key to operationalising our commitments under our CAP, and to driving focus across the Qantas Group.\nCore to pillar one is minimising the cost of capital while \npreserving financial strength. Performance against the Group’s Climate Action Plan (CAP) will be critical to retain \naccess to capital at an efficient price in the future.\nCore to pillar two is investing to \ncreate competitive advantages and drive value. Returns must explicitly consider \nclimate-related costs including \nwhere appropriate an internal carbon price (ICP).\nCore to pillar three is growing invested capital with disciplined investment and returning surplus capital to shareholders. Investment in the business will prioritise those initiatives that deliver both ESG and ROIC outcomes and drive shareholder returns.\nAs part of that process, we have set an ICP that reflects our expected cost of decarbonisation1 based on our secured deals in the market and our expectations for forward prices of SAF and offsets. As is the case with other input costs like fossil fuel, the ICP is subject to change. Our expectation is that any incremental cost would be covered via revenue and cost.\n### Key actions in FY23 included:", "chunk_word_count": 371, "section_path": "Contents > NTEGRATING ESG CONSIDERATIONS INTO THE QANTAS GROUP’S FINANCIAL FRAMEWORK", "document_id": "Qantas 2023 Sustainability Report", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 13, "chunk_text": "# Contents\n## LINKING EXECUTIVE REMUNERATION TO OUR CLIMATE PERFORMANCE\nOngoing Executive sponsorship \nof the Sustainability Management \nBoard and SAF Futures Board \nGovernance structures and \npolicies developed and approved \n(where appropriate) by the Qantas \nGroup Board, including: \n— Provision of Limited Assurance by KPMG of emissions \n— Incorporation of carbon offset trading into the Treasury Risk Management policy ensuring appropriate segregation of duties, offset integrity parameters, counterparty assessment and Management and Board reporting requirements, all effective from 1 July 2023 \n— Establishment of an ESG Finance team\nOperationalised internal cost of \ncarbon across business segments \nincluding roll-out of training in \nemission reduction pathways and \nICP application \nBusiness cases continue to \nconsider an ICP and physical \nenvironment impacts\nEstablished Qantas Climate Fund. More information on the Climate Fund can be found on pages 18 to 19, and 29.\nIn FY23, the Board approved changes to our Annual Incentive Plan performance measures and targets to include a climate-related performance measure. This will continue for FY24. The FY23 Annual Incentive Plan performance measures and outcome are available in the Qantas Group’s 2023 Remuneration Report section of the 2023 Annual Report.\n## SUSTAINABILITY GOALSAND BEHAVIOURS\nIn recognising the importance of our strategic priorities, the impact of role modelling behaviours and the impact of leaders’ decision-making, a new sustainability goal was launched as part of the FY24 Performance, Planning and Review cycle for Executive Management and senior professional employee groups across Qantas and Jetstar.", "chunk_word_count": 239, "section_path": "Contents > LINKING EXECUTIVE REMUNERATION TO OUR CLIMATE PERFORMANCE", "document_id": "Qantas 2023 Sustainability Report", "page": 18, "page_start": 18, "page_end": 18 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 14, "chunk_text": "# Contents\n## THE QANTAS CLIMATE FUND — ALLOCATING CAPITAL TO MEET CLIMATE AMBITIONS\nThe path to net zero is uniquely challenging for the aviation sector. Substantial investment and support are needed to develop and scale the solutions our industry will require to meet its climate targets.\nAs Australia’s largest airline, the Qantas Group recognises the crucial role we have to play in creating a more sustainable future for our business and industry.\nThe Group has taken a leadership position and established the Qantas Climate Fund, dedicated to directly investing in the development of the solutions needed to meet our targets and reduce our impact on the planet — both in the air and on the ground.\nThe $\\$ 400$ million Fund includes the US\\$200 million jointly committed by Qantas and Airbus in June 2022 to catalyse domestic SAF supply, with the remainder of the investment from the Qantas Group. The Fund will be the largest aviation fund of its kind in the world and will invest in sustainability projects and technologies across:\n— SAF — High-integrity nature-based offsets Carbon removal technology — Operational efficiency and waste reduction.\nThe first investments from the Qantas Climate Fund have already been made.\n### CASE STUDY — Wheatbelt Connect\nThe Wheatbelt Connect project is also being supported through the Qantas Climate Fund, with an initial investment of approximately $\\$ 5$ million.\n### CASE STUDY — Investing in Queensland biofuel development\nIn March 2023, we announced early-stage funding from the Qantas Group, Airbus and the Queensland Government, to support a feasibility study for the development of a Queensland biofuel production facility. The project being developed by Jet Zero Australia, in partnership with leading SAF technology company LanzaJet, aims to produce SAF from ethanol, derived from agricultural by-products.\nThis project in the Western Australia Wheatbelt, between Qantas, ANZ and INPEX, supports native reforestation and carbon farming to generate Australian Carbon Credit Units. It also includes a study to investigate the conversion of native Mallee biomass into renewable fuels.\nThis direct investment strategy aims to mitigate potential future supply and price risks of SAF for Qantas Group and also generates offsets.\nThrough the Qantas Climate Fund, the Qantas Group and Airbus have jointly invested $\\$ 2$ million of an initial $\\$ 6$ million capital raising, with the Queensland Government contributing $\\$ 760,000$ and other Australian and international investors providing additional funding. The funds will be used to conduct a detailed feasibility study and early-stage project development.\n[IMAGE CAPTION] LQANTAS INPEX ANZ\nThe proposed facility will utilise LanzaJet’s alcohol-tojet technology to produce up to 100 million litres of SAF per year. Construction of the facility is expected to start in 2024.\n### Valuing our planet\nWe are committed to minimising our impact on the planet — in the air and on the ground — so that future generations can continue to experience the wonder of travel.\n### Climate action\n## OUR APPROACH", "chunk_word_count": 485, "section_path": "Contents > THE QANTAS CLIMATE FUND — ALLOCATING CAPITAL TO MEET CLIMATE AMBITIONS", "document_id": "Qantas 2023 Sustainability Report", "page": 19, "page_start": 19, "page_end": 21 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 15, "chunk_text": "# Contents\n## CLIMATE GOVERNANCE\nWe recognise that human-induced climate change is a significant issue for the aviation industry. We are committed to supporting the aims of the Paris Climate Agreement to limit warming to well below ${ 2 ^ { \\circ } \\mathrm { C } }$ above pre-industrial levels and pursuing efforts to limit the temperature increase to $1 . 5 ^ { \\circ } \\mathrm { C }$ above pre-industrial levels.\nThe Qantas Group Board oversees and approves the strategic direction of the Group and the corporate governance framework. The Board also oversees the Group’s Sustainability Strategy, which includes Qantas’ response to climate-related issues. Board Committees responsible for considering climaterelated matters include the:\nIn 2019, we were one of the first airlines in the world to announce our commitment to achieving net zero emissions by 20501 and capping our net emissions at 2019 levels. In March 2022, we released our CAP which details our climate change targets and how we plan to meet them.\nCHESS, which assists the Board in fulfilling its strategy, policy, systems oversight, monitoring and corporate governance responsibilities with regard to environmental matters, including compliance with legal and regulatory obligations and risk management\nQantas supports the TCFD and details on how we align with its recommendations can be found in the Report appendix.\n## OUR TARGETS\nAudit Committee, which oversees the reporting and assessment of the effectiveness of the Qantas Group’s enterprise-wide risk management and internal controls framework, including for climate change risks.\nThe Board approved the CAP, and CHESS receives a progress update against the Plan at each meeting. As climate change has wide-ranging implications for our business, responsibilities for managing and reducing climate-related risks are Group-wide.\n### Climate risk\nDetails on our approach to delivering on these targets can be found in the following pages of this Report.\nClimate change has been identified as a material business risk to the Group, as detailed in our Annual Report. Climate risk is an inherent part of the operations of an airline and is managed through scenario analysis, governance, technology, operational and market-based controls, including consideration of changing factors such as global climate policies and stakeholder expectations.\nThe frequency with which the Board is informed about climate-related issues depends on the significance of the specific risk (opportunity or threat). Strategic risks, including those related to sustainability, are included in the Group Risk Report which is provided to the Audit Committee and CHESS every six months.", "chunk_word_count": 410, "section_path": "Contents > CLIMATE GOVERNANCE", "document_id": "Qantas 2023 Sustainability Report", "page": 22, "page_start": 22, "page_end": 22 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 16, "chunk_text": "# Contents\n## STRATEGY\n### Group emissions pathway\nThe Group emissions pathway provides details on the key levers to reach our 2030 and 2050 emissions targets. The pathway will be updated should significant changes occur. It remains unchanged from the pathway presented in the FY22 Sustainability Report.\nThe Qantas Group’s long-term strategy acknowledges the potential impact of climate change and resource constraints on the business.\n### Climate Action Plan\nWe are focused on driving progress across three pillars — some of which we have the ability to influence directly, and some of which will require action and collaboration within our industry, across sectors and by policymakers, while others will rely on technology development:\nOperational and fleet efficiency: Focusing on flying and engineering practices, investing in fuel-efficient aircraft, as well as broader airspace design and management initiatives which require industry-wide collaboration. Continuing to reduce fuel burn, including smarter flight planning. Reducing single-use plastic and waste to landfill\nSAF: Working with governments, industry and businesses to develop a commercial-scale, competitive SAF industry in Australia. This includes supporting the establishment of new supply chains and relies on creating SAF from various biomass sources such as used cooking oil, energy crops, agricultural residues or waste materials that can reduce emissions on a lifecycle basis, typically by around 80 per cent. It also includes advancing non-biogenic, synthetic SAF produced with carbon dioxide, green hydrogen and significant amounts of renewable electricity using powerto-liquid technology pathways\n## PATHWAY TO NET ZERO EMISSIONS BY 2050\nIncrease our operational and fuel efficiency (estimated contribution to total reduction in 2030 of 20–25 per cent \nand 30–40 per cent in 2050) \nInvest in domestic and international SAF (estimated contribution to total reduction in 2030 of 20–25 per cent and \n30–40 per cent in 2050) \nWhere we cannot reduce our direct emissions, we will invest in high-integrity, high-quality carbon offsetting projects \nacross our network (estimated contribution to total reduction in 2030 of 50–60 per cent and 30–40 per cent in 2050) Note: The pathway is by its nature indicative, and will evolve as our fleet strategy, markets and technologies evolve. \nWe have included ranges to reflect this.\nCarbon offsets: Offsetting emissions by investing in high-quality, high-integrity Australian and international projects with community co-benefits, including those led by Traditional Owners.\nThe Qantas Climate Fund will enable direct investment in solutions across all pillars to help meet our targets.\nThese scenarios detail different policy and economic settings and resulting conditions such as the pace of SAF industry development and commercialisation in Australia. The scenarios were applied to the Group’s emissions trajectory and we assessed the progress required on SAF, offset contributions and other levers required to meet our CAP targets and manage climate risk exposure to the business.", "chunk_word_count": 454, "section_path": "Contents > STRATEGY", "document_id": "Qantas 2023 Sustainability Report", "page": 23, "page_start": 23, "page_end": 24 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 17, "chunk_text": "# Contents\n## PATHWAY TO NET ZERO EMISSIONS BY 2050\n### Climate scenario analysis\nWe undertook our first climate scenario analysis in 2019 in line with the recommendations of the TCFD. In FY22, we updated this analysis to reference revised climate data, developments in the business, progress in technology and fuel availability as well as regulatory changes.\nScenario assessment does not provide an indication of probable outcomes and relies on assumptions that may or may not prove to be correct or eventuate. However, Qantas uses scenario assessment to help us understand potential business impacts in different scenarios to support our planning.\n### Physical risk assessment\nThe physical risk assessment considered three Intergovernmental Panel on Climate Change (IPCC) scenarios, at domestic and select international ports.\nThese scenarios were:\nThe analysis considered both transition and physical risks and opportunities for the business under different scenarios and provided a preliminary assessment of the financial implications of these risks. The analysis was based on scenarios aimed at improving our understanding of the risks and opportunities arising from climate change.1 We aim to update the analysis in FY24.\nRepresentative Concentration Pathway (RCP) $2 . 6 \\mathrm { ~ - ~ } { < } 2 ^ { \\circ } \\mathrm { C }$ low warming, unlikely $- \\mathsf { R C P 4 . 5 - 7 ^ { \\circ } C }$ moderate warming, most likely — $- \\mathrm { \\sf ~ R C P } 8 . 5 - > 4 ^ { \\circ } \\mathbb { C }$ highest warming, worst case.\nChanges in the frequency and intensity of different climate events to 2100 were modelled based on these three global scenarios. These changes were then applied to Group historic weather delay and cancellation data from all domestic ports to assess changes in operational conditions.\n### Transition risk assessment\nIn order to analyse transition risks and opportunities to the business, we used four climate scenarios:\nKey physical risk findings included a 15 per cent increase in weather-related disruptions by $2 0 5 0 ^ { 2 }$ , driven largely by more frequent thunderstorms and days above $3 7 . 5 ^ { \\circ } \\mathrm { C }$ . The analysis also revealed that the physical climate change risks are highly site-specific, determined by geographic location and existing infrastructure.\nAmbitious: where emissions are on track to be less than $2 ^ { \\circ } \\complement$ and industries decarbonise faster than expected 一 Committed: where emissions are on track to meet ${ 2 ^ { \\circ } \\mathrm { C } }$ Delayed: where emissions are expected to overshoot $2 ^ { \\circ } \\complement$ as a result of a disorderly transition Slow: where emissions are expected to overshoot ${ 2 ^ { \\circ } \\mathrm { C } }$ as a result of slow transition.\nThe following table details some of our key climate risks, and the mitigation actions and opportunities relative to each risk.\nPhoto: Storms over Sydney, New South Wales. If global climate change exceeds an average annual temperature increase of more than 2°C (RCP 4.5), weather-related disruptions are expected to increase by 15 per cent by 2050, driven largely by a 40 per cent increase in thunderstorm disruptions.\n## RISK MANAGEMENT", "chunk_word_count": 543, "section_path": "Contents > PATHWAY TO NET ZERO EMISSIONS BY 2050 > Climate scenario analysis", "document_id": "Qantas 2023 Sustainability Report", "page": 24, "page_start": 24, "page_end": 25 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 18, "chunk_text": "# Contents\n## QANTAS SUSTAINABILITY REPORT 2023 | CLIMATE ACTION (CONTINUED)\nForecasting and purchasing credits that will be ineligible at retirement date under the International Civil Aviation Organization Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) and the Safeguard Mechanism.\n• The Group is actively monitoring the shifting standards and vintages approved for CORSIA eligibility. The nine offset standards approved during the pilot phase (2021–23) are included in the Group’s TRM policy • CORSIA eligibility is a key priority for offsets procurement and a basis for all discussions with potential suppliers\n### Potential financial risk\n• Volumes of credits ineligible to be counted towards Group compliance requirements under CORSIA regime\nRisk of purchased projects failing expected integrity or quality standards\n$\\cdot$ The Group has implemented a multi-layered integrity framework to elevate future investment and sourcing in high-quality carbon credits. These new measures incorporate enhanced due diligence and assurance over the Group’s portfolio and we will communicate these requirements to suppliers\n### Potential financial risk\n• Media scrutiny, leading to customer/brand reputation damage and potential accusations of greenwashing (with associated regulatory penalties)\n### Cumulative transition\n• Advocating with the Australian Government to establish the cross-sector forum the Jet Zero Council to encourage and support increased production of SAF in Australia and to accelerate the transition to lower-carbon flying Engaging original equipment manufacturers on improving aircraft fuel efficiency, supporting greater SAF blend rates, developing next-generation technologies • Developing sustainability-focused solutions to encourage customers to participate in shared emissions reduction\nCollective risk of a less supportive policy, economic and technological transition to a lower-carbon future\n### Potential financial risk\n• Higher than expected gross cost exposure associated with meeting CAP targets and climate-related regulatory requirements\n## PHYSICAL RISK\n### Mitigations and opportunities\n### Risk\n### Extreme weather events\nIf global climate change exceeds an average annual temperature increase of more than ${ 2 ^ { \\circ } \\mathrm { C } }$ (RCP 4.5), weather-related disruptions are expected to increase by 15 per cent by 2050, driven largely by a 40 per cent increase in thunderstorm disruptions\n• Reflecting physical climate risks in operational processes (such as in the case of a cyclone, thunderstorm or high temperature day) and employee training\n• Planning to incorporate physical climate risks assessments into new business cases for certain assets and equipment as well as assessing existing capital assets and equipment to withstand climate risks over their useful life\nIf global climate change exceeds an average annual temperature increase of more than $4 ^ { \\circ } \\complement$ (RCP 8.5), both thunderstorms and hot days (above $3 7 . 5 ^ { \\circ } \\mathrm { C } ]$ will increase significantly, especially from 2040 onwards\n### Potential financial risk\n• Increased weather-related disruption costs due to operational and equipment limitations\nSafety\nHealth and safety risks associated with incremental changes in climate variables and extreme weather events including increased risk of future pandemics\n• Adapting processes and systems to expected changes in climate variables to support safety and customer experience\nPotential financial risk\nExposure to increased safety incident cost and reduced revenue due to lower safety reco", "chunk_word_count": 521, "section_path": "Contents > QANTAS SUSTAINABILITY REPORT 2023 | CLIMATE ACTION (CONTINUED)", "document_id": "Qantas 2023 Sustainability Report", "page": 26, "page_start": 26, "page_end": 26 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 19, "chunk_text": "# Contents\n## CLIMATE ACTION PLAN PILLAR ONE:OPERATIONAL AND FLEET EFFICIENCY\nThe Qantas Group remains focused on improving operational efficiency through fleet transformation activities, fuel efficiency initiatives and reducing waste to landfill.\nThe Group has set a target to improve fuel efficiency by an average of 1.5 per cent per annum, from a 2019 baseline, by 2030. This will be supported by the fleet renewal program, including the introduction of new-generation aircraft and the associated retirement of legacy airframes, as well as a focus on operational procedures aimed at reducing fuel burn. This target may be influenced, both positively or negatively, by market factors — such as passenger and freight loads — and the effectiveness of operational efficiency initiatives.\nDuring FY23, an Operational Efficiency Leadership team was established. It is responsible for:\nThe central coordination of organisational \neffort — ensuring cross-Group collaboration and \ninformation sharing \nHolistic prioritisation and management of strategic \ninitiatives, and \nEnsuring visibility of progress towards the average 1.5 per cent fuel efficiency target.\nOperational and fleet efficiency initiatives include:\nFlight operations: enhancement of pilot fuel efficiency operating procedures and practices, utilising FlightPulse as the key pilot interface and roll-out of Constellation flight planning and flight planning enhancements \nEngineering: trial of next-generation integrated ground power and pre-conditioned air to reduce Auxiliary Power Unit fuel usage, and aircraft performance improvements through aircraft drag reduction \nApproval to retrofit scimitars to 23 of our newest Boeing 737-800 aircraft, enhancing fuel efficiency and reducing carbon emissions\n— Ongoing rollout of ground service equipment to electric alternatives\nThe Qantas Group is participating in government-led noise reduction advisory forums and supports community engagement, ensuring we minimise our noise footprint as far as possible. We support noise abatement initiatives that do not increase track miles, which subsequently increases $\\complement \\mathsf { 0 } _ { 2 }$ emissions. The fleet renewal program will address this critical issue with the introduction of quieter aircraft.\nAircraft specification: weight reduction initiatives ranging from introducing lighter weight seat products, increasing seat layout density in Jetstar, adding an extra two seats in A320 NEOs and A321 NEOs compared to A320 and A321 classic layouts.\n### Fleet renewal\nQantas Freight announced the purchase of six Airbus A321 freighters, which are expected to progressively arrive between early calendar year 2024 and mid-2026, replacing the fleet of five Boeing 737 freighters. Each A321 freighter can carry 23 tonnes of cargo, nine tonnes more than the older 737s, and are around 30 per cent more fuel efficient per tonne of freight carried.", "chunk_word_count": 418, "section_path": "Contents > CLIMATE ACTION PLAN PILLAR ONE:OPERATIONAL AND FLEET EFFICIENCY > Fleet renewal", "document_id": "Qantas 2023 Sustainability Report", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 20, "chunk_text": "# Contents\n## CLIMATE ACTION PLAN PILLAR ONE:OPERATIONAL AND FLEET EFFICIENCY\n### On the ground\nThe Group is investing significantly in fleet renewal taking delivery of a new aircraft every three weeks on average for the next few years. The incoming aircraft, which will begin replacing our existing fleet which has an average age of 14.2 years1 , will help Qantas and Jetstar restore capacity and expand their networks while lowering emissions and improving efficiency.\nWhile emissions on the ground are a relatively small part of our total emissions profile, we are seeking to further reduce our footprint.\nThrough our partnership with BP Lightsource, we have increased our procurement of renewable electricity, purchasing large-scale generation certificates (LGCs). From the start of 2022, we have sourced LGCs to cover 100 per cent of the electricity consumption in all Qantas Group buildings throughout Australia.\nA total of nine A321neo LR (NEOs) aircraft have joined the Jetstar fleet2 , with the initial order of 18 set to be delivered by the end of 2024. The NEOs’ CFM Leap A1 engines burn up to 20 per cent less fuel than Jetstar’s earlier A321 aircraft.\nIn June 2023, Qantas finalised our incremental order for nine A220-300s, bringing the total order to 29 A220-300s. These next-generation aircraft, through longer range and better economics, will improve how our customers travel around Australia. Qantas has also commenced the retirement of the older B717 fleet, with the first aircraft exiting service on June 2023 after 19 years of flying.\nDuring FY23, Qantas Freight purchased an electric main deck pallet loader to support our new A330P2F freighters. The new electric loader is powered by a rechargeable lithium-ion battery. The new loader can perform several turnarounds on a single charge and will be able to service all Qantas and customer aircraft currently handled by Qantas Freight.\nIn the first year of flying, the airline’s current NEO fleet has reduced total emissions by more than 16,000 tonnes. In addition to the fuel savings, the NEO has up to a 50 per cent reduction in noise footprint compared with our existing A320 and A321 aircraft. This significant noise saving occurs during both departure and arrival.\nIn August 2023, we announced an order of 24 aircraft (12 Airbus A350s and 12 Boeing 787s) arriving from the 2026/27 financial year to progressively replace the existing A330 fleet.\n### CASE STUDY — Wings of change", "chunk_word_count": 399, "section_path": "Contents > CLIMATE ACTION PLAN PILLAR ONE:OPERATIONAL AND FLEET EFFICIENCY > On the ground", "document_id": "Qantas 2023 Sustainability Report", "page": 28, "page_start": 28, "page_end": 28 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 21, "chunk_text": "# Contents\n## OUR FOCUS IN FY24 WILL INCLUDE:\nQantas is installing Split Scimitar Winglets on 23 of our Boeing 737-800, which will increase the fleet’s fuel efficiency and reduce carbon emissions.\nAccelerating fleet renewal opportunities including advancing A320 NEO deliveries \nDeveloping a mid-life refresh for the Jetstar 787 fleet to enhance the cabin while replacing old and heavier product and technology systems on board Continuing digitalisation of operations by rolling out paperless engineering in Jetstar with an eMobility suite of apps that removes paper-based processes onboard and in maintenance support areas \nfrom 2023.\nThe Split Scimitar Winglet System is a modification of the current Blended Winglet System. It further reduces aerodynamic drag on the aircraft resulting in fuel savings and carbon emissions reduction, as well as increasing payload, range and take-off performance capability.\nQantas B737-800 aircraft fly both domestic and international sectors.\nThe installation will begin in December 2023 at our maintenance base in Brisbane, Queensland and is expected to be completed by the end of 2026.\nWhen installation is completed, it is expected carbon emissions will reduce by 8,000 tonnes per year.\n## CLIMATE ACTION PLAN PILLAR TWO: SUSTAINABLE AVIATION FUEL\n### Advocating for a domestic SAF industry", "chunk_word_count": 200, "section_path": "Contents > CLIMATE ACTION PLAN PILLAR TWO: SUSTAINABLE AVIATION FUEL > Advocating for a domestic SAF industry", "document_id": "Qantas 2023 Sustainability Report", "page": 28, "page_start": 28, "page_end": 28 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 22, "chunk_text": "# Contents\n## CLIMATE ACTION PLAN PILLAR TWO: SUSTAINABLE AVIATION FUEL\n### Sustainable Aviation Fuel Coalition\nIn November 2022, Qantas launched the SAF Coalition program, with Australia Post, Boston Consulting Group, KPMG Australia, Macquarie Group and Woodside Energy signing as foundation members. The Coalition demonstrates that demand exists for SAF in Australia.\nThe Group has been engaging with governments in Australia to advocate for a supportive policy framework to enable and expedite a domestic SAF industry. Recent developments include the Australian Government’s establishment of the Jet Zero Council (see page 10), the Australian Renewable Energy Agency’s (ARENA) $\\$ 30$ million grant funding for SAF development and the Australian Government signalling that $\\$ 400$ million of Powering the Regions funding will be directed to aviation.\nThe use of SAF is central to achieving our interim targets and net zero by 2050 goal. With long-haul routes accounting for around 70 per cent of the Group’s emissions profile, SAF is currently the only viable technology/decarbonisation option available across all of our flying operations. Our target is for 10 per cent of our fuel use to come from SAF by 2030 and ${ \\sim } 6 0$ per cent by 2050.\nMembers pay a premium to address some of the carbon emissions associated with their flying activity by contributing to the incremental cost of SAF rather than using traditional carbon offsets.\nWhile the global landscape for SAF is rapidly evolving, the development of a SAF sector at the pace and scale required by airline decarbonisation targets can only occur with significant government support. In the last 12 months, countries aiming to take a leadership position in SAF have accelerated development by enacting supporting policies at national and provincial levels. The approach has varied by region — the EU has enacted progressive blending mandates; the US has world–leading financial subsidies for producers; and the UK is investigating a hybrid of both approaches coupled with grant funding.\nThe UK, Europe and Japan have set, are investigating or have proposed SAF blending mandates of between five and 10 per cent of the fuel supplied by fuel distributors to airlines in those countries to be reached by the end of the decade, and the USA has set a 2030 production target of three billion gallons per year.\nCoalition members receive enhanced reporting on the emissions from their flying activity and their employees are recognised towards achieving Qantas Frequent Flyer’s Green Tier status.\nQantas has continued to evolve the SAF Coalition proposition and is seeking expressions of interest to join the CY23 iteration of the program (which will utilise the SAF-derived emission reduction from the SAF being acquired in Heathrow).\nAt our May 2023 Investor Day, the Group called for the Australian Government to introduce a SAF blending mandate as part of a broader framework of industry policies, similar to those announced in other jurisdictions.\nThe Group is also fostering policy development with supportive state governments, with the Group signing a Memorandum of Understanding with the Queensland Government to support the development of the sector in that state.", "chunk_word_count": 509, "section_path": "Contents > CLIMATE ACTION PLAN PILLAR TWO: SUSTAINABLE AVIATION FUEL > Sustainable Aviation Fuel Coalition", "document_id": "Qantas 2023 Sustainability Report", "page": 29, "page_start": 29, "page_end": 29 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 23, "chunk_text": "# Contents\n## CLIMATE ACTION PLAN PILLAR TWO: SUSTAINABLE AVIATION FUEL\n### Sustainable Aviation Fuel Coalition\nQantas has made significant progress in delivering the SAF strategy including securing offtakes from the US, pioneering the establishment of the SAF Coalition, securing the first investment in Australian SAF production (through the Airbus SAF Partnership), and advocating government for supportive policy development. As promising as the early SAF development has been both locally and globally, SAF is not yet available at the scale or price needed to meet our 2030 and 2050 targets. Scaling SAF production to the point where it can contribute to the emission reduction required by our CAP whilst also being cost-competitive will take the concerted effort of both industry and government.\n### The Qantas Climate Fund\n## 1. Certified sustainable feedstock including wastes and residues such as cooking oil and council waste\nThe Group has taken a leadership position and in FY23 established the Qantas Climate Fund, dedicated to directly investing in the development of the solutions needed to meet our targets and reduce our impact on the planet — both in the air and on the ground.\nMost materials on Earth are carbon-based including jet fuel. Sustainable feedstocks include wastes for which the carbon has already been accounted in the use of the primary product or has been absorbed from the atmosphere in its production. International certification bodies, such as the International Sustainability and Carbon Certification and the Roundtable on Sustainable Biomaterials, describe requirements for the calculation of the carbon lifecycle impacts and broader sustainability criteria for certification of sustainable feedstocks.\nThe Fund will focus on stimulating the production of SAF, high-integrity offsets that deliver dividends for nature and carbon removal technology, as well as technologies that deliver on efficiency and waste reduction.\n### How does SAF reduce emissions?\n## 2. Sustainable feedstock converted into sustainable jet fuel\nMore information can be found on page 18.\nSustainable feedstocks such as used cooking oil, biomass and waste residues are broken down through chemical processing before being built back up into a long chain hydro-carbon — making a sustainable jet fuel.1\n## BQANTAS G ROUP CLIMATE\n### Current SAF use\nIn 2022, Qantas became the first Australian airline to purchase SAF on an ongoing basis with the delivery of seven million litres of SAF to Heathrow airport during the 2022 calendar year. Qantas has increased this offtake to 10 million litres in the 2023 calendar year, representing a projected 7.9 per cent of our total Heathrow fuel uptake and an approximate reduction of 20,000 tonnes of $\\complement \\mathsf { 0 } _ { 2 }$ -e on a lifecycle basis compared to fossil jet fuel.\n## 4. Blended SAF delivered into the aircraft wing", "chunk_word_count": 454, "section_path": "Contents > CLIMATE ACTION PLAN PILLAR TWO: SUSTAINABLE AVIATION FUEL > Sustainable Aviation Fuel Coalition", "document_id": "Qantas 2023 Sustainability Report", "page": 29, "page_start": 29, "page_end": 30 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 24, "chunk_text": "# Contents\n## 3. Sustainable jet fuel is blended up to $5 0 / 5 0$ with fossil jet fuel\nThe certified SAF, which is now considered equivalent to jet fuel, is then delivered to the shared re-fuelling infrastructure at airports and into the wing.\nThe sustainable jet fuel is blended up to 50 per cent with fossil jet fuel and tested to ensure it meets the requirements of the American Society for Testing and Materials for aviation fuel to become a certified SAF. It can technically be blended at a higher level, but 50/50 is the current specified amount.\nIn March 2022, the Qantas group entered into an agreement with biofuel producer Aemetis to purchase 7.5 million litres of SAF made using agricultural waste for delivery into Los Angeles International Airport from 2025.\n## OUR FOCUS IN FY24 WILL INCLUDE:\nWorking with government and industry to effectively deploy committed funding to the domestic SAF sector, assist in the formulation of strategic SAF development plans and the introduction of supporting policy that enables the creation and embedding of the SAF value chain.\nContinuing to seek out domestic and offshore SAF investment and offtake opportunities with credible partners and project development plans that de-risk, to the extent possible, the production of cost-effective SAF to support the Group’s 2030 and 2050 targets\nWe will continue to look for opportunities to purchase SAF from international ports, particularly in the US, to support our target of 10 per cent SAF in our overall fuel mix by 2030.\nEvolving the SAF Coalition to drive further membership and to provide important price support for the future supply of domestic SAF\n## CLIMATE ACTION PLAN PILLAR THREE: CARBON OFFSETS\nAviation is a hard-to-abate sector, and high-integrity carbon offsets will play an ongoing part in achieving our goals until alternate direct emissions reduction levers (such as SAF, fuel-efficient fleets and emerging technologies) become more readily available.\nDemand for carbon offsets continues to grow, with recent regulatory changes driving activity in carbon markets. In Australia, the Safeguard Mechanism reforms and outcomes of the Chubb Independent Review (which concluded that the Australian Carbon Credit Unit (ACCU) scheme is “essentially sound”) have stimulated demand for ACCUs and defined the base parameters for effective carbon offsetting.\nQantas will continue to monitor international developments and consider strategic procurement positions, particularly regarding the next iteration of CORSIA eligible credits under Phase 1. The results of the 2023 Technical Advisory Board assessment and its recommendations are expected for consideration by the 230th ICAO Session of the Council in October/November 2023.\nCarbon credit markets continue to diversify and become more sophisticated, with growing convergence between compliance and voluntary standards and emerging methodologies and technology-based offsets gaining recognition. The Group has a focused approach to offsets procurement, ensuring investment aligns with shifting regulatory requirements and market expectations of what constitutes a high-quality, highintegrity carbon offset.\nIncreasing demand and its impact on supply is a key focus of procurement, and a driver behind future investment in longterm offtakes and securing volume for future requirements.\nDuring FY23, the Group developed a multi-faceted Carbon Offsets Strategy and accompanying Integrity Framework to address the increasing scrutiny of carbon offsetting and ensure the Group’s carbon portfolio remains a credible and effective tool for achieving net zero ambitions.", "chunk_word_count": 545, "section_path": "Contents > 3. Sustainable jet fuel is blended up to $5 0 / 5 0$ with fossil jet fuel", "document_id": "Qantas 2023 Sustainability Report", "page": 30, "page_start": 30, "page_end": 31 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 25, "chunk_text": "# Contents\n## CLIMATE ACTION PLAN PILLAR THREE: CARBON OFFSETS\n### Offsets strategy and Integrity Framework\nWhile the Group’s existing approach to carbon offsetting has been consistent with standard market practices, expanding compliance requirements and overall exposure have required an updated Integrity Framework, intended to elevate our approach to ensure our carbon portfolio is resilient and composed of verifiable high-quality, high-integrity credits.\nThe updated Integrity Framework has included additional layers of scrutiny regarding offsets procurement.\nIn the past, our sourcing approach has been informed by:\nPurchasing from verified registries: Credits procured by the Group are sourced from reputable registries that assess the credibility of projects before permitting the issuing of any credits\nDue diligence/assurance from suppliers: Project owners and issuers conduct their own levels of technical and scientific due diligence on carbon projects and provide this data to registries prior to the credits being issued\nOngoing monitoring and reporting: Project owners and issuers provide periodic reporting on the projects sourced as part of the Group’s carbon portfolio.\nWe have now added further layers of scrutiny to the Group’s sourcing approach and ongoing offset portfolio management, effective from 1 July 2023:\nInvestment Principles: The Group has developed prescriptive Investment Principles to guide carbon credit procurement for carbon offsetting. These Principles provide integrity and quality criteria that credits must meet to ensure the carbon offsets procured are real, measurable, and verifiable. Internally, the Principles will provide guidance and a framework by which sourcing will occur. Externally, the Principles provide clarity to stakeholders, build confidence, and maximise efficiency\n[IMAGE CAPTION] QANTAS GROUP CARBON OFFSET INVESTMENT PRINCIPLES FRAMEWORK\nList of specific project types/methodologies/registries/sectors/jurisdictions that meet established principles\n### CASE STUDY — Reef credits\nProject Evaluation Framework: The new Project Evaluation Framework will be used to assess carbon credits procured against the Investment Principles. This tool will be used to direct procurement by screening suppliers and assessing projects. Through benchmarking potential investments against the Group’s Investment Principles, Management will assess the commercial, market, project management, technical, legal, and regulatory risk of projects and deliver an overall integrity rating. Offsets will not be purchased where projects do not meet minimum Qantas integrity criteria.\nQantas is investing in innovative and emerging environmental markets such as the Reef Credits scheme which is helping to protect one of Australia’s most iconic natural assets. Reef Credits are a market-based mechanism that is helping improve water quality in the Great Barrier Reef catchment and is supported by investment from the Queensland Government.\nThe scheme is independently audited and assessed by Eco-Markets Australia, which establishes clear and robust rules to ensure water quality improvement credits are real, additional and permanent — underpinned by a transparent and accountable governance structure.", "chunk_word_count": 447, "section_path": "Contents > CLIMATE ACTION PLAN PILLAR THREE: CARBON OFFSETS > Offsets strategy and Integrity Framework", "document_id": "Qantas 2023 Sustainability Report", "page": 31, "page_start": 31, "page_end": 32 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 26, "chunk_text": "# Contents\n## CLIMATE ACTION PLAN PILLAR THREE: CARBON OFFSETS\n### Governance\nIdentifying opportunities for investment in carbon removal and sequestration projects (including environmental planting, afforestation and blue carbon1 ) and emerging technology-based removals (including Direct Air Capture).\nGovernance structures around offsets have been enhanced, with several new internal layers of assurance to ensure the broader strategy is being delivered and aligned with the Group’s Carbon Offsetting Strategic Framework. This includes integrating carbon into the Group Financial Framework and Treasury Risk Management Policy, establishing an internal Carbon Offset Governance Forum and embedding integrity expectations into supplier contracts.\nThe Group’s Climate Fund will form a part of future sourcing approaches, identifying strategic opportunities for carbon offsetting investment. The Fund will consider investments that enable the Group to maintain strategic positions that facilitate access to our required supply of credits. An additional focus of the Fund is to catalyse offset markets relevant to the Group’s compliance needs, including CORSIA eligible credits and ACCUs.\n### Sourcing strategy\nEnsuring Qantas retains access to adequate volumes of credits for both compliance and voluntary needs is a key consideration. Increased demand for credits, driven in part by domestic and international compliance regimes (including CORSIA and the Safeguard Mechanism) is expected to stimulate further participation in carbon markets.\n### Key customer programs\nOur two key customer programs are Fly Carbon Neutral (FCN) and Qantas Future Planet. FCN gives customers the opportunity to offset their flights, with Qantas matching the contributions.2 Qantas offsets employees’ duty and corporate travel through FCN.\n### CASE STUDY — Katingan Peatland Restoration and Conservation Project, Indonesia\nThe Katingan Mentaya REDD Project finances the conservation of peatlands located within a state-designated production forest.\nAligned to the new Framework is a parallel sourcing strategy that considers the Group’s compliance and voluntary requirements, in addition to associated integrity and cobenefit priorities. This includes:\nFuture Planet provides a carbon offsetting solution for corporate businesses wanting to offset their emissions. Through the program, we have offset emissions for more than 40 businesses, including Australia Post, Atlas Air, Allens, DHL, Deakin University, NextDC and T2.\nThe ecologically significant tropical peatlands store approximately 20 times more carbon below-ground than above-ground vegetation.\nUpdated targets for First Nations offsets procurement. Indigenous ACCUs will remain a priority sourcing target for the Group’s portfolio (given their associated nature and First Nations co-benefits, alignment to broader organisational targets and compliance eligibility under the Safeguard Mechanism)\nThe project finances the conservation of these peatlands by appropriately valuing the natural capital and the ecosystem services they provide, preventing significant volumes of carbon dioxide from being released into the atmosphere.\nFuture Planet has partnered with Australia Post since 2019 for its carbon neutral delivery of every parcel sent through post offices and the MyPost system across Australia. Atlas Air’s participation enables Qantas to offset emissions from its international freighter flights operated by Atlas Air between Australia, Asia and the USA.\n— A transition toward nature-based solutions. We expect this will grow as a proportion of the Group’s portfolio to 2030 and beyond. Nature-based carbon removal methodologies such as environmental planting and afforestation will be targeted as part of a mixed carbon portfolio\n### CASE STUDY — First Nations fire abatement", "chunk_word_count": 532, "section_path": "Contents > CLIMATE ACTION PLAN PILLAR THREE: CARBON OFFSETS > Governance", "document_id": "Qantas 2023 Sustainability Report", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 27, "chunk_text": "# Contents\n## OUR FOCUS IN FY24 WILL INCLUDE:\nIn FY23, we procured offsets from Arnhem Land Fire Abatement (ALFA) an Aboriginal-owned, notfor-profit carbon farming business that supports Traditional Owners and rangers to utilise customary fire knowledge and skills in tandem with contemporary technology to accomplish highly sophisticated landscape-scale fire management that generates ACCUs through savanna burning methodology.\nEmbedding enhanced screening and evaluation processes into FY24/25 offsets procurement \nIntegrating emerging, third-party carbon \ncredit ratings agencies into procurement and \nassessment processes \nAssessing emerging reporting and disclosure \nstandards which account for co-benefits \nassociated with high-quality carbon projects \n(including community, nature and biodiversity) Ensuring key regulatory developments which govern offsets integrity (in both compliance and voluntary regimes domestically and internationally) are \nreflected in the Group’s Investment Principles and minimum quality standards.", "chunk_word_count": 128, "section_path": "Contents > OUR FOCUS IN FY24 WILL INCLUDE:", "document_id": "Qantas 2023 Sustainability Report", "page": 34, "page_start": 34, "page_end": 34 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 28, "chunk_text": "# Contents\n## METRICS AND REPORTING\nAviation fuel, which makes up the majority of our emissions, has consistently accounted for more than 97 per cent of Qantas Group’s Scope 1 and 2 emissions. The remaining three per cent relates to our ground-based emissions sources, the largest of which is electricity (Scope 2).\nIn FY23, our Scope 2 emissions were 62,462 $\\complement \\mathsf { 0 } _ { 2 }$ -e tonnes compared with $6 4 , 8 9 4 \\mathrm { C } 0 _ { 2 }$ -e tonnes in FY22 and 64,983 $\\complement \\mathsf { 0 } _ { 2 }$ -e tonnes in FY21.\n### Regulatory and compliance update\nQantas Group is supportive of the Australian Government’s updated Safeguard Mechanism which requires Australia’s highest greenhouse gas emitting facilities to keep their domestic emissions below an emissions limit (baseline). The new requirements, effective from 1 July 2023, broadly align with our Climate Action Plan and we consider we are well positioned to manage our exposure.\nIn FY23, our Scope 3 emissions were 3,182,594 CO2-e tonnes compared with 459,788 CO2-e tonnes in FY22 and 218,276 CO2-e tonnes in FY21. The increase in Scope 3 emissions in FY23 was a result of increased fuel consumption and a change in the Scope 3 emissions factor relating to transport fuels.\nAs flying returned to close to pre-pandemic levels in FY23, greenhouse gas emissions also increased.\nIn FY23, our Scope 1 emissions were $9 , 7 2 0 , 6 8 7 \\ : \\mathrm { C } \\ : 0 _ { 2 }$ -e tonnes compared with 4,734,407 $\\complement \\mathsf { 0 } _ { 2 }$ -e tonnes in FY22 and 3,236,753 $\\complement \\mathsf { 0 } _ { 2 }$ -e tonnes in FY21.\nFor international emissions, we comply with the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Commencing in 2021, CORSIA requires airlines to purchase carbon offsets to meet their share of emissions growth from a 2019 baseline.\nFor domestic emissions, we submit our annual greenhouse accounts to the National Greenhouse and Energy Reporting Scheme each October.\n[IMAGE CAPTION] Greenhouse gas emissions\n### Greenhouse gas emissions\nThe Qantas Group reports on Scope 1, 2 and 3 greenhouse gas emissions annually. In relation to Australian domestic emissions, we report in accordance with the Australian Government National Greenhouse and Energy Reporting Scheme. International emissions are reported in accordance with the International Civil Aviation Organization Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).\nIndirect Scope 3 emissions from our value chain are monitored and reported using Climate Active guidance, informed by the Greenhouse Gas Protocol categories. Applying a test for relevance, we report on a range of indirect emissions (pages 73 and 74 of this Report) with the largest being extraction, production and transport of fuels which is addressed through operational and fleet efficiency measures. Additionally, programs such as our waste reduction initiatives support the reduction of Scope 3 emissions. We will undertake a more detailed analysis of our Scope 3 emissions in FY24.\n### Reducing waste through circularity", "chunk_word_count": 511, "section_path": "Contents > METRICS AND REPORTING", "document_id": "Qantas 2023 Sustainability Report", "page": 35, "page_start": 35, "page_end": 35 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 29, "chunk_text": "# Contents\n## OUR APPROACH\nWe are working with our suppliers to increase the use of recycled and renewable materials and considering the environmental impact in the design phase of our products. For example, each of our premium economy blankets are made with 20 recycled plastic bottles, our water bottles are 100 per cent recycled PET and we have introduced pens made of wheat straw and kraft paper onboard our aircraft.\n### CASE STUDY — Qantas Regional Grants recipients helping to tackle waste\nWe recognise the impact waste has on the environment and as a Group we are committed to addressing this impact through waste reduction projects, innovation and improved waste management.\nWe relaunched the Qantas Regional Grants program in FY23, and two of the 32 successful grant recipients are working on ways to reduce waste and support recycling.\nThe Group’s ambition is to have zero single-use plastics across our operations by 20271 and zero onshore waste to landfill by $2 0 3 0 ^ { 2 }$ . A robust governance structure has been established to drive the delivery of Project Bowerbird, the Group’s waste reduction strategy, and accelerate the implementation of initiatives. This includes establishing an Executive Steering Committee and Business Unit Working Groups to monitor progress against targets and manage any roadblocks.\nAbility Enterprises based in Queensland will use its grant to upgrade its plastics recycling facility with the addition of a colour sorting machine and provide employment to 45 vulnerable people. Take 3 for the Sea will further its work to reduce plastic pollution in oceans and waterways through educational programs and resources.\nSince 2011, the Qantas Group has been a signatory to the Australian Packaging Covenant, working to improve the sustainability of the packaging we use through product reviews, product substitution to recyclable or compostable alternatives and increasing the use of recycled content.\n## SINGLE-USE PLASTICS\nAs at 30 June 2023, more than 202.9 million single-use plastics have been replaced or removed from our operations since Project Bowerbird commenced in 20193 .\nWe continue to identify opportunities to reduce plastics across our operations and in our inflight service where possible, taking into account safety, hygiene and various regulatory requirements. This includes the introduction of compostable hot meal boxes on domestic flights; responsibly sourced wooden cutlery and bamboo drink stirrers; changes to our amenity kits; phasing out single-serve condiments in our lounges; and trialling reduced thickness pallet wrap and protective sheeting made of 100 per cent recycled plastic in Freight operations.", "chunk_word_count": 415, "section_path": "Contents > OUR APPROACH", "document_id": "Qantas 2023 Sustainability Report", "page": 36, "page_start": 36, "page_end": 36 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 30, "chunk_text": "# Contents\n## WASTE REDUCTION\nWe support National Recycling Week to raise awareness among employees, with information sessions and a recycling drive in our head office. This provided the opportunity for employees to recycle or donate mobile phones, chargers and batteries; prescription glasses and hearing aids in good condition for redistribution through Lions Recycle for Sight; travel-sized toiletries for redistribution through Every Little Bit Helps; workwear and accessories in excellent condition for redistribution through Dress for Work and Dress for Success; and end of life shoes for recycling into change room flooring, anti-fatigue mats and ground cover for playgrounds and gyms through Tread Lightly. For Clean Up Australia day, employees were encouraged to participate in internal and external events around the country.\nWe recycled 2,841 tonnes of waste in FY23, representing 23 per cent of total waste diverted. In FY24, we will continue to implement initiatives that directly reduce waste as well as those that expand recycling systems across our operations. A detailed roadmap to 2030 is under development to support the achievement of zero onshore waste to landfill by 2030.\nDuring FY23, we began to reintroduce onboard recycling which had paused during the COVID-19 pandemic. For Qantas, domestic inflight recycling recommenced for flights into Sydney, Brisbane and Canberra and we are working toward phased full reintroduction across our domestic network in collaboration with suppliers.\nJetstar activated inflight recycling on flights into Melbourne, Sydney, Brisbane, Perth, Adelaide, Cairns and Avalon on 5 June 2023 (World Environment Day). The initial phase of the roll-out covers over 70 per cent of the domestic network, with further expansion planned in FY24.\nWe are working on optimising product loading on board our flights, re-establishing a food donation program with our caterer, removing plastic packaging, replacing products with compostable, recycled or recyclable alternatives, and government advocacy on quarantine requirements for international flight waste.\n[IMAGE CAPTION] To be placed in recycling\nOn the ground in our Qantas lounges, we continue to expand organics and recycling separation, with over 10 tonnes of food waste composted each month and diverted from landfill. Improving waste separation and collection across our domestic ports will continue throughout FY24. We are trialling innovative cleaning and food service products to reduce plastic, and replacing items reviewed for material efficiency to increase recoverability and reduce waste.\n[IMAGE CAPTION] To be placed in general waste Jetstar★\nEmployee engagement has been a key focus, with waste education sessions and a Group-wide training module developed to support behavioural change.\n[IMAGE CAPTION] FY23 waste\nIn FY23, twenty-three per cent of our recoverable waste was recycled. Across the business, we continue to expand recycling systems for materials including paper and cardboard, mixed recycling, organics, electronic waste, metals, timber and soft plastics.\nQuarantine waste is a highly regulated waste stream that is subject to biosecurity regulations. We are working with the Australian Government on opportunities to recover low-risk materials from the quarantine waste stream.", "chunk_word_count": 484, "section_path": "Contents > WASTE REDUCTION", "document_id": "Qantas 2023 Sustainability Report", "page": 37, "page_start": 37, "page_end": 38 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 31, "chunk_text": "# Contents\n## WASTE REDUCTION\n### CASE STUDY — Converting passenger aircraft to freight\nIn February 2023, the second of our A330 passenger planes began its conversion to a dedicated air freighter. Prior to leaving Australia, items, including a bar cart, seats, exit signs and memorabilia made from repurposed life jackets, were auctioned to aviation enthusiasts to raise money for Pathfinders to donate to NextSense (formerly the Royal Institute for Deaf and Blind Children). Pathfinders is a volunteer fundraising committee made up of past and present Qantas crew members.\n## OUR FOCUS IN FY24 WILL INCLUDE:\nContinuing to reduce single-use plastics across our supply chain through the removal of packaging, changes to materials and products, increasing the use of recycled content, and identifying and trialling reusable items across our operations \nDeveloping a roadmap to accelerate waste reduction and diversion initiatives with a focus on highest materiality areas and opportunities \nInvesting in available and emerging solutions to replace plastic and reduce waste.\nBefore the major structural works were carried out in Dresden, Germany, the aircraft was stripped of all cabin items including seats, galleys and toilets, which will be reused, recycled and repurposed where possible.\n### Protecting nature through sustainable tourism\n## OUR APPROACH\n## NATURAL CAPITAL AND BIODIVERSITY\n### Achieving Green Tier\nQantas views sustainable tourism as being mindful of the current and future economic, social and environmental impacts of tourism and aims to address the needs of visitors, the industry, the environment and host communities.\nNature and its resources are vital to the sustainability of the Qantas Group. Our businesses are inextricably linked to well-functioning, healthy ecosystems, which underpin everything from the food we serve, to the performance of our network, to the iconic destinations we fly our customers to. However, these ecosystems are under increasing threat, with nature loss occurring at an unparalleled rate and rapidly emerging as a global priority, alongside climate change.\nComplete actions in 5 out of 6 categories\nOur approach is to ensure travel and aviation continue to co-exist in the long term, by committing to reduce our own impacts and encouraging travellers to reduce their impacts while protecting and preserving tourism resources.\nOffset Flying Offset a flight booked on Qantas.com\n### Sustainable Travel\nA landmark United Nations report recently found that one million of the world’s estimated eight million species of plants and animals are currently threatened with extinction. Human-induced climate and land use change is considered the leading cause, with 75 per cent of the Earth’s land surface “severely altered” to date by human actions, including the loss of more than 85 per cent of wetland ecosystems.1", "chunk_word_count": 435, "section_path": "Contents > WASTE REDUCTION > CASE STUDY — Converting passenger aircraft to freight", "document_id": "Qantas 2023 Sustainability Report", "page": 38, "page_start": 38, "page_end": 39 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 32, "chunk_text": "# Contents\n## SUSTAINABLE TRAVEL CHOICES\nEco hotel stay booked through Qantas Hotels and Holidays\nIn November 2021, Qantas was the first airline globally to announce a recognition and rewards initiative designed to encourage and recognise Frequent Flyer members who make more sustainable choices in the air and on the ground.\nSustainable Lifestyle Offset your Home and Car Purchase solar panels\nGreen Tier officially launched on 8 March 2022 and is aimed at educating, encouraging and rewarding our 15 million Australian Frequent Flyer members for a range of activities including offsetting their flights, staying in eco-hotels and installing solar panels at home.\nAustralia, despite its seemingly abundant natural assets, is on the frontline of nature loss with one of the highest country risk profiles, including:\n### Choose Sustainable\nPurchase from eco winery through Qantas Wine Offset Qantas Wine or Qantas Store delivery\n— 19 ecosystems assessed as collapsing (second highest G20 country) The highest rate of mammalian extinction of any country in the world Only developed country identified as a global deforestation hotspot.\nTo achieve Green Tier, members need to complete at least five sustainable activities each year across six areas: flying, travel, lifestyle, sustainable purchases, reducing impact and giving back. Once achieved, members are rewarded with benefits such as bonus Qantas Points or status credits, access to exclusive events and initiatives, and the ability to earn Qantas bonus points when purchasing eligible sustainable products or experiences. These benefits are in addition to the rewards and status they receive under their existing flying tiers.\n### Reduce Your Impact\nTake our impact quiz to learn how\nAs Australia’s national airline, Qantas acknowledges our significant interactions with nature and its resources. We recognise our crucial role in addressing this ongoing environmental crisis. We have a track record of backing regenerative initiatives through our carbon offset program. This includes our recent investment in the Reef Credits scheme.\n### Give Back\nContribute to a sustainability organisation or project\nMore than 470,000 members have completed at least one activity towards achieving Green Tier.\nThe Group is committed to expanding these efforts, beginning our journey to implement the draft guidance released by the Taskforce on Nature-related Financial Disclosures (TNFD).", "chunk_word_count": 363, "section_path": "Contents > SUSTAINABLE TRAVEL CHOICES > Choose Sustainable", "document_id": "Qantas 2023 Sustainability Report", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 33, "chunk_text": "# Contents\n## SUSTAINABLE TRAVEL CHOICES\n### CASE STUDY — Qantas Regional Grants supporting regional conservation and tourism\nThe TNFD was established in 2021 in response to the growing need to factor nature into financial and business decisions. The TNFD is a global initiative that seeks to create a framework for businesses to manage, disclose, and react to naturerelated risks and opportunities, ultimately aiming to shift global finances away from nature-negative outcomes and toward nature-positive outcomes. The TNFD has released its beta framework, with final recommendations to be released in September 2023.\nAnother of our successful Qantas Regional Grants recipients is supporting sustainable tourism and conservation in regional Australia. Aussie Ark, located in regional New South Wales, will use the grant to expand their eco-tourism accommodation options in the Barrington Tops, furthering Aussie Ark’s ability to support the conservation of threatened native animals.\nTo prepare for this, the Group undertook a nature risk and opportunity assessment in FY23. This assessment identified material nature risks and opportunities across Qantas’ value chain to create business value and inform the development of the Group’s Nature Strategy. It was conducted in line with global best practices, including the TNFD beta framework.\nThis assessment was split into three broad categories: upstream supply chain, direct operations, and loyalty and destination tourism. The assessment found the Group’s risk, from both an impact and dependency perspective, is concentrated in passenger and freight air transport supply chains, with key issues being freshwater use, land use and pollution.\nThis assessment has important implications for how we design our response to these risks as a part of a TNFD-aligned Nature Strategy. This strategy is due to be released in FY24, after the release of the final TNFD framework and guidance.\n## OUR FOCUS IN FY24 WILL INCLUDE:\nContinuing to grow Green Tier by increasing the number of eco-hotels and sustainable holiday and tourism experiences for members\n— Adding opportunities for members to learn how to reduce their environmental footprint — Releasing the Nature Strategy later in FY24, supporting four priority areas:\n— Refining biodiversity assessment for offset procurement and investment — Creating a biodiversity assessment framework for SAF investment — Demonstrating leadership as an early TNFD adopter — Developing opportunities to connect customers with Australia’s natural assets.\n### Enabling our people\nWe are committed to enabling our people to be and do their best in a safe and inclusive culture.\nThis section of the Report highlights how we are supporting the achievement of the UN SDGs through our focus on inclusion and diversity, supporting our employees and respecting human rights. More information can be found in the Report appendix.\n### Supporting our people to feel safe and valued", "chunk_word_count": 447, "section_path": "Contents > SUSTAINABLE TRAVEL CHOICES > CASE STUDY — Qantas Regional Grants supporting regional conservation and tourism", "document_id": "Qantas 2023 Sustainability Report", "page": 40, "page_start": 40, "page_end": 41 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 34, "chunk_text": "# Contents\n## SAFETY, HEALTH AND SECURITY\nThe Board has overall responsibility for the governance of risks. Oversight is maintained through the Board’s Audit Committee, and CHESS, which is responsible for strategy, policy, systems oversight, monitoring and governance of the Qantas Group’s operational risks.\n### Our approach\nThe safety, health and wellbeing of our customers and people is always our priority. Our safety, health and security activities are supported by comprehensive governance structures and processes to monitor and manage performance and risks.\nManagement has a governance model that facilitates the sharing of information and issues through both the airline (for example, Jetstar, Qantas Link, Network Aviation or Qantas Airways) and function (for example engineers, pilots and cabin crew). These governance forums have reporting and escalation pathways from the frontline through an individual airline or function, to the Group Safety and Operations Committee with representatives of airlines and functions, through to CHESS. In this way, safety concerns and successes can be quickly shared across the entire organisation.\nQantas Group operates under one Safety Management System that integrates the management of risks associated with:\nIn April 2023, after more than three years in operation, our COVID-19 pandemic support team officially closed its doors, bringing an end to an important chapter in our COVID-19 pandemic response strategy. The cross-functional team, drawn from several Group airlines, was made up of more than 50 people from across the Group and included representatives from varied roles including pilots, cabin crew, airports, safety, medical, and people services. While COVID-19 is still with us, the management of the virus has now been integrated within business units.\n— People safety (workplace health and safety) — Aviation operational safety Aviation operational security — Privacy and cyber security.\nThe Safety Management System is audited internally and by external parties such as IATA, CASA and work health and safety regulators.\nOne of the highlights of our calendar is the annual Safety Conference. Our 11th Safety Conference, held in October 2022, brought together our people, partners and peers to share knowledge and experience across the topics covered by CHESS. Presenters included leaders and industry experts. In 2022, participants could explore a ‘virtual expo’ on our internal website, learn about the changing face of national security, hear the story of one man’s resilience during more than 500 days spent in the Antarctic, find out more about our sustainability agenda and hear more about specific areas of safety enhancement across the Qantas and Jetstar Group.\n## HIGHLIGHTS OF OUR SAFETY JOURNEY\n### People safety", "chunk_word_count": 419, "section_path": "Contents > HIGHLIGHTS OF OUR SAFETY JOURNEY > People safety", "document_id": "Qantas 2023 Sustainability Report", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 35, "chunk_text": "# Contents\n## HIGHLIGHTS OF OUR SAFETY JOURNEY\n### CASE STUDY — World first COVID-19 study using aircraft wastewater\nWe are committed to minimising safety risks through our Safety strategy which has four key objectives:\nQantas has been at the forefront of trialling a worldfirst for sampling wastewater to understand the spread of COVID-19. First proposed in 2020, and led by our Chief Medical Officer Dr. Ian Hosegood, a paper published in The Lancet in May 2023 highlights the key role international airports can have in screening, detecting, and mitigating cross-border transmission of COVID-19 and potentially other infectious diseases.\nNavigating safe outcomes: ensuring key safety risks \nare identified, and that we have confidence in safetycritical controls and their effectiveness, with consistent application across the Group \nHealthier with us: ensuring our people’s and customers’ health and wellbeing is managed throughout their journey with us \nSafety leaders: giving our frontline leaders tools to help them improve the workplace and increase control of the Significant 21 risks1 \nSafety done well, consistently: making sure that our \ntools, processes and systems respond to the working and operating environment, and our capability ensures efficient and compliant operations.\n### Fatigue Risk Management System\nWhen Qantas started flying, there were no rules to manage the risk of fatigue impacting crew performance. When regulations were introduced, they were based on experience and historical practice. In subsequent years, the Qantas Group assessed and managed fatigue-related risks in response to the changing operational landscape (such as the arrival of new aircraft and routes that increased flying time) and iteratively implemented amendments to the flight and duty time limitations using scientific studies and other evidence as the basis.\nWith aircraft passengers representing a subpopulation of a country or region, aircraft-based wastewater surveillance can be a promising approach to effectively identifying emerging viruses, tracing their evolution, and mapping global spread with international flights. The paper proposes the development of a global aircraft-based wastewater genomic surveillance network where aircraft wastewater samples are routinely collected for microbiological analysis and sequencing and linking the resulting data with associated international air traffic information.\nRecently, there has been a transition from a prescriptive rules-based to a data-driven risk-based system called the Fatigue Risk Management System (FRMS). While CASA regulations exist for flight crew there are currently none for fatigue risk management (FRM) of cabin crew. Qantas is using a data-driven approach to develop a FRM program for cabin crew. Like the system for flight crew, it will provide limits around duty times and minimum rest breaks, monitoring of fatigue reports and ongoing management of fatigue risks.", "chunk_word_count": 428, "section_path": "Contents > HIGHLIGHTS OF OUR SAFETY JOURNEY > CASE STUDY — World first COVID-19 study using aircraft wastewater", "document_id": "Qantas 2023 Sustainability Report", "page": 44, "page_start": 44, "page_end": 44 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 36, "chunk_text": "# Contents\n## HIGHLIGHTS OF OUR SAFETY JOURNEY\n### Navigating safe outcomes — risk reduction\nOur focus is on preventing aircraft accidents and all injuries, especially our Significant 21. In managing people safety, we prioritise those activities that could cause the worst outcomes — serious injury or even a fatality — to protect our employees and contractors through the Critical Risk Enhancement program which covers all of our highest-risk work. Our aim is to strengthen critical controls; those very strong controls that could, by themselves, prevent an accident or injury.\nWith the creation of a strong international alliance between the airline industry and health authorities, this surveillance network will potentially complement public health systems with a true early warning ability to inform decision-making for new variants and future global health risks.\nAn ongoing research program is underway to better understand and manage the fatigue risks associated with ultra-long-haul flying, including the secondment of a PhD student from The University of Adelaide dedicated to this program. We are also working with Monash University, which has received government research and fellowship grants, to develop an app providing personalised fatigue management guidance.\nDuring FY23, we prioritised activity to manage the risk of falling from height, with data indicating this risk had the highest rate of serious incidents and near misses in the Qantas Group over the last five years. The Fall from Height program is structured into six workstreams, each targeting immediate actions to reduce risk quickly, followed by initiatives to support longer-term, systemic change. The program is governed by an internal Management board with representation from across impacted business units and includes subject matter experts. Membership is designed to change as the program moves through different risks with a transition in 2023 from fall from height to traffic management.\nQantas also has a program of research underway relating to customers’ experience in long-haul and ultra-long-haul flying (see the case study on the following page).", "chunk_word_count": 322, "section_path": "Contents > HIGHLIGHTS OF OUR SAFETY JOURNEY > Navigating safe outcomes — risk reduction", "document_id": "Qantas 2023 Sustainability Report", "page": 44, "page_start": 44, "page_end": 45 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 37, "chunk_text": "# Contents\n## HIGHLIGHTS OF OUR SAFETY JOURNEY\n### CASE STUDY — Reducing jetlag through innovation and imagination\nIn June 2023, we released the entire cabin design of our Airbus A350s that will fly direct from Sydney to New York and London from late 2025, as part of Project Sunrise. Qantas will be the first airline in the world to offer a purpose-built wellbeing zone located between the premium economy and economy cabins, featuring integrated stretch handles, a guided on-screen exercise program, a hydration station and a range of refreshments.\nThe joint study found the impacts of jetlag can be reduced by reshaping the inflight travel experience. Qantas has been working with the University of Sydney’s Charles Perkins Centre since 2015, when we first began preparing for the Perth to London direct flights.\nFurther testing will be conducted at Airbus’ Hamburg headquarters later this year when specialists will design the lighting settings for each part of the Project Sunrise flights.\nWe continue to look for opportunities to collect data on issues such as fatigue. A flight from Sydney to Dresden in March 2023, moving a passenger A330 for conversion to a freighter, operated with four pilots and a Fatigue Research Manager to make sure crew data was collected and monitored correctly, with crew wearing fatigue monitoring devices to observe their melatonin levels before, during and after the service.\nIn 2019, Australian researchers collected data from 23 volunteer passengers who were fitted with wearable device technology during the 20-hour flights as they followed a specially designed menu, lighting, sleep and movement sequences. The initial findings1 indicate that, compared with customers on a traditional inflight sequence of eating and sleeping, those on the tailored schedule experienced less severe jet lag (self-reported), better sleep quality inflight and better cognitive performance in the two days after the flight.\nQantas and the University of Sydney’s Charles Perkins Centre also released initial research findings from world-first scientific research on reducing jet lag and improving sleep and overall wellbeing before, during and after ultra-long-haul flights, which has informed the cabin design of the Qantas A350s.", "chunk_word_count": 348, "section_path": "Contents > HIGHLIGHTS OF OUR SAFETY JOURNEY > CASE STUDY — Reducing jetlag through innovation and imagination", "document_id": "Qantas 2023 Sustainability Report", "page": 45, "page_start": 45, "page_end": 45 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 38, "chunk_text": "# Contents\n## HIGHLIGHTS OF OUR SAFETY JOURNEY\n### Safety performance metrics\nAligning with the approach defined in the Safety Management System, the program of work focuses on a four-pillar model of prevent, promote, intervene early and recover. Our Psychosocial Risk Management program connects the Safety and People functions to drive leadership engagement and empowerment and to manage these risks at an individual, team and organisational level.\nWe use three key metrics to measure safety performance — total recordable injury frequency rate (TRIFR)1 , lost work case frequency rate (LWCFR)2 and fatalities.\nQantas Freight has also introduced a new program called SafeWay which has a focus on manual handling, helping employees to bend and lift safely to help prevent body-stressing injuries. Through SafeWay, the team has introduced onsite physiotherapy to provide early intervention and injury response services. They are also consulting with employees to design safer workplace practices and providing leaders with online training around supportive conversations.\nIn FY23, our TRIFR was 18.5 compared with 14.3 in FY22 and 17 in FY21. Our LWCF was 9.8 compared with 7.7 in FY22 and 5.4 in FY21. There were no fatalities in FY23 which is consistent with FY22 and FY21.\nThe comparison between FY23 and FY22 injury rates is impacted by the COVID-19 pandemic. During FY22, reduced operations during the pandemic resulted in lower injury rates, lower hours worked, and some workgroups, that traditionally have high injury rates, being stood down. Injury rates in FY23 were similar to FY19 (pre-COVID-19).\n### Healthier with us\nHealthier with us is our health and wellbeing program, designed to foster an environment that supports, enables and motivates our people to live healthier, happier and more productive lives. Its approach is to provide our employees with validated, relevant, meaningful, and timely wellbeing initiatives, information, activities, resources, and tools.\nData insights reveal the top three injury drivers are body stressing, slips, trips and falls, and body hit by objects. We continue to implement targeted programs and initiatives to address these risks.\n### Psychosocial risk management\nDuring FY23, we implemented the Group Musculoskeletal Strategy, targeting body stressing and manual handling. While the Strategy aims to prevent injuries, it also focuses on injury response, early intervention and recovery programs, supporting people who have experienced these injury types.\nQantas has long recognised the impact of psychosocial hazards on people’s health and wellbeing. The Our Minds Matter program, introduced in 2016, is aimed at understanding and improving the mental health of our people. In line with evolving regulatory changes to psychosocial risk management across Australia, an additional program of work is underway to first ensure compliance with new regulatory requirements while continuing to implement leadership practices within the psychosocial risk management space.\nSupporting the Strategy, in October 2022 QantasLink Engineering trialled the use of Biosymm exoskeleton suits, which can provide a 45 per cent reduction in the muscle activity required for manual handling tasks. In June 2023, our Freight business partnered with Sparta Science to trial a predictive analysis of movement health biomarkers which are correlated with musculoskeletal disorders.", "chunk_word_count": 507, "section_path": "Contents > HIGHLIGHTS OF OUR SAFETY JOURNEY > Safety performance metrics", "document_id": "Qantas 2023 Sustainability Report", "page": 46, "page_start": 46, "page_end": 46 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 39, "chunk_text": "# Contents\n## HIGHLIGHTS OF OUR SAFETY JOURNEY\n### Building mental health and wellbeing literacy\nBeyond Blue supports us in reducing the stigma and bias around mental illness through the sharing of Beyond Blue learning opportunities and resources\nOur employees have access to an extensive suite of wellbeing and mental health learnings, which we believe contributes not only to healthy, safe and resilient workplaces but also to healthy, safe and resilient families and communities outside of work. Mental health first aid and psychological first aid are two of the external learning programs offered.\n— Australian Red Cross is a key delivery partner in our mental health first aid and psychological first aid training, delivering accreditation courses to our people all over Australia and increasing mental health literacy in our community. Through Australian Red Cross, Qantas also participates in the Lifeblood Teams program, with Qantas Group volunteers making blood, platelet and plasma donations. We currently have close to 300 members in our Qantas Lifeblood team who made more than 1,000 donations in 2022.\n### Employee Assistance program\nWe partner with Converge International to provide our Employee Assistance program (EAP) which includes coaching and support for mental health and mental illness challenges, as well as financial coaching, career coaching, and nutrition and lifestyle coaching and support. The EAP gives our people and their families access to qualified professionals including psychologists, social workers and management coaches.\nQantas is a member of the Corporate Mental Health Alliance Australia, a collective of Australia-based organisations working together to provide mentally healthy work environments through collaborative research and development of tools and resources.\nDuring FY23, we extended the EAP to employees based in the Americas, Asia, the UK, Europe and Africa. The service is available 24 hours a day, 365 days a year for employees and their immediate families.\n### Safety leaders\nIn FY23, we continued to roll out a leadership program with a focus on psychological safety and the importance it has in organisational and leadership effectiveness. The program leverages expertise from the Neuro Leadership Institute, as well as psychological safety and Just Culture1 processes, and applies them to broader leadership behaviours.\n### Our wellbeing partners\nWe engage a network of experienced partners and providers to support our health and wellbeing program.\nThe Resilience Project’s Wellbeing Series with videos and information covering The Resilience Project’s top 10 strategies to build resilience and happiness Integrity Health and Safety, a First Nations-owned and operated business, delivers the annual Flu Vaccination Campaign across our Southern Hemisphere-based business. It supports the professional development of Aboriginal and Torres Strait Islander nurses by funding scholarships to help build healthcare capability in Aboriginal and Torres Strait Islander communities\n### Safety done well, consistently\nIn FY23, we continued our improvement of the Safety Management System (SMS) with updates to the Critical Risk Management System, to improve the way we manage high-consequence people safety risks, and our Group Integrated Management System that forms the backbone of our SMS.\nMaking these documents more relevant, easier to read and access, and up to date with contemporary practice and regulations supports our people to deliver safe outcomes in their day-to-day work.", "chunk_word_count": 523, "section_path": "Contents > HIGHLIGHTS OF OUR SAFETY JOURNEY > Building mental health and wellbeing literacy", "document_id": "Qantas 2023 Sustainability Report", "page": 47, "page_start": 47, "page_end": 48 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 40, "chunk_text": "# Contents\n## HIGHLIGHTS OF OUR SAFETY JOURNEY\n### Aviation operational security\nFY23 continued a busy and multifaceted transition from the restart of the domestic and international networks following the COVID-19 pandemic to business-as-usual operations and a focus on strategic risk management. This included re-engagement with offshore regulators; the re-set and approval of statutory documents; port threat assessments; and the Aviation Security Identification Card and access return-to-work program.\nThe aviation industry continues to face complex threats from individuals and organisations globally. Qantas invests significant resources to protect passengers and employees, as well as aircraft worth billions of dollars, from security risks which can vary from acts of terrorism to state-sponsored cyber attacks against critical infrastructure.\n### Aviation operational safety\nFY23 was not without challenges as we continued to bring aircraft grounded by the global COVID-19 pandemic back into service and opened or reopened flying to ports that we had not flown to recently.\nQantas works closely with the Australian Government, airports, police, intelligence agencies, regulators, border agencies, overseas agencies, law enforcement agencies and global partners across the industry to proactively monitor and manage threats and risks. We seek to be at the forefront of improving security outcomes for customers and employees by operating within a security framework that is proportionate, agile and responsive to changing threats and risks.\nQantas Group Security and Facilitation (GSF) participates in several domestic and international committees to review and refine security measures, plan for and acquire enhanced security equipment and implement world best practices in aviation security.\nOur operational safety performance was strong in FY23 as we maintained a reporting culture where people feel safe to report issues without fear of negative consequences. The safety management system is underpinned by this reporting culture.\nIntensive and proactive engagement with the Australian Government and key offshore regulators has been a key priority for GSF to ensure the Group continues to be considered in aviation security and facilitation policy development.\nDuring FY23, we also started taking delivery of new aircraft. The team choosing those aircraft considers safety in the selection of the aircraft, in the configuration of the aircraft, in the technology that the pilots will interact with, and the way people will load bags into the hold under the aircraft, or stow bags in the cabin.", "chunk_word_count": 379, "section_path": "Contents > HIGHLIGHTS OF OUR SAFETY JOURNEY > Aviation operational security", "document_id": "Qantas 2023 Sustainability Report", "page": 48, "page_start": 48, "page_end": 48 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 41, "chunk_text": "# Contents\n## HIGHLIGHTS OF OUR SAFETY JOURNEY\n### CASE STUDY — Supporting critical medical treatments\nWe expect to return to around 100 per cent of our international network pre-COVID capacity by March 2024, up from around 85 per cent of pre-COVID levels in June 2023 and a significant increase from only 45 per cent in mid-2022.\nIn 2022, Qantas Freight transported more than 27,000 shipments which have special handling categories as they literally save lives. This special cargo includes live human organs such as hearts, livers, and kidneys, as well as tissues and eyes (corneas). More than 12,000 of these shipments are ‘saving human life’ items such as chemotherapy medication, blood diagnostic samples, specialist medical parts and equipment for operations.\nAir returns received widespread media coverage during the year. Despite the attention, turnbacks indicate a strong safety system and, reviewing our data, there has been no change from our average rate of turnbacks before and after COVID-19, which for Qantas is approximately 60 a year or one per 2,000 flights.\nThese critical freight movements play an integral role in saving thousands of lives every year.\nOur regional arm QantasLink has more turnbacks, over 200 a year, because it operates more flights and it makes sense to return to a major city rather than fly to a remote town without the same level of technical support as our major hubs. Globally, the industry sees more than 10,000 air returns a year.\nQantas Freight handles a wide variety of items every year, from customer products and sporting equipment for major events, to rare livestock and animals.\nThe GSF regularly engages with the Department of Home Affairs’ Cyber and Infrastructure Security Centre, the Australian Border Force, as well as with key offshore regulators, such as the USA Transportation Security Administration, the UK Civil Aviation Authority (CAA), and New Zealand (NZ) CAA.\n### Instagram\n### CyberSafety", "chunk_word_count": 313, "section_path": "Contents > HIGHLIGHTS OF OUR SAFETY JOURNEY > CASE STUDY — Supporting critical medical treatments", "document_id": "Qantas 2023 Sustainability Report", "page": 48, "page_start": 48, "page_end": 49 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 42, "chunk_text": "# Contents\n## HIGHLIGHTS OF OUR SAFETY JOURNEY\n### Cyber security and privacy\nThe aviation sector is dependent on data, systems and networks and, like many organisations, we operate in an environment of ever-evolving cyber threats, where attackers continually adopt more sophisticated techniques. We recognise the importance of protecting data and systems from these attacks, and the potential financial and reputational implications associated with unauthorised access to the information we hold.\nAcross the Group, we are responsible for handling a substantial amount of personal information. We collect, share, use, store and process personal information in accordance with an ever-changing and increasingly complex landscape of international and domestic laws and regulations. We acknowledge our responsibility to protect and maintain the privacy rights of individuals, to maintain the security and the value of their personal information, and strive to meet their expectations regarding fair, ethical and responsible data use.\nWe continue to invest in improving the resources, processes and technology that support the Group to address the volumes of personal information we manage. Risk assessments are conducted on relevant third-party suppliers and we work with them to address any material cyber and privacy risks identified.\n456likes\nThe Group is committed to raising our employees’ awareness of our shared privacy compliance obligations and embedding a CyberSafe culture. This includes articulating clear cyber accountabilities at all levels of the organisation. The need for shared vigilance on cyber issues is supported by formal recognition of employees who demonstrate positive CyberSafe behaviours.\nyberSafetystartswithyou $^ *$ beginyour journeytoday\nCyberSafe#sharewithcybercare#keepitsecretkeepitsafe keepitprivate#ifindoubtgiveashout#reportphish multifactorauthentication Photo: Johnny Tilley from the Freight operations team.\nDuring FY23, the Group Cyber team continued to train our people to increase their awareness of phishing and scams, and measured our employees’ ability to spot and report suspicious emails. The team’s activities include running phishing simulations (based on real phishing threats that frequently target our people, both at work and home) and providing a variety of bespoke training programs, in addition to a suite of mandatory cyber security and privacy training for our people. The bespoke programs include face-to-face executive training and role-specific training for higher-risk users such as privileged users and developers. The Group also includes cyber content in induction training for operational employees (such as pilots and cabin crew) as well as corporate employees.", "chunk_word_count": 379, "section_path": "Contents > HIGHLIGHTS OF OUR SAFETY JOURNEY > Cyber security and privacy", "document_id": "Qantas 2023 Sustainability Report", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 43, "chunk_text": "# Contents\n## OUR FOCUS IN FY24 WILL INCLUDE:\nA Group-wide privacy awareness campaign was run in May 2023 to coincide with Privacy Awareness Week activities coordinated by the Australian privacy regulators.\nContinuing to enhance our work around managing psychosocial safety, with new Australian legislation helping us review our approach and broaden the program to consider all psychosocial risks and to enhance employee support\nIn FY23, the Group also completed our first Cyber Culture Survey to measure the success of the Group’s ongoing cyber culture strategy and to identify areas for enhancement, as part of the process of continuous improvement required to maintain a strong ‘human firewall’.\nSupporting key teams to reduce risk in working at heights and traffic management including data monitoring to better understand and identify these hazards, and implementing programs to protect and enhance critical controls\nWe also worked with experts to gain a deeper understanding of several high-profile data breaches that impacted Australian and global companies during the year and incorporated learnings from those events into our approach to cyber security and privacy.\nIn December 2022, we held our inaugural Cyber Safety Week across the Group to help equip our people with the tools and knowledge to be CyberSafe. Topics included how to spot a phish, social media dos and don’ts, as well as tips for keeping an online identity secure. This was particularly timely as it followed shortly after a number of significant data breaches at other Australian businesses.\nUsing technology to gain deeper insights into our safety data including through new tools, such as artificial intelligence and machine learning, that provide deeper performance insights into safety risk exposure and performance, and applying these across aircraft safety and people safety\nContinuing to research fatigue risks and management, with a key area being ultra-long haul flying and applying learning across works groups prone to fatigue\nContinuing to improve cyber security and privacy capabilities in an environment of dynamic threat, heightened customer expectations, rapid technological advancement and broad-reaching regulatory reform\nLeveraging the safety risk management processes and structures already in place and further embedding cyber security and privacy accountabilities into all parts of the Group\nRaising the profile of cyber security and privacy through activities such as the Cyber Safety Week, Cyber Culture Survey and as a key element of the annual Safety Conference.", "chunk_word_count": 387, "section_path": "Contents > OUR FOCUS IN FY24 WILL INCLUDE:", "document_id": "Qantas 2023 Sustainability Report", "page": 50, "page_start": 50, "page_end": 50 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 44, "chunk_text": "# Contents\n## INVESTING IN OUR PEOPLE\nThe Qantas Group People Strategic Plan supports our vision of enabling our people to be and do their best in a safe and inclusive culture with emphasis on:\n— Attraction and retention — Developing and engaging Inclusion and diversity.\n### Our workforce\nOur global workforce consists of more than 27,0001 employees across 27 countries,2 of whom 95 per cent are directly employed by a Group entity, either by an individual contract or under enterprise agreements (EA) and in accordance with relevant national employment legislation.\nWithin Australia, 81 per cent of our employees hold operational roles, such as pilots, cabin crew, engineering and maintenance, customer service, freight operations, and safety. The remaining 19 per cent of our employees provide operational support, in areas such as aircraft load control, meteorology and flight planning services, or deliver corporate services, such as risk and compliance, finance, legal, treasury, human resources and sustainability services.\nOur operations also include a proportion of indirect workers who deliver services under contracts between the Group and specialist providers, whereby we are one of many clients. These indirect workers include contractors, contingent workers and outsourced labour hire resources that support our business in areas such as cabin crew, ground handling, baggage services, catering, cleaning, security services, information technology, and payroll services.", "chunk_word_count": 218, "section_path": "Contents > INVESTING IN OUR PEOPLE", "document_id": "Qantas 2023 Sustainability Report", "page": 51, "page_start": 51, "page_end": 51 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 45, "chunk_text": "# Contents\n## ATTRACTION AND RETENTION\n### Improving staff travel\nenable employees to recognise their colleagues for modelling Qantas Group behaviours.\nWe introduced changes to our Staff Travel program in FY23, to further enhance our employee value proposition. The changes included lower staff travel standby fares, a staff discount on commercial fares for a guaranteed seat, and expanding the number and categories of eligible travel beneficiaries.\nThere has been strong interest in working for the Qantas Group, with applications over the past 12 months continuing to grow and now exceeding those prior to the COVID-19 pandemic.\nIn FY23, there were 24,721 employees recognised and a total of 168,844 recognition nominations across ThankQ and Bravo. This includes manager recognition, as well as by peers.\nRetention of talent continues to be a priority, with investment focused on recognition, benefits, opportunities for internal promotion and professional development. Local-level solutions are required for some workgroups and locations to address a highly competitive talent market for technical skills. Voluntary employee turnover declined from 10.4 per cent at 30 June 2022 to 8.6 per cent at 30 June 2023.\nThe annual eXcel Awards are an annual employee recognition event, celebrating the exceptional achievements of people across the Qantas Group who made a stand-out contribution in the previous calendar year.\n### Recognising our employees\nThere are many opportunities for recognition including through our programs ThankQ (Qantas) and Bravo (Jetstar) which\n### Recruitment drive\nAs we move from recovery to growth, the Qantas Group expects to create more than 8,500 new highly-skilled jobs in Australian aviation over the next decade. These additional roles include pilots, engineers, cabin crew and airport employees, and are driven by investment in new aircraft and increased flying to meet long-term demand.\n### Rewarding employees\nRecognising the significant role of employees in contributing to our recovery from the COVID-19 pandemic, in February 2022, we introduced a Recovery and Retention program, awarding 1,000 share rights to 17,000 eligible non-executive employees and a share rights-based bonus to managers and Senior Executives.\nIn October 2022, we expanded the Recovery and Retention program to an additional 3,600 non-executive employees who joined after 1 July 2021. Both awards fully vested in August 2023 following performance and service conditions being met.\nIn addition to the 1,000 share rights awarded to non-executive employees, enterprise agreement-covered employees were given the opportunity to secure a one-off $\\$ 5,000$ payment upon finalisation of their relevant new enterprise agreement within a specified time period.\n## DEVELOPING AND ENGAGING\nQantas will invest in establishing the Engineering Academy, which is expected to open its doors to the first students in 2025. Entry-level classroom training for aviation engineering takes at least 12 months. Further theory and on-the-job training is required to move through various levels of accreditation as an aircraft maintenance engineer. A fully licenced aircraft maintenance engineer typically takes a minimum of five years of practical and classroom training.\n### Onboarding", "chunk_word_count": 484, "section_path": "Contents > ATTRACTION AND RETENTION", "document_id": "Qantas 2023 Sustainability Report", "page": 52, "page_start": 52, "page_end": 53 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 46, "chunk_text": "# Contents\n## QANTAS GROUP PILOT ACADEMY\nWe run Welcome Onboard induction programs for all corporate and support employees and leaders new to the Group. These programs are aligned to the Qantas Group Strategy and include an emphasis on environmental and social sustainability.\nDelivering a strong pipeline of highly-skilled pilots $1 6 0 +$ students currently training to become \ncommercial pilots \n>1,000 pilots expected to graduate from the \nAcademy over the next five years into Qantas Group and wider aviation industry \n50 scholarships announced over next five years for future female and First Nations pilots.\n### Leadership development program\n### New flight training centre\nAcross the Qantas Group, we are focused on providing a safe and inclusive workplace that enables our people to be and do their best every day.\nIn May 2023, construction began on a new flight training centre in Sydney, which will train up to 4,500 Qantas and Jetstar pilots and cabin crew each year from early 2024. This multi-milliondollar facility will house up to eight full-motion simulators including for the Airbus A350, the aircraft that will operate non-stop flights from Sydney to London and New York.\nOur leaders play a critical role in our people’s everyday experience and across 2023 we are continuing to invest in our leaders’ professional development through a range of programs focused on creating a safe and inclusive culture.\n## QANTAS GROUP ENGINEERING ACADEMY\nThe purpose-built facility in St Peters, near Sydney Airport, will also offer flight training devices, aircraft cabin mock-ups with emergency procedures equipment, and classroom and training facilities. Senior Qantas and Jetstar training captains will train pilots from the two airlines while global training provider CAE will maintain all simulators and training equipment and manage the centre’s day-to-day operations as part of a long-term agreement.\nProviding aviation engineers for the Qantas Group and broader aviation industry Supports the ability to meet growth as well as attrition as current engineers retire Capacity to train up to 300 engineers/year Expected to open to students in 2025 \\~1,000 expressions of interest received to join the Academy since announcement.\n### Engineering Academy\nIn 2023, we announced that we will establish the Qantas Group Engineering Academy in Australia, with the capacity to train up to 300 engineers annually. Trainees will be able to choose to study in Brisbane or Melbourne, with both cities selected as Academy locations.\nThe Academy will provide aviation engineers for the Qantas Group as well as the broader aviation industry, including defence contractors and general aviation — two areas with high demand for these skills. A particular focus will be on encouraging more women to consider a career as an aircraft engineer.\nQantas and Jetstar pilots typically complete four simulator sessions per year to remain current in their formal qualifications and up to 15 sessions when training for a new aircraft type.\nQantas relocated simulators from Sydney to Melbourne and Brisbane in 2021 to make way for the NSW Government’s Sydney Gateway road project. Sydney-based pilots currently travelling interstate will be able to attend training in their home state when the new facility opens in early 2024.", "chunk_word_count": 517, "section_path": "Contents > QANTAS GROUP PILOT ACADEMY", "document_id": "Qantas 2023 Sustainability Report", "page": 53, "page_start": 53, "page_end": 53 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 47, "chunk_text": "# Contents\n## FUTURE TALENT PROGRAMS\nRapid growth of graduate and intern talent pipelines Focused on future skills including engineering, digitech and data science \n3,000 applications for 55 graduate positions \nEstablishment of intern program to support future talent pipeline across the Group \nPartnering with schools to create aviation work experience weeks.\nOver the next decade, the Qantas Group alone will need around 200 new engineering recruits every year to meet growth and attrition as current engineers retire. That number exceeds the current national supply of new aviation engineers each year, meaning a new training pipeline is needed.\n### New facility at Mascot\nto a library of over 100,000 self-directed online courses for all Qantas Group employees, tailored to professional and personal interests.\nGroup has endeavoured to modernise the terms and conditions of the various EAs, reflective of the prevailing operating conditions and the evolving industrial landscape.\nOur new training facility at the Mascot campus officially launched in August 2022. Known as The Longreach Centre of Service Excellence, it is used to provide training for cabin crew across the Group and includes four cabin pods (one business pod, one first class pod, two mixed — premium economy, economy), service rooms and 13 training rooms for theorybased training on the business, service and safety training.\nThere is an established process for negotiating new EAs, which involves our internal Industrial Relations team engaging with affected employees, predominantly via the relevant Union representatives, and includes extensive negotiation to reach agreed-upon terms. Following negotiation, our people have an opportunity to vote on the EAs, and if voted in favour by a majority of employees casting a vote, the EAs are ultimately endorsed by the Fair Work Commission.\n### Measuring employee experience\nIn FY23, we partnered with Qualtrics to evolve our approach to understanding our people’s experience across the Group. We are now undertaking bi-annual surveys focused on five key areas: engagement, experience vs expectation, intent to stay, inclusion and wellbeing. Additionally, we launched a range of new surveys aligned to key moments that matter in the employee life cycle, including onboarding, starting a new role, post learning and development, work anniversaries and returning from parental leave. These enhancements provide leaders with access to data and insights more frequently and readily, and give us a holistic view of our people’s experiences across different areas of our business.\n### Return of the Graduate program\nThe Qantas and Jetstar Graduate programs restarted in October 2022, with 46 graduates commencing across the two businesses. Qantas is forecasting an additional 55 graduates to join us in FY24, with a focus on increasing female participation within STEM streams and increasing First Nations representation. Giving graduates the chance to grow a mix of specialist and generalist skills is a key part of our talent strategy and one way we continue to build our talent pipeline.\n### High Court decision\nQantas acknowledges and accepts the High Court’s September 2023 decision to uphold two prior rulings by the Federal Court regarding the legality of outsourcing the remainder of the airline’s ground handling function in 2020. The decision to outsource the remainder of the airline’s ground handling function was made in August 2020 while its operations were severely affected by the COVID-19 pandemic. Qantas deeply regrets the personal impact the outsourcing decision had on all those affected.", "chunk_word_count": 552, "section_path": "Contents > FUTURE TALENT PROGRAMS", "document_id": "Qantas 2023 Sustainability Report", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 48, "chunk_text": "# Contents\n## LABOUR RIGHTS\n### AcademyQ\nThe Group recognises and supports the rights of freedom of association, with more than 50 Enterprise Agreements (EAs) covering approximately 20,000 employees. Over time the\nSupporting people development is AcademyQ, an online platform relaunched in FY23. It provides unlimited access\n## OUR FOCUS IN FY24 WILL INCLUDE:\nInvesting in leadership and professional \ndevelopment for 7,500 leaders including 5,500 frontline leaders \nBuilding our future talent pipelines across the Pilot Academy, our graduate programs and the Engineering Academy \nUnderstanding our employee experience across engagement, inclusion and wellbeing.\n### Enhancing inclusion and diversity\nThe Qantas Group has long recognised the importance of inclusion and diversity in creating a better company and a better society more broadly.\n[IMAGE CAPTION] First Nations team members (right).\nHaving a strong focus on inclusion and diversity is essential for us to build on our strong foundations. We value our people’s diverse lived experience and believe that our inclusive culture contributes to our strength and success. Our diversity of thought and experience helps us to understand our customers, make better decisions and get things done safely.\nOur three-year Inclusion and Diversity strategy was launched in 2021 to drive better business outcomes and an improved people experience through shared accountability for inclusion and diversity. In implementing the strategy, we have focused on diverse representation, fostering a safe and inclusive environment for our people and customers, and taking opportunities for external leadership.\nDuring the year the Qantas Group made progress towards achieving our ambitions. Information about our work on First Nations engagement can be found on pages 67 to 70 of this Report.\n## SUSTAINABLE ABORIGINAL AND TORRES STRAIT ISLANDER CAREERS\nSustainable, meaningful careers are critical to our vision for reconciliation. We aim to build on our long, proud history of engaging with Aboriginal and Torres Strait Islander peoples by providing First Nations representation, leadership and engagement opportunities across the Qantas Group.\nBy reducing barriers to employment and promotion, we are striving to empower Aboriginal and Torres Strait Islander peoples to contribute meaningfully within their communities and in the workplace. More information can be found on our website at Reconciliation at Qantas and on pages 67 to 70 of this Report.\n10,000 customer-facing front-line employees, leaders and people managers to foster an awareness, understanding and appreciation of First Nations knowledge, cultures, histories and rights.\nCultural Awareness by SBS (online) is also being rolled out more broadly to the wider Qantas group workforce to develop the cultural capability of our workforce.\nWe also continue to work with CareerTrackers, Maxima, The Clontarf Foundation and the Australian Indigenous Education Foundation to provide education and career opportunities for Aboriginal and Torres Strait Islander students.\nQantas is proud to be working with Johnny Briggs to deliver face-to-face cultural confidence training, alongside an ongoing partnership with Jawun to deliver secondment and immersion opportunities. Aboriginal and Torres Strait Islander\nUnderpinning our commitment to reconciliation is our Cultural Learning Framework, a comprehensive and inclusive customer service training suite that will be rolled out to\n## RELEASE OF THE QANTAS GROUP ACCESS AND INCLUSION PLAN", "chunk_word_count": 512, "section_path": "Contents > LABOUR RIGHTS", "document_id": "Qantas 2023 Sustainability Report", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 49, "chunk_text": "# Contents\n## ENGAGING OUR PEOPLE TO ACT AS CHAMPIONS FOR INCLUSION\nIn 2023, the Qantas Group was proud to release our first Access and Inclusion Plan. Our vision is to increase access and inclusion for our employees and customers.\nWe aim to harness the collective efforts, ideas and energy of our employees in creating an inclusive environment for our people and customers.\nIn developing the Plan, we aimed to place the lived experience of people with disability at its centre. We were guided by our partners Australian Network on Disability, Paralympics Australia, our employees and people with disability.\nOur Inclusive Leadership development program is currently being provided to those in leadership roles — approximately 7,500 leaders, including 5,500 frontline leaders in our daily operations. Partnering with the NeuroLeadership Institute, our program focuses on psychological safety, inclusion and belonging.\nThe Plan sets out our key goals to improve accessibility for our people, our customers and our community across four pillars:\nThe training follows First Nations Cultural Awareness training, which also prioritised leadership attendance to upskill this cohort to drive cultural change.\nCustomer experience: we work to ensure we make the customer journey as seamless as possible for people with disability \nSustainable careers: we support people with disability to build their careers \nPlaces and technology: we strive for an accessible and inclusive environment for employees and customers Community and partnerships: we create more inclusive and accessible communities through our partnerships and procurement.\nOur employee network groups are also key to facilitating and supporting change.\n### CASE STUDY — Fostering inclusion\n## CULTURAL DIVERSITY\nIn 1997, Wayne Bell was in an accident which resulted in an above-the-knee amputation. With the help of a great support network, Wayne then represented Australia at the Sydney 2000 Paralympics in the pentathlon.\nThe Qantas Group became a member of the Asian Leadership Project in 2023, offering employees the opportunity to attend key networking and awareness-raising events.\nIn 2012, Wayne joined Qantas as a Customer Service Agent. He wears a leg prosthesis which supports him but is not visible to others. When he first joined Qantas, Wayne remembers his colleagues being unsure how to talk about disability or ask questions.\nWe are building the cross-cultural awareness of our people and have launched culturally inclusive service training for customer-facing frontline employees this year.\nIn releasing a foundational Access and Inclusion Plan, our aim is to continue to build disability confidence across the business. To do this, and in support of our plan, we re-released online disability awareness training in February 2023. The rollout of the training has commenced and is initially prioritising frontline and customer-facing team members.\nOur ongoing focus for FY24 will be on better understanding the cultural diversity in our workforce and launching an employee network group.\nWayne believes Qantas’ new employee network for people with disability and allies will foster inclusion and help create a safe space for people to share their experiences and learn from each other.\nIn July 2023, we also launched Enabled, an employee network for people with disability and allies. More information about our Access and Inclusion Plan is available at Acting responsibly | Qantas AU.", "chunk_word_count": 525, "section_path": "Contents > ENGAGING OUR PEOPLE TO ACT AS CHAMPIONS FOR INCLUSION", "document_id": "Qantas 2023 Sustainability Report", "page": 56, "page_start": 56, "page_end": 56 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 50, "chunk_text": "# Contents\n## GENDER INCLUSION\nStreamlined our process to facilitate leave Enhanced our ability for employees to keep in touch Focused on coaching on return to work for leaders returning to work.\nThe Qantas Group is focused on ensuring pay equity (same pay in like-for-like roles) and improving gender representation across all employee functions.\nWe continue to advocate for enhanced gender inclusion as a Founding Member of the Champions of Change Coalition and as a sponsor of the Chief Executive Women’s network.\nTo support our internal carers community, we have also launched a platform providing employees with access to parenting and caring resources, and will launch a carer’s employee network later in the year.\nOur gender pay gap is impacted heavily by the historic underrepresentation of genders in varying paid vocations (pilots/ cabin crew). We currently have strategies in place to address this by improving gender representation. These strategies include undertaking a pay equity analysis on like-for-like roles, and increasing representation of women in leadership and under-represented roles.\nThis year we were pleased to announce that Vanessa Hudson would be the Qantas Group’s first female CEO.\n## INCLUSION BASED ON LIFE AGES AND STAGES\nWe are also increasing our support for employees who are veterans. On Anzac Day this year, we spotlighted employee stories and connection with this day.\nIn 2023, we enhanced employee support for employees transitioning to and from parental leave, through our Little Joeys program. We have:\nQantas supports the IATA 25by2025 global campaign to change gender balance within the aviation industry. We have agreed to several commitments, with a focus on:\n— Increasing representation of women in senior leadership — Increasing female pilots across the Group Female nominations for IATA governance roles Participating in annual benchmarking by reporting annual key diversity metrics.\nWhile the Group is slightly above the global average1 in terms of the number of female pilots, we know we still have more work to do when it comes to inclusion and diversity in our workforce.\nIn March 2023, we relaunched our scholarship program for the Qantas Group Pilot Academy to provide 50 scholarships to female students and Aboriginal and Torres Strait Islander peoples. The $\\$ 1.5$ million investment over five years is aimed at encouraging more women and First Nations people to pursue a career in aviation.\nThis is one way we are building a pathway for pilots from a diverse range of backgrounds to join the industry and create a long-term talent pipeline of skilled aviators for the Qantas Group.\nPhoto: In March 2023, we took part in the opening of the Avalon 2023 Australian International Airshow at Avalon, Victoria with a flyover featuring one of our Airbus A330s in formation with two Royal Australian Air Force (RAAF) F/A-18F Super Hornets. The display marked the centenary of the RAAF and celebrated women in aviation ahead of International Women’s Day. Pictured are Qantas First Officer Sarah Baldwin, Captain Kim Murrant and Fleet Operations Manager – Day Operations Anita Murray-Jones (left to right) with members of the RAAF. Photo credit: Defence Australia\nOur relaunched Altitude employee network continues to showcase the leadership and stories of women through days of awareness such as International Women’s Day, key networking events and employee support initiatives.", "chunk_word_count": 538, "section_path": "Contents > GENDER INCLUSION", "document_id": "Qantas 2023 Sustainability Report", "page": 57, "page_start": 57, "page_end": 57 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 51, "chunk_text": "# Contents\n## LGBTQI $^ +$ INCLUSION\nWe also took part in the 2023 Australian Workplace Equality Index (AWEI) Employee Survey. As a member of Pride in Diversity and in line with our Qantas Group strategy to foster an inclusive culture, we wanted to hear from our employees. The results are being used to help us understand the current state of $\\mathsf { L G B T Q } | +$ inclusion and identify opportunities for improvement.\nQantas has been a long-term partner of the Sydney Gay and Lesbian Mardi Gras (SGLMG) organisation as part of our commitment to inclusion and diversity. Our partnership with the SGLMG focuses on supporting and celebrating our LGBTQ $| + \\rrangle$ people, allies and the broader $\\mathsf { L G B T Q } | +$ community and celebrating our diverse employee base.\nThe Illuminate Network is an employee network for LGBTQI+ employees and their allies to support a workplace inclusive of everyone. With a focus on developing a workplace free from bullying, harassment and discrimination, the Network has developed an internal framework to provide information, support and advocacy training for sexual and gender-diverse employees.\nIn 2023, we extended our support to WorldPride 2023 which was held in Sydney in conjunction with the 2023 SGLMG, making it one of the largest events to come to Australia since the Sydney 2000 Olympics. As part of our sponsorship we:\nUpdated our ‘rainbow’ logos to incorporate the colours of the progress pride flag \nInstalled a special ‘Pride is in the Air’ livery on one of our A330-200 aircraft \nRan a regional grants program to support LGBTQI+ \nindividuals living in regional communities to attend Sydney WorldPride including airfares, accommodation and tickets to the SGLMG parade \nShowcased a Sydney WorldPride theme for our Qantas Magazine February 2023 edition \nEngaged employees through workshops, activation kits at our major ports and story sharing \nReleased limited edition pride pyjamas \nHosted the Official Sydney WorldPride flight from \nLos Angeles to Sydney \nParticipated at both Fair Day and SGLMG.\nOur Better Together $\\mathsf { L G B T Q } | +$ inclusion training was updated in December 2022. The course focuses on helping to build an understanding of $\\mathsf { L G B T Q } | +$ inclusion and why it is important to our team members, customers and the communities in which we operate. The course covers key aspects of LGBTQI+ inclusion such as communication, the role individuals can play in creating a more inclusive culture and provides resources for further support.\n## OUR FOCUS IN FY24 WILL INCLUDE:\nLaunching new employee resource groups including a Carers Network and Cultural Diversity Network Reviewing and refreshing our recruitment process to ensure it is inclusive and accessible to all — Implementing our Access and Inclusion Plan.\n### Respect for human rights", "chunk_word_count": 468, "section_path": "Contents > LGBTQI $^ +$ INCLUSION", "document_id": "Qantas 2023 Sustainability Report", "page": 58, "page_start": 58, "page_end": 59 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 52, "chunk_text": "# Contents\n## OUR APPROACH\nWe recognise that our corporate responsibility to respect human rights goes beyond public statements of commitment and extends to the actions we take to demonstrate our respect for human rights. For the Qantas Group, this means seeking to act in a way that avoids harm, or infringing on the rights of other people, whether they are employees, customers, workers in our supply chain, or the broader community. It includes taking action consistent with the UNGPs to address any adverse impacts in which we may be involved, or connected, and to proactively look for ways to advance the respect of human rights through our business activities.\nWe also understand that at-risk and vulnerable groups may be particularly affected by adverse human rights impacts.\nThe Group is committed to respecting all internationally recognised human rights as set out in the United Nations Universal Declaration on Human Rights. At a minimum, we comply with all applicable national and international laws and where national laws conflict with international standards, we seek opportunities to adopt the higher standard. We also uphold the International Labour Organisation Core Labour Standards and voluntarily commit to conduct our business in line with the standards of the United Nations (UN) Guiding Principles on Business and Human Rights (UNGPs).\nWe completed our first salient human rights assessment in 2018, and across FY22 and FY23 we engaged Pillar Two, an independent business and human rights advisory firm to undertake a review of our salient human rights issues. Our salient human rights issues are the areas where we consider the most severe adverse human rights impacts could occur across our business activities and relationships.\nThe review involved a Group-wide, cross-functional workshop to identify potential examples of relevant adverse human rights impacts, the themes of which were subsequently validated in a series of internal stakeholder consultation sessions. We then worked with Pillar Two to assess the indicative severity of these potential adverse human rights impacts by evaluating their scale, scope and remediability in line with international standards and frameworks.\n## SALIENT HUMAN RIGHTS ISSUES\nSince 2017, we have been a signatory to the UN Global Compact (UNGC), whereby we have committed to incorporating the Ten Principles of the UNGC on human rights, labour, environment and anti-corruption, in our strategies, policies and procedures, supporting us to uphold our corporate responsibilities to safeguard people and planet.\nAt Qantas, we are committed to respecting all internationally recognised human rights. As part of this commitment, we work to identify and address any involvement we may have in actual and potential adverse human rights impacts across our operations and value chain.\nThis work informed the identification of five salient human rights issues for Qantas, which we aim to use to help us focus our human rights risk management.\nOur commitments to the respect of human rights are outlined across a range of policy documents including our Code of Conduct and Ethics and Business Practices Document, and are also disclosed in corporate publications such as our Modern Slavery Statement and our Human Rights Policy Statement.\nAs an international airline group, we have a diverse global footprint. We recognise the importance of undertaking effective human rights due diligence, including for our operations, business partners and suppliers in higher-risk environments.", "chunk_word_count": 543, "section_path": "Contents > OUR APPROACH", "document_id": "Qantas 2023 Sustainability Report", "page": 60, "page_start": 60, "page_end": 60 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 53, "chunk_text": "# Contents\n## MODERN SLAVERY STATEMENT\nIn December 2022, we published our third Modern Slavery Statement under the Commonwealth Modern Slavery Act 2018, our seventh in line with the requirements of the UK’s Modern Slavery Act 2015. The Statement sets out our approach to modern slavery risk management in our operations and value chains, including the actions taken by the Group to mitigate and prevent potential violations of forms of modern slavery. It provides examples, in the form of case studies, demonstrating our engagement with suppliers, to address issues of potential concern and advance respect for human rights in line with international standards and our expectations.\n### Five key focus areas\nWe continue to enhance the level of disclosure in our annual Statement, reflective of the maturation and continuous improvement of our policies and processes supporting the effective management of modern slavery risks in our operations and value chains. Our improvement is evidenced through the various independent benchmarking reviews undertaken of the quality of disclosures in the Modern Slavery Statements by reporting entities.\nOur governance framework underpins our response to modern slavery and broader human rights risks, including providing a clear structure for accountability. Sustainability, which includes respect for human rights, is now one of the four key foundations for the Qantas Group, and one of the seven focus areas of our Corporate Strategy. Our internal audit and risk function, and business assurance processes, help track our performance with respect to our Supply Chain Assurance program, with oversight from the Qantas Board Audit Committee.\nIn October 2022, Monash University’s Modern Slavery Research program assessed the Statements submitted by ASX100 companies in FY21. The Qantas Group’s Statement received an ‘A’ rating, improving on our rating from the previous year.1 Additionally, in June 2023, the Australian Council of Superannuation Investors (ACSI)2 released the outcomes of its review of the FY22 Modern Slavery Statements submitted by reporting entities in the ASX200. Qantas scored in the top quartile.\nFurther information relating to the risk management framework can be found in the Our Governance section of the Group’s Corporate website.\n## KEY ACTIONS IN FY23\nWe continue to advance the respect for and safeguard of human rights and strengthen our processes for managing modern slavery risks in our operations and supply chain. While our annual Statement details our modern slavery response and actions to address modern slavery risk, some key actions undertaken in FY23 included:\n## MEASURING OUR PERFORMANCE", "chunk_word_count": 404, "section_path": "Contents > MODERN SLAVERY STATEMENT", "document_id": "Qantas 2023 Sustainability Report", "page": 60, "page_start": 60, "page_end": 61 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 54, "chunk_text": "# Contents\n## OUR FOCUS IN FY24 WILL INCLUDE:\nWe are committed to establishing a credible framework for measuring our company’s broader human rights performance, but recognise this can be complex and context-specific. In some cases too, stakeholders may have differing views about appropriate approaches, including on how to implement core external standards and measure that implementation. We also appreciate that high-level key performance indicators and metrics may not always provide a meaningful representation of companies’ effectiveness. In light of these challenges, we are continuing to work to refine our approach to assessing effectiveness, including through engagement and collaboration with key industry peers and external human rights experts.\nContinuing to develop the actions that underpin each focus area (as detailed on the previous page) to support our management of these issues Maintaining our focus on transparently disclosing the Group’s potential modern slavery risks in our global operations and value chains, and continuing to look for ways to further improve.\nFinalising our refreshed human rights salience assessment \nto help us continue to prioritise our response to the \npotential impacts on human rights across our operations \nand value chain \nWorking with human rights specialists to undertake a deep \ndive review of potential adverse human rights impacts \ninvolved in both the conventional and sustainable fuel \nvalue chain and applying the UNGPs to understand how we \nmay be involved through our sourcing activity \nDeveloping a modern slavery response plan to guide \nour response to a potential modern slavery case \nwhere identified \nDesigned and commenced a pilot of an alternate approach \nfor anti-slavery and human trafficking due diligence with a \npotential new airline partner Strengthening labour and human rights-related obligations and our expectations of suppliers in our Supplier \nRequirements and Supplier Code of Conduct \nEnhancing our third-party modern slavery due diligence questionnaire to include additional modern slavery \nindicators, as well as translating the questionnaire together with our Supplier Code of Conduct to a key alternate \nlanguage to ensure understanding \nEstablishing a cross-functional project team to assess risks (including modern slavery) of our existing unassessed supplier base \nSite visits of tier two suppliers located in Thailand \nand direct suppliers in Europe to verify conformance \nand support continuous learning on labour rights \nand standards.\nMore information on our actions can be found in our Modern Slavery Statement.\nFor the Group, being effective in managing modern slavery risks means that we can affect positive change through our processes and actions, and demonstrate and communicate how we do so. Our Statement describes in more detail the actions we take to identify and address modern slavery risk and how we measure the effectiveness of those actions.\n### Connecting customers and communities\nWe are committed to connecting customers and creating value to strengthen the communities in which we operate.\nThis section of the Report highlights how we are taking actions in line with the UN SDGs through our focus on supporting communities and economic development. More information can be found in the Report appendix.\n### Connecting the regions", "chunk_word_count": 497, "section_path": "Contents > OUR FOCUS IN FY24 WILL INCLUDE:", "document_id": "Qantas 2023 Sustainability Report", "page": 61, "page_start": 61, "page_end": 62 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 55, "chunk_text": "# Contents\n## OUR APPROACH\n[IMAGE CAPTION] Photo: Good360 Australia will use its Regional Grant to source, refurbish and redistribute laptops to residents of the Northern Rivers in New South Wales who were impacted by the 2022 floods.\nFrom assisting in times of natural disaster to providing an international platform to showcase the best our country has to offer, our aim is to positively contribute to communities across Australia.\n## SUPPORTING REGIONAL CUSTOMERS AND COMMUNITY\n### Qantas Residents Fares1\nQantas Residents Fares is a regional program that supports local residents living in selected regional postcodes in Queensland, Western Australia and the Northern Territory by offering them discounted fares. Eligible residents can access year-round discounts, from 20 per cent off the Qantascontrolled component of all-inclusive return fares, from regional airports to their eligible city/cities. Qantas invested more than $\\$ 35$ million in the program in FY23, with over 65,000 return trips taken.\nIn December 2022, further discounts were announced for Alice Springs residents for return flights to Adelaide. It is the first interstate route included in the program.\n### Qantas Regional Grants program\nIn December 2022, we re-launched the Qantas Regional Grants program (originally launched in 2019 but paused during the pandemic) to support not-for-profit groups and projects directly benefitting regional Australia.\nThe Qantas Regional Grants program provides $\\$ 10$ million in grants over five years $- \\$ 2$ million each year. The grants include a combination of flights, cash and marketing support.\nround of applications. These organisations are supporting employment and economic opportunities, boosting community engagement, enhancing access to key services, and improving health and environmental outcomes.\nThe judging panel was chaired by the QantasLink Chief Operating Officer and included two independent community panellists and two QantasLink pilots.\nWe received 1,600 applications across every state and territory and, as announced in July 2023, thirty-two community groups from around Australia will receive grants for this\nA full list of recipients can be found on our website at Regional Grant Recipients | Qantas.\n## SUPPORTING REGIONAL COMMUNITIES AND CUSTOMERS IN TIMES OF NEED\nIn response to the devastating floods that impacted parts of regional Australia in October 2022, QantasLink increased support to regional communities by capping fares to destinations across New South Wales (including Moree, Dubbo and Ballina) and Victoria (including Mildura and Bendigo).\nWe also provided access to Qantas lounges for State Emergency Service volunteers travelling to flood-affected areas.\nIn addition to supporting Australia, we also provide international relief. Following the devastating earthquakes that hit southern Turkiye and northern Syria in February 2023, Qantas and Jetstar flew 12 pallets of humanitarian supplies to Singapore to support recovery efforts. Our aircraft carried blankets, quilts, sleeping bags, tents, air mattresses and pillows out of Melbourne, connecting with Turkish Airlines who took the supplies to their destination.\n## OUR FOCUS IN FY24 WILL INCLUDE:\nContinuing to amplify the Qantas Regional Grants program, honouring our commitment to invest $\\$ 10$ million across five years into regional Australia Promoting regional domestic tourism to \nsupport both regional tourism businesses and regional towns \nRaising awareness of the regional residents \nfares program.\n### Supporting communities", "chunk_word_count": 516, "section_path": "Contents > OUR APPROACH", "document_id": "Qantas 2023 Sustainability Report", "page": 63, "page_start": 63, "page_end": 64 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 56, "chunk_text": "# Contents\n## OUR APPROACH\n### CASE STUDY — StarKids partnership between World Vision and Jetstar\nAs the national carrier, Qantas plays a key role in supporting Australian communities and having a voice on social issues. We partner with organisations that share similar values and champion the spirit of Australia.\nMoney raised through StarKids supports World Vision’s Unlock Literacy program which has been implemented in remote communities in the Northern Territory and Western Australia.\nFollowing a strategic review of our partnerships in 2021, our focus is on those that support:\nInclusion and diversity priorities, including our First Nations Engagement Strategy Regional Australia Environmental and social sustainability Showcasing the best of Australian culture — Building national pride through sport.\nUnlock Literacy supports and encourages parents and community members to create a culture of reading in school, at home and in the community.\nWorld Vision is working with the Warlpiri Youth Development Aboriginal Corporation (WYDAC), which has championed Warlpiri youth in Central Australia since 1993. The partnership continues to grow, building on WYDAC’s strong understanding of Warlpiri communities and people.", "chunk_word_count": 178, "section_path": "Contents > OUR APPROACH", "document_id": "Qantas 2023 Sustainability Report", "page": 65, "page_start": 65, "page_end": 65 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 57, "chunk_text": "# Contents\n## WORKING WITH OUR PARTNERS\n### Community\nSince 1991, Qantas customers have raised more than $\\$ 37.7$ million for UNICEF through the Change for Good initiative, with funds supporting the world's most disadvantaged children in over 190 countries. Most funds raised for the program are from inflight passengers travelling to Australia from international destinations.\nBetween 2007 and 2023, the StarKids partnership between World Vision and Jetstar has raised more than $\\$ 12$ million for children and families. StarKids raises funds through customer donations while booking flights on our Jetstar website, collections on board our flights and public donations via the StarKids page on our website. We also raise funds via Workplace Giving and fundraising activities that we conduct at Jetstar Head Office and across our ports in Australia, Singapore, Denpasar and Bangkok.\nIn addition to being the official airline of Sydney WorldPride, we also supported regional $\\mathsf { L B G T Q } | +$ communities by providing an opportunity for people in each state and territory to attend the 2023 Sydney WorldPride Festival and Mardi Gras Parade. Applicants were asked to demonstrate how they foster $\\mathsf { L G B T Q } | +$ inclusion in their communities, with one winner and their guest from each state and territory receiving flights, accommodation and event entry.\nQantas Loyalty Green Tier provides a platform for Qantas’ customers to support organisations such as the Great Barrier Reef Foundation, OzHarvest, Kimberley Land Council and UNICEF Australia. Since the program's launch in March 2022, these partners have all seen an increase in support.\nIn May 2023, Jetstar donated 100 iPads formerly used by Engineering to the Merriang Special Developmental School (SDS) in Lalor, Victoria. The iPads are used as part of a program to facilitate communication among students who are predominantly non-verbal. This donation takes our tally up to more than 300 iPads donated to Merriang SDS from JetStar Customer Experience and Engineering.\nQantas also commenced a partnership with Pride Cup in early 2023. Pride Cup is a not-for-profit organisation that consults with communities and local sporting clubs to run pride games. It aims to use the power and reach of sport to support inclusion of all people.\nStarKids is currently supporting humanitarian relief and community-based development projects in Australia (with a focus on First Nations children and youth) as well as Cambodia, Thailand, Myanmar, Indonesia and Vietnam.", "chunk_word_count": 398, "section_path": "Contents > WORKING WITH OUR PARTNERS", "document_id": "Qantas 2023 Sustainability Report", "page": 65, "page_start": 65, "page_end": 65 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 58, "chunk_text": "# Contents\n## EMPLOYEE VOLUNTEERING\nQF1300, the passengers took in the sights of Sydney Harbour, Newcastle and Wollongong. Qantas Pathfinders President and Captain Craig Lambert piloted the special flight.\nNovember each year marks Movember, raising money for men’s health. Employees across the Group took part in raising money to support men’s health projects in mental health, suicide prevention, prostate cancer and testicular cancer.\nIn FY23, our employees again supported a wide range of causes, including our workplace giving program.\nAt the end of 2022, Qantas restarted our Jawun secondee program with three Qantas employees spending six weeks working in and supporting First Nations leaders, organisations and communities to achieve their own development goals. This in turn leads to lasting, material and measurable improvements in the lives of the Indigenous people in those communities.\nMore than 50 years ago, Qantas employees established Pathfinders, a volunteer fundraising committee made up of past and present Qantas crew members. Since formed, and through fundraising events and support from sponsors and donations, it has raised more than eight million dollars. Qantas is proud to continue to support Pathfinders in its fundraising efforts for NextSense (formerly the Royal Institute for Deaf and Blind Children).\nIn April 2023, some Jetstar Bali crew visited a local foundation for children with vision impairments. The visit was organised by one of our crew members who regularly visits the school in her spare time to read books to the children and donate items, including food and toys.\nJetstar employees also took part in a clean up of Bali beaches in April 2023.\nThe QantasLink Airports team raised money to support the Black Dog Institute’s mental health research by walking, running, riding or swimming.\nQantas staff have also volunteered their time to assist Paralympics Australia in its preparation for the Paris 2024 Games with staff supporting the team, including meeting and greeting athletes, and assisting with outfitting.\nThe Joey Joy Flight has been operating since 1975 and returned in November 2022. The flight is supported by Qantas Pathfinders and Turramurra Rotary and offers children with a disability or from a disadvantaged background a flight onboard one of our A330 aircraft. Children and their carers were welcomed to Sydney Airport by face painters, SpongeBob SquarePants and Matilda the Kangaroo. Once onboard\nPerth Cabin Crew supported the annual Perth Telethon by answering phones and taking donations in its call centre. Perth-based 737 Pilot, Captain Marnie Shields talked live on air about Qantas’ partnership with the Telethon.", "chunk_word_count": 412, "section_path": "Contents > EMPLOYEE VOLUNTEERING", "document_id": "Qantas 2023 Sustainability Report", "page": 66, "page_start": 66, "page_end": 66 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 59, "chunk_text": "# Contents\n## EMPLOYEE VOLUNTEERING\n### CASE STUDY — Jawun Secondment Program\nBut the reward is contributing to something meaningful, experiencing life in what is likely a vastly different environment to your regular home, and forming relationships with people you’ll never forget.”\nQantas employees Tracey Hobl, People Safety, (photo right) and Glen Driver, Sales and Development, took part in the program from October to December 2022. They were based in North-East Arnhem Land for six weeks, with 11 other secondees from different companies around Australia.\nTracey said “My Jawun secondment was an incredibly impactful and transformative experience. I found the immersion in culture and perspective to be life-changing. Often, experiences like these can broaden our horizons, challenge our preconceptions, and foster a deep sense of personal growth. Participating in the program I feel that I’ve gained more than I was able to contribute. This realisation speaks to the profound impact of cross-cultural exchange and the value of learning from and connecting with others who have different lived experiences.”\nGlen said “Each day was an amazing opportunity to meet new people, learn about a different culture and see firsthand the success of projects led by Yolngu people in the selfdetermination of their own community. It was an inspiring six weeks and I left with so many new perspectives on life. Some days you can feel like you’re really helping out; the next day the challenges of your work will seem insurmountable.\n### National sporting and arts partnerships\nOur sports and arts sponsorships are focused on supporting elite Australian talent, helping our national teams excel in global competitions and fostering tourism opportunities.\n### Football Australia\n### The Arts\nIn FY23 we announced the renewal of our long-standing partnership with Football Australia which sees us continue as the official airline of Football Australia’s two senior national teams, the Subway Socceroos and the CommBank Matildas for the next three years. The partnership helps raise the profile of Australian football locally and abroad, and champions gender on an even playing field. Qantas is proud to be supporting and flying the Matildas as they take on the world in 2023 engaging Qantas employees, customers and fans throughout the country to cheer on the national team and support women’s sport.\nQantas is proud to be the official airline and major partner of the National Gallery of Australia and a major partner of the National Gallery of Victoria. Qantas is also a proud supporter of the Museum of Old and New Art, in Hobart, Tasmania. Qantas is the official Aboriginal and Torres Strait Islander exhibition and program partner of the Museum of Contemporary Art.\n### Australian Olympic Committee\nFor more than 60 years, Qantas has proudly supported the Australian Olympic team, having flown our athletes to and from every Olympic Games since 1948. The Australian Olympic Committee and Qantas are working to implement programs to offset carbon emissions from the travel requirements of the team in the lead up to Paris 2024.\n### Opera Australia\nOpera Australia performs operas, musicals and concerts across Australia. As the official airline and hero partner of Opera Australia, Qantas is proud to help deliver an annual schools’ and Auslan program, supporting many of these performances to be delivered virtually during the COVID-19 pandemic.", "chunk_word_count": 541, "section_path": "Contents > EMPLOYEE VOLUNTEERING > CASE STUDY — Jawun Secondment Program", "document_id": "Qantas 2023 Sustainability Report", "page": 66, "page_start": 66, "page_end": 67 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 60, "chunk_text": "# Contents\n## OUR FOCUS IN FY24 WILL INCLUDE:\nCricket Australia\nRefreshing the Qantas Group Workplace Giving program and employee community grants program \nRelaunching the UNICEF Change for Good and staff ambassador program \nElevating national sporting organisations that further societal causes.\nOur partnership with Cricket Australia has seen us carry the men’s and women’s Australian cricket teams around Australia and the globe since 2011.\nThe Australian Ballet\nThe Australian Ballet is one of Australia’s flagship arts companies. As the official airline and lead partner of The Australian Ballet, our support enables dancers, crew, and artists to travel domestically and internationally.\n### Aboriginal and Torres Strait Islander partnerships\n## OUR APPROACH\nFran also works as a Customer Service Agent at Sydney International Terminal.\nto show our ongoing commitment to reconciliation. It was an expansion of previous RAPs, in that it includes actions for all parts of the Qantas Group, including Jetstar. We are currently developing our next RAP. We had intended to launch this in FY23 but now aim to release it in FY24.\nDuring FY23, we released an updated First Nations Strategy for the Qantas Group. Its vision is to create a shared national identity that celebrates the knowledge and cultures of First Nations people.\n### Reconciliation Action Plan\nThrough our partnership with Reconciliation Australia, we seek to honour knowledge and celebrate Aboriginal and Torres Strait Islander culture and develop programs that work towards Closing the Gap.", "chunk_word_count": 237, "section_path": "Contents > OUR FOCUS IN FY24 WILL INCLUDE:", "document_id": "Qantas 2023 Sustainability Report", "page": 67, "page_start": 67, "page_end": 68 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 61, "chunk_text": "# Contents\n## SUSTAINABLE CAREERS\nThis vision will be accomplished through the social, economic and cultural inclusion of First Nations people across the Qantas Group, and realised through four key focus areas:\nSustainable, meaningful careers are critical to our vision for reconciliation. More information can be found on page 54 of this Report.\nWe launched our first Reconciliation Action Plan (RAP) in 2007. During the COVID-19 pandemic, we released an interim RAP\n— Providing meaningful careers \n— Diversifying our supplier base and spend Amplifying First Nations experiences and culture through our customer journey \n— Strengthening our reconciliation journey through community engagements.\nWe engaged the services of specialist First Nations consultancy, 15 Times Better, to complete a comprehensive review of the Qantas Group’s First Nations engagement activity. This resulted in the development of an overarching Qantas Group First Nations Engagement Strategy that will guide our First Nations-focused activities across Qantas, Jetstar, Qantas Freight and Qantas Loyalty businesses.\nDuring FY23, we established the Qantas Internal First Nations Advisory Council which is chaired by the CEO of Jetstar, Stephanie Tully. It is made up of representatives from across the Group with representation from Qantas’ First Nations employees.\nWe also relaunched our First Nations employee network, Daramu, in FY23. Its vision is to create a safe community for First Nations people and allies to grow, connect, yarn, learn and celebrate First Nations culture across the Qantas Group.\nDuring the year, employee Fran Grant was appointed Chair of the Daramu Committee. Fran is a Yuin woman and her Aboriginal family comes from the New South Wales South Coast. She is the child of a Stolen Child, which carries great responsibility amongst her family and community.\nPhoto: In July 2023, the Minister for Indigenous Australians, The Hon Linda Burney MP, (right) attended a special NAIDOC Week event at Qantas in Sydney to discuss reconciliation and the Voice to Parliament. Fran Grant, Chair of our First Nations employee network, Daramu, led Qantas employees in the discussion with the Minister.", "chunk_word_count": 332, "section_path": "Contents > SUSTAINABLE CAREERS", "document_id": "Qantas 2023 Sustainability Report", "page": 68, "page_start": 68, "page_end": 68 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 62, "chunk_text": "# Contents\n## SUPPLIER DIVERSITY\nA key part of our vision for reconciliation is the economic inclusion of Aboriginal and Torres Strait Islander peoples. We recognise the mutual benefit of doing business with Aboriginal and Torres Strait Islander suppliers and our objective is to support First Nations’ economic inclusion by increasing the diversity of our supplier base.\nWe have also introduced maps of Indigenous Australia from the Australian Institute of Aboriginal and Torres Strait Islander Studies and curated music and books from First Nations artists and authors in our lounges.\nTo improve cash flow and business outcomes for Aboriginal and Torres Strait Islander-owned businesses, during FY23 we implemented a reduction in payment times for Aboriginal and Torres Strait Islander suppliers, which is also available to Australia-based small businesses who meet eligibility requirements.\nDuring FY23, Qantas and Tourism Western Australia teamed up with Western Australian Wongi artist Kevin Wilson to feature his artwork on limited-edition Qantas amenity kits for business class customers. The partnership was part of Western Australia’s new tourism brand Walking On A Dream, with the artwork showcasing iconic destinations in the State including Ningaloo Reef, the Margaret River Region and the Kimberley.\nQantas is a founding member of Supply Nation, a not-for-profit organisation connecting Australian companies and government with Aboriginal and Torres Strait Islander businesses. We continue to be a gold sponsor of the annual Supply Nation Connect tradeshow and gala dinner.\nIn FY23, we announced a partnership with Indigenous water company Yaru Water Australia to supply water to first and business class customers, and in our Australian lounges. Yaru Water is sourced and bottled from Mount Warning-Wollumbin in Bundjalung country in Northern New South Wales. Our partnership has enabled the Yaru Water team to expand its operations and its support for the Yaru Foundation which aims to create better health outcomes for First Nations communities. In August 2023, Qantas won Supply Nation’s Supplier Diversity Partner of the Year award for our partnership with Yaru Water.\n## CUSTOMER EXPERIENCE\nAboriginal and Torres Strait Islander cultures are integral to the spirit of Australia and we seek to amplify this throughout our customers’ journeys. As the national carrier, we are uniquely positioned to connect people to the world’s oldest living cultures through our domestic and international networks.\nWe include Acknowledgement of Country across all Qantas and Jetstar services, with a specific acknowledgement for incoming Qantas international flights, Qantas domestic flights to certain ports and some Jetstar flights. The Acknowledgement of Country is aimed at raising awareness among our employees and customers of the history of our country and making this recognition a part of our everyday language.", "chunk_word_count": 437, "section_path": "Contents > SUPPLIER DIVERSITY", "document_id": "Qantas 2023 Sustainability Report", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 63, "chunk_text": "# Contents\n## COMMUNITY ENGAGEMENT\nWe are focused on engaging Australian communities by:\nLeveraging our voice to influence public understanding of issues that impact First Nations people \nPromoting stories of reconciliation in action to increase public and employee engagement \nStrengthening partnerships that directly contribute \nto Closing the Gap, such as partnerships that provide education pathways and employment opportunities \nfor First Nations people or support the growth of First Nations businesses \nExpanding our support of the Aboriginal and Torres Strait Islander tourism industry \nDeveloping and implementing a new Qantas First Nations governance model, including engaging with our First Nations employees via our Daramu employee network and establishing an External Advisory Council \nCollaborating with other organisations on their \nreconciliation journey.\n### The Voice\nIn 2019, Qantas joined other organisations to publicly support the Uluru Statement from the Heart which calls for Voice, Treaty and Truth. We also took action by responding to the Interim Voice Co-design Process Report, in support of the many Aboriginal and Torres Strait Islander communities and leaders who have worked for reconciliation.\nAs the National carrier, we have a long history of championing reconciliation and have committed our support for the Yes campaigns for the Voice to Parliament. On 2 July 2023, on the first day of NAIDOC Week, we reaffirmed our support for a Voice to Parliament and a Yes vote in the upcoming referendum, through a joint statement with Reconciliation Australia and more than 70 organisations and businesses.\nIn August 2023, we unveiled special livery, featuring the Yes23 campaign logo, on three Qantas Group aircraft: a Qantas Boeing 737, a QantasLink Dash 8 Turboprop and a Jetstar Airbus A320.\n### NAIDOC Week and National Reconciliation Week\nGarma returned in August 2022 after two years of cancellations due to the COVID-19 pandemic, and a group of Qantas frontline and corporate employees attended to listen, learn and experience Yolngu culture.\nQantas continues to commit to multi-channel campaigns for both NAIDOC Week and National Reconciliation Week to promote positive relationships between Aboriginal and Torres Strait Islander peoples and non-First Nations people.\nThe Festival was also attended by Prime Minister of Australia, Anthony Albanese, who reconfirmed the Australian Government’s commitment to a referendum which will determine whether the Australian Constitution will include an Indigenous Voice to Parliament, in line with the Uluru Statement from the Heart.\nThe theme of 2022 NAIDOC Week (July 2022) was Get Up! Stand Up! Show Up! We supported the Week with messages to our customers on our marketing channels and special events for our employees including a ceremony from Turrbal woman and internationally renowned opera singer, Songwoman Maroochy. Songwoman Maroochy was joined by Shannon Ruska, a proud Yuggera Toorabel and Quandamooka man from South East Queensland, who gave a dance and didgeridoo performance.\nAdam Goodes read his children’s books to children of Qantas employees, we welcomed the Gamay Dancers to perform at our Mascot Campus in Sydney and showcased products from South Australian Indigenous supplier, Edible Reconciliation, in our Sydney Qantas Club.\nDuring 2023 National Reconciliation Week (27 May to 3 June 2023), we held an information session with Bridget Calma, an Associate of the Indigenous Law Centre at the University of NSW. Bridget talked about the importance of The Uluru Statement from the Heart and answered questions in the lead-up to the Referendum.", "chunk_word_count": 549, "section_path": "Contents > COMMUNITY ENGAGEMENT", "document_id": "Qantas 2023 Sustainability Report", "page": 70, "page_start": 70, "page_end": 71 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 64, "chunk_text": "# Contents\n## OUR FOCUS IN FY24 WILL INCLUDE:\n### Sorry Day\nSupporting the Yes campaign and providing \nresources for Qantas Group employees to make an informed decision \nDeveloping the next Qantas Group RAP \nStrengthening the First Nations Governance \nStructure including the development of a First Nations External Advisory Council \nContinuing to roll out the Cultural Learning \nframework throughout the business including front-line employees.\nIn 2023, we marked National Sorry Day with a presentation from Daramu Chair, Fran Grant, in which she shared her family’s story. National Sorry Day remembers the First Nations people forcibly removed from their families and communities, now known as The Stolen Generations.\n### Garma Festival\nWe are proud to be long-term partners of the Garma Festival, an Indigenous event that celebrates the traditions of the Yolngu people of East Arnhem Land across culture, art and ceremony.\n### Non-financial metrics\nThe Qantas Group is committed to transparency of key performance indicators, including environmental and social metrics. Financial performance can be found in the FY23 Annual Report. \nKPMG provided Limited Assurance over selected sustainability metrics. The assurance statement can be found on page 75.\n## CUSTOMER\n## COMMUNITY", "chunk_word_count": 191, "section_path": "Contents > OUR FOCUS IN FY24 WILL INCLUDE:", "document_id": "Qantas 2023 Sustainability Report", "page": 71, "page_start": 71, "page_end": 73 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 65, "chunk_text": "# Contents\n## EMPLOYEES\n9. Total Recordable Injury Frequency Rate (TRIFR): The total number of injuries or illnesses during work hours (1 July to 30 June) with an accepted workers’ compensation claim for Australian-based personnel, or equivalent in other jurisdictions, per million hours worked. Journey and slip port injuries and illnesses from COVID-19 are excluded from this calculation. This metric includes embedded contractors who work exclusively for the Qantas Group and perform work that is considered core business. Scope: TRIFR for both domestic and international operations: Qantas (International, Domestic), Qantas Freight, Jetstar Australia and New Zealand, QantasLink, Network Aviation, National Jet Systems, and Non-Flying Businesses (all corporate areas including Loyalty). The FY22 data has been restated to take into account matured data. The FY23 and FY22 restatement was conducted on 18 July 2023.\n10. Lost Work Case Frequency Rate (LWCFR): Described as the total number of injuries or illnesses during work hours (1 July to 30 June) with an accepted workers’ compensation claim for Australian-based personnel, or equivalent in other jurisdictions, which resulted in total incapacity, per million hours worked. Total incapacity is defined as any injury or illness that results in an injured worker being unfit for work. Journey and slip port injuries and illnesses from COVID-19 are excluded from this calculation. This metric includes embedded contractors (as described above) and employees of majority-owned entities of the Qantas Group. Scope: LWCFR for both domestic and international operations: Qantas (International, Domestic), Qantas Freight, Jetstar Australia and New Zealand, QantasLink, Network Aviation, National Jet Systems, and Non-Flying Businesses (all corporate areas including Loyalty). The FY22 data has been restated to take into account matured data. The FY23 and FY22 restatement was conducte on 18 July 2023.\nmployees of wholly-owned entities of the Qantas Group, as well as Jetstar Asia Airways Pte Ltd, and majority-owned entities Holiday Tours and Travel Ltd, Taylor Fry Holdings Pty Ltd and Trip A Deal Pty Ltd, by employment type, full-time time equivalent figure excludes employees on leave without pay, and employees terminated up to and including 30 June 2023.\n12. Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership and other indicators of diversity is limited to the total workforce of wholly-owned entities of Qantas Airways Limited broken down by gender, age group and Aboriginal and Torres Strait Islander employees as well as women in the following positions: Non-Executive Directors and Senior Management. Gender diversity indicators are consistent with diversity policy and targets, measured as at 30 June. Full-time equivalent figure excludes employees on leave without pay, and employees terminated up to and including 30 June 2023. Aboriginal and Torres Strait Islander employees includes employees on LWOP, but excludes employees terminated up to and including 30 June 2023. Percentage of women in senior positions includes employees on LWOP, but excludes employees terminated up to and including 30 June 2023. The N/A is due to there being no intake of any graduates during FY21 and FY22.\n13. Total Scope 1 and Scope 2 greenhouse gas emissions are measured in tonnes for the period 1 July to 30 June. Refer to relevant footnotes for Scope 1 and Scope 2.", "chunk_word_count": 531, "section_path": "Contents > EMPLOYEES", "document_id": "Qantas 2023 Sustainability Report", "page": 73, "page_start": 73, "page_end": 74 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 66, "chunk_text": "# Contents\n## EMPLOYEES\n14. Total direct greenhouse gas emissions (Scope 1) measured in tonnes for the period 1 July to 30 June. Scope 1 emissions include aviation fuel and other fuels and gases from both domestic and international operations. For domestic emissions, the Qantas Group applies the National Greenhouse and Energy Reporting (NGER) Measurement Determination factors and methodology. For international emissions, the Qantas Group applies International CORSIA factors and methodology. The Qantas Group is a CORSIA participant and aligns international emissions disclosure with the CORSIA regulatory framework. All emissions are reported as $\\complement \\complement _ { 2 }$ equivalent $[ \\mathbb { C } 0 _ { 2 }$ -e). $\\mathrm { C H } _ { 4 }$ and $N _ { 2 } 0$ have been applied to all emissions per their NGER Measurement Determination factors. Scope: All activities under operational control of the Qantas Group. FY23 data excludes SAF derived CO2-e emission abatement.\nect greenhouse gas emissions (Scope 2) measured in tonnes for the period 1 July to 30 June. Scope 2 emissions include indirect emissions from the consumption of purchased electricity. The Qantas Group applies the National Greenhouse and porting (Measurement) Determination factors for the calculation of $\\complement \\mathsf { 0 } _ { 2 }$ -e, except for Tri-Generation associated emissions where the Qantas Group applies a facility-specific emission factor. Emission factors for the consumption of purchased from the grid are updated annually to reflect changes in energy mix. Scope: All activities under operational control of the Qantas Group.\n16. Total indirect greenhouse gas emissions resulting from value chain activities (Scope 3) measured in tonnes for the period 1 July to 30 June. Scope 3 emissions inclusions are informed by the GHG Protocol Corporate Value Chain (Scope 3) Accounting & Reporting Standard and Australian Climate Active Carbon Neutral Standard. Upstream fuel-related activities (e.g. extraction and refining) and food and beverage-related purchased goods make up the majority of total scope 3 emissions. The Qantas Group reports on Scope 3 indirect emissions of material relevance. The Qantas Group also offsets all employee and contractor business travel under our Fly Carbon Neutral program, therefore all business travel emissions are excluded from our emissions profile to prevent double counting. Where possible, the Qantas Group is informed by the Australian Government’s Climate Active Carbon Neutral Standard for Products and Services to determine our Scope 3 emissions using National Greenhouse Accounts (NGA) emissions factors for the calculation of $\\complement \\complement _ { 2 }$ -e. The increase in Scope 3 emissions for FY22 is a result of an increase in fuel consumption and a change in the Scope 3 emissions factor relating to transport fuels. Scope 3 emissions have been restated for FY20 to FY22 to include emissions from jet fuel attributed to the Group’s Freight operations.\n### Independent Limited Assurance Report to the Directors of Qantas Airways Limited\n### Criteria Used as the Basis of Reporting", "chunk_word_count": 487, "section_path": "Contents > EMPLOYEES > Independent Limited Assurance Report to the Directors of Qantas Airways Limited", "document_id": "Qantas 2023 Sustainability Report", "page": 74, "page_start": 74, "page_end": 74 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 67, "chunk_text": "# Contents\n## EMPLOYEES\n### Conclusion\nBased on the evidence we obtained from the procedures performed, we are not aware of any material misstatements in the Selected Sustainability Information, which has been prepared by Qantas Airways Limited in accordance with the Criteria for the year ended 30 June 2023.\nThe criteria used in relation to the Selected Sustainability Information are Qantas’ management measurement methodologies, which reference industry standards including the Global Reporting Initiative (GRI) Standards and the National Greenhouse and Energy Reporting Act 2007. A summary is provided in the footnotes in the 2023 Sustainability Report (the Criteria).\n### Information subject to assurance\nWe reviewed the following, as presented in the Qantas Airways Ltd (Qantas) 2023 Sustainability Report (the Sustainability Report), for the year ended 30 June 2023 (collectively, the Selected Sustainability Information):\nMateriality assessment, set out in ‘About this Report’, including the application and presentation of the materiality process and the material topic selection; and — The following sustainability metrics, which are on a Group basis unless otherwise indicated:\n### Basis for Conclusion\nWe conducted our work in accordance with Australian Standard on Assurance Engagements ASAE 3000 and ASAE 3410 Assurance Engagements on Greenhouse Gas Statements (the Standards). In accordance with the Standards, we have:\n## SUSTAINABILITY\nused our professional judgement to plan and perform the engagement to obtain limited assurance that we are not aware of any material misstatements in the Selected Sustainability Information, whether due to fraud or error; considered relevant internal controls when designing our assurance procedures, however we do not express a conclusion on their effectiveness; and ensured that the engagement team possess the appropriate knowledge, skills and professional competencies.\n### Summary of Procedures Performed\nOur limited assurance conclusion is based on the evidence obtained from performing the following procedures:\ninterviews with senior management and relevant employees; reviewing the materiality assessment methodology and agreeing to material topics disclosed;\nunderstanding the key systems, processes, and controls for collecting, managing, and reporting of the Selected Sustainability Information; \nreviews of relevant documentation including Qantas’ policies and procedures; \nwalkthroughs of key data sets and detailed \nanalytical procedures; \nagreeing the Selected Sustainability Information to underlying sources; \nassessing the suitability of the Criteria, including key assumptions; and \nreviewed the 2023 Sustainability Report in its entirety to ensure it is consistent with our assurance work.\n### Our Responsibility\nOur responsibility is to perform a limited assurance engagement in relation to the Selected Sustainability Information for the year ended 30 June 2023, and to issue an assurance report that includes our conclusion.\n### Our Independence and Quality Management\nWe have complied with our independence and other relevant ethical requirements of the Code of Ethics for Professional Accountants (including Independence Standards) issued by the Australian Professional and Ethical Standards Board, and complied with the applicable requirements of Australian Standard on Quality Management 1 to design, implement and operate a system of quality management.", "chunk_word_count": 479, "section_path": "Contents > EMPLOYEES > Conclusion", "document_id": "Qantas 2023 Sustainability Report", "page": 76, "page_start": 76, "page_end": 77 }, { "report": "Qantas 2023 Sustainability Report .pdf", "chunk_idx": 68, "chunk_text": "# Contents\n## SUSTAINABILITY\n### Use of this Assurance Report\nThis report has been prepared for the Directors of Qantas for the purpose of providing an assurance conclusion on the Selected Sustainability Information and may not be suitable for another purpose. We disclaim any assumption of responsibility for any reliance on this report, to any person other than the Directors of Qantas, or for any other purpose than that for which it was prepared.\n### How the Standard Defines Limited Assurance and Material Misstatement\nThe procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than, for a reasonable assurance engagement. Consequently the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed.\nKPMG 20 September 2023\n### Management’s responsibility\nManagement are responsible for:\n— determining that the criteria is appropriate to meet their needs; preparing and presenting the Selected Sustainability Information in accordance with the criteria; and establishing internal controls that enable the preparation and presentation of the Selected Sustainability Information that is free from material misstatement, whether due to fraud or error.\nMisstatements, including omissions, are considered material if, individually or in the aggregate, they could reasonably be expected to influence relevant decisions of the Directors of Qantas.\n### Inherent Limitations\nThere are inherent limitations in performing assurance — for example, assurance engagements are based on selective testing of the information being examined — and because of this, it is possible that fraud, error, or non-compliance may occur and not be detected. An assurance engagement is not designed to detect all misstatements, as an assurance engagement is not performed continuously throughout the period that is the subject of the engagement and the procedures performed on a test basis. The conclusion expressed in this report has been formed on the above basis. Additionally, non-financial data may be subject to more inherent limitations than financial data, given both its nature and the methods used for determining, calculating, and sampling or estimating such data. We specifically note that Qantas has used estimates or extrapolated underlying information to calculate certain amounts included within the Selected Sustainability Information.", "chunk_word_count": 370, "section_path": "Contents > SUSTAINABILITY > Use of this Assurance Report", "document_id": "Qantas 2023 Sustainability Report", "page": 77, "page_start": 77, "page_end": 77 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 0, "chunk_text": "# RioTinto\n## Climate Change Report 2023\n## Contents\n## Highlights\n## Scope 1 and 2 emissions: Decarbonising our operations\nOur operations are located on land and waters that have belonged to Indigenous Peoples for thousands of years. We respect their ongoing deep connection to, and their vast knowledge of, the land, water and environment. We pay respects to Elders, both past and present, and acknowledge the important role Indigenous Peoples play within our business and the communities where we live and work.\nThe climate change section of the Annual Report has been prepared in accordance with the Companies Act Climate-related Financial Disclosure requirements and UK listing rules, and provides details on climate-related governance, strategy and risk management, as well as metrics and targets. Climate change matters are also integrated into other parts of the Annual Report such as in the Key performance indicators (KPIs), Principal risks and uncertainties and Notes to the financial statements.\nProgress on our Climate Action Plan is detailed in this 2023 Climate Change Report.\nWe will continually enhance our climate reporting in response to standards and requirements set by the International Sustainability Standards Board and national regulators.\nSome data in the tables and charts presented in this report do not total precisely. This is due to rounding.\n## Our 2023 reporting suite\nOur Climate Change Report is part of our broader 2023 reporting suite. You can find this report and others, including our 2023 Annual Report, Sustainability Fact Book, 2023 Addendum - Scope 1, 2 and 3 Emissions Calculation Methodology and Industry Association Disclosure on our website. Some of our reports are published on our website later in the year, including our 2023 Taxes Paid Report, Country by-Country Report, Modern Slavery Statement, and our Voluntary Principles on Security and Human Rights report.\n## To view and download these documents\nvisit our website www.riotinto.com\n[IMAGE CAPTION] 2023 Annual Report\n[IMAGE CAPTION] 2023 Sustainability Fact Book\n## 2023 Climate Change Report\n## 2023 Addendum and 3 Emissions Calculation Methodology\n## 2023 Industry Association Disclosure\n## 2023 highlights\n### Scope 1 and 2 emissions: Decarbonising our operations\nScope 1 and 2 abatement projects committed 1.9Mt CO e 2022: 0.2Mt CO2e\nScope 1 and 2 emissions 32.6Mt CO e (20221 : 32.7Mt $C O _ { 2 } \\Theta$ ) Delivery of our abatement projects slightly exceeded emissions growth from higher production\nTargets: $1 5 \\%$ by 2025; $50 \\%$ by 2030 (relative to 2018 equity baseline); net zero by 2050\nBiofuels\nRenewable Energy 146MW\n### 100% biofuels operation\nWind and solar projects commenced construction at QIT Madagascar Minerals (QMM) and Richard’s Bay Minerals (RBM)\nBoron became the world’s first open cut mine to fully transition its heavy machinery from diesel to biofuels\n### Minerals Processing\n### Nature-based Solutions\nBlueSmelting™ demonstration plant commissioned and first tonne of pre-reduced ore produced\nContinued to develop pilot projects in Madagascar and progressed pre-feasibility and feasibility work in South Africa, Guinea, US and Argentina\n### Scope 3 emissions: Partnering across our value chains\n### Steel", "chunk_word_count": 502, "section_path": "RioTinto > 2023 highlights > Scope 1 and 2 emissions: Decarbonising our operations", "document_id": "Rio Tinto Climate Change Report 2023", "page": 1, "page_start": 1, "page_end": 3 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 1, "chunk_text": "# RioTinto\n## 2023 highlights\n### Aluminium\nCollaborated with Baowu on various low-carbon pathways. Made advances on our breakthrough BioIron™ technology and with BlueScope on Electric Smelting Furnace (ESF) technology\nDefined potential areas of collaboration to help decarbonise alumina refining with customers, representing $4 7 \\%$ of global bauxite sales\nCommitted to helping our customers and suppliers achieve their targets a decade earlier – reaching net zero by 2050\n### Shipping\n### Procurement\nLowered shipping emissions intensity by $3 7 \\% ^ { 2 }$ , added five liquified natural gas dual fuel vessels, and progressed end-state fuel option development (low-carbon ammonia and methanol)\nEnhanced our understanding of the sources and nature of our procurement-related emissions, including our highest emitting categories and suppliers, and potential abatement solutions\nCapital expenditure (abatement \nprojects and investments) \n\\$130m \n2022: \\$128m3 \nInvestment ramp-up expected later \nthis decade \nOperational expenditure \n\\$234m \n2022: $\\$ 138$ million \nIncludes biofuels and steel decarbonisation\nRECs and offsets (intangible assets) \\$61m 2022: \\$33m\n### Investing in decarbonisation\nAligning our capital and operational expenditure with our climate change targets and goals\nCapital expenditure guidance to 2030 \\$5-6bn Excluding capitalised costs of RECs and voluntary and compliance offsets\n$\\$ 1$ 1.5bn estimated capital investment \n2024-2026", "chunk_word_count": 202, "section_path": "RioTinto > 2023 highlights > Aluminium", "document_id": "Rio Tinto Climate Change Report 2023", "page": 3, "page_start": 3, "page_end": 3 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 2, "chunk_text": "# RioTinto\n## 2023 highlights\n### Chief Executive’s statement\nWe are continuing to execute the strategy we set in 2021, which will deliver long-term value by focusing on growth in materials for the low-carbon transition, decarbonising our operations and tackling emissions across our value chains. We are creating more definition around how we will achieve our targets, and seeing the early results gives me confidence that we have the right objectives, the right team and the right strategy.\n2023 was another year of extreme weather and broken temperature records. In December, I attended the UN climate summit (COP28) and came away concerned the world is not on track with the Paris Agreement goal to limit warming to $1 . 5 ^ { \\circ } \\mathrm { C }$ by 2100. National targets are not in line with the overall goal, and current climate policies in many countries are not yet aligned with their stated ambitions.\nbiofuels deployment. Using commercial partnership models we also aim to reduce longer-term cash flow risks, while moving away from fossil fuels will also reduce the associated price volatility.\nWe have a clear pipeline of global projects that moves us towards our $50 \\%$ target for 2030. To achieve this we need to accelerate both permitting and partnering while balancing the needs of our local stakeholders. Our target remains contingent on delivering deep decarbonisation of the electricity we use in Australia to operate our Aluminium business. We have taken important steps to provide renewable power to Rio Tinto’s Gladstone operations and have agreed to buy all electricity from the 1.1GW Upper Calliope Solar Farm.\nOur Scope 3 emissions were 578Mt $C O _ { 2 } \\Theta$ in 2023, of which $94 \\%$ come from our customers processing our products. When we engage with our customers and their governments on climate change, we see they have real commitments to reduce their emissions. However, as they stand today, we estimate that those emissions will reach net zero by around 2060. It is clear that our customers and suppliers see Rio Tinto as being able to help them make a real difference to decarbonise. But it is clear we must do more, so we are committing to help them find better ways to achieve their targets a decade earlier – reaching net zero by 2050.\nMany $1 . 5 ^ { \\circ } \\mathrm { C }$ scenarios now overshoot the long-term temperature goal and rely on significant deployment of carbon dioxide removals to get to net zero that may not be plausible. No single company or country can halt the course of climate change alone, so partnering to reduce emissions is vital. This is why we put the low-carbon transition at the heart of our business strategy and are working with governments, customers, communities and others to decarbonise our operations and value chains.", "chunk_word_count": 476, "section_path": "RioTinto > 2023 highlights > Chief Executive’s statement", "document_id": "Rio Tinto Climate Change Report 2023", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 3, "chunk_text": "# RioTinto\n## 2023 highlights\n### Chief Executive’s statement\nWe continue to believe electrification is the most efficient and cost-effective way to eliminate our diesel emissions, but we are not expecting large-scale deployment of electric fleets to our operations before 2030. In the interim, we are investigating and deploying transitional, drop-in solutions, including renewable diesel. In May, our Boron operation in California became the world’s first open pit mine to successfully transition heavy machinery from fossil diesel, resulting in an annual abatement of 45,000t $C O _ { 2 }$ . And in late 2023, we announced deployment of renewable diesel at nearly ten times this scale at our Kennecott Copper operation in Utah. Replacing diesel fuel with renewable diesel at this site in 2024 will reduce emissions at Kennecott by an estimated $80 \\%$ or up to 495,000t $C O _ { 2 }$ per year.\nWe are acting now by investing in the development of breakthrough technologies and upgrading our ores to be suitable for these. By holding ourselves accountable on real and measurable commitments in the near term, we can help to make sure technologies are developed early enough to accelerate the transition in the long term. This year we are setting new, specific near-term targets for steel, alumina refining, shipping and procurement decarbonisation across our value chains.\nOur Scope 1 and 2 emissions targets are a $1 5 \\%$ reduction by 2025 and $50 \\%$ by 2030 relative to 2018 levels. These targets are ambitious and aligned with $1 . 5 ^ { \\circ } \\mathrm { C }$ , the stretch goal of the Paris Agreement. They are particularly ambitious as, unlike our competitors, around $80 \\%$ of our emissions come from processing activities, which are typically hard to abate.\nIt is exciting to see some real momentum this year and we expect to have made financial commitments to abatement projects totalling more than $1 5 \\%$ of our emissions by 2025. However, it takes time to deliver such complex and large-scale structural changes to our energy system, so the actual emissions reductions will lag this. In 2023, we made project commitments which will deliver abatement of around 2Mt $C O _ { 2 } \\Theta$ per year, mostly in renewable energy contracts and\nWe have refined our approach to capital and operational spend on decarbonisation. We are shifting to greater investment in commercial contracts, such as sourcing biofuel from third parties or renewable electricity through power purchase agreements (PPAs), rather than our own capital spend. Our expected capital investment in decarbonisation is now $\\$ 5-6$ billion between 2022 and 2030, down from our original forecast, though much of the difference is balanced by substantial opex investment.\nJakob Stausholm\nChief Executive", "chunk_word_count": 456, "section_path": "RioTinto > 2023 highlights > Chief Executive’s statement", "document_id": "Rio Tinto Climate Change Report 2023", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 4, "chunk_text": "# RioTinto\n## 2023 highlights\n### Our business at a glance\nWe have provided the materials the world needs for more than 150 years. Our portfolio includes iron ore, copper, aluminium and a range of other minerals and materials needed for communities and nations to grow and prosper, and to cut carbon emissions to net zero. We continually search for new projects that can support the energy transition, and are currently exploring for eight commodities in 18 countries.\nAs stewards of these minerals and metals we have a responsibility to minimise the impact of our operations on the environment. $7 2 \\%$ of the electricity we use is from renewable sources and this enables the production of some of the world’s lowest carbon intensity aluminium, copper and iron ore available to the global economy. Despite this, we still have a significant carbon footprint with Scope 1 and 2 emissions of 32.6Mt $C O _ { 2 } \\Theta$ in 2023 (2022: 32.7Mt $C O _ { 2 } \\Theta$ ). Unlike peers in the industry, around $80 \\%$ of our operational emissions come from hard-to-abate processing activities for which many of the necessary technological solutions do not exist at commercial scale today.\n### Our strategy and approach to climate change\nClimate change has informed our strategic thinking and investment decisions for more than two decades. In 2021, we launched our business strategy with the low-carbon transition at its heart. This report focuses on two of the three pillars of our business strategy. The first pillar “Grow in materials essential for the energy transition” is covered in our Annual Report.\n1. Grow in materials essential for the energy transition 2. Accelerate the decarbonisation of our assets 3. Partnering across our value chains to help our customers and suppliers decarbonise\n### Managed and non-managed operations\nKey Product groups\n### Iron Ore\n### Aluminium\n### Copper\n### Minerals\nMines \nProjects \nSmelters, refineries, processing plants and \npower and shipping facilities remote from mine\nNon-managed operations\nScope 2 reporting\nIn 2023, we improved our carbon emissions reporting and now use the market-based method as our primary measure for assessing performance against our targets. Further detail on this change in reporting and the implications for our emissions baseline is available in our 2023 Addendum - Scope 1, 2 and 3 Emissions Calculation Methodology\nWe support the goals of the Paris Agreement, and climate change considerations are integrated into our strategic and operational decision making. Our approach is supported by strong governance, processes and capabilities. A carbon price has been integrated into our investment decisions since 1998, with separate price assumptions applied for the regions and main markets in which we operate and sell our products. We first set emissions intensity targets in 2008, updated them from 2015 and achieved them in 2020.\nHaving divested the last of our coal businesses in 2018, we are orienting our growth capital expenditure towards materials that enable the energy transition, including copper, lithium and high-grade iron ore. Our ambition is to increase our growth capital to up to $\\$ 3$ billion per year in 2024 and 2025, developing new options and finding innovative ways of bringing projects onstream faster.\n### Climate Action Plan – 2023 progress and 2024 update\n### Progress in 2023", "chunk_word_count": 543, "section_path": "RioTinto > 2023 highlights > Our business at a glance", "document_id": "Rio Tinto Climate Change Report 2023", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 5, "chunk_text": "# RioTinto\n## 2023 highlights\n### Action in 2024\n### Scope 1 and 2 emissions targets and roadmap\nWe have committed to reaching net zero by 2050 and set ambitious interim targets relative to our 2018 equity emissions baseline: to reduce greenhouse gas (GHG) emissions by $1 5 \\%$ by 2025 and by $50 \\%$ by 2030.\nIn the Pilbara, we remain committed to building 1GW of renewable energy capacity. However, due to the extended timeline for deployment of battery electric haulage solutions, we now estimate that 600MW to 700MW capacity is required by 2030.\n### Repowering Pacific Aluminium Operations\n– Completed commercial and technical due diligence of submissions for supply of renewable electricity to Gladstone aluminium assets. – Executed first renewable energy contract required for our Boyne smelter.\n– Execute further renewable energy contracts required for our Boyne Smelter. Launch a Request for Proposal, in partnership with other shareholders, for renewable energy projects for Tomago. – Seek renewable energy and storage capacity for Tranche 1 of electrification at the Gladstone alumina refineries.\n### Alumina Processing\n– Developed a decarbonisation energy strategy for Yarwun and Queensland Alumina (QAL) refineries. \n– Approved the Yarwun Hydrogen Calcination Pilot Demonstration Program. Progressed an electric boiler feasibility study for Vaudreuil. Progressed a double digestion pre-feasibility study at QAL, and commissioned a pilot plant. Progressed studies on electric steam generation technologies, electric calcination and thermal energy storage systems for refineries. \n– Progress QAL double digestion feasibility study. \n– Commence construction of the hydrogen calcination demonstration project. \n– Progress electric steam and thermal energy studies for refineries. \n– Deliver biofuel studies for Gladstone refineries as potential low-carbon fuel feedstock for steam generation.\n### Aluminium Anodes\n– Research and development to focus on growing carbon-free aluminium smelting from the ELYSISTM prototype cells that will enable the joint venture to take the next step towards an industrial demonstration level project.\nELYSISTM progressed its research and development program with the ongoing aim of steadily improving cell performance. Learnings from the past two years will now be incorporated into the development of the larger-scale cells (450kA).", "chunk_word_count": 346, "section_path": "RioTinto > 2023 highlights > Action in 2024", "document_id": "Rio Tinto Climate Change Report 2023", "page": 8, "page_start": 8, "page_end": 8 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 6, "chunk_text": "# RioTinto\n## 2023 highlights\n### Renewable Energy\nConstructed a 5MW solar plant pilot project at Kennecott Copper. Approved a 12.4MW solar system and a 2.1MWh battery storage system via long-term Power Purchase Agreements (PPAs) for Amrun, with construction starting in 2024 subject to regulatory approvals. Continued discussions on the proposed coastal Pilbara solar photovoltaic (PV) and progressed studies for further solar and wind developments. Signed a memorandum of understanding (MOU) with the Yindjibarndi Energy Corporation (YEC) to explore opportunities to collaborate on renewable energy projects in the Pilbara region. The initial focus is on rapidly exploring the potential development of a solar power generation facility for the supply of energy to Rio Tinto. – Voltalia began construction of Phase 1, 130MW solar farm for Richards Bay Minerals (via PPA) – Commenced construction of 16MW Phase 2 Wind project at QIT Madagascar Minerals\n– Aggrekko will commence solar panel installation on the Amrun solar project, subject to regulatory approvals. Finalise the first tranche of renewable PPA commercial negotiations (up to 200MW) for our US renewable energy portfolio. Commission the Diavik Diamond Mine solar plant. Seek final investment decision on the Pilbara coastal solar PV. Commission the 5MW solar plant and start construction of Phase 2, 25MW solar plant at Kennecott Copper. Execute RBM Phase 2 PPA (approximately 200MW).\n### Minerals Processing\nCommissioned the BlueSmelting™ demonstration plant at Rio Tinto Iron and Titanium (RTIT) Quebec Operations and produced first tonne of pre-reduced ore. Completed an industrial trial of biocarbon at Sorel-Tracy1 . Progressed development of a biocarbon supply chain to provide a substitute for anthracite for the smelter operations. – Implemented testing projects for electrification to reduce pelletising emissions at IOC.\n– Ongoing validation of smelter gas and hydrogen use at the BlueSmelting™ plant. Production and testing of material from the BlueSmelting™ plant at the smelters. Progress with the installation of an electric boiler at the Iron Ore Company of Canada (IOC). Progress research and development analysis for biofuel and coke alternatives for pelletisation. – Progress with the industrial ramp-up of biocarbon. – Secure access to biocarbon sources.\nDiesel Transition\n– Transitioned heavy machinery at US Borax operation to $100 \\%$ renewable diesel, and secured contract to supply Kennecott Copper with renewable diesel from 2024. – Assessed application of trolley-assist haulage technology for our existing haul fleet. Collaborated with original equipment manufacturers (OEMs) to prepare for battery electric haul truck pilots in the Pilbara. Completed a six-month test program of a Scania 20 tonne battery electric truck in the Pilbara. Continued our involvement in CharIN and the ICMM's Initiative for Cleaner Safer Vehicles (ICSV) to solve challenges related to interoperability and large electric truck dynamic charging.\n– Transition Kennecott Copper to renewable diesel. \n– Commence battery electric haul truck trials in the Pilbara. \n– Develop a deployment plan for partial electrification options. Consider options to develop an Australian biofuel supply chain.\n### Progress in 2023", "chunk_word_count": 484, "section_path": "RioTinto > 2023 highlights > Renewable Energy", "document_id": "Rio Tinto Climate Change Report 2023", "page": 8, "page_start": 8, "page_end": 8 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 7, "chunk_text": "# RioTinto\n## 2023 highlights\n### Nature-based solutions (NbS)\nCompleted five feasibility studies and commenced four feasibility studies in Guinea and South Africa. \nImplemented pilot projects in Fort Dauphin, in southeastern Madagascar, and completed restoration and REDD+1 feasibility studies. \n– Finalise feasibility studies in Guinea and South Africa. \n– Apply dual pilot-feasibility approach to our priority regions to finalise feasibility studies and ramp-up implementation pilots. Finalise and disclose information on voluntary commercial agreements. Provide detail on our carbon credit sourcing strategy, including our integrity criteria, due diligence process and volumes.\n### Scope 3 emissions goals and customer engagement\nWe are committing to partner with our customers and suppliers to find better ways to help them achieve their targets a decade earlier – reaching net zero by 2050. We are acting now by investing in the development of breakthrough technologies that will help decarbonise our value chains, and upgrading our ores to be suitable for these.\n### Steel value chain\n– In 2022 we met our original target to engage with nearly all our direct iron ore customers. Since then, we have progressed to advanced discussions with $5 9 \\%$ of them (by sales volume). In 2023, we made further progress on tangible prioritised projects with $2 5 \\%$ of direct steel customers (by sales volume). Progressed design of Baowu Meishan microwave lump drying pilot plant. Completed feasibility study for BioIronTM Continuous Pilot Plant (CPP) and secured a location. Completed concept studies with BlueScope on ESF, and partnership with Baowu for small-scale pilot plant.\n– Complete construction of the Baowu Meishan lump drying plant. Commence construction of the BioIronTM CPP2 . Continue research on pelletisation of Pilbara ores. Progress laboratory testing and work program with BlueScope and BHP including further test works and pre-feasibility study for a Direct Reduction-Electric Smelting Furnace (DR-ESF) pilot plant. Plan for construction of a small-scale electric melter at a Baowu steel mill. Conduct feasibility study to evaluate a pilot scale-up for a fines-based reduction process.\n### Aluminium value chain\n– Defined potential areas of collaboration to help decarbonise alumina refining with customers, representing $4 7 \\%$ of bauxite sales.\n– Partner with two bauxite customers to advance research and development and process improvement projects in digestion and organics management. Develop technical options to reduce moisture content in bauxite.\n### Shipping\n– Achieved $3 7 \\%$ lower emissions intensity. \n– Introduced five liquified natural gas vessels into the fleet. \n– Completed a 12-month biofuel trial. Completed feasibility study as part of West Australia-East Asia Iron Ore Green Corridor Consortium with Global Maritime Forum. Progressed key elements for low-carbon ammonia deployment as part of ITOCHU Ammonia JDA including safety and regulatory considerations, vessel design and risk management. \n– Accelerate fuel efficiencies across the freight portfolio. \n– Introduce four more LNG vessels. \n– Pursue further biofuel or recycled fuel deployment. \n– Improve emissions transparency using actual voyage data for over $9 5 \\%$ of our cargo shipments for which we manage shipping.", "chunk_word_count": 493, "section_path": "RioTinto > 2023 highlights > Nature-based solutions (NbS)", "document_id": "Rio Tinto Climate Change Report 2023", "page": 9, "page_start": 9, "page_end": 9 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 8, "chunk_text": "# RioTinto\n## 2023 highlights\n### Procurement\nCompleted a study to understand the sources of our procurement-related emissions. This enhanced our understanding of the sources and nature of our procurement-related emissions, including our highest emitting categories and suppliers, and potential abatement solutions.\nEngage with our top 50 suppliers in high-emitting categories on decarbonisation. Introduce decarbonisation criteria to evaluate all new sourcing in high emissions categories.\n### Progress in 2023\n### Action in 2024\n### Capital allocation alignment with our $1 . 5 ^ { \\circ } \\mathsf { C }$ decarbonisation strategy\nWe estimate the total capital expenditure on decarbonisation between 2022 and 2030 is expected to be $\\$ 5-6$ billion1 and $\\$ 1.5$ billion in the period 2024-2026.\n### $\\$ 425$ million total decarbonisation spend\n– We estimate our total spend on decarbonisation in 2024 will be approximately $\\$ 750$ million including capital expenditure and investments, operational expenditure, offsets and RECs.\n– $\\$ 130$ million capital expenditure (abatement projects and investments) – $\\$ 234$ million operational expenditure – \\$61 million RECs and offsets (intangible assets)\n### 1.9Mt of abatement commitments made\n– Renewable energy in Australia and Africa \n– Renewable diesel at Boron and Kennecott \n– Piloting low-carbon heat and using hydrogen in processing emissions\n### Climate policy engagement\nWe continue to encourage industry associations to align their advocacy with the goals of the Paris Agreement. We review the climate advocacy of industry associations annually, publishing our review on our website and using it to inform our membership renewal decisions.\n– We published our review of industry associations in February 2023 and conducted an interim and year-end review of their advocacy. We engaged with four industry associations to discuss their climate advocacy.\n– Formalise process to prioritise an energy transition that considers all issues. Assess projects in consultation with relevant stakeholders, including considering different partnership models and decarbonisation solutions that reflect the requirements of industry and local communities.", "chunk_word_count": 319, "section_path": "RioTinto > 2023 highlights > Procurement", "document_id": "Rio Tinto Climate Change Report 2023", "page": 9, "page_start": 9, "page_end": 10 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 9, "chunk_text": "# RioTinto\n## 2023 highlights\n### Climate governance\nIn the short-term incentive plan (STIP), safety, environment, social and governance matters, including climate change, are now assigned an explicit performance weighting.\n– Safety, environmental, social and governance matters remain as targets within the STIP. The 2023 STIP measures comprised the following: Impeccable environmental, social and governance (ESG) $( 2 0 \\% )$ ), People and culture $( 1 0 \\% )$ , Excel in development $( 1 0 \\% )$ , and Social licence $( 1 0 \\% )$ .\nClimate change performance objectives are assigned \nan explicit performance weighting of $10 \\%$ in the STIP \nin 2024. We will assess progress of moving carbon \nabatement projects through the various stages of development all the way to execution to meet our decarbonisation targets. \nPropose incorporating decarbonisation related performance measures into our LTIP as part of our 2024 Remuneration Policy. See page 135 of our 2023 Annual Report for further details.\nThe carbon abatement target set for 2023 was 10Mt of ${ \\mathsf { C O } } _ { 2 } { \\mathsf { e } } .$ A total of 29 projects progressed through a development stage during the year, leading to an above target performance of 12Mt $C O _ { 2 } \\Theta$ abatement expected by 2030.\n– For further information on climate governance, see page 45 of our 2023 Annual Report. The 2023 STIP award calculation may be found on page 130 of the report.\n### Just transition\nWe are committed to supporting a just transition to a low-carbon economy that is socially inclusive and provides decent work and livelihoods.\n– We have seen tangible examples of teams across the business undertaking decarbonisation activities with a just transition at the forefront of the chosen approach. This has manifested through government engagement and host community partnerships, including the Diavik Diamond Mine closure investment, and contribution to energy hub development in both the Pilbara and Gladstone.\nFormalise the process to prioritise an energy transition that gives due consideration to ESG issues. Finalise \nalignment with the CA100+ net zero standard for \na just transition. \nOngoing assessment of projects in consultation with stakeholders, to consider different partnership models and decarbonisation solutions reflecting the requirements of industry and local communities.\n### Task Force on Climate-related Financial Disclosures (TCFD) disclosure\nWe support the TCFD recommendations and are committed to aligning our disclosures with the Climate Action $1 0 0 +$ (CA100+) Net Zero Company Benchmark.\n– Integrated climate-related disclosures on governance, strategy, risk management, and metrics and targets into the 2023 Annual Report. Ensured climate-related financial disclosures comply with the Companies Act 2006 as amended by the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022. See pages 44 to 58 of our 2023 Annual Report for further detail. Aligned our reporting on the CAP with the CA100+ Net Zero Company Benchmark. – Published our Scope 1, 2 and 3 Emissions Calculation Methodology report.\nPublish our progress on climate change annually in line with the recommendations of the TCFD and other requirements.", "chunk_word_count": 508, "section_path": "RioTinto > 2023 highlights > Climate governance", "document_id": "Rio Tinto Climate Change Report 2023", "page": 10, "page_start": 10, "page_end": 10 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 10, "chunk_text": "# RioTinto\n## 2023 highlights\n### Scope 1 and 2 emissions: Decarbonising our operations\nOur targets are to reduce our Scope 1 and 2 emissions by $1 5 \\%$ by 2025 and $50 \\%$ by 2030 (relative to 2018 levels), and to reach net zero by 2050.\nOur asset portfolio has broadly remained stable over the period from 2018 to today. The share of emissions from our portfolio of commodities is largely unchanged with approximately two-thirds of our emissions from our Aluminium business. While the asset portfolio has remained stable, delivering net reductions in absolute emissions faces two significant challenges. First, increasing work indexes with longer haul distances and declining ore grades, typical for the mining sector, mean that more energy is required to achieve the same level of output. Second, we are continually looking to grow production, particularly in the commodities needed to deliver the energy transition. This growth may be brownfield organic (such as in the Pilbara), greenfield organic (such as Simandou), or through mergers and acquisitions (such as our investment in Matalco). Consequently, the timing, costs and carbon benefits of our plans will evolve as our business evolves.\nWe report these targeted emissions on an equity basis and they cover more than $9 5 \\%$ of our operational emissions. We exclude reductions achieved by divesting assets and increases associated with acquisitions and so adjust our 2018 baseline. Following our acquisition of additional equity in the Oyu Tolgoi (OT) mine in late 2022 and the Mineração Rio do Norte (MRN) mine in late 2023, we have also adjusted our 2022 emissions total to compare our actual progress on abatement in 2023 relative to other changes at our operations.\n### Scope 2 reporting changes\nIn 2023, we updated our Scope 2 emissions reporting methodology to align with improved and evolving global GHG emissions reporting standards. We now report our Scope 2 emissions on both the market-based and location-based methods, and we will use the market-based method as our primary measure for assessing performance against our targets.\nWhile this restatement increases our 2018 baseline and all subsequent years’ reported emissions, it provides a better representation of the commercial decisions we are making in decarbonisation, such as electricity purchase contracts where the rights to the renewable attributes are secured. Further detail on this change in reporting and the implications for our emissions baseline is available in our 2023 Addendum -Scope 1, 2 and 3 Emissions Calculation Methodology report.\nWhile there is no universal standard for determining the alignment of targets with the Paris Agreement goals, we conclude our Scope 1 and 2 targets for 2030 are aligned with efforts to limit warming to $1 . 5 ^ { \\circ } \\mathrm { C }$ . In 2021, KPMG provided limited assurance over the alignment of our Scope 1 and 2 targets with efforts to limit warming to $1 . 5 ^ { \\circ } \\mathsf { C }$ . For this 2023 report, KPMG provide limited assurance over our progress reporting against our Climate Action Plan commitments (in addition to their assurance of our Scope 1, 2 and 3 emissions). Their statement is included at the end of the report.", "chunk_word_count": 529, "section_path": "RioTinto > 2023 highlights > Scope 1 and 2 emissions: Decarbonising our operations", "document_id": "Rio Tinto Climate Change Report 2023", "page": 11, "page_start": 11, "page_end": 11 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 11, "chunk_text": "# RioTinto\n## 2023 highlights\n### Where we are today\nOur Scope 1 and 2 emissions were 32.6Mt $C O _ { 2 } \\Theta$ in 2023. This is $6 \\%$ below our 2018 baseline of 34.5Mt $C O _ { 2 } \\Theta$ and slightly below our adjusted 2022 emissions of 32.7Mt $C O _ { 2 } \\Theta$ (adjusted for acquisitions). Abatement delivered by our projects in 2023 exceeded emissions growth from higher production giving a slight reduction in emissions on a like for like basis.\nOur Group-wide consumption of electricity is approximately four times that of other global diversified mining majors due to the high energy intensity of the Aluminium business.\n### Commitments to abatement projects1\nMt $C O _ { 2 } \\Theta$ equity basis\nHowever, $7 2 \\%$ of the electricity we use is from 2 renewable sources and we are making investment and supply decisions to increase this.\nOur 2023 emissions were slightly higher than our actual 2022 emissions total of 32.3Mt $C O _ { 2 } \\Theta$ due to the recent acquisitions of additional equity in OT and MRN.\nThe scale of our commitments has increased rapidly since we reset our Scope 1 and 2 emissions reduction targets in October 2021. In 2023, we made project commitments which will deliver abatement of around 2Mt per year, mostly in renewable energy contracts and certificates, and biofuels deployment.\nOur abatement projects are complemented by investment in nature-based solutions and the purchase of high-quality regulatory carbon credits. In 2023, our net emissions total does not include any carbon credit retirements from these sources.\nIn 2023 we committed to accelerate our decarbonisation towards our 2025 and 2030 targets. By 2025 we expect to have made financial commitments to abatement projects on renewables, diesel replacement and process heat that will achieve more than $1 5 \\%$ of Group emissions, however, our actual emissions abatement will lag these. These delays are the result of a range of factors including engineering and construction timelines, pace of development related to new technology and energy systems in the locations we operate, and the need to carefully integrate our ambitions with the needs of our local communities and stakeholder groups. We also need additional abatement to address underlying emissions growth as our production plans evolve.\nAgainst a backdrop of rising production, the emissions reductions achieved since 2018 are mostly the result of decarbonising power. These include PPAs at Escondida and the purchase of renewable energy certificates (RECs) for our Kennecott and Oyu Tolgoi copper operations.\nIn response to these challenges and delays, we continue to work with our partners, governments and others to develop transformational projects and industry breakthroughs, and in parallel, we are turning to commercial solutions, such as PPAs and biofuels, that can deliver emissions reductions faster. Abatement from these are anticipated to occur substantially between 2025 and 2030.\nThe four most significant sources of operational emissions are electricity (purchased and generated) at $4 1 \\%$ , fossil fuels for heat at our processing plants and alumina refineries at $2 2 \\%$ , carbon anodes in aluminium and reductants in titanium dioxide furnaces at $2 4 \\%$ , and diesel consumption in our mining equipment and rail fleet at $12 \\%$ .", "chunk_word_count": 542, "section_path": "RioTinto > 2023 highlights > Where we are today", "document_id": "Rio Tinto Climate Change Report 2023", "page": 12, "page_start": 12, "page_end": 12 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 12, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### 32.6Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$\n2022: 32.7Mt $C O _ { 2 } \\Theta$ (adjusted for acquisitions)\n[IMAGE CAPTION] 1. Represents the abatement from in-year project commitments. There may be a lag to realised abatement given execution schedules or the nature of contracts entered into. 2. Excludes signed Upper Calliope solar farm PPA with potential 1.8Mt per year of emissions reduction, pending project approvals.\n### Our roadmap to 2030\n### Between now and 2030, the most significant opportunities to reduce our Scope 1 and 2 emissions are to switch the electricity we generate or purchase to renewables, and to address process heat emissions from our alumina refineries.\nOur six global decarbonisation programs tackle all sources of carbon emissions in our business. We have a pipeline of projects and committed investments that support our 2030 target.\nvolume and type of carbon credits retired and net Group emissions.\nOur decarbonisation trajectory does face headwinds, typical to the mining industry more broadly, from increased work indexes. In addition, production growth and growth from new projects such as Simandou, Jadar and Rincon must be accommodated within our absolute emissions reduction target. Collectively, this represents around 4Mt $C O _ { 2 } \\Theta$ to our baseline to 2030.\nWe must also execute other key projects in our pipeline related to renewable electricity contracts and alumina processing heat reductions to meet our 2030 target.\nTo reach our 2030 goals, our single largest lever - accounting for around one-quarter of our emissions - is to develop a competitive renewable energy solution for the Boyne and Tomago aluminium smelters in our Pacific Aluminium Operations.\nWhile prioritising emissions reductions at our operations, we are also investing in naturebased solutions that can bring benefits to people, nature and climate. We may retire high-quality carbon credits from these projects towards our 2030 targets. This will complement our abatement project portfolio – which aims to reduce operational emissions by $50 \\%$ by 2030 – and support our compliance with carbon pricing regulation such as the Safeguard Mechanism in Australia. Our emissions reporting will continue to transparently distinguish between our underlying operational emissions, the\nIn December 2023, we signed a PPA to buy all the electricity, and associated green products to be generated in the future, from the 1.1GW Upper Calliope Solar Farm project, which if combined with more renewable power and suitable firming, transmission and industrial policy, could provide part of a solution to repower our three Gladstone production assets (Boyne aluminium smelter, Yarwun alumina refinery and the Queensland alumina refinery). Once approved and developed, this solar project has the potential to reduce operating carbon emissions by 1.8Mt per year.\nWe expect to make financial commitments before the end of the decade that will result in structural abatement of our portfolio beyond 2030. This demonstrates our continued commitment towards our net zero goal.", "chunk_word_count": 491, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > 32.6Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$", "document_id": "Rio Tinto Climate Change Report 2023", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 13, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### Decarbonisation plan\n(Mt $C O _ { 2 } \\Theta$ , equity basis)1\n[IMAGE CAPTION] Note: small differences in chart attributable to rounding 1. Rebased emissions due to Scope 2 methodology changes. Data represents ‘gross’ Scope 1&2 emissions and direct abatement projects. 2. ‘Other required’ will flex over time based on abatement project delivery, growth, closures and asset changes.\n### Our roadmap to 2050\n### We are targeting net zero emissions from our operations by 2050. This is challenging given approximately half of our Scope 1 and 2 emissions will require technology breakthroughs.\nWe're investing in technology to reduce our Scope 1 and 2 emissions, including: – Industrial processing, including the use of double digestion and ELYSIS™. – Electrification – electric boilers, battery electric haul trucks and locomotives. – Biogenics – biocarbon and biofuels, as well as our development of nature-based solutions.\n1. Commercial transactions - projects we are moving quickly, with available technology and attractive economics, including PPAs and renewable energy certificates.\nOur definition of net zero applies to our operational emissions on an equity basis. To reach net zero we will need to decarbonise our operations as far as technically and commercially practical and address all remaining emissions with carbon dioxide removals from the atmosphere and long-term storage. Each of our six decarbonisation programs has a pathway to net zero which follows this framing. Our greatest challenges are the emissions from aluminium anodes, alumina processing, diesel and minerals processing, that require technology breakthroughs.\n2. Transformational projects - those which transition our assets for the low-carbon future. These include the repowering of our Pacific Aluminium Operations and changes to our processing facilities.\nOur approach to decarbonisation is threefold, and considers the commercial and technical viability of the abatement options, categorised as: commercial transactions, transformational projects and industry breakthroughs:\n3. Industry breakthroughs - research and development activities, which unlock technical and commercial challenges predominantly in hard-to-abate processing, including the progress we are making in piloting our BlueSmelting™ technology.\n### Decarbonisation project pipeline\n(Mt $C O _ { 2 } \\Theta$ , equity basis)\nBeyond 2030, we aim to achieve deeper emissions reductions at our Australian aluminium smelters by deploying ELYSIS™ and phasing out the use of carbon anodes, progressing low-emissions battery electric trucks and mobile equipment at our mining operations, and addressing emissions at our minerals processing operations. Given the uncertain timing of suitable, proven and commercial-scale technology, our roadmap to 2050 allows for future opportunities to be defined post-2040. We believe this strikes a balance between developing and implementing commercial and transformational projects on our current roadmap and the expectation of advances and industry breakthroughs in future technologies over the longer term.", "chunk_word_count": 453, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > Decarbonisation plan", "document_id": "Rio Tinto Climate Change Report 2023", "page": 13, "page_start": 13, "page_end": 15 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 14, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### Nature-based solutions\nWe believe in the use of nature-based solutions to halt and reverse nature loss, support positive, sustainable change for communities and address climate change. Focusing on quality, long-term benefits, we use our global presence to execute naturebased solutions projects in the locations where we operate, and will voluntarily retire carbon credits to complement the decarbonisation activity undertaken across our six programs.\nCarbon capture and mineralisation In 2023 we considered different technologies to capture the low concentration $C O _ { 2 }$ from our Aluminum smelters with the potential for first implementation at our Aluminum smelte in Iceland (ISAL). While the most promising technologies are an adaptation of direct air capture to point source capture, the technology readiness level is often low and requires significant development often from laboratory to commercial scale. We established several partnerships to develop a pipeline of potential capture technologies and aim to reach pilot stage with the most promising one at ISAL. In parallel, through our partnership with Carbfix, the characterization of the ISAL site for mineralization is progressing, aiming at first injection in 2026/2027. The assessment of the $C O _ { 2 }$ mineralization potential of our co-owned Tamarack Nickel project in Minnesota has been initiated with the characterization of historical drill core samples and the initiation of a 2000m deep well drilling, aiming for full characterization in 2024.\nAdditionally, we have ambitions to grow our business to provide the materials the world needs to deliver the energy transition. Our new projects are co-designed by our growth teams, decarbonisation teams and external experts. This approach ensures we consider low-carbon options for new assets and the timing of their deployment to support our growth and decarbonisation goals.\n[IMAGE CAPTION] Roadmap to net zero (Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ equity basis)\n1. Electricity abatement assumes commercial solutions (power purchase agreements, renewable energy certificates) to be rolled over upon conclusion of contract terms or alternative abatement projects implemented. Our 2030 targets are dependent on the ability to repower our Australian aluminium assets. \n2. Aluminium anodes abatement shown illustratively as linear decline throughout 2040s, timing of ELYSISTM deployment to be defined. \n3. Nature-based solutions play a role in addressing climate change and nature loss. High-quality offsets include regulated compliance and voluntary offsets from our nature-based projects. \n4. The transition to net zero requires proving and scaling-up technology breakthroughs for hard-to-abate processes. Baseline emissions extended post-2040 using assumed asset life extensions.\n### Our six abatement programs\nIn 2022, we established six abatement programs to focus on the decarbonisation challenges across our product groups: repowering Pacific Aluminium Operations, Alumina Processing, Aluminium Anodes, Renewable Energy, Minerals Processing, and Diesel Transition. Our pipeline of abatement projects is evolving as projects approach commercial and technical readiness.", "chunk_word_count": 475, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > Nature-based solutions", "document_id": "Rio Tinto Climate Change Report 2023", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 15, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### Pacific Aluminium Operations Australia – refining and smelting\nWe operate a large-scale, fully integrated aluminium business producing some of the highestquality, lowest-carbon-footprint aluminium in the world. Our aluminium comes mainly from hydro-powered smelting operations in North America, Europe, New Zealand and in Australia at the Bell Bay aluminium smelter.\n8.4Mt\nIn addition, in Australia, our Aluminium operations include mines, refineries and smelters. The operations primarily centre around the Gladstone region of Queensland, which is home to two alumina refineries: Yarwun and Queensland Alumina Limited (QAL), and Boyne Smelters Limited (BSL) aluminium smelter. Together the operations support more than 8,000 direct and indirect jobs.\n$C O _ { 2 } \\Theta$ Scope 1 and 2 emissions in 2023 from Repowering Pacific Aluminium Operations $2 \\%$ decrease from 2022)\n5.8Mt $C O _ { 2 } \\Theta$ Scope 1 and 2 emissions in 2023 from alumina refining (including Atlantic Operations) $2 \\%$ increase from 2022)\nSuccessful emissions reduction across the aluminium value chain in Australia relies heavily on the availability of large-scale, competitive, firmed renewable power, alongside significant investment, collaboration and partnership with governments, technology developers and industry peers to support innovation breakthroughs.\nThese operations are some of the hardest-toabate in our portfolio. Alumina refining requires large amounts of industrial heat, and reducing emissions from this process is challenging as much of the technology required does not exist today.\n\\$50m Decarbonisation spend in 2023\nThe transformation of Australia’s electricity market from the current fossil fuel baseload requires investment in off-and-onsite infrastructure, supported by strong coordination between government and industry. This transition is essential to enable guaranteed supply of internationallycompetitive, large-scale and reliable renewable power over the long term for domestic industrial users.\nOur Boyne Smelter operates in a coal-based power grid and requires a reliable, firmed power supply to protect against major process disruption. Its transition must also take into account the broader impact on the grid.\nEconomically, repowering large, energyintensive assets like the Boyne Smelter is a highly complicated and challenging process, however, it also presents opportunity. Securing a long-term renewable power solution for the smelter could support a cohesive energy transition for the Gladstone region, maintain manufacturing jobs, create new industries and deliver a substantial uplift in renewable energy investment.", "chunk_word_count": 380, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > Pacific Aluminium Operations Australia – refining and smelting", "document_id": "Rio Tinto Climate Change Report 2023", "page": 16, "page_start": 16, "page_end": 16 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 16, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### Repowering Pacific Aluminium Operations\nOur Pacific Aluminium Operations portfolio includes BSL and Gladstone Power Station in Queensland, and the Tomago Aluminium smelter in New South Wales. Both smelters are energy-intensive facilities sourcing third-party power from fossil fuel-based grids. These three facilities account for $2 6 \\%$ of our electricity-related Scope 1 and 2 emissions and the smelters are dependent on renewable repowering solutions to maintain their long-term viability.\nunderway to identify high-quality, low-cost renewable power projects for Tomago.\nWe continue to engage with market participants and governments to deliver the integrated set of solutions required to fully decarbonise the electricity supply arrangements for Boyne and Tomago.\nContracts for the current supply of electricity to our Boyne Smelter expire in 2029 and Tomago in 2028. Significant progress has been made to secure long-term electricity arrangements to Boyne. We have signed a PPA to buy 1.1GW of renewable energy from the Upper Calliope Solar Farm project and are continuing to assess other proposals, solutions and partnerships to competitively meet the needs of our production assets in the Gladstone region. A process is also\nFull decarbonisation of our Australian aluminium smelting operations also requires deployment of ELYSIS™ technology to remove emissions generated by the carbon anodes process.\nDecarbonising these assets is essential to meeting our 2030 carbon reduction targets and requires the delivery of complex technical and commercial solutions supported by governments. Our Boyne Smelter requires 932MW of power, which is equivalent to 4GW of high-quality wind and solar capacity paired with appropriate and competitive firming assets and contracts. The smelter at Tomago requires 975MW of power, equivalent to 4-6GW of wind and solar capacity plus firming.\n### Update on progress against 2023 Climate Action Plan commitments\n### Action 6\nProgress renewable supply options for the Boyne and Tomago aluminium smelter\nWhat we will do in 2024\n– Execute renewable power contracts required for Boyne Smelter.\n– Put a Request for Proposal to market, in partnership with other shareholders, for renewable energy projects for Tomago. Complete commercial and technical due diligence on the relevant projects to target a viable contractual solution by $\\mathsf { Q } 1 2 0 2 5$ .\n– Go to market for renewable energy and storage capacity for Tranche 1 of electrification at the Gladstone alumina refineries for delivery of assets in 2029/2030 (currently provided by onsite power/LNG).\n### Alumina Processing", "chunk_word_count": 403, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > Repowering Pacific Aluminium Operations", "document_id": "Rio Tinto Climate Change Report 2023", "page": 17, "page_start": 17, "page_end": 17 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 17, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### The alumina refineries in Gladstone, Yarwun and Queensland Alumina Limited (QAL) are the largest source of process heat emissions in the Group.\nAlumina refining requires significant energy inputs for the high temperature processes, and in Australia, the industry has been underpinned by low-cost fossil fuels, predominantly coal and gas. In 2023, emissions from the refineries were 5.8Mt $C O _ { 2 } \\Theta$ or $1 8 \\%$ of the Group’s emissions (compared to 5.7Mt $C O _ { 2 } \\Theta$ in 2022).\nRefinery emissions are generated through combustion of fossil fuels, to generate heat required for the digestion and calcination phases of the refining process. Our preferred decarbonisation strategy, based on technical merit and commercial viability, is a combination of fuel switching and electrification.\nIn the medium term, additional renewable energy capacity must be developed and secured to meet the increasing requirements of electrification of our alumina refineries in Gladstone.\n[IMAGE CAPTION] Reducing emissions from the alumina refining process\nIn 2023, we published a case study on this program describing the challenges, the potential solutions and the policy backdrop for the successful decarbonisation of alumina refining.\n### Update on progress against 2023 Climate Action Plan commitments\n### Action 1\nDevelop the decarbonisation energy transition strategy for the Yarwun and QAL refineries.\nOur energy transition strategy focuses on three pillars:\n– Reducing energy demand through process change improvements. \n– Improving energy efficiency and use by recovering low-grade waste steam. \n– Switching to lower-carbon fuels including hydrogen and biofuels to generate heat.\n### Action 2\nComplete feasibility studies for electric steam generation and thermal storage options at Yarwun and QAL.\nElectric steam generation studies continued in 2023, with a primary focus on transmission and distribution upgrade requirements to meet the increased electrical demand by \ntransitioning from fossil fuels to electrification. \nOrder of Magnitude (OoM) studies are in progress for electric steam generation \ntechnologies for Yarwun and QAL. \nDetailed concept and OoM studies have been completed on thermal energy storage systems and their application at our refineries. A preferred technology has been selected and the next phase of engineering is being scoped.\n### Action 3\nSeek approval for electric boilers at Vaudreuil.\n– The electric boiler feasibility study for Vaudreuil is nearing completion.\n### Action 4\nAdvance studies on double digestion, hydrogen and electric calcination.\n– The QAL double digestion pre-feasibility study progressed in 2023. A pilot plant to simulate the double digestion process was constructed and commissioned to provide technical inputs to support the study.\n– Electric calcination studies progressed at Vaudreuil with pilot trials expected in 2", "chunk_word_count": 438, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > The alumina refineries in Gladstone, Yarwun and Queensland Alumina Limited (QAL) are the largest source of process heat emissions in the Group.", "document_id": "Rio Tinto Climate Change Report 2023", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 18, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### Action 5\nCommence construction of hydrogen calcination industrialisation demonstration at Yarwun.\n– We are partnering with the Australian Renewable Energy Agency (ARENA) and Sumitomo to build a hydrogen calcination pilot plant as part of a A\\$111.1 million program. – The project will consist of a 2.5MW on-site electrolyser to supply hydrogen, a storage facility and a retrofit to one of Yarwun’s four calciners to burn hydrogen as a fuel source, replacing natural gas. The trial will test and validate using hydrogen as a fuel source in the calcining process over two years. Production is expected to be the equivalent of approximately 6,000 tonnes of alumina per year while reducing Yarwun’s $C O _ { 2 }$ emissions by 3,000 tonnes per year. – Site preparation works are underway ahead of construction in 2024 and operations in 2025.\n### What we will do in 2024\n– Progress the double digestion feasibility study at QAL. – Commence construction of the hydrogen calcination demonstration project. – Progress electric steam and thermal energy studies for QAL and Yarwun and finalise approvals for electric boilers at Vaudreuil. – Deliver biofuel studies for the Gladstone refineries as potential low-carbon fuel feedstock for steam generation.\n### Aluminium Anodes\n### We are working to develop a breakthrough smelting technology to produce aluminium with no direct greenhouse gas emissions\n6.8Mt $C O _ { 2 } \\Theta$ Scope 1 and 2 emissions in 2023 $1 9 \\%$ increase from 2022)\nEmissions from the use of carbon anodes in our aluminium smelters are 5.5Mt $C O _ { 2 } \\Theta$ and represent a longer-term challenge. This Global Decarbonisation Program also addresses some other smaller sources of emissions. We established the ELYSIS™ partnership in 2018 with Alcoa and with support from Apple and the governments of Canada and Quebec, to develop the world’s first carbon-free aluminium smelting process using inert anodes instead of carbon.\nThe smelting cells will operate on an electrical current of 450kA, which is the commercial scale for many large, modern aluminium smelters. So, between now and 2030, we aim to grow zero carbon aluminium smelting capacity from ELYSIS™ rather than to reduce emissions from carbon anodes at existing smelters. Beyond 2030, we expect to phase out the use of carbon anodes at our smelters.\n\\$61m\nAnode decarbonisation spend in 2023\nWith the first industrial-scale pilot cell producing aluminium with zero carbon emissions at the ELYSIS™ Industrial Research and Development Center, work is now focused on scaling up the ELYSIS™ technology towards the demonstration of even larger commercial-size cells.\n### Update on progress against 2023 Climate Action Plan commitments\n### Action 6\nCommission 450kA ELYSIS™ cells currently under construction at Alma\nELYSISTM has started commissioning activities following completion of the construction work. ELYSISTM progressed its research and development program with the ongoing aim of steadily improving cell performance. Learnings from the past two years will now be incorporated into the development of the larger-scale cells (450kA).", "chunk_word_count": 499, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > Action 5", "document_id": "Rio Tinto Climate Change Report 2023", "page": 19, "page_start": 19, "page_end": 20 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 19, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### What we will do in 2024\n– The focus will be on continuing to grow our zero carbon aluminium smelting from the ELYSISTM prototype cells that will enable the joint venture to take the next step towards an industrial demonstration level project. ELYSISTM expects to start the first 450 kA cell in 2024.\n### Renewable Energy\nWe rely on renewable and non-renewable electricity to power our mines, processing plants and supporting infrastructure. We are working to displace gas and coal-fired power with solar PV, wind and other renewable technologies.\n$72 \\%$ of the electricity we use is from renewable sources. See page 39 for further detail on the generation and use of electricity with and without contracted energy attributes. We are focusing on the transition to renewable energy sources in five main jurisdictions, representing 3.1Mt of emissions: the Pilbara in Western Australia, Richards Bay Minerals (RBM) operations in South Africa, bauxite operations in Weipa, Australia, Kennecott operations in the United States, and Oyu Tolgoi in Mongolia.\n4.8Mt\n$C O _ { 2 } \\Theta$ Scope 1 and 2 emissions in 2023 ( $7 \\%$ decrease from 2022)\n72%\nPercentage of electricity used from renewable sources\n\\$55m Decarbonisation spend in 2023\nDecarbonising the electricity at each of these locations has varying degrees of complexity, including whether the power is externally or internally generated, land access requirements (including permitting and Traditional Owner engagement) and availability of commercial solutions.\n### Update on progress against 2023 Climate Action Plan commitments\n### Action 7\nDiscussions for the proposed coastal solar PV are nearing completion with key stakeholders, including Traditional Owners, allowing for further cultural heritage surveys to inform the final solar farm design and capacity. The timeframe for these discussions has pushed the potential start of construction to 2025.\nApprove and commence construction of 100MW of solar photovoltaics (PV) for the Pilbara.\n### Action 8\nProgress studies on the next 130MW solar PV for the Pilbara.\nDetailed integrated system planning has identified preferred locations for future solar developments and planning for Traditional Owner engagement to enable support and land access is underway.\n### Action 9\nFinancial approval for Phase 1 was approved and includes a 12.4MW solar PV system and a 2.1MWh battery storage system via long-term PPAs. These agreements are expected to deliver greater than a $3 5 \\%$ reduction in diesel use for electricity generation.\nSign power purchase agreement (PPA) for Amrun microgrid and start construction 2023/2024.\n– Subject to final regulatory approvals, installation of the solar PV infrastructure and energy storage is planned to start in 2024.\n### Action 10\nSign a wind PPA at RBM.\n– The next tranche of 200MW wind PPA negotiations has been delayed from Q4 2023 to 2024.\n– Early works and site preparation for the 130MW Bolobedu PV solar facility commenced in 2023, after the first 20-year PPA was executed in 2022. This project will reduce RBM’s annual emissions by 230ktpa, or $10 \\%$ .", "chunk_word_count": 499, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > What we will do in 2024", "document_id": "Rio Tinto Climate Change Report 2023", "page": 20, "page_start": 20, "page_end": 22 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 20, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### Action 11\nSign commercial agreements for our US operations.\nConducted market reviews of different commercial structures and determined appropriate commercial and technical solutions, which may include renewables PPAs.\n– We had expected to finalise commercial agreements representing 570MW of renewable energy capacity in 2023, however continued assessment is required amid tightening market conditions in the US. Abatement from agreements is now expected from 2027, noting that our US operations are currently fully abated via an agreement with Rocky Mountain Power until the end of 2025.\n### Other actions\nSigned a memorandum of understanding with Yindjibarndi Energy Company (YEC) to explore opportunities to collaborate on renewables projects, including wind and solar power and battery storage systems, on Yindjibarndi Country in the Pilbara region. \nGround works are underway and the first set of turbines was delivered in December for QIT Madagascar Minerals’ 16MW Phase 2 Wind project \nConstructed a 5MW solar plant at Kennecott Copper to reduce operational emissions by 3,000 tonnes of $C O _ { 2 }$ equivalent per year. \nAnnounced construction of a 3.2MW solar plant at the Diavik Diamond Mine in Canada, which will provide $2 5 \\%$ of Diavik’s electricity, reducing diesel consumption by 1 million litres and emissions by 2,900 tonnes each year.\nThe activity undertaken in 2023 represents:\n### What we will do in 2024\n### 146MW\n– Subject to final regulatory approvals, start solar panel installation on Amrun Phase 1 renewables project (12.4MW). \n– Finalise the first tranche of renewable PPA commercial negotiations (up to 200MW) for our US renewable energy portfolio. \n– Commission the Diavik Diamond Mine solar plant. \n– Seek final investment decision on the Pilbara coastal solar PV plant. \n– Commission the 5MW solar plant and start construction of Phase 2, 25MW solar plant at Kennecott Copper. \n– Voltalia will continue construction of the 130MW solar plant for Richards Bay Minerals (Phase 1 PPA) and we will execute Phase 2, approximately 200MW PPA.\nWind and solar projects commenced construction at QIT Madagascar Minerals (QMM) and Richard’s Bay Minerals (RBM)\n### 1TWh\nApproved in renewable energy certificates (RECs)", "chunk_word_count": 356, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > Action 11", "document_id": "Rio Tinto Climate Change Report 2023", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 21, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### Case study: Pilbara renewables\nWe operate one of the world’s largest microgrids in the Pilbara, with four gas-fired power stations underpinning 480MW of firm power capacity and approximately 1,000 kilometres of transmission lines. Each year we spend $\\$ 100$ to $\\$ 200$ million to purchase and transfer natural gas to power our operations. Our electricity use in the Pilbara accounts for $2 . 5 \\%$ of our emissions and presents multiple opportunities to introduce renewable power generation in our network.\nMaintaining grid security and reliability while ensuring optionality and optimisation of the energy mix is critical to the development of large-scale renewable power for our Pilbara network. We have almost 1.5GW of studies underway, across multiple locations and at varying stages of development across our portfolio. This work is informed by, and supports, the extensive stakeholder engagement required to facilitate land access, studies and regulatory approvals.\nIn 2024 we will continue to work with Traditional Owners to progress studies and approvals for approximately 300MW of solar projects, with regard to our stakeholders’ timeframes and constraints.\nA typical iron ore mine, such as Hope Downs, currently has a disturbed operating footprint of approximately 200 hectares. This is similar to the land area as required for a 100MW solar PV facility. Although relatively simple to install and low impact on the ground, the sheer scale of this footprint means that we must take the time required to engage with Traditional Owners, to find appropriate sites, and walk these areas for cultural artefacts before all parties are satisfied to select a site. This is a critical part of our co-stewardship of the region, to ensure that the cultural heritage and ecological considerations are carefully assessed before each site is selected.\nIn 2021, we announced our intention to build 1GW of renewable energy capacity for our Pilbara grid by 2030. This would largely displace gas-fired electricity generation and support the first phases of fleet electrification. However, the timeline for large-scale deployment of battery electric haulage solutions has been extended until the 2030s. As a result, we now estimate we require approximately 600MW to 700MW of renewable power capacity by 2030, although we continue to plan to deliver 1GW. Our first solar project, announced in 2020, was a 34MW capacity solar farm at the Gudai-Darri mine. Work is continuing to integrate this renewable project into our private Pilbara power network without negatively impacting our operations, and taking into account the remote setting, power network uniqueness and mining operations context. This, alongside project delays and challenges in accessing adequate technical capability during the COVID pandemic when travel was restricted, has led to delays in commissioning the project.\n### Minerals Processing", "chunk_word_count": 454, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > Case study: Pilbara renewables", "document_id": "Rio Tinto Climate Change Report 2023", "page": 23, "page_start": 23, "page_end": 23 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 22, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### Our second-largest source of process emissions, after alumina and aluminium, arises from processing titanium dioxide $( \\mathsf { T i O } _ { 2 } )$ in Canada and South Africa.\n2.0Mt $C O _ { 2 } \\Theta$ Scope 1 and 2 emissions in 2023 $1 7 \\%$ decrease from 2022)\nEach year, Rio Tinto produces approximately 1.2 million tonnes of $\\mathsf { T i O } _ { 2 }$ feedstocks at our operations in Quebec, Canada and South Africa. This represents around $1 5 \\%$ of the global $\\mathsf { T i O } _ { 2 }$ market and produces primary products including chloride and sulphate slags, Upgraded Slag (UGS), rutile and co-products including zircon and metallics. Finding new and innovative technologies to support the decarbonisation of these facilities represents both a challenge and an opportunity. Carbon abatement can be partially realised by transitioning from fossil fuels to renewable energy sources for heating and operating these facilities, yet adopting new technologies and modifying traditional processing flowsheets is also critical.\n\\$64m Decarbonisation spend in 2023\nIn 2023, we continued to test innovative technology solutions and fuel sources.\n### Update on progress against 2023 Climate Action Plan commitments\n### Action 12\nCommission the BlueSmelting™ demonstration plant at RTIT Quebec Operations, to test the ilmenite prereduction process.\n– The plant was commissioned and the first tonne of pre-reduced ore was produced in July 2023. \n– For further information on BlueSmeltingTM, see our website.\n### Action 13\n– A one-month industrial trial of biocarbon at our Quebec Operations in Sorel-Tracy in  June 2023 confirmed biocarbon could be used in smelters without impact on product specification or quality1 . The trial utilised ilmenite ore from our Havre-Saint-Pierre mine.\nCommence industrial trials of biocarbon at RTIT Quebec Operations and RBM.\n### Action 14\n– The development of a biocarbon supply chain is in progress to serve as a substitute for anthracite.\nInvestigate options to develop a sustainable supply chain.\n### Action 15\nCommission plasma burner pilot at IOC.\n– We have implemented development and testing projects for electrification to reduce pelletising emissions at our IOC operations. These initiatives range from testing plasma torch technology in induration furnaces to installing state-of-the-art electric boilers and exploring the adoption of biocarbon and pyrolytic oil as new sources of heat.\n### What we will do in 2024\n– Ongoing industrial validation of smelter gas and hydrogen use as a reductant at the BlueSmelting™ demonstration plant. \n– Production and testing of material from the BlueSmeltingTM plant at the smelters. \n– Progress with the installation of an electric boiler at IOC. \n– Progress research and development analysis for biofuel and coke alternatives for iron ore pelletisation at IOC. \n– Progress with the industrial ramp-up of biocarbon. \n– Secure access to biocarbon sources to support our decarbonisation efforts.\n### Diesel Transition", "chunk_word_count": 483, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > Our second-largest source of process emissions, after alumina and aluminium, arises from processing titanium dioxide $( \\mathsf { T i O } _ { 2 } )$ in Canada and South Africa.", "document_id": "Rio Tinto Climate Change Report 2023", "page": 24, "page_start": 24, "page_end": 24 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 23, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### Diesel is the primary energy source for Rio Tinto’s core mining operations, powering our operations globally and accounting for $12 \\%$ of our total emissions in 2023.\nOur efforts in developing solutions to decarbonise our operations, which include the modelling of energy systems and solutions, reinforce the view that the long-term solution for transitioning our mining fleet and equipment from fossil fuels is electrification.\nAlthough current technology does not yet deliver the energy density required in large mining vehicles, exciting progress, including the pace of electric vehicles roll-out and breakthroughs in mining fleet development, assures us that these challenges can be met through innovation and working together.\nHowever, to support meaningful emissions reductions in the mining industry, specialised electric vehicles - distinct from those used in the transportation and consumer sector - are essential. These vehicles must be adaptable to changing mining plans and must deliver powerful performance to support intense work cycles. Most importantly, they will need to be safe, reliable and capable of supporting extended battery capacity and cycle life under harsh and perpetual operating conditions.\nWe cannot pursue the electrification of our fleet in isolation. This is why we are committed to transitioning away from diesel through parallel investment in research and development projects, and the development of complementary approaches to reduce diesel-related emissions. These include increasing fuel efficiency and biofuels procurement.\nA robust fleet is only part of the infrastructure required to support the large-scale transition to an electric mining fleet at our operations. Dynamic and flexible charging infrastructure is also required to support constantly evolving mine plans and equipment routes. It is likely charging stations cannot remain fixed in one location and may need to be complemented by mobile solutions. The charging network must also be underpinned by access to renewable energy sources and the related systems needed to operate these.\n### 4.5Mt\n### 1.6 billion litres\n$C O _ { 2 } \\Theta$ Scope 1 and 2 emissions in 2023 $2 \\%$ decrease from 2022). The Diesel Transition program also addresses marine fuel and some other smaller emissions sources.\ndiesel consumed at our major managed operations in 2023\n\\$38m\n### \\$1.6 billion\nDecarbonisation spend in 2023\nspent on diesel fuel in 2023\n### Medium to long-term transition of diesel usage\n(mobile sources)\n### Contribute to 2030 targets\n### Update on progress against 2023 Climate Action Plan commitments\n### Action 16\n– Boron operations were the first open pit mine globally to successfully transition heavy machinery to $100 \\%$ renewable biofuel from May 2023, a year earlier than anticipated.\nProgress plans to convert the entire fleet at Boron to renewable diesel ahead of the requirement to do this in California in 2024.\n### Action 17\n– We continue to assess this technology to identify suitable operations where it can be deployed, either standalone or as a precursor to wider fleet electrification.\nDevelop a viable trolley assist option for the existing haul fleet, to enable a substantial reduction in diesel use while on trolley.\n– Limitations to deployment include retrofitting to existing operations and a dependence on the availability of renewable energies.", "chunk_word_count": 526, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > Diesel is the primary energy source for Rio Tinto’s core mining operations, powering our operations globally and accounting for $12 \\%$ of our total emissions in 2023.", "document_id": "Rio Tinto Climate Change Report 2023", "page": 25, "page_start": 25, "page_end": 26 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 24, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### Other action\nWe have undertaken the following activities through our partnerships and industry collaborations on diesel transition.\nCompleted a six-month test program of a Scania 20 tonne battery electric truck at our Channar operations in the Pilbara. \nContinued involvement in CharIN and the ICMM’s Initiative for Cleaner Safer Vehicles to build on collaborative industry partnerships, to solve challenges related to inter-operability and large electric truck dynamic charging.\n### What we will do in 2024\n– Transition our Kennecott Copper operations to renewable diesel. \n– Commence battery electric haul truck trials in the Pilbara. \n– Develop a deployment plan for partial abatement electrification options. \n– Consider options to develop an Australian biofuel supply chain.\n### Case study: biofuel trial at Kennecott Copper\nWe partnered with engine manufacturer Cummins to complete a seven-month trial of renewable diesel at our Kennecott operation in Utah, US. This successful trial has led to the execution of a commercial supply agreement for biofuel to be used at Kennecott. Transitioning heavy mobile equipment and processing activities to $100 \\%$ biofuel will target a $C O _ { 2 } \\Theta$ reduction of more than 495,000 tonnes, comparable to eliminating annual emissions of over 107,000 cars.\n### Nature-based solutions\n\\$88m 2023 spend on carbon credits and Nature-based Solutions\nNature-based solutions (NbS) complement our decarbonisation program. They do not compete for capital with, or replace, our decarbonisation projects, rather they are treated as standalone carbon and nature investments that can bring positive outcomes in the regions where we operate.\nWe expect to ramp-up the retirement of carbon credits to approximately 3.5 million per year over the next decade. This is equivalent to around $10 \\%$ of our 2018 baseline emissions. We will then flex this up or down depending on the level of progress we make on technology breakthroughs for our hard-to-abate emissions.\nWe have three pathways to securing carbon credits: investment in Australia Carbon Credit Units; the development of our own voluntary projects; and commercial agreements with voluntary carbon credit developers.\nOur ambition is to work with communities to commit at least 500,000 hectares of land to high-integrity NbS programs globally by 2025. We define high-integrity as projects that balance positive outcomes for people, nature and climate and take an integrated landscape perspective.", "chunk_word_count": 385, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > Other action", "document_id": "Rio Tinto Climate Change Report 2023", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 25, "chunk_text": "# RioTinto\n## 2023 Scope 1 & 2 emissions\n### Forecast carbon credit retirements\n(Mt $C O _ { 2 } \\Theta$ , equity basis)\n4\nNBS pathways\n1a: High range of Australian Carbon Credit Units (development and commercial)\n1b: Low range of Australian Carbon Credit Units (development and commercial)\n2: Voluntary development projects\n3: Voluntary commercial agreements\nRegardless of the pathway, we use similar development and assessment criteria covering the carbon integrity and social and ecological safeguards that underpin the projects. These quality criteria are described in more detail in our 2022 Climate Change Report and based on our standards, along with guidance from organisations such as:\nWe are also focused on project development to reduce our overall reliance on spot transactions and move ACCU costs closer to the marginal cost of development. In 2023, our net emissions total does not include 86,000 ACCUs retired for compliance with the Safeguard Mechanism for the period 2021-22. We expect to include ACCUs in our net emissions figure from 2024 onwards.\nLocal partners, including non-governmental organisations, communities and their representatives, have the knowledge and experience of what works best in their context. Some of these local parties are connected to leading international organisations able to support the responsible scaling of activities. Our NGO partners include: BirdLife International, Asity Madagascar, BirdLife South Africa, Guinée Ecologie, Peace Parks Foundation, Sayari Earth Foundation, Wildlife Conservation Society and WILDTRUST.\n– International Union for Conservation of Nature (IUCN) Global Standard for Nature-based Solutions – United Nations Framework Convention on Climate Change (UNFCCC) – Integrity Council for the Voluntary Carbon Market (ICVCM) and Voluntary Carbon Markets Integrity Initiative (VCMI).\n### 2: Voluntary development projects\n## 2023 Progress\nA critical long-term component is to support the development of REDD $^ { + }$ (reducing emissions from deforestation and forest degradation), restoration and sustainable landscape management programs in the regions connected to our assets. We believe these are much-needed tools to finance large-scale, long-term activities that bring urgent positive outcomes for people and climate, while preventing the deterioration of pristine environments and restoring the ecosystem services on which we all rely.\nWe completed five feasibility studies, with four additional feasibility studies currently ongoing in Guinea and South Africa. These studies, which include stakeholder engagement, assess the viability of a project to generate sustainable carbon credits with long-term positive outcomes for people and nature.\nWe continually review our criteria to consider the latest developments in best practice and our own learnings.", "chunk_word_count": 410, "section_path": "RioTinto > 2023 Scope 1 & 2 emissions > Forecast carbon credit retirements", "document_id": "Rio Tinto Climate Change Report 2023", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 26, "chunk_text": "# RioTinto\n## 2023 Progress\n### 1: Investment in Australia Carbon Credit Units (ACCUs)\nOur efforts are most mature in Fort Dauphin in the Anosy region of Madagascar, where we have been implementing pilot projects, while completing restoration and REDD+ feasibility studies. These pilots focus on a variety of protection and restoration activities for forests and mangroves. We use pilots to test ideas with interested communities, develop models addressing their land management challenges, and secure early wins as we progress government engagement and partner capacity building.\nOur carbon team sources, develops and invests in Australian carbon farming projects to meet our Safeguard Mechanism liabilities. Sourcing focuses on high-quality projects within three land-based methods: savanna burning, human-induced regeneration (HIR)/ integrated farming land management (IFLM) and active planting.\nOur priority areas are Madagascar, Guinea, South Africa and Argentina due to their high-carbon, biodiversity and social potential. These regions cover a diverse set of landscapes including forests, coastal dunes, mangroves and pastoral lands.\nThese development projects focus on implementing solutions that result in longterm changes in land and water stewardship, to restore or protect ecosystems while generating benefits for communities. In addition to conservation and restoration efforts, there is strong focus on energy management projects (such as cookstoves), efficient agriculture and agroforestry projects (with potential links to markets) and ecotourism. Together, these will help to define a more diversified and self-sustaining economy for these regions. Project design is focused on securing areas under immediate threat, largely generating avoidance credits. This will shift to a greater balance of removals as our restoration projects mature.\nWe have an opportunity to invest in carbon projects that have positive outcomes for nature and promote Indigenous participation in carbon markets. This year we purchased:\nWhile we are committed to this work, our progress is dependent on governments agreeing and implementing clear policy and stable regulatory environments, in alignment with Article 6 of the Paris Agreement.\n– Approximately 500k ACCUs from Indigenous-owned carbon projects and are in discussions to create long-term partnerships with multiple Indigenous project developers.\n### 3: Voluntary commercial agreements\n– An equity stake in AI Carbon, an Australian nature-based carbon developer. This provides us with access to a pipeline of high-quality HIR carbon removal and native regeneration projects, many of which are on land with Traditional Owner connections presenting opportunities for partnerships.\nGovernment engagement and capacity building takes time, so our development portfolio is unlikely to be at scale before 2030. In the meantime, we will enter commercial agreements with a small number of high-quality carbon projects in our operating regions to build net reduction progress and deliver positive outcomes for people and nature.\n### What we will do in 2024\n- Finalise feasibility studies in Guinea and South Africa. \n- Ramp-up activities in priority regions, including NbS pilots and studies. \n- Finalise and disclose information on voluntary commercial partnerships we have secured. \n- Provide details on our carbon credit sourcing strategy, including integrity criteria, due diligence and volumes purchased.", "chunk_word_count": 494, "section_path": "RioTinto > 2023 Progress > 1: Investment in Australia Carbon Credit Units (ACCUs)", "document_id": "Rio Tinto Climate Change Report 2023", "page": 28, "page_start": 28, "page_end": 28 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 27, "chunk_text": "# RioTinto\n## 2023 Progress\n### Scope 3 emissions: Partnering across our value chains\nIn 2023, our Scope 3 emissions were 578Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ (equity basis), approximately 18 times higher than our Scope 1 and 2 emissions. Most of these emissions $( 9 4 \\% )$ stem from customer processing of our products, particularly iron ore and bauxite and alumina, contributing $69 \\%$ and $22 \\%$ respectively.\nWe have seen a significant increase in the number of our customers setting public targets for their Scope 1 and 2 emissions (our Scope 3). About $5 3 \\%$ of our total iron ore sales are now to steel producers with already set public targets to reach net zero by 2050, up from about $50 \\%$ in 2022 and $2 8 \\%$ in 2021. Meanwhile, nearly $40 \\%$ of our bauxite sales are to customers with set net zero emissions targets, though only $13 \\%$ of this is to companies aiming for net zero by 2050. As these numbers rise, we expect to enhance our ability to partner through the value chain to achieve our common sustainability objectives.\nWe actively engage with our customers including encouraging them to set targets aligned with a net zero future while partnering on impactful areas of mutual collaboration.\nWe are committed to partnering with our customers and suppliers to find better ways to help them achieve their targets a decade earlier – reaching net zero by 2050.\nAs things stand today, our analysis of our customers’ targets and their governments’ commitments to reduce their emissions shows a trajectory for those processing emissions that approaches net zero by around 2060.\nTo do this, we are acting now by investing in the development of breakthrough technologies aiming to help decarbonise our value chains and upgrading our ores to be suitable for these. By holding ourselves accountable on real and measurable commitments in the near term, we can help to make sure technologies are developed early enough to accelerate the transition in the long term. Therefore, this year we have set specific near-term targets for steel, alumina refining, shipping, and procurement decarbonisation, that are detailed further in this section.\n[IMAGE CAPTION] Illustrative Scope 3 emissions trajectories (Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ Estimates are based on current product and customer mix. The net zero trajectory for our Scope 3 emissions and the illustrative Scope 3 trajectory represent two potential pathways, and are not definitive forecasts.\nApproximately $78 \\%$ of our Scope 3 processing emissions come from China, which has pledged to be carbon neutral by 2060. $1 8 \\%$ come from Japan, South Korea and other countries that have pledged to be carbon neutral by 2050.", "chunk_word_count": 465, "section_path": "RioTinto > 2023 Progress > Scope 3 emissions: Partnering across our value chains", "document_id": "Rio Tinto Climate Change Report 2023", "page": 29, "page_start": 29, "page_end": 30 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 28, "chunk_text": "# RioTinto\n## 2023 Progress\n### Scope 3 emissions: Partnering across our value chains\nThe biggest source of our Scope 3 emissions is the traditional coal-powered blast furnace, followed by electricity-intensive aluminium smelting. In 2023, Scope 3 processing emissions related to our iron ore rose from 387Mt $C O _ { 2 } \\Theta$ in 2022 to 400Mt $C O _ { 2 } \\Theta$ in 2023 primarily due to an increase in production. Downstream processing emissions from bauxite and alumina decreased from 147Mt $C O _ { 2 } \\Theta$ in 2022 to 130Mt $C O _ { 2 } \\Theta$ mostly as a result of reduced emission intensities related to aluminium smelting in China.\nIllustrative S3 trajectory incorporating current customer and country pledges Potential net zero 2050 emissions pathway (based on NZSI and IAI scenarios)\n(2022: 584Mt CO2e)\n### What we are doing\nIn 2023, we defined $_ { 4 + 2 }$ focus areas to address our Scope 3 emissions. These cover our four most significant categories – steel, alumina refining, shipping, and procurement decarbonisation – considering the magnitude of emissions and our ability to drive meaningful incremental impact. In parallel, we are also working on two transversal programs aimed at leveraging our scale to support collective industry and policy action and enhancing emissions transparency across our value chains.\n## 3. Future pathways\n### Steel value chain\nThe main focus of our research and development is, therefore, on a range of new technologies that unlock competitive low-carbon technologies for low and medium-grade iron ores. We are working to solve the key constraints to this, notably removing impurities found in low-mid-grade iron ores prior to and during iron and steelmaking. We are working on beneficiating our ores as well as partnering with our stakeholders on the development of an electric smelting furnace (ESF). Beneficiation involves the removal of impurities prior to processing while the addition of an ESF enables impurity removal following the ironmaking process and prior to the conversion into steel.\nSteel is one of the most cost-efficient construction materials and is essential in low-carbon infrastructure, transportation and buildings. With close to two billion tonnes of crude steel produced globally in 2023, the industry overall emits over 3 billion tonnes of $C O _ { 2 }$ annually, equivalent to around $8 \\%$ of global carbon emissions.\n## 1. Existing pathways\nWe are actively working with our customers to help reduce their carbon emissions from the current blast furnace process. We are working with customers on increasing the ratio and usage of iron ore lump as well as pelletising Pilbara ores as a blast furnace feed. New technologies are also looking at ways to recycle and optimise residual slag as well as exploring the usage of carbon capture, utilisation, and storage.\nAs the world’s largest iron ore producer, we have a key role to play in decarbonising the steel industry. We are partnering with our customers and industry participants to build a portfolio of options spanning the entire value chain, from iron ore processing to steelmaking.", "chunk_word_count": 509, "section_path": "RioTinto > 2023 Progress > Scope 3 emissions: Partnering across our value chains", "document_id": "Rio Tinto Climate Change Report 2023", "page": 30, "page_start": 30, "page_end": 31 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 29, "chunk_text": "# RioTinto\n## 2. Emerging pathways\nWe leverage our high-grade iron ore from IOC, and eventually Simandou, to help accelerate the proliferation of shaft furnace, direct reduced iron (DRI), which is the only economic low $C O _ { 2 }$ ironmaking route available today. We are also working to secure offtakes of low-carbon hot briquetted iron (HBI) as a way of better understanding the emerging low-carbon iron and steel market while lowering our Scope 3 emissions. This pathway will, however, eventually become constrained by the scarce availability of high-grade ores, which represent only $5 \\mathrm { - } 1 0 \\%$ of the global iron ore supply.\nIn 2022 we met our original target to engage with nearly all our direct iron ore customers. Since then, we have advanced to collaborating on tangible projects. We are currently working with over 40 partners, across 50 projects, in 10 countries.\nWe have also developed an alternative end-to-end proprietary process called BioIron™, which uses biomass instead of coal, along with microwave energy, to convert Pilbara ores into metallic iron. The process was proven effective in 2023 in a small-scale pilot plant in Germany, with the potential to reduce $C O _ { 2 }$ emissions by more than $9 5 \\%$ when compared to pig iron produced in the blast furnace.\nSupported by research on our orebodies, our objective is to unlock the most sustainable and economic pathways for our iron ores. We prioritise our project portfolio at key project milestones considering parameters technical and commercial feasibility, and abatement potential, to ensure a disciplined approach to investing capital and effort. We focus on three pathways:\n$\\ln 2 0 2 3 ,$ , we spent $\\$ 28$ million on steel decarbonisation initiatives, and have set specific action-oriented targets for steel decarbonisation.\n[IMAGE CAPTION] Our objective is to unlock the most sustainable and economic pathways for our iron ores BOF: Basic Oxygen Furnace DR-EAF: Direct Reduction - Electric Arc Furnace\n### Detailed progress on key steel decarbonisation projects and objectives for 2024\n## 2023 progress", "chunk_word_count": 341, "section_path": "RioTinto > 2. Emerging pathways", "document_id": "Rio Tinto Climate Change Report 2023", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 30, "chunk_text": "# RioTinto\n## 2024 objectives\n1. Existing pathways – Blast furnace optimisation Working with our customers to lower the CO2 intensity of the blast furnace: Potential abatement of 20-30% from traditional blast furnace\n– Complete construction of the Baowu Meishan lump drying plant.\nBaowu Meishan microwave lump drying pilot plant detailed design plan nearing completion. Potential for a $2 \\%$ increase in the proportion of lump used within the blast furnace and 32Ktpa carbon emissions reduction at the site.\nContinue to work with key steelmakers to progress higher lump usage trials where lab tests are showing positive results.\nTesting increased lump usage in the blast furnace with POSCO and Zenith. Laboratory tests indicate the potential to increase lump usage by at least $3 - 5 \\%$ per customer. A $5 \\%$ increase in lump usage can drive a reduction of approximately $1 \\%$ in blast furnace emissions per customer, by mitigating the need for pre-processing (eg sintering and pelletising).\nDeveloping an economically viable carbon capture technology with Shougang that could capture blast furnace gas (which consists of approx. $20 \\%$ $C O _ { 2 } \\uparrow$ . At scale, this technology could deliver up to $2 . 5 \\%$ reduction in $C O _ { 2 }$ emissions from the blast furnace, compared to a baseline of 2.26t $\\mathsf { C O } _ { 2 } / \\mathrm { t }$ steel. A small-scale test facility, designed in 2023, is under construction.\nComplete small-scale carbon capture test facility construction. Complete large-scale pilot facility detailed design and begin construction.\n## 2. Emerging pathways – High-grade DRI\nUtilise our high-grade iron ores to accelerate the early proliferation of low CO2 technologies Estimated abatement compared with a traditional blast furnace emitting 2.3tonnes CO2/ tonne steel: - Natural gas DR shaft + Electric Arc Furnace - 50-65%; \n- Hydrogen DR Shaft + Electric Arc Furnace - 70-90%\nSigned a multi-year agreement to supply high-grade direct reduction iron ore pellets from our IOC operations to H2 Green Steel’s integrated low-carbon steel plant in Boden, Sweden. Evaluating a portfolio of options in energy-advantaged regions (Canada, the US, Europe, Australia, the Middle East) to accelerate the build-out of natural gas and, eventually, hydrogen shaft furnace solutions.\n– Progress a portfolio of options in energyadvantaged regions to secure a lower $C O _ { 2 }$ technology for our high-grade iron ores. This will include the completion of engineering studies and the formation of partnerships in key regions.", "chunk_word_count": 412, "section_path": "RioTinto > 2024 objectives", "document_id": "Rio Tinto Climate Change Report 2023", "page": 32, "page_start": 32, "page_end": 32 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 31, "chunk_text": "# RioTinto\n## 3. Future pathways\nFundamental research to understand and enhance the suitability of low to mid-grade ores for future low CO2 technologies \nEstimated abatement compared with a traditional blast furnace emitting 2.3tonnes CO2 / tonne steel: \n- Hydrogen DR shaft + Electric Smelting Furnace (ESF) + Basic Oxygen Furnace - $\\pmb { \\mathcal { W } } \\pmb { \\mathcal { S } } \\pmb { \\mathcal { Q } } \\pmb { \\mathcal { Q } } \\pmb { \\mathcal { Q } }$ \n- BioIronTM + ESF + Basic Oxygen Furnace - 80 - 95% Research to improve our scientific understanding of our ores’ properties to enhance their suitability for new low $C O _ { 2 }$ technologies and processes. \nIn 2023 we developed AI-based techniques to predict ore characteristics such as density and porosity, partnering with the Australian National University (ANU). \nLaunched a multi-year research and development program with Future ENergy EXports and the University of Western Australia to research how Pilbara ores react to different gases and under different conditions, to inform performance in low $C O _ { 2 }$ technologies (shaft furnace and fluid bed).\n– Progress our program with ANU, building a small-scale pilot facility to further study how our ores would behave under different types of hydrogen-based processing. Commence lab-scale test work to investigate how our ores behave under different ironmaking conditions.\n### Pilbara beneficiation (ore upgradeability)\n– Evaluating the extent to which impurities can be removed from our Pilbara blend ores economically prior to processing, so these ores can be used effectively in low $C O _ { 2 }$ technologies. Completed mineral resource and inventory reviews to understand how much of our future reserves are suitable for upgrading. \nDeveloped conceptual process flows to upgrade suitable ores, and began lab-scale test work to improve our understanding of the amenability of our ores for low $C O _ { 2 }$ technologies.\nComplete lab-scale test work and progress small-scale beneficiation trials. Complete conceptual study into pilot plant options using an existing plant as a pilot facility.\n### BioIron™\nCompleted a detailed feasibility study, secured a site for the next Continuous Pilot Plant (CPP), and continued test works on the Small Scale Pilot Plant (SSPP) with the University of Nottingham (UoN), to improve our understanding of the process and equipment design. Continued to work closely with environmental organisations such as the World Wide Fund for Nature (WWF) to develop credible guidelines for the definition of “sustainable” biomass.\nCommence construction of the CPP1 which will help demonstrate production at 1 tonne per hour. Launch global studies for microwave scale up and for raw biomass supply.", "chunk_word_count": 444, "section_path": "RioTinto > 3. Future pathways > Pilbara beneficiation (ore upgradeability)", "document_id": "Rio Tinto Climate Change Report 2023", "page": 32, "page_start": 32, "page_end": 32 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 32, "chunk_text": "# RioTinto\n## 3. Future pathways\n### Hydrogen DRI and electric melter\nProgressed research on pelletisation of Pilbara ores for the shaft furnace with research partners (such as COREM) and customers including Nippon Steel and Kobe. \nCompleted a concept study with BlueScope and OEMs, providing initial estimates and a conceptual design for the shaft furnace and ESF technology using Pilbara iron ores. \nAgreed with Baowu to collaborate on the development of an ESF, and pelletisation of Pilbara ores. Progressed research with Rio Tinto’s Bundoora Technical Development Centre (BTDC) to develop a fines-based reduction process (fluid-bed process) using Pilbara ores, achieving encouraging results at batch scale.\n– Continue research on pelletisation of Pilbara ores with partners including Baowu, Nippon Steel, Kobe, COREM and BlueScope. Progress laboratory testing and work program with BlueScope and BHP including further test works and pre-feasibility study for a Direct Reduction-Electric Smelting Furnace (DR-ESF) pilot plant. Progress plan to construct a small-scale ESF at one of Baowu’s steel mills in China. Conduct a feasibility study to evaluate a pilot scale up for our fines-based reduction process.\n### Aluminium value chain\n### Shipping", "chunk_word_count": 185, "section_path": "RioTinto > 3. Future pathways > Hydrogen DRI and electric melter", "document_id": "Rio Tinto Climate Change Report 2023", "page": 32, "page_start": 32, "page_end": 32 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 33, "chunk_text": "# RioTinto\n## 3. Future pathways\n### Steel decarbonisation targets:\nOur Scope 3 emissions from shipping and logistics are 9.2Mt $C O _ { 2 } \\Theta$ . Of this, 5.1Mt $( 5 4 \\% )$ is generated by our chartered fleet, and around 2.2Mt $( 2 4 \\% )$ comes from shipping our products, where freight has been arranged by the purchaser. The remaining 2.0Mt $(22 \\% )$ comprises other logistics elements such as truck, rail, container movement and spend based emissions. In addition to Scope 3 emissions, there is an additional 0.4Mt of Scope 1 shipping-related emissions attributed to the vessels we own.\nWe are the world’s largest bauxite producer and a leading producer of low-carbon aluminium. Our efforts to decarbonise our own operations are at the core of our Scope 3 partnerships with our customers - helping them find more efficient, lower emissions ways of processing our bauxite and alumina.\nSupport our customers’ ambitions to reduce their carbon emissions from the blast furnace by $20 \\mathrm { - } 3 0 \\%$ by 20351 .\n– Reduce our Scope 3 emissions from our IOC high-grade ores by $50 \\%$ by 2035 relative to 2022 levels2 .\nMore than $8 5 \\%$ of our 130Mt $C O _ { 2 } \\Theta$ Scope 3 emissions in the aluminium value chain comes from the aluminium smelting process – the most electricity and emissions intensive part of the value chain. However, the majority of our product is processed in China using coal-fired refining and smelting processes, where we have little influence over the power source for these electricity grids.\n– Commission the Biolron™ CPP by 20262 .\n– Commission a shaft furnace (DRI) $^ +$ ESF pilot plant by 2026, in partnership with a steelmaker1,3.\nIn order to reduce emissions from shipping, we focus on:\n– Finalise study on a beneficiation pilot plant in the Pilbara by 2026.\nEnergy efficiency: By the end of 2023 we achieved a $3 7 \\%$ reduction in emissions intensity relative to 2008 levels (up from $30 \\%$ by the end of 2022), mostly by:\nWe estimate that we will spend $\\$ 100 m$ on steel decarbonisation in 2024. Approximately one third of this will be capital expenditure on BioIronTM (subject to approvals and technical feasibility), with the remainder being operational expenditure on our other partnerships.\nOur short-to-medium-term focus is to help our customers improve the alumina refining process to increase energy efficiency and optimise use of our bauxite4 .\na. Incorporating larger vessels such as Newcastlemax vessels which have ${ \\sim } 1 0 \\%$ lower emission intensity compared with 170-180k deadweight tonnage (DWT), and smaller Capesize vessels.\nIn 2022, we met our target of engaging with nearly all bauxite customers and have since then advanced engagement with them.\nb. Design improvements and technical modifications to the hull, propeller design and engine efficiency. As we improve the energy efficiency of our own vessels, we are also prioritising chartering vessels with energy-saving devices installed.", "chunk_word_count": 499, "section_path": "RioTinto > 3. Future pathways > Steel decarbonisation targets:", "document_id": "Rio Tinto Climate Change Report 2023", "page": 33, "page_start": 33, "page_end": 33 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 34, "chunk_text": "# RioTinto\n## 3. Future pathways\n### Steel decarbonisation targets:\nIn 2023, we worked with three key customers representing $4 7 \\%$ of our bauxite sales, to shortlist potential areas for collaboration. We are now developing action plans to collaborate on priority environmental topics and build on our work on residue management. We also continue to advance and share new research and development in the refining process, and draw on learnings from our own assets.\nc. Speed and route optimisation: We deploy sophisticated weather routing software and seek to continually optimise scheduling and reduce unneeded time waiting in port.\nBeyond electricity, emissions are mostly related to the oxidation of carbon anodes in the aluminium smelting process, and the use of energy for process heat in the alumina refining process. These emissions sources account for approximately $1 1 \\%$ and $12 \\%$ respectively of Scope 3 emissions, related to our bauxite and alumina sales. As we advance ELYSIS™ technology at our own assets, we will gain crucial experience to enable better industry-wide outcomes in the future.\nWe also identified and implemented emission reduction technologies on our owned fleet. In 2024, we plan to trial further technologies, while also exploring opportunities to apply these to our chartered fleet.\nTransitional fuels: We are exploring opportunities for biofuels and liquified natural gas (LNG). In 2023, we introduced five LNG dual-fuel Newcastlemax vessels to our portfolio, each capable of delivering up to 15 to $20 \\%$ $C O _ { 2 }$ emissions reductions. A further four will be introduced in 2024. We completed a 12-month biofuel trial on our owned vessels with a $30 \\%$ blend with very low sulphur fuel oil which could reduce $C O _ { 2 }$ emissions by $2 6 \\%$ . The trial affirmed the fuel’s technical viability for existing vessels, although the economics remain challenging. We continue our work with our partners to develop commercially viable biofuel bunkering solutions as well as recycled fuel deployment.\n### Alumina decarbonisation targets:\n– In 2024, partner with at least two bauxite customers with the goal of improving energy efficiency and reducing emissions, focusing on:\na. Digestion – implement and validate digestion improvement technology b. Organics management – develop approaches to control or remove organic compounds from the refining process.\n– In 2024, develop technical options to reduce moisture content in our bauxite, leading to greater energy efficiency in refining, transport and distribution.\nEnd-state fuels: To achieve our 2030 and 2050 goals, our marine team is focusing on end-state fuels. Although there is no clear, single end-state fuel solution for the shipping industry, low-carbon methanol and lowcarbon ammonia are considered the most promising to reach net zero shipping. We are focused on bringing dual fuel, net zero vessels into our portfolio by 2030.\n### Procurement", "chunk_word_count": 464, "section_path": "RioTinto > 3. Future pathways > Steel decarbonisation targets:", "document_id": "Rio Tinto Climate Change Report 2023", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 35, "chunk_text": "# RioTinto\n## 3. Future pathways\n### Collective industry action and policy advocacy\nUpstream Scope 3 emissions from procurement were 25.6Mt $C O _ { 2 } \\Theta$ in 2023, split between purchased fuels, goods and services. The goods and services are further divided between emissions related to operational expenditure purchases (such as caustic, explosives, coke, pitch) of 17.5Mt, and capital expenditure purchases (such as machinery, electrical equipment) of 2.5Mt. Due to the nature of our businesses, many of our purchased inputs are from hard-to-abate sectors, such as caustic, coke, pitch and steel.\nWe leverage our size and scale to drive collective industry action, share lessons learned and insights, and advocate for informed industry position and policy (including economic incentives). We do this by engaging with entities such as the International Council on Mining and Metals (ICMM), First Movers Coalition, the International Maritime Organization via member states, investor groups, and governments. In 2023, we worked with our peers at ICMM to develop two guidance documents on Scope 3 emissions, the first focused on a common reporting and the second on target-setting. Additionally, in sectors such as shipping, we more specifically support regulatory incentives, carbon pricing and the development of low-carbon bunkering infrastructure. We also actively champion collective action with our customers and experts. In October, we held the Iron Ore Technical Forum in Xi’an, China, where 400 international experts discussed the road to decarbonisation for a particularly hard-to-abate sector.\nAlongside technological breakthroughs, regulations will support the drive towards net zero shipping. In 2023, the International Maritime Organization (IMO) announced stronger ambitions, including guidance for net zero shipping “by or around 2050”, with interim non-binding emissions reduction targets set for 2030 and 2040, however, it has not set out how these targets will be achieved.\nWe work with more than 20,000 suppliers across complex multi-layered supply chains. We are taking a systematic approach, initially prioritising engagement with 50 of our highest-emitting suppliers representing over $40 \\%$ of our procurement-related emissions, to focus our efforts, drive supplier accountability for setting and delivering against their decarbonisation targets, and collaborating on improving emissions measurement and abatement.\n### Shipping decarbonisation targets:\n– Aim to reach net zero shipping by 2050 across our shipping footprint.\n– First Movers Coalition (FMC) pledge of $10 \\%$ of time-chartered fleet to be running on net zero fuel by 20301 .\nShort-term pathways to reduce emissions for our highest-emitting suppliers resemble our own efforts, notably converting to renewable energy, decarbonising transport and sourcing low-carbon raw materials, and we are exploring opportunities for knowledge sharing and collaboration.\n– Extend our current emissions intensity targets. We continue to aim to reduce emissions intensity by $40 \\%$ by 2025 (five years ahead of IMO targets), while also setting a new target for $50 \\%$ intensity reduction by ${ } ^ { 2 0 3 0 ^ { 2 } }$ .", "chunk_word_count": 478, "section_path": "RioTinto > 3. Future pathways > Collective industry action and policy advocacy", "document_id": "Rio Tinto Climate Change Report 2023", "page": 34, "page_start": 34, "page_end": 34 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 36, "chunk_text": "# RioTinto\n## 3. Future pathways\n### Transparency and traceability\nWe maintain a complete and audited inventory of Scope 3 emissions to ensure quality and traceability in our calculations. Each year, we enhance measurement accuracy by integrating more specific data from customers and suppliers. For iron ore processing, where customer data is scarce, we use a technical energy and mass balance approach. In 2022, we enhanced transparency related to our emissions from shipping, launching a reporting platform and partnering with shipowners for actual emissions data on voyage-chartered vessels. The accuracy of our emissions from shipping has subsequently improved, and we aim to extend this accuracy to at least $9 5 \\%$ of all managed freight, including owned and chartered vessels, by the end of 2024. In the aluminium value chain, we track product flow from bauxite to aluminium, integrating customer data, our lifecycle assessment inputs, joint venture data and industry intelligence for more accurate emissions tracking.\nIn 2024 we are also strengthening decarbonisation as a key evaluation criterion for all new sourcing arrangements in high-emission categories such as raw materials, explosives and mining equipment, based on suppliers’ GHG performance and disclosure.\n– Enhance accuracy of emissions reporting. By 2024 we aim to use actual voyage data (eg actual fuel consumption) rather than industry estimates for more than $9 5 \\%$ of our cargo shipments3.\n### Procurement decarbonisation targets:\n– Starting in 2024, prioritise engagement with our top 50 suppliers, focused on driving supplier accountability for setting and delivering against their decarbonisation targets, and collaborating on improving emissions measurement and abatement.\n– Starting in 2024, decarbonisation will be used as a key criterion in all new sourcing arrangements in our highest-emitting categories (raw materials, explosives and global equipment).\nOur Scope 3 emissions factors and assumptions are detailed in our 2022 Scope 1, 2 and 3 Emissions Calculation Methodology Report, available on our website. The Scope 3 methodology this year is largely the same and updates are set out in an Addendum to the 2022 report.\n### Capital allocation and investment framework\n### Our investment framework\nrecognising that only focusing on “cash positive” projects will not get us to our 2030 target.", "chunk_word_count": 360, "section_path": "RioTinto > 3. Future pathways > Transparency and traceability", "document_id": "Rio Tinto Climate Change Report 2023", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 37, "chunk_text": "# RioTinto\n## 3. Future pathways\n### Progress in 2023\nDecarbonisation investment is derived from the Group’s capital allocation framework and aligned to our 2025 and 2030 Scope 1 and 2 emissions targets. Decarbonisation investment decisions are made under a dedicated evaluation framework which considers the impact of the investment on shareholder value, the impact on an asset’s cost base, the level of abatement, the maturity of the technology, the competitiveness of the asset and its policy context, and alternative options on the pathway to net zero. Projects are also assessed against our approach to a just transition, with consideration to the impact on employees, local communities and industry.\n\\$425m Total decarbonisation spend (2022: \\$299m)\nFor nearly a quarter of a century, we have included a cost of carbon in our investment decisions. However, legislated carbon penalties are now starting to have a greater influence on our portfolio, such as the expansion of Australia’s Safeguard Mechanism. Approximately half our emissions are covered by carbon pricing regulation, principally in Australia and Canada.\n\\$130m \nCapital expenditure and investments \n(2022: $\\$ 128 m$\nPricing of future carbon penalties remains uncertain, but based on today's policies we expect a long-term return across our portfolio of $3 \\%$ to $5 \\%$ . While this is currently below our cost of capital, when modelled under our Competitive Leadership scenario which limits the global temperature outcome to $1 . 8 ^ { \\circ } \\mathrm { C }$ , we see returns increasing to $10 \\%$ to $1 3 \\%$ , indicating that “the business of decarbonisation is good business”.\n\\$234m Operational expenditure (2022: $\\$ 1238$\nThe composition of the portfolio of decarbonisation projects is complex. In some cases, such as renewables, projects are already cost competitive compared with traditional fossil fuel processes and are expected to deliver cost savings. In other cases, such as our new renewable diesel contract at Kennecott, opportunities come at an incremental cost. Consideration often needs to be given to higher-cost options that are available today, vs lower-cost options that may be available later. Our investment framework seeks to balance these quantitative and qualitative drivers,\n\\$61m \nRECs and offsets (intangible assets) \n(2022: $\\$ 33m$ )\nThese qualitative and quantitative metrics ensure we make investment decisions that deliver on our targets and improve the economics of our projects under increasing carbon pricing regulation. Overall, we aim for our projects to be value accretive at a modest carbon price.\nOur decarbonisation project portfolio includes approximately 70 projects and is segmented into five categories based on readiness for execution. This is constantly evolving as new projects are added and project timelines adjusted following further technical and commercial assessment.", "chunk_word_count": 443, "section_path": "RioTinto > 3. Future pathways > Progress in 2023", "document_id": "Rio Tinto Climate Change Report 2023", "page": 35, "page_start": 35, "page_end": 35 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 38, "chunk_text": "# RioTinto\n## 2030 decarbonisation spend guidance\nOur target to reduce emissions by $50 \\%$ by 2030 relative to 2018 levels remains unchanged, however we now believe that achieving this will require less capital investment and more operating expenditure. We originally estimated that approximately 3GW of renewable power would be needed to decarbonise our operations in the Pilbara - 1GW to replace gas-fired power generation and 2GW to decarbonise our diesel-based fleets. Carbon reduction from economically viable, large-scale fleet electrification has always been expected post-2030, however delays in the availability of this technology mean that we now do not expect to invest in the same scale of Pilbara renewables pre-2030. We remain committed to developing 1GW of renewable energy capacity in the Pilbara, however, we now estimate that 600 to 700MW capacity is required by 2030.\nOur investment framework has enabled us to explore alternative ways to deliver our decarbonisation portfolio and create new partnership models. We now anticipate that up to $70 \\%$ of our abatement by 2030 will be delivered by commercial partnerships, with several renewable PPAs and biofuel contracts executed over the past 12 months. While total capital expenditure across the portfolio will be lower, significant capital expenditure is expected across multiple projects including renewables development in the Pilbara and other locations, alumina process heat, and establishment of a biofuel supply chain.\nTo accelerate our emissions abatement, we will take advantage of commercial solutions that can be ready in the market this decade and avoid lengthy project development schedules. Examples of these include the use of renewable diesel in our mining fleets as well as potential PPAs with Traditional Owners in the Pilbara. Therefore, although our 2030 emissions target remains unchanged, we now believe that this can be met with \\$5bn-\\$6bn of capital investment, down from previous guidance of $\\$ 7.5$ bn. This excludes capitalised RECs, voluntary offsets and compliance offset costs.\n### Decarbonisation pipeline\n[IMAGE CAPTION] (Mt $C O _ { 2 } \\Theta$ equity basis)\n### What we will do in 2024\nOur actual spend on decarbonisation was $\\$ 299$ million in 2022 and $\\$ 425$ million in 2023. We estimate our total spend on decarbonisation in 2024 will be approximately $\\$ 750$ million, including:\n– $\\$ 250$ million in capital expenditure on abatement projects and investments – $\\$ 440$ million on operational expenditure – $\\$ 60$ million for RECs and offsets (intangible assets).\nIn addition, we anticipate entering into new energy contracts that are in addition to the above.\nWe estimate our capital expenditure on decarbonisation will be $\\$ 1.5$ billion in the period 2024-2026.\nWe estimate that we will spend $\\$ 100 m$ on steel decarbonisation in 2024. Approximately one third of this will be capital expenditure on BioIronTM (subject to approvals and technical feasibility), with the remainder being operational expenditure on our other partnerships.\n### Climate policy engagement", "chunk_word_count": 476, "section_path": "RioTinto > 2030 decarbonisation spend guidance > Decarbonisation pipeline", "document_id": "Rio Tinto Climate Change Report 2023", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 39, "chunk_text": "# RioTinto\n## 2030 decarbonisation spend guidance\n### We support the goals of the Paris Agreement, to pursue efforts to limit the global average temperature increase to 1.5 degrees and do not advocate for policies that undermine this or discount Nationally Determined Contributions.\nWe have financial interests in 20 facilities covered by the Safeguard Mechanism, including bauxite mines, alumina refineries, aluminium smelters, iron ore mines and rail, marine shipping and ERA uranium mine closure activities. These facilities represent approximately $8 \\%$ of the emissions covered by this legislation.\nWhile business has a vital role in managing the risks and uncertainties of climate change, governments can support the challenge by providing enabling frameworks, which increase momentum towards shared net zero goals. Higher carbon prices and other forms of support are necessary to enable us to address harder-to-abate parts of our portfolio. However, these in isolation or on a standalone country basis, in the absence of a global carbon price, may not support global emissions reductions.", "chunk_word_count": 164, "section_path": "RioTinto > 2030 decarbonisation spend guidance > We support the goals of the Paris Agreement, to pursue efforts to limit the global average temperature increase to 1.5 degrees and do not advocate for policies that undermine this or discount Nationally Determined Contributions.", "document_id": "Rio Tinto Climate Change Report 2023", "page": 37, "page_start": 37, "page_end": 37 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 40, "chunk_text": "# RioTinto\n## 2030 decarbonisation spend guidance\n### Europe\nRecently, the European Union (EU) has implemented the Carbon Border Adjustment Mechanism (CBAM) that applies to imported goods including cement, iron, steel, aluminium and fertilisers, electricity and hydrogen. While currently in a transitional reporting phase, the CBAM will result in costs being payable by importers of carbon intensive goods where no carbon price is levied in the producing country.\nWe also advocate for a Safeguard Mechanism which considers the financial impact of this policy on lower-margin assets, and balances this with the shared commitment on the transition to net zero and the extended timeframes and investment required for technological breakthroughs.\nWe currently export aluminium, iron ore and some minerals to the EU from Canada and Australia. As the reporting requirements are based on products sold (rather than producing facilities) the regulation brings a new level of reporting complexity for our operations worldwide. We are developing the necessary tools to gather the emissions and carbon pricing data needed by importers. We are also engaged with different industry associations on the future expansion of the EU’s CBAM, the inclusion of indirect emissions, and the definition of new precursors (such as anodes and alumina).\nGovernments and government-owned providers are key to ensuring the access to internationally competitive, large-scale and reliable renewable energy required to support companies’ abatement projects and the broader global energy transition. Without access to firmed renewable power, it is often challenging to justify the significant capital investment required to decarbonise, particularly for energy intensive processing facilities.\nBroader Australian government activity is focused on establishing the structural and national energy systems to support the pathways to net zero. As a large domestic energy user, we continue to advocate for policies supporting development of new renewable energy generation and storage capacity which provide firmed, competitively priced energy to enable the decarbonisation of our operations.\nSome of the technologies required to decarbonise our operations are at very early stages of development. A range of policy measures are necessary to support early movers to innovate and deploy low-carbon technology in hard-to-abate sectors and provide regulatory certainty to attract investment. Incentives, investment from, and partnership with, governments and others are key to support industrial transitions and competitive low-carbon manufacturing. This funding must be commensurate with the level of capital investment required to transition to net zero.\n### Industry associations and civil society", "chunk_word_count": 396, "section_path": "RioTinto > 2030 decarbonisation spend guidance > Europe", "document_id": "Rio Tinto Climate Change Report 2023", "page": 37, "page_start": 37, "page_end": 37 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 41, "chunk_text": "# RioTinto\n## 2030 decarbonisation spend guidance\n### Canada\nIndustry associations and civil society organisations play an important role in policy development. In 2023 we engaged with external stakeholders on an enhanced approach to advocacy, to support the decarbonisation of our operations.\nMost of our facilities in Canada are covered by carbon pricing regulation. The Government of Quebec and the California Air Resource Board (CARB) are currently assessing possible changes to the operating parameters of their joint cap and trade system. These include the level of the annual allowance caps, the treatment of saved and accumulated allowances, the market control mechanisms, the use of offsets and the treatment of carbon sequestration. We advocate for the continued flexibility of compliance instruments, accessibility to compliancegrade offsets from California and to maintain the current market control mechanisms. We have also engaged with the Government of British Columbia on reforms to the Output-Based Pricing System and their implications for our Kitimat smelter.\nThe Rio Tinto Board approves our positions on climate change policy and approach to engaging with industry associations and the annual review of their advocacy. Responsibility for comparing our positions with those of individual industry associations is delegated to management on a ‘comply or explain’ basis.\nWe know the transition to net zero is both a challenge and an opportunity, and we cannot do it alone. The recent rapid shift in the external context, including increasingly ambitious emissions abatement targets, greater investment through funding for the development of low-carbon technologies and energy systems, and increased disclosure of reporting of climate-related data promoting transparency, supports the shared ambitions required for progress.\nWhere our membership is significant, we work in partnership to ensure the positions of industry associations and our public positions are consistent and aligned with the Paris Agreement. Our annual review of our industry associations’ memberships supplements this report and can be found on our website.\n### United States\nThe United States has enacted policies which aim to support economic growth, trade opportunities and supply chain security, in a manner consistent with broader decarbonisation ambitions. The Inflation Reduction Act provides financial incentives for projects including fleet decarbonisation, production of renewable fuels and clean energy and manufacturing credits for the production of critical minerals.\nAustralia\nWe support Australia’s legislated emissions reduction targets. The Safeguard Mechanism reform introduced in July 2023 plays an important role in reducing Australia’s emissions by $4 3 \\%$ below 2005 levels by 2030, and meeting the commitment to reach net zero by 2050. Rio Tinto supports its role as part of a suite of measures to incentivise genuine industrial abatement.\nIn addition to domestic supply and trade policies, the US is in the process of extending existing trade relationships, including with Australia, that support the development of regional clean energy systems and supporting supply chains.\n### Just transition", "chunk_word_count": 469, "section_path": "RioTinto > 2030 decarbonisation spend guidance > Canada", "document_id": "Rio Tinto Climate Change Report 2023", "page": 37, "page_start": 37, "page_end": 37 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 42, "chunk_text": "# RioTinto\n## 2030 decarbonisation spend guidance\n### Our decarbonisation strategy presents an opportunity to work closely with the local communities in which we operate, to explore different partnership models and ensure the low-carbon transition is undertaken in a manner where employees, society and local communities are not left behind.\nThe low-carbon transition impacts all aspects of our business, and the wider community. It requires significant investment and, in some of our key geographies, increased access to land to enable renewable energy growth. This introduces social impact risks to vulnerable communities, employees and the wider industry, and we continue to build meaningful relationships and partnerships to manage social and human rights risks and implement the opportunities.\nOur progress on our 2023 commitments was largely through our work with local communities and our employees on projects to decarbonise our operations or as part of our approach to closure. Across all areas of our business, we are seeing tangible examples of teams undertaking decarbonisation activities with a just transition at the forefront. This has manifested through government engagement and host community partnerships.\n### Diavik closure investment\nOur solar plant at Diavik Diamond Mine will generate approximately 4,200MWh of electricity each year and provide up to $2 5 \\%$ of Diavik’s electricity during closure work until 2029. We worked with the Government of the Northwest Territories and community partners to determine how renewable energy infrastructure can best benefit the region following closure.\nWhile our broader business objectives of impeccable ESG and social licence guide our approach to a just transition, we work to ensure these guiding principles are felt on the ground across our decarbonisation portfolio. Potential risks and opportunities are assessed on a project-by-project basis.\n### Gladstone community\nOur operations in the Gladstone region support 8,000 direct and indirect jobs. We continue to work to ensure the decarbonisation plans for these assets consider the associated impact on our people and the local community.\n### CA 100+ Benchmark\nThe partnership is an example of how we intend to approach projects – creating new partnerships, strengthening existing relationships and providing long-term benefits to local communities. This partnership approach is reflective of our focus on a just transition instead of specific delivery model approach or capital spend commitment. The significant land requirements in the Pilbara for our solar projects, potential impacts to the local flora and fauna and associated heritage surveys are all being studied in consultation with Traditional Owners.\n### Community collaboration\n### What we will do in 2024\nIn October 2023, we signed a memorandum of understanding (MOU) with Yindjibarndi Energy Corporation to explore opportunities to collaborate on renewable energy projects on Yindjibarndi Country in the Pilbara region of Western Australia. Together, we will study and evaluate a range of opportunities including wind and solar power as well as battery energy storage systems.\n– Formalise the process to prioritise an energy transition that gives due consideration to ESG issues.\n– Continue our assessment of projects in consultation with stakeholders, to consider different partnership models and decarbonisation solutions reflecting the requirements of industry and local communities.\nThis MOU builds on our partnership with the Yindjibarndi Aboriginal Corporation, following the signing of an updated agreement in 2022 to deliver improved social and economic outcomes for the Yindjibarndi People.", "chunk_word_count": 543, "section_path": "RioTinto > 2030 decarbonisation spend guidance > Our decarbonisation strategy presents an opportunity to work closely with the local communities in which we operate, to explore different partnership models and ensure the low-carbon transition is undertaken in a manner where employees, society and local communities are not left behind.", "document_id": "Rio Tinto Climate Change Report 2023", "page": 38, "page_start": 38, "page_end": 38 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 43, "chunk_text": "# RioTinto\n## 2030 decarbonisation spend guidance\n### Data tables\n### Greenhouse Gas Emissions\n### Scope 1 and 2 greenhouse gas emissions – equity basis (Rio Tinto Share1 ). Performance against target\n### Equity greenhouse gas emissions (Mt $\\mathsf { C O } _ { 2 } \\mathsf { e } )$ )\nOur 2030 greenhouse gas emissions targets are to reduce our absolute Scope 1 & 2 emissions by $1 5 \\%$ by 2025 and $50 \\%$ by 2030 compared with our 2018 equity baseline. Please see GHG Emissions Methodology sheet for details of our approach to reporting Scope 1, 2 & 3 emissions. \nChanges to our 2018 baseline include: Scope 2 update to market-based methodology, the additional equity share of the Oyu Tolgoi mine that was purchased in mid-December 2022, and the additional equity share of MRN purchased in 2024 \nThe baseline value is based on the current equity in each asset, including zero equity in divested assets. \n1. Rio Tinto Share (equity basis) represents emissions from our benefit or economic interest in the activities resulting in the emissions \n2. Scope 2 emissions in the Baseline are calculated using the market – based method.\n### Scope 1, 2 and 3 greenhouse gas emissions – equity basis\nQueensland Alumina Limited (QAL) is $80 \\%$ owned by Rio Tinto and $20 \\%$ owned by Rusal. However, as a result of QAL’s activation of a step-in process following the Australian Government’s sanction measures, Rio Tinto is currently entitled to utilise $100 \\%$ of the capacity at QAL, but paying $100 \\%$ of the costs for as long as that step-in continues. Our 2023 equity emissions and our 2018 baseline include QAL emissions on the basis of Rio Tinto’s $80 \\%$ ownership. In 2023, the additional emissions associated with the step-in were 0.8Mt. Rusal has commenced proceedings challenging the validity of the step-in and the sanctions regime may change over time, such that the duration of the step-in remains uncertain. Historical Scope 1 and 2 emissions have been restated to reflect improvements in data quality.\nScope 2: Market-based emissions reported as zero include Escondida, Resolution Copper, Weipa and Kennecott Copper with surrendered Renewable Energy Certificates (RECs) and Oyu Tolgoi I-RECs from Inner Mongolia and nearby provinces. QMM has a wind and solar contract with energy attributes.\n4. In 2023 we are not reducing our reported net emissions by using any surrendered carbon units as eligible offsets retired. Our net emissions total does not include 86,000 ACCUs retired for compliance with the Safeguard Mechanism for the period 2021-22. We expect to include ACCUs in our net emissions figure from 2024 onwards.\nHistorical information for copper equivalent intensity has been restated in line with the 2023 review of commodity pricing to allow comparability over\n7. GHG Protocol Corporate accounting and reporting standard recommends disclosure of $C O _ { 2 }$ emissions from biologically sequestered carbon for transparency. These are from biofuel use and are not classified as our Scope 1 emissions.", "chunk_word_count": 498, "section_path": "RioTinto > 2030 decarbonisation spend guidance > Data tables", "document_id": "Rio Tinto Climate Change Report 2023", "page": 39, "page_start": 39, "page_end": 39 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 44, "chunk_text": "# RioTinto\n## 2023 Scope 2 reporting methodology update\n### Equity greenhouse gas emissions – Baseline (Mt $\\mathsf { C O } _ { 2 } \\mathsf { e } )$\n### Scope 3 greenhouse gas emissions – equity basis\n### GHG Emissions (indicative) breakdown by Product Group\n### Energy\n### $100 \\%$ managed basis, location-based method\nNote: Due to rounding, the sum may not total 100 per cent.\n### Equity basis, market-based method\n### Total energy use (PJ)\nEnergy reported on equity basis includes market-based electricity. Wherein, “Renewable energy purchased” consists of enegy with zero emission sources due to contracts where we have the rights to the energy attributes (e.g. purchase and surrender of Renewable Energy Certificates (RECs)).\nRenewable energy generated includes our equity share of generation of hydro power from Energy Electrique in Quebec, Kemano & Iron Ore of Canada as well as renewable power plants in the Pilbara region, Australia.\nSome renewable and non-renewable electricity include above is exported to third parties\n### Electricity generation & use, equity basis – indicative table\n### Total electricity generated and used (GWh)\nhis table provides further transparency over electricity sources, including commercially purchased attributes which enabled us to claim zero emissions. It is a mixture of market and location ased methods. The data is on an equity basis and includes electricity generated and sold to third parties.\nenewable electricity purchased (with contracted energy attributes)” is where we report zero Scope 2 emissions for the equivalent electricity purchased (in MWh). Under these circumstances, th newable supply may or may not be connected to the site and follows the reporting energy market rules of the country/region.\nRio Tinto has entered into electricity supply contracts for operations with low emission or renewable electricity suppliers, in many cases before market-based reporting and renewable energy certificates existed from these suppliers. The “renewable electricity purchased (without contracted energy attributes)” is indicative of the physical location of sites in relation to large renewable energy suppliers we are contracted to on physical supply including ISAL in Iceland, NZAS in New Zealand, Bell Bay in Tasmania Australia. Under a market-based Scope 2 method these are not treated as zero emission sources and these are grid connected and not classified as direct supply.\n### Assurance statement (KPMG) Assurance statement (KPMG)\n### Independent Assurance Report\nof KPMG (KPMG Australia) to the Directors of Rio Tinto plc and Rio Tinto Limited\n## CONCLUSION\n### Climate Action Plan Progress – Limited assurance\nBased on the evidence we have obtained from the procedures performed, we are not aware of any material misstatements in the reporting of Rio Tinto’s progress against its Climate Action Plan commitments (CAP Progress) presented in the Rio Tinto Climate Change Report 2023 for the year ended 31 December 2023, which has been prepared by Rio Tinto plc and Rio Tinto Limited (together, Rio Tinto) in accordance with the Reporting Criteria.", "chunk_word_count": 480, "section_path": "RioTinto > CONCLUSION > Climate Action Plan Progress – Limited assurance", "document_id": "Rio Tinto Climate Change Report 2023", "page": 39, "page_start": 39, "page_end": 42 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 45, "chunk_text": "# RioTinto\n## CONCLUSION\n### Scope 1 and 2 GHG Emissions – Reasonable assurance\nIn our opinion, in all material respects, Rio Tinto’s total Scope 1 and 2 Greenhouse Gas (GHG) emissions (equity basis) of 31.1Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ (Location-Based) and 32.6Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ (Market-Based) (Scope 1 and 2 GHG Emissions) presented in the Rio Tinto Climate Change Report 2023 for the year ended 31 December 2023, has been prepared by Rio Tinto in accordance with the Reporting Criteria.\n### Scope 3 GHG Emissions – Limited assurance\nBased on the evidence we obtained from the procedures performed, we are not aware of any material misstatements in the Scope 3 GHG emissions (equity basis) of 578.1Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ (Scope 3 GHG Emissions) in the Rio Tinto Climate Change Report 2023 for the year ended 31 December 2023, which has been prepared by Rio Tinto in accordance with the Reporting Criteria.\n### Information Subject to Assurance\nThe Information Subject to Assurance comprised the following data and information for the year ended 31 December 2023:\nCAP Progress, as disclosed in “Our Climate Action Plan – 2023 progress & 2024 update: Progress in $2 0 2 3 ^ { \\prime \\prime }$ and the disclosures directly related to each “Progress in $2 0 2 3 ^ { \\prime \\prime }$ update within the body of the report Total Scope 1 and Scope 2 (Location-Based) GHG Emissions (equity basis) 31.1Mt CO2e Total Scope 1 and Scope 2 (Market-Based) GHG Emissions (equity basis) 32.6Mt $\\mathsf { C O } _ { 2 } \\mathsf { e }$ Total Scope 3 GHG Emissions (equity basis) 578.1Mt CO2e\nin the Rio Tinto Climate Change Report 2023 available on Rio Tinto’s website at https://www.riotinto.com/en/sustainability/climate-change.\n### Reporting Criteria\nThe Reporting Criteria used as the basis of reporting are:\nFor the CAP Progress, the Basis of Preparation as described and presented within the Climate Action Plan and the Rio Tinto Climate Change Report 2023; \nFor the Scope 1 and 2 GHG Emissions, the World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD)’s GHG Protocol: A Corporate Accounting and Reporting Standard (Revised Edition) (2015), GHG Protocol: Scope 2 Guidance and the Basis of Preparation as described and presented within the Scope 1, 2 and 3 Calculation Methodology (2022 Report and 2023 Addendum); and For the Scope 3 GHG Emissions, the WRI and WBSCD’s GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2013) and Technical Guidance for Calculating Scope 3 Emissions (version 1.0) and the Basis of Preparation as described and presented within the Scope 1, 2 and 3 Calculation Methodology (2022 Report and 2023 Addendum).", "chunk_word_count": 471, "section_path": "RioTinto > CONCLUSION > Scope 1 and 2 GHG Emissions – Reasonable assurance", "document_id": "Rio Tinto Climate Change Report 2023", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 46, "chunk_text": "# RioTinto\n## CONCLUSION\n### Basis for Conclusion\nWe conducted our work in accordance with International Standard on Assurance Engagements ISAE 3000 and International Standard on Assurance Engagements ISAE 3410 (Standards). In accordance with the Standards we have:\nUsed our professional judgement to plan and perform the engagement to obtain limited assurance that we are not aware of any material misstatements in the CAP Progress in 2023 and the Scope 3 GHG Emissions, whether due to fraud or error; • Used our professional judgement to assess the risk of material misstatement and plan and perform the engagement to obtain reasonable assurance that the Scope 1 and 2 GHG Emissions are free from material misstatement, whether due to fraud or error; Considered relevant internal controls when designing our assurance procedures, however we do not express a conclusion on their effectiveness; and Ensured that the engagement team possess the appropriate knowledge, skills and professional competencies.\n### Summary of Procedures Performed\nIn gathering evidence for our conclusions, our assurance procedures comprised:\nEnquiries with relevant Rio Tinto personnel to understand and evaluate the design and implementation of the key systems, processes and internal controls to capture, collate, calculate and report the Information Subject to Assurance; • Assessment of the suitability and application of the Reporting Criteria in respect of the Information Subject to Assurance; • Corroborative enquiries with relevant management to understand progress against the Climate Action Plan commitments; • Testing the disclosed information on CAP Progress to source documentation on a sample basis;\nKPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation", "chunk_word_count": 332, "section_path": "RioTinto > CONCLUSION > Basis for Conclusion", "document_id": "Rio Tinto Climate Change Report 2023", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 47, "chunk_text": "# RioTinto\n## CONCLUSION\n### Independent Assurance Report\nof KPMG (KPMG Australia) to the Directors of Rio Tinto plc and Rio Tinto Limited\nAnalytical procedures over the Scope 1, 2 and 3 GHG Emissions;\nSubstantively tested the Scope 1 and 2 GHG Emissions, on a sample basis at corporate and operational level, which included testing a selection of 15 operations being Tom Price, Pilbara Rail Operations, Richards Bay Minerals, Tomago, Oyu Tolgoi, RTM Boron Operations, Kennecott, Queensland Alumina Limited, Gladstone Power Station, RTA Yarwun, Boyne Smelters, Bell Bay Aluminium, RTA Weipa, RTA Alma and RTA Arvida; Interviews and walkthroughs with site personnel at each of the 15 operations listed above to assess the key systems, processes and internal controls to capture, collate, calculate and report Scope 1 and 2 GHG Emissions at an operational level, and how this information is reported and captured at corporate level; Testing the Scope 3 GHG Emissions to source documentation on a sample basis; • Testing the mathematical accuracy of a sample of calculations underlying the Scope 1, 2 and 3 GHG Emissions; Assessing the appropriateness of a sample of emissions factors applied in calculating the Scope 1, 2 and 3 GHG Emissions; Reviewing the Scope 1, 2 and 3 Calculation Methodology (2022 Report and 2023 Addendum) and the Rio Tinto Climate Change Report 2023 in their entirety to ensure they are consistent with our overall knowledge of Rio Tinto and our observation of its operations.\n### How the Standard Defines Limited Assurance, Reasonable Assurance and Material Misstatement\nThe procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed.\nsonable assurance is a high level of assurance, but is not a guarantee that it will always detect a material misstatement when it exis\nMisstatements, including omissions, are considered material if, individually or in the aggregate, they could reasonably be expected to influence relevant decisions of the Directors of Rio Tinto.\n### Use of this Assurance Report\nThis report has been prepared for the Directors of Rio Tinto for the purpose of providing assurance conclusions on the Information Subject to Assurance and may not be suitable for another purpose. We disclaim any assumption of responsibility for any reliance on this report, to any person other than the Directors of Rio Tinto, or for any other purpose than that for which it was prepared.\n### Our Responsibility", "chunk_word_count": 433, "section_path": "RioTinto > CONCLUSION > Independent Assurance Report", "document_id": "Rio Tinto Climate Change Report 2023", "page": 43, "page_start": 43, "page_end": 43 }, { "report": "Rio Tinto Climate Change Report 2023.pdf", "chunk_idx": 48, "chunk_text": "# RioTinto\n## CONCLUSION\n### Management’s responsibility\nManagement are responsible for:\nOur responsibility is to perform a limited assurance engagement in relation to the CAP Progress and Scope 3 GHG Emissions and a reasonable assurance engagement in relation to the Total Scope 1 and 2 GHG Emissions for the year ended 31 December 2023, and to issue an assurance report that includes our conclusions.\nDetermining that the Reporting Criteria is appropriate to meet their needs; \nPreparing and presenting the Information Subject to Assurance in accordance with the Reporting Criteria; \nEstablishing internal controls that enable the preparation and presentation of the Information Subject to Assurance that is free from material misstatement, whether due to fraud or error; \nEnsuring the Basis of Preparation in accordance with which the Information Subject to Assurance has been determined and compiled is clearly and unambiguously set out in the Rio Tinto Climate Change Report 2023; \nTelling us of any known and/or contentious issues relating to the Information Subject to Assurance; and \nMaintaining integrity of the website.\n### Our Independence and Quality Management\nWe have complied with our independence and other relevant ethical requirements of the Code of Ethics for Professional Accountants (including Independence Standards) issued by the Australian Professional and Ethical Standards Board, and complied with the applicable requirements of Australian Standard on Quality Management 1 to design, implement and operate a system of quality management.\nsignature]\nKPMG\nAdrian King\n21 February 2024\nPartner Melbourne, Australia\nKPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation\n### riotinto.com\nThis report is printed on paper certified in accordance with the $\\mathsf { F S C } ^ { \\scriptscriptstyle \\textregistered }$ (Forest Stewardship Council®) and is recyclable and acid-free.\nPureprint Ltd is FSC certified and ISO 14001 certified showing that it is committed to all round excellence and improving environmental performance is an important part of this strategy.\nPureprint Ltd aims to reduce at source the effect its operations have on the environment and is committed to continual improvement, prevention of pollution and compliance with any legislation or industry standards.\nPureprint Ltd is a Carbon / Neutral® Printing Company. Report produced by Black Sun Global, part of the Positive Change Group.\n### RioTinto\nRio Tinto plc 6 St James’s Square London SW1Y 4AD United Kingdom\nRio Tinto Limited \nLevel 43, 120 Collins Street \nMelbourne VIC 3000 \nAustralia", "chunk_word_count": 462, "section_path": "RioTinto > CONCLUSION > Management’s responsibility", "document_id": "Rio Tinto Climate Change Report 2023", "page": 43, "page_start": 43, "page_end": 46 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 0, "chunk_text": "# RYANAIR\n## RYANAIRGROUP\n### Pathway to Net Zero emissions by 2050\nSee page 12 for more details\n## CONTENTS\nEmployee Attraction & Retention Employee Satisfaction Inclusion, Diversity & Equality Boosting Economies\n## OUR APPROACH TO SUSTAINABILITY\nA Message from Our Group CEO \nMateriality \nA Message from Our Director of Sustainability \nESG Ratings & Memberships \nGovernance Highlights \nSummary of Director Competencies \nRyanair’s Board of Directors\n## OUR CUSTOMERS\nCustomer Panel \nCustomer Improvements \nCustomer Satisfaction \nAccessible Transport \nCustomer Charter \nCyber Security & Data Protection\n## ENVIRONMENT\nClimate Change Managemen Aircraft Emissions Building Energy Managemen Supply Chain Emissions Waste Management The Impact of Fit for 55 Environment Key Facts\nAPPENDIX\nSustainability Accounting Standards Board \n(SASB) \nTask Force on Climate-Related Financial \nDisclosures (TCFD) \nConsolidated Disclosures Persuant to Article 8 \nTaxonomy Regulation \nGlobal Reporting Initiative (GRI) \nExternal Assurance Statement\nSOCIAL\nLabour Relations Operational Safety & Security Training & Development Update\nWe support the 2015 Paris Agreement, Destination 2050, the United Nations Global Compact and the 17 UN Sustainable Development Goals. Our 2022 Sustainability Report, Aviation With Purpose, communicates our goals, targets and initiatives which support these agendas.\n## A MESSAGE FROM OUR GROUP CEO\nWe are pleased to present our Sustainability Report for the year ended 31 March 2022 (FY22); the second year in a row that our business was devastated by the Covid-19 pandemic. Our recovery was badly disrupted by the Omicron variant in late November, and our Spring recovery was again disrupted by Russia’s illegal invasion of Ukraine on 24 February.\nFor example, Ryanair is one of the few airlines in Europe that is fully crewed, despite the fact that we are operating at $1 1 5 \\%$ of our pre-Covid capacity.\nWe must continue to work hard this year to earn the trust of our passengers, to improve our customer service, to maximise our punctuality and our reliability, while minimising our air fares, so that we can make air travel affordable for millions of Europeans and their families.\nWe remain hopeful that the high rate of vaccination across the EU will allow the airline and tourism industry to finally put the Covid-19 pandemic behind us. However, we cannot ignore the risk of new variants emerging in Autumn 2022, but hopefully nothing emerges that is vaccine resistant. If there are no adverse Covid developments, then we expect shorthaul intra-European air travel to recover strongly during Summer 2022, and that this recovery will be maintained through the remainder of FY23.", "chunk_word_count": 407, "section_path": "RYANAIR > RYANAIRGROUP", "document_id": "Ryanair 2022 Sustainability Report", "page": 2, "page_start": 2, "page_end": 5 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 1, "chunk_text": "# RYANAIR\n## SUSTAINABILITY\nOver the last year, under the leadership of Thomas Fowler, our Director of Sustainability & Finance, we have made significant progress on our sustainability ambitions. This was independently recognised by the CDP (Carbon Disclosure Project), giving us a B rating and Sustainalytics ranking us No.1 rated large cap. airline in the World and the No.1 rated airline in Europe.\nBut our experience with Omicron, and the Ukraine invasion, shows how fragile the market remains, and the strength of any recovery will be hugely dependent upon there being no adverse or unexpected developments over the next fiscal year.\nWe will continue to invest heavily in new fuel efficient and environmentally friendly aircraft. We will continue to invest heavily in recruitment, training, and the safety of many thousands of highly skill aviation professionals, and we will continue to expand at new and existing airports who wish to work with us.\nTHE FUTURE\nThanks to the support of our people, and the leadership of our Board of Directors, we believe that Ryanair has negotiated the unprecedented Covid pandemic better than any other European airline.\n## MATERIALITY\nIn Fiscal Year ended 31 March 2022 (“FY22”), Ryanair conducted a materiality assessment. A well-established process was followed when producing it and we followed some clear steps:\nIn order to identify the areas of most importance to the Ryanair Group (“Group”) and its stakeholders, we completed a horizon scanning exercise to understand the key topics in this agenda. This was informed by competitor reviews, regulation – both existing and upcoming – media analysis and relevant industry research.\nThese topics were then explored in a stakeholder engagement exercise which sought the views of customers, staff, suppliers and professional services.\nRyanair’s Enterprise Risk Management Register was used to plot the potential impact of the topics on the Group.\nThe materiality matrix was presented to the Sustainability Committee for approval and sign off.\nWe established key (where relevant, quantitative) indicators to help us track the success of initiatives. \nThese indicators can be seen throughout this report.\n## TOPICS WHERE WE WILL LEAD THE AVIATION INDUSTRY\nThis report is structured to tell our stakeholders how we are managing the issues that are most material to us.\nOperational Safety & Security\nEmissions\nManaging the safety of our customers and our people (Page 22)\nReducing emissions across our entire value chain (Page 12)\nCyber Security\nOccupational Health & Safety\nProtecting our customer and company data (Page 38)\nImproving and maintaining workplace health & safety standards (Page 22)\nTraining & Development\nEnsuring industry-leading training for pilots, cabin crews, engineers and the wider team (Page 24)\n## A MESSAGE FROM OUR DIRECTOR OF SUSTAINABILITY\n66\nWE WILL CONTINUE TO LEAD SUSTAINABLE AVIATION, FOCUSING ON THE AREAS THAT MATTER MOST TO OUR BUSINESS AND THE REGIONS WE SERVE.\nThomas Fowler, Director of Sustainability & Finance\nIn November 2021 Ryanair published its first “Aviation With Purpose” report. It contained information on our Pathway to Net Zero, our environmental targets, our Safety Strategy and our customer initiatives, among other important topics.\nBoth of these initiatives, building on our already excellent operations, will help us deliver our 2030 carbon intensity goal of 60g $C O _ { 2 }$ pax/km ( $10 \\%$ reduction) by 2030 and our 2050 Net Zero goal.", "chunk_word_count": 547, "section_path": "RYANAIR > SUSTAINABILITY", "document_id": "Ryanair 2022 Sustainability Report", "page": 5, "page_start": 5, "page_end": 7 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 2, "chunk_text": "# RYANAIR\n## SOCIAL\nIn this 2022 update you will see an increase in our disclosures around these key topics. This takes account of increasing expectations around ESG reporting driven by the Sustainable Finance Disclosure Regulation (SFDR) and the upcoming Corporate Sustainability Reporting Directive (CSRD).\nSafety & Security remains our number one priority. This year we completed the standardisation of all our safety procedures across all Group Airlines. This ensures sharing the knowledge and experience gathered over 37 years of safe flying.\nWe continued to deliver best in class training to our team members. This included training up to 1,000 cadets and almost 150 co-pilots being promoted to captain.\nTo ensure we are prepared for the CSRD, we conducted a materiality assessment and scenario analysis to understand what our key disclosures should be. This report focusses on these key issues. You will see throughout, Ryanair operates best-in-class management for each of its material issues. We have also set out the steps taken to deliver on our goals.\n## GOVERNANCE\nWe incorporated key ESG goals into our Remuneration Policy (setting both annual and long term targets), an action which demonstrates the importance of ESG to Ryanair.\nENVIRONMENT\nTo date, we have taken delivery of 73 new Boeing 737- 8200 “Gamechangers” aircraft ahead of peak summer 2022. These aircraft, which offer $4 \\%$ more seats, yet burns $1 6 \\%$ less fuel and reduce noise emissions by $40 \\%$ have performed in line with (and frequently ahead of) expectations. In April 2022, we signed a contract with world leading Sustainable Aviation Fuel (SAF) provider, Neste, for a $40 \\%$ SAF blend in Amsterdam.\nWe will continue to lead sustainable aviation, focussing on the areas that matter most to our business and the regions we serve.\nFinally, I would like to thank my colleagues across the Ryanair Group whose hard work and commitment to sustainability has seen CDP upgrade Ryanair’s rating to B (from B-) and Sustainalytics rank Ryanair the No.1 rated large cap. airline in the World and the No.1 rated airline in Europe.\nAs a leader in corporate sustainability, we recognise the importance of getting external recognition and being active participants in key forums.\nNCDP $\\mathtt { C D P ^ { \\star } }$ awarded Ryanair an industry leading ‘B’ climate protection score in December 2021 (was ‘B-‘ in 2020).\nIn March 2022, Ryanair received an ESG Risk Rating of 23.8 and was assessed by Sustainalytics to be at medium risk of experiencing material financial impacts from ESG factors. This review made us the No.1 rated large cap. airline in the World and the No.1 rated airline in Europe\\*\\*.\nAim to achieve an ‘A’ in the next 2 years.\nMembers of:\n## POLICIES", "chunk_word_count": 453, "section_path": "RYANAIR > SOCIAL", "document_id": "Ryanair 2022 Sustainability Report", "page": 7, "page_start": 7, "page_end": 9 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 3, "chunk_text": "# RYANAIR\n## ESG TARGETS\nDuring FY22, the Ryanair Board approved the updated Code of Business Conduct and Ethics and Anti-Bribery & Anti-Corruption Policy. These updates ensure our policies continue to align to best practice and international standards.\nTo demonstrate the importance we are putting on ESG issues, management’s short, and long-term variable pay is now linked to the Group’s ESG performance. The current KPIs include key environmental targets (including the achievement of a CDP A rating) and improvements in Customer Satisfaction (CSAT) scores, which underpins the Group’s ambitious sustainable traffic growth to ${ } ^ { 2 2 5 \\mathsf { m } }$ passengers p.a. by FY26.\nWe also published a range of new policies including a Freedom of Association Policy, Non-Discrimination Policy and Public Affairs Statement.\nYou can find all our policies on the Group’s website.\n## OUR APPROACH TO SUSTAINABILITY\n## SUMMARY OF DIRECTOR COMPETENCIES\n## RYANAIR’S\n## BOARD OF DIRECTORS\nIndependent: Yes \nBoard Tenure: 5 years Citizenship: Irish/US Commitee: \nExecutive \nNomination (Chair)\nIndependent: Yes Board Tenure: 9 years Citizenship: Irish Commitee: Executive (Chair) Nomination\n## STAN MCCARTHY (NON-EXEC CHAIRMAN)\n## LOUISE PHELAN (NON-EXEC-SID)\nIndependent: Yes \nBoard Tenure: 4 years \nCitizenship: Irish \nCommitee: \nA Audit \nRemuneration\nIndependent: Yes \nBoard Tenure: 8 years \nCitizenship: Irish \nCommitee: \nExecutive \nRemuneration\n## RÓISÍN BRENNAN (NON-EXEC)\n## MICHAEL CAWLEY (NON-EXEC)\nIndependent: Yes \nBoard Tenure: 4 years \nCitizenship: Irish \nCommitee: \nAudit\nIndependent: Yes \nBoard Tenure: 1 year \nCitizenship: Irish \nCommitee: \nAudit\n## EMER DALY (NON-EXEC)\n## GEOFF DOHERTY (NON-EXEC)\nIndependent: Yes \nBoard Tenure: 7 years \nCitizenship: Irish \nCommitee: \nExecutive \nNomination \nIndependent: Yes \nBoard Tenure: 6 years \nCitizenship: Irish \nCommitee: \nSafety & Security \n(Co-Chair)\nIndependent: Yes Board Tenure: 9 years Citizenship: UK Commitee: Audit (Chair)\n## HOWARD MILLAR (NON-EXEC)\n## DICK MILLIKEN (NON-EXEC)\nIndependent: No \nBoard Tenure: 26 years \nCitizenship: Irish \nCommitee: \nExecutive\nMIKE O’BRIEN (NON-EXEC)\nMICHAEL O’LEARY (EXEC)\nIndependent: Yes Board Tenure: 9 years Citizenship: Irish Commitee: Remuneration (Chair)\nYears: 13 Citizenship: Polish\n## JULIUSZ KOMOREK (COMPANY SECRETARY)\nJULIE O’NEILL (NON-EXEC)\n## ENVIRONMENT\nIn 2021 we demonstrated our commitment to the Paris Agreement by developing a Pathway to Net Zero emissions by 2050. In FY22 we continued to build on our safe and efficient flying expertise.\n## MALTA AIR\nAPPENDIX\n## CLIMATE CHANGE MANAGEMENT\nIn FY22, we enhanced our TCFD reporting by conducting a scenario analysis to identify some of the material risks that Ryanair faces as a result of Climate Change. These were further incorporated into the Group’s risk management framework. Details can be seen in the Group’s enhanced TCFD report on page 42.\n50%\nRyanair has also identified some key opportunities that the Group can capitalise on. For example, every customer who switches to Ryanair from EU legacy airlines can cut their $\\mathsf { C O } _ { 2 }$ by up to $50 \\%$ per flight.\nCustomers who switch to Ryanair from EU legacy airlines can cut their $\\pmb { \\complement } \\pmb { \\ 0 } _ { 2 }$ by up to $50 \\%$ per flight", "chunk_word_count": 500, "section_path": "RYANAIR > ESG TARGETS", "document_id": "Ryanair 2022 Sustainability Report", "page": 9, "page_start": 9, "page_end": 13 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 4, "chunk_text": "# RYANAIR\n## AIRCRAFT EMISSIONS\nIn FY22 we focussed on carbon intensity reduction. By reducing emissions we lower our environmental footprint. It also reduces our exposure to environmental/ carbon taxes. We have committed to the Science Based Targets initiative (SBTi) to get our targets validated to their standards over the coming 2 years.\nIn FY22, Ryanair obtained independent verification of our emissions across the entire value chain. We worked with our partners to understand the full impact that Ryanair and its supply chain has on the environment. The work was independently audited and verified by independent environmental accredited verification, certification and auditing body, Verifavia (See page 54).\nAt almost $82 \\%$ of total emissions, Scope 1 emissions are those that we can have most impact in addressing. That is why we published our Pathway to Net Zero in November 2021.\nUpdate on our Pathway to Net Zero\\*\\*\n[IMAGE CAPTION] \\*For a full breakdown of all emissions, please see the TCFD table on page 48 of this report. \\*\\*For more information on SAF, and our Pathway to net zero, please see our website.\n## CARBON INTENSITY\n73\nDespite the continued impact of Covid-19, load factors increased to $82 \\%$ in FY22 $71 \\%$ in FY21). The introduction of 73 new Gamechanger aircraft, along with an increase in load factor led to a $9 \\%$ improvement in carbon intensity to 76g CO2 pax/km in FY22 (FY21: 83g CO2 pax/km). We remain committed to reducing emission intensity by $10 \\%$ from prepandemic levels (66g $\\complement 0 _ { 2 }$ pax/km) to 60g ${ \\mathsf { C O } } _ { 2 }$ pax/km by 2030.\nGamechanger aircraft (with $16 \\%$ lower fuel burn) introduced, along with rising load factor, led to a reduction in carbon intensity", "chunk_word_count": 295, "section_path": "RYANAIR > AIRCRAFT EMISSIONS", "document_id": "Ryanair 2022 Sustainability Report", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 5, "chunk_text": "# RYANAIR\n## RYANAIR’S PARTNERSHIP WITH NESTE\nIn April 2022, Ryanair announced a partnership with Neste, the world leading sustainable aviation fuel (SAF) supplier, to power approx. one third of its flights at Amsterdam Airport Schiphol (AMS) with a $\\mathbf { \\mathcal { A } } [ \\mathbf { 0 } ] \\%$ SAF blend.\nThis SAF will reduce greenhouse gas emissions by over $\\textcircled { \\bullet } \\textcircled { \\bullet } \\textcircled { \\bullet }$ supporting Ryanair’s Pathway to Net Zero by 2050 decarbonisation goals. Ryanair has already significantly advanced this commitment by partnering with Trinity College Dublin to open the Ryanair Sustainable Aviation Research Centre and investing approx. \\$22bn in a new fleet of 210 B737 ‘Gamechangers’, which offers $4 \\%$ more seats but are $1 1 \\%$ more fuel and CO2 efficient and reduce noise emissions by $\\angle 1 0 ^ { \\circ }$\n“We are delighted to announce this landmark deal with Neste which will see Ryanair uplift this new 40% SAF blend. SAF is a cornerstone of our Pathway to Net Zero by 2050 decarbonisation strategy and this new blend will power a third of Ryanair flights at Amsterdam (Schiphol) airport while reducing greenhouse gas emissions by over $\\textcircled { 3 } \\textcircled { 1 } \\textcircled { \\div }$ We look forward to growing our partnership with Neste as we work toward achieving our goal of operating 12.5% of Ryanair flights with SAF by 2030.” Ryanair’s Director of Sustainability, Thomas Fowler\n66\nWE’RE EXCITED TO SUPPORT RYANAIR’S \nWORK TOWARDS ITS DECARBONISATION GOALS \nBY SUPPLYING OUR NESTE MY SUSTAINABLE \nAVIATION FUEL™. SAF IS A KEY ELEMENT \nIN ACHIEVING AVIATION’S EMISSION \nREDUCTION GOALS.\n[IMAGE CAPTION] Ryanair Partners With Neste To Power Flights With 40% SAF Blend\n”\nJonathan Wood, Neste’s vice president Europe, Renewable Aviation\n## BUILDING ENERGY MANAGEMENT\nRyanair’s Scope 2 emissions relate to the energy use in our office buildings in Ireland, Malta and Poland. These emissions also include our hangars in Austria, Germany, Ireland, Italy, Lithuania, Poland, Spain and the UK.\nThough our Scope 2 emissions only account for $0 . 0 4 \\%$ of total emissions, it is still an area we are keen to reduce. That is why we have established a 2030 absolute Scope 2 emission reduction target of $3 5 \\%$ . This target covers $100 \\%$ of emissions from Ryanair’s Dublin campus and support buildings (including training centres).\nThis target was established in FY22. We will engage our energy suppliers over the coming months and/ or when their contracts are under review to put Power Purchase Agreements (PPAs) in place to guarantee renewable energy is used at Ryanair’s head offices and support buildings.\nSolar farm at Airside Green, Dublin\n[IMAGE CAPTION] Airside Green, sustainable offices\nThe management of our Dublin campus and support buildings are certified with the ISO 14001, 45001 and 9001 standards.", "chunk_word_count": 476, "section_path": "RYANAIR > RYANAIR’S PARTNERSHIP WITH NESTE", "document_id": "Ryanair 2022 Sustainability Report", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 6, "chunk_text": "# RYANAIR\n## SUPPLY CHAIN EMISSIONS\nWhile we will have the greatest positive impact addressing our Scope 1 emissions, our analysis shows that we can also have a material positive impact on the environment through the reduction of our Scope 3 emissions. That is why the Group has set a Scope 3 absolute emissions reduction target. The main components of Ryanair’s Scope 3 emissions when fuel (well-to-tank) is excluded relates to aircraft manufacturing, employee commuting, and ground handling. Our target is to reduce non-fuel Scope 3 absolute emissions by $50 \\%$ by 2030. Ryanair will continue to work with our key suppliers and support their decarbonization plans. In FY22, we reduced this impact by focussing on two key areas:\nWe will look to expand on the number of airports where e-turnarounds are performed in coming years.\n## AIRPORTS\nOver $70 \\%$ of our flights go to airports that have set a net zero goal. We engage with our airport partners to ensure future aviation infrastructure demands will be met.\n70%\nof our flights go to airports that have set a net zero goal\n## GROUND HANDLING\nThe electrification of ground handling is underway. With our handling partner Azul, we have introduced electric turnarounds in a number of our locations including all airports in Spain. With our partners in Menzies Aviation we have also introduced electric turnarounds in Amsterdam Schipol, Gothenburg-Landvetter and Oslo Airport. Collectively these E-Turnaround lead to emission savings of c.1,000 tonnes of $C O _ { 2 }$ p.a.\nENVIRONMENT\n## WASTE MANAGEMENT\nRyanair is working to reduce its impact on the environment in all aspects including waste.\n## ON BOARD WASTE\n## WHAT HAPPENS TO THE TYRESWE NO LONGER USE?\nOn board our aircraft, we are working with our partners to reduce single use plastics. To date, we are ahead of our 5-year target having introduced recyclable plastics on over $80 \\%$ of our product lines. We have a goal to be $100 \\%$ single use plastic free by 2025.\nWhen a tyre reaches the end of its first life, Michelin can give it several additional lives by retreading (recapping) it while preserving the same quality and safety levels.\nWaste is managed locally by our airport partners and depending on the location, either fully incinerated or separated with eligible pieces recycled and the remainder disposed of through incineration or landfill.\nIn a second phase, when the tyre has reached its maximum life, Michelin has partnered with Aliapur, which collects used tyres throughout Europe, including those used by Ryanair, to recycle them.\nThese tyres are shredded so that the materials can be transformed into other uses, such as racetracks, household insulation or playgrounds.\nAll this work means that none of the tyres used by Ryanair end up in landfill.\n## TYRES\n80% of our product lines, to date, have already introduced recyclable plastics\nWe are working with our suppliers to reduce the waste that comes from our operations. With the introduction of the Boeing 737-8200 “Gamechangers” into our fleet in FY22 we began working with Michelin. In the past year, in partnership with Michelin, we recycled 3.5 tonnes\\*\\*\\* of tyres.\n## THE IMPACT OF FIT FOR 55", "chunk_word_count": 529, "section_path": "RYANAIR > SUPPLY CHAIN EMISSIONS", "document_id": "Ryanair 2022 Sustainability Report", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 7, "chunk_text": "# RYANAIR\n## ENGAGEMENT ON FIT FOR 55\nThe “Fit for $5 5 \"$ package proposed by the European Commission in 2021 aims to reduce the EU’s net emissions by $5 5 \\%$ by 2030, relative to 1990 levels. While this is a commendable goal, a review of the specific proposals that relate to aviation reveal they mainly apply to intra-EU flights and that, incredibly:\nWe engage with European decision makers to support a fair green transition of the aviation sector.\nAmong the measures included in the “Fit for $5 5 \"$ package, we welcomed the proposal to increase the use of SAF, and engaged relevant stakeholders to stress the importance of using sustainable fuels to cut the sector’s carbon footprint.\n• the majority of EU’s aviation emissions, which are largely caused by long haul carriers, are exempt; \n• the most environmentally efficient EU airlines, such as Ryanair, are punished by increased costs preventing investment in decarbonisation; \n• EU peripheral regions will suffer from reduced air connectivity and significantly increased cost of air access.\nWe have highlighted the limited environmental benefit and the harmful consequences for the EU economy and connectivity resulting from other elements of the package, e.g., a kerosene tax that applies only to intra-EU flights. We welcomed the European Parliament’s vote in June 2022 to include all flights departing from the EEA in the ETS, ending a legislative loophole which exempts long-haul flights from any contribution to decarbonisation.\nRyanair believes the European Union should take action to:\n• Scrap the kerosene tax proposal, since it has no environmental benefits, but extremely negative impacts on connectivity, tourism and employment; \n• Extend ETS to all flights departing from an EU/EEA airport, and honour free allowances at least until 2030 to facilitate investment in decarbonisation measures; \n• Ring-fence any revenues generated by national or European fiscal measures to fund decarbonisation projects for aviation; \n• Promote the production of SAF and make it available in the EU at competitive prices; \n• Encourage the efficient point to point high load factor, low fare model to achieve a real and FROM FIT FOR 55immediate reduction of aviation emissions.\n## REGIONS UNDER THREAT FROM FIT FOR 55\nRegions not under threat Regions under medium threat Regions under heavy threat Non-EU Countries\n## ENVIRONMENT KEY FACTS", "chunk_word_count": 381, "section_path": "RYANAIR > ENGAGEMENT ON FIT FOR 55", "document_id": "Ryanair 2022 Sustainability Report", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 8, "chunk_text": "# RYANAIR\n## THE RYANAIR SUSTAINABLE AVIATION RESEARCH CENTRE, TRINITY COLLEGE DUBLIN\nThe Ryanair Sustainable Aviation Research Centre was launched in April 2021. The Centre has a team of 11 engineers and scientists focused on researching sustainable aviation fuels (SAF), zero carbon aircraft propulsion systems and noise mapping for low-noise aircraft fleets.\nSAF Research Update: The team at Trinity is developing its calculation for the Life Cycle Assessment of the first types of SAFs to be used by Ryanair. This will culminate in a submission to the Gold Standard certification body, for independent verification. The team at Trinity are also on schedule to launch a fast-track test facility to certify new SAFs, by June 2023.\nNoise Research Update: Results for the noise modelling of Ryanair’s future fleet will be presented at the Internoise 2022 conference. In FY23, data from Dublin airport will be used to study Ryanair’s reducing noise footprint and to investigate the impact new aircraft technology will have on the airport and surrounding communities. This will enable the Centre to model the noise emission beyond what is currently commercially available.\nPropulsion Research Update: An aircraft design tool is to be validated for the first time using commercial flight data (based on Ryanair operational flight data). The validation will assess the accuracy of the model for predicting fuel burn.\nFor more information on the Centre’s work, please see our website.\n## AIRCRAFT NOISE\nIn FY22, $100 \\%$ of Ryanair aircraft complied with ICAO 10-decible criterion. The introduction of 73 new Boeing 737- $8 2 0 0 ^ { \\prime } { \\sf s }$ ahead of peak summer 2022 will maintain this high standard with operational noise emissions reductions by up to $40 \\%$ compared to the Boeing 737-800NG.\nWATER MANAGEMENT\nFollowing extensive internal and external engagement with our stakeholders, water management is not a material issue for Ryanair. We monitor our usage and undertake a process of remediation if excessive water usage is identified in any of our locations.\n## SOCIAL\nFY22 saw a return to air travel and our people were ready for it. From ground to air, our 19,000 + aviation professionals delivered exceptional service to our passengers.", "chunk_word_count": 362, "section_path": "RYANAIR > THE RYANAIR SUSTAINABLE AVIATION RESEARCH CENTRE, TRINITY COLLEGE DUBLIN", "document_id": "Ryanair 2022 Sustainability Report", "page": 20, "page_start": 20, "page_end": 23 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 9, "chunk_text": "# RYANAIR\n## SECURE EMPLOYMENT\nRyanair continues to invest in its relationships with our people and their trade unions throughout Europe. Almost $90 \\%$ of our people are covered by collective bargaining agreements. We meet regularly with our union partners to negotiate on pay and conditions for our people, in addition to engaging on operational updates, procedures and policy updates. The remainder of our people not covered by a collective bargaining agreements include management, support teams and contractors.\nGiven the seasonality of the aviation industry, we also offer seasonal/fixed term contracts in a number of holiday destinations across the network. Over 500 of our people operate on agreed part-time rosters or working arrangements across the network.\nWe also offer flexi rosters which allows our cabin crew and pilots to nominate if they wish to work only early shifts or late shifts. None of our 19,000 strong workforce are on zero hours contracts.\nDespite the setbacks this year of the Omicron variant and the Russian invasion of Ukraine, we are committed to restoring the pay cuts we agreed with our people during Covid. We are delivering the first tranche of the 3-year restoration plan as agreed in July 2022 and we are working on agreements with our union partners to accelerate years 2 and 3 into one restoration in April 2023 contingent on Ryanair returning to pre-Covid profitability during FY23. We are committed to the full pay restoration for all our people as our business recovers.\n90%\nAlmost $90 \\%$ of our people are covered by collective bargaining agreements\n## OPERATIONAL SAFETY& SECURITY\nThe safety and security of our customers and people is Ryanair’s No.1 priority.\nOur safety commitment begins with the hiring and training of Ryanair’s pilots, cabin crew, and maintenance teams. Ryanair has not had a single fatality in its $^ { 3 7 + }$ year operating history.\n66\nWE ARE VERY PROUD \nOF OUR 37+ YEAR SAFETY RECORD. \nTHE SAFETY AND SECURITY OF OUR PEOPLE \nAND OUR CUSTOMERS REMAINS \nOUR NO.1 PRIORITY.\nWe have some of the best people in the industry working across the Ryanair Group and our safety record is testament to their commitment to safety. With these safety professionals leading the way, we are confident that we will continue to fulfil our ‘One Mission’ objective to deliver safe, efficient operations for all our customers and people.\nIn FY21, we launched our four-year safety strategy. As part of our unwavering commitment to safety, we continue to invest in and develop our Safety Management System.\nCarol Sharkey, Chief Risk Officer\nWe have an industry leading safety record and strivefor continuous improvement, beyond compliance. FY22 was no different.\nNo.1\nSafety and security of our customers and crew is the No.1 priority of Ryanair\n## METRICS & TARGETS", "chunk_word_count": 460, "section_path": "RYANAIR > SECURE EMPLOYMENT", "document_id": "Ryanair 2022 Sustainability Report", "page": 23, "page_start": 23, "page_end": 24 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 10, "chunk_text": "# RYANAIR\n## COMMITMENT\nRyanair’s commitment to safety and security is visible at all levels within the Group – from the Board and Senior Management Team to line personnel.\nSafety performance is assessed against predetermined safety objectives and safety performance indicators, both internal and external (as applicable).\nThis year we completed the standardisation of all our safety procedures across Group airlines. This ensures sharing the knowledge and experience gathered over 37 years of safe flying. Safety performance is not only reviewed at individual airline level, a Group Safety Committee, comprised of the independent Board Director of Safety (Mike O’Brien), the Chief Risk Officer (Carol Sharkey), the Director of Flight Standards and the Accountable Managers of each of the Group Airlines has also been established.\n## SAFETY SURVEY\nWe carried out an extensive Safety Survey in FY22. Hundreds of our people across all Group Airlines provided feedback on our Safety Management System.\nThe feedback from this Safety Survey was encouraging. It confirmed that our safety and security policy, procedures and systems are well understood and embraced by our people.\n## MANAGEMENT SYSTEM\n## COMPLIANCE MONITORING\nRyanair Group Airlines are required to comply with applicable International and EU Aviation Safety & Security Regulations, including Regulation (EU) 2018/1139 (as amended).\nWe have robust internal Compliance Monitoring Programme in place across all Ryanair Group Airlines. This includes a comprehensive and extensive annual schedule of independent audits and inspections. Where necessary, action is taken to further reduce risk and to achieve our goal of continuous improvement.\nAs required by these Regulations, Ryanair Group Airlines have established and implemented a comprehensive Management System, integral elements of which are a Safety Management System and Compliance (Quality) Monitoring System.\nAll activity is carried out under the control and supervision of the Competent Authority (Irish Aviation Authority, Polish Civil Aviation Authority, Transport Malta – CAD and UK Civil Aviation Authority). Each Group Airline is subject to routine robust audit and inspection by their Competent Authority.\nThe Management System includes:\n## TRAINING & DEVELOPMENT UPDATE\nTraining is at the forefront of the employee experience at Ryanair and our people have access to some of the best training facilities in the industry. Our pilot and cabin crew training facilities in Ireland, Italy and the U.K. are strategically located across the network and house state-of-the-art flight and cabin simulators.\n## TRAINING\n### Support Staff\nOur support staff are provided with induction training along with recurrent training. This training is specific to the department in which the staff member is located. Mandatory training happens every year on topics such as GDPR, Cyber Security and Anti-Bribery & Anti-Corruption.\nOur people undergo extensive training throughout their careers in Ryanair. Our Training Department provide training to over 19,000 aviation professionals to ensure they maintain the highest safety standards and deliver the best service to our customers.\n### Pilots\nOur pilots carry out 50 hours of recurrent training annually, including training and classes at our stateof-the-art Full Motion Simulators/Academy Centres in Ireland, Italy and the UK. In addition, pilots complete theoretical training and practical equipment training on a recurrent basis.", "chunk_word_count": 513, "section_path": "RYANAIR > COMMITMENT", "document_id": "Ryanair 2022 Sustainability Report", "page": 25, "page_start": 25, "page_end": 26 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 11, "chunk_text": "# RYANAIR\n## RECOGNISING TALENT\n### Flight Deck\nDuring FY22, despite the reduction in our flying schedule, we promoted $5 \\%$ of our pilots and over $10 \\%$ of our cabin crew to more senior levels, including important new roles within our industry leading training department.\n### Cabin Crew\nOur cabin crew undergo a 6-week initial training course when joining Ryanair. That training includes health and safety, aviation safety, passenger safety and crew resource management safety. As per EASA guidelines, cabin crew also undergo recurrent training of approximately 28 hours p.a.\n[IMAGE CAPTION] The weekly Wings Ceremony\nGround Operations\nFrom check-in to loading bags on our aircraft, our ground operations department (“GOPs”) undergo training on an ongoing basis of approximately 10 hours p.a. With entry requirements to countries changing due to Covid-19, our Ground Staff constantly undergo training on new local and government requirements.\n### Cabin Crew\nOnce the First Officer has successfully completed the RTC requirements, they become eligible to be assessed for the command upgrade course.\nWith the delivery of 73 Boeing 737-8200 “Gamechanger” aircraft and the opening of 15 new bases, we promoted $10 \\%$ of our cabin crew to senior positions in FY22.\nWe promoted 144 First Officers to Captain in FY22. On average, it takes just over 5 years for a Co-Pilot to become a Captain within the Group Airlines.\n## GRADUATE PROGRAMME\nSince commencing the programme in 2016, we have hired over 120 Graduates. Every year, we select high-achieving graduates looking for opportunities in Commercial, Engineering, Finance, Flight Operations, Ground Operations, HR, Legal, Maintenance, Management, Marketing and Safety & Security. Our graduates are given real responsibility from day one and get the opportunity to rotate through 4 areas of the business. Our Graduates develop skills and build relationships that allow them to make an impact on our business.\n## ROUTE TO COMMAND\nAs we grow to ${ } ^ { 2 2 5 \\mathsf { m } }$ passenger p.a. by FY26 and continue to take delivery of the 210 Boeing 737-8200 “Gamechanger” aircraft order, our command upgrade programme has become more important than ever.\nRyanair has developed a unique and innovative approach to preparing its First Officers to advance their career through the command upgrade process. This approach called ‘Route to Command’ (RTC) is a three-year skills and knowledge based process.\n## WHAT OUR GRADUATES HAD TO SAY ABOUT THE PROGRAMME:\n“What I love about the graduate programme at Ryanair is that you are not treated as a graduate, but rather you are given responsibility and ownership of tasks from day one. In particular, the finance graduate programme is truly rewarding because I am gaining real world experience in aviation finance at Europe’s Number One airline- while also completing the ACA exams, a globally recognised accountancy qualification that is funded by the company.”\n“Ryanair’s graduate programme is a great opportunity for recent graduates to join an internationally recognised company and gain invaluable experience working in a fast-paced environment from the get-go! Not only do graduates instantly become an integral part of the business, the opportunities and progression offered to you along the way are endless. It’s the perfect first step for anyone looking to start a successful career.”\nMitiona, Finance Graduate 2021 Programme\nLouise, Marketing Graduate 2021 Programme", "chunk_word_count": 545, "section_path": "RYANAIR > RECOGNISING TALENT", "document_id": "Ryanair 2022 Sustainability Report", "page": 26, "page_start": 26, "page_end": 28 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 12, "chunk_text": "# RYANAIR\n## CADET PROGRAMME - WHAT’S INVOLVED?\nAttracting and retaining aviation professionals to Ryanair throughout COVID-19 has had its challenges, however over the last year, we have increased our headcount by $1 8 \\%$ (by investing in state of the art training centres) in line with our ambitious targets to carry ${ 2 2 5 } \\mathsf { m }$ passengers p.a. by FY26. We expect to create over 6,000 new jobs for pilots, cabin crew and engineers over the next five years.\n## GROUND SCHOOL\n## 5 Weeks\nIncluding Distance Learning/ Virtual Classroom\nIn FY22 we experienced a staff turnover rate of $1 5 \\%$ ( $3 \\%$ in flight operations). We closely monitor turnover and gather insights through exit interviews, employee engagement surveys and benchmarking to enable us to address any concerns and implement retention measures.\n## SIMULATOR\n## 5 Weeks (64 hours)\n## 12 Fixed Base Sessions\n## CADET RECRUITMENT\nThe Ryanair cadet course has been developed over many years and reflects not only industry best practice and learnings from Ryanair’s Safety Management System, but also the experience gained by training in excess of 3,000 First Officers over the last 5 years. Due to the commitment of the students and the excellence of the training programme, the Ryanair command upgrade course success rate is currently at $9 9 \\%$ . Ryanair is hiring up to 1,000 cadets p.a. through its flight academy partners.\n## 8 Full Flight Sessions - Including Final Simulator Check\n## LINE TRAINING\n## 14 Weeks (82 Sectors)\nIncluding Line Check\n[IMAGE CAPTION] Celebrating World Pilot’s Day\nTOTAL\n## 6 months from commencement to Ryanair Co-Pilot\n## EMPLOYEE WELLBEING\nThe wellbeing of our people is a key priority for Ryanair. An excellent example of our focus on wellbeing is our Peer Support Programme. This is a confidential programme that assists and supports pilots and cabin crew in recognising, coping with and overcoming any issues which might negatively affect their ability to operate safely.\n## NON-EXECUTIVE DIRECTOR FORWORKFORCE ENGAGEMENT\nThe role of the Workforce Engagement Non-Executive Director is to engage with employees and bring feedback to the Board so together, the Board can understand and consider these views in its", "chunk_word_count": 366, "section_path": "RYANAIR > CADET PROGRAMME - WHAT’S INVOLVED?", "document_id": "Ryanair 2022 Sustainability Report", "page": 28, "page_start": 28, "page_end": 29 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 13, "chunk_text": "# RYANAIR\n## SICK DAYS\nOur industry leading rosters and point to point model mean that our people enjoy a superior work life balance compared to our competitors.\ndecision making. The Board includes Workforce Engagement as an agenda item at least quarterly.\nIn FY22, just over $2 \\%$ of our overall working days accounted for sick days which equates to 4 days per employee.\nDuring the past year, Róisín Brennan, as Workforce Engagement Non-Executive Director, built upon previous panel engagements and hosted several panel discussions with our engineers, Labs team, cabin crew, pilots, and office support staff. With the easing of travel restrictions across Europe, engagements took place face-to-face in Bergamo, Stansted and Ryanair’s Dublin office.\n80%\nof survey respondents would recommend Ryanair as a good place to work\nThe mix of those in attendance at each of the panel discussions provided valuable insights into the working life of our people. Suggestions made at some of the panel discussions have subsequently been incorporated into our operations.\nWe have further engagements planned throughout the coming year and we look forward to engaging further with our people. \nRóisín Brennan \nNon-Executive Director of Workforce Engagement\n## INCLUSION, DIVERSITY & EQUALITY\n[IMAGE CAPTION] The Flight Squad – Celebrating International Women’s Day\nAs Europe’s largest airline group, with bases in 37 countries, operating at over 220 airports, we are proud to have a diverse workforce with over 71 nationalities speaking over 45 languages and an average age of 32 years old. Ryanair has positioned itself as a leading employer in Europe with a team of over 19,000 people.\n## GENDER DIVERSITY\nIn FY22, we established our Gender, Diversity & Inclusion Committee made up of employees from across the network including Senior Leaders such as Ryanair DAC’s Chief Financial Officer (Tracey McCann) and Chief Risk Officer (Carol Sharkey). This committee is responsible for promoting and supporting diversity in the workforce.\nOur pilots and cabin crew (representing almost $90 \\%$ of our total workforce) are covered by negotiated collective agreements or set pay rates, under which our female pilots and cabin crew are paid the same basic salary and the same variable pay rates as their male colleagues.\nRyanair is committed to building on the number of female employees in management and leadership positions. More than $70 \\%$ of management promotions in the past year have been taken up by female workers. The airline industry traditionally experiences a lack of female pilots and male cabin crew, however over the past few years we have seen a gradual increase in female recruits for our cadet courses.\n70%\nof management promotions in the past year have been taken up by female workers\nBelow is a Gender breakdown based on age.\n## 20 ANOS DE CREC", "chunk_word_count": 456, "section_path": "RYANAIR > SICK DAYS", "document_id": "Ryanair 2022 Sustainability Report", "page": 29, "page_start": 29, "page_end": 32 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 14, "chunk_text": "# RYANAIR\n## BOOSTING LOCAL, REGIONAL AND NATIONAL ECONOMIES\nFOR EVERY \n€1 OF GDP \nGENERATED DIRECTLY \nBY RYANAIR ACTIVITY \n€2.20 OF GDP \nIS CREATED IN SPAIN INDIRECTLY EVERY TOURIST \nARRIVING IN SPAIN WITH \nRYANAIR CONTRIBUTES €811 TO \nSPANISH GDP\nRyanair has generated (both directly and indirectly) tens of thousands of jobs in Europe. With our customer base set to grow to ${ } ^ { 2 2 5 \\mathsf { m } }$ p.a. by FY26, our contribution to the European economy and regional development will grow even further.\nIn FY22, on the 20th anniversary of Ryanair’s arrival in Spain, we partnered with PwC to study the Group’s track record and quantify its contribution to the Spanish economy and society. The study found the main areas of Ryanair’s socio-economic contribution in Spain was boosting corporate activity, tourism and employment.\nOverall, Ryanair´s total annual impact in terms of GDP including corporate and tourism impact is more than €15bn.\nThe total annual impact in terms of employment, including corporate activities and tourism, exceeds 300,000 FTE jobs which represents $1 . 7 \\%$ of employed people in Spain in 2019.\n225m Our customer base is set to grow to 225m p.a. by FY26\n## OUR CUSTOMERS\nConstantly improving our customer experience remains one of our biggest priorities, as we grow to 225m passengers p.a. by FY26. This year, thanks to direct feedback from our customer panel and surveys, we’re launching even more new developments, all designed to make our customer’s experience with us even better.\nOur customer panel, representing our key markets, underpins Ryanair’s commitment to deliver what matters most to our customers.\nThanks to feedback from our five panellists at our very first Customer Panel event in Dublin in September 2021, we launched a whole new range of Customer Initiatives including a Day of Travel App, Wallet and Digital Self Service Hub.\nBased on our panellists’ insight, this Autumn we’ll launch a range of new initiatives, all designed to improve our customers travel experience.\nAs we grow, we want to ensure we’re constantly enhancing our customer experience. That’s why, this Summer, we’ll be announcing that we’re adding to our Customer Panel, to include participants from our Top 12 markets. Our new panellists will be recruited ahead of our next panel event which takes place in October 2022, in Buzz’s HQ in Wroclaw, Poland.\nFollowing on from this success, in April 2022, we held a further Customer Panel event, in Ryanair Labs, Madrid.\n## CUSTOMER IMPROVEMENTS\n## LAUNCHED OCTOBER 2021\n## SELF SERVICE HUB\n## RYANAIR WALLET\nPassengers can easily make changes to their booking, including flight changes, passenger details, baggage, seats and much more through the Self-Service Hub.\nAll credit requests are now processed to the myRyanair Wallet within 24 hours. It makes it easy to book new flights or get a refund within 5 working days.\n## DAY OF TRAVEL ASSISTANT\n## CHAT\nOur Day of Travel Assistant gives customers updates on terminal, flight information, bag drop and gate number. In the case of a (rare) major disruption, we post live videos updates.\nOur chatbot handles $80 \\%$ of customer queries and our customers can reply in more languages than ever before. We’ve added video content too, as visual aids can be much easier to follow.", "chunk_word_count": 545, "section_path": "RYANAIR > BOOSTING LOCAL, REGIONAL AND NATIONAL ECONOMIES", "document_id": "Ryanair 2022 Sustainability Report", "page": 33, "page_start": 33, "page_end": 36 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 15, "chunk_text": "# RYANAIR\n## FARE FINDER\nCustomers can filter options by country, region, airport, trip type and tourist attraction making for a faster, more efficient booking process that’s catered to them.\n## AUTUMN 2022\n## DEPOSIT BOOKINGS\n## MULTI AIRPORT BOOKING\nPay 50% deposit and the balance 60 days pre-departure.\nFly in and out of different airports with one booking, instead of booking two one-way flights.\nAIRPORT EXPRESS\nCUSTOMER SELF-SERVICE\nAvoid airport queues! Scan a QR code to add products, change flights, browse inflight magazine and more.\nVoice activation function via Alexa for customers to confirm booking details, access flight info & any required help conveniently on the Ryanair website or app.\nAlongside our Customer Panel, feedback from our monthly CSAT survey is our biggest measure of how satisfied customers are with their travel experience (details of which are published on our website). Every customer who flies with us each month is invited to rate their trip based on the below measures.\nCustomer Satisfaction score out of 100:\n89% Overall Customer Satisfaction\n89% Reliability\nWe have a very strong satisfaction rate of $89 \\% ^ { \\star }$ , up $2 \\%$ from last year’s score. In FY22 we recorded a significantly improved CSAT Score. This was largely as a result of less flights and less Air Traffic Control (ATC) delays which meant the biggest determinant of our CSAT score, On Time Performance (OTP), was at its highest in years.\n90% Inflight experience\n92% Punctuality\nOur customers rate our Crew amongst the friendliest in the skies, with a CSAT score of $9 6 \\%$ .\nOur Net Promoter Score (NPS), a metric whereby we ask customers if they would recommend us to a friend, has remained consistent at 11 during FY22. Ryanair’s NPS has grown by $20 \\%$ over the past three years.\n96% Crew friendliness\n90% Choice of destinations\nCUSTOMER EXPERIENCE FORUM\nWe also recently established a Customer Experience Forum, made up of senior stakeholders from across the business. The forum meets monthly to review feedback from our CSAT survey and identify meaningful actions, to improve our customer’s experience.\n4/5 App rating", "chunk_word_count": 352, "section_path": "RYANAIR > FARE FINDER", "document_id": "Ryanair 2022 Sustainability Report", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 16, "chunk_text": "# RYANAIR\n## SUNSHINE LANYARD\nWe have a dedicated special assistance team in Ryanair (via live calls and chat) who are available 7 days a week, 364 days a year, supporting passengers in 7 languages: English, French, German, Italian, Polish, Portuguese and Spanish.\nNot all disabilities are visible – some are not immediately obvious.\nThey include autism, chronic pain, and learning difficulties as well as mental health conditions, mobility, speech impairments, and sensory loss such as speech, sight loss, hearing loss, or deafness. The Sunflower is a globally recognised symbol for hidden disabilities. Some people choose to wear the Sunflower lanyard to discreetly identify that they may need support, help, or just a little more time in shops, transport, or public spaces.\nThis year we expect to support at least $3 . 5 \\mathsf { m }$ passengers who need special assistance with their travel and we always achieve a very high CSAT score $( + 9 0 \\% )$ for this assistance.\nWe recently launched an Alexa voice recognition overlay on our website. It is a resource for passengers (especially those who are visually impaired) to access our FAQ’s, check flight times and explore all of their travel options. Our Alexa overlay has been accredited by the National Council for the Blind of Ireland (NCBI).\nIn Ryanair we transport up to 500,000 passengers every day and some of these have hidden disabilities. We have rolled out “Hidden Disabilities” training to all of our pilots, cabin crew and ground support teams teaching them to recognise the Sunflower lanyard and that the person wearing it might just need a little more time or support with their travel journey.\nThe NCBI are also working with us to ensure our website reaches the highest standards of digital accessibility for people with disabilities. Passengers will benefit from these changes as they are rolled out over the coming months.\nTECHNOLOGY IS A KEY ENABLER FOR PEOPLE WITH SIGHT LOSS AND BROADER DISABILITIES AND THIS NEW INITIATIVE FROM RYANAIR IS A GREAT NEW INNOVATION SUPPORTING THOSE WITH DISABILITIES.\nKyran O’Mahoney, CTO, National Council for the Blind of Ireland\n”\nWE ARE DELIGHTED THAT RYANAIR HAS JOINED THE GLOBAL HIDDEN DISABILITIES SUNFLOWER NETWORK. PASSENGERS WITH HIDDEN DISABILITIES CAN FLY KNOWING THAT THEY WILL BE SUPPORTED.\nTristan Casson-Rennie, Regional Director, Hidden Disabilties Sunflower\nWe are available to talk to our customers between 6am and 9pm (GMT) 7 days a week. We support 7 languages across live call and chat. For issues including claims for refunds, lost or damaged bags or compensation, we provide the option to raise service requests through our Help Centre.", "chunk_word_count": 435, "section_path": "RYANAIR > SUNSHINE LANYARD", "document_id": "Ryanair 2022 Sustainability Report", "page": 38, "page_start": 38, "page_end": 39 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 17, "chunk_text": "# RYANAIR\n## DELAYS\nIn Ryanair we are very proud of our industry leading On Time Performance (OTP) of over $90 \\%$ and we are also industry leading in how we manage on-the-day delays and disruptions.\nThrough the Day of Travel Assistant on the Ryanair app we will advise you of your new Estimated Time of Departure (ETD) every 30 mins, we will send you a delay notification at 60 minutes and every 30 minutes after that. If the delay exceeds two hours we will send you an email notifying you of your rights, we will also send you a refreshment voucher and this is redeemable in the airport for drinks and snacks.\nIn the unlikely event we cancel or reschedule a flight, we will always advise customers of their rights by providing the necessary links to request a flight change, refund or free move. Passenger rights will also be advised as they apply to cancellations (EU261 Passenger rights legislation). All reimbursement requests will be processed to the Ryanair customer wallet (in “My Ryanair”) within 24 hours and cash refund requests processed within 5 days.\nWe will also keep our customers informed as to the reason for the delay and what we are proactively doing to get them on board and to their destination.\n### If a claim for compensation is made or luggage is damaged, we will respond within 14 days.\nIf your flight is delayed overnight (which is a very rare thing in Ryanair), we will arrange your hotel accommodation and ground transportation and pay you out of pocket meal expenses.\nWe use customer feedback as an opportunity to improve our service. If a customer wants to give us feedback it is possible to do so through our Help Centre and we will respond to all complaints within 28 days.\n90%\nCustomers can track service requests through our Help Centre. In instances where customers disagree with service request outcomes we provide Alternative Dispute Resolution (ADR). This is an independent and objective platform for escalation of issues across our European network.\nWe are very proud of our industry leading On Time Performance (OTP) of over $90 \\%$\n## CYBER SECURITY & DATA PROTECTION\nCyber Security is a challenge faced by all businesses. A severe cyber attack has the potential to impact Ryanair’s operations and put our customers data at risk. That is why we have such a focus on cyber security and have best in class practices and policies.\n## CYBER SECURITY STRATEGY", "chunk_word_count": 414, "section_path": "RYANAIR > DELAYS", "document_id": "Ryanair 2022 Sustainability Report", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 18, "chunk_text": "# RYANAIR\n## PERFORMANCE AND PRIORITIES\nRyanair’s Chief Technology Officer (CTO) reports on our cyber security strategy to the Ryanair Audit Committee and the Ryanair Board at least annually. Updates on the strategy are provided quarterly to the Board and monthly to Ryanair’s Technology Leadership team.\nAn external, independent cyber security audit takes place biannually. This review analyses over 200 data points and the security controls in place to defend them.\nUnder NIST, Ryanair is currently the highest ranked airline with a score of 3.5, substantially above the industry average of 3.2. However, to keep ahead of the curve we recognise that we must have an ethos of continuous improvement. Therefore we have identified an ambitious goal of 3.7 in our next review.\nTo ensure robust controls are in place, we are audited by independent third parties to ensure compliance with the National Institute of Standards and Technology (NIST) Framework.\nWe also undertake constant internal security audits. We use the Security Scorecard rating to benchmark our audits against industry peers. We are constantly tracking ahead of the industry.\n3.7\nRyanair also has a Cyber Security Policy in place that is reviewed at least annually. This policy is aligned to high quality frameworks including ISO 27001, PCI Data Security Standards, Open Web Application Security Project $\\textcircled{8}$ (OWASP) and more. For an abridged version of this policy, please see our Information Security Policy.\nWe recognise that we must have an ethos of continuous improvement. Therefore we have identified an ambitious goal of 3.7 in our next NIST review.\n[IMAGE CAPTION] Ryanair’s Security Scorecard Source: Security Scorecard and Bitsight", "chunk_word_count": 266, "section_path": "RYANAIR > PERFORMANCE AND PRIORITIES", "document_id": "Ryanair 2022 Sustainability Report", "page": 40, "page_start": 40, "page_end": 41 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 19, "chunk_text": "# RYANAIR\n## PROTECTING DATA\n### Team\nA multi-disciplinary team with a working knowledge of all systems is a requirement to ensure we are defended against a cyber-attack.\nIn FY22, Ryanair updated its Privacy Policy to ensure it is in compliance with recent case law and in line with best practice. The updated Policy includes additional information on: periods for which we retain data, our service providers and other third parties with whom we share data, the legal bases on which we rely for any international transfers of data, our optional online verification, and how we process documents required to comply with public health requirements. We also made our online data request processes more user friendly.\nRyanair’s Cyber Security team is made up of skilled professionals with extensive experience in the field. The team focuses on testing – both defensive and offensive – risk and compliance, vulnerability assessment, security operations and app development.\n### Training\nWe recognise any form of security is just as strong as your weakest link. With that in mind, all our colleagues with access to Ryanair’s systems undertake annual mandatory training in cyber security. This is on top of mandatory training for new starters. Bespoke training is offered as required, both at a team and individual level.\nGovernance\nThe Board of Directors has ultimate responsibility for the Company Data Protection Policy. At management level, the Data Protection Committee is tasked with review and approval of data protection procedures and departmental or topic-specific policies. The members of the Committee include Ryanair’s Data Protection Officer, Group Chief Legal Officer, CTO, Director of Digital & Marketing and Director of People.\nWe also carry out frequent phishing tests – which is the most likely form of attack. If any of our people fail these tests, they are required to complete additional training.\n## APPENDIX\n## SUSTAINABILITY ACCOUNTING STANDARDS BOARD (SASB)\n### Greenhouse Gas Emissions\n### Labour Practices\n### Competitive Behaviour\n### Activity Metric\n## TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)", "chunk_word_count": 330, "section_path": "RYANAIR > PROTECTING DATA", "document_id": "Ryanair 2022 Sustainability Report", "page": 41, "page_start": 41, "page_end": 43 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 20, "chunk_text": "# RYANAIR\n## GOVERNANCE\n### Board & Audit Committee\nRyanair’s Board has ultimate oversight of the Group’s climate strategy, sustainability goals and climate-related risks and opportunities. The Board and Audit Committee receive quarterly updates on Ryanair’s climate related risks and performance from the Group CFO and the Director of Sustainability & Finance.\n### Sustainability Committee\nThe Sustainability Committee is an Executive/Management level committee that meets monthly. The Sustainability Committee is responsible for the day-to-day identification, assessment and management of climate-related risks and opportunities.\nThe Sustainability Committee covers all airlines within the Ryanair Group and includes members from multiple departments. Together, members integrate Ryanair’s sustainability goals with our business’ demands. These initiatives are then communicated to the wider organisation.\nThe Sustainability Committee maintains an effective and continual dialogue with the Board and stakeholders (via the Group CFO and the Director of Sustainability & Finance).\n### Sustainability Team\nRyanair’s Sustainability Team is responsible for the day-to-day management and delivery of the sustainability strategy and targets. The team reports to the Group CFO with a dotted line to the Board and Audit Committee.\n### Enterprise Risk Register\nKey risks, including climate related risks, are analysed as part of bi-yearly review of the Group Enterprise Risk Register. Climate-related risks, along with associated plans to mitigate such risk, are assessed, scored and highlighted to the Audit Committee and the Board.\nClimate related risks are identified through scenario analysis, horizon scanning and ongoing industry scrutiny.\n## STRATEGY\nThe Ryanair Group’s long-term strategy identifies climate change as a key area that will impact the business going forward. Short and medium-term risks and opportunities are addressed on an ongoing basis by the Ryanair Sustainability Committee and Sustainability team who report onwards to the Board.\nIn FY22, the Ryanair Group published its Pathway to Net Zero – a detailed plan on where it aims to achieve its emissions reductions. This pathway forms a key pillar of our ongoing Group strategy. Emission reductions will come from:\n$32 \\%$ technological and operational improvements, $34 \\%$ Sustainable Aviation Fuel (SAF), $10 \\%$ Single European Sky initiative and $2 4 \\%$ carbon offsetting.\n## TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)", "chunk_word_count": 357, "section_path": "RYANAIR > GOVERNANCE", "document_id": "Ryanair 2022 Sustainability Report", "page": 44, "page_start": 44, "page_end": 44 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 21, "chunk_text": "# RYANAIR\n## STRATEGY CONTD.\n### Transition Risk: Market\nInability to meet mandated SAF blending\n### Trend\n### Medium term\n### Long term\n### Stable\n### Climate-Related Risk description\nPotential strategic/Financial impacts Increased costs for SAF or potential non-compliance penalties resulting in lower earnings.\n### Mitigating actions/Opportunities\nCurrently SAF represents less than $1 \\%$ of the aviation industry’s needs. The cost of SAF, depending on the feedstock and country of uplift, can be two to four times the cost of normal jet kerosene. There is a risk through prohibitive pricing or lack of availability that the Group cannot meet mandated SAF blending requirements.\nRyanair has signed up to the Fuelling Flight Initiative through the European Climate Foundation which calls on Europe to ensure future fuel policy only promotes the most sustainable fuels for reducing the climate impact of aviation.\nRyanair and Trinity College Dublin - Sustainable Aviation Research Centre partnership looks to put in place a number of innovative actions to accelerate the use of SAF.\nBy using SAF, GHG reductions will decrease which will reduce ETS and CORSIA compliance costs.\nRyanair has a strong relationship with multiple fuel suppliers which will help the Group procure SAF and meet its goal of $1 2 . 5 \\%$ by 2030.\n### Changing customer behaviour away from aviation\n### Long term\n### Climate-Related Risk description\nPotential strategic/Financial impacts Potential loss of revenue.\n### Mitigating actions/Opportunities\nThere is a reduced demand for flights with customers switching to rail or holidaying at home.\nBy Ryanair positioning itself as a leader in the climate change agenda for aviation there is an opportunity that passengers will switch to flying with Ryanair as they reduce their carbon footprint.\n### Inability to access financing\n### Trend\nLong term\n### Climate-Related Risk description\n### Potential strategic/Financial impacts\n### Mitigating actions/Opportunities\nWith the EU taxonomy classifying what sustainable activities are and directing financing towards them, the aviation industry may find it difficult to attract funding for investments.\nThe Group has a strong balance sheet with a BBB (stable) credit rating with S&P and Fitch, relatively low net debt by European airline standards and $90 \\%$ unencumbered assets which can ease funding activities.\nPotential for higher financial costs or inability to fund major capital expenditure effectively.\nLong term $= 5 +$ years Medium Term $= 3 - 5$ years Short Term $= 0 - 3$ years\n## TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)", "chunk_word_count": 402, "section_path": "RYANAIR > STRATEGY CONTD.", "document_id": "Ryanair 2022 Sustainability Report", "page": 45, "page_start": 45, "page_end": 45 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 22, "chunk_text": "# RYANAIR\n## STRATEGY CONTD.\n### Transition Risk: Market\n### A reduction in asset valuations\n### Trend\nStable\n### Long term\n### Climate-Related Risk description\n### Potential strategic/Financial impacts\n### Mitigating actions/Opportunities\nRyanair maintains a young fuelefficient fleet and closely monitors external valuations to optimise sales. Reflecting B737-400 retirements and similar sales by cargo operations means that the B737-800 NGs are the logical choice for the industry to reflect and reduce their carbon footprint with more efficient CFM 7B engines, keeping valuations up.\nThe resale valuation of the Ryanair fleet decreases due to fuel efficiency expectations.\nReduction in asset valuations / accelerated depreciation resulting in lower earnings.\n### Transition Risk: Technology Shifts\nCosts to transition to lower emissions technology\n### Trend\n### Long term\nPotential strategic/Financial impacts Higher capital expenditure and lower earnings.\n### Mitigating actions/Opportunities\n### Climate-Related Risk description\nRyanair has a long-standing strategy for fleet modernisation supported with strong cashflows and access to capital markets.\nThe Group has set the goal of reaching net zero emissions by 2050. The pathway to reaching net zero requires certain enhancements in new technologies which will reduce emissions. There is a risk that the cost of this new technology may be prohibitive.\nToday Ryanair’s average fleet age is just 8 years and will drop in 2024 when we take final delivery of our 210 new “Gamechanger” (Boeing 737-8200) aircraft. New technologies will be more fuel efficient delivering ongoing operational cost savings. Ryanair has partnered with Trinity College Dublin to form the Ryanair Sustainable Aviation Research Centre to research improved aircraft technology for the future.\n## TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)", "chunk_word_count": 269, "section_path": "RYANAIR > STRATEGY CONTD.", "document_id": "Ryanair 2022 Sustainability Report", "page": 46, "page_start": 46, "page_end": 46 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 23, "chunk_text": "# RYANAIR\n## STRATEGY CONTD.\n### Transition Risk: Reputation\nIncreased consumer concern\n### Trend\n### Medium term\n### Stable\n### Long term\n### Climate-Related Risk description\nPotential strategic/Financial impacts Reluctance to fly results in lower revenue.\n### Mitigating actions/Opportunities\nPublic concern about climate change may lead to reputational risks to Ryanair. If Ryanair is not perceived (regardless of whether it is) to be addressing its role in addressing climate change customers may choose to book with other airlines/ other forms of transport that are perceived to be more proactive. These risks are identified by the Sustainability Department and Marketing Department by monitoring consumer opinion to climate change.\nThere is an opportunity to enhance the Group reputation and brand value as a carbon efficient airline. With a pre-Covid fuel efficiency of 66grams of $\\mathsf { C O } _ { 2 }$ per pax/km, the Group is a leader in the industry for fuel efficiency where switching to Ryanair from a legacy carrier reduces a passenger’s carbon footprint by $50 \\%$ .\nBy offering customers the opportunity to offset their emissions through the Ryanair Customer Offset Scheme, carbon conscious customers can fully offset their emissions when they fly. Our offsetting programmes include the distribution of energy-efficient cookstoves in Uganda by First Climate; Balikesir’s Wind Power Plant Project in Turkey and Improved Kitchen Regimes in Malawi.\n### Transition Risk: Policy and Legal\nIncreased carbon pricing and aviation taxes\n### Long term\n### Climate-Related Risk description\nPotential strategic/Financial impacts Increased operating costs and lower passenger revenues.\n### Mitigating actions/Opportunities\nThere is a risk that the increased cost of compliance with Fit for 55 regulation including carbon pricing and aviation taxes will make travelling by air prohibitively expensive.\nAs a fuel-efficient airline, the change in legislation should be less impactful on the Group than on other airlines. This presents a competitive advantage. Ryanair has the lowest cost per pax (ex-fuel) of any other major European airline, giving it a competitive advantage. This, coupled with its leadership in carbon reduction, ensures that fares will be the lowest in the market, a key competitive advantage over high cost airlines.\n## TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)", "chunk_word_count": 360, "section_path": "RYANAIR > STRATEGY CONTD.", "document_id": "Ryanair 2022 Sustainability Report", "page": 47, "page_start": 47, "page_end": 47 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 24, "chunk_text": "# RYANAIR\n## STRATEGY CONTD.\n### Transition Risk: Policy and Legal\n### A ban on short haul travel\n### Medium term\n### Climate-Related Risk description\nPotential strategic/Financial impacts Potential loss of revenue on short haul.\n### Mitigating actions/Opportunities\nThere is a risk that legislation is passed in certain jurisdictions that places a ban on sectors below a certain distance.\nThe Group has very little exposure to sectors that can be easily replaced by other modes of transport. Ryanair operates on routes with an average sector length of over $^ { 1 , 3 0 0 \\mathsf { k m } }$ and also connects outer regions and islands, etc. which means switching to ground transport is not viable.\nHighly mobile assets that can serve other markets (peripheral regions/ islands).\nLowest cost producer of a seat (cost per pax.)\n### Physical Risk: Chronic\n### Rising temperatures and sea levels\n### Long term\nPotential strategic/Financial impacts Lower revenue as a result of cancelled flights.\n### Climate-Related Risk description\n### Mitigating actions/Opportunities\nChronic physical risks such as higher average temperature could potentially lead to lower load factors due to performance restrictions. As some of the airports Ryanair flies to are on coastal areas, a rise in sea level due to higher temperatures could make the risk of flooding higher. If these airports closed due to flooding, it may result in Ryanair cancelling flights/closing bases and as a consequence change public willingness to travel to these locations\nThe Group predominantly flies within Europe which even under extreme weather conditions should not result in significant performance restrictions.\n## TASKFORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)\n### Physical Risk: Acute\nIncreased severity of extreme weather events such as wild-fires, cyclones and floods.\n### Trend\nStable\n### Long term\n### Climate-Related Risk description\n### Potential strategic/Financial impacts\nMitigating actions/Opportunities The Group uses dynamic flight plans to respond rapidly in order to avoid potential weather events.\nThe occurrence of extreme weather events and the resulting cancellations due to the closure of airports could have a material adverse effect on the Group’s financial performance indirectly, as a consequence of changes in the public’s willingness to travel within Europe due to the risk of flight disruptions. Local impacts such as fires / drought impact on the attractiveness of the Group network.\nOperational disruption and potential revenue loss. Costs of delays and operational disruption including turbulence.\nGroup assets are highly mobile (aircraft) so are not subject to acute risks associated with coastal flooding or tropical cyclones.\nInability to source key supplies due to climate change.\n### Trend\n### Long term\n### Climate-Related Risk description\nPotential strategic/Financial impacts The cost of key supplies increases resulting in lower earnings.\n### Mitigating actions/Opportunities\nValue chains are exposed to acute climate change from higher temperatures or a reliance on fresh water (inadequate supply).\nThe Group engages a wide range of suppliers and can manage developments by switching should constraints / disruptions arise.\nLowest cost operator which is a key competitive advantage over higher cost airlines/ forms of transport.", "chunk_word_count": 502, "section_path": "RYANAIR > STRATEGY CONTD.", "document_id": "Ryanair 2022 Sustainability Report", "page": 48, "page_start": 48, "page_end": 49 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 25, "chunk_text": "# RYANAIR\n## RISK MANAGEMENT\nIn FY22, Ryanair conducted a scenario analysis to assess the potential impact in 2030 and 2050 based on the IEA Net Zero Emissions (NZE) Scenario and also on a high emission scenario. This analysis helped Ryanair Group identify short, medium and long-term climate-related physical and transition risks. These risks are an inherent part of operating in the airline industry with their impact being assessed through the Enterprise Risk Register. Upstream climate risks are also raised with the sustainability committee. The potential financial impact is assessed using forecasting scenario analysis.\nAll risks including those related to climate change are identified through the Group’s Enterprise Risk Management Register. The register highlights the risks, their likelihood of occurring and impact with associated risk mitigation.\nRyanair has used standard industry risk terminology when identifying its risks. However, the upcoming EU Taxonomy and Corporate Sustainability Reporting Directive (CSRD) will ensure a consistent approach across industries.\n## METRICS & TARGETS\n### Metrics\nIn FY22, we conducted a verified audit of the emissions across the entire\\* value chain.\nScope 1 – 9,193,324 MtCO2e – 9,099,611 MtCO2 – 5,663 MtCH4 – 86,112 MtN20 \nScope 2 – 4,150 MtCO2e \nScope 3 – 2,075,941 MtCO2e\n### Targets\nIn FY21, Ryanair set out key targets that will help deliver its Pathway to Net Zero.\nSince then, we have established two new emissions targets to reduce impact.", "chunk_word_count": 230, "section_path": "RYANAIR > RISK MANAGEMENT", "document_id": "Ryanair 2022 Sustainability Report", "page": 50, "page_start": 50, "page_end": 50 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 26, "chunk_text": "# RYANAIR\n## CONSOLIDATED DISCLOSURES PURSUANT TO ARTICLE 8 TAXONOMY REGULATION\nThe EU Taxonomy is a classification system for environmentally sustainable economic activities. The purpose of which is to direct investments towards sustainable projects and activities and to provide companies, investors and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable.\nArticle 8 of Regulation (EU) 2020/852 (the “Taxonomy Regulation”) establishes a framework to facilitate sustainable investing. As part of the Taxonomy Regulation, Ryanair is required to disclose how and to what extent the Group’s activities are associated with economic activities that qualify as environmentally sustainable under Articles 3 and 9 of the Taxonomy Regulation and Article 10 (2) of Commission Delegated Regulation (EU) 2021/2178 (the “Delegated Disclosures Act”).\n### First Time Application\nArticle 8 disclosure requirements are applicable for reporting periods from January 1, 2022. As such, fiscal year 2022 is the first period for reporting the share of taxonomy-eligible economic activities in terms of turnover, capital expenditures (Capex) and operating expenditures (Opex). Only taxonomy-eligible economic activities related to the first two environmental objectives (climate change mitigation and climate change adaptation) in accordance with Article 9 of the Taxonomy Regulation and Article 10 (2) of the Delegated Disclosures Act are required to be reported for Ryanair’s financial year 2022.\n### Ryanair Approach\nThe economic activities listed in Annex 1 and Annex 2 of Commission Delegated Regulation (EU) 2021/2139 (the “Climate Delegated Act”) were analysed by management. The main economic activity of the Group is the air transport of passengers. This activity is not one of the sectors covered by the Climate Delegated Act in the reporting year. It is expected to be included within the second climate delegated act, which is expected to be published in 2022. However, it is expected that in the future, the Group’s use of sustainable aviation fuel (SAF) and the best in class engine technology will be taxonomy-aligned. There were no other material activities identified as taxonomy eligible.\n## KPI\nWith Aviation not yet one of the sectors covered by the Climate Delegated Act, the share of taxonomy-eligible economic activities in Turnover, Capex and Opex was $0 \\%$ in fiscal year 2022.\n### Turnover\nTurnover consists of Total operating revenues. See Consolidated Income Statement per page 156 of our Annual Report alongside note 17 for details of the Groups revenue generation. The associated critical accounting policies are set out on pages 163 to 174 of our Annual Report.\n### Capex\nCapex consists of additions to fixed assets, intangible assets (net of supplier reimbursements), maintenance prepayments greater than one year, intangible assets and right-of-use assets. See note 17 of the Consolidated financial statements.\nOpex consists of Total operating expenses. See Consolidated Income Statement per page 156 of our Annual Report. \nThe associated critical accounting policies are set out on pages 163 to 174 of our Annual Report.\n## GLOBAL REPORTING INITIATIVE (GRI)\nRyanair Holdings plc has reported the information cited in this GRI content index for the period 01 April 2021 to 31 March 2022 with reference to the GRI Standards.\nGRI 1: Foundation 2021\n### GRI 1 used\n\n\n## GRI STANDARD\n## LOCATION", "chunk_word_count": 523, "section_path": "RYANAIR > CONSOLIDATED DISCLOSURES PURSUANT TO ARTICLE 8 TAXONOMY REGULATION", "document_id": "Ryanair 2022 Sustainability Report", "page": 51, "page_start": 51, "page_end": 54 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 27, "chunk_text": "# RYANAIR\n## DISCLOSURE\n### GRI 402: Labor/Management Relations\n402-1 Minimum notice periods regarding operational changes See page 21 of this report.\n### GRI 403: Occupational Health and Safety\n### GRI 416: Customer Health and Safety\n### GRI 418: Customer Privacy\n## ASSURANCE STATEMENT\n## GOVERNANCE\nVERIFAVIA SAS (‘VERIFAVIA’) has been engaged by Ryanair to perform an independent verification with limited assurance of the scope 1, 2 and some scope 3 carbon inventory data for the fiscal year 2022 (01 April, 2021 – 31 March, 2022) as presented in the Ryanair’s Carbon Footprint report. Scope 2 emissions were calculated using location-based emission factors. Scope 3 emissions consisted of Ground Support Equipment, catering, aircraft manufacturing, jet fuel (well-to-tank), employee commuting, and aircraft tyres.\nAll other information in Ryanair’s Carbon Footprint report is not subject to our assurance engagement and we do not report and do not opine on this information.\nThe Sustainability Team of Ryanair is responsible for the preparation and presentation of Ryanair’s Carbon Footprint report, including the reported annual environmental data and information presented therein. We are responsible for providing an Assurance Statement on the reported annual environmental data presented in the Report. VERIFAVIA disclaims any liability or responsibility to a third party for decisions, whether an investment or otherwise, based on this Assurance Statement.\nCRITERIA\nWe conducted the independent audit based on the following verification criteria:\nISO 14065:2013 – Greenhouse gases – requirements for greenhouse gas validation and \nverification bodies for use in accreditation or other forms of recognition \nISO 14064-3:2019 – Greenhouse Gases – Specification with guidance for the validation and \nverification of greenhouse gas emissions and removals \nChapter 10 of the Greenhouse Gas Protocol – “A Corporate Accounting and Reporting Standard” \n(Revised Edition)\n\n## RESPONSIBILITIES\nRyanair is solely responsible for the preparation and reporting of its carbon inventory data, for any information and assessments that support the reported data, for determining the company’s objectives in relation to carbon information and management, and for establishing and maintaining appropriate performance management and internal control systems from which reported information is derived.\nIn accordance with the verification contract, it is our responsibility to form an independent opinion, based on the examination of information and data presented in the Carbon Footprint report, and to report that opinion to Ryanair. We also report if, in our opinion:\nthe carbon inventory data is or may be associated with misstatements (omissions, misrepresentations, or errors) or non-conformities; or \nthe verification team/verifier has not received all the information and explanations that it requires to conduct its examination; or \nimprovements can be made to the company’s performance in monitoring and reporting carbon inventory data.\nWe conducted our examination having regard to the verification criteria documents listed above. This involved a virtual site visit on 8 March 2022, to interview the staff responsible to give us reasonable assurance that the amounts and disclosures relating to the data have been properly prepared in accordance with the requirements of the Greenhouse Gas Protocol in terms of relevance, completeness, consistency, transparency, and accuracy. This also involved assessing where necessary estimates and judgements were made by Ryanair in preparing the data and considering the overall adequacy of the presentation of the data in the Carbon Footprint report.", "chunk_word_count": 536, "section_path": "RYANAIR > DISCLOSURE", "document_id": "Ryanair 2022 Sustainability Report", "page": 55, "page_start": 55, "page_end": 57 }, { "report": "Ryanair 2022 Sustainability Report.pdf", "chunk_idx": 28, "chunk_text": "# RYANAIR\n## INDEPENDENCE STATEMENT\nWe confirm that VERIFAVIA and the verification team are independent of Ryanair and have not assisted in any way with the development of the carbon inventory or in the preparation of any text or data provided in the Carbon Footprint report, except for this Assurance Statement.\n## OPINION\nWe conducted a verification of the carbon inventory data reported by Ryanair in its Carbon Footprint report and presented above. Based on the verification work undertaken to reasonable assurance, these data are fairly stated and contain no material misstatements or material non-conformities.\n### Our Climate Goals\n## 02 FUEL\nWork with suppliers to increase sustainable aviation fuel (SAF) with industry-leading SAF goals $> 1 0 \\%$ by 2030.\nHighest standards of fuel efficiency (Ryanair's SOPs).\nInvest in innovative aviation technology.\n## 06 INSIGHTS\nWork with policy makers \nto develop smarter regulation \nto support ambitious \nclimate targets.\nWork with industry to share insights that help achieve ambitious climate goals.\nPrioritise carbon reduction over carbon offsetting.\n## RYANAIR\n## KEY STATS YEAR END MARCH 2022\n## CHOICE & COVERAGE\n## UNRIVALED CUSTOMER SERVICES\n## RYANAIRGROUP\nThis report provides updated information pertaining to Ryanair's FY22 Sustainability performance.\nIt communicates valuable information to our stakeholders. It provides a clear understanding of our company policy, as well as the direction and coordination of our future endeavours.", "chunk_word_count": 224, "section_path": "RYANAIR > INDEPENDENCE STATEMENT", "document_id": "Ryanair 2022 Sustainability Report", "page": 57, "page_start": 57, "page_end": 60 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 0, "chunk_text": "# SONY\n## Sustainability Report 2023\n## Sony’s Purpose & Values\n## Purpose\nFill the world with emotion, through the power of creativity and technology.\n## Values\nDreams & Curiosity\nPioneer the future with dreams and curiosity.\nDiversity\nPursue the creation of the very best by harnessing diversity and varying viewpoints.\nIntegrity & Sincerity\nEarn the trust for the Sony brand through ethical and responsible conduct.\n## Sustainability\nFulfill our stakeholder responsibilities through disciplined business practices.\n## The Sony Group Code of Conduct\n## Approach to Sustainability\nThe Sony Group Code of Conduct (the “Code”) sets forth the basic standards of ethical and responsible business conduct that must be followed by all Sony directors, officers, and employees (“Sony Group personnel”) in their daily work.\nSony manages diverse businesses with people at the core, and aims for sustainable value creation based on such diversity and mid- to long-term growth in the Sony Group's corporate value under its Purpose to “fill the world with emotion, through the power of creativity and technology,” and its Corporate Direction of “getting closer to people.”\nThe Code requires that we ask if our business conduct contributes to a better future, not only for Sony, but also for society as a whole. The Code provides a set of guiding principles to conduct our business activities on a principled path. Staying true to the Code helps ensure Sony’s long-term success, which in turn is based on the trust of stakeholders.\nIn order to have people connected to each other through emotion, it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment. Sony acts with due consideration of the impact of its business activities on stakeholders, including shareholders, customers, employees, suppliers, business partners, local communities and other organizations as well as the global environment, and focuses on building trust with stakeholders through dialogue.\nSony’s Purpose, which is to fill the world with emotion through the power of creativity and technology, challenges Sony Group personnel to create new value, as well as to contribute to stakeholders from a long-term perspective. In pursuing this Purpose, in accordance with our Values, it is crucial that we follow the Code.\nThrough innovation and sound business practice, Sony endeavors to enhance its corporate value and contribute to the development of a sustainable society.\n## Responsible 邮 Supply Chain 107\n## Corporate Governance 147\n027 Overview \n028 Environmental Policies and Targets \n042 Contributions to Solving \nEnvironmental Issues \n043 Products and Services \n050 Supply Chain \n052 Manufacturing Sites \n062 Logistics \n064 Product Recycling \n068 Environmental Communication\n## 107 Overview \n108 Supply Chain Management \n115 Responsible Sourcing of Minerals\n147 Overview \n148 Corporate Strategy, Business Strategy and Other Policies \n148 Governance Framework \n162 Internal Control and Governance Framework \n167 Relationship with Shareholders and Other Stakeholders\n### The Sony Group Code of Conduct Approach to Sustainability 002\n### Quality and Customer Service\nAt a Glance 2022 004\n118 Overview \n119 Product Quality and Quality Management \n122 Product Quality, Safety \nand Long-Term Reliability \n124 Customer Service \n125 Improving the User Experience \n127 Accessibility\nEditorial Policy 005\n### Data Section\n170", "chunk_word_count": 522, "section_path": "SONY > Sustainability Report 2023", "document_id": "Sony Sustainability Report 2023", "page": 2, "page_start": 2, "page_end": 4 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 1, "chunk_text": "# SONY\n## 170 Datasheet \n177 Environmental Data Collection Methods and Rationale \n181 Independent Assurance Statement\nBusiness Overview 006\n### Technology\n### Sony’s Sustainability 007\n007 Organizational Structure \n008 Message from the Senior Executive in \nCharge of Sustainability \n009 Summary of Actions \n014 Stakeholder Engagement \n017 SDGs and Sony’s Contributions \n018 External Evaluation and Recognition \n070 Overview \n072 Technology for Sustainability \n077 Responsible AI\n### Community Engagement 130\n### GRI Standards Content Index 182\nC o n t e n t s\n130 Overview \n131 Focus Areas and Results \n132 Support for Education \n133 Disaster Relief and Humanitarian Aid \n134 Initiatives for Global Issues \n135 Support for Communities \n136 Employee Engagement \n078 Overview \n079 Sony’s People Philosophy \n080 Diversity, Equity and Inclusion \n085 Talent Development \n091 Employee Engagement \n095 Occupational Health & Safety \n101 Maintaining and Promoting Health\n### Employees\n078\n### Navigation Buttons\n### Materiality 020\nBack to the contents page \n心 Back to the previously viewed page \n< Previous page \n> Next page\n## 021 Climate Change \n023 Diversity, Equity and Inclusion \n025 Respect for Human Rights \n026 Technology for Sustainability\n### Ethics and Compliance 137\n137 Overview \n138 Global Ethics & Compliance Network \n139 The Sony Group Code of Conduct \n140 Sony’s Ethics and Compliance Program \n145 Privacy and Personal Information \nManagement \n146 Customer-first Business Operations\n### Respect for Human Rights\n104\n## 104 Overview \n105 Human Rights Due Diligence\nGo to the relevant page in this report Go to the relevant external site\n### At a Glance 2022\n### Support for social justice and human rights groups (Global Social Justice Fund)\n### Women in the workforce\n### Management positions held by women\n### Selected as one of the World’s Most Ethical Companies\n\\* Except as noted individually, the figures are based on the results for fiscal year 2022 (April 1, 2022 to March 31, 2023).\n\\* Group-wide, as of March 31, 2023.\n### Employee engagement index\n\\* Awarded by the Ethisphere Institute, a corporate ethics research and promotion organization based in the USA. “World’s Most Ethical Companies” and “Ethisphere” names and marks are registered trademarks of Ethisphere LLC.\nPercentage of employees who did not give an unfavorable response to four questions regarding employee engagement\n### Exhibited at the CSUN Assistive Technology Conference, the world’s largest international conference on accessibility\nTarget year for climate change initiatives\n### Community engagement expenditure by field\nTotal Expenditures approx. 5.1 billion yen\n[IMAGE CAPTION] Sales and financial services revenue by geographical segment\nMoved up 10 years\n## 2040 2050\nAchieve net zero emissions, including Scopes 1 - 3, by 2040\nTransition to 100% renewable energy at all Sony sites by 2030\nSony has been participating in CSUN since 2018 and we were bronze sponsors in 2023\n\\* Total expenditures do not include expenditures from the Sony Global Relief Fund for COVID-19 and Global Social Justice Fund.\nImplemented supplier plant assessments regarding a compliance of Sony Supply Chain Code of Conduct\n### Number of employees by geographic segment \\* as of March 31, 2023\n### Composition of Board of Directors", "chunk_word_count": 508, "section_path": "SONY > 2040 2050 > Number of employees by geographic segment \\* as of March 31, 2023", "document_id": "Sony Sustainability Report 2023", "page": 4, "page_start": 4, "page_end": 5 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 2, "chunk_text": "# SONY\n## 2040 2050\n### Technology\nSony Research Award Program Awarded to a total of 134 research projects\n113,000\n[IMAGE CAPTION] \\*1 Asia-Pacific: Southeast Asia, India, Oceania, Taiwan Region an South Korea \\*2 Other Areas: Middle East, Latin America, Africa and Canada\nSensing Solution University Collaboration Program\nWorked with 45 laboratories on research and support\n### Referenced Guidelines\n### Editorial Policy\n### Disclosure of Financial and Non-Financial Information\nThe information in this report is presented with reference to the Global Reporting Initiative (GRI) Standards. This report also refers to the Environmental Reporting Guidelines (Fiscal year 2018 version) published by Japan’s Ministry of the Environment.\n### Corporate Report\nIntegrated report covering financial and non-financial information, such as business strategy and management policies for mid- to long-term value creation\nGRI Standards Content Index\n• Message from the CEO • Value Creation at Sony • Value Creation in Each Business • Corporate Governance\n\n### Reporting Principles of Materiality\nSony has defined materiality as “material topics related to sustainability that impact Sony’s value creation and are based on mid- to long-term social changes and the needs of diverse stakeholders,” and conducted a materiality assessment from the perspectives of both the company and the stakeholders.\nSony started to issue its Environmental Report in 1994. The report was then issued as Sony’s CSR Report from 2003 to 2017, and has been issued as the Sustainability Report since 2018. The Sustainability Report 2023 has been issued to provide a comprehensive and detailed report on non-financial information for a wide range of stakeholders. This report is categorized into nine areas of activity, and it focuses on activities in fiscal year 2022. It is issued with the approval of the corporate executive officer in charge of sustainability.\n### Investor Relations Website\n### Sustainability Report\nA business overview, with financial and non-financial information, particularly relevant to investors and shareholders\nCovers non-financial information, such as activities related to sustainability and CSR, relevant to a wide range of stakeholders\nMateriality\n### Third-Party Verification\nFor a third-party report on the assurance of environmental data, please use the link below.\n• Approach to Sustainability \n• Technology \n• Environment \n• Employees \n• Respect for Human Rights \n• Responsible Supply Chain \n• Quality and Customer Service \n• Community Engagement \n• Ethics and compliance \n• Corporate Governance\n### Briefings for Investors\n• Corporate Strategy Meeting • Earnings Announcement • Business Segment Meeting • Sustainability Meeting • Technology Meeting\n### Scope:\nIndependent Assurance Statement\nSony Group Corporation, consolidated subsidiaries and other companies within the scope of consolidation. In this report, “Sony” refers to the “Sony Group,” as distinct from Sony Group Corporation and Sony Corporation. “Headquarters” refers to Sony Group Corporation. The “Sony Group” refers to Sony Group Corporation (the parent company operating in Japan) and all consolidated subsidiaries in which Sony Group Corporation holds a capital stake of more than $50 \\%$ . For a list of consolidated subsidiaries please see “Affiliated Companies” on Sony Group Portal.", "chunk_word_count": 491, "section_path": "SONY > 2040 2050 > Technology", "document_id": "Sony Sustainability Report 2023", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 3, "chunk_text": "# SONY\n## 2040 2050\n### Disclosure and Communication of Financial and Non-Financial Information\nFinancial Reports \n• Securities Report (Japanese only) \n• SEC Filings\nCorporate Governance and Internal Controls • Corporate Governance Report\nSony understands the importance of appropriate disclosure to and communication with stakeholders. Since 2019, Sony has been issuing its Corporate Report to comprehensively communicate financial information and non-financial information, including policies for mid- to long-term value creation and business strategies. Sony also posts financial data, non-financial information and business summaries designed primarily for investors and shareholders on the Investor Relations section of its website. In addition, Sony issues its Sustainability Report to provide a wide range of stakeholders with non-financial information on topics such as activities related to sustainability and CSR.\nAffiliated Companies\n### Media Utilized for Disclosure\nReports\n### Period Covered\nCorporate Report Corporate Governance Report (in Japanese) Securities Report (in Japanese)\nFY2022 (April 1, 2022 - March 31, 2023) Some information on activities in April 2023 and after is also included.\nWebsite Links Investor Relations Sustainability\n### Date of Issue\nAugust 2023 (Previous report issued: August 2022; issued annually)\n### Business Overview\n### Data by Geographic Segment\nSales and financial services revenue\n[IMAGE CAPTION] Number of Employees\\*3\n### Data by Segment\nSales and financial services revenue\n[IMAGE CAPTION] Number of Employees\\*3\n[IMAGE CAPTION] Distribution by shareholder type\n\\*1 Asia-Pacific: Southeast Asia, India, Oceania, Taiwan Region and South Korea \\*2 Other Areas: Middle East, Latin America, Africa and Canada \\*3 Numbers rounded to the nearest hundred employees\n### Organizational Structure\n### Dialogue with Stakeholders\nThrough the issuance of various reports such as its Corporate Report and Sustainability Report, and through its Sustainability Briefing and websites, Sony communicates its approach to sustainability and information about initiatives regarding sustainability.\nCorporate Report Sustainability Briefing Sustainability\nSony Group Corporation has established the Sustainability Department under the supervision of the Senior Executive in charge of Sustainability. The Sustainability Department promotes various sustainability-related initiatives throughout the Sony Group in cooperation with each business unit and operating company (Business Unit (s) ) and other corporate divisions, including Compliance, Human Resources, Corporate Planning & Control, Finance and Legal (Relevant Divisions).\n### Pursuing Sustainability Activities in Management and Business Units", "chunk_word_count": 365, "section_path": "SONY > 2040 2050 > Disclosure and Communication of Financial and Non-Financial Information", "document_id": "Sony Sustainability Report 2023", "page": 6, "page_start": 6, "page_end": 8 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 4, "chunk_text": "# SONY\n## 2040 2050\n### Raising Employee Awareness\nThe Business Units consider sustainability issues and opportunities for their respective businesses, and, with unique perspectives, implement sustainability-related initiatives that align with their respective business characteristics. In addition, the Business Units, consulting with the Sustainability Department, have introduced key performance indicators (Sustainability KPIs), which measure the Business Units’ sustainability efforts. The Sustainability KPIs are incorporated into the Business Units’ performance evaluations, and the Sustainability Department evaluates the status of achievement of such Sustainability KPIs. Additionally, sustainability is incorporated into one of the Senior Executives’ performance-linked remuneration evaluation factors for individual performance from the perspective of social value creation and ESG (Environment, Social, Governance). In the fiscal year ended March 31, 2023, a global sustainability conference was held, where the Senior Executive in charge of Sustainability, the Senior Executive in charge of Human Resources, and sustainability personnel from the Business Units came together to confirm and share the sustainability initiatives for the Business Units and their progress on the Sustainability KPIs.\nSony recognizes the importance of boosting employee awareness of sustainability and engages in a variety of initiatives to do so.\n• Sustainability Awards \n• Sustainability forums \n• Sustainability-themed sessions at global online meetings open to all employees \n• Dissemination of information via intranet websites \n• E-learning training programs\n### Reports to the Board of Directors for Review\nThe Sustainability Section submits quarterly reports on its activities to the Board of Directors. Once a year, in principle, it reports to the Board of Directors on the status of Sony’s entire set of sustainability initiatives (climate change and other environmental initiatives, prevention of forced labor in the supply chain and other human rights initiatives, diversity and social initiatives, etc.) and the Board reviews them. For matters of great importance, the senior executive and department in charge of a particular matter provide regular reports for the Board of Directors to review.\n### Sony’s Sustainability Efforts\nThe Sustainability Department, operating under the above structure and the aforementioned “Sony’s Approach to Sustainability,” strives to spread this policy across Sony’s business operations. Through dialogue with stakeholders and materiality analysis, the Sustainability Department identifies sustainability issues that need to be addressed by the Sony Group as a whole. Additionally, the Sustainability Department promotes the group-wide sustainability initiatives by formulating relevant Group policies on identified sustainability issues, including a global environmental plan, “Road to Zero,” and communicating across the Sony Group by collaborating with the Senior Executives in charge of Sony’s headquarters functions and the Relevant Divisions. The Senior Executive in charge of Sustainability regularly reviews and assesses risks and engages in detection, communication, evaluation and response for the risk of loss related to sustainability.\nFor the fiscal year ended March 31, 2023, the Sustainability KPIs included reducing the use of virgin oil-based plastic in Sony products, introducing renewable energy at Sony’s manufacturing facilities, reducing GHG emissions in Sony’s manufacturing processes, implementing awareness-raising activities related to the environment and diversity, equity, and inclusion (DE&I) using Sony’s content IP, as well as conducting DE&I programs and training.", "chunk_word_count": 507, "section_path": "SONY > 2040 2050 > Raising Employee Awareness", "document_id": "Sony Sustainability Report 2023", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 5, "chunk_text": "# SONY\n## 2040 2050\n### Message from the Senior Executive in Charge of Sustainability\non their individual needs.\nSony also collaborates with other companies to enhance and accelerate accessibility and inclusion, and launched over-the-counter (OTC) hearing aids and a retinal projection camera kit.\n### Global Environmental Initiatives\nSony has been promoting environmental activities since the 1970s. Road to Zero, our long-term environmental plan established in 2010, is designed to reduce the Group’s environmental footprint to zero by 2050. It follows a specific road map including concrete medium-term targets that are set every five years by backcasting from the final goals of the plan for 2050, which are based on four environmental perspectives of climate change, resources, chemical substances and biodiversity.\n### Shiro Kambe\n### Initiatives for Diverse Business, People, and Society\nSenior Executive Vice President Corporate Executive Officer Officer in charge of Sustainability Sony Group Corporation\nFor Sony to achieve further growth and create value over the long term, we must also continue to evolve the diversity of our businesses and employees.\nHowever, as climate change risks are becoming more apparent and serious worldwide, and the transition to a decarbonized society has become an urgent issue, we decided in May 2022 to accelerate our environmental impact reduction activities in the climate change area and to bring forward the target year of achieving a zero environmental footprint in this area by ten years. Specifically, we are aiming to first reduce Scope 1 and 2 GHG emissions generated from our business sites to net-zero by 2030. Furthermore, when including Scope 3, which indirectly occurs in the value chain, we aim to reach net-zero by 2040. Sony leverages its technologies and businesses to improve the global environment, examples include our development of new environmentally conscious materials, the Synecoculture™\\* initiative, and our project to protect the earth by supporting environmental monitoring using AI and sensing technology.", "chunk_word_count": 313, "section_path": "SONY > 2040 2050 > Message from the Senior Executive in Charge of Sustainability", "document_id": "Sony Sustainability Report 2023", "page": 9, "page_start": 9, "page_end": 9 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 6, "chunk_text": "# SONY\n## 2040 2050\n### Promoting Sustainable Management\nAs one of our measures to evolve the diversity of our employees, we are making leadership appointments that encourage new perspectives and value creation. At Sony University, which aims to develop future leaders, we are increasing the diversity of participants. We are also working to further improve diversity, including gender and internationality, on the Board of Directors.\nUnder our Purpose to “fill the world with emotion, through the power of creativity and technology,” and our Corporate Direction of “getting closer to people,” Sony operates diverse businesses and aims for sustainable value creation based on mid- to long-term growth in the Sony Group’s corporate value. Sony will continue to focus on management centered around Kando and People based on such diversity. In order to have people connected to each other through emotion, it is necessary to create a society in which everyone can live with peace of mind in a sustainable global environment. We believe it is important for us to fulfill our responsibility to society and the environment, and contribute through our technologies and businesses.\nIn addition, we provide various external programs that help people from various backgrounds for their career development and challenges. In 2020, Sony established the Global Social Justice Fund to support initiatives that promote social justice and human rights, and to foster DE&I around the world. Sony Group Companies in the U.S., mainly the Entertainment Companies, published their Global Social Justice Fund Impact Report in 2022, highlighting the outcomes of the grants for communities around the globe.\nMoving forward, we would like to further evolve our sustainability initiatives by prioritizing dialogues with our stakeholders and continuing to learn.\n### Materiality Assessment\nThrough our commitment to an inclusive future, Sony aims to create a world where everyone belongs. We strive to enhance the accessibility of our products, services and experiences. We employ inclusive design and incorporate feedback gained through the interviews and usability tests with employees and users with disabilities in the planning and development process into our design and features. The PlayStation®5 (PS5™) software God of War Ragnarök featured more than 70 accessibility features when it was released in 2022. It enables players to customize their gameplay experience depending\nSustainability-related issues are diverse, and new challenges continue to arise accompanying the evolution of society and technology. In addition, the issues that we see as priority areas may change depending on the status of Sony’s business going forward. In promoting sustainability initiatives, we believe that it is important to regularly review and update the sustainability issues that are important to the Sony Group, both from our own perspective and from that of our stakeholders. Our previous materiality analysis was conducted in 2018. Since then, the environment surrounding Sony has changed dramatically, including an increase in natural disasters due to climate change, the COVID-19 pandemic, an increase in human rights risks and social divisions, and the emergence of new geopolitical risks. In light of these changes, we conducted a materiality analysis from the perspective of the entire Sony Group in 2022, and we identified climate change; diversity, equity and inclusion (DE&I); respect for human rights; and technology for sustainability as the most important. We are tackling a variety of sustainability issues from this perspective.", "chunk_word_count": 545, "section_path": "SONY > 2040 2050 > Promoting Sustainable Management", "document_id": "Sony Sustainability Report 2023", "page": 9, "page_start": 9, "page_end": 10 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 7, "chunk_text": "# SONY\n## 2040 2050\n### Summary of Actions\n### Stakeholder Engagement\n### Communication with Stakeholders\nny recognizes that, by addressing issues that are of concern to its many stakeholders, it is strengthening its operating foundation, which is in turn vital to its business activities and the achievement of sustainable growth. \nny strives to earn the trust of all stakeholders by conducting its business responsibly and engaging in stakeholder dialogue.\n### Partnership and Participation in Multi-Stakeholder Frameworks\nFor Sony, engaging and working together with various stakeholders is vital for pursuing sustainability initiatives. In addition to promoting stakeholder engagement, Sony participates in multi-stakeholder efforts to forge a global framework for sustainability.\n### SDGs and Sony’s Contributions\nhelp achieve the SDGs.\nSony ensures that all employees are aware of the Sony Group Code of Conduct, in which its core principle of respecting human rights is made explicit. Sony also implements initiatives to advance social justice, protect human rights and promote DE&I through the Global Social Justice Fund it established in 2020. \nVia such initiatives, Sony is working to eliminate discrimination as addressed by Goal 10 (reduced inequalities), as well as to secure equal opportunities by encouraging appropriate behavior and correcting inequalities in outcomes.\nTo minimize inputs of virgin resources into its business activities, Sony identifies key resources and strives to achieve zero usage of those virgin materials. Furthermore, Sony endeavors to ensure the appropriate use of water, minimize waste from its business sites, and collect and recycle products from the market to contribute to Goal 12 (responsible consumption and production).\nSony manages diverse businesses with people at the core under its Purpose to “fill the world with emotion, through the power of creativity and technology,” and its Corporate Direction of “getting closer to people.” In order to have people connected to each other through emotion, it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment. Through innovation and sound business practice, Sony endeavors to contribute to the development of a sustainable society. Sony believes that its diverse business portfolio is very relevant to the 17 SDGs, and aims to contribute to the achievement of the SDGs through its technologies, products, services and content, as well as various partnerships.\nMateriality (Respect for Human Rights) Respect for Human Rights\nMateriality (Climate Change) Environment\n### Initiatives throughout Supply Chains", "chunk_word_count": 395, "section_path": "SONY > 2040 2050 > Summary of Actions", "document_id": "Sony Sustainability Report 2023", "page": 10, "page_start": 10, "page_end": 18 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 8, "chunk_text": "# SONY\n## 2040 2050\n### Diversity, Equity and Inclusion (DE&I)\nSony works with its suppliers to secure compliance with the Sony Supply Chain Code of Conduct and Sony Group Policy for Responsible Supply Chain of Materials, applying the policies to its sites, suppliers and contract manufacturers. In this way, Sony and its suppliers are addressing issues in the supply chain including human rights, labor conditions, occupational health and safety, and the environment. Through this initiative, Sony is endeavoring to provide safe, decent, and humane work as called for by Goal 8 (decent work and economic growth), and contribute to suitable and equitable skills development and economic activity as sought by Goal 10 (reduced inequalities). By implementing such initiatives throughout the supply chain, Sony is aiming to realize peaceful and inclusive societies as described by Goal 16 (peace, justice and strong institutions).\nSony leverages its diverse businesses and workforce as strengths in its business strategy. In order to further promote diversity as a key management strategy, in addition to promoting diversity in business and geography and hiring diverse talent, Sony provides opportunities to think more deeply about diversity, whether it be in terms of race, nationality, disabilities, gender, sexual orientation, values, or work styles. These opportunities are also extended to other companies and external organizations. By promoting the message of diversity to society, Sony is promoting inclusive and sustainable economic growth, employment, and decent work for all, as outlined in Goal 8 (decent work and economic growth).\nSony is working to achieve gender equality and empower women as outlined in Goal 5 (gender equality) by establishing action plans to increase career opportunities for women and implementing ongoing initiatives at group companies.\nResponsible Supply Chain\n### Sustainability Initiatives and SDGs\n### Community Engagement\nMateriality (Diversity, Equity and Inclusion (DE&I) ) Diversity, Equity and Inclusion\n### Responsibilities toward the Global Environment and Positive Contributions\nUnder the slogan “For the Next Generation,” Sony is meeting community needs, focusing on the following areas: supporting education in various countries and regions, providing emergency relief and assistance for large-scale disasters. These activities contribute to Goal 4 (quality education) and create a positive social impact while partnering with external groups as prescribed by Goal 17 (partnerships for the goals).\nSony endeavors to reduce environmental impact and prevent pollution in its business activities and throughout the life cycle of its products. To address Goal 13 (climate action), Sony is reducing energy consumption from business activities and the life cycle of products and services, aiming to achieve zero emissions of greenhouse gases by 2040, including Scope 3. Sony has also joined the RE100 initiative by making a commitment to sourcing $100 \\%$ renewable electricity for the worldwide operations of the Sony Group by 2030. This concrete commitment is in line with securing renewable energy as sought by Goal 7 (affordable and clean energy).\n### Human Rights and Diversity\nAll stakeholders who are connected to the business activities of the Sony Group, including employees and creators, are important and help support Sony in its drive to contribute to social change that will\nCommunity Engagement\n### External Evaluation and Recognition", "chunk_word_count": 519, "section_path": "SONY > 2040 2050 > Diversity, Equity and Inclusion (DE&I)", "document_id": "Sony Sustainability Report 2023", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 9, "chunk_text": "# SONY\n## 2040 2050\n### ESG External Evaluations and Inclusion in Indexes\nSony is consistently ranked highly for its ongoing efforts to promote sustainability by the world’s leading ESG evaluation institutions, and it has been chosen for inclusion in various ESG indexes.\n### ESG External Evaluations\n### Inclusion in ESG Indexes\n• In CDP surveys, Sony Group Corporation received the highest A List rating for climate change (December 2022) • Sony Corporation was awarded an $\\ \" \\mathsf { A } ^ { \\prime \\prime }$ (highest grade) and selected as a Supplier Engagement Leader in CDP’s 2022 Supplier Engagement Assessment in recognition of its climate change initiatives in cooperation with the supply chain (March 2023)\n• Sony Group Corporation has been named one of the World’s Most Ethical Companies for the fifth consecutive year by Ethisphere Institute, a US-based organization dedicated to the study and advancement of ethical business practices (March 2023) \\* “World’s Most Ethical Companies” and “Ethisphere” names and marks are registered trademarks of Ethisphere LLC.\n• Sony Group Corporation received the highest AAA ranking in the MSCI ESG Ratings assessment for the fourth consecutive year (December 2022)\nFTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that Sony Group Corporation has been independently assessed according to the criteria of the FTSE4Good and FTSE Blossom Index Series and has satisfied the requirements to become a constituent of those index series. Created by the global index provider FTSE Russell, those index series are designed to measure the performance of companies demonstrating strong Environmental, Social and Governance (ESG) practices and used by a wide variety of market participants to create and assess responsible investment funds and other products.\nTHE INCLUSION OF SONY GROUP CORPORATION IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF SONY GROUP CORPORATION BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.\n### Major External Awards Received for Sustainability Initiatives\n\\* Organization names appear as they were at the time of award receipt. Organizations with no country name given in “Awarded by” are in Japan.\n### Fiscal Year 2022 (in order received)\n### Materiality\n### The Materiality Assessment Process\n### Analysis Results and Sony Group Material Topics\n### Step 1: Identify and classify material topics\nBased on internal and external information and documents, Sony selected material topics with high relevance. References included the Global Reporting Initiative (GRI) Standards and the Sustainability Accounting Standards Board (SASB) standards, which are global guidelines for sustainability reporting, the ISO 26000 international standard for corporate social responsibility, and the SDGs, which are globally agreed goals for building a sustainable world.\nAs a result of the aforementioned assessment process, climate change; diversity, equity and inclusion; respect for human rights; and technology for sustainability as the most important. The Sustainability Report 2023 classifies Sony’s materiality topics, including the above, into nine categories: environment, technology utilization, employees, respect for human rights, responsible supply chain, quality and customer service, community engagement, ethics and compliance, and corporate governance.", "chunk_word_count": 540, "section_path": "SONY > 2040 2050 > ESG External Evaluations and Inclusion in Indexes", "document_id": "Sony Sustainability Report 2023", "page": 19, "page_start": 19, "page_end": 21 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 10, "chunk_text": "# SONY\n## 2040 2050\n### Overview and Purpose of Materiality Analysis\n### Step 2: Assess the topics from the perspective of Sony and its stakeholders\nThe Sony Group develops diverse businesses globally. Sony recognizes that stakeholders expect it to maintain a well-defined stance and take action to address the issues facing society and the global environment, in addition to delivering emotional experiences through its business.\nThe topics identified and classified in the Step 1 were assessed from the perspectives of Sony and its stakeholders. The senior executives in charge of Sony headquarters functions assessed each topic from the angle of its mid- to long-term positive or negative impact on value creation at Sony to determine its importance from the company’s perspective. The assessment of the importance of each topic from the perspective of stakeholders was based on information published by NGOs, investors, ESG rating agencies, the mass media and other sources.\n[IMAGE CAPTION] Sony Group Material Topics\nIn response to such expectations, and to various social and environmental changes, Sony reviewed material topics in sustainability from the standpoints of all its businesses in fiscal 2022.\n### Step 3: Identify the most important topics\nThe most important topics were specified after being reviewed by top management and the Board of Directors on the basis of the assessment conducted in Step 2.\nMateriality Assessment Steps\n### Climate Change\n### Road to Zero Roadmap\n### Rationale for Identifying Materiality\nSony acknowledges that climate change impacts are becoming more apparent and the transition towards a decarbonized society is crucial issue for all companies and that our stakeholders have elevated expectations of Sony’s environmental initiatives along two axes: the first being its “responsibility,” for instance, to reduce Sony’s environmental impact, and the “contribution” it can make by leveraging its diverse businesses and technologies. Sony’s corporate activities are only possible if the earth, which sustain all life, is healthy. Sony believes that it is important to respond to the environment, including by taking measures against climate change.\nCarbon emissions from Zero\n2040\n▲\nScope 3: Reduce carbon emissions by $45 \\%$ from product use (vs. FY2018) Carbon removal: Incremental implementation\n2035", "chunk_word_count": 356, "section_path": "SONY > 2040 2050 > Overview and Purpose of Materiality Analysis", "document_id": "Sony Sustainability Report 2023", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 11, "chunk_text": "# SONY\n## 2040 2050\n### Policy and Initiative Overview\n▲\nScopes 1 & 2:• Achieve net-zero status GLMATE NCDP • Zero carbon emissions from electricity used in Sony’s operations\nSony has been implementing a variety of initiatives to combat global warming since 1970s. In 2010 Sony announced Road to Zero, a global environmental plan to achieve a zero environmental footprint by 2050. From the standpoint of the designated priority area of climate change, Sony set the goal of reducing greenhouse gas emissions to zero for its products and business activities throughout their entire life cycles, and to this end each business segment is implementing its own action plan.\n2030\nAs climate change risks become more apparent and serious worldwide, the transition to a decarbonized society has become an urgent issue. Sony made the decision in 2022 to accelerate its goal of achieving net-zero targets throughout the entire value chain, including scopes 1 to 3, by ten years from 2050 to 2040, and to make direct and indirect emissions (scopes 1 and 2) of its own operations net-zero status by 2030. Sony has also announced its plan to accelerate the target for achieving $100 \\%$ renewable electricity in its own operations by ten years, from 2040 to 2030. To achieve these goals, we work to promote energy conservation and introduce renewable energy at our sites around the world, while also encouraging our business partners who engage in parts, materials and finished product manufacturing to reduce their own GHG emissions. Furthermore, we provide energy-saving products, services and solutions for a wide range of business areas, and actively invest in startups that work to create next-generation environmental technologies to further contribute to the decarbonization of society as a whole.\n[IMAGE CAPTION] GHG Emissions\n[IMAGE CAPTION] Percentage of Renewable Electricity Used at Own Business Sites\nGoing forward, Sony will continue to further accelerate efforts to address climate change by accepting responsibility to aim for zero greenhouse gas emissions and making contributions through its diverse technologies and businesses.\n### Reducing Product Energy Demand\nSony has instituted many initiatives to reduce the energy consumed by its products, setting specific annual goals for each product category. Examples of such initiatives include the development of an automatic energy-saving function for BRAVIA™ TV sets using a dedicated camera to detect whether a person is in front of the TV, and a focus on energy-saving design for the VPL-XW5000 video projector, which has resulted in a $30 \\%$ reduction in electricity consumption per lumen (a measure of the brightness of light) compared to the previous model, VPL-VW775, while maintaining the same performance. Sony’s Crystal LED displays for professional use (BH and CH series) have also achieved energy efficiency gains of more than $20 \\%$ over the B and C series through measures such as adoption of highly efficient LED elements, innovations in light transmission through the evolution of surface processing technology, and Sony’s proprietary power source design.\n### Initiatives to Eliminate GHG Emissions\n### Renewables as Exclusive Energy Sources for Sony Operations", "chunk_word_count": 503, "section_path": "SONY > 2040 2050 > Policy and Initiative Overview", "document_id": "Sony Sustainability Report 2023", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 12, "chunk_text": "# SONY\n## 2040 2050\n### Japan’s First Virtual PPA under Feed-In Premium Scheme\nSony is also working to utilize $100 \\%$ renewable energy to power its operations worldwide, including installing solar power systems and purchasing renewable energy from electric utilities. This goal has already been attained in Europe and China, with plans in place to introduce more renewable energy in Pan-Asia, North America and Japan.\nAs a new initiative to introduce more renewable energy, in FY2022 Sony Global Manufacturing & Operations Corporation implemented a virtual power purchase agreement (PPA) under the feed-in premium scheme, the first Japanese company to do so, at its Kohda Site. Under this virtual PPA, the Kohda Site is expected to consistently introduce approximately 2.4 million kWh of renewable electricity each year.\n[IMAGE CAPTION] Solar power generation facilities on a Sony site\n[IMAGE CAPTION] Figure redrawn with permission from Renewable Energy Institute\n### Reduced Emissions across Entire Supply Chain\nSony asks its manufacturing partners and suppliers of materials and parts to analyze their own GHG emissions, set reduction goals, and manage progress. It has also implemented a measure to share with its business partners and clients the energy-saving expertise it has garnered from initiatives at Group sites worldwide. Sony helps some of them set targets for emissions reduction equivalent to levels set out by the Science Based Targets initiative, and obtain the initiative’s approval.\n### Diversity, Equity and Inclusion (DE&I)\n### Rationale for Identifying Materiality\nIn April 2023, Sony made changes to its organizational structure to strengthen such initiatives across the group, newly appointing the Senior Executive in charge of Lead of Group DE&I and the Senior Vice President in charge of Group DE&I Promotion. By further evolving Sony’s DE&I initiatives, Sony promotes diversity, the source of innovation, creating new value that leads to both the growth of the Sony Group and the development of society.\nSony recognizes that diverse organizations are more innovative in corporate activities than non-diverse organizations. Sony believes it is important to respect our employees’ diverse values, remember the importance of equity, and foster an inclusive organizational culture. Expectations are also rising for corporate initiatives to address social issues such as social justice and inequality, and Sony believes that it is important for the Sony Group to further promote initiatives aimed at resolving issues both inside and outside the Group.\n[IMAGE CAPTION] Number of Employees (By region)\\*3 \\*1 Asia-Pacific: Southeast Asia, India, Oceania, Taiwan Region and South Korea \\*2 Other Areas: Middle East, Latin America, Africa and Canada \\*3 Numbers rounded to the nearest hundred employees\n[IMAGE CAPTION] Number of Employees (By segment)\\*3", "chunk_word_count": 432, "section_path": "SONY > 2040 2050 > Japan’s First Virtual PPA under Feed-In Premium Scheme", "document_id": "Sony Sustainability Report 2023", "page": 23, "page_start": 23, "page_end": 24 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 13, "chunk_text": "# SONY\n## 2040 2050\n### Policy and Initiative Overview\nSony works to bring value to society from the standpoint of its Purpose & Values while implementing DE&I initiatives based on its People Philosophy, “Special You, Diverse Sony,” as well as the Sony Group Diversity Statement.\nSony maintains operations in countries and regions around the world, hiring employees with high potential who best meet local needs. Approximately half of all Sony Group employees are engaged in business activities outside Japan, and more than $90 \\%$ of these employees are locally hired. Sony aims to globally promote greater opportunities for women as part of our efforts to ensure an inclusive work environment in which diverse employees can play an active role. As of March 31, 2023, the ratio of women to men in the workforce was $3 4 . 0 \\%$ and the ratio of women to men in management positions was $3 0 . 0 \\%$ at the whole Sony Group. Additionally, Sony considers increasing gender diversity as an area of focus for Japan, where the ratio of women to men in management positions is low and the number of women majoring in the fields of science or engineering is limited.\n[IMAGE CAPTION] Women in the workforce and management positions held by women (Group-wide) \\* Totals are based on data provided by Sony Group companies as of the end of each fiscal year (March 31). The definition of “manager” varies in different countries, regions and companies.\nSony also hires and provides workplace support for individuals with disabilities. Beyond complying with the laws, rules, and regulations of each nation and region in which it operates, Sony is devoted to creating inclusive workplaces where all employees, regardless of disability, can build careers. The Sony Group as a whole endeavors to increase the accessibility of its products and services, and undertakes initiatives related to diversity and social justice. In 2020, the Group established the 100 million USD “Global Social Justice Fund” to provide support to organizations advocating for social justice and human rights, and promote DE&I initiatives worldwide.\nIt is essential that each employee has a deeper understanding of diversity to foster an inclusive work environment. By learning, valuing and understanding each individual’s uniqueness, Sony makes “Diversity” as an even greater strength to create new value.\n### Advancing Respect for Diversity and an Inclusive Society\n\\*1 Allyship: Actions to support and take action to help a member of a marginalized group by a person who is not a member of that group. \n$^ { \\star 2 }$ Groups that make up a relatively small portion of the greater community and that, as a result, are often treated less fairly.\n### Initiatives to Increase Product and Service Accessibility", "chunk_word_count": 454, "section_path": "SONY > 2040 2050 > Policy and Initiative Overview", "document_id": "Sony Sustainability Report 2023", "page": 24, "page_start": 24, "page_end": 25 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 14, "chunk_text": "# SONY\n## 2040 2050\n### Diversity Week: Deepening Diversity Awareness\nSony employs inclusive design to enhance accessibility and enable more people, including people with disabilities, to enjoy its products and services. Sony incorporates feedback gained through the participation of employees with disabilities in the planning and development process, interviews with people with disabilities, and usability tests.\nSony has been holding events to promote diversity in a wide array of countries and regions, among which is Diversity Week, introduced in Japan in 2015. From 2016 onwards, the event has been held across the globe under a common theme with the goal of Sony group companies worldwide deepening the understanding of gender, race, nationality, sexual orientation, gender\nidentity, disability and other topics related to DE&I. In 2022, Sony held seminars, lectures and other events around the world under the theme, “Allyship\\*1 in Action: Enhancing communication and connection in a diverse society.”", "chunk_word_count": 150, "section_path": "SONY > 2040 2050 > Diversity Week: Deepening Diversity Awareness", "document_id": "Sony Sustainability Report 2023", "page": 25, "page_start": 25, "page_end": 25 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 15, "chunk_text": "# SONY\n## 2040 2050\n### Social Justice and Human Rights Initiatives\nIn 2020, the Group established the “Global Social Justice Fund” to support organizations advocating for social justice and human rights, and promote DE&I initiatives worldwide. The fund supports more than 450 organizations engaging civic participation, criminal justice reform, diversity and education in 9 regions and 70 countries.\nIn Japan, several events were held such as a seminar on paternity leave, a lecture on nursing care, and a program for work-life balance in the age of century-long lifespans. Sony Kibou/ Hikari Corporation was established to provide employment opportunities for individuals with disabilities. The company conducted workshops where group employees participated in image data production, which is their business, and lectures on how to create a more inclusive workplace. In the US, the themes explored included social justice, racial equity awareness, accessibility and allyship. These take a wide array of forms, from virtual conversation between employees and management and employee-led events celebrating Latinx and Hispanic culture, to educational functions about laws affecting the LGBTQ $^ +$ community or interactive bystander intervention training on how to safely intervene when one witnesses discrimination. In Europe, both events to raise DE&I awareness and online training to educate about the under-represented groups\\*2 and encourage meaningful action were held. In China adopting the sub-theme of “Respect differences in workplace, and create values together,” online forums to promote respect for individuality, online workshops to facilitate a scientific approach to thinking about leadership and other exhibitions were conducted.\nThe Sony Music Group Global Scholars Program, established by the Sony Music Group in June 2022 to develop the next generation of industry leaders, is a case in point. It recently announced 50 scholarship recipients from all over the world and has begun assisting with their education. To address racial inequality and social injustice around the world, Sony Pictures Entertainment launched Sony Pictures Action, a multipronged strategy to promote racial equality and inclusion, anchored on the four pillars of People, Content, Partners, and Community. Sony Interactive Entertainment, meanwhile, has created its PlayStation Career Pathways Program, a multi-year talent development initiative supporting Black and Indigenous university students seeking careers in the gaming industry. The program offers scholarships, mentorships, and career readiness training to participants, with the goal of helping them build the skills and connections needed to succeed in the industry.\nFor example, an overview of Sony’s efforts in the area of ”Responsible Supply Chain” are as follows:\n### Respect for Human Rights\n• Implements the Sony Supply Chain Code of Conduct which adopts RBA Code of Conduct, industry best practice for achieving a responsible supply chain to our own electronics manufacturing sites and suppliers, then continue to respond to human rights, labor, safety or environmental issues throughout the supply chain. \n• Checks compliance status annually for our own manufacturing sites, and at the start of business and regularly thereafter with OEM/ODM, raw materials and parts suppliers depending on level of risk and size of business. \n• As a result of the above assessments, Sony requests improvements from manufacturing sites and suppliers that were determined to require corrective measures, and provides support and monitoring until the completion of improvements.", "chunk_word_count": 529, "section_path": "SONY > 2040 2050 > Social Justice and Human Rights Initiatives", "document_id": "Sony Sustainability Report 2023", "page": 25, "page_start": 25, "page_end": 26 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 16, "chunk_text": "# SONY\n## 2040 2050\n### Rationale for Identifying Materiality\nSony is aware of the potential human rights impacts of its global business activities. Sony recognizes that respecting human rights throughout Sony's value chain and addressing any potential human rights risks, whether the relationship with Sony’s business operation is direct or indirect, is a responsibility that a diverse range of stakeholders expect for Sony. Considering recent changes in the external environment related to respect for human rights, Sony believes it is important to further strengthen its efforts.\n[IMAGE CAPTION] Sony Human Rights Framework Concept Diagram\n### Policy and Initiative Overview\nSony’s policy requiring respect for human rights is set forth in the Sony Group Code of Conduct. Sony expects all Sony group companies to practice responsible business conduct by respecting all human rights in compliance with the Code as well as all relevant laws and regulations. Under this policy, Sony established and implemented group policies specific to the human rights area, such as “Sony Supply Chain Code of Conduct” which sets forth the code of conduct for Sony’s own manufacturing sites and suppliers, and aims to work towards a responsible supply chain, and “Sony Group AI Ethics Guidelines,” which guide all Sony officers and employees to utilize AI and/or conduct AI-related R&D in a manner that conforms with our values and emerging social norms. Sony engages in initiatives to prevent or mitigate any potential negative impact on human rights in line with the frameworks set out in the United Nations Guiding Principles on Business and Human Rights (UNGP) issued by the United Nations Human Rights Council and the OECD Guidelines for Multinational Enterprises.\n[IMAGE CAPTION] Priority Areas: Overview of Responsible Supply Chain Initiatives\nAs one of our major efforts, Sony conducts human rights risk impact assessments, which serve as the starting point for human rights due diligence. After identifying potential human rights risks that are highly relevant to Sony's business activities, the assessments further identified three areas as priority areas for enhancing initiatives throughout the Sony Group: responsible supply chains; respect for diversity, equity and inclusion and responsible development; and use of technologies. As a result of the assessments, Sony promotes individual initiatives for each of these areas.\n### Technology for Sustainability\n[IMAGE CAPTION] sensor equipped with AI processing functionality vision sensor IMX500\nSony recognizes that our stakeholders have expectations regarding our ability to both grow our business and solve social and environmental issues through technology. Sony believes that it is an important mission of Sony to lead and contribute to the resolution of sustainability issues not only by increasing business revenue through the technologies and products Sony develops, but also by having a positive impact on society and the environment.", "chunk_word_count": 451, "section_path": "SONY > 2040 2050 > Rationale for Identifying Materiality", "document_id": "Sony Sustainability Report 2023", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 17, "chunk_text": "# SONY\n## 2040 2050\n### Policy and Initiative Overview\nAs the environment continues to change rapidly and substantially worldwide, social and environmental problems are increasing in gravity. Sony believes that it is essential to contribute to the solving of such problems through the application of technology. To that end, Sony supports technological development that helps businesses grow, along with innovation that betters society and industry for the future.\nIn 2022 Sony established its R&D mission: “Push our civilization forward and make this planet sustainable.” To help facilitate this, the company conducts research and development in businesses and fields where it can enrich people’s lives, shape social infrastructure, and make significant contributions to sustainability.\nSony’s research and development is underway, for example, on sensing technology that measures the water content in soil, ultra-wide-area communication network technology, and predictive data analytics technology based on captured data. Sony has combined these technologies to build Sony’s Earth MIMAMORI platform aiming to help predict and mitigate the effects of natural disasters and contribute to solve environmental concerns. The intelligent vision sensor $1 \\mathsf { M } \\mathsf { X } 5 0 0$ , which is a CMOS image sensor equipped with AI processing functionality helps to raise efficiency and productivity in society, such as by realizing smart cities and factories. The IMX500 processes data inside the sensor itself, and is capable of extracting only necessary data. In transmitting a 4K image to the cloud, for example, it can reduce the volume of data to one-7,400th of what the average digital camera transmits, helping to reduce energy consumption and communication costs. Sony will continue to develop and offer solutions to create value for society by applying its technologies in partnership with other companies.\n### Looking to the Future\n### Overview\nUnder the targets set to achieve from fiscal year 2021 to 2025 in Green Management 2025, Sony prioritizes both encouraging business partners, consumers, and other stakeholders to take action and work together to build a sustainable world, as well as its own environmental activities. By 2030, we also intend to switch to $100 \\%$ renewable energy for electricity used at our business sites and achieve net-zero direct and indirect emissions (scopes 1 and 2) in our operations. Then, by 2035, we are aiming to reduce scope 3 greenhouse gas (GHG) emissions during product use by $45 \\%$ , achieving net-zero targets in all scopes by 2040. Moving forward, Sony will continue to strengthen our efforts to achieve a zero environmental footprint.\n### Basic Approach\nSony has pursued environmental initiatives since the 1970s, and began setting environmental principles and targets in the early 1990s. In April 2010, Sony established the “Road to Zero,” a plan to realize a sustainable society by achieving a zero environmental footprint throughout the life cycle of its products and business activities by 2050. In May 2022, Sony made the decision to bring forward the target year of achieving a zero environmental footprint in the climate change area by ten years from 2050 to 2040. Working toward a zero environmental footprint, once every five years Sony sets concrete medium-term environmental targets for each stage of the life cycle for its products with respect to climate change, resources, chemical substances, and biodiversity.\n### Environment", "chunk_word_count": 542, "section_path": "SONY > 2040 2050 > Policy and Initiative Overview", "document_id": "Sony Sustainability Report 2023", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 18, "chunk_text": "# SONY\n## 2040 2050\n### Milestones\n1976: Company-wide Sony Environmental Conference established \n1993: Sony Global Environmental Policy and Environmental Action Program developed \n1995: Began to acquire ISO14001 certification at manufacturing sites in Japan \n2002: Green Partner Environmental Quality Approval Program introduced \n2006: Integration of environmental management systems at sites around the world completed \n2009: $100 \\%$ renewable electricity use achieved at all European sites \n2010: “Road to Zero,” Sony’s Global Environmental Plan announced \n2015: Approved as Science Based Targets (SBT) \n2018: Sony joins RE100 global initiative \n2022: Sony announced the bringing forward of the target year of achieving a zero environmental footprint in the climate change area and “RE100” Approved as a Science Based Targets (SBT) net zero target\n### Organizational Structure\nSony is implementing and continually improving its globally integrated environmental management system with the aim of realizing the Sony Group Environmental Vision, achieving its medium-term environmental targets and complying fully with legal requirements, regulatory demands and internal policies established for the Group.\nIn addition, Sony has set up specialized functions to handle individual areas of activity within headquarters environmental functions. Corporate Executive Officers oversee these functions as Sony Group Corporation senior management.\n### Basic Policy\n### Environmental Policies and Targets\nIn order to realize the Environmental Vision, Sony formulates targets and concrete plans and initiates actions to implement, while contributing to a better society through partnerships and communications with internal and external stakeholders.\nSony reduces our environmental footprint and prevents environmental pollution throughout the lifecycle of our products and business activities by complying with all applicable environmental regulations and also by continually improving our global environmental management systems. Sony formulates the following goals in four key environmental perspectives and takes proactive actions to achieve those goals.\n### Environmental Plan\n### Sony Group Environmental Vision\n### “Road to Zero,” Sony’s Global Environmental Plan", "chunk_word_count": 305, "section_path": "SONY > 2040 2050 > Milestones", "document_id": "Sony Sustainability Report 2023", "page": 28, "page_start": 28, "page_end": 29 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 19, "chunk_text": "# SONY\n## 2040 2050\n### Climate Change\nSony reduces energy consumption and strives to achieve zero GHG\\* emissions throughout the lifecycle of our products, service and business activities.\nAs stated in the Sony Group Environmental Vision, Sony strives to realize a sustainable society by achieving a zero environmental footprint throughout the life cycle of its products and business activities. It is this long-term goal that prompted Sony to name its new global environmental plan, Road to Zero. Under this plan, Sony aims to bring its environmental footprint to zero by 2050 and works to achieve medium-term environmental targets toward this end. In May 2022, Sony made the decision to bring forward the target year of achieving a zero environmental footprint in the climate change area by ten years from 2050 to 2040.\nThe Sony Group Environmental Vision presents a philosophy and principles for environmental management activities throughout the global Sony Group with the aim of contributing to the realization of a sustainable society. Since enacting the Sony Global Environmental Policy which is a predecessor of the Sony Group Environmental Vision and the Environmental Action Program, in 1993, Sony has pursued a broad range of environmental initiatives. In 2010, we updated our Environmental Vision along with the formulation of the Road to Zero environmental plan.\n\\* Gases that raise the temperature of the earth’s surface by absorbing infrared radiation from reflected sunlight. Carbon dioxide (CO2), methane, nitrous oxide, hydrofluorocarbon (HFC), perfluorocarbon (PFC), sulfur hexafluoride $( { \\mathsf { S F } } 6 )$ and nitrogen trifluoride (NF3) are seven typical examples.\n### Resources\nIn order to minimize resource inputs for our business activities, Sony identifies “Key Resources” and strives to achieve zero usage of those virgin materials. Sony also uses water efficiently, minimizes wastes from sites and maximizes our effort for take back and recycling products from markets.\n### “Road to Zero, Sony’s Global Environmental Plan\n### Philosophy\nSony recognizes the importance of preserving the natural environment that sustains all life on the earth for future generations and thereby ensuring that all humanity can attain a healthy and enriched life. In order to realize such sustainable society, Sony strives to achieve a zero environmental footprint throughout the lifecycle of our products and business activities.\n### Chemical Substances\nSony minimizes the risk of chemical substances that we use causing serious harm to human health and the environment. Sony maintains strict control over the chemical substances we use, while, in line with the precautionary approach, taking steps whenever possible to reduce, substitute and eliminate the use of substances that have potentially significant impacts on the environment even in the cases where scientific evidence is not fully proven.\n[IMAGE CAPTION] Sony focuses on four environmental perspectives\nBiodiversity\n### Four Focus Points for a Zero Environmental Footprint\nSony protects and utilizes ecosystem services in a sustainable manner, while actively promoting maintenance and recovery of biodiversity through our business and local contribution activities.\nSony efforts to achieve a zero environmental footprint focus on four important environmental perspectives: climate change, resources, chemical substances, and biodiversity.", "chunk_word_count": 510, "section_path": "SONY > 2040 2050 > Climate Change", "document_id": "Sony Sustainability Report 2023", "page": 29, "page_start": 29, "page_end": 30 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 20, "chunk_text": "# SONY\n## 2040 2050\n### Focus on Climate Change\nSony aims to achieve zero GHG emissions in its business activities, as well as throughout the entire life cycle of its products and services. In order to reduce emissions, we conduct scenario analysis\\* in accordance with TCFD Recommendations, analyze and ascertain climate-related risks and opportunities, and review the countermeasures. To achieve zero GHG emissions, Sony works to maximize energy-saving measures and introduce as much renewable energy as possible.\n\\* At Sony, “key resources” are designated by taking the following factors into account: resource depletion, resource availability, environment impact of resource extraction, and loss of biodiversity and community impacts from resource extraction.\nIn addition to such measures as reducing the amount of electricity used at business sites, promoting the installation of solar power generation equipment, and maximizing energy efficiency in Sony products and services, Sony also encourages similar measures in the supply chain, including at contract manufacturers and suppliers of raw materials and components, to reduce direct and indirect GHG emissions. Sony also investigates ways to offset any emissions that might remain through efforts such as carbon removal.\n### Focus on Biodiversity\nRecognizing the importance of natural capital,\\*1 as the very foundation of human life, and the ecosystem services\\*2 it supplies, Sony endeavors to maintain and recover biodiversity, both in its business activities and through community initiatives. At each stage of the product lifecycle, Sony business activities are either dependent on or related to natural capital and biodiversity. We set and work toward goals with this in mind, especially at stages where this link is particularly prominent. For example, Sony aims to eliminate parts derived from virgin resources and prevent the loss of biodiversity due to mining in our procurement of raw materials and parts. For paper resources closely tied to biodiversity, we are continuing efforts to reduce the amount of paper used, and prioritize the purchase of environmentally conscious paper. Land use is another factor causing the loss and deterioration of biodiversity. In response, Sony promotes nature restoration and biodiversity conservation efforts that meet regional needs for the green areas on the premises of Sony sites as well as the surrounding area. Sony takes seriously the issue of plastic pollution in the oceans, which has become a worldwide crisis in recent years. We promote activities to reduce the amount of plastics used in products and in manufacturing sites, as well as the collection of plastic waste and cleanup activities at sites.\n### Focus on Water Use\nAlthough water circulates around the earth continuously through the water cycle, the amount of water available for use by the planet’s inhabitants is limited. With population growth and other issues putting further pressure on water supplies, the importance of conserving this resource will increase in the years ahead. Taking into account the locations of its sites, as well as regional differences, Sony will continue taking steps to minimize its withdrawal of water and to ensure the water it returns to water sources is of a quality that does not negatively impact the environment.\n\\* See below for more information on scenario analysis in accordance with TCFD Recommendations.\n### Disclosure of Climate-related Information in Accordance with the TCFD Recommendations", "chunk_word_count": 534, "section_path": "SONY > 2040 2050 > Focus on Climate Change", "document_id": "Sony Sustainability Report 2023", "page": 30, "page_start": 30, "page_end": 30 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 21, "chunk_text": "# SONY\n## 2040 2050\n### Focus on Resources\nSony seeks to minimize the consumption of resources and maximize resource recycling in order to use resources effectively in its business activities and throughout the life cycle of its products and services, based on the globally prescribed promotion of a circular economy. Sony minimizes resource consumption by reducing the weight of products, minimizing the use of packaging materials, and utilizing resources more efficiently in its internal operations. Concurrently, Sony also works to extend the life of products through quality and durability enhancements, while undertaking environmentally conscious design, such as making products easier to repair, in order to indirectly reduce resource consumption. Additionally, as part of its efforts to respond to the growing global problem of plastic pollution in the ocean, Sony continues to work toward reducing the amount of singleuse plastic product packaging. Sony aims to reduce the number of parts derived from virgin resources to zero by identifying certain key resources\\* in terms of environmental impact due to the depletion, uneven distribution and mining of resources, loss of biodiversity due to mining, and the effects of these impacts on local communities. In terms of waste, Sony recycles waste generated from internal operations, with the goal of eliminating landfilled waste. Additionally, Sony designs products to facilitate recycling and implements ongoing programs to collect and recycle end-of-life products according to the needs of local communities, while also promoting advanced recycling with recycling companies.\n### Focus on Paper Resources\nRecognizing that paper resources are limited, under the Sony Group Paper / Printed Material Purchasing Policy, Sony constantly works to reduce paper consumption while prioritizing the procurement of environmentally preferable paper, such as paper made from resources sourced from FSC-certified and recycled paper.", "chunk_word_count": 289, "section_path": "SONY > 2040 2050 > Focus on Resources", "document_id": "Sony Sustainability Report 2023", "page": 30, "page_start": 30, "page_end": 30 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 22, "chunk_text": "# SONY\n## 2040 2050\n### Sony Group Paper / Printed Material Purchasing Policy [PDF: 427KB]\nFocus on Chemical Substances\nSony endeavors to minimize the risk that chemical substances it uses might cause serious harm to human health and the environment. Chemical substances used in Sony products are suitably managed based on available data including national regulations, toxicity, environmental impacts, applications, and content level in components and products. Sony adopts a precautionary approach and takes steps to identify and strive to eliminate substances considered to be high-risk, even in cases where scientific evidence is insufficient, thereby reducing potential impact on the environment. Sony manages the type and application of chemical substances used at business sites, and for high risk substances sets criteria for managing each substance to either prohibit their use or reduce emissions or amounts transferred. Sony also prohibits the use of certain substances in manufacturing processes in the supply chain which are restricted under international frameworks because of environmental impacts throughout the life cycle.\nSony also recognizes that food is essential to the lives all our employees and humanity as a whole. This is also linked to environmental issues such as soil pollution, deforestation, food loss and global warming. We work to communicate these issues to our employees and encourage them to have an environmentally conscious diet.\n\\*1 The natural assets include elements of the natural environment such as forests, rivers, the atmosphere and soil, as well as living organisms. Natural capital is the source of ecosystem services, fossil fuels and minerals. $^ { \\star 2 }$ Services produced by natural capital and received by humans from nature include groundwater, lumber, and climate regulation.\nresources, Sony takes action to reduce the amount of plastic used in products and packaging in order to address the growing problem of ocean plastic pollution.\n### Focus Point 2: Expand Renewable Energy Use", "chunk_word_count": 310, "section_path": "SONY > 2040 2050 > Sony Group Paper / Printed Material Purchasing Policy [PDF: 427KB]", "document_id": "Sony Sustainability Report 2023", "page": 30, "page_start": 30, "page_end": 31 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 23, "chunk_text": "# SONY\n## 2040 2050\n### Medium-Term Environmental Targets\nSony is a member of RE100 and aims to achieve $100 \\%$ renewable electricity utilization at all Sony Group sites by 2030.\\* Sony will further accelerate efforts to achieve this goal by expanding the use of renewable electricity to at least $3 5 \\% ^ { \\star }$ of the total amount of electricity used at all Sony sites around the world.\n\\* IPCC: Intergovernmental Panel on Climate Change to realize a decarbonized world with virtually zero GHG emissions, companies will need to develop energy saving products, introduce renewable energy, and reduce emissions throughout their supply chains. At the same time, in order to achieve sustainable use of resources, economic growth must be balanced with environmental impact; societies must shift to circular economies; and the recent problem of ocean plastic pollution must be addressed.\nSony is working toward its goal of having a “zero environmental footprint”, setting medium-term (5-year) environmental targets progressively backcasted from targets based on current achievement levels. This approach will enable Sony to work steadily toward achieving the zero environmental footprint goal, while making ongoing adjustments based on current progress. In 2011, Sony established the Green Management 2015 medium-term environmental targets (fiscal year 2011–2015), which was the first step on the road to a zero environmental footprint, and took the second step in 2016 with the Green Management 2020 medium-term environmental targets (fiscal year 2016–2020). Sony is currently implementing initiatives to achieve the goals it has set under the Green Management 2025 medium-term environmental targets (fiscal year 2021–2025).\n### Formulating Green Management 2025\nSony believes that encouraging business partners, consumers, and other stakeholders to take action and work together to build a sustainable world is equally as important as its own environmental activities. When formulating Green Management 2025, Sony examined its past environmental activities and conducted a group-wide materiality analysis focused on what is important to Sony, its stakeholders and society at large. Based on these results and the wider social context, Sony reaffirmed the importance of the four environmental perspectives that it has been working to address: climate change, resources, chemical substances, and biodiversity. The following three areas are particular key priorities.\n\\* Revised May 2022\nRE100 Membership\n### Focus Point 3: Enhance Supply Chain Engagement to Reduce Environment Impact\nSony has been working to reduce the environmental impact of the entire supply chain by working even more closely with raw material and component suppliers and contractors to which it outsources manufacturing. Sony endeavors to further enhance its engagement with these partners, encouraging them to set targets for reducing GHG emissions and water consumption and managing their progress.\n### Green Management 2025\n### Focus Point 1: Improve Energy- and Resource-Efficiency of Products\nIn addition, Sony has helped raise awareness of the Sustainable Development Goals (SDGs), including those in relation to the environment, through its entertainment content reaching more than 2 billion people around the world. Green Management 2025 also focuses on promoting these activities and encouraging engagement in environmental activities with the aim of getting over 2.5 million people to take action.", "chunk_word_count": 515, "section_path": "SONY > 2040 2050 > Medium-Term Environmental Targets", "document_id": "Sony Sustainability Report 2023", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 24, "chunk_text": "# SONY\n## 2040 2050\n### Sony Moves Even Closer to Zero with 2025 Targets\nSony continues to pursue energy efficiency during product use, which accounts for the majority of GHG emissions throughout the life cycle of its products. In addition to minimizing the consumption of\nSince April 2021, Sony has been working to achieve the goals it has set under the Green Management 2025 medium-term environmental targets (fiscal year 2021–2025). Sony continues to accelerate its environmental activities in order to move even closer to a zero environmental footprint.\n### Green Management 2025 in Context\n### Specific Green Management 2025 Targets\nIn light of the urgent environmental issue of climate change, GHG emissions must be reduced to virtually zero by 2050 in order to keep the global average temperature increase below $1 . 5 ^ { \\circ } \\mathsf { C }$ as recommended in the Special Report on Global Warming of $1 . 5 ^ { \\circ } \\mathsf { C }$ approved by the Intergovernmental Panel on Climate Change $( | { \\mathsf { P C C } } ) ^ { \\star }$ in 2018. In order\nFor a list of Green Management 2025 targets, see the following website.\n### Green Management 2025 Targets and Progress\nUnder the Green Management 2025 (GM2025) medium-term environmental targets, which spanned from fiscal year 2021 through fiscal year 2025, Sony set targets for each stage of the product lifecycle and took action accordingly. The targets and fiscal year 2022 progress of activities for each stage are outlined below.\n### Product/Service Planning and Design\n### Operations\nSony provides products and services with low environmental impact in all business areas. We are promoting electronic products with designs that reduce environmental burden throughout their lifecycle, and promoting the use of recycled plastics in our products alongside the reduction of plastic packaging. Particularly in its entertainment business, Sony also makes the most of the content it creates to develop and implement environmental campaigns.\nSony has adopted renewable energy at worksites throughout the Sony Group as part of its focus on reducing its environmental impact. Sony has been accelerating the adoption of renewable energy since 2021. In May 2022, we moved our target year for using $100 \\%$ renewable energy up from 2040 to 2030. Our GM2025 goal for renewable energy-derived electricity in 2025 was also increased from $1 5 \\%$ to $3 5 \\%$ .\n### Supply Chain\n### Logistics\nSony requests its raw materials and component suppliers as well as subcontractors to strengthen their efforts to reduce environmental burden, set targets, manage progress and achieve results in order to meet reduction targets across the entire product lifecycle.\nSony is taking steps to reduce shipping weight by making products smaller and lighter, and pursuing alternative shipping methods (modal shift, etc.) by identifying and employing methods that are most efficient and have less impact on the environment in order to reduce $C O _ { 2 }$ emissions due to distribution.", "chunk_word_count": 495, "section_path": "SONY > 2040 2050 > Sony Moves Even Closer to Zero with 2025 Targets", "document_id": "Sony Sustainability Report 2023", "page": 31, "page_start": 31, "page_end": 33 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 25, "chunk_text": "# SONY\n## 2040 2050\n### Take Back and Recycling\nSony focuses on recycling-oriented product design and promotes take-back and recycling processing for end-of-life products. Meanwhile, Sony seeks to ensure that even items which the company itself is unable to recycle at the present time are recycled, and is collaborating with recyclers to clarify the extent to which key resources are being recycled.\n### RE100 Membership\n### Global Environmental Initiatives\nworkplaces, as well as the collection of plastic waste and cleanup activities at each Sony site.\nIn 2018, Sony joined RE100\\* and itself is working toward sourcing $100 \\%$ renewable electricity for the worldwide operations of the Sony Group by 2040. This target was moved up to 2030 in May 2022. Sony has already switched to $100 \\%$ renewable electricity in Europe and China. In Pan-Asia, North America and Japan, we are increasing renewable energy use using various strategies including deploying solar energy systems. In Pan Asia, our manufacturing sites are now $100 \\%$ renewable energy. Particularly, to address its energy-intensive operations in Japan, Sony has installed solar power generation equipment, is engaging in Japan’s first virtual PPA (power purchase agreement) based on a feed-in premium (FIP) scheme, and is implementing intracompany transfers of surplus power generated by off-site solar power systems to supply power to group sites.", "chunk_word_count": 218, "section_path": "SONY > 2040 2050 > Take Back and Recycling", "document_id": "Sony Sustainability Report 2023", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 26, "chunk_text": "# SONY\n## 2040 2050\n### Approval for $1 . 5 \\%$ Science Based Targets\nSony is promoting One Blue Ocean activities for products and sites based on the following four initiatives. The main achievements of fiscal year 2022 are also outlined below.\nWhen formulating Green Management 2025 Medium-Term Environmental Targets, we took a longer-term perspective and set its climate change targets to be achieved by fiscal year 2035. These targets are listed below and have been approved by the Science Based Targets $( \\mathsf { S B T } ) ^ { \\star }$ initiative as consistent with a $1 . 5 ^ { \\circ } \\mathsf { C }$ goal. In May 2022, the target year was moved up to 2040, and our goal of achieving net-zero targets in scopes 1 to 3 across the entire value chain was approved as an SBT net-zero target in August 2022.\nReducing Plastic and Utilizing Recycled Materials For a wide range of products, Sony is reducing the size and weight of plastic parts, minimizing plastic packaging, and expanding the use of recycled plastic.\nSee below for fiscal 2022 results.\n\\* SBT is an international initiative to encourage companies to set science-based GHG reduction targets in order to limit the increase in the average global temperature due to climate change to 1.5 degrees Celsius above preindustrial levels.\nReducing Use of Virgin Plastics Product Bodies Reducing Plastic Packaging\n• Set SBT-consistent reduction targets for raw material and component suppliers and outsourced manufacturers equivalent to $10 \\%$ of supply chain $\\mathsf { G H G }$ emissions by fiscal year 2025 \n• Reduce GHG emissions at Sony sites globally by $7 2 \\%$ relative to fiscal year 2018 levels by fiscal year 2035 \n• Reduce GHG emissions during product use by $45 \\%$ relative to fiscal year 2018 levels by fiscal year 2035\n\\* RE100 is a global initiative led by the non-profit The Climate Group in partnership with CDP in which participating companies set a goal of procuring $100 \\%$ renewable electricity for power used in their global business operations.\nReducing Plastic Use in Production \nSony is further reducing the amount of plastic used at production sites. The amount of plastic waste generated from Sony production sites in fiscal year 2022 was reduced by 1,206 metric tons over fiscal year 2021. This represents a 2,082 metric tons reduction over plastic waste generated in fiscal year 2018.\nUse of Renewable Energy Japan’s First Virtual PPA Utilizing FIP Scheme\n### Reducing or Eliminating Single-use Plastics in Conference Rooms and Shops\nSony aims to eliminate the use of single-use plastics such as plastic bottles, straws, and cups in conference rooms and reception rooms. In addition, plastic bags will no longer be provided at in-company shops and cafes, and the use of single-use plastics such as straws and cups will be reduced and gradually phased out. At the same time, Sony is working to cultivate awareness among employees about the use of reusable shopping bags and personal cups. In fiscal year 2022, we stopped providing bottles and other singleuse plastics in conference rooms at 32 sites. We also stopped providing plastic bags at shops and convenience stores at 23 sites, as well as plastic straws at 18 sites.", "chunk_word_count": 541, "section_path": "SONY > 2040 2050 > Approval for $1 . 5 \\%$ Science Based Targets", "document_id": "Sony Sustainability Report 2023", "page": 34, "page_start": 34, "page_end": 34 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 27, "chunk_text": "# SONY\n## 2040 2050\n### Tackling Ocean Plastic Pollution with the One Blue Ocean Project\nSony takes seriously the issue of plastic pollution in the oceans, which has become a worldwide crisis in recent years. Since 2019, Sony has continued to work on the One Blue Ocean Project, an initiative to help reduce ocean plastic pollution. It involves promoting even more activities to reduce the amount of plastics used in products and in\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n[IMAGE CAPTION] Logo of the One Blue Ocean Project\n### Specialized Functions for Environmental Management\nExpanding Local Cleanup of Riverbanks and Shorelines Sony employees at certain sites and group companies all over the world have been carrying out community cleanup activities along rivers and seashores, and these activities are being steadily expanded to even more sites. Employee awareness of measures to combat ocean plastic pollution will also be further enhanced. In fiscal 2022, 7,847 Sony Group employees and their families worked together to clean up 608 45-liter trash bags and 13 metric tons of trash during a total of 127 cleanup activities at 44 sites.\nAdditionally, to promote integrated environmental management globally, Sony has established six regional environmental offices to facilitate region-wide environmental management activities, such as a better understanding of local legal and regulatory trends, effective communication of standards and instructions set forth by headquarters to the regional divisions and sites, and effective performance of audits at all regional business divisions and sites. These are the North America environmental office, Latin America environmental office, Europe environmental office,\\*1 Japan/ East Asia environmental office,\\*2 China environmental office,\\*3 and Pan Asia environmental office.\\*4\nIn order to promote a wide range of measures, such as manufacturing and sales of environmentally conscious products, recycling of its products and environmental management at its sites, Sony has a dedicated headquarters that oversees environmental management for the entire Group based on the Sony Group Environmental Vision. It sets goals and rules and monitors performance. There are also specialized functions at this environmental headquarters, specifically in the areas related to energy consumed at sites and by products; resource conservation, including recycling; chemical substance management; biodiversity conservation; procurement; logistics; and communications. Each specialized function is integrated and linked with related fields and internal organizations such as quality assurance, customer service, occupational health and safety, and disaster prevention, to create an even more effective management system. The environmental headquarters is overseen by senior management, and a Sony Group Corporation corporate executive officer assumes ultimate responsibility. The president of Sony Group Corporation and other executives share information on environmental issues of importance to the Sony Group in regularly-held executive meetings.\nOne Blue Ocean Project\n\\*1 The Europe environmental office supervises divisions/sites in the nations of Europe, Israel, Turkey, Russia, and former Soviet Union (except for Azerbaijan, Tajikistan, Turkmenistan, and Uzbekistan). \n\\*2 The Japan/East Asia environmental office supervises divisions/sites in Japan, South Korea and the Taiwan Region. \n\\*3 The China environmental office supervises divisions/sites in the mainland China and Hong Kong Region. \n\\*4 The Pan Asia environmental office supervises divisions/sites in Mongolia and other Asia (except for divisions/sites supervised by the Europe environmental office, the Japan/East Asia environmental office, and the China environmental office), Africa, Middle East, Oceania, Azerbaijan, Tajikistan, Turkmenistan, and Uzbekistan.", "chunk_word_count": 541, "section_path": "SONY > 2040 2050 > Tackling Ocean Plastic Pollution with the One Blue Ocean Project", "document_id": "Sony Sustainability Report 2023", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 28, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Environmental Management Structure\nSony is implementing and continually improving its globally integrated environmental management system with the aim of realizing the Sony Group Environmental Vision, achieving its medium-term environmental targets and complying fully with legal requirements, regulatory demands and internal policies established for the Group.\n### Integrated ISO 14001 Certification for the Entire Sony Group\nSince the 1990s, Sony sites\\*1 throughout the world have sought certification under ISO 14001, the international standard for environmental management systems. Acquisition of ISO 14001 certification at all sites was completed in fiscal year 2000. Since then, Sony has expanded this effort, establishing a group-wide environmental management system integrating its headquarters with environmental departments, business units and sites globally, while taking advantage of the management systems already operational at each business site, and acquiring integrated ISO 14001 certification for the entire Sony Group in fiscal year 2005. As of March 31, 2023, integrated ISO 14001 certification had been obtained by 91 of the Sony Group’s business units and sites around the world.\\*2 \\*1 “Sites” refers to manufacturing and non-manufacturing sites.\n[IMAGE CAPTION] The Sony Group Global Environmental Management System (As of Friday, March 31, 2023) Integrated ISO 14001 certification for 91 Sony Group sites worldwide\n$^ { \\star 2 }$ The scope of integrated ISO 14001 certification is all manufacturing, distribution centers with 100 or more employees and non-manufacturing sites with 1,000 or more employees.\n### Continual Improvement by Using the PDCA Cycle\nAnother means by which the Sony Group facilitates environmental action is to provide broad environmental education for employees that is tailored to specific objectives or the type of work they perform.\n[IMAGE CAPTION] Sony Group Environmental Audit System\nIn compliance with ISO 14001, the global standard for environmental management systems that is based on the rationale of the Plan-Do-Check-Act (PDCA) cycle, Sony’s corporate headquarters conducts annual assessments of the environmental impact of the entire Sony Group and, after identifying risks and opportunities, incorporates its findings into medium-term environmental targets and annual plans. In line with these plans, individual business units and sites establish and implement their own annual plans, incorporating essential elements of guiding principles established by the headquarters. Progress on the implementation of these business plans is reviewed regularly by a committee that is headed by the officer in charge of environmental affairs, contributing to ongoing improvement efforts.\nConnecting Environmental Initiatives with Remuneration For all businesses of the Sony Group (except for certain operations such as the financial services), the results of environmental initiatives are assessed as part of the annual review of business results, and the assessment is used to determine bonuses for employees of Sony’s main business units. Additionally, environment related matters are taken into account as a factor in evaluating the remuneration linked to business results of Senior Executives and Senior Vice Presidents in charge of each business unit. Awards are given annually at the global level to recognize outstanding achievements in raising awareness and expanding initiatives.\n### The Sony Group Environmental Management System PDCA Cycle\nBasic policy regarding Senior Executive remuneration", "chunk_word_count": 513, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Environmental Management Structure", "document_id": "Sony Sustainability Report 2023", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 29, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Environmental Audits\nSony has established an integrated environmental audit system that combines three kinds of audits—internal, corporate and external—and aims to facilitate continual improvements to the Sony Group’s environmental management system, prevent environmental accidents at sites, and ensure the reliability of environmental data. In internal audits, business units and sites independently confirm the effectiveness of their own organization’s environmental management system. In corporate audits, headquarters or regional environmental offices conduct audits of business units and sites in order to verify compliance with corporate rules. In external audits, an external certification body conducts audits to determine the effectiveness of environmental management systems throughout the Sony Group.\nTo gauge the progress of these environmental activities, Sony has developed an online data system for periodically collecting performance for, among others, energy consumption by products, energy used by sites, and volume of waste generated. To ensure the effective functioning of the PDCA cycle, Sony has created an environmental document structure in line with the requirements of ISO 14001. The structure covers overall elements of environmental management such as management procedures on site and in the business groups, internal environmental communications, efforts to make products more environmentally conscious, and internal audits.\n### Overview of Sony’s Environmental Impact\n[IMAGE CAPTION] GHG Emissions from the Value Chain\n### Assessing GHG Emissions over the Entire Value Chain\nThe recent escalation of climate change issues has prompted corporations to broaden the scope of efforts to ascertain the GHG emissions not just of their own operations but also those throughout their entire value chain.\\*1 Sony has determined emissions from its major component suppliers and manufacturing contractors. Furthermore, based on the level of emissions identified, Sony has calculated emissions for its entire value chain.\\*2 The amount of emissions from Sony’s overall value chain in fiscal year 2022 is estimated to be approximately 21.420 million metric tons. The largest volume of emissions, approximately 11.795 million metric tons, was from “energy consumed during product use.” The next largest category was “goods and services procured,” which includes raw materials and components, at approximately 6.208 million metric tons. Sony will continue to strive to identify and manage emissions over the entire value chain.\n### Environmental Data\n\\*1 Value chain refers to the entire product life cycle process, from procurement of materials through to manufacturing, use and disposal. It includes upstream and downstream manufacturing processes. \n\\*2 GHG emissions are calculated in accordance with the GHG Protocol’s scope 3 accounting and reporting standard and guidelines published by Japan’s Ministry of the Environment.", "chunk_word_count": 424, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Environmental Audits", "document_id": "Sony Sustainability Report 2023", "page": 36, "page_start": 36, "page_end": 38 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 30, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Overview of Environmental Impact\nThe chart below shows Sony’s impact on the environment over the entire life cycle of its business activities, including energy and resources used in business activities, energy consumed by Sony products when used b customers, and the recycling and disposal of products after use. The chart shows the principal environmental impact during fiscal year 2022 for items that Sony can recognize and manage directly.\nEnvironmental Data Collection Methods and Rationale\n[IMAGE CAPTION] Overview of Sony’s Environmental Impact \\*1 Total volume of reused/recycled materials used in products \\*2 Relevant primarily to Sony Group companies in Japan, Europe and North America \\*3 Volume of Class 1-4 chemical substances handled Note: Business processes other than those shown in this chart—including the production of purchased materials used and the recycling of products—may also have an impact on the environment.\n### Disclosure of Climate-related Information in Accordance with the TCFD Recommendations\n### Off-Site\nSony recognizes that its business depends upon the sustainability of the global environment and societies where people can live in security. Based on this understanding, Sony is constantly moving forward with environmental and social initiatives throughout the value chain. In particular, Sony is tackling climate change as one of its priority issues. In May 2019, Sony Group Corporation announced its endorsement of the final report published by the Task Force on Climate-related Financial Disclosures (the “TCFD Recommendations”) established by the Financial Stability Board. Sony Group Corporation also participates in the TCFD Consortium, which was established to facilitate implementation and discussion among companies and financial institutions that endorse the TCFD Recommendations in Japan. Sony Group Corporation will continue its climate-related information disclosure in accordance with the TCFD Recommendations.\nSony Group Environmental Vision Environmental Plan Medium-Term Environmental Targets\n### Governance\nUnder the Companies Act of Japan, Sony Group Corporation has adopted the “Company with Three Committees” corporate governance system as the most appropriate system for the company. Under this system, the Board of Directors (the “Board”) determines Sony’s fundamental management policies and other material matters, while broadly delegating the decision-making authority to conduct Sony’s business operation to Senior Executives including CEO and Corporate Executive Officers in line with their respective responsibilities as defined by the Board, with a view to promoting timely and efficient decision-making within Sony.\nSony Group Environmental Vision Environmental Management Structure", "chunk_word_count": 393, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Overview of Environmental Impact", "document_id": "Sony Sustainability Report 2023", "page": 38, "page_start": 38, "page_end": 39 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 31, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Policy on Climate Change\nThe Board regularly deliberates and decides upon the mid-term management plan and annual business plan, taking into account various risks and opportunities, including climate change, in its deliberations and decisions. Senior Executives implement strategies according to the management plans and the business plan while carrying out business execution, and the Board receives and discusses reports on the status of business execution as needed. With authority delegated by the Board, the CEO of Sony Group Corporation, who is a member of the Board has responsibility and authority to establish and determine the Sony Group Environmental Vision, which stipulates the corporate philosophy on the global environment and corporate principles including on climate change matters and medium-term environmental targets (Green Management 20XX) both are applicable to entire Sony. The Corporate Executive Officer in charge of sustainability including environmental matters is appointed by the Board, then established the Sony Group Environmental Management Structure, which consists of internal regulations that stipulate the basic framework for global environmental management at Sony. Through the environmental department, this Corporate Executive Officer supervises the initiatives implemented by each business unit and business site to achieve the Sony Group Environmental Vision, and also supervises their operation of and adherence to the Sony Group Environmental Management Structure. In order to address the TCFD Recommendations, environmental department leads the analysis and identification of climate related risks and opportunities through scenario analysis and review the countermeasures. (For more details, see the following “Strategies” section.) The progress on initiatives implemented under this environmental execution framework are regularly reported to and reviewed by the Board. The Compensation Committee has the authority to determine the compensation policy on the content of individual compensation for Senior Executives and other officers, including the CEO, and to determine or oversee the amount of individual compensation paid to Senior Executives. Sustainability including environmental matters is taken into account as a factor in evaluating remuneration linked to business results of Senior Executives. Furthermore, KPIs for initiatives to address sustainability issues that each business emphasizes are set and incorporated into the performance evaluation of each business.\nSony reduces energy consumption and is striving to achieve zero GHG emissions throughout the lifecycle of its products, service and business activities.\nSpecifically, Sony has designated the following initiatives to achieve its medium-term environmental targets, and is working to reduce direct and indirect emissions.\n### On-Site\n• Promoting efficient energy use \n• Switching to energy sources that are lower in GHG emissions • Promoting use of renewable energy \n• Reducing GHG emissions from non-energy related sources \n• Developing and providing energy-efficient, environmentally conscious products and services \n• Working with manufacturing subcontractors and suppliers of raw materials and components\n### Strategy\nScenario) \\*9 4°C scenario (IEA Stated Policies Scenario, Announced Pledges Scenario, IPCC SSP5-8.5)", "chunk_word_count": 470, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Policy on Climate Change", "document_id": "Sony Sustainability Report 2023", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 32, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Identifying and Addressing Business Risks\nTackling environmental issues is consistent with Sony’s commitment to build a sustainable world and is important in terms of ensuring business continuity. Sony seeks to identify various environmentrelated risks and address foreseeable risks. This applies to transition risks such as adoption of carbon taxes, regional expansion of emissions trading schemes, stronger regulation of energy efficiency standards for products, and market changes driven by shifting consumer attitudes. It also applies to physical risks such as abnormal weather events and sea level rise due to climate change.\n### Analysis Results and Countermeasures\nAs a result of three analyses based on the above prerequisites, recognized risks and opportunities and countermeasures which are unique to the I&SS segment, Financial Services segment and ET&S segment television business are as shown in the table below. Based on the results of the above scenario analysis, the entire Sony Group is working toward using $100 \\%$ renewable electricity in its own operations by 2030 to achieve its $\\mathsf { R E 1 0 0 ^ { \\star } }$ target. Specifically, Sony Group Corporation is examining measures such as directly purchasing renewable electricity from power utilities and purchasing renewable electricity certificates.", "chunk_word_count": 207, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Identifying and Addressing Business Risks", "document_id": "Sony Sustainability Report 2023", "page": 40, "page_start": 40, "page_end": 40 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 33, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Creating and Expanding Business Opportunities\nSony believes that tackling environmental issues also leads to business opportunities. For example, the Paris Agreement\\*1 that emerged from the COP $2 1 ^ { \\star 2 }$ meeting in December 2015 addressed climate change issues, and with increasing public awareness, consumer demand is shifting toward energy-efficient products. Sony has already increased the energy efficiency of many of its products. In light of these social trends, demand for energy-efficient products may continue to grow. One example of this is the development of IMX500, an intelligent vision sensor with AI processing functionality in its image sensor logic chip. We expect it to be used in IoT fields. Processing information through the sensor on its edge enables the transmission of metadata only (semantic information). This reduces the amount of data transmitted to the cloud as well as the amount of data to be processed, which we believe will reduce energy consumption. \\*1 The Paris Agreement was adopted at COP 21 held in Paris, France and serves as\nAlong with these efforts, in each business segment, Sony develops and enhances risk management and business continuity plans (BCPs) from the perspective of improving risk management across supply chains, through the identification, analysis, and assessment of business continuity risks. Flood damage has grown in recent years due to the impact of climate change, prompting Sony to reassess the flood risk at its manufacturing sites in Japan and implement preventative measures that will mitigate flood damage and facilitate rapid recovery. Sony is collaborating with relevant companies and organizations, and conducts hands-on drills to address foreseeable risks, in an effort to enhance business continuity and accelerate flood recovery. Sony will continue to increase its resilience to climate change, based on its analyses and initiatives.\nIn the second analysis from November 2021 to March 2022 we targeted the Financial Services segment, a key sector in TCFD Recommendations. In order to evaluate impact across the entire Financial Services segment, we conducted scenario analysis\\*1 on Sony Life Insurance, Sony Assurance and Sony Bank based on individual business characteristics and the exposure of assets held. As prerequisite scenarios, we used the $1 . 5 ^ { \\circ } \\mathsf { C }$ scenario,\\*4 the $2 ^ { \\circ } \\mathsf { C }$ scenario\\*5 and the $4 ^ { \\circ } \\mathsf { C }$ scenario.\\*6\nIn the third analysis from October 2022 to March 2023, we focused on scenario analysis\\*1 of the television business, which has high environmental impact within the ET&S segment. As prerequisite scenarios, we used the $1 . 5 ^ { \\circ } \\mathsf { C }$ scenario,\\*7 the $2 ^ { \\circ } \\mathsf { C }$ scenario\\*8 and the $4 ^ { \\circ } \\mathsf { C }$ scenario.\\*9\nan international framework for climate change action starting from 2020. \\*2 COP 21 refers to the 21st session of the Conference of the Parties (COP) to the 1992 United Nations Framework Convention on Climate Change (UNFCCC).\n\\* A global initiative in which participating corporations aim to operate on $100 \\%$ renewable electricity. It is headed by an international non-governmental organization, the Climate Group, in partnership with the CDP.\n\\*1 Assuming no major changes in business content between the time of analysis and fiscal 2030.", "chunk_word_count": 552, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Creating and Expanding Business Opportunities", "document_id": "Sony Sustainability Report 2023", "page": 40, "page_start": 40, "page_end": 40 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 34, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Scenario Analysis\n$^ { \\star 2 2 ^ { \\circ } \\subset }$ scenario (IEA Sustainable Development Scenario, 2°C Scenario, Beyond $2 ^ { \\circ } C$ Scenario, IPCC Representative Concentration Pathway (RCP) 4.5, RCP 2.6) \\*3 4°C scenario (IEA Stated Policies Scenario, New Policies Scenario, Current Policies\n### Analysis Methodology and Assumptions\nIn accordance with the requirements of the TCFD Recommendations and advice from external experts, we have conducted Scenario Analysis\\*1 three times. The first analysis is on climate change impact for the Sony Group conducted from September 2019 to July 2020 (excluding financial business. The same applies after in the first analysis). To assess the impact of climate change across the Sony Group, each business segment assessed the degree to which climate change impacts its industry on a four-point scale of “Very Significant,” “Significant,” “Moderate,” and “Minor.” The rating was based on how often climate change impacts were mentioned in the guidelines and assessment methodologies for investors, ESG assessment institutions, and investor initiatives. Based on the analyses, climate change was found to have a moderate impact on the Imaging & Sensing Solutions (I&SS), Electronics Products & Solutions (Entertainment, Technology and Services from April 1, 2022), and Game & Network Services segments, while having a minor impact on the Music and Pictures segments. Of the three business areas that are moderately impacted by climate change, the I&SS segment generates the most GHG emissions. Sony Group Corporation conducted scenario analyses\\*1 using multiple scenarios for the segment. For the external environment in 2030, we used the $2 ^ { \\circ } ( { \\star } 2$ and 4°C\\*3 temperature rise scenarios predicted by the International Energy Agency (IEA).\nScenario, Reference Technology Scenario, IPCC RCP 8.5) $^ { \\star } 4 1 . 5 ^ { \\circ } \\mathsf C$ scenario (IEA Net Zero Emissions by 2050 Scenario) \\*5 2°C scenario (IEA Sustainable Development Scenario, IPCC RCP 2.6) \\*6 $4 ^ { \\circ } \\mathsf C$ scenario (IEA Stated Policies Scenario, IPCC RCP 8.5) $^ { \\star } 7 1 . 5 ^ { \\circ } \\mathsf C$ scenario (IEA Net Zero Emissions by 2050 Scenario, IPCC SSP1-1.9) $^ { \\star } 8 2 ^ { \\circ } \\mathsf C$ scenario (IEA Sustainable Development Scenario, Announced Pledges", "chunk_word_count": 384, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Scenario Analysis", "document_id": "Sony Sustainability Report 2023", "page": 40, "page_start": 40, "page_end": 42 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 35, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Risk Management\nto achieve these targets. Climate change targets include a $5 \\%$ reduction in annual energy consumption per Sony product (compared to fiscal year 2018). Along with moving up the year to meet our climate change targets, we have also changed the target rate for renewable electricity used in our facilities from $1 5 \\%$ or more to $3 5 \\%$ or more. Both our $1 . 5 ^ { \\circ } \\mathsf { C }$ target to be achieved by 2035 and our net zero target to be achieved by 2040 are approved by the Science Based Targets $( \\mathsf { S B T } ) ^ { \\star }$ initiative as climate change targets based on scientific grounds. In the Financial Services segment, we invest in green bonds, social bonds, sustainability bonds and other ESG-related investments. We established the Sony Financial Group ESG Investment Policy in April 2022, and our financial group companies are now proceeding to establish systems for ESG investment in accordance with this policy.\nEach business unit, subsidiary/affiliated company and corporate division of Sony periodically reviews and assesses risks for the area of which it is in charge and works on finding, reporting, reviewing and responding to the risks. In addition, Senior Executives have established and maintain a system to identify and control risks that may cause losses to Sony, in the areas of which they are in charge. The Corporate Executive Officer in charge of group risk control comprehensively promotes and manages the establishment and maintenance of the systems as stated above through the activities with related departments. The Board of Directors receives regular reports on the framework and its operational status, to confirm the validity of the framework.\nUnder the framework, each business unit, subsidiary/affiliated company and corporate division also assesses and analyzes climaterelated risks, when assembling business strategies and business plans.\n\\* An international initiative to encourage companies to set science-based GHG reduction targets in order to limit the increase in the average global temperature due to climate change to 1.5 degrees Celsius above preindustrial levels.", "chunk_word_count": 354, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Risk Management", "document_id": "Sony Sustainability Report 2023", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 36, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Metrics and Targets\nIn 2010, the Sony Group formulated the Road to Zero global environmental plan, which aims to reduce its environmental footprint to zero by 2050. The target year for our goal of achieving carbon net zero group-wide was moved up from 2050 to 2040 in May 2022. For climate change action, Sony is developing and supplying environmentally conscious products and services in order to reduce GHG emissions not only from manufacturing at its sites, but also throughout the life cycle of its products. Sony is also making energyefficiency improvements at its business sites and shifting to renewable energy, while encouraging contract manufacturers and component suppliers to reduce their emissions.\nIn September 2020, Sony Group Corporation announced its Green Management 2025 medium-term environmental targets to achieve by the end of fiscal year ending on March 31, 2026 and has been implementing initiatives to meet these targets since April 2021. In GM2025, the life cycle of products has been divided into five stages: product/service planning and design, operations, supply chain, logistics, take back and recycling. At each stage, Sony has set specific targets from the four perspectives of climate change, resources, chemical substances, and biodiversity, and implemented initiatives\n### Contributions to Solving Environmental Issues\n### Environmentally and Socially Beneficial Products and Services\n[IMAGE CAPTION] Examples of products and services that contribute to the resolution of environmental and social issues (from top left): Logo for Triporous, a new material made from rice husks; Two types of recycled flame-retardant plastic SORPLAS pellets and a sulfur-based flame retardant; Demonstration test for our Open Energy Systems; VENICE 2 digital cinema camera; Virtual production shooting; Aerosense drone.\nSony works to create products, services and systems that solve environmental and social issues through electronic equipment and a wide range of business areas.\nIn our materials business area, Sony provides licenses for Triporous™, an absorbent material that purifies water we developed in-house, and also supply SORPLAS™, which enables up to $9 9 \\%$ of recycled materials to be utilized.", "chunk_word_count": 341, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Metrics and Targets", "document_id": "Sony Sustainability Report 2023", "page": 42, "page_start": 42, "page_end": 43 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 37, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Development of Environmental Technologies\nIn services and systems, we have made the Autonomous Power Interchange System that lies at the core of our Open Energy Systems™ open source and free of charge. This energy system facilitates the storage of renewable energy-derived power for flexible community interchange. In video production, we provide digital cinema systems that reduce environmental impact of movie productions and screenings, and virtual production technology that enables shooting on a virtual set in studio instead of on location. The Sony Group’s Aerosense Inc. utilizes drones both in Japan and overseas to support mountain and ecosystem surveys as well as other environmental conservation projects. Further, in Bangladesh where traffic issues have become a massive issues, we provide an IC card-based boarding system equipped with FeliCa™ to promote the use of the state-run buses.\nSony regards working to realize a sustainable society as a key theme and is conducting technological development to solve both environmental and social issues, not only in our business’s technology development departments, but also in our R&D Center, Sony Computer Science Laboratories, Inc. (Sony CSL), and other R&D organizations. This includes the promotion of next-generation development in projects like Sony’s Earth MIMAMORI platform, which utilizes sensing on a global scale to help prevent environmental destruction, and Synecoculture™\\*, which creates a rich ecosystem through new farming methods.\nThere are a variety of departments responsible for the development and utilization of technologies that contribute to sustainability. Among these, we established the Sustainability Technology Liaison Meeting, which meets regularly to identify issues, search for, and share solutions. At meetings, information is actively exchanged by mapping activities pursued by each business as well as by sharing the issues faced and initiatives pursued by each department.\nFurther details on these products and services can be found in Technology for Sustainability.\nTechnology for Sustainability\n### Products and Services\ndecrease in the number of units sold.\n[IMAGE CAPTION] ${ \\mathsf { C O } } _ { 2 }$ emissions from product use Notes: • CO2 conversion rate from fiscal year 2018 to 2020 uses the 2013 value of the relevant country. • CO2 conversion rate from 2021 onward is used for each fiscal year • Some figures were recalculated.\nIn fiscal year 2022, the Sony Group used approximately 8.5 thousand metric tons of recycled plastic in its products. This amount consisted of approximately $78 \\%$ recycled plastic content from scraps and other waste materials generated from manufacturing by the Sony Group and other companies, and approximately $2 2 \\%$ post-consumer recycled plastic content from used products, containers, and other sources. We have used approximately 59 thousand metric tons of recycled plastic from fiscal year 2014 through fiscal year 2022.", "chunk_word_count": 456, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Development of Environmental Technologies", "document_id": "Sony Sustainability Report 2023", "page": 43, "page_start": 43, "page_end": 44 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 38, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Reducing Greenhouse Gas Emissions\n\\* Total volume of resources used is the total weight of resources used in products, accessories, instruction manuals and packaging materials. The weight of total products shipped is used to represent this value.\nSony products consume electrical power while used by their owners, resulting in indirect emissions of $C O _ { 2 }$ . Sony has adopted the target of reducing annual energy consumption per product\\*1 from product use by $5 \\%$ by fiscal year 2025 compared to the fiscal year 2018 level. Sony sets specific fiscal year targets in every product category and is implementing diverse measures to reduce energy consumption. For example, BRAVIA™ television models include Auto Power Saving Mode\\*2, \\*3 that detects user movement to automatically reduce screen brightness, reducing power consumption when no one is in front of the TV. This reduces energy consumption by $3 2 \\% ^ { \\star 4 }$ . PlayStation®VR2 (PS VR2) has improved power management compared to its predecessor. By default, the PS VR2 display turns off immediately when not being worn. In addition, the headset automatically shuts off after 30 minutes after you exit a game if it isn’t being worn. Our VPL-XW5000 video projector also boasts an energy-saving design that reduces power consumption by $30 \\%$ per lumen (a unit for measuring the amount of light) compared to the previous model, VPL-VW775, while maintaining the same performance. For professional grade equipment, we harnessed the latest surface treatment technology to equip our BH/CH Crystal LED series, often used for design review in corporate show rooms, with high luminosity-efficient LEDs and Sony’s proprietary power supply design to reduce energy consumption more than $20 \\%$ over our B/C series.\nHowever, due to larger products, higher levels of performance and additional functions, fiscal year 2022 power consumption Sony-wide increased approximately $3 . 9 \\%$ over 2018. Total $C O _ { 2 }$ emissions in product use over the lifetime of all products sold in fiscal year 2022 were approximately 11.8 million metric tons.\\*5\n[IMAGE CAPTION] Total volume of recycled plastics used in products BRAVIA™ Environmental Initiatives Sony Group Portal Website “Environment”\n\\*5 In theory, emissions during product use in the current fiscal year should be calculated from the total quantity of electrical power consumed by previously sold Sony products that are still in use by consumers in the current fiscal year. However, given the difficulty of determining how many previously sold Sony products are still in use by consumers of the total number of Sony products sold to date, Sony uses the total quantity of electrical power consumed while in use over the lifetime of Sony products sold in the current fiscal year as an indicator for $C O _ { 2 }$ emissions during use.\nReducing the Power Consumption of BRAVIA™ Energy Efficiency of PlayStation® 5\n### Reducing Use of Virgin Plastics Product Bodies", "chunk_word_count": 488, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Reducing Greenhouse Gas Emissions", "document_id": "Sony Sustainability Report 2023", "page": 44, "page_start": 44, "page_end": 44 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 39, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Conserving Resources\nWith the target of reducing virgin oil-based plastic used per product by $10 \\%$ from the fiscal year 2018 level, by fiscal year 2025 (excluding packaging), Sony is working to expand its use of recycled plastics and make its product chassis more lightweight and compact while also minimizing plastic packaging. In fiscal year 2022, virgin oil-based plastic used per product was down approximately $3 . 4 \\%$ from the fiscal year 2018 level. This is mainly due to the advancement of recycled plastics across a wide range of product categories, such as televisions.\n### Total Volume of Resources Used in Products\nSony is working to reduce the average mass of products in order to minimize resource inputs. In fiscal year 2022, the total volume of resources used in products\\* was approximately 459 thousand metric tons, which was $10 \\%$ lower than in fiscal year 2018. This is due to continuous efforts to reduce the size and weight of both products and packaging in a wide range of product categories, as well as a", "chunk_word_count": 184, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Conserving Resources", "document_id": "Sony Sustainability Report 2023", "page": 44, "page_start": 44, "page_end": 45 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 40, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Incorporating Recycled Plastic\n2 million stands were produced using a minimum of $2 4 \\%$ postconsumer recycled PP\\*, sourced from washing machines and refrigerators. We continue to investigate where recycled plastics can be used in our products in future. For instance, our game disc cases used worldwide in FY22 included an average of $14 \\%$ recycled PP from post-industrial waste.\nretardants require an addition amount of around $10 \\%$ , SORPLAS not only surpasses conventional flame retardant plastics in terms of durability, heat resistance and recyclability, but also achieves an outstanding utilization rate of up to $9 9 \\%$ waste plastics. The effective utilization of SORPLAS has been shown to reduce $C O _ { 2 }$ emissions in product manufacturing by up to $7 2 \\%$ .\\* Moreover, Sony’s versatile waste-plastic compounding technology makes it possible to tailor SORPLAS to the needs of a variety of products.\nTo reduce the consumption of virgin plastic, Sony has expanded the use of recycled plastics in a broad range of product categories by developing recycled plastics while elevating quality and reducing manufacturing costs.\nSony is using its original recycled plastic SORPLAS™ in the rear cover of select BRAVIA™ televisions, which is one of the largest plastic parts used in the product.\n\\* This equates to approximately $3 \\%$ of the total PP used for PS5 stands (that were sold globally in FY22), which is sourced from post-consumer recycled PP.\nIn 2022, Sony also employed our in-house developed recycled plastic in LinkBuds headphones for the first time. Many of these recycled plastics have been previously painted or colored, which presents a challenge in terms of design. We overcame this issue by focusing on industrial waste materials from automobile parts before coloring, and painstakingly separating plastics by color before applying additional color. This minimizes the amount of additives required in the coloring process, enabling us to use plastics that are over $8 5 \\%$ recycled, and up to $9 8 \\%$ for black pellets. These plastics can be found in LinkBuds S, released in 2022, and the WH-1000XM5.\nSony first used SORPLAS in its products in 2011 and has since incorporated it into a wide variety of Sony products such as select models of BRAVIA™, Xperia™ Smartphones, compact cameras and camcorders.\nSoundbar and Wireless Speaker Initiatives\nHeadphones Initiatives\nNews Release: Sony announces the new LinkBuds S “Earth Blue” model, Sony’s smallest and lightest noise cancelling truly wireless headphones made from plastic water dispensers\n\\* Comparison of the $C O _ { 2 }$ emitted from the production of SORPLAS to that of flame-retardant virgin plastic for the same application. Based on Sony calculations.\nExternal Sales of SORPLAS™ Recycled Plastic Leading the development of recycled plastics", "chunk_word_count": 460, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Incorporating Recycled Plastic", "document_id": "Sony Sustainability Report 2023", "page": 45, "page_start": 45, "page_end": 45 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 41, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### SORPLAS™, Sony’s Original Flame-Retardant Recycled Plastic\nSony commenced external sales of SORPLAS (Sustainable Oriented Recycled Plastic), a flame-retardant recycled plastic, in 2011. This plastic is made possible by a proprietary compounding technology that combines an original, non-halogen and non-phosphorus flame retardant—itself produced using a Sony-developed process—and waste plastics (polycarbonate resin) from various sources in an optimal blend. Thanks to Sony’s novel flame-retardant, which makes it possible to impart flame-retardancy by the addition of a very small amount of less than $1 \\%$ of total content while conventional flame\n### Reducing Plastic Packaging\nFor our LinkBuds S “Earth Blue” model, released as part of our environmental efforts, we also incorporated recycled plastic obtained from reclaimed water server jugs. The unique design of the housing varies per product, featuring a marbled texture obtained by emphasizing the recycled material’s high viscosity.\nSony has adopted the targets of reducing plastic packaging used per product by $10 \\%$ and eliminating plastic packaging from newly-designed small products, and is actively working to reduce the amount of single-use plastic packaging used in a range of product categories. In fiscal year 2022, plastic packaging used per product was $2 2 . 2 \\%$ lower than in fiscal year 2018. This was mainly due to the reduction in the amount of Styrofoam used in televisions and the shift from plastic to paper packaging materials in audio and other product categories. Individual packaging\\*1 uses zero plastic\\*2 for the WH-1000XM5 headphones, the Xperia 1 IV and 5 IV Smartphone and the Vlog camera ZV-1F released in 2022. Sony’s Original Blended Material paper was used for individual product boxes for the WH-1000XM5, Xperia 1 IV and Xperia 5 IV.\nIn fiscal year 2022, Sony Interactive Entertainment successfully trialed the use of recycled Polypropylene (PP) plastics in PlayStation® 5. Over\n[IMAGE CAPTION] Volume of additive required for material to meet flame-retardancy standard (V-O rating at $1 , 5 \\mathsf { m m }$ ) Percentage of total weight\n\\*1 Individual packaging refers to the individual product box and packaging inside the box.\n\\*2 Coating and adhesive materials excluded.\nReducing plastic packaging for headphones \nFirst Xperia™ Smartphone to Use No Plastic in the Individual Packaging \nZV-1F—capturing our environmental vision \nSony’s Original Blended Material", "chunk_word_count": 378, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > SORPLAS™, Sony’s Original Flame-Retardant Recycled Plastic", "document_id": "Sony Sustainability Report 2023", "page": 45, "page_start": 45, "page_end": 46 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 42, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Reducing Plastic inside Product Boxes\nSony has also switched to paper boxes for more than 130 compact camera and camcorder accessories.\nBy minimizing packaging materials using packaging drop simulation technology, Sony reduced the amount of plastic packaging used for the 4K LCD TV KJ-55X85K, launched in 2022, by approximately $3 5 \\%$ .\\*1 Our recently released PlayStation®VR2 (PS VR2) headset uses $9 8 \\%$ fiber-based packaging and cushioning materials, an improvement compared to $9 6 \\%$ for PS VR. This year, we will also be replacing the plastic hanger tabs in selected PlayStation®5 peripherals worldwide with a fiber-based solution. The plastic film to protect the display and the plastic bag to protect the body of the Xperia™ Smartphone were replaced with paper starting with the Xperia PRO-I released in 2021. Furthermore, our α7 IV - Full-frame Mirrorless Interchangeable Lens Camera uses pulp molds and other recyclable\\*2 materials.\nXperia™: toward zero plastic packaging - ‘Road to Zero’ Efforts by Sony Corporation - Phasing Out Plastic Packaging for Small Products Alpha 7 IV full-frame mirrorless interchangeable-lens camera and accessories\n\\* Compared to WF-SP800N headphones\nSony Financial Group Paper Use Reduction Efforts\n### Resource Conservation in Sales and Repairs\n### Extending Product Life to Save Resources\nSony is working to reduce resource consumption in products and packaging as well as during sales and product repairs. In-store promotional materials in Japan have shifted to build-to-order and direct delivery to shopfronts, which eliminates excess inventory, and now have a long-life design to last for multiple years. From 2022, we are promoting resource conservation in the promotion materials themselves by using packaging materials usually discarded after delivery as a part of the materials, such as for part of the structure of signboards.\nSony indirectly reduces resource consumption by extending product life. The Xperia™ Smartphone, released in fiscal year 2022, features unique charging optimization technology that adjusts the amount of charge according to a user’s individual usage habits, and a “careful charging” function that reduces load on the battery during charging. These features promote long-lasting batteries that don’t deteriorate, even after three years\\* of use. This allows for a product to be used long-term, reducing battery and product waste.\n\\*1 Compared to 2018 model (KJ-55X9000F) \\*2 Only possible in regions with a recycling system.\nBRAVIA™ Environmental Initiatives \nImproved PlayStation®5 Packaging \nZero Plastic Packaging – Xperia’s initiatives for sustainability\n\\* Based on a simulation that repeatedly charges and discharges with the same type of battery (for USB charging). Battery life varies by use.\nIn TV repair, we are working to reuse LCD panel packaging materials. Though the growing size of TV screens in recent years has required more packaging materials, we have reduced waste generated during repairs and reduced the use of new packaging materials.\n[IMAGE CAPTION] Paper protective materials used for the α7 IV", "chunk_word_count": 476, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Reducing Plastic inside Product Boxes", "document_id": "Sony Sustainability Report 2023", "page": 46, "page_start": 46, "page_end": 46 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 43, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Going Paperless\nSony is working to reduce paper use across a wide range of its businesses. For our electronics products, we continue to prioritize ease of customer understanding for instruction manuals, while moving online in a variety of product categories to reduce paper use. We had previously included instructions for multiple languages for overseas models of audio products such as Walkman® or headphones, but have now unified these after-purchase instructions by introducing the Textless Quick Start Guide (QSG), which uses illustrations that users can easily understand regardless of language since 2015. For our LinkBuds, released in 2022, we removed after-purchase paper instructions entirely, instead providing a QR code on the packaging to enable users to use their smartphone to access the online Help Guide. Further, we revised the precautions and specifications that must be provided in paper manuals to reduce paper included in packaging by $8 5 \\%$ .\\* We also expanded these measures to include headphones such as Linkbuds S, the WH-1000XM5 and the INZONE H7/H9 gaming headset. The Sony Financial Group has been reducing the use of paper for contracts and transactions, employing digital technology to both to conserve paper resources and reduce mailing, which produces carbon emissions.\n### Switching to Paper Product Boxes\nSony is switching to paper product boxes for a wide range of product categories. Product boxes, including those for existing models, have been changed to paper, and all headphones shipped after fiscal year 2022 will be in paper boxes. From the Xperia 1 III released in 2021, the film for Xperia™ Smartphones was changed to wear-resistant varnish.\n### Three Core Principles for Managing Chemical Substances in Products\n### Management of Chemical Substances\nManagement Regulations for Environment-related Substances to be controlled which are Included in Parts and Materials (SS-00259)\n### Sony’s Proprietary Global Standards for the Management of Chemical Substances\nTo guide its efforts to manage chemical substances in products in compliance with Sony’s own global standards for management of chemical substances, titled “Management Regulations for Environmentrelated Substances to be Controlled which are Included in Parts and Materials” (SS-00259), Sony has established three core principles:", "chunk_word_count": 359, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Going Paperless", "document_id": "Sony Sustainability Report 2023", "page": 46, "page_start": 46, "page_end": 47 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 44, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Complying with Regulations Governing Chemical Substances in Products\nMany of Sony’s electronics products are made of between a few hundred and a few thousand parts and contain a variety of chemical substances, some of which may be classified as hazardous and may harm the environment if they are not properly treated prior to product disposal. Many countries and regions have introduced various laws and directives to prevent such environmental harm. In the European Union, certain chemical substances in products are restricted by RoHS Directive\\*1 and REACH\\*2 Regulation. In Japan, products that contain certain chemical substances are required to carry the J-Moss\\*3 mark, while in China it is required to disclose information on chemical substances contained in products in line with the Management Methods on the Pollution Control of Electronic Information Products, often referred to as China RoHS.\\*4\nSony has set up necessary procedures to ensure compliance with the EU’s REACH Regulation requirements and RoHS Directive. In response to its obligation under REACH to provide information to customers and to submit notification, as well as to the CE marking requirement under RoHS Directive, Sony has adopted the chemSHERPA\\*1 scheme based on IEC 62474.\\*2 This enables Sony to collect data on specified chemical substances in parts and materials purchased from suppliers for management in an internal database.", "chunk_word_count": 224, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Complying with Regulations Governing Chemical Substances in Products", "document_id": "Sony Sustainability Report 2023", "page": 47, "page_start": 47, "page_end": 47 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 45, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Upstream Management\nSony introduced the Green Partner Environmental Quality Approval Program in 2002. This program outlines Sony’s Green Partner Standards for chemical substance management. Sony audits suppliers based on these standards. Sony purchases parts only from suppliers who have passed this audit and have been certified as Green Partners. Sony also applies the Green Partner Environmental Quality Approval Program to manufacturing partners. To further enhance the efficiency of the system to manage chemical substances, Sony also supplies our primary suppliers with a List of Specified Raw Material Suppliers (a list of recycled resin and, coated wire suppliers list) through our electronic procurement system.\n\\*1 chemSHERPA is a scheme that facilitates sharing information throughout an entire supply chain on chemical substances that may be used in products. \\*2 IEC 62474 is a set of international standards regulating the procedures, content, format and other aspects of reporting within the supply chain regarding the presence of chemical substances and constituent materials in electrical and electronic goods.\nIn light of the global nature of its markets and supply chains, Sony has established its own global standards for the management of chemical substances, titled “Management Regulations for the Environment-related Substances to be Controlled which are Included in Parts and Materials (SS-00259)”,\\*5 taking into account the related laws and regulations around the world and simultaneously the opinions of various stakeholders. In line with these standards, Sony ensures globally consistent management of chemical substances in parts and materials that make up its products.\n[IMAGE CAPTION] System for Managing Chemical Substances in Products\n\\*1 Directive on the restriction of the use of certain hazardous substances in electric and electronic products (RoHS).\n\\*2 REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) is a regulation for managing chemical substances introduced in Europe, whereby companies are required to, among others, register, apply for authorization, notify, restrict and communicate information on certain chemical substances. \\*3 J-Moss refers to Japanese Industrial Standards (JIS) for marking the presence of certain chemical substances in electrical and electronic equipment. \\*4 Management Methods on the Pollution Control of Electronic Information Products regulates the use of six substances, including lead and mercury, in electronic products and components sold in the Chinese market. \\*5 Management Regulations for the Environment-related Substances to be Controlled which are Included in Parts and Materials (SS-00259) refers to Sony standards that are used for giving directions to suppliers on chemical substances for items procured by Sony. (For more information, please refer to “Controlled Substances -SS-00259 for General Use-” on the Sony website.)\n### Management in Quality Control/Quality Assurance Processes", "chunk_word_count": 434, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Upstream Management", "document_id": "Sony Sustainability Report 2023", "page": 47, "page_start": 47, "page_end": 48 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 46, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Reduction and Replacement of Chemical Substances of Very High Concern\nSony has also successfully replaced PVCs by substitute materials for internal components that are difficult to remove prior to recycling, such as flexible flat cables, insulation plates, and heat-shrink tubes (excluding those for batteries). Also, Sony is working to end the use of PVCs in the housings and internal wiring of small electronic devices (the adoption of alternatives is subject to the ability to resolve issues relating to quality, technology, and supply). As of the end of July 2023, Sony has replaced PVCs in new products and new models in the following products with alternative substances.\nNew parts and materials are tested to confirm whether they comply with SS-00259 based on collected chemSHERPA data, in addition to conventional quality control standards. By implementing these strict management procedures worldwide, incompliant products are prevented from entering the market.\nSony defines “Environment-related Substances to be Controlled” (hereafter “Controlled Substances”) as certain chemicals that it has determined to have significant impact on both humans and the global environment, including substances that may not be controlled by laws (please refer to Management Regulations for Environment-related Substances to be Controlled which are Included in Parts and Materials (SS-00259)). Sony either prohibits the use of these substances in parts or phases them out wherever a viable alternative that meets all product quality requirements and are technically and economically available. In addition, Sony specifies high-risk applications from collected application- and content-related information, considering the hazardous nature and extent of exposure (volume) as risk factors, and proceeds to prohibit the “Controlled Substances” in the specified use.\n### Utilization of Chemical Analysis\nTo prevent prohibited substances from accidentally entering products, Sony requires suppliers to conduct precision analysis (10 substances) on the specific parts and raw materials. For some high-risk substances Sony has also implemented internal control systems that involve using, for example, X-ray fluorescence (XRF) and other measurement devices, to Sony sites worldwide, to help confirm that prohibited substances are kept out of products.\n### Substance Management in Xperia™ Smartphones\nManagement Regulations for Environment-related Substances to be controlled which are Included in Parts and Materials (SS-00259)\nIn the smartphone category, Sony began phasing out brominated flame retardants (BFRs) in circuit boards, casings, and cables starting in 2002, making it one of the first companies in the industry to phase out BFRs. Since then Sony has continued the journey and phased out BFRs in all parts, and also phased out chlorinated flame retardants (CFRs), polyvinyl chloride (PVC), as well as phthalates, beryllium, and antimony trioxide in plastic and resin.", "chunk_word_count": 437, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Reduction and Replacement of Chemical Substances of Very High Concern", "document_id": "Sony Sustainability Report 2023", "page": 48, "page_start": 48, "page_end": 48 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 47, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Polyvinyl Chloride (PVC)\nImproper disposal of PVCs poses a risk of generating hazardous substances. For example, Sony is concerned about the possibility tha its small electronic products, in particular, could be collected to obtain valuable materials, and then the unwanted parts could be improperly incinerated and disposed of in landfills, thus causing adverse environmental impacts. In addition, there are also concerns about the environmental and health impact of some of the substances used as plasticizers and stabilizers in PVCs. Although PVCs are not currently regulated by any laws that apply to chemical substances used in electronic products, Sony works to reduce PVC content in individual components.\nSony Mobile Critical Substances [PDF:151KB]\n### Management of Chemical Substances in Packaging Materials\nSony takes precautions to increase the safety of its packaging materials and ensure that hazardous substances, including heavy metals, are not mixed into packaging materials by managing materials in line with its proprietary “Management Regulations for Environmentrelated Substances to be Controlled which are Included in Parts and Materials” (SS-00259). The packaging section of SS-00259 is based on, among others, EU Directive on packaging and packaging waste.\nAs a result, Sony does not use PVCs in product packaging materials (with the exception of some packing materials for devices, semiconductors, batteries, and similar items) or in sheets/laminates used for product housings, contactless IC cards, and carrying bags/ cases for products (excluding those for professional use).\n### Brominated Flame Retardants (BFRs)\n### Creating Environmentally Conscious Products\nSome BFRs are harmful to human health and tend to remain in the environment and accumulate in living organisms. As is the case with PVC, improper incineration of BFRs carries a risk of releasing harmful substances into the environment. Sony has banned the use of components and materials containing any of three specified BFRs— polybrominated diphenyl ethers, polybrominated biphenyls, or hexabromocyclododecanes—and is working to phase out BFRs (the adoption of which is subject to the resolution of issues relating to quality, technology, and supply).", "chunk_word_count": 335, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Polyvinyl Chloride (PVC)", "document_id": "Sony Sustainability Report 2023", "page": 48, "page_start": 48, "page_end": 49 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 48, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Promoting Environmentally Conscious Design\nSony has set medium-term environmental targets for products, including reducing annual power consumption, promoting resource conservation and managing chemical substances. Business units set areas of focus based on Sony medium-term environmental targets and targets based on the specific characteristics of the environmental impact throughout the lifecycle of targeted product categories. In the course of product design, environmental targets are set for each product according to business unit targets and feedback about previous models to execute an environmentally conscious design. Environmental assessments are conducted and progress toward these targets is reviewed before mass-production of a product begins. Business units receive feedback on the results of this review, conduct their own review of progress with their medium-term environmental targets for each product, and report results to the department in charge of environmental functions at headquarters. In turn, this department evaluates the targets and progress of each business unit and conducts an overall review of the Sony Group’s progress on achieving its medium-term environmental targets. Based on the results of this review, Sony determines areas of focus for the subsequent fiscal year. This method enables Sony to execute ongoing environmentally conscious processes for the department in charge of environmental functions at headquarters, as well as each business unit and product, which in turn ensure the development of environmentally conscious products.\nAlso, Sony is working to use Sony developed environmentally sound, bromine-free flame retardant for the manufacture of a polycarbonate plastic flame retardant in some product categories such as LCD TV. As of the end of July 2023, Sony has replaced BFRs in new products and new models in the following products with alternative substances.\n[IMAGE CAPTION] Management Structure for Environmentally Conscious Product Development\n### Examples of Polyvinyl Chloride (PVC) -Free Products and Brominated Flame Retardant (BFR) -Free Products\nSony has banned the use of tris (2-chlor oethyl) phosphate, a chlorinated flame retardant identified as carrying risks similar to those associated with brominated flame retardants, as well as phosphoric acid tris (2-chloro-1-methylethyl) ester (TCPP) and tris (1,3-dichloro-2-propyl) phosphate (TDCPP).\n### Utilizing Life Cycle Assessment (LCA)", "chunk_word_count": 354, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Promoting Environmentally Conscious Design", "document_id": "Sony Sustainability Report 2023", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 49, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Examples of Environmental Features in Sony Products\nProduct life cycle assessment (LCA) is a means of identifying and quantifying the environmental impact of products at all stages of their life cycles, which include the manufacture of materials and parts used in products, the assembly and transport of products, product use and standby mode, and end of life (i.e., disposal and recycling). LCA of major products helps us to clarify priorities for product improvement for all product categories and reduce the environmental impact of Sony products.\n[IMAGE CAPTION] Breakdown of ${ \\mathsf { C O } } _ { 2 }$ Emissions Over the Life Cycle of Signature Sony Products Sony calculated the emissions based on the following assumptions: •Place of sale: Japan • Product transportation: 500 kilometers by truck in Japan : by ship or by air for international transport • Years of use: BRAVIA™ LCD televisions, 10 years; Blu-ray Disc™ / DVD players, 7 years; Headphones, 4 years; Interchangeable lens camera α™, 6 years; Xperia™ Smartphone, 3 years\nSony is working on environmentally conscious and recycling-friendly designs and is improving environmental performance in terms of energy and resource conservation in a wide range of product categories. Signature products for these efforts are introduced on Sony Group Portal Website “Environment.”\nSony Group Portal Website “Environment”\nAs shown in the graph to the right titled “Breakdown of $C O _ { 2 }$ Emissions Over the Life Cycle of Signature Sony Products,” we see that the life cycle stages responsible for generating a large portion of a product’s $C O _ { 2 }$ emissions differ depending on the product category. For example, for product categories such as LCD televisions, and Blu-ray Disc™\\*/ DVD players, emissions during product use account for a large proportion of total emissions. For this reason, reducing the power consumption of these products during use is particularly important. Among product categories such as headphones, smartphones and interchangeable lens camera $\\mathbb { Q } ^ { \\mathsf { T M } }$ , a large portion of $C O _ { 2 }$ emissions occur in the production of materials and parts, rather than during use. For these products, such measures as reducing product weight are crucial in lowering life cycle $C O _ { 2 }$ emissions. LCA results are reflected in medium-term environmental targets and utilized in product design for the environment.", "chunk_word_count": 405, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Examples of Environmental Features in Sony Products", "document_id": "Sony Sustainability Report 2023", "page": 50, "page_start": 50, "page_end": 50 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 50, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Designing Recyclability and Reparability into Products\nOne initiative Sony is taking to ensure that its products are environmentally conscious involves designing them with recyclability and reparability in mind. This means, for example, labeling the material type of plastic used in parts to make it easier to extract resources from used products during recycling, and reducing the number of screws to make it easier to dismantle and repair the product. These specific environmental considerations are compiled and incorporated into the design of each product.\nFor example, Sony has issued Environmental Design Standards and Guidelines for TVs and Serviceability Standards, which are used when planning and designing new products, and monitors progress on meeting these standards. These design standards and guidelines reflect the trends in regulations inside and outside of Japan as well as Sony’s medium-term environmental targets. Sony conducts an annual review and revision of these guidelines based on industry trends and the latest recycling information, which is gathered via regular sharing of information and opinions with the Green Cycle Corporation, an affiliate of Sony engaged in the recycling business. Additionally, in order to ensure compliance with the laws and regulations regarding circular economy in Europe, Sony provides information on repair and disassembly of the display products such as TVs and commercial monitors on the support page of the website for repair shops and recyclers, and provides dealers and retailers with reparability index information for TV and smartphone products sold in France.\nNotes: • This chart shows the proportion of $\\mathsf { C O } _ { 2 }$ emissions at each stage of the life cycle. It does not indicate the degree of environmental impact of these products. • The assumptions (usage assumptions, shipping distance, mode of shipping, manufacturing site assumptions, etc.)used for calculation of CO2 emissions differ among products.\n\\* The “Blu-ray Disc™” word mark is a trademark of the Blu-ray Disc Association.\n### Sharing Expertise on Reduction of Energy Consumption and Promoting Renewable Energy Utilization", "chunk_word_count": 336, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Designing Recyclability and Reparability into Products", "document_id": "Sony Sustainability Report 2023", "page": 50, "page_start": 50, "page_end": 51 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 51, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Supply Chain\nsupports target setting and certification acquisition of SBT-consistent targets for some suppliers.\nWith regard to chemical substances, Sony requires its materials and parts suppliers and subcontractors to comply with laws and regulations in each country restricting or banning the use of chemical substances in materials, parts, semi-finished goods and finished products delivered to Sony based on Sony’s own chemical substance management standards. Sony requests that substances restricted under international frameworks and separately designated by Sony not be used in the manufacturing process and continues to investigate the use of these substances.\nIn fiscal year 2022, Sony began promoting the Partner Eco Challenge Program, which provides suppliers with expertise on the reduction of energy consumption as implemented at Sony sites globally. In this program, personnel who are familiar with environmental initiatives and energy management visit suppliers, identify areas for improvement at manufacturing sites and provide Sony expertise. Using this as a starting point, employees at supplier manufacturing sites proactively develop initiatives for improvement and verify the results of these initiatives during the half-year period set for the program. During this period, Sony regularly checks progress and provides support for initiatives by visiting the site, while also holding seminars on basic energy conservation and other endeavors that raise awareness throughout the site. Through this program, Sony accelerates the use of renewable energy as fits power usage on the supplier site, setting goals equivalent to SBT and providing ongoing support for the acquisition of target certification.\n### Reducing Environmental Impact Across the Supply Chain\nList of Chemical Substances Prohibited in the Manufacturing Process and Requiring Proper Management (for Sony Materials and Components Suppliers and Outsourcing Contractors) [PDF:46KB]\n### Working with Materials/Parts Suppliers and Subcontractors to Reduce Environmental Impact\nAs a part of its efforts to reduce environmental impact across the supply chain, we request that our materials and parts suppliers and subcontractors handle both greenhouse gas and water depletion issues. For GHG emissions, Sony requests them to monitor emission levels, set medium- and long-term targets for emissions reduction and perform progress management. For water depletion, Sony requests them to set targets for water consumption reduction in consideration of water depletion risk in the areas where the site is located. Sony conducts surveys on efforts to reduce environmental burden in order to understand the impact greenhouse gas emissions and water consumption, etc., by sites have on manufacturing materials, components and products, delivered to Sony. In fiscal year 2022, Sony obtained answers about a variety of data from materials and parts suppliers which account for approximately $80 \\%$ of the total transaction value and from subcontractors which account for approximately $90 \\%$ of the total transaction value. We provided both tools and guidance to support GHG emissions calculation as well as instructional videos on how to use those tools. This enabled all suppliers surveyed to be able to calculate and monitor their emissions.", "chunk_word_count": 489, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Supply Chain", "document_id": "Sony Sustainability Report 2023", "page": 51, "page_start": 51, "page_end": 51 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 52, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Promoting Green Purchasing\nHaving set internal standards for green purchasing, Sony chooses environmentally conscious products when procuring nonproduction materials such as printing paper, stationery and office equipment in Japan. At the same time, in principle, Sony carefully examines needs, amounts to be used and stock levels to purchase appropriate quantities. In addition, when choosing products to be purchased, Sony prioritizes select recommended products in consideration of environmental impact at all stages of a product’s life, from resource extraction through to production, distribution, use and disposal. Information on recommended products is included in Sony’s purchasing system of nonproduction materials, making it possible for individuals in charge of purchasing decisions to give priority to environmentally conscious products.\nIn fiscal 2022, participating suppliers said that this helped them recognize areas where there was still room for improvement.\nOur $1 . 5 ^ { \\circ } \\mathsf { C }$ Science Based Target (SBT) stipulates materials and parts suppliers and subcontractors will set SBT-consistent reduction targets equivalent to $10 \\%$ of supply chain GHG emissions by fiscal year 2025. To this end, Sony provides SBT guidance during surveys to them and\n### Development and Introduction Support for Low VOC Paint\nSony has long supported the development and introduction of waterbased paints and other low VOC paints in order for manufacturers to reduce the volatile organic compounds (VOC) generated in the product painting process.\nIt’s technically more difficult to ensure the coating performance and aesthetic beauty used to evaluate overall performance with waterbased paints than with conventional paints. To remedy these points, Sony worked with paint manufacturers to learn how to optimize paint components, repeatedly undergoing a verification process at our in-house laboratory that was used to improve coating performance and aesthetic appearance.\nThrough this, we succeeded in developing a low environmental impact water-based paint that more than halves the VOC generated\\*1 while still maintaining the same performance as conventional paint. We also provided support for introducing coating equipment that is optimal for using water-based paint at coating manufacturers. Once we had ensured the paints met the high quality standards required of Sony products, we began using them for some products in 2020, then for Vlog camera ZV-1F\\*2 in 2022.\n\\*1 Compared with individual parts. \n\\*2 Water-based paint is used for the resin parts of the black model. Type of paint may be changed as needed for production time.\n[IMAGE CAPTION] The black model of the Vlog camera ZV-1F includes resin parts coated with water-based paint.\n### ${ \\mathsf { C O } } _ { 2 }$ Emissions from Energy Use at Sites", "chunk_word_count": 438, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Promoting Green Purchasing", "document_id": "Sony Sustainability Report 2023", "page": 51, "page_start": 51, "page_end": 53 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 53, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Manufacturing Sites\nand advanced control technology operates the chillers at minimum power, while another system reuses the production equipment exhaust heat to power the boiler. These innovations improved clean room energy efficiency by approximately $30 \\%$ compared to fiscal year 2015. Sony Device Technology (Thailand) Co., Ltd (SDT). installed an energyefficient air conditioning system when it reconstructed its clean room for semiconductor production. The system requires less airflow than conventional air-conditioning systems to keep the work area clean, enabling it to reduce its annual $\\mathsf { C O } _ { 2 }$ emissions by approximately 4,608 metric tons, a $8 8 \\%$ reduction compared to the previous system.\nIn fiscal year 2022, emissions of $C O _ { 2 }$ from energy use at Sony sites accounted for approximately 0.844 million metric tons, out of the approximately 0.965 million metric tons, of total greenhouse gas emissions at Sony, down by approximately 0.161 metric tons from fiscal year 2020. The above $C O _ { 2 }$ emissions resulting from energy use at Sony sites include emissions from fuel used by Sony-owned business vehicles. In fiscal year 2022, $\\mathsf { C O } _ { 2 }$ emissions resulting from fuel used in vehicles amounted to approximately 7,000 metric tons. Going forward, Sony will take efforts to restrict greenhouse gas emissions through infrastructure-related measures, including the installation of high-efficiency equipment and the promotion of energy recycling, and to enhance nonstructural measures, notably the introduction of training programs designed to foster energysaving leaders.\n### Reducing Greenhouse Gas Emissions\n### Greenhouse Gas Emissions at Sony Sites\n[IMAGE CAPTION] Outside Nagasaki TEC where Fab 5 began operation\nWith the target of reducing absolute greenhouse gas (GHG) emissions from Sony sites by $5 \\%$ relative to fiscal year 2020 levels by fiscal year 2025, Sony has endeavored to reduce greenhouse gases such as $C O _ { 2 }$ and perfluorocarbons (PFC) related to energy consumption. In fiscal year 2022, the total volume of GHG at manufacturing sites was approximately 0.965 million metric tons, which was approximately $12 \\%$ lower than in fiscal year 2020. While there was an increase in the amount of energy used in semiconductor manufacturing, overall emissions decreased due to increased efforts to promote energysaving, expansion of renewable energy\\* use and other GHG emission reduction measures.", "chunk_word_count": 395, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Manufacturing Sites", "document_id": "Sony Sustainability Report 2023", "page": 53, "page_start": 53, "page_end": 53 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 54, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Emissions of PFCs and Other Greenhouse Gases\nPFCs and other greenhouse gases with high global warming potential are used in cleaning and etching processes during the manufacturing of semiconductors. Emissions of PFCs and other greenhouse gases in fiscal year 2022 (calculated in terms of CO2) totaled approximately 121,000 metric tons, up about 24,000 metric tons from fiscal year 2020. Despite the introduction of PFC abatement equipment and other reduction initiatives, total emissions increased due to the growth in semiconductor device production.\nSony Technology (Thailand) has reduced greenhouse gas emissions from its cooling system thanks to a collaborative project with Kansai Energy Solutions (Thailand) and Tip Top Engineering Co., Ltd. in which the two companies designed, operate and manage a highly efficient chiller system\\* that reduces CO2 emissions by approximately 2,467 metric tons per year.\n\\* Renewable energy includes solar, wind, water, geothermal, and biomass. This is energy that comes from sustainable sources.\n(Million Metric Tons-CO2)\n[IMAGE CAPTION] Greenhouse Gas Emissions at Sony Sites: Japan/East Asia: Japan, South Korea and Taiwan Region\n\\* A chiller system that supplies chilled water to a plant.\n### Helping to Reduce our Plant’s Footprint Greenhouse Gas Emissions Reduction Project at STT\n### Promoting Efficient Energy Use\nTo achieve its fiscal year 2025 reduction targets, Sony is working on various energy conservation activities at its sites around the world.\n[IMAGE CAPTION] Chiller system installed at STT\n### High Efficiency Energy Systems for Plants\nSony Semiconductor Manufacturing Corporation’s Nagasaki Technology Center (Nagasaki TEC) aimed to be the most energy efficient plant in the semiconductor industry upon construction of the Fab 5 building. In the chillers and boilers that control the temperature and humidity of clean rooms used for semiconductor manufacturing, AI is utilized,\n### Energy Conservation: Initiatives Driven by Plant Employees\n### Use of Renewable Energy\n### Key Procurement Policy\nEvaluate environmental impact when introducing or operating power generation equipment, taking care to prevent adverse effects on the environment.", "chunk_word_count": 331, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Emissions of PFCs and Other Greenhouse Gases", "document_id": "Sony Sustainability Report 2023", "page": 53, "page_start": 53, "page_end": 54 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 55, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Use of Renewable Energy and Renewable Electricity Rate\nSony promotes a broad range of energy-saving efforts at its sites around the world. In addition to increasing the energy efficiency of buildings and equipment, in recent years Sony has actively implemented activities for reducing energy consumption suggested by manufacturing site employees.\nSony’s original goal to use renewable energy (renewable electricity rate) for $1 5 \\%$ or more of the electricity used in operations at business sites by fiscal year 2025 was updated to $3 5 \\%$ or more by 2025 in May 2022. Sony is working to adopt renewable energy in ways suited to the regional circumstances of its business locations worldwide, employing strategies such as installing solar power systems in site buildings, procuring renewable energy from power utilities, and utilizing renewable energy certificates. In fiscal year 2022, 758,953 MWh renewable electricity was used, which is approximately $2 9 . 7 \\%$ .\nExamples of Environmentally Conscious Items:\n• Land stability (outflow of earth or equipment due to slope collapse, etc.) \n•Noise generated from power conditioners, etc. \n• Impact of reflected solar panel light on living environment \n•Impact on landscape \n• Impact on animals, plants and ecosystems \n• Check laws and regulations, and communicate with the local community during off-premises installation. \n•Hydroelectric power generation must be 30 MW or less. \n• Carry a sense of forward movement to promote proliferation of new renewable energy power generation as much as possible. \n• Choose a renewable energy power source that already exists in the country or region of the site.\nThese activities focus on the formulation and implementation of energy-saving solutions for manufacturing sites, which consume more electricity than any other part of Sony’s manufacturing operations. Employees set ambitious project targets and take steps to shed light on energy consumed in different manufacturing processes. This enables employees to identify unnecessary uses of energy in such processes, as well as to develop and test solutions and, having confirmed the effectiveness thereof, to effect ongoing improvements. Particularly outstanding solutions are subsequently expanded to other sites.\n### Renewable Energy Procurement Policy\nSony has always considered the surrounding environment when introducing renewable energy, so we have updated our procurement policy with additional environmentally conscious items for the introduction and operation of power generation equipment.\nThese activities were prompted by the effectiveness of the Eco Challenge Project implemented in 2009 at Sony Group Corporation’s Sendai Technology Center and Sony Storage Media Manufacturing Corporation’s Tagajo site. Similar energy conservation activities are now being implemented at Sony manufacturing sites around the world.\n[IMAGE CAPTION] Major Sony sites that have installed solar power equipment\nOne main example of this is at Shanghai Suoguang Visual Products Co., Ltd. (SSVE) in China, where employees from various departments all consider and implement measures together to reduce energy consumption based on their own perspectives. In the manufacturing division, for example, employees took the lead in fine tuning air condition operation according to production planning needs. Such efforts led to an approximately $10 \\%$ reduction in energy consumption for fiscal year 2022.\n### RE100 Membership", "chunk_word_count": 518, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Use of Renewable Energy and Renewable Electricity Rate", "document_id": "Sony Sustainability Report 2023", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 56, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Reducing Waste Generation\nIn 2018, Sony joined $\\mathsf { R E 1 0 0 } , ^ { \\star }$ a global initiative to use $100 \\%$ renewable energy, in addition to internally set targets. Our goal of working toward sourcing $100 \\%$ renewable electricity was originally 2040, but was moved up to 2030 in May 2022.\n### Amount of Waste Generated at Sites\nSimilar introduction through a variety of initiatives is underway in Japan, as well. As the first such initiative in Japan, we began operating a virtual PPA using the feed-in premium (FIP) system in fiscal 2022. With virtual PPA, power generated is then sold on the market, which means that market price fluctuations may cause a financial loss to Sony as the consumer, which we are then responsible for compensation for. Through the FIP system, government subsidies reduce risk associated with price fluctuations, making it possible to procure renewable energy that’s sustainable from a management perspective. Through these endeavors, we expect the Sony Global Manufacturing & Operations Kohda Site, a production base of the Sony Group, to introduce environmental value of approximately 2.4 million kWh of electricity derived from renewable energy annually.\nWith the target of reducing waste amount intensity value from Sony sites by $5 \\%$ relative to fiscal year 2020 levels by fiscal year 2025, Sony has implemented a variety of measures to reduce waste and use resources more effectively. In fiscal year 2022, the amount of waste generated at sites worsened approximately $3 1 . 6 \\%$ in waste intensity compared to fiscal year 2020. Sites generated approximately 55,000 metric tons of waste, which is up approximately $6 . 8 \\%$ from fiscal year 2020. Although Sony is promoting reduction by continuously improving production site processes and reducing waste generated, the volume of waste increased, mainly due to the expansion of semiconductor plants and increased production. Furthermore, about 6,000 metric tons of industrial waste generated was plastic waste.\n\\* RE100 is a global initiative led by the non-profit The Climate Group in partnership with CDP in which participating companies set a goal of procuring $100 \\%$ renewable electricity for power used in their global business operations.\n### Sony accelerates target to achieve a zero environmental footprint by ten years", "chunk_word_count": 384, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Reducing Waste Generation", "document_id": "Sony Sustainability Report 2023", "page": 55, "page_start": 55, "page_end": 55 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 57, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Regional Initiatives\nEven before joining RE100, Sony had been taking action on renewable energy at sites around the world. It has already achieved $100 \\%$ use of renewable energy in many regions. In fiscal year 2008, it was one of the first enterprises in Europe to make the switch to $100 \\%$ renewable energy for the electricity consumed at its sites. Since then, it has also achieved $100 \\%$ renewable energy in China (in fiscal year 2020) and at all manufacturing sites in the Pan Asia region (in fiscal year 2022). This success in the Pan Asia region is due to the installation of solar power systems at its sites and the active use of renewable energy certificates. Sony is systematically increasing the amount of renewable energy it sources in North America, with the aim of achieving $100 \\%$ in fiscal year 2030.\n[IMAGE CAPTION] Amount of Waste Generated at Sites Japan/East Asia: Japan, South Korea and Taiwan Region\n[IMAGE CAPTION] Virtual PPA mechanism (figure redrawn with permission from Renewable Energy Institute) A virtual PPA (Power Purchase Agreement) is a system in which consumers (companies that wish to use electricity) conclude a long-term contract with a power generation company directly, trading the “environmental value” contained in renewable power rather than actual power. Sony has concluded a contract with OTS LLC, a power generation company, to utilize the platform provided by Digital Grid Corporation.\n### Landfilled Waste Rate for Sony Sites\nIn fiscal year 2022, the landfilled waste rate for all Sony Group sites was approximately $2 . 5 \\%$ . The rate for sites in Japan was $0 . 2 \\%$ . However, the landfilled waste rate for Sony sites became approximately $3 . 0 \\%$ when the calculation includes waste that Sony is required by law or ordinance to dispose of by landfills. Sony strives to reduce the rate of waste disposed in landfills by recycling wastes generated by sites.\n### Management of Industrial Waste", "chunk_word_count": 335, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Regional Initiatives", "document_id": "Sony Sustainability Report 2023", "page": 55, "page_start": 55, "page_end": 56 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 58, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Improving Component Packaging\nSony takes precautions to ensure waste from its sites is not inappropriately disposed of. For example, in Japan Sony has set consistent internal standards for selecting waste disposal contractors and inspecting disposal sites on an ongoing basis. It has also established an internal system of accreditation for disposal site inspectors, and is stepping up efforts to minimize risks associated with contracting out waste disposal. To reinforce this system, Sony implements periodic on-site inspections in the waste disposal contractors, thereby ensuring rigorous management procedures.\nAt all of its sites, Sony works to reduce the amount of waste through overall reviews of the packaging used in components and the optimization of this packaging. For example, a range of measures are employed to reduce the amount of materials used in component packaging materials and hence curb the amount of waste. These include the complete elimination of protective bags for components, modifications to increase the capacity of containers used to store components, and the switch from disposable containers to multi-use returnable boxes. In particular, Sony is working to standardize the sizes of, and materials used in, returnable containers while aiming to expand the range of items for which such containers are used.\nSony also takes steps to ensure the quality of wastewater at its sites. In addition to observing related laws and regulations in each of the countries and territories in which it operates, Sony manages wastewater quality criteria further than is required. For example, the introduction of sophisticated water treatment facilities has enabled it to reduce BOD and COD levels\\* in wastewater.\n### Example of Waste Reduction\nSony is reducing waste at all its business sites. Sony Semiconductor Manufacturing Corporation changed the flocculant used in the treatment of wastewater generated from production machinery to a biobased polymer flocculant that offers improved setting and flocculating performance. This led to a reduction of sludge, which accounts for the majority of waste. This led to a reduction of both conventional primary flocculant (inorganic flocculant) and inorganic flocculant-derived sludge. Sludge was further reduced by processing excess sludge in a dehydrator. These, in addition to other measures, have reduced waste by about 1,300 metric tons annually. In 2021, the Kagoshima Technology Center, in cooperation with a subcontractor company, recycled sludge from on premises into a block to create a flowerbed. A signboard describes this recycled block, giving customers and locals an opportunity to learn about environmental activities while also raising the awareness of people on premises.\n[IMAGE CAPTION] $ \\ C O _ { 2 }$ Emissions from Product Transport Returnable container used to transport components at Sony Global Manufacturing & Operations Corporation\n\\* Biochemical oxygen demand (BOD) and chemical oxygen demand (COD) are indicators of water pollution.\n### Environmental Data (Environmental Data file: Water Pollutants)\n[IMAGE CAPTION] Water Usage at Sony Sites Japan/East Asia: Japan, South Korea and Taiwan Region\n[IMAGE CAPTION] Flowerbed made from blocks of recycled sludge\n### Proper Water Management to Protect the Local Environment", "chunk_word_count": 503, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Improving Component Packaging", "document_id": "Sony Sustainability Report 2023", "page": 56, "page_start": 56, "page_end": 56 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 59, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Water Usage and Risk at Sony Sites\nWater is a constantly circulating and unevenly distributed resource, which makes water issues very regional in nature. To tackle this issue, Sony set the goals of improving water usage intensity value on sites that use high volumes of water by $5 \\%$ relative to fiscal year 2020 and implementing risk reduction measures at sites located in water risk areas. In fiscal year 2022, water usage at Sony sites worsened approximately $1 1 . 7 \\%$ in waste intensity relative to fiscal year 2020. Water usage was approximately 19.97 million $\\mathsf { m } ^ { 3 } .$ , an increase of $6 . 8 \\%$ relative to fiscal year 2020. Sony is making efforts to recycle water and save water on production sites, but the amount of water used has increased, mainly due to the expansion of semiconductor plants and increased production.\n### Reducing Water Use at Manufacturing Sites\nAvailable water resources vary greatly in terms of quantity and quality, depending upon the region. In business, it is necessary to consider water resources from the perspective of securing enough water for production while maintaining good stakeholder relations. Sony uses water risk assessment tools provided by the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF) to perform water risk assessments for the regions where Sony sites are located. Sony is working with local stakeholders to ensure proper use of water by promoting activities that reflect the water risks in each region.\nrecharged, a volume that exceeds that used by Kumamoto TEC. Kumamoto TEC has been recognized externally for its groundwater recharge efforts through a variety of awards. In 2022, they received the 3rd Kumamoto Environmental Awards Special Award and the 2022 Local Environmental Conservation Merit Award.\nFor semiconductors and electronic devices, vast amounts of water are needed not only in the manufacturing process but also in the recycling process. At its plants all over the world, Sony is taking a variety of measures to preserve local water resources, including wastewater, recycling and initiatives for reducing water usage.\n### Reducing Water Usage in Various Ways", "chunk_word_count": 364, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Water Usage and Risk at Sony Sites", "document_id": "Sony Sustainability Report 2023", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 60, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Increasing Semiconductor Production while Reducing Water Usage\nGreen Cycle Corporation, an affiliate of Sony that engages in the recycling of home appliances, began harvesting rainwater in fiscal year 2014. Green Cycle uses the rainwater in recycling processes such as crushing machines. Via measures such as turning the entire 2,500 $\\mathsf { m } ^ { 2 }$ rooftop of Plant No. 2 into a rainwater collection area, Green Cycle Corporation was able to harvest $1 , 4 7 2 . 3 \\ : \\mathrm { m } ^ { 3 }$ of rainwater in fiscal year 2022, which covered $42 \\%$ of the plant’s total water usage. The Sony headquarters building uses treated wastewater to cool its heating equipment. By using water treated at the nearby Shibaura Water Reclamation Center to cool heating equipment, the amount of clean water normally used to replenish the water in the cooling towers has been reduced by approximately $3 0 , 0 0 0 { \\mathrm { m } } ^ { 3 }$ per year. Sony Technology (Thailand) (STT) focuses on wastewater recycling as a means to reduce tap water usage. It has installed an on-site wastewater treatment plant to supply make-up water to airconditioning cooling towers, which normally use large amounts of tap water. By using recycled water for the cooling towers, STT reduced its tap water consumption in fiscal year 2022 by 49,331 $\\mathsf { m } ^ { 3 }$ .\nSony Semiconductor Manufacturing Corporation (SCK) is working toward reducing the amount of water it uses for the semiconductor production while increasing the production capacities. Nagasaki Technology Center is working to reuse wastewater from gas detoxifying equipment used in the semiconductor manufacturing process, and is reusing about $80 \\%$ of the wastewater. Kumamoto Technology Center (Kumamoto TEC) is aiming to reduce water used for combustion treatment to remove exhaust gas emitted from the semiconductor production lines. To do this, they have enhanced the equipment to increase the proportion of recycled water, thereby lowering the amount of fresh water needed by about $50 \\%$ . In addition, in order to help preserve the abundant aquifer in the Kumamoto region, Kumamoto TEC has for many years been conducting “groundwater recharge” efforts. This involves flooding fields with river water that slowly permeates into the water table during times before planting or when no crops are being grown. In fiscal year 2022, approximately 3.39 million $\\mathsf { m } ^ { 3 }$ water intake was\n[IMAGE CAPTION] Water Risk Analysis Chart for Sony Group sites", "chunk_word_count": 431, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Increasing Semiconductor Production while Reducing Water Usage", "document_id": "Sony Sustainability Report 2023", "page": 57, "page_start": 57, "page_end": 57 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 61, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Efforts in Water Usage and Local Water Risk\n• Sony’s semiconductor manufacturing sites use the largest volumes of water and are located in areas where water risk is low, but we continue to promote wastewater recycling to reduce usage. • We have set voluntary standards for environmental pollutants in wastewater, and are working to reduce the risk of wastewater pollution at Sony sites where wastewater pollution risk is high. • We have non-manufacturing sites located in areas with a high risk of water depletion and drought. The volume of water consumed at these sites is low, but we continue to work to reduce water usage.\n[IMAGE CAPTION] Wastewater treatment recycle plant installed at STT\n[IMAGE CAPTION] Kumamoto TEC’s facility for recovery of water used for gas combustion treatment\n### Environmentally Preferable Paper Purchasing\n### Class 1 substances: Prohibit use\n[IMAGE CAPTION] Release of VOCs into the Air\n• The substances regarded as having a serious impact on the human body or environment (carcinogenicity, mutagenicity, toxicity for reproduction, acute toxicity, ecotoxicity, etc.) which are prohibited to be produced or used under international treaties or individual countries’ regulations • The substances considered to have a high risk of environmental pollution such as soil contamination\nRecognizing that paper resources are finite, Sony strives to use paper in an environmentally responsible manner, and it has established a related purchasing policy for paper and printed materials. We consistently strive to reduce paper use by purchasing paper that is environmentally friendly in terms of bleaching and printing, paper where the main raw material is recycled paper and paper that is sourced from properly managed forests as certified by relevant third party organizations. Particularly, we promote the use of FSC-certified paper\\*, which is evaluated for both its legality and for forest sustainability. In fiscal year 2022, Sony used a total of approximately 279 metric tons of FSC-certified paper\\* for such items as corporation publications, including company brochures and notices of general meetings of shareholders, product catalogs, calendars, business cards, and envelopes.\nList of Chemical Substances Registered as Class 1 (Prohibition of Use) in Site Operation by the Sony Group. [PDF: 101KB]\nClass 2 substances: Prohibit use (Exemptions granted for certain applications)\n### Example of Reduction in Chemical Substance Usage\nSony Semiconductor Manufacturing Corporation (SCK) collaborated with an equipment manufacturer to develop a proprietary volatile organic compound (VOC) treatment system as part of ongoing efforts to reduce the amount of VOCs released. Conventional VOC treatment systems are installed near ventilation duct outlets. Since such equipment is designed to treat extremely rarefied organic substances, it is very large, making space and cost constraints an issue for semiconductor plants that want to install these types of systems. SCK responded by focusing on production equipment for highly concentrated organic substance and developed a small, fixed condensing-type VOC treatment system in conjunction with an equipment manufacturer. The newly developed system can be installed near production equipment and is able to treat VOCs efficiently.\n\\* Paper certified as being produced from wood in consideration of conservation by the Forest Stewardship Council (FSC).\nFocus on Paper Resources", "chunk_word_count": 522, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Efforts in Water Usage and Local Water Risk", "document_id": "Sony Sustainability Report 2023", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 62, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Management of Chemical Substances\nThe Sony Group has developed a group-wide approach to the management of chemical substances used at sites where the use of these chemicals is controlled by legislation, designated as having a potentially harmful impact on the environment, or used in large quantities.\n### Efforts to Reduce VOC Emissions to Air\nWith the target of reducing volatile organic compounds (VOCs) released into the air to fiscal year 2010 levels or lower, Sony is working on a variety of initiatives, such as transitioning to VOC alternatives and reducing the amount of VOCs used in the manufacturing process. In fiscal year 2022, VOC emissions into the air were approximately 506 metric tons, down approximately $5 7 \\%$ relative to fiscal year 2010. The decline was the result of a series of measures that include replacing VOCs with alternative substances and reducing VOC use in manufacturing processes.\n### Reinforcing Standards for Managing Chemical Substances\nSony categorizes chemical substances into four classes and carefully manages and reduces the amounts s of these chemical substances used, as well as the amount transferred as air, water, or soil emissions and waste. In countries where no legal reporting requirements exist for chemical management, Sony sites apply standards based on Japan’s Pollutant Release and Transfer Register (PRTR) as internal rules. Chemical substances are classified as follows:\n### Ozone-Depleting Substances\ndocument that sets out procedures that comply with Japanese laws and ordinances. This manual stipulates that issues be addressed through the following three phases:\n### Phase 3\nSony succeeded in completely eliminating first-generation chlorofluorocarbons (CFCs) from its manufacturing processes in 1993 and banned the use of second-generation hydrochlorofluorocarbons (HCFCs) at the end of fiscal year 2000. Sony business sites currently prohibit the use of ozone depleting substances stipulated under the Montreal Protocol. Sony uses CFCs as a refrigerant in some airconditioning units only. Compliance with laws and regulations in each country is ensured, and strict care is taken to prevent leakage of CFCs from these units during maintenance.\nIf any contamination is identified based on these results, carry out prevention and remediation procedures.\nIncidents of soil and groundwater contamination resulting from operations have been confirmed at Sony Group sites as follows. In response, Sony has been remediating the contamination and submitting regular reports to authorities.\n### Phase 1\nInvestigate past and present chemical use and confirm the existence or otherwise of used or unused underground tanks, buried piping, other similar equipment, or previous incidents, at the site. Perform an inspection of the site to ascertain whether there is any residual soil or groundwater contamination.\n### Phase 2", "chunk_word_count": 440, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Management of Chemical Substances", "document_id": "Sony Sustainability Report 2023", "page": 58, "page_start": 58, "page_end": 59 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 63, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Environmental Risk Management at Sony Sites\nBased on the investigations undertaken in Phase 1, carry out an assessment of the areas that are potentially contaminated. Undertake measurements at these locations in line with the Soil Contamination Countermeasures Act.\nTo carry out effective risk management of chemical substances and emergency responses, the Sony Group has enacted the Sony Group Standards for Site Environmental Risk Management, which set the management standard and give examples of improvement measures. Based on these standards, at each site Sony has implemented accident prevention measures, including prohibiting the burial of tanks for chemical substances and pipes, and various leak prevention measures. In addition, Sony rigorously works to prevent environmental accidents through ongoing improvements to its systems based on regular audits at each site, information sharing among sites and other initiatives. Sony has established a system whereby its sites are required to promptly report environmental accidents to the authorities and to take appropriate countermeasures. No accidents falling withing the scope of ISO 14001 certification were reported at any of Sony’s sites in fiscal year 2022.\n### Response to Soil and Groundwater Contamination\nIn the event that an incident of soil or groundwater contamination is identified at a Sony site in a voluntary check or other assessment, remediation processes are implemented in compliance with pertinent local laws and ordinances. For example, Sony Group companies in Japan deal with the occurrence of contamination of soil and groundwater at Group sites by taking steps in line with the Sony Group Standard for Assessing Soil and Groundwater, an internal\n### Examples of Biodiversity Conservation Initiatives\nefforts, inhabitation of endangered owls has been confirmed every year since 2016.\nThen, in 2011, the Kohda Site began carrying out activities to secure and share seedlings of native species, necessary for regeneration of the local ecosystem. It has been promoting this through collaboration with local government, residents, and companies. In recognition of these activities, Sony Forest was certified by the Japan Committee for the United Nations Decade on Biodiversity as the sixth exemplary project in 2015. In 2022 it was judged to be equivalent to an area that is certified for the promotion of biodiversity in the Promoting Biodiversity\\*2 certification test project aimed at achieving 30by30\\*3 spearheaded by the Ministry of the Environment.\n\\* Currently affiliated with the National Institute of Standards and Technology (USA) and a professor of the Chuo University Research and Development Initiative.", "chunk_word_count": 409, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Environmental Risk Management at Sony Sites", "document_id": "Sony Sustainability Report 2023", "page": 59, "page_start": 59, "page_end": 60 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 64, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Guiding Principles for Biodiversity Conservation Initiatives\nMonitoring Survey of the Recovering Gamo Tidal Flats Sony Group Corporation’s Sendai Technology Center (Sendai TEC) and Sony Storage Media Manufacturing Corporation’s Tagajo site are conducting a biological monitoring survey of the Gamo Tidal Flats (Sendai City, Miyagi Prefecture, Japan), which is about $4 \\ k \\mathsf { m }$ from the manufacturing site. The Gamo Tidal Flats were damaged by the tsunami caused by the Great East Japan Earthquake, devastating the surrounding pine forest and reed fields, leading to a critical situation for the area’s flora and fauna. This rich natural area was originally inhabited by a variety of worms and gobies, is a breeding ground for little terns and Kentish plovers, and is also the wintering ground for the brant goose, a natural monument of Japan, and has been designated as a national wildlife sanctuary special protection area. Since 2014, Sendai TEC and the Tagajo Site have been tracking the recovery of the Gamo Tidal Flats in collaboration with the Gamo Conservation Society environmental NGO. A decade has passed since the earthquake, and the environment of the Gamo Tidal Flats continues to recover. A 2020 survey confirmed 12 species of benthic life including sand blubber crabs, 21 species of birds including the red-necked stint and other plovers and sandpipers, 11 species of plants including okahijiki and hamanigana, and 4 species of insects including earwigs. Three rare species, osprey and dunlin (birds) and herbaceous seepweed (salt-tolerant plant) were also observed.\nRecognizing the importance of natural capital, as the very foundation of human life, and the ecosystem services it supplies, Sony endeavors to maintain and recover biodiversity, both in its business activities and through regional biodiversity conservation initiatives. Changes in land usage have been indicated as one of the causes of loss and deterioration of biodiversity. From a land use perspective on the site, we consider the impact of our business activities on neighboring ecosystems, carrying out biodiversity conservation and restoration initiatives in the green areas of our manufacturing sites, as well as in the ecosystems of the surrounding area according to the region’s specific needs.\n\\*1 An area considered important for the protection of wild birds and mammals. \\*2 Awarded by the Ministry of the Environment to site considered to be in harmony with nature through private sector biodiversity conservation efforts. In fiscal year 2022, we conducted trials and tests of this system as certification demonstration testing, and plan to start formal certification in fiscal year 2023. \\*3 The name for the goal to effectively conserve at least $30 \\%$ of the land and sea as a healthy ecosystem by 2030 in order to halt biodiversity loss (nature positive). Sony is also participating in the 30by30 Alliance for promoting biodiversity that is spearheaded by the Ministry of the Environment.\n### Conservation Initiatives\n### Conservation Activities in Sony Forest to Promote a Richer Ecosystem", "chunk_word_count": 489, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Guiding Principles for Biodiversity Conservation Initiatives", "document_id": "Sony Sustainability Report 2023", "page": 60, "page_start": 60, "page_end": 60 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 65, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Coral Conservation Efforts in Nagasaki Prefecture\nSince its inception in 1972, the Kohda Site of Sony Global Manufacturing & Operations Corporation, a producer of products such as digital still cameras, has protected a natural woodland on its site, naming it Sony Forest. Sony Forest was designated as a wildlife sanctuary\\*1 (Kohda Northern Wildlife Sanctuary, Aichi Prefecture, Japan), and is vital to the neighboring ecosystem. Owls are at the top of the ecosystem pyramid, so in order to build a rich ecosystem inhabited by them, we continue activities at the Kohda Site such as building spaces for owls to fly and feed, as well as installing nest boxes. As a result of these\nSony Semiconductor Manufacturing Corporation works to conserve the wild coral that grows around the beaches of Takashima off the southern coast of Nagasaki Prefecture and is important to the area’s rich ecosystem. In 2019, we worked with the Yattaro de Takashima local preservation group, Associate Professor Yukio Koibuchi of the University of Tokyo, who develops coral cultivation devices\\*, MM Bridge Co., Ltd., Nippon Corrosion Engineering Co., Ltd., and CP Farm Co. Ltd. to build two coral cultivation devices, and have continued to monitor their effects since installing them on the seabed of the area. Coral grew significantly in 2022, helping conserve the biodiversity of the sea area as a habitat, breeding ground and source of nutrition for wildlife.\n[IMAGE CAPTION] Owl chick born in the Sony Forest (2020)\n[IMAGE CAPTION] Osprey chicks found in the Gamo Tidal Flats (August 2020)\n[IMAGE CAPTION] Growing coral (June 2022)\n### Biodiversity Conservation Activities in Austria\n### Other Initiatives\nThe Sony DADC Thalgau plant in Austria is actively promoting activities to conserve biodiversity in the nature-rich region of the Fuschlsee Nature Reserve, located $1 0 \\ k m$ away. In recent years, the habitat of the wild bee, which plays an important role in the ecosystem as a pollinator in this area, has been deteriorating due to climate change and housing development. Sony DADC Austria is implementing activities to protect the bee, such as installing beehives on the plant grounds, housing approximately 400,000 bees. In addition, to protect the ecosystem that lives in the grassland on the plant grounds and as a way of landscape management, employees let sheep of local farmers graze the land instead of using tractors that strain the soil.\nVolunteering to Protect Nature Reserves in the UK Old Growth Conservation Efforts in Kunisaki City, Oita Prefecture Promoting Forest Management Activity at So-net Forest (in Japanese) Protecting Spawning Grounds of the Endangered Loggerhead Turtle in Japan Environmental Protection Activity in New York City Coral Conservation Efforts in Nagasaki Prefecture Participating in the Forest Conservation Project in Sumatra Participating in Panama’s Biodiversity Event Festi Harpia 2019", "chunk_word_count": 465, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Coral Conservation Efforts in Nagasaki Prefecture", "document_id": "Sony Sustainability Report 2023", "page": 60, "page_start": 60, "page_end": 61 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 66, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Promoting Biodiversity through Synecoculture™\\*\nSony is promoting biodiversity and extending the reach of such efforts on its sites through Synecoculture. Synecoculture is a farming method advocated by Masatoshi Funabashi, senior researcher at Sony Computer Science Laboratories, in which a wide variety of plants are mixed and densely grown on a single area of farmland to create an augmented ecosystem, thereby maximizing the circulation inherent in an ecosystem, and by doing so, help overcome the trade-off between productivity and environmental degradation. Sony Group Enteritis in China have been widely deploying this technique since fiscal year 2020 at sites across the country with coordinated efforts both internally and externally. Five Synecoculture farms have now been established on a total of $6 , 0 0 0 ~ \\mathsf { m } ^ { 2 }$ of land, with over $2 , 0 0 0 \\mathsf { k g }$ of vegetables harvested in the last three years. These initiatives were recognized through an award from the Shanghai Municipal Commission of Commerce (led by Shanghai Government) in fiscal 2022. Sony/Taiyo Corporation started a Synecoculture farm in fiscal 2022 with the support of SynecO Co., Ltd., which operates a business centered on Synecoculture, planting more than 100 species of plants. Plants on the farm have continued to grow steadily, creating a health ecosystem that provides radishes, potatoes and other vegetables served in the employee cafeteria.\n### Environmental Initiatives for Food\n[IMAGE CAPTION] Planting nectar plants to protect bees\nSony has been working on environmental issues related to food in our Food for the Future project since 2021. We engage every employee in activities that encourage them to be aware of use of environmentally conscious food and take action in their daily lives through a variety of efforts, including distribution of a guidebook detailing environmentally conscious food, internal seminars and educational events, and providing meals that use environmentally conscious food in our employee cafeterias worldwide. October 2022 was Food for the Future Month. During the month, on-site cafeterias provide information about environmentally conscious food, provide meals that use them, and hold seminars featuring expert keynote speakers from outside the company.\n### Biodiversity Conservation Activities in China\nSony Precision Devices (Huizhou) Co., Ltd. (SPDH) is located in a natural area close to a mangrove forest, and is actively working to remove alien species and promoting biodiversity conservation efforts in the region. Mangrove Forest Park is home to a wide variety of flora and fauna that inhabit the intertidal zone and brackish water, including storks, black-faced spoonbills (nationally protected species in China) and other endangered species. SPDH has been pursuing efforts to remove water hyacinth, a non-native species to the area, since 2010, in cooperation with the Huizhou Aquatic Environmental Center.\n[IMAGE CAPTION] Guidebook of environmentally conscious food distributed to employees\n[IMAGE CAPTION] Activities at Mangrove Forest Park\n\\* Synecoculture is a trademark of Sony Group Corporation.\n[IMAGE CAPTION] The Sony/Taiyo Synecoculture farm", "chunk_word_count": 494, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Promoting Biodiversity through Synecoculture™\\*", "document_id": "Sony Sustainability Report 2023", "page": 61, "page_start": 61, "page_end": 62 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 67, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Reducing Food Loss in Singapore\nsubmission of photos, the splendor of nature and the importance of biodiversity are conveyed to more and more people. About 10,000 entries were submitted to the Chinese photo contests from 2016 to 2022, and they were shared through social media with approximately 993,000 people, including Sony Group employees in China and their friends. In addition to holding exhibitions of the winning photo entries in Japan and China, the project has been providing other opportunities for the public to think about the importance of biodiversity, through activities such as biodiversity lectures and nature photographing workshops using Sony cameras.\nIn addition to our Food for the Future project, we held Ugly Food Day at Singapore’s Sony Electronics Asia Pacific (SEAP) and Sony Electronics Singapore (SES) in 2022 to raise food loss awareness. In the country, approximately $50 \\%$ of imported vegetables and fruit were not consumed or otherwise discarded due to being too “ugly” or because too many had been imported. SEAP/SES bought this unsold produce and distributed it to employees. SEAP/SES also held an in-house workshop where participants made beeswax wrap, a substitute for the typical plastic wrap used in kitchens.\nSony also conducts the One Blue Ocean Project to tackle the issue of marine pollution by collecting plastic waste and reducing the use of single-use plastic at its business sites.\n### Tackling Ocean Plastic Pollution with the One Blue Ocean Project\n[IMAGE CAPTION] Distributing fruits and vegetables on Ugly Food Day\n[IMAGE CAPTION] SDT employees conduct cleanup activities\nWinning works from the Chinese photo contest\n### Worldwide Cleanup Activities Catered to Regional Characteristics\n### Other Initiatives\n### Wow! Wow! Biodiversity Project (in Japanese)\nCleaning Up Marine Plastic Waste Across China\nSony continues to conduct cleanup activities at its manufacturing sites around the world that are catered to the specific characteristics of the region. Even in locations where it is difficult for people to gather due to the COVID-19 pandemic, we are conducting cleanup activities after ensuring thorough infection control measures at many of our sites. For example, Sony Device Technology (Thailand) Co., Ltd. (SDT) has been planting mangroves since 1999 and is also engaged in cleanup activities to conserve these forests. In 2022, we cleaned up the beach at The Sirindhorn International Environmental Park, collecting about $6 5 \\mathsf { k g }$ of plastic waste.", "chunk_word_count": 400, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Reducing Food Loss in Singapore", "document_id": "Sony Sustainability Report 2023", "page": 62, "page_start": 62, "page_end": 62 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 68, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Wow! Wow! Biodiversity Project\nTogether with the Nature Conservation Society of Japan, Sony launched the Wow! Wow! Biodiversity Project in fiscal year 2015, as a platform for organizing nature appreciation events, holding photo contests for the general public and spreading awareness of biodiversity through social media. In fiscal year 2016, Sony China joined this project and is conducting similar awareness-raising activities in various cities across China. The annual photo contests have become popular in both Japan and China. Through the\nSony Technology (Thailand) Co., Ltd. Chonburi and the Bangkadi Plant (STT) have been planting mangroves since 2010 and are also engaged in cleanup activities to conserve these forests. In fiscal year 2022 we arranged the Forest Planting Project at Khlong Tamru Environmental Education, Chonburi, Thailand, planted 2,000 mangrove trees, released 500 fish and 500 crabs, and collected about 115 kg of plastic and other waste.\n### Reducing the Environmental Impact of Logistics\n### Logistics\n### Promoting Modal Shift\n### Modal Shift in Japan\nAs a part of its efforts to reduce environmental impact from the transport of finished goods, Sony promotes modal shift, switching the modes of transport it uses from air to sea and from truck to railroad.\nIn Japan, Sony has promoted modal shift from truck to rail transport, which boasts lower $C O _ { 2 }$ emissions. Recognizing our efforts to use rail transport, particularly for consumer electronics, Sony has been certified by the Japanese Ministry of Land, Infrastructure, Transport and Tourism as a certified company in the “Eco Rail Mark” system since 2011.\n### $\\mathbf { C O } _ { 2 }$ Emissions from Product Transport", "chunk_word_count": 281, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Wow! Wow! Biodiversity Project", "document_id": "Sony Sustainability Report 2023", "page": 62, "page_start": 62, "page_end": 63 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 69, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Modal Shift for Tape Media\nFrom fiscal year 2020, Sony Storage Media Solutions Corporation switched from air to sea transport for storage tape media that is manufactured in Japan and destined for distribution centers in the US, Belgium, and Singapore. This led to a reduction of approximately 695 metric tons of $\\mathsf { C O } _ { 2 }$ emissions in fiscal year 2022 compared to fiscal year 2020.\nWith the target of reducing absolute $C O _ { 2 }$ emissions related to logistics between nations and within regions\\* by $10 \\%$ (compared with fiscal year 2018) by fiscal year 2025, Sony has worked to reduce transport weight by making products and packaging smaller and lighter, while optimizing transportation efficiency and switching to transportation methods that have a low impact on the environment. In fiscal year 2022, the total $\\mathsf { C O } _ { 2 }$ emissions from product transport (international and regional) was approximately 162 thousand metric tons, a decrease of $10 \\%$ over fiscal year 2018. This was due to changes in the amount transported, adopting methods that emit less $C O _ { 2 } ,$ shortening distances through more efficient routing and improving loading efficiency by downsizing product packaging and improving parts packaging.\nSony also promotes domestic sea transport. In fiscal year 2022, $C O _ { 2 }$ emissions attributable to the transport of products in Japan were approximately 167 metric tons lower than would have been the case if products had been transported by truck.\n[IMAGE CAPTION] Modal shift from air to sea transport\n[IMAGE CAPTION] Logo indicating Eco Rail Mark certification for businesses\n\\* Some countries and regions are excluded from “intraregional transportation.”\n[IMAGE CAPTION] ${ \\mathsf { C O } } _ { 2 }$ Emissions from Product Transportation (International and Regional)\nModal Shift in the US\nSony Electronics Inc. (SEL) in the United States has optimized the use of rail transport for product shipments from the West Coast to reduce $\\mathsf { C O } _ { 2 }$ emissions generated during transport. SEL has also increased loading efficiency reducing number of shipments; focused on minimizing outbound air shipments; reducing small load shipments and working with carriers for shipment consolidation. Annually, SEL in conjunction with its logistics partner run a carrier nomination bid, strategically focused on reduction in environmental impact as a member of the SmartWay program operated by the United States Environmental Protection Agency (EPA).\n### Improving Transport Efficiency with Milk Runs\n### Promoting the Use of Reusable Bands for Products and Parts Transport in Manufacturing Sites and Warehouses", "chunk_word_count": 442, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Modal Shift for Tape Media", "document_id": "Sony Sustainability Report 2023", "page": 63, "page_start": 63, "page_end": 64 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 70, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Raising Transport Efficiency by Improving Shipping Boxes\nEfficient transport realized by maximizing loading volume per truck reduces environmental impact. Sony seeks to improve transport efficiency by utilizing milk runs.\\* In China, Sony has been improving transport efficiency, which helps to reduce $\\mathsf { C O } _ { 2 }$ emissions, using a combination of transport solutions such as milk runs and round trips.\nAt Sony DADC US Inc., warehousing, packaging, returns processing and distribution of assorted media had previously used regulation size boxes. Space inside the boxes was often left unused depending on the shipment size and number of orders. Cushioning material was also needed inside the empty spaces to protect the goods during transport, which resulted in additional expenditures for materials. In response to these circumstances, improvements to the boxes at the Terre Haute plant have been made through redesign into a shape optimally suited for the size and amount of products to be shipped, expanding choice of boxes available and utilizing mailer envelopes for very small orders. Ultimately, the plant eliminated the wasted space in the boxes, increased the rate of products shipped, and substantially improved transport efficiency. The initiative also helped to reduce the amount of cushioning material used.\nTo keep stacked cartons from collapsing during transport of products and parts in manufacturing sites and warehouses, Sony employs reusable bands as one of its materials. This has contributed to the reduction of use and disposal of packaging materials such as stretch films.\n\\* In a milk run, a truck follows a route to collect parts from several suppliers, thereby improving transport efficiency compared with the routing method of separate runs to each supplier.\n[IMAGE CAPTION] A reusable band in use\n[IMAGE CAPTION] Sony trucks run loaded round-trip to increase transportation efficiency\n[IMAGE CAPTION] The shape of the shipping boxes was changed to optimally suit the products being shipped\n### Sony’s Recycling Targets and Record\n### Product Recycling\n### Improving Product Recyclability\nSony promotes the collection of end-of-life products worldwide with our goal to establish and maintain recycling schemes suitable for the needs of local communities. In fiscal year 2022, Sony’s Take-Back of End-of-Life Products Record was approximately 50 thousand metric tons of end-of-life products. The figures for fiscal year 2022 are aggregate figures current as of July 2023, and do not include some countries, namely Portugal, France and Poland.", "chunk_word_count": 402, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Raising Transport Efficiency by Improving Shipping Boxes", "document_id": "Sony Sustainability Report 2023", "page": 64, "page_start": 64, "page_end": 65 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 71, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Working with the Sony Group’s Specialized Recycling Company\nAs one of its strategies for resource efficiency, Sony works to increase the recyclability of its products. When examining various related measures, Sony receives feedback from Green Cycle Corporation, an affiliate of Sony specializing in the recycling business. Highly effective, practical measures incorporating these ideas and suggestions for easier disassembly and separation of materials obtained during the recycling process are then drawn up and submitted to design departments for each product category. Meanwhile, Sony supports the efforts of Green Cycle Corporation to improve its recycling technologies by sharing the latest information on product dismantling. The amount of home electronics waste, including flat-screen TVs, has been rising in recent years, and boosting waste processing capacity has become an issue. In fiscal year 2020, Green Cycle Corporation built a second recycling building and introduced a new process for flat-screen TV processing based on Sony product information and other data. The new building has improved the efficiency of the disassembly process and significantly boosted processing capacity.\n### Product Recycling Policy and Performance\nSony has also been working on advanced recycling since 2021 with the goal to improve collection efficiency 1.5 times over fiscal year 2020 in regards to the recycling of key mineral resources (tantalum). We worked with specific recycling plants in Japan to adjust sorting equipment and improve the operation process used to collect parts containing tantalum from end-of-life products. These efforts led to $5 5 \\%$ of the total weight of parts in end-of-life products containing tantalum being recoverable, approximately 44 times the efficiency of fiscal year 2020.\n### Sony’s Product Recycling Policy\nSony subscribes to the principle of individual producer responsibility (IPR), that is, the idea that a producer bears responsibility for its products over their entire life cycle. Accordingly, Sony is focused on recycling-oriented product design, collection and recycling used products, and building global recycling systems that suit the needs of individual countries and regions. Sony recognizes its social responsibility as a manufacturer to deal with its used products and actively promotes product collection and recycling, and complies with recycling laws and regulations in countries and regions around the world.\n### Take-back of End-of-Life Products Record\n(Thousand Metric Tons)\n[IMAGE CAPTION] 100 Notes: • The figure for fiscal year 2022 is as of July 2023. The figure for fiscal year 2021 was corrected from that of previous year’s report. • Japan / East Asia refers to the Japan, South Korea and Taiwan region. • End-of-life products collected and counted may vary by region.\n[IMAGE CAPTION] Recycling at Green Cycle Corporation’s facilities in Nagoya, Aichi Prefecture\n### Product Recycling Initiatives\nIn the treatment of used products, Sony complies with recycling laws and regulations in countries and regions around the world, including Japan’s Home Appliance Recycling Law, the EU’s Waste Electrical and Electronic Equipment Directive (WEEE Directive), state recycling laws on waste electrical and electronic equipment in the US, China’s Management Regulations for Recycling and Disposing of Consumer Electronics and Electronic Waste, and India’s E-Waste Management Rules, 2016 and amendments.\n### Recycling Activities in Japan", "chunk_word_count": 521, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Working with the Sony Group’s Specialized Recycling Company", "document_id": "Sony Sustainability Report 2023", "page": 65, "page_start": 65, "page_end": 66 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 72, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Recycling Activities in Europe\nMaterials such as iron, copper, aluminum, and plastic are then separated out and sold to businesses that produce raw materials, making them available for reuse. In addition, certain harmful substances such as lead and mercury found in some older products and parts are removed and disposed of properly in accordance with the law. In fiscal year 2022, Sony recycled approximately 99 thousand CRT televisions and 388 thousand flat-screen televisions. The Home Appliance Recycling Law obliges manufacturers to maintain recycling rates of at least $5 5 \\%$ for CRT televisions and at least $7 4 \\%$ for flat-screen televisions. Sony has consistently exceeded these rates since fiscal year 2001. In fiscal year 2022 the recycling rate for Sony-manufactured CRT televisions was $7 4 \\%$ , while for Sony-manufactured flat-screen televisions it was $8 7 \\%$ .\nSony recycles televisions and personal computers in line with applicable recycling-related laws in Japan. Sony also bears the cost of recycling lithium-ion batteries and other small rechargeable batteries, as well as packaging materials, as required by law.\nTake-back legislation in Europe—in particular, the European Union (EU) Directives on Waste Electrical and Electronic Equipment (WEEE),\\*1 Batteries\\*2 and Packaging\\*3—requires manufacturers to organize and finance the collection and recycling of end-of-life products and packaging.\nSony takes full responsibility for its take-back obligations in all applicable European countries. With the aim of building a recycling market where the principle of competition works in Europe, Sony formed the European Recycling Platform (ERP) in cooperation with other companies in 2002, building efficient and cost-effective systems for the collection and recycling of end-of-life products that enable member companies to fulfill their obligations as manufacturers. Sony continuously strives to find the best recycling partners.\n### Recycling of Television Sets\nJapan’s Home Appliance Recycling Law, which came into effect in April 2001, initially covered four major home appliances: televisions, refrigerators, washing machines and air conditioners. In April 2009, the law was revised to also cover LCD and plasma televisions and clothes dryers. Among applicable products, Sony manufactures televisions\\* (CRT, LCD and plasma models). The Home Appliance Recycling Law requires consumers to pay collection, transport and recycling fees when disposing of applicable home appliances, retailers to take back such appliances and return them to manufacturers, and manufacturers to recycle these appliances.\n\\* Sony-manufactured televisions include products bearing the Aiwa brand manufactured in and before 2005.\n\\*1 Directive 2012/19/EU on waste electrical and electronic equipment (WEEE) \\*2 Directive 2006/66/EC on batteries and accumulators and waste batteries and accumulators \\*3 Directive 94/62/EC on packaging and packaging waste\nCompliance with Japan’s Home Appliance Recycling Law (in Japanese) \nSony’s Recycling Record\nSony has established a nationwide cooperative recycling network with four other manufacturers. As a consequence, Sony-manufactured televisions are now recycled at 15 recycling plants across Japan. At these recycling plants, TVs are manually disassembled, and the parts are crushed and sorted using various equipment.\n### Recycling of Personal Computers", "chunk_word_count": 494, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Recycling Activities in Europe", "document_id": "Sony Sustainability Report 2023", "page": 66, "page_start": 66, "page_end": 66 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 73, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Sony’s Recycling Compliance Systems\nAlthough Sony sold off its personal computer business in July 2014, it is collecting and recycling its PC products in Japan that are no longer used by households and businesses, including long-time corporate users, in accordance with Japan’s Act on the Promotion of Effective Utilization of Resources. Items being recycled are desktop PC units, notebook PCs, CRT displays, and LCDs.\nSony utilizes authorized collection schemes for the collection and recycling of WEEE, batteries and packaging across Europe. These conduct regular on-site audits of all contracted recyclers to ensure compliance and prevent illegal shipments outside the EU. Sony engages authorized partners that undertake recycling on behalf of manufacturers to ensure our products are recycled in a compliant manner, in accordance with European Directives and country specific regulations. In 2022, Sony financed the costs of recycling approximately 20,396 metric tons\\* of end-of-life products and packaging in Europe. In collaboration with other manufacturers, Sony discloses relevant information on components that require special treatment for product categories placed on the market in Europe for recyclers to facilitate safe recycling.\n[IMAGE CAPTION] TV being dismantled at Green Cycle Corporation\nSony is a member of the PC3R Promotion Association and collects and recycles used PC products under the industrywide collection and recycling scheme operated by the association. The results of the association’s collection and recycling efforts are published on the association’s website (link below).\nIn fiscal year 2022, Sony collected and recycled a total of approximately 15 thousand units, for a total weight of approximately 80.2 metric tons. From these items, about 58.7 metric tons of materials were reused, including metal, plastic, and glass parts.\n\\* End-of-life products and packaging in fiscal year 2022 does not include certain countries, such as Portugal, France, and Poland.\n### Recycling Activities in North America\n### Recycling Activities in Pan Asia\nAs a member of the Call2Recycle Program,\\* SEL recycles rechargeable batteries free of charge in line with the program’s recycling scheme.\nSony Electronics Inc. in the United States and Sony of Canada Ltd. continue to contribute to the development of the recycling infrastructure in North America. All recycling and support activities are committed to a responsible recycling process that support state and provincial legislation and voluntary initiatives.\nThe operations of Sony in the Pan Asia region stretch from Middle East to New Zealand. Throughout the region, Sony offices and manufacturing locations continually work to ensure that the recycling needs of the local community are met. In terms of national electronic waste recycling legislation, Sony actively works with local partners to ensure that local requirements are met.\n\\* Call2Recycle is a nonprofit public service organization that conducts and manages rechargeable battery recycling programs and provides related consulting services in the United States and Canada.\nSony Take Back Recycling Program Call2Recycle\n### Recycling Responsibly", "chunk_word_count": 476, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Sony’s Recycling Compliance Systems", "document_id": "Sony Sustainability Report 2023", "page": 66, "page_start": 66, "page_end": 67 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 74, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### United States: Promoting of the Sony Take Back Recycling Program\nIn addition to conducting its own independent audits of recyclers and the downstream processing firms to which they subcontract, SEL has set forth a recycling policy whereby all recyclers it does business with must obtain Responsible Recycling (R2) or e-Stewards certification. R2 and e-Stewards are certification systems for recyclers organized in part by the U.S. Environmental Protection Agency (EPA) that evaluate such factors as environmental management performance and workplace environment.\n### India: Working with a Local Partner to Collect and Recycle E-Waste\nSony Electronics Inc. (SEL) continues to promote the Sony Take Back Recycling Program, which was put in place to increase recycling rates for used electronics in compliance with individual state laws and regulations. Through this program, SEL works with recycling companies across the United States to allow consumers to drop off Sony products at designated collection centers free of charge. In fiscal year 2022, these collection centers and through compliance channels collected approximately 7,771 metric tons (17.13 million pounds) of used consumer electronics. This equates to recycling $0 . 2 3 \\mathsf { k g }$ for every 1 kg of electronics sold.\nIn order to ensure compliance with E-Waste Management Rules, 2016 and amendments, Sony India has partnered with a leading third party company for channelization of e-waste which includes collection and recycling of e-waste. In fiscal year 2022, Sony India collected and recycled approximately 5,179 metric tons of e-waste internally and through the third party partner. Additionally, Sony India focused on raising awareness regarding environmentally safe disposal of E-waste and encouraged end-consumers to submit their end of life Sony Products to the broad network of e-waste collection points established by Sony India for their safe disposal. In fiscal year 2022, Sony India launched the awareness campaigns through newspapers and social media. Pan India circulation of newspapers reached more than 4.2 million readers and awareness video on social media received more than 7.5 million views in total. Sony India continues to review results and formulate future plans accordingly.", "chunk_word_count": 350, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > United States: Promoting of the Sony Take Back Recycling Program", "document_id": "Sony Sustainability Report 2023", "page": 67, "page_start": 67, "page_end": 67 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 75, "chunk_text": "# SONY\n## DRIVING AMBITIOUS CORPORATE CLIMATE ACTION\n### Canada: Working with Provincial Governments to Support Electronics Recycling Programs\nSEL also manages a website that provides consumers with information about the program and the importance of recycling. The website provides consumers with useful recycling information that helps bolster recycling rates for used electronics through a variety of features, such as a search function to find nearby recycling centers.\nSince the first provincial program was launched in 2004, Sony of Canada Ltd. (Sony Canada) has worked with provincial governments to set up recycling programs for end-of-life products. From 2008 through 2015, Sony Canada operated an expanded recycling program for small electronics equipment across Canada by enabling consumers to take such products to its retail partners across the country. More recently, compliance obligations with provincial programs matured to deliver appropriate collection opportunities for consumers through the Electronic Products Recycling Association (EPRA). Consumers and businesses can drop off their end-of-life electronics free of charge for responsible recycling at an EPRA-authorized drop-off location in nine provinces. In addition, Sony Canada is a founding and current active member of Electronics Product Stewardship Canada (EPSC). EPSC is comprised of leading electronics manufacturers who work to design, promote and implement sustainable solutions for end-of-life electronics.\n[IMAGE CAPTION] Sony Take Back Recycling Program collection activity (United States)\n## ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT\n### Australia: Participating in the “National Television and Computer Recycling Scheme” (NTCRS)\n### Recycling Programs in Latin America\n[IMAGE CAPTION] “ART” campaign logo\nSony encourages the customers to recycle their products under each recycling program in countries existing the takeback and recycling regulations. In Mexico, Sony handles the individual WEEE take-back and recycling scheme through 6 collection points, and complies with the recycling regulation based on producer responsibility. In Colombia, Ecuador and Peru, Sony belongs to a collective scheme promoting WEEE take-back and recycling, and complies with the recycling regulation. Further, in Chile, Sony belongs to a voluntary WEEE take-back program.\nSince 2012, Sony Australia has been taking part in a recycling scheme with partners accredited by the Australian federal government under new home appliance recycling legislation, specifically the “National Television and Computer Recycling Scheme”. Under the recycling system, Sony Australia has been making a concerted recycling effort over this period of time. From July 2022 through June 2023, approximately 4,415 metric tons of discarded televisions, computers, printers and computer peripherals had been recycled as Sony’s share of the total amount recycled.\nAlso, in Colombia and Chile, Sony is participating in the collective take back program for containers and packaging. These collective programs seek to continue the path to the recycling of containers and packaging within the framework of the existing regulation.\n### Korea: “ART” (Action Really Together) Campaign\n### Recycling Activities in Latin America", "chunk_word_count": 459, "section_path": "SONY > DRIVING AMBITIOUS CORPORATE CLIMATE ACTION > Canada: Working with Provincial Governments to Support Electronics Recycling Programs", "document_id": "Sony Sustainability Report 2023", "page": 67, "page_start": 67, "page_end": 68 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 76, "chunk_text": "# SONY\n## ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT\n### Recycling Activities in China\nSony has offices in a number of Central and South American countries, including Argentina, Bolivia, Chile, Colombia, Ecuador, Mexico, Panama and Peru. These offices operate recycling programs designed to meet the needs of their particular areas. Here we introduce a joint project operated throughout Latin America as well as representative examples of Sony commitment to recycling initiatives.\nIn Korea, the recycling law has been in place since 2003 and covers electronics, battery as well as packaging. Sony Korea has been working with related associations to collect the specific volume assigned by the government annually. In addition, to educate and encourage employees and local community to play their parts in e-waste recycling, Sony Korea has initiated the “Zero Waste Campaign” in Korea since 2012. This initiative has since been extended to Sony Group companies, neighbors and friends of Sony employees as well as other organizations. Hence, the campaign was renamed “Action Really Together (ART)” in 2016 to emphasize the importance of taking actions together for a good cause, regardless of brands. Besides collecting end-of-life products for recycling, Sony Korea also collects unwanted used products in good working condition and donates them to a local NGO.\n### Compliance with Regulations on Recovery Processing of Waste Electrical and Electronic Products (China WEEE)\nIn 2011, China enacted the Regulations on Recovery Processing Waste Electrical and Electronic Products. The regulation mandates the recycling of five types of products: televisions, refrigerators, washing machines, air conditioners and PCs, and obliges manufacturers and importers to contribute to a fund that is used to cover the cost of processing of waste electrical and electronic products. In compliance with the regulations, Sony (China) Limited makes regular contributions to the fund.\n### Sony Joint Project: Green Service Program\nSince 2010, Sony sales companies in Latin America-including Sony Inter-American, Sony Chile, Sony Argentina and Sony Bolivia gradually launched the Green Service Program. Under this initiative, using participating companies’ service networks, products and components that are under warranty but discarded during repair are appropriately treated. Also the e-waste generated by Sony sales companies facilities in Latin America are appropriately treated under this program as well. This program marks a shift in focus from simple disposal to the proper management and repair of products, helping Sony fulfill its responsibility to reduce the environmental impact of its products after they are sold and respond to the expectations of customers. In fiscal year 2022, approximately 33 metric tons of e-waste was collected and processed appropriately. Going forward, the companies will continue to implement the Green Service Program.\n“ART” (Action Really Together) Campaign in Korea", "chunk_word_count": 440, "section_path": "SONY > ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT > Recycling Activities in China", "document_id": "Sony Sustainability Report 2023", "page": 68, "page_start": 68, "page_end": 69 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 77, "chunk_text": "# SONY\n## ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT\n### Environmental Communication\nSIE planted over 600,000 trees and supported ecological restoration projects, such as planting wildflower meadows and coastal seagrass, through cooperation with partners worldwide.\nIn 2018, Sony Pictures Television (SPT) and the United Nations Foundation launched the “Picture This” short film competition in order to raise awareness of the Sustainable Development Goals (SDGs). For the fiscal year 2022 competition, the World Photography Organisation joined SPT and the United Nations Foundation, seeking entries that encouraged viewers to take action to achieve the SDGs. The competition received a total of 487 submissions from video creators across the globe. The official website has been accessed by over 50,000 people, with more than 3 million impressions on social media and engagement in excess of 150,000, which indicates that a vast number of people have taken this opportunity to learn more about the SDGs. On behalf of Sony Music Entertainment (UK), the Sony Music Group has joined the Music Climate Pact in 2021 to share insights on combating climate change and promote decarbonization efforts across the music industry. In 2022, together with other smaller indie labels, Sony Music Entertainment (UK) participated in a study conducted by the British Phonographic Industry to establish a foundation to obtain the most accurate benchmark for music’s carbon footprint.\n### Worldwide Environmental Communication\nThrough hosting special events and supplying special content, Sony is helping to raise the environmental awareness of society. Sony provides a wide variety of stakeholders with environmental information in an accurate, timely and continuous manner.\n\\* PGA Tour is the US men’s professional golf tour.\n### Taking Advantage of Sony Events to Raise Environmental Awareness", "chunk_word_count": 277, "section_path": "SONY > ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT > Environmental Communication", "document_id": "Sony Sustainability Report 2023", "page": 69, "page_start": 69, "page_end": 69 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 78, "chunk_text": "# SONY\n## ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT\n### Environmental Activities Leveraging Entertainment Business\nSony presented at CEATEC 2022, a technology trade show held in Japan, where we introduced a diverse array of technologies that contribute to the environment under the theme, “To Continue to Share Kando (Emotion) on the Earth.” from the three perspectives of “The Planet,” “Society,” and \"People.” For “The Planet”,” we showcased our experimental space photography simulator and other highlights of STAR SPHERE, the project aiming to deliver inspiring space experiences across the globe. For “Society,” we presented the SUV prototype “VISION-S 02,” based on a new concept in mobility that helps solve environmental issues. For “People,” we shared Sony’s Original Blended Material, a paper material developed to create opportunities to consider the ways to reduce environmental impact, and that material was used to construct our booth and display fixtures. Since 2015, Sony Electronics Inc. (SEL) in the United States has worked with partners to conduct the Sony Open in Hawaii, a PGA Tour event\\* with an environmental focus. In 2023, we continued sustainability initiatives at the tournament to reduce the overall environmental footprint of the event—reusing structural material, diverting waste through recycling, and encourage energy and water conservation. SEL provided reusable water bottles to the large number of volunteers that support event functions to further reduce plastic waste, and provided bike valet service to facilitate attendees making use of environmentally conscious transportation. In conjunction with the Sony Open, a recycling event was held for local residents, providing a convenient way to responsibly recycle unwanted consumer electronics.\nSony capitalizes on its influential entertainment business to promote environmental activities.\n\\* Playing for the Planet is an international initiative launched by the United Nations Environment Programme (UNEP) to rally the game industry to combat climate change.\nAs part of the United Nations Playing for the Planet alliance\\* Green Game Jam 2022, Sony Interactive Entertainment (SIE) partnered with environmental organizations on reforestation and restoration projects as part of activities supporting the launch of its action-adventure game Horizon Forbidden West, created by Guerrilla. In addition, around 270 gamers designed their own environment games in Dreams. In total,\n[IMAGE CAPTION] Key visual of the 2022 Picture This\n[IMAGE CAPTION] Sony’s booth at CEATEC 2022 (photo by Masaya Yoshimura).\n[IMAGE CAPTION] Raising awareness of ecosystem restoration through Horizon Forbidden West\nSIE’s key environmental initiatives in 2022 Report on the 2022 Picture This The Sony Music Group joins the Music Climate Pact", "chunk_word_count": 408, "section_path": "SONY > ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT > Environmental Activities Leveraging Entertainment Business", "document_id": "Sony Sustainability Report 2023", "page": 69, "page_start": 69, "page_end": 70 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 79, "chunk_text": "# SONY\n## ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT\n### Environmental Communication Through the Corporate Websites\nproducts as well as the group’s environmental targets in new product announcement videos. Additionally, in 2022, we held an event for the LinkBuds wireless headphones series in Shanghai, China that was organized around environmental themes. At the event, visitors tried out LinkBuds to take part in a new auditory experience called “Always On” as they made a reusable shopping bag or participated in an exhibition about Synecoculture™, which creates a rich ecosystem through new farming methods. Through these, we were able to communicate the intrinsic appeal of our products while also helping people understand Sony’s environmental initiatives.\nSony regularly shares environmental information on the websites and social media of our group companies. To celebrate Earth Day on April 22, we introduced a limited time Earth Day home screen for the website of our group headquarters, the Sony Group Corporation, along with a message from the CEO and information summarizing environmental measures taken by group companies. During that time, other group company websites and social media accounts also focused on sharing environmentally conscious products and initiatives.\n### Management of Risks Related to Chemical Substances\nAs a company that uses chemical substances, Sony discloses information on emissions of such substances and exchanges views on safety and environmental issues with residents in the vicinity of its sites, as well as with local authorities, with the aim of reinforcing mutual understanding.\n[IMAGE CAPTION] \\* Synecoculture is a trademark of Sony Group Corporation. The Earth Day home page of Sony Group Corporation’s website\nFor instance, Sony Semiconductor Manufacturing Corporation actively participates in local community events and organizes its own interactive events at all of its plants. The company also holds tours of its manufacturing plants, during which it explains to visitors how wastewater is processed by environmental-related equipment.\n[IMAGE CAPTION] Visitors making reusable bags while wearing LinkBuds at the event in Shanghai, China\n### Stakeholder Engagement\nSony is active in a wide range of fields, and its stakeholders have diverse expectations. In order to promote a healthy, spiritually abundant, sustainable society, Sony is deeply committed to stakeholder engagement, a process whereby it seeks to earn greater trust from stakeholders and cooperate with them to achieve common aims.\nPartnership and Participation in Multi-Stakeholder Frameworks\n### Raising the Environmental Awareness of Employees\nSony shares information on environmental issues with employees of the global Sony Group. All Group employees in Japan are required to take an environmental e-learning course, and the teaching materials from the course are being used to conduct environmental education at business sites outside of Japan. Sony is raising the environmental awareness of Group employees worldwide, using channels such as the corporate intranet to provide timely environmental information. Sony conducts events and educational activities for employees at its business sites around the world, to introduce environmental issues and Sony’s environmental initiatives. For example, in 2022, Sony conducted online seminars on the issues of environmentally conscious food for all employees in Japan.\n### Environmental Communication Through Marketing\nSony promotes environmental communication by sharing environmental information with consumers through product websites, stores, displays and other marketing activities.\nFor example, we introduce environmental considerations taken for", "chunk_word_count": 532, "section_path": "SONY > ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT > Environmental Communication Through the Corporate Websites", "document_id": "Sony Sustainability Report 2023", "page": 70, "page_start": 70, "page_end": 71 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 80, "chunk_text": "# SONY\n## ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT\n### Overview\nstrategies of each business segment, and Sony Computer Science Laboratories, which conducts research activities for the future of humanity and the planet, we established the following: Sony Research, which leads the development of large-scale AI models and undertakes extremely challenging projects, Technology Infrastructure Center, which strengthens fundamental technologies for the entire group and deploys technologies to each business unit, and an organization dedicated to technology promotion and deployment, which takes R&D findings and ideas with limited applicability to existing businesses and works to see them deployed in society and business. To create technology that brings kando (emotion) to diverse range of people, we also emphasize diversity within our organization. In addition to conducting R&D activities at multiple sites across Japan, China, India, Europe, and the United States, each taking advantage of regional characteristics and strengths, we will continue to recruit talented researchers from around the world. These diverse organizations constitute the Sony R&D ecosystem which aims to contribute towards creating value for the Sony Group, and we will further strengthen our collaborations with creators as well as academia to pioneer a better future together.\n### Basic Approach\nSony conducts research and development as a creative entertainment company with a solid technological foundation with the aim of “filling the world with emotion through the power of creativity and technology.” Sony believes it is essential to understand the motivations of creators and users in order to fulfill its management objective of creating technology that gets closer to people. To help solve the problems faced by humanity, society, and our planet, we will contribute through Sony Group’s diverse products, content and services, which people and technology are constantly improving.\nTechnology\n### Technology That Inspires Emotion\n### Structure\n### R&D\n### Sony Computer Science Laboratories\nBased on Sony Group’s R&D mission to “Push our civilization forward and make this planet sustainable” and the direction of our technology—“We are here for creators”, we consider all people who pioneer the future as creators, including researchers and entrepreneurs, and we are engaged in research and development activities to expand their creativity. Sony is prioritizing R&D that enables creators to fully apply their creativity and convey their ideas to diverse users around the world. The three domains of sensing, AI, and the digital virtual world, as well as integration among them, will be the core to realize this. In addition, by developing large AI models to accelerate progress in these three domains, Sony will transform itself as an AI- and data-driven company.\nSony Computer Science Laboratories, Inc. (Sony CSL) was established in 1988 to pioneer new research fields and paradigms, as well as new technologies and businesses, for the good of humanity, society and our planet. Sony CSL gives free rein to its researchers and is committed to creating a better future via creative and imaginative research. As of 2023, Sony CSL is researching a diversity of themes at its laboratories in Tokyo, Paris, Kyoto and Rome, ranging from social issues in areas such as ecosystems, urban planning, and energy to augmentation of human capabilities and creativity. It strives to channel the fruits of its research back into society.", "chunk_word_count": 530, "section_path": "SONY > ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT > Overview", "document_id": "Sony Sustainability Report 2023", "page": 71, "page_start": 71, "page_end": 71 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 81, "chunk_text": "# SONY\n## ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT\n### Sony CSL\nIn pursuing this technology strategy, we strengthened our R&D structure effective April 2023. In addition to R&D sections of each business unit, which will support the medium- to long-term business\n### Sony Research\n### Sony Research Award Program\nSony Research Inc. was founded in April 2023 with the mission to “pioneer the future of creation.” It undertakes the research and development of disruptive technologies that aims to empower creators around the world to maximize their creativity, IP value, and fan engagement. Sony Research defines creators in the largest possible sense and aims to develop technology that can also make fundamental societal contributions. The company includes Sony AI, which was founded in 2020 and will initially focus on projects in the realm of sensing, AI, and digital virtual spaces. Going forward, the scope of research will be expanded to include new fields and challenges. Recognizing the power and influence that AI can have on society, Sony Research aims to contribute by developing AI that is responsible, fair and transparent.\nSony Research Award Program is an open innovation program for research and development. The program is open to universities and research institutions in North America, Europe, and India, and calls for research proposals, sponsoring grant awards recipients with research funding and opportunities to collaborate with Sony’s diverse R&D organizations. Launched in 2016 for North American universities, the program has expanded to cover more regions and research institutions and granted awards to a total of 134 research projects by FY2022. It contributes to making Sony’s R&D advanced and promoting R&D on innovative technologies and their implementation in society on a global scale.\n### Sony Startup Acceleration Program\n### Sony Innovation Fund\nSony has participated for many years in the global ecosystem for creating new businesses and supporting the business growth of venture companies. It established the Sony Innovation Fund in 2016, the Innovation Growth Fund in 2019, the Sony Innovation Fund: Environment in 2020 to support companies tackling global environmental issues, and in 2021 launched an innovative program to support ESG initiatives by companies that it invests in. Sony Ventures Corporation, established in July 2021, launched Sony Innovation Fund 3 L.P. in February 2022. This new investment fund, which completed a final closing with a total of 26.5 billion yen, invests in venture companies in industries that are expected to show strong growth. The new fund brings the total Assets Under Management (AUM) to over 60 billion yen. Sony Innovation Fund 3 L.P. is intended to contribute to social progress and the creation of sustainable societies via ESG-focused investment and support for venture companies.\n## SONY RESEARCH AWARD PROGRAM\n### Sensing Solution University Collaboration Program (SSUP)", "chunk_word_count": 453, "section_path": "SONY > ELECTRONIC WASTE (“E-WASTE”) MANAGEMENT > Sony CSL", "document_id": "Sony Sustainability Report 2023", "page": 71, "page_start": 71, "page_end": 72 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 82, "chunk_text": "# SONY\n## SONY RESEARCH AWARD PROGRAM\n### Sony Research\nSensing Solution University Collaboration Program (SSUP) is a program that, with the keywords of “Sensing” and “Collaboration,” offers joint research and research support through the free lending of research equipment for research themes that use Sony Semiconductor Solutions Corporation’s sensing solutions, as well as related activities to encourage co-creation and to support education. It aims to create a better future and bring surprise and excitement to people, sensing the world with Sony’s devices such as low-power consumption microcontroller computers and cameras, to create solutions for real-world problems as well as in the entertainment world. Beginning in 2019, SSUP has globally conducted joint research with 45 university laboratories (32 in Japan and 13 overseas) by FY2022.\nSony Establishes Sony Research to Undertake Unprecedented Disruptive Research in Sensing, AI and Digital Virtual Spaces\n### Program\n### Sony Startup Acceleration Program (SSAP)\nThe Sony Startup Acceleration Program (SSAP) was launched in 2014 as a program to support the creation and operations of new businesses within Sony, and began providing services outside the company from FY2018. With Sony’s employees serving as experienced accelerators, SSAP provides seamless support from ideation to commercialization for Sony group companies, external organizations (including major corporations), venture companies, SMEs, non-profits (NPOs), and educational institutions. Thus far, SSAP has provided new business acceleration services in more than 300 cases to hundreds of companies across 22 industries, creating 25 new businesses from scratch, with over 400 people using its incubation program. SSAP engages in open innovation with companies and organizations, and aims to bring people’s ideas to life and create an affluent and sustainable society.\n### Sony Innovation Fund\n[IMAGE CAPTION] Sony Startup Acceleration Program (in Japanese)\nSensing Solution University Collaboration Program (SSUP)\n### STAR SPHERE, a New Look at Earth", "chunk_word_count": 299, "section_path": "SONY > SONY RESEARCH AWARD PROGRAM > Sony Research", "document_id": "Sony Sustainability Report 2023", "page": 72, "page_start": 72, "page_end": 73 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 83, "chunk_text": "# SONY\n## SONY RESEARCH AWARD PROGRAM\n### Technology for Sustainability\nCombining these technologies enables sensing all around the world, even in locations where humankind is not active. The data from such sensing can be collected by low earth orbit satellites and the necessary information relayed to human society via AI processing. Sony calls this concept “MIMAMORI” and is engaged in research and development to make this mechanism to change human behavior patterns a reality. Within frameworks such as a comprehensive alliance with the Japan International Cooperation Agency (JICA), and the Social Innovation Division for Planetary Boundary jointly established with Hokkaido University, Sony is collaborating with external partners in joint research and trials at various locations around the globe. In March 2023, Sony signed a letter of intent with Thailand’s Geo-Informatics and Space Technology Development Agency (GISTDA) to work towards building a system to alleviate damage caused by natural disasters. These projects will help to prevent environmental destruction and predict emergencies such as river flooding and wildfires, as well as increase agricultural and livestock productivity.\nIn August 2020, Sony announced that it would begin developing a nanosatellite that could be operated from the ground to capture the earth and stars. Development has been completed under a joint demonstration agreement with the Japan Aerospace Exploration Agency (JAXA) and the University of Tokyo.\nUntil now, space missions have been used mainly for industrial purposes such as planetary exploration or space communication and surveys, and only a few people, such as astronauts, have experienced manned space flights. Believing that it is important for ordinary people to experience the universe for themselves and see Earth in a new light, as a planet in space, to help humanity create sustainable societies and find solutions to environmental issues, Sony, the University of Tokyo, and JAXA founded the STAR SPHERE project. In January 2023, STAR SPHERE’s nano satellite “EYE” was launched from Florida, USA. “EYE” uses water as an environmentally conscious propellant, and it can maneuver to a certain extent. The satellite is currently in orbit around the Earth, and assessments are being conducted in preparation for deploying the service. By allowing the general public to discover unfamiliar aspects of the Earth and stars, such as the expressive colors of the aurora, STAR SPHERE will give people more opportunities to learn about our planet and environment.\nSony regards working to realize a sustainable society as a key theme and is conducting technological development to solve both environmental and social issues.\n### Projects", "chunk_word_count": 415, "section_path": "SONY > SONY RESEARCH AWARD PROGRAM > Technology for Sustainability", "document_id": "Sony Sustainability Report 2023", "page": 73, "page_start": 73, "page_end": 73 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 84, "chunk_text": "# SONY\n## SONY RESEARCH AWARD PROGRAM\n### IoT for a Sustainable Society: Sony’s Earth MIMAMORI platform\nIn order to realize a sustainable society, it is necessary to constantly protect various regions such as mountain forests, satoyama (woodlands surrounding rural settlements), rivers, and coasts. Furthermore, it requires the detection of anomalies to prevent problems from arising, instead of addressing environmental issues after they have already arisen. Such systems can only be realized through the ability to acquire and transmit data in a global sensor network extending to mountainous and coastal areas not serviced by conventional mobile networks. They also require devices and networks that can function in areas where electricity service is difficult. Sony has a range of technologies to realize these systems:\n[IMAGE CAPTION] “MIMAMORI,” a proposed global sensing solution to detect anomalies and take preventative action\n[IMAGE CAPTION] Picture taken by the nano satellite “EYE”\n• IMX500, an intelligent vision sensor equipped with AI processing functionality \n• Low-power edge AI devices such as SPRESENSE™ that offer advanced sensing in a battery-powered device \n• ELTRES™-compatible radio signal processing technology that enables low power and low bit rate data transmission with a range of over $1 , 0 0 0 { \\mathrm { k m } }$ \n• Prediction One, an analysis tool that makes useful predictions from the data collected \n• A wafer-level diode-pumped solid-state surface-emitting laser, which can be used in atmospheric monitoring to sense particles invisible to the eye \nand more besides.\n### Sony’s Earth MIMAMORI platform\n## ELTRES™\nNews Release: Wireless Experiment System Compatible with Sony’s Proprietary Low-Power Wide Area (LPWA) Communications Standard ELTRES™ Successfully Received Signal in Space (in Japanese)\n### STAR SPHERE Space Inspiration Project\nPrediction One (in Japanese)\n(Series) Unleash Space! STAR SPHERE Project Background (in Japanese)\nNews Release: Hokkaido University and Sony Group Open the “Social Innovation Division for Planetary Boundary”\n### Synecoculture™\\* and Augmented Ecosystems\nSynecoculture™ and Augmented Ecosystems New Company Founding: SynecO, Inc.\nConventional agriculture largely focuses on increasing productivity from a single crop by plowing topsoil, spreading fertilizer, and applying agrochemicals. These practices damage ecosystems and cause environmental problems. Sony CSL successfully conducted demonstration tests for Synecoculture, a new agricultural practice that balances productivity and biodiversity, moving closer toward sustainability. Synecoculture is already being used in the Sahel region in Africa and has the potential to have a major global impact by contributing to desert greening and helping local economies around the world.", "chunk_word_count": 404, "section_path": "SONY > SONY RESEARCH AWARD PROGRAM > IoT for a Sustainable Society: Sony’s Earth MIMAMORI platform", "document_id": "Sony Sustainability Report 2023", "page": 73, "page_start": 73, "page_end": 74 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 85, "chunk_text": "# SONY\n## ELTRES™\n### NOS-DX1000 Next-gen Olfactometry System Contributing to Longevity with Proprietary Odorant Control Technology\nAccording to a report by Japan’s Ministry of Health, Labour and Welfare, one in five elderly people in Japan will have dementia in 2025, making it critical to detect the disease early and control its progression. Several studies report that a drop in olfactory ability is one of the symptoms that heralds the onset of Alzheimer’s disease or Lewy body dementia. This indicates that olfactometry could play a role in the early detection of the disease.\nSynecoculture eliminates the need for the plowing, fertilizing, and agrochemical use that impact the environment, by taking maximum advantage of the material cycling that occurs naturally in ecosystems, aiming to create rich ecosystems with a diverse mix of plants that coexist together and grow lushly. The importance of building ecosystems with a high degree of biological diversity and functionality is increasing in response to climate change, food crises, and pandemics. Synecoculture provides a fundamental solution to such global agenda. Sony CSL is also working to supply new value through augmented ecosystems, which expand the applications for Synecoculture beyond food production to the creation of ecosystems with diverse objectives and functions. The project supports education to enhance the understanding of natural environments and adds new value to the basic infrastructure of urban and living spaces. Building on this project, Sony founded SynecO Inc. to create sustainable environments and industries based on the renewable natural capital in which society should be rooted.\nIn March 2023, Sony Corporation released the NOS-DX1000 Next-gen Olfactometry System. Previous methods of measuring the sense of smell had drawbacks such as requiring 30 or more minutes for measurement, contaminating rooms with odors, or only being usable in certain facilities. Sony’s product uses the proprietary Tensor Valve™ technology, which prevents odor leakage to digitally transform processes of smell testing and measurement in an easy-to-use manner. The device contains deodorizing mechanism that suppresses odor contamination, enabling olfactometry to be carried out anywhere. Sony plans to contribute to extending longevity in a super-aged society by introducing the Next-gen Olfactometry System for diagnosis in hospitals and clinics in the near future, and will continue to contribute to otorhinology and neurology going forward by providing simpler and more accurate olfactometry.\n\\* Synecoculture is a trademark of Sony Group Corporation.\n[IMAGE CAPTION] Olfactometry with the NOS-DX1000\n[IMAGE CAPTION] Method of open-field agriculture and augmenting ecosystems by utilizing the self-organizing power of the ecosystem", "chunk_word_count": 412, "section_path": "SONY > ELTRES™ > NOS-DX1000 Next-gen Olfactometry System Contributing to Longevity with Proprietary Odorant Control Technology", "document_id": "Sony Sustainability Report 2023", "page": 74, "page_start": 74, "page_end": 75 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 86, "chunk_text": "# SONY\n## ELTRES™\n### Products\nthey need to efficiently develop and deploy solutions. The platform supports partners in efforts to build optimal systems in which the edge and the cloud function in synergy and address global environmental issues, thereby helping to solve issues with cloud systems. Demonstration tests with AITRIOS and the IMX500 are underway in fields such as local government, retail, and manufacturing. One such test is a project in Rome to solve social issues. In Rome, drivers searching for parking spaces cause traffic jams, leading to air pollution. Overcrowded buses and traffic accidents involving jaywalkers are also issues. In an effort to solve this, edge devices (AI cameras) with IMX500 sensors are being used in a demonstration test in collaboration with a local application development partner.\nbe purchased without professional prescription or intervention for people with perceived mild to moderate hearing loss over the age of 18. In the U.S., the low prevalence of hearing aid use is an issue. Less than $20 \\% ^ { \\star }$ of people aged 20–69 who need hearing aids actually wear them. Some studies show that hearing loss may increase the risk of developing dementia, which means hearing care is an important issue to address to extend people’s healthy life expectancy. The advantages of OTC hearing aids are price affordability, ease of purchase at mass retailers or online stores, and easy self-fitting. During the initial stage of product development, we considered we could apply Sony’s headphone designs to hearing aids, but we found that people with hearing loss have unique needs and challenges through a series of in depth interviews. Based on these findings, we created discreet, sleek and ergonomic designs to encourage people to want to wear the hearing aids, and developed a user-friendly smartphone app for improved usability.", "chunk_word_count": 300, "section_path": "SONY > ELTRES™ > Products", "document_id": "Sony Sustainability Report 2023", "page": 75, "page_start": 75, "page_end": 75 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 87, "chunk_text": "# SONY\n## ELTRES™\n### Edge AI Solutions to Help Solve Social Issues\nIn May 2020, Sony Semiconductor Solutions Corporation (SSS) announced the commercial release of its IMX500 intelligent vision sensors, the first image sensors in the world to be equipped with AI processing functionality. They feature a stacked configuration consisting of a pixel chip and logic chip, which are key technologies of SSS image sensors. The logic chip is equipped with SSS’s proprietary DSP (Digital Signal Processor) dedicated to AI signal processing, and embedded memory for the AI model.\nThe spread of the IoT has made cloud AI processing systems commonplace. However there is concern that this will lead to increased $\\mathsf { C O } _ { 2 }$ emissions as IP traffic and data center electricity consumption rise due to higher data volumes from the growing number of IoT devices. Edge AI processing addresses these problems by processing and analyzing data on the devices themselves.\nAnother test is being conducted in the field of logistics. SSS and NEC Corporation have been collaborating since December 2022 to demonstrate an edge AI sensing solution using edge devices (AI cameras).\nUnused shelf space is rendered visible with edge AI and combined with inbound and outbound logistics data in a system that can reduce work by advising warehouse workers how to use shelf space optimally. The trend in commerce toward online platforms is leading to increasingly significant shortages of personnel and processing capacity in the logistics industry. Sony will use the knowledge gained from demonstration tests to work toward implementing the technology in the logistics industry and alleviate worker shortages by facilitating digital transformation.\nWe will continue to combine Sony’s technologies and expertise in the development of OTC hearing aids with the aim of providing hearing experiences that deliver “Anshin” and “Kando” to enrich human life.\nSSS developed the IMX500 to be capable of outputting the desired metadata as semantic information. Only necessary data is extracted, reducing data transmission latency, power consumption, and communication costs. Privacy concerns are also addressed by not outputting information that can identify an individual.\n\\* Quick Statistics About Hearing. (2021, March 25). www.nidcd.nih.gov. Retrieved October 11, 2022, from https://www.nidcd.nih.gov/health/statistics/quickstatistics-hearing\nSony and WS Audiology Have Entered into a Partnership Agreement in the Over-the-Counter Self-Fitting Hearing Aid Business \nAiming for Over the Counter (\"OTC\") hearing aids where everyone can share the moment,for richer conversations and experiences \nSony Electronics Launches its First Over-the-Counter Hearing Aids in the US and Makes Hearing and Improved Accessibility Options for Consumers a Reality\n[IMAGE CAPTION] AITRIOS edge AI sensing platform\n\\* AITRIOS and AITRIOS logos are the registered trademarks or trademarks of Sony Group Corporation or its affiliates.\n[IMAGE CAPTION] CRE-E10 OTC Hearing Aids\n### OTC (Over the Counter) Hearing Aids\nIn late 2021, Sony launched the AITRIOS™\\* AI sensing platform to accelerate the development of solutions using the IMX500 and various other image sensors. AITRIOS is a one-stop platform that provides various partners involved in development with all the features\nSony Corporation’s self-fitting OTC hearing aids were launched in the U.S. in October 2022, in partnership with WS Audiology. OTC hearing aids are newly approved hearing aids in the U.S. that can\n### Material\n### Services and Systems", "chunk_word_count": 536, "section_path": "SONY > ELTRES™ > Edge AI Solutions to Help Solve Social Issues", "document_id": "Sony Sustainability Report 2023", "page": 75, "page_start": 75, "page_end": 76 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 88, "chunk_text": "# SONY\n## ELTRES™\n### News Release: Relaxing Wear Using Triporous™ Selected for ISS Mission (in Japanese)\n### Licensing of Triporous™\n### Implementing Open Xchange Systems in Society\nTriporous is a plant-based porous carbon material with excellent adsorption qualities. Sony obtained end-to-end patents on this material and began licensing Triporous in 2019. Triporous is made from rice husks, of which Japan alone generates around two million metric tons per year, and this excess biomass is part of approximately 100 million metric tons generated annually worldwide. Manufacturing Triporous can reduce air pollutants and greenhouse gases more than using incinerator disposal. Thanks to its microstructure derived from rice husks, Triporous has unique adsorption properties different from those of conventional activated carbon. Using filters containing Triporous instead of activated carbon to recycle water takes advantage of Triporous’s superior adsorption properties, reducing system costs and waste by allowing filters to be changed less frequently. This has been demonstrated in cooperation with a water treatment equipment manufacturer. Triporous is also being put to use in deodorizing, antimicrobial fibers for apparel and in cleansers for healthcare. Clothes containing Triporous were even selected for use on the International Space Station. Sony will work with partners to apply Triporous to solve a variety of social issues and help to bring about a more environmentally conscious, recycling-oriented society.\nSony Computer Science Laboratories, Inc. (Sony CSL) is conducting research, development, and demonstrations with its Open Xchange Systems $( \\mathsf { O } \\mathsf { X } \\mathsf { S } )$ to promote decarbonization and biodiversity conservation through climate change mitigation. OXS combine Sony CSL’s decentralized Open Energy Systems™ (OES) and educational programs including tools that visualize carbon dioxide emitting behaviors in daily activities. With these technological and design approaches, OXS aims to accelerate the use of renewable energy and trigger behavior changes that would lead to decarbonization. One of the main actions taken with OXS was to publish the source code for the Autonomous Power Interchange System (APIS), the core module of the OES, as open-source software in 2020. In July 2021, the UMABA Project was commenced. This new power-sharing demonstration, which linked storage batteries and EVs over an AC network, was conducted by an industry-academia-government consortium investigating environmentally conscious working vacations. The project is based in Umaba School Cottage, a working vacation facility in Miyoshi, Tokushima Prefecture, and is working to facilitate decarbonization in the area.", "chunk_word_count": 398, "section_path": "SONY > ELTRES™ > News Release: Relaxing Wear Using Triporous™ Selected for ISS Mission (in Japanese)", "document_id": "Sony Sustainability Report 2023", "page": 76, "page_start": 76, "page_end": 76 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 89, "chunk_text": "# SONY\n## ELTRES™\n### Outside Sales of SORPLAS™ Recycled Plastic\nSony commenced outside sales of its proprietary Sustainable Oriented Recycled Plastic (SORPLAS)\\* in 2014. SORPLAS is a flame-retardant recycled plastic that offers excellent heat resistance, durability, and recyclability. It contains up to $9 9 \\%$ recycled materials. SORPLAS was first used in Sony products in 2011 and has since been incorporated into a wide variety of Sony products.\nSony aims to promote the recycling of resources and help reduce the environmental impact of society as a whole by offering SORPLAS to other companies. Many companies are interested in using SORPLAS. So far, it has been adopted for a wide variety of products, including televisions, cameras, smartphones, computers, lighting fixtures, and daily necessities such as travel goods and stationery.\nGoing forward, the research team at Sony CSL will continue to research and implement ${ \\sf O X S }$ to realize a society that can achieve decarbonization and improve people’s quality of life anywhere in the world, regardless of the absence of energy infrastructure.\n[IMAGE CAPTION] Demonstration test in UMABA Project\nSORPLAS recycled plastic pellets (black), recovered pellets (transparent: right) and Sony’s original flame retardant (left)\n\\* SORPLAS is an environmentally conscious plastic developed and provided by Sony Semiconductor Solutions Corporation.\nTriporous, a new material made from rice husks\nTriporous™ Official Website \nTriporous’s Environmental Performance \nNews Release: Sony Begins Licensing of New Material Triporous™\n### Digital Cinema Systems\ngreenhouse gas emissions approximately $7 5 \\%$ compared to on-location productions. In addition, 3DCG virtual backgrounds can be reused repeatedly to minimize waste.\nenvironmental conservation abroad. The project illustrates how Aerosense drones are trusted even outside Japan for their high reliability and technical capabilities.\nPrevious film development required a massive amount of positive film, water and chemicals. To rectify this issue, Sony introduced the HDW-F900, the world’s first 24P digital video camera for cinema production, back in the year 2000, and began offering 4K digital cinema projection systems consisting of projectors and other devices in 2007. Since then, we have continued to provide digital cameras to movie production sites and theaters worldwide. These cameras save both resources and power and improve operation efficiency. In 2018, Sony released the VENICE digital cinema camera. This camera was both smaller and lighter than conventional models, yet capable of 6K recording. In 2022, Sony released VENICE 2, which supports internal recording in an even smaller, lighter body.\n[IMAGE CAPTION] Virtual production shooting\n[IMAGE CAPTION] Aerosense drone\n### Virtual Production Technology That Can Reduce Environmental Impact\n### FeliCa™ IC Card Ticket System\nSony’s smart card ticket system, based on FeliCa contactless IC card technology, is helping to alleviate air pollution in Bangladesh. The city is facing serious air pollution issues due to increasing traffic congestion. Transport operators in Bangladesh have introduced FeliCa’s IC card ticket system to encourage citizens to use the metro and buses. The number of passengers has increased due to the improved convenience of public transportation, such as smooth boarding and alighting, and traffic congestion has been reduced.", "chunk_word_count": 504, "section_path": "SONY > ELTRES™ > Outside Sales of SORPLAS™ Recycled Plastic", "document_id": "Sony Sustainability Report 2023", "page": 76, "page_start": 76, "page_end": 77 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 90, "chunk_text": "# SONY\n## ELTRES™\n### Supporting Disaster Prevention and Environmental Projects with Drones\nThe Sony Group’s Aerosense Inc. combines automated flight drones with cloud services to build and provide various industrial solutions. They enable high-precision drone surveying that helps save labor at civil engineering sites nationwide. This technology is also used for confirmation work in natural disaster response and prevention, bolstering national resilience by allowing damage to be quickly investigated during such events. In recent years, climate anomalies have driven an increase in natural disaster damage. Authorities need ways to safely and efficiently make assessments of broad areas at long distance. One of the many current applications of Aerosense’s vertical take-off and landing (VTOL) drones is inspecting roads and power lines damaged by mountain landslides.\nVENICE 2 Digital Cinema Camera\n### VENICE size and weight reduction information\n### Virtual Production Technology\nSony provides virtual production technology to creators that has the potential to reduce environmental impact of content production. The technology enables in-studio filming that mimics the look of being on-location. The combination of large LED displays, cameras, camera tracking, and a real-time 3DCG rendering engine allows creators to shoot in front of a virtual 3DCG background image on the display, mixing CG and live action without post processing. According to Sony Pictures Entertainment, this technology could reduce\nIn 2022, Aerosense and the IT company funlead corp. began an international research collaboration with Malaysia’s Sunway University. Drones and AI were used to generate maps of mangrove distribution in Malaysia, demonstrating the technology and contributing to\n### Responsible AI\n### Stakeholder Dialogue and External Collaboration\nAI and Pandemic Response Subgroup, a working group that aids the development of responsible AI solutions for epidemics of infectious disease such as COVID-19. At the request of the AI Council of the Center for Strategic and International Studies (CSIS), a U.S. think tank, Sony is participating as a council member to set the AI ethics agenda for the G7 Hiroshima Summit 2023 and reach a common global consensus on responsible AI use.\nSony actively pursues dialogue with relevant companies, organizations, and the academic community on ethical issues surrounding AI utilization, while considering the interests of diverse stakeholders, including customers and creators.\n\\* ABOUT ML stands for “Annotation and Benchmarking on Understanding and Transparency of Machine Learning Lifecycles.”", "chunk_word_count": 382, "section_path": "SONY > ELTRES™ > Supporting Disaster Prevention and Environmental Projects with Drones", "document_id": "Sony Sustainability Report 2023", "page": 77, "page_start": 77, "page_end": 78 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 91, "chunk_text": "# SONY\n## ELTRES™\n### Framework for AI Ethics Initiatives\nIn May 2017, Sony became the first Japanese company to join the Partnership on AI to Benefit People and Society (PAI), a non-profit organization created to contribute to solutions for some of humanity’s challenging problems, including advancing the understanding of AI and addressing ethics surrounding AI technology. One of the most common issues in AI ethics is that of fairness, transparency, and accountability, abbreviated as “FTA.” Sony utilizes knowledge it has gained from its AI and robotics related research, development, and business ventures and contributes to a number of working groups addressing this issue. Sony currently serves as an expert advisor for PAI’s strategic planning. Sony also serves on the steering committee for ABOUT ML,\\* an initiative to improve the transparency of machine learning. Sony also serves as an expert advisor to the Explainability Research Project and the Diversity and Inclusion Research Project. Since August 2021, Sony’s Global Head of AI Ethics has been a General Chair of the ACM Conference on Fairness, Accountability, and Transparency (FAccT), the premier conference on sociotechnical algorithmic systems.\nThrough the utilization of artificial intelligence (AI), Sony aims to contribute to the development of a peaceful and sustainable society while delivering kando—a sense of excitement, wonder and emotion— to the world. At the same time, Sony understands that the influence of AI on society is multi-faceted and can have unintended consequences. Sony established the Sony Group AI Ethics Guidelines in September 2018 to guide all Sony officers and employees in utilizing AI and conducting AI-related R&D in a manner that conforms with our values and emerging social norms. The guidelines were subsequently revised to align with Sony’s Purpose established in January 2019 to “fill the world with emotion, through the power of creativity and technology.” In December 2019, Sony established the Sony Group AI Ethics Committee and since that time has been strengthening its initiatives and framework for AI ethics. In 2021, the AI Ethics Office was established to provide subject matter expertise on AI ethics to all Sony business units. In addition, Sony has established a notification system for AI utilization in products, services, and internal operations in Sony Group’s business units, to share information on AI ethics risks. In March 2021, in accordance with the Sony Group AI Ethics Guidelines, Sony established an internal document stipulating requirements to be complied with in the commercialization process of electronic products and services. In July 2021, Sony started conducting AI ethics assessments in the product development life cycle, and has since assessed over 100 instances. Sony uses e-learning tools to promote an understanding of AI ethics among its employees and invites speakers from outside the company to discuss this issue at lectures and symposia.", "chunk_word_count": 458, "section_path": "SONY > ELTRES™ > Framework for AI Ethics Initiatives", "document_id": "Sony Sustainability Report 2023", "page": 78, "page_start": 78, "page_end": 78 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 92, "chunk_text": "# SONY\n## ELTRES™\n### Trusted R&D for AI\nSony pursues R&D for AI that is trusted and backed by solid technologies, and is engaged in technical initiatives related to AI ethics. As a solution for securing FTA, Sony implements its AI development tool, Neural Network Console, with eXplainable AI (XAI) and fairness plugins to make it easy to use. XAI is a technology that enables people to understand the logic behind AI decision-making, an area often called a “black box” since it is not always immediately apparent how it works. Sony has also released its machine learning fairness library and Responsible AI XAI source code as open source software. Additionally, Sony provided its Prediction One predictive analysis tool with the ability to visualize the predictive reasoning. In 2021, Sony also launched its AI Ethics Research Flagship within Sony AI with projects to conduct cutting-edge research into the challenges faced in the development of AI products and services, including ethical data collection and algorithmic fairness. Taking advantage of its position as a company that extends across a wide range of industries, Sony will put fair and transparent AI into practice, leveraging its global and diverse perspective.\nSony is also involved with Japanese initiatives to establish principles and guidelines that promote the utilization of AI for social good. These initiatives include the AI Utilization Strategy published by Keidanren (Japan Business Federation) in February 2019 and the Social Principles of Human-Centric AI published by Japan’s Cabinet Office in March 2019. Sony is currently a member of the Conference toward AI Network Society, a group within the Ministry of Internal Affairs and Communications whose goal is the comprehensive study of the social, economic, ethical, and legal factors involved in the promotion of AI networks throughout society as a whole. Additionally, Sony is a participant in the Global Partnership on AI, an initiative launched in June 2020 to promote the development and utilization of AI based on human-centric principles, and serves as a member of the\nSony Group AI Ethics Guidelines [103KB PDF] Sony Group’s Initiatives for Responsible AI\n### Structure\n### Overview\nMaterial issues related to employees are discussed and deliberated at group-level meetings and by HR committees for each business segment. The Sony Group Corporation officer in charge of human resources and a diverse group of HR managers from the main six business segments also hold regular meetings.\nAs part of the new management system for fiscal year 2023, Sony has further enhanced its organizational structure through the appointment of a Senior Executive and a Senior Vice President in charge of Lead of Group DE&I. Through this, it aims to achieve further group-wide growth by making the most of wide-ranging diversity among its businesses and employees. Sony will continue to promote diversity as a source of innovation in order to create new value that leads to both the growth of Sony Group and the development of society.", "chunk_word_count": 485, "section_path": "SONY > ELTRES™ > Trusted R&D for AI", "document_id": "Sony Sustainability Report 2023", "page": 78, "page_start": 78, "page_end": 79 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 93, "chunk_text": "# SONY\n## ELTRES™\n### Basic Approach\nSince its establishment, Sony has sought to remain at the forefront of technological development and the discovery of new businesses, building continuously on its achievements to deliver new value for people everywhere. In these efforts, Sony recognizes the people who work at Sony to be its most important management resources. Sony has always viewed employees not as a group, but as individuals, based on the belief that they are important stakeholders in Sony’s diversified, global business and are the key to its efforts to achieve sustainable growth and generate social value. Sony respects the independence of each individual and their enthusiasm for taking on challenges and cherishes a corporate culture that places the company and employees on equal terms, based on the partnership of choice between Sony and each individual employee, where each party is accountable for being responsive to the needs of the other. Sony Group has defined a shared group-wide People Philosophy of “Special You, Diverse Sony” with the aim of maximizing the value created by its 110,000 diverse employees and in line with Sony’s Purpose & Values, which lead to further evolutions. The group-wide people strategy is based on this philosophy and is organized around the themes of “Attract talented individuals,” “Develop talented individuals,” and “Engage talented individuals,” leading to human resource policies that reflect the characteristics of the environments and regions in which each individual business operates. Sony believes that increasing employee engagement by making the most of the individual skills, abilities, and creativity among teams of employees who are diverse in terms of race, nationality, religion, disabilities, gender, values, and work styles contributes to the sustained generation of social value and increases in corporate value.\nEmployees\n### Looking to the Future\nWith a focus on diversity, equity & inclusion, talent development, and engagement, Sony Group will continue to offer working conditions that contribute to the health and safety of employees as part of its efforts to achieve sustainable growth and generate social value. Sony also supports employees’ continued growth by providing opportunities for them to improve and make the most of their individual strengths, skills, abilities, and creativity.\n品\n### Milestones\n1966: Internal job posting program started \n1973: Sony Technology Exchange Fair started \n1978: Sony Taiyo Corporation founded \n1988: Flex-time System introduced Basic Policy and Management System established \n1990: Parenting leave and flex holiday programs introduced \n2000: Sony University program started \n2008: Flexible work (formerly called telework) policy introduced \n2015: Flexible career leave and free agent programs introduced \n2018: “PORT”, a place for employees to learn and interact \n2021: Sony’s People Philosophy and people strategy redefined Sony selected as one of the Iconic Leaders of The Valuable 500 \n2023: Senior Executive and Senior Vice President in charge of Lead of Group DE&I appointed", "chunk_word_count": 465, "section_path": "SONY > ELTRES™ > Basic Approach", "document_id": "Sony Sustainability Report 2023", "page": 79, "page_start": 79, "page_end": 80 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 94, "chunk_text": "# SONY\n## ELTRES™\n### Sony’s People Philosophy\nSince its founding, Sony has respected the independence and aspirational spirit of individuals, always cherishing a corporate culture based on the partnership of choice between Sony and each individual employee, where each party is accountable for being responsive to the needs of the other. This is the essence of Sony’s Founding Prospectus, written in 1946 by co-founder Masaru Ibuka, which reads, “We shall establish an ideal factory that stresses a spirit of freedom and open-mindedness, and where engineers with sincere motivation can exercise their technological skills to the highest level,” and “We shall place emphasis on a person’s ability, performance and character, so that each individual can fully exercise his or her abilities and skills.” It is also reflected in the words that fellow co-founder, Akio Morita, spoke to newly hired Sony employees: “If you regret joining Sony, quit immediately. Once you’ve decided to work for Sony, let us be responsible to each other. I’d like every one of you to think at the end of your life that you have no regret spending time at Sony.” A positive growth cycle by which the growth of diverse individuals propels Sony’s growth is possible because the company and the employees stand together on equal terms, with an overarching expectancy of mutual delivery and scaling up, as Sony continues to provide employees with a range of growth opportunities so they can willingly take on their best career options.\nand is organized around the themes of “Attract talented individuals,” “Develop talented individuals,” and “Engage talented individuals.” Attract talented individuals: Sony approaches a broad range of talent via recruitment campaigns across the Group, attracting diverse people who identify with the Sony Purpose & Values, embrace a challenging spirit and possess ambition to grow.\nDevelop talented individuals: Sony provides employees with a diverse range of spaces and opportunities for autonomous learning and has systems in place that make various career challenges available to them. Engage talented individuals: Sony boosts employee engagement and creates relationships where organizations and employees help each other to develop and grow.", "chunk_word_count": 348, "section_path": "SONY > ELTRES™ > Sony’s People Philosophy", "document_id": "Sony Sustainability Report 2023", "page": 80, "page_start": 80, "page_end": 80 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 95, "chunk_text": "# SONY\n## ELTRES™\n### Special You, Diverse Sony\nSony Group has defined a shared group-wide People Philosophy of “Special You, Diverse Sony” with the aim of maximizing the value created by diverse employees in various businesses and achieving further evolution of Sony Group, in line with Sony’s Purpose & Values, which bring together Sony’s 110,000 employees in the creation of long-term value. The phrase “Special You” describes an independent individual who shapes their own career with a spirit of freedom and open-mindedness and opens up the future. “Diverse Sony” represents Sony’s culture, which values diversity and supports each employee’s individual strengths, thoughts, dreams, and the challenges they are excited about. “Special You, Diverse Sony” conveys the message that each unique individual and Sony itself, which embraces the individual, can grow together, aligned by our shared Purpose.\nBecause each of the Sony Group’s diverse businesses requires various management styles and talent with different skills and abilities to create value, each business plans and executes a people strategy that best suits its needs, while operating in line with the shared People Philosophy. Rather than managing each individual business, Sony Group Corporation leads and supports the evolution of each Sony business, while promoting common themes that will drive sustainable growth for the entire group.\n### Employees\nThe group-wide people strategy is based on Sony’s People Philosophy\n### Diversity, Equity and Inclusion\nprovides opportunities for non-Japanese employees to explore their own career development and gain insights. This includes Sony Happy Hour, a regular networking event for non-Japanese employees, crosscultural communication events, and talks on diversity by globally known outside speakers. Sony also implements ongoing initiatives to foster a culture that respects diversity, including the creation of online training content demonstrating basic approaches for working together with employees from different cultural backgrounds.\nDiversity, Equity and Inclusion\n### Transcending Boundaries of Business and Geography\n### Cross-Business Collaboration\n### Sony Group Diversity Statement\nSony is engaged in a broad range of businesses, and its diverse employees collaborate across them to take on new challenges in areas such as the development of products, services and content, and marketing. In fiscal year 2022, a total of 3,500 Sony Group employees transferred to other companies within the Group. This enables employees to branch out in their careers and build crossbusiness connections, creating new opportunities for collaboration around the Group.", "chunk_word_count": 390, "section_path": "SONY > ELTRES™ > Special You, Diverse Sony", "document_id": "Sony Sustainability Report 2023", "page": 80, "page_start": 80, "page_end": 81 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 96, "chunk_text": "# SONY\n## ELTRES™\n### Talent Acquisition\nSony, which develops diverse businesses globally, employs employees with diverse backgrounds. Sony leverages its diverse businesses and workforce as drivers of value creation. The Sony Group Diversity Statement was established in 2013 to serve as a global policy to further highlight the importance of diversity in the workplace. Sony’s People Philosophy establishes that Sony is a “place” that supports and realizes the growth of independent “individuals” and will grow together to fulfill the Sony’s Purpose. Accordingly, Sony values the perspective of equity and strives to ensure true inclusion by respecting diversity encompassing characteristics such as race, nationality, religion, beliefs, disabilities, gender, age, origin, sexual orientation, gender identity, values and work style. Sony regards diversity, equity and inclusion as a key management concern and will continue to maximize its performance in this area.\nSony develops, designs, sells and markets products, services and content in many different countries and regions around the world, and promotes the localization of these operations by securing talent that can meet the specific needs of each market through its global network of R&D bases. Sony acquires talent in each country and region through an approach based on diversity, equity and inclusion, and works with external organizations to actively promote hiring of people from groups that have experienced barriers to equality of opportunity. In terms of diversity of knowledge and experience, Sony promotes emergence within the organization through activities that foster increased awareness and learning from new perspectives, including appointing people with extensive experience outside Sony to be responsible for core individual business units and headquarters functions. Through this, it continues to evolve while responding swiftly to rapid changes in the business environment. In the United States, Sony is providing people from underrepresented communities with opportunities to learn through the production of actual films, supporting the development and acquisition of talented and creative people from diverse backgrounds.\n### Employee Activities Across Regions\nAs of March 31, 2023, approximately 940 employees were working overseas as part of Sony’s global deployment of personnel, in order to transfer technology and knowledge, and launch new businesses. This includes some 100 employees dispatched from group companies outside of Japan, working in various business fields, approx. $50 \\%$ of whom are in management positions. The Sony Group operates job transfer policies to efficiently facilitate international transfers. To better support employees of all nationalities and languages, the Sony Group in Japan follows up on employees after hiring and assists employees in their networking and career development. To facilitate English communication among employees from around the world, intranet content and systems for personnel and accounting are offered in both English and Japanese.", "chunk_word_count": 443, "section_path": "SONY > ELTRES™ > Talent Acquisition", "document_id": "Sony Sustainability Report 2023", "page": 81, "page_start": 81, "page_end": 81 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 97, "chunk_text": "# SONY\n## ELTRES™\n### Sony Group Diversity Statement\nBeing a company that “fills the world with emotion” means combining creativity with continuously-evolving technology. In addition to this, Sony believes that bringing together diverse people who share our Purpose & Values across a wide range of businesses and enabling organic cooperation in the creation of new value that transcends business boundaries are also essential in order to fulfill this Purpose. It is in Sony’s DNA—and a source of our innovation—to value different perspectives and backgrounds as we conduct our business activities globally and rise to new challenges. Sony strives to be an organization that promotes innovation by recruiting, training and promoting employees from diverse backgrounds, ensuring healthy work environments and enabling all employees across Sony Group to\nSony is also strengthening the recruitment of international talent of diverse nationalities for R&D departments in Japan in order to drive progress on advanced technologies and businesses, while also increasing the hiring of talented university graduates and mid-career professionals from around the world. Under its Global Internship Program, Sony welcomes talented university students from a variety of countries and regions, including Japan and other Asian countries, Europe, and North America, to offices in its major business fields. In recent years, Sony has launched workshops for junior high and high school students with the aim of inspiring the next generation of STEM professionals. By conveying the appeal of STEM subjects to students who have not yet chosen a field of study, these activities transcend company boundaries and help to expand the future pool of professionals working in scientific fields.\nFurthermore, in collaboration with the project members of $\\mathsf { D N I } \\ @ \\mathsf { N C }$ Sony (Diversity Initiative for Value Innovation at Sony), Sony Group companies in Japan have conducted surveys and interviews with non-Japanese employees. Using these results, those companies have identified issues faced by these employees and are working on devising and implementing necessary measures. Specifically, Sony\n[IMAGE CAPTION] Ratio of Women in Management Positions in Sony Group Companies in Japan\n(The entry-level wage at Sony Group Corporation is established at an equal level for both men and women and is set to be significantly higher than the legal minimum wage in each part of the country.)\n[IMAGE CAPTION] A workshop for junior high and high school students\nEliminating unconscious bias is an essential step towards building a gender-equal society. In Japan, Sony provides management training intended to address a wide range of unconscious biases while also actively supporting the continued progression of female employees at various career stages through initiatives such as programs and systems encouraging men in the workforce to take parental leave. In addition to providing similar training outside of Japan, Sony also holds forums where women in leadership roles can form communities to connect and learn from each other.", "chunk_word_count": 476, "section_path": "SONY > ELTRES™ > Sony Group Diversity Statement", "document_id": "Sony Sustainability Report 2023", "page": 81, "page_start": 81, "page_end": 82 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 98, "chunk_text": "# SONY\n## ELTRES™\n### Sony Group Diversity Statement\nSony’s efforts to promote women’s participation in the workplace and provide mid- to long-term support for female leaders also extend beyond Sony Group itself. In Japan, it engages in academic-industry collaboration to support the professional development of women, including support for the University of Tokyo’s Metaverse School of Engineering and a wide-ranging partnership with Nara Women’s University in science and engineering fields. In March 2023, Sony invited an expert to give a lecture in celebration of International Women’s Day. The event was intended to provide a deeper understanding of global trends and to encourage the audience to take action aimed at gender equality. Sony is also engaged in wide-ranging efforts to support the next generation of female creators and engineers outside of Japan, including the Diverse Directors Program in the field of film and television, Alpha Female+ for female photographers, and Girls Make Games, which supports female game developers.\n### Supporting Active Contributions by Diverse Employees", "chunk_word_count": 165, "section_path": "SONY > ELTRES™ > Sony Group Diversity Statement", "document_id": "Sony Sustainability Report 2023", "page": 82, "page_start": 82, "page_end": 82 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 99, "chunk_text": "# SONY\n## ELTRES™\n### Promoting Greater Opportunities for Women\n\\* Targets for the “ratio of women workers in management positions” as of the end of FY2025 are described, pursuant to the provision of the Ordinance on the Action Plans for Business Owner based on the Act on Promotion of Female Participation and Advancement in the Workplace (Ordinance No. 162 of the Ministry of Health, Labor and Welfare, 2015) \n\\*1 Percentage calculated from the numerical target for women in management positions by the end of fiscal year 2025, prescribed according to the total number at the end of fiscal year 2022 \n\\*2 Numerical target of Sony Interactive Entertainment Inc. in Japan \n\\*3 The value obtained by calculating the sum of the numerical targets for women in management positions by the end of fiscal year 2025 at applicable companies under the Sony Financial Group umbrella (Sony Financial Group Inc., Sony Life Insurance Co., Ltd. (employees working within main company only), Sony Assurance Inc., Sony Bank Inc., Sony Lifecare Inc., Lifecare Design Inc. and Proud Life Inc.), then dividing the result by the expected total number of employees as of the end of fiscal year 2025.\nSony embraces diversity and the working contributions of women on a global basis. Women accounted for $34 \\%$ of the Sony workforce and held $30 \\%$ of management positions at the whole Sony Group as of the end of fiscal year 2022.\nSony Group Corporation has set two targets to be achieved by the end of fiscal year 2025, having women hold over $20 \\%$ of management positions and ensuring that $100 \\%$ of employees with newborns take childcare leave (legal childcare leave of absence and/or Sony’s paid childcare leave), with the men among them taking an average of more than 10 days of childcare leave. Group companies in Japan set their own targets and are actively implementing initiatives to achieve them. In addition, remuneration levels are determined by role rather than age or years of service. Sony is expanding its efforts to disclose information regarding gender diversity, including through inclusion of information in its Securities Report. It carries out disclosure of information and disclosure of action plans at its companies in Japan in accordance with the provisions of Japan’s Act on Promotion of Women’s Participation and Advancement in the Workplace, using the Ministry of Health, Labour and Welfare’s Database of Corporate Performance in the Area of Women’s Participation and Advancement in the Workplace.\n### United States\nSony Music Publishing held an employee workshop on unconscious bias. Participants in the workshop could see how they, just like everyone else, have unconscious biases and learned how important it is to look at things from diverse angles. Sony Interactive Entertainment helps female employees to further develop their capabilities through activities such as the Senior Women’s Leadership Forum, which provides a space to connect with female managements and learn practices and strategies relating to leadership.", "chunk_word_count": 486, "section_path": "SONY > ELTRES™ > Promoting Greater Opportunities for Women", "document_id": "Sony Sustainability Report 2023", "page": 82, "page_start": 82, "page_end": 83 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 100, "chunk_text": "# SONY\n## ELTRES™\n### China\nTo coincide with the global Diversity Week 2022, which featured the theme of Allyship in Action, Sony China held various events to emphasize dialogue between diverse groups of employees and the co-creation of value through communication that respects differences. This included virtual gatherings entitled Close-Up: Diverse Sony and Close-Up: Special You, together with online workshops on the topics of Diversity as a Starting Point for Value Creation and Awaken Your Heart: A Neuroscience Perspective on the Benefits of Male and Female Leadership.\n### Key Activities to Promote Women’s Career Development at the Sony Group around the World\n### Promoting Greater Opportunities for Individuals with Disabilities\n### Japan\nSony Group held its own event to celebrate International Women’s Day in March 2023, including a display of mimosas—the new key symbol of International Women’s Day—at the entrance of Sony City, the Headquarters of Sony Group. At a lecture featuring a guest expert from the UN, top management expressed the message that, rather than being the sole responsibility of women themselves, each and every person must play a role in valuing diversity and creating an inclusive world. This provided an opportunity to reaffirm the importance of wide-ranging diversity, including in areas beyond gender.\nSony employs and supports individuals with disabilities in compliance with the laws, regulations, and rules of the countries and regions in which it operates, while endeavoring to create inclusive working environments that enable employees to build successful careers regardless of any disabilities they may have.\nGroup companies outside Japan also employ persons with disabilities in partnership with national and local government agencies or as allowed by local circumstances, and in some cases have received external recognition for employment of persons with disabilities or have been cited as examples for other companies to follow. Sony provides opportunities for learning about special-purpose subsidiaries in Japan and approaches to employing persons with disabilities, as well as avenues for companies to share expertise. By employing persons with disabilities in a way that only Sony can, Sony is practicing the approach of co-founder Masaru Ibuka both locally and globally. In December 2019, Sony became a signatory of The Valuable 500, an initiative of the World Economic Forum that focuses on the inclusion of persons with disabilities. Sony has been selected as one of the Iconic Leaders among the 500 signatories, and is providing support for the Media Hub\\*2 project.\nSony co-founder Masaru Ibuka once recalled the day when an initiative was launched, saying, “We had a spirit of autonomy and a belief in creating workplaces that do not offer charity, but rather create an environment that makes it possible for individuals with disabilities to manufacture products that exceed those manufactured by individuals without disabilities.\\*1 ” Sony’s senior management has been seeking to build an environment in which individuals do not feel held back by their disability and disabilities do not create barriers, enabling everyone to thrive.\n[IMAGE CAPTION] The International Women's Day display at the entrance to Sony City", "chunk_word_count": 500, "section_path": "SONY > ELTRES™ > China", "document_id": "Sony Sustainability Report 2023", "page": 83, "page_start": 83, "page_end": 83 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 101, "chunk_text": "# SONY\n## ELTRES™\n### Japan\nSony Taiyo Corporation, which was established in 1978 prior to the legal institution in Japan of special-purpose subsidiaries, has begun to share throughout the Sony Group the know-how and experience it has amassed on the employment of persons with disabilities. Sony has created an inclusive environment at its three special-purpose subsidiaries: Sony Taiyo Corporation, Sony Kibou/Hikari Corporation, which specializes in providing employment opportunities for individuals with intellectual and mental disabilities, and Sony Life Business Partners Co., Ltd., which was established in 2019 to carry out clerical work and other tasks for Sony Life. Sony is now expanding initiatives to create an inclusive environment throughout the group. Sony Group special-purpose subsidiaries are independent businesses that seek to provide job satisfaction via carefully thought-out employment, such as duties carried out jointly with other business sites or individual companies. These initiatives are leveraged in the employment of persons with disabilities at each group company. Guidance is provided to prepare suitable work environments and raise employee awareness so that everyone can flourish at work, wherever they are, and to increase workplace knowledge about disability employment and expand job opportunities in individual companies. Amongst other steps, Sony prepared group-wide guidelines on reasonable workplace accommodations, prior to legislative changes introduced in Japan in 2016. These guidelines ensure that sufficient discussions take place with individual employees who have a disability prior to making such accommodations.\nIn addition to employing persons with disabilities and giving consideration to the accessibility of products and services, Sony aims to lead the inclusion of persons with disabilities throughout the global community, linking its efforts to spread the sentiments of Sony’s founders and expand its corporate initiatives to Sony’s Purpose. Employees with disabilities accounted for $2 . 7 6 \\%$ of Sony Group Corporation’s workforce as of March 31, 2023, while the average for the Sony Group in Japan (companies with over 101 employees, consolidated basis) was $2 . 4 6 \\%$ as of March 31, 2023, both above the $2 . 3 \\%$ mandated by Japanese law for companies over a certain size.\nIn recent years, Sony has also been focusing on the impact that the presence of allies who understand $\\mathsf { L G B T Q + }$ topics and offer active support has on the psychological safety and willingness to work of LGBTQ $^ +$ employees. It is making efforts to increase the numbers and visibility of such allies in its workforce, and these allies also planned and attended events held in fiscal year 2022.\n\\*1 LGBTQ+ is an acronym for lesbian, gay, bisexual, transgender, queer or questioning, and others. The expression is broadly used to refer to persons who do not identify as straight (heterosexual) or cisgender (identifying with the gender assigned at birth).", "chunk_word_count": 462, "section_path": "SONY > ELTRES™ > Japan", "document_id": "Sony Sustainability Report 2023", "page": 83, "page_start": 83, "page_end": 84 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 102, "chunk_text": "# SONY\n## ELTRES™\n### China\nSony China goes beyond simply providing employment opportunities for people with disabilities; it endeavors to promote the hiring of people with disabilities via a diversity and inclusion program that supports practical courses which help university students with disabilities adapt to their future life as a working adult.\n\\*2 Personnel programs that have been extended to same-sex partners include monetary gifts and leave for bereavement, rent subsidies, and participation in employee family events.\n\\*1 Based on the approach of Sony $\\subset \\mathsf { O } ^ { \\cdot }$ -founder Masaru Ibuka that, although there are persons without disabilities, no one is healthy all the time. $^ { \\star 2 }$ The Valuable 500 Media Hub: An initiative to build a creative content resource with interviews and footage featuring persons with disabilities in the community.\n### LGBTQ $^ { + }$ Initiatives by the Sony Group Around the World\n### Key Activities to Promote Career Development of Individuals with Disabilities at the Sony Group Around the World\n### Building Safe, Authentic Workplaces for LGBTQ $^ +$ Employees\n### Japan\nSony organizes talks on LGBTQ $^ { 1 + }$ topics for employees and the public online, making them easier to attend for employees from other business sites and staff in charge of diversity at other companies. In addition to expanding opportunities for employees of the Sony Group in Japan to learn about LGBTQ $^ { 1 + }$ topics, this has also made clear the importance of companies in Japan working together. Elements such as the participation of $\\mathsf { L G B T Q + }$ allies in their events have also helped broaden the scope of the proactive role of allies. Sony has also co-hosted events with other companies to increase the number of employees who are LGBTQ+ allies. Sony sponsored and was involved in Diversity Career Forum, an event organized by the NPO ReBit. Through the forum, Sony was able to broadly highlight its $\\mathsf { L G B T Q + }$ and diversity initiatives to the public. Sony received the highest Gold rating in the PRIDE Index from the volunteer organization work with Pride, in recognition of its internal and external efforts to promote understanding of $\\mathsf { L G B T Q + }$ topics.\nSony globally strives to provide ${ \\mathsf { L G B T Q } } + { } ^ { \\star 1 }$ employees with working environments in which they can feel comfortable being themselves, striving to be a leader whilst acknowledging various national and regional considerations and circumstances. Sony Group introduced a Pride logo in 2022 to express its embracing of LGBTQ $^ +$ employees and the wider community to people within the group and beyond. This logo is used on a global basis for internal and external initiatives relating to LGBTQ+ topics.", "chunk_word_count": 480, "section_path": "SONY > ELTRES™ > China", "document_id": "Sony Sustainability Report 2023", "page": 84, "page_start": 84, "page_end": 84 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 103, "chunk_text": "# SONY\n## ELTRES™\n### Japan\nThe Sony Group in Japan is creating inclusive workplace environments where a disability is no impediment to building a career, and is working with employees with disabilities to check building accessibility with the aim of ensuring a comfortable workplace environment for all. In addition to active recruitment efforts on an individual company level, twelve Sony Group companies participated in the annual job fair, which included company information sessions and individual interviews. This was an opportunity for job seekers to engage directly with Sony Group companies, get an overview of individual companies and the type of work they engage in, and hear details about the approach taken to supporting employees with disabilities on a group and company level. As the only company in Japan selected by The Valuable 500 as one of its Iconic Leaders, Sony is discussing initiatives with affiliated companies in Japan and The Nippon Foundation Library to create a society where people with disabilities can flourish.\nIn Japan, Sony has expanded certain personnel programs\\*2 to encompass same-sex partners and implements an e-learning course covering LGBTQ $^ +$ topics for all employees, while also offering $\\mathsf { L G B T Q + }$ workshops.\nSony also supports the diversity of employees in other ways, such as enabling employees to use their preferred names at work, providing multipurpose restrooms, using gender-neutral uniforms, making it optional for job applicants to indicate their gender on applications, and providing private toilet and shower facilities in each room at corporate dormitories.\nUnited States\nIn the United States, Sony Corporation of America and Sony Interactive Entertainment reviewed their healthcare plans based on standards set by the World Professional Association for Transgender Health (WPATH) and implemented measures to more reliably support transgender and non-binary employees in areas such as benefits coverage, wellness, medication, hormone therapy and surgical assistance. Sony Pictures Entertainment was a Gold Sponsor of the GLAAD Media Awards, held by the LGBTQ $^ +$ media advocacy organization GLAAD.\nIn addition, Sony organizes internal and external events designed to raise awareness on working environments that are comfortable for everyone.\nUnited States\nSony actively works with partners such as Disability: IN, a global organization devoted to inclusion and equity for persons with disabilities in business. Group companies in the United States have created a joint e-learning training program and conduct training for employees with the aim of enhancing understanding of accessibility and disability. Sony Pictures Entertainment is also making efforts to further advance diversity, equity and inclusion through activities such as awareness training to help managers become inclusive leaders.\n### □ Europe\nIn Europe, Sony Music Publishing (Germany) collaborated with Sony Music Entertainment to co-sponsor Christopher Street Day (Berlin Pride), one of Europe's largest pride events. This included participation by employees, artists and DJs.", "chunk_word_count": 465, "section_path": "SONY > ELTRES™ > Japan", "document_id": "Sony Sustainability Report 2023", "page": 84, "page_start": 84, "page_end": 86 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 104, "chunk_text": "# SONY\n## ELTRES™\n### Talent Development\nand gain experience in a wider range of fields. Sony is also strengthening its overall management using leadership development and coaching strategies at its overseas bases and in its businesses. In addition to mandatory training, Sony supports employee-driven development. It offers seminars, courses at outside institutions, and a growing range of online courses to fit the needs of employees, and has also expanded individualized study opportunities by opening a learning platform for group companies in Japan in 2021. Sony is creating an environment that makes employees aware of their own career path and individual growth. Specifically, it is done by recommending contents based on each employee’s individual skills when they need it, and through visual representation of the employee’s learning trajectory. Sony is also working on content collaboration with overseas group companies using the common platform. Overseas group companies also run their own initiatives, and have provided personalized learning content based on the situation of each employee.\nand its growth as a company.\nBack in 1966, Sony became the first Japanese company to launch an internal job posting program, which has now been in place for 57 years. The program provides an avenue for employees to explore career opportunities while serving to optimize the assignment of personnel and strengthen key parts of Sony’s business. To date, more than 8,000 employees have moved to new positions via the program, which has become essential to Sony’s personnel strategy of developing employees who are eager to take on new challenges. In fiscal year 2015, Sony introduced Career Plus, a program that enables employees to remain in their current positions while also being involved in other jobs and projects posted by the company by holding concurrent or secondary positions. The program enables personnel to demonstrate their expertise and knowledge in various areas. Moreover, in order to ensure that career development is focused on the individual, Sony has greatly expanded its existing open recruitment system, adding new programs to it. These include a free agent program that gives talented employees the ability to declare their availability to Sony Group companies, which provides them with greater opportunities to branch out and pursue job opportunities in new fields, and Sony CAREER LINK, a program in which employees who register a profile can be contacted by a specific workplace or human resources department when a position matching their skills and experience becomes available.", "chunk_word_count": 402, "section_path": "SONY > ELTRES™ > Talent Development", "document_id": "Sony Sustainability Report 2023", "page": 86, "page_start": 86, "page_end": 86 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 105, "chunk_text": "# SONY\n## ELTRES™\n### Growth via the Interaction of Highly Original Employees and the Sony Culture of Supporting a Spirit of Challenge\nSony aims to be a place where each unique employee can grow and be challenged to the utmost, and where their growth leads to the growth of the company. Sony strives to enhance motivation and encourage personal growth for its employees through on-the-job learning, as well as through access to a variety of programs designed to enhance individual abilities and skills and tailored to local needs. As a company that does business in a variety of countries and regions, Sony recognizes the importance of cultivating future business leaders with a global perspective. Accordingly, Sony is implementing initiatives aimed at fostering such employees and creating even more opportunities to bring their capabilities into full play.\nIn addition, programs to acquire the skills needed to produce highquality results in a changing work environment have been provided in Japan and overseas. For example, Sony Corporation of America runs sessions where experts talk about working successfully in a hybrid environment, and provides tools and resources to support employees in transitioning to a hybrid environment.\nInformation on training sessions conducted in fiscal year 2022 is shown below.\nEvery autumn, Sony offers employees opportunities to network and explore new avenues through its Career Month, during which it holds lectures and workshops to encourage employees to be more proactive about their career and provides career counseling. Employees also meet directly with their supervisors to discuss development plans regarding their careers and growth, and to review their skills. They receive support in autonomously shaping their career path in a way that is appropriate to their current career stage. Sony seeks to support employees’ growth through work experience, and the New Performance Management Program used at Sony Group companies was revised in fiscal year 2016 to better reflect individual observations and foster growth. The program not only enables employees to set individual goals and track their progress, but also encourages year-round communication with management by incorporating feedback on such aspects as their everyday conduct and impact on their workplace.\n### Learning and Career\n### Learning and Development\nSony has defined the global behaviors it wants to see among employees: “Inspire and Be Inspired,” “Stay on Point,” and “Break Through Barriers.” Sony is strengthening its systematic training to give employees the skills they need in various formats including group training and e-learning.\nManagement is considered to play an important role in the growth of the company and its employees. Management teams and HR in the Sony Group in Japan discuss the orientation of medium-term management training and engage in initiatives to expand horizons\n### Career Development\nSony has always encouraged its employees to take on new challenges, fostering this mindset both to further the growth of its employees", "chunk_word_count": 471, "section_path": "SONY > ELTRES™ > Growth via the Interaction of Highly Original Employees and the Sony Culture of Supporting a Spirit of Challenge", "document_id": "Sony Sustainability Report 2023", "page": 86, "page_start": 86, "page_end": 87 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 106, "chunk_text": "# SONY\n## ELTRES™\n### Engineering Talent\nSony is pursuing its purpose of “fill the world with emotion, through the power of creativity and technology” by encouraging its employees to take on new challenges and supporting their career development by giving them professional experience within the Sony Group.\n[IMAGE CAPTION] PORT Minato Mirai supports voluntary activities for employees to learn in remote and in-person situations Photo: ©Kenta Hasegawa\nTo pursue its purpose of “fill the world with emotion, through the power of creativity and technology,” Sony must engage in innovation to win new customers. Technology underpins the value creation that drives all Sony Group businesses, so Sony constantly seeks to get even closer to people, to understand their motivations, and to pursue “technology that inspires emotion.”\n### PORT — An Ideal Venue to Develop New Talent\nSony recognizes the importance of fostering a culture and nurturing an environment in which the group’s diverse businesses and the diverse employees who drive those businesses can learn from each other and continue to grow. PORT is a place where ambitious employees who hold diverse values—people from various specialized fields and backgrounds—can organically interact across business and geographic boundaries.", "chunk_word_count": 195, "section_path": "SONY > ELTRES™ > Engineering Talent", "document_id": "Sony Sustainability Report 2023", "page": 87, "page_start": 87, "page_end": 87 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 107, "chunk_text": "# SONY\n## ELTRES™\n### Using Field-Specific Technology Strategy Committees to Achieve Intra-Group Collaboration\n[IMAGE CAPTION] A studio set up at PORT Minato Mirai to support the creation and dissemination of educational content\nSony aims to create long-term social value, in addition to generating sustainable, strong revenues. In order to create sustainable value and continue growing, Sony must leverage the diversity of its businesses and employees to further evolve. Lively interaction among employees from different backgrounds who hold diverse values leads to their own continual growth and ultimately drives the growth of Sony. Technology strategy committees are given the role of sharing knowledge from various fields across organizations, systematically advancing the technologies, and promoting the growth of human resources. The committees are highly significant in Sony’s efforts to create sustainable value and secure ongoing growth. Sony formed field-specific technology strategy committees in fiscal year 2015, and they involve approximately 1,500 employees.\nIt embodies this concept by providing a venue for employees of the Sony Group to gather, connect, and create synergies in order to grow as individuals and nurture employees who can navigate Sony into the future. PORT holds a large number of spontaneous employee-led lectures, study sessions, workshops, and brainstorming sessions. In fiscal year 2022, more than 1,400 events, mainly online, were held, bringing in more than 58,000 participants over the year. Examples of the wide-ranging content include lectures by employees to explore Sony’s diverse businesses in depth, round-table discussions where employees share their work-related experiences and thoughts on their job, lectures to get people to think about their career, groups to discuss work styles in remote environments, AI-related workshops, lectures on career development, and discussions of topical books. Sony provides active support for the continuation of these employeedriven activities. PORT supports the creation of learning communities, facilitates lateral connections amongst employees actively engaged in initiatives, and provides a venue where know-how can be shared. It directly supports more than 30 communities, and regular study group meetings are held more than 1,000 times a year. PORT Shinagawa and PORT Minato Mirai provide environments geared to online PORT activities. With the support of dedicated staff and access to Sony video equipment, employees can record and stream training sessions and learning activities and create their own content.\nThese efforts enable employees of the Sony Group working in different countries and regions to stay connected despite geographical limitations and continue to create voluntary learning opportunities.", "chunk_word_count": 403, "section_path": "SONY > ELTRES™ > Using Field-Specific Technology Strategy Committees to Achieve Intra-Group Collaboration", "document_id": "Sony Sustainability Report 2023", "page": 87, "page_start": 87, "page_end": 87 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 108, "chunk_text": "# SONY\n## ELTRES™\n### Career Support for Senior Employees\nIn today’s era of extended longevity, work and life planning are not uniform. Each individual has different needs and values, and the options available to them are also diversifying. Sony has deployed the Career Canvas Program for veteran and senior employees to encourage them to think about, design and implement their own life plans while working actively within Sony. In line with Sony’s founding philosophy of “building one’s own career,” we offer a variety of programs, including workshops on career development and financial assistance, to help employees relearn how to keep developing themselves.\nA technology strategy committee is established for each field. Each one consists of specialists who are selected from across Sony Group companies. These committees work to achieve technical innovation and roll out organization-specific technologies across the group. Technology is developed by people, so technology strategy committees implement related human resource measures. Sony offers talent development programs such as core technology training courses as well as personnel recruitment; this approach accounts for the special features of different technologies, and transcends the boundaries between different Sony Group companies.\nand supporting talent development. Publicizing this program within the company and in society at large demonstrates this awareness and legacy at a group-wide level.\n### The Distinguished Engineer’s Mission\n[IMAGE CAPTION] Technology Training Courses\nThe DE is to formulate and execute technology strategies while identifying signals of change, and support the development of talent in order to ensure Sony’s sustainable growth. The DE:\n• Formulates the technological strategies that underpin Sony’s \ncorporate strategy beyond the existing frameworks \n• Supports the execution of corporate strategies through \ntechnology by building global networks and identifying signs \nof change \n• Discovers engineers with high potential and supports their \ndevelopment\n### Technology Training Courses\nAt the Sony Group in Japan, approximately 450 Sony engineers with frontline expertise in key technological fields serve as instructors, developing curricula and textbooks for use in core technology training courses and contributing to the enhancement of technical skills of engineers and other employees. These courses, which serve as the foundation for gaining further technical skills, have been in continuous development since the 1980s. Employees with a high level of expertise in a specific technical field serve as leaders who plan courses with selected themes that are in demand based on the latest conditions in specific fields and Sony goals. The courses are used by employees to expand their knowledge of specialized subjects, brush up on their knowledge for application in other areas, or re-learn subjects.\n### Sony Outstanding Engineer Award\nCreated to further inspire engineers to take on new challenges, the Sony Outstanding Engineer Award is the highest form of individual recognition for engineers of the Sony Group. In order to develop products and services that appeal to customers’ sensibilities, there is a wide range of technologies that Sony will have to work on. In addition to elemental technologies, there is also a need to integrate creative new technologies, and to optimize complex systems. Intended to increase the motivation of engineers, such awards have encouraged employees to be proactive in addressing challenges and have also promoted a corporate culture that emphasizes value creation.", "chunk_word_count": 532, "section_path": "SONY > ELTRES™ > Career Support for Senior Employees", "document_id": "Sony Sustainability Report 2023", "page": 87, "page_start": 87, "page_end": 88 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 109, "chunk_text": "# SONY\n## ELTRES™\n### Sony Technology Exchange Fair\nThe annual Sony Technology Exchange Fair (STEF) provides an opportunity for Sony Group engineers to present their R&D work to colleagues and create new value by sharing information and ideas among a diverse range of employees in Japan and overseas, from experienced employees to younger team members. In addition to providing a space to present technologies of the Sony Group’s business units, STEF also seeks to enhance expertise and knowledge among employees, featuring conferences and seminars with invited speakers from inside and outside the group, panel sessions chaired by a DE, who is an expert in their technical field, and the Open Innovation Showcase featuring exhibits by companies receiving investment from the Sony Innovation Fund. This annual event has served as a launchpad for numerous research and development projects since it was first organized in 1973. The event celebrated its 50th anniversary in fiscal year 2022, and some of the exhibitions and conferences were opened to people from outside of Sony for the first time to mark the occasion. This provided an opportunity to introduce a wide range of stakeholders, including members of the media, investors and analysts, engineers, researchers, creators, business partners, and students, to Sony’s advanced technologies and the\nSony develops the basic skills of its new recruits by offering them general technological training designed by its leading engineering experts, as well as specialized training programs developed by each of Sony’s business units, which are designed to familiarize the trainees with technologies specific to each business. In fiscal year 2022, Sony created and updated content with a focus on three areas useful for expanding the skills of all occupations—data analysis, AI, and cloud computing—and promoted the transition to on-demand content. As a result of these efforts, a total of 28,700 employees took part in these courses, which are a cornerstone of the development of technical capabilities within Sony Group and will continue to be provided as opportunities for professional development. Engineers are provided with various opportunities to gain advanced knowledge in related fields and foster their ongoing professional development by participating in sponsored courses, seminars given by outside experts, and employee open houses.", "chunk_word_count": 364, "section_path": "SONY > ELTRES™ > Sony Technology Exchange Fair", "document_id": "Sony Sustainability Report 2023", "page": 88, "page_start": 88, "page_end": 88 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 110, "chunk_text": "# SONY\n## ELTRES™\n### Corporate Distinguished Engineer Program\nBased on Sony’s Purpose, the Corporate Distinguished Engineer program is designed to accelerate formulation and implementation of technology strategies that support sustainable growth and the development of talent. The term Distinguished Engineer (DE) designates those engineers group-wide who possess outstanding expertise and technical knowledge in key technological fields and are capable of carrying out the DE mission, shown below. The program highlights the important role that the DEs play as “the faces of Sony technology” who take the lead in formulating technology strategies\nway in which Sony values technology. Over 20,000 people from Sony Group companies in Japan and overseas attended exhibitions online and in person. The hybrid format entered its second year after being introduced in fiscal year 2021. The on-site venue in Tokyo featured an expanded number of exhibits and provided a space for exhibitors and visitors to actively exchange ideas. There was also a live stream from the venue for employees around the world who could not make it in person, creating a sense of unity between all the venues. 40 online conferences were also held featuring guests and DEs who play a prominent role in their field. Sony is a creative entertainment company with a solid foundation of technology, and STEF is a key corporate event that brings employees together and creates the potential for collaborations throughout the Sony Group. STEF is intended to generate technologies that will underpin the Sony of the future.\nleaders who will play key roles in driving the business forward. Approximately 1,400 employees from six major businesses across Sony Group have taken part to date, bringing together a diverse group of people with different backgrounds from all over the world. Participation among female employees and entertainment business employees have both increased to approximately $30 \\%$ . Sony has established global and domestic Japanese courses with the aim of implementing programs that reflect the needs of each business. It offers programs at three levels: general manager, senior manager and emerging leaders. Aiming to become leaders who can drive Sony forward as a creative entertainment company with a solid foundation of technology that makes a difference to its surroundings, participants chosen from Sony Group’s diverse range of businesses take part in six-month programs to cultivate and enhance their management literacy and leadership skills. By working hard together, participants form personal networks that transcend business and organizational boundaries, fostering collaboration and cooperation between businesses.\nand other executives, including those in charge of Sony’s business segments. This helped to promote participants’ learning, broaden their horizons, and improve motivation.\nIn addition to the above examples, various executives and managers are involved in supporting professional development in numerous ways throughout Sony University. Moving forward, Sony Group will continue its united efforts towards further development in support of the cultivation of future leaders.\n[IMAGE CAPTION] A poster session with CEO Kenichiro Yoshida", "chunk_word_count": 483, "section_path": "SONY > ELTRES™ > Corporate Distinguished Engineer Program", "document_id": "Sony Sustainability Report 2023", "page": 88, "page_start": 88, "page_end": 89 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 111, "chunk_text": "# SONY\n## ELTRES™\n### Incentive Remuneration for Inventions\nIn fiscal year 2022, a total of four courses took place in Japan and globally. Global courses included both the course for global general managers and a newly-established course for senior managers. Participants drawn from Sony Group companies, businesses and regions around the world attended lectures and engaged in group discussions and dialogue with members of the management teams of various business segments, endeavoring to improve their skills and mindsets in areas such as leadership, strategic planning and vision. There was a dialogue session with CEO Kenichiro Yoshida where participants representing each business unit gave presentations on initiatives based on the theme of “Getting closer to a Community of Interest.” Their presentations were followed by an active discussion in which the other participants also joined.\nSony rewards employees for their inventions by ensuring that they receive fair and suitable incentive remuneration as stipulated under the Patent Act. The remuneration serves as an incentive to realize inventions and increase patent quality to strengthen Sony’s business.\n[IMAGE CAPTION] Final presentation with COO/CFO Hiroki Totoki\n### Leadership and Future Leaders\nIdentifying and developing future leaders is a key element of Sony’s management strategy. Sony provides opportunities for professional growth across the Sony Group by leveraging the comprehensive capabilities of its diverse businesses to ensure that it continues to nurture future leaders.\nSimilarly, courses for general managers and emerging leaders in Japan served to cultivate and strengthen the skills and mindset participants require to take on management roles while also providing an opportunity for mutual study and networking among participants from various businesses. The emerging leader course also featured analysis of management issues facing Sony Group and the proposal of management concepts to the management team. Lively discussions ensued with CEO Kenichiro Yoshida, CFO Hiroki Totoki\n### Sony University\nSony University was established in 2000 with the mission to “cultivate talent who can create and lead management visions and strategies,” to “pass on the Sony Spirit,” and to “create a human network for group management.” Under this mission, Sony University programs are designed to foster top management candidates and global\n### Sony Cross-Mentoring Program", "chunk_word_count": 359, "section_path": "SONY > ELTRES™ > Incentive Remuneration for Inventions", "document_id": "Sony Sustainability Report 2023", "page": 89, "page_start": 89, "page_end": 90 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 112, "chunk_text": "# SONY\n## ELTRES™\n### Roundtables with Top Management\nSPE supports aspiring and current leaders with development resources through a wide variety of programs and initiatives, including a dedicated “Leadership Portal” containing a multitude of online tools, playlists, and a learning calendar; a full spectrum of live leadership courses targeting high-potential employees at every level; an “Internal Career Portal” with exclusive access to Sony Pictures opportunities and internal mobility support; a sophisticated and user-friendly “Learning Hub” full of engaging content and compliance requirements; a leadership development program for Employee Business Resource Groups; and “LENS,” a mentorship program with senior leaders in the animation industry.\nSony launched the Sony Cross-Mentoring Program in 2022 with the aim of promoting mentorships across Sony Group. In addition to being an opportunity for networking, strategic connections between management teams from different businesses and the next generation of leaders enable mentees to build relationships with mentors, deepen their understanding of new fields beyond their own business area, and develop new awareness and ideas that contribute to their individual development plans.\nSony provides opportunities for direct dialogue between top management and employees working in various businesses and areas of expertise throughout Sony Group. In fiscal year 2022, roundtables were held with CEO Kenichiro Yoshida and COO/CFO Hiroki Totoki, which provided an opportunity to share individual thoughts and ideas regarding shared topics. This open discussion led to inspiration and lessons regarding potential future developments in each business and area of expertise. This also contributed to the building of connections and networks among participants.\nThe program takes place over six months, and mentors share their wealth of experience and knowledge through regular communication covering themes such as management skills, leadership skills, business, and careers, helping mentees to enhance their qualities and expand their horizons.\nThese regular talent reviews in each business segment and lateral group-wide opportunities for wide-ranging professional growth serve to maximize knowledge of other business segments, expand personal networks and support synergies between business segments. Having a robust talent pipeline also helps Sony to formulate systematic business succession plans.", "chunk_word_count": 342, "section_path": "SONY > ELTRES™ > Roundtables with Top Management", "document_id": "Sony Sustainability Report 2023", "page": 90, "page_start": 90, "page_end": 90 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 113, "chunk_text": "# SONY\n## ELTRES™\n### Entertainment, Technology & Services\nSony Corporation provides a wide range of learning opportunities for young employees to study proactively in diverse settings and boost their potential to flourish professionally.\nIn the first year, a total of 22 pairs were formed across six major businesses within Sony Group. Through this program, Sony aims to pass on the wealth of experience accumulated within the group to the next generation, contributing to employees’ professional development and the creation of new value.\nIt has introduced an on-demand learning system and has made some courses required for employees in certain positions with the aim of supporting employees’ subjective development. In terms of technical training, in addition to the training available throughout the group, Sony Corporation also holds intermediate and advanced courses for software engineers with the aim of enhancing the capabilities of its cloud professionals and has established a Certification Support System in the fields of AI and cloud technology. Sony Corporation also provides three training programs in the field of business skills that use business vision and leadership as key themes to cover evolving business models. These programs are designed to encourage software engineers to advance new business creation and train talent that can lead the transition to a solution-based business model, developing the leadership qualities of people who can drive the future of Sony and providing an opportunity to gain fresh perspectives and insights.\n### Main Initiatives to Train Employees and Develop Skills Worldwide in Sony Group Companies", "chunk_word_count": 250, "section_path": "SONY > ELTRES™ > Entertainment, Technology & Services", "document_id": "Sony Sustainability Report 2023", "page": 90, "page_start": 90, "page_end": 90 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 114, "chunk_text": "# SONY\n## ELTRES™\n### Music\n[IMAGE CAPTION] Sharing Diverse Knowledge and Experience Through the Sony Cross-Mentoring Program Support future leader development and new value creation by connecting with senior management beyond business and regional boundaries\nSony Music Publishing (SMP) has made it a priority to expand support for employees and create a more equitable culture through several new initiatives – most recently with the launch of its Women’s Leadership Program – consisting of in-depth sessions hosted over the course of 6-9 months that are aimed at advancing growth and development of current and future women leaders at the company. The program helps women to enhance their leadership skills, adopt the practices and mindset of leaders, and learn methods to maximize their own capabilities. The Women’s Leadership Program has received extremely positive feedback from within SMP and across Sony Group. Externally, in 2023, the program was nominated for the Music Biz Agent of Change award.\nImaging & Sensing Solutions\nSony Semiconductor Solutions (SSS) continues to enhance opportunities for learning and development with the aim of achieving reliable, sustainable growth as a business. SSS group has established and implemented its own talent management structure for management development, and has\nMovies\nTo maximize the potential of employees and foster a highly engaging and rewarding professional environment, Sony Pictures Entertainment (SPE) has created a comprehensive leadership development ecosystem.\nstarted holding regular consultations with the management team as part of its succession planning for upper management positions. It is also actively expanding development opportunities for talented professionals. This has included conducting one-on-one sessions with executive officers to provide more wide-ranging perspectives, external assessments intended to promote development by visualizing areas for improvement, and the provision of individual training, including external training and executive coaching. For mid-level management, SSS carries out surveys of all section managers with the aim of raising standards across the group. It has also introduced three of its own measures for advancing mid-level management and provided training courses to more than 200 section managers. SSS is also expanding training opportunities for leaders and young employees. During this fiscal year, it introduced the Women’s Leadership Program for female employees selected for displaying leadership as a way to support the systematic development and appointment of female managers and implemented its own career training for employees in their third and sixth years with the company.\n### Financial Services\nThe Sony Financial Group (SFG) human resource development committee aims to enhance the visibility and recognition of key personnel and implement measures to support their development, and efforts to make further advancements in this area are continuing. In fiscal year 2022, an expert in human capital management held special training sessions for officers and general managers from SFG companies across the group. During the last of the nine sessions, proposals regarding management issues to be faced by $\\mathsf { S F G }$ based on backcasting from 2030 and measures of focus for the next three years were put forward.", "chunk_word_count": 494, "section_path": "SONY > ELTRES™ > Music", "document_id": "Sony Sustainability Report 2023", "page": 90, "page_start": 90, "page_end": 92 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 115, "chunk_text": "# SONY\n## ELTRES™\n### Employee Engagement\nsystem, which enable employees to have versatile work options. Sony’s workstyle reform project was launched at group companies in Japan in 2017. It endeavors to further raise awareness of existing initiatives, such as no-overtime workdays, and ensuring employees take advantage of such schemes, as well as encouraging employees to take their annual paid leave.\ninstitutionalized in October 2022, even under these circumstances, Sony’s efforts to expand programs to provide employees with flexible and efficient work options remain unchanged, with the aims of enhancing the business efficiency of its organizations, fostering an organizational culture that generates ideas, and increasing the productivity and output of each employee.\nIn addition, as telework has become more established during the COVID-19 pandemic, efforts such as improving the efficiency of individual work and the use of online tools enabled Sony Group Corporation to reduce its average monthly overtime hours to 25.1 hours in fiscal 2022, a second consecutive decrease. Last year, Sony Group Corporation employees used an average of 14.2 days of paid leave, and employees of the Sony Group in Japan used an average of 13.3 days, which is higher than the general average.\n### Supporting Employees Balancing Work with Child Care, Nursing Care, and / or Medical Treatment\n### Initiatives to Enhance Employee Engagement\nThe Sony Group in Japan promotes the Symphony Plan, a system to support the work-life balance of employees that is focused on the three areas of child care, nursing care, and medical treatment. The plan is designed to help Sony employees achieve work-life balance by creating an environment in which they can make the most of their skills at all stages of their career and throughout the various events in their lives.\nSony believes that employee engagement is the culmination of wideranging measures to support employees’ growth. Sony implements diverse structural, environmental, and cultural initiatives so that each unique employee can constantly challenge themselves to create value.\n### Flexible Work Options for Diverse Lifestyles\nThe Sony Group in Japan offers human resource programs that enable employees to make the most of their talents within their preferred lifestyles.", "chunk_word_count": 354, "section_path": "SONY > ELTRES™ > Employee Engagement", "document_id": "Sony Sustainability Report 2023", "page": 92, "page_start": 92, "page_end": 92 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 116, "chunk_text": "# SONY\n## ELTRES™\n### Work-Life Balance and Well-Being\nUnder the Symphony Plan, the Sony Group in Japan has various support programs including childcare paid leave (up to $2 0 { \\mathrm { d a y s } }$ ), which can be used in conjunction with childcare leave and maternity or paternity leave, a childcare and nursing care leave grant, which enables employees to take leave without having to worry about finances, and “life vacations” and “accumulated leave”, which can be used for the purposes of childcare, fertility treatment, nursing care, and cancer treatment. These programs are widely used by employees. For employees who have childcare or nursing care responsibilities or who are receiving fertility or cancer treatment, Sony provides support by offering the option of reduced working hours and allowing use of paid annual leave on an hourly basis for childcare or nursing care. Since fiscal year 2017, the Career Plus Leave program has been supporting career development while employees take parenting or nursing leave by enabling employees to keep doing some work from home and also by subsidizing development programs such as language courses. The program provides greater flexibility for employees to continue their career development.\nSony believes that strong revenues are sustained by providing a worker-friendly environment where all employees can perform to their full potential. Under this vision, Sony considers employee health and work-life balance as essential to creating innovation and sustaining strong revenues as a company. Sony offers flexible working provisions and work conditions for employees to realize this work-life balance, while adhering to the customs and laws in countries and regions where it does business.\nSony Group Corporation and certain Sony group companies have a flexible career leave program, which has been in place since 2015 and is designed to open up a wider range of career paths. It enables employees to take up to five years off to pursue studies or work on upgrading their language or communication skills, or to accompany a spouse who has been assigned abroad or embarks on international studies, or to take up to two years off to pursue studies at their own expense to further develop their expertise.\nEach employee of the Sony Group plays a part in the sustainable growth of the company. As part of its commitment to diversity, equity and inclusion, Sony has an important responsibility to create inclusive workplaces with attractive working conditions, and to encourage ways of working that enable employees to make the most of their talents while balancing their work responsibilities with events in their personal lives, including parenting, nursing care, and medical treatment. Sony recognizes the need to accommodate diverse ways of working to secure the health and motivation of employees. Based on this approach, Sony in Japan has introduced a flex-time system, a discretionary working system, and an advanced professional", "chunk_word_count": 473, "section_path": "SONY > ELTRES™ > Work-Life Balance and Well-Being", "document_id": "Sony Sustainability Report 2023", "page": 92, "page_start": 92, "page_end": 92 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 117, "chunk_text": "# SONY\n## ELTRES™\n### Work-Life Balance and Well-Being\nThe company has a flexible work policy, which broadened the scope of its former telework policy in 2018 by making all employees eligible and expanding the number of telecommuting days available to employees. As a special measure to prevent the spread of COVID-19, the maximum limit on full telecommuting days that employees can take under the flexible work policy has been eliminated, and since June 2020 the core hours that were part of the flextime policy have been abolished. These changes were made to prioritize the health and safety of employees by mitigating the risk of COVID-19 transmission and creating an environment that allows for more flexible and efficient work styles. While the special measures were\n### Care\nStarting in 2018, Sony established a tie-up with a daycare provider to assist employees of Sony group companies in Japan who find it difficult to secure daycare for their children and return to work. The tie-up enables the use of corporate-led daycare facilities\\* throughout Japan. To meet the needs of the growing number of family caregivers, Sony also conducted seminars and lectures on strategies for balancing nursing and work, while providing essential information about nursing through initiatives such as training programs promoting understanding of this issue among both caregivers themselves, but also their colleagues and managers. Through these initiatives, Sony provides various types of support to meet each individual’s needs, helping employees to continue developing their careers while balancing it with parenting and nursing.\n• Care leave (for one year, to care for a specific family member) \n• Care leave grant $50 \\%$ of standard monthly remuneration, up to 200,000 yen per month, during the period of care leave) \n• Reduced working hours to provide care (for a specific family member and specific reason, until that reason no longer applies)\n### Treatment\n• Fertility treatment scheme (up to one year’s leave, reduced working \nhours, funding) \n• Scheme for designated medical treatment (cancer treatment) \n(reduced working hours)\n### Major Work-Life Balance Policies (Sony Group Corporation)\n\\* Under amendments to Japan’s Child and Child Care Support Act, which came into effect in April 2016, the Cabinet Office of Japan introduced provisions to allow for corporate-led daycare facilities in an effort to enable parents to work by addressing shortages of places and long waiting lists for daycare facilities. The provisions enable corporations to organize the establishment and operation of daycare facilities", "chunk_word_count": 405, "section_path": "SONY > ELTRES™ > Work-Life Balance and Well-Being", "document_id": "Sony Sustainability Report 2023", "page": 92, "page_start": 92, "page_end": 93 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 118, "chunk_text": "# SONY\n## ELTRES™\n### Promoting Work-Life Balance\n• All employees eligible to work from home, a satellite office or elsewhere remotely \n• Use of paid annual leave \n• Life vacations (leave covering the time required for hospital appointments) \n• Accumulated leave \n• Support for continued career development by employees during childcare leave, nursing care leave or flexible career leave to accompany a spouse (subsidies for education expenses while on leave)\nIn addition to establishing programs that promote work-life balance, the Sony Group in Japan strives to create a corporate culture in which employees seeking to balance the demands of childcare (or nursing care) and work can build careers. Sony conducts seminars for employees who will be taking childcare leave. At these seminars, employees gain knowledge and information that will be useful during their leave, review their career so far, and start career planning for their return. Follow-up seminars are offered to those employees after returning to work. Both seminars are also attended by the employee’s managers. Sony also conducts seminars to encourage men in the workforce to take childcare leave and other forms of parental leave by providing them with information on the various provisions available to them as part of the company’s goal to foster environments that make it easier to balance work and childcare. The seminar enables participants to hear about the experiences of other men who have taken parental leave. As of the end of fiscal year 2022, the ratio of male employees taking childcare leave at Sony Group Corporation was $56 \\%$ , demonstrating both rising awareness among male employees themselves and greater understanding among their managers and colleagues. In addition to enabling male employees to take childcare leave, Sony will continue to support their ongoing participation in childcare and promote the medium- and long-term career development of all employees, regardless of gender.\n### Main Work-Life Balance Initiatives at Sony Group Locations Around the World\n### Japan\nSony builds a corporate culture in which employees can continue to build their career throughout the various events in their lives. This is supported by initiatives such as the Symphony Plan (a system to support the work-life balance of employees), childcare seminars, a tie-up with a daycare provider, and training regarding nursing care. Managers also receive regular training to promote consideration and understanding of the work-life balance of colleagues and team members, including with regards to childcare, nursing care and medical treatment.\n### Childcare\n• Childcare leave (up until April 15 of the year following the date on which the child reaches 1 year of age) \n• Maternity and paternity leave (4 weeks in total, up until 8 weeks after childbirth) \n• Childcare leave grant (50,000 yen/month during the period of childcare leave) \n• Reduced working hours for childcare (until the end of March of sixth grade of elementary school) \n• Parental leave (provides for 20 days’ paid leave) \n• Babysitter/childcare subsidy (until end of March of third grade of elementary school)\nUnited States\nSony Corporation of America has further enhanced its system of short-term disability benefits for employees on medical leave, while Sony Interactive Entertainment offers online therapy sessions, fitness classes and free telemedicine services. New hybrid offices and\n### Employee Engagement Survey", "chunk_word_count": 536, "section_path": "SONY > ELTRES™ > Promoting Work-Life Balance", "document_id": "Sony Sustainability Report 2023", "page": 93, "page_start": 93, "page_end": 94 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 119, "chunk_text": "# SONY\n## ELTRES™\n### Communication Among Employees\nremote working policies have also been established, and work-life balance is promoted through measures such as mutual engagement between management and employees to balance face-to-face communication with the flexibility of remote work in order to achieve individualized working styles tailored to each person’s situation.\nSony implements a single employee engagement survey across all of its businesses worldwide to collect information that is used to increase the engagement of each employee and energize the organizations. The survey gathers and analyzes information on key factors for continuously improving employee engagement, such as employees’ trust in the company and attitudes about value creation, work efficiency and effectiveness, the work environment, careers, growth, employee wellbeing indices, and diverse perspectives. The survey results are used to identify areas for further improvement and effective action.\nSony is exploring new avenues for fostering even more active communication. Sony Group companies in the picture business and the entertainment, technology & services business operating in North America, Europe, and the Asia-Pacific region have adopted a system that allows employees to recognize and give accolades to peers for their contributions.\n### Europe\nSony Music Publishing provides support by offering private spaces for breastfeeding and other amenities to assist people with young children. It also offers wellness-related activities ranging from morning yoga to pilates in partnership with employee support activities at Sony Music.\nSony employees are voluntarily creating various communities across business and organizational boundaries, which serve as platforms for information exchange, learning, and idea creation. Sony Corporation is utilizing We Project, a bottom-up initiative designed to ferment corporate culture, to hold opinion polls about corporate culture and build communities through the in-house social media. Sony actively supports these communities by providing venues and platforms, and asking management to be involved in planning various activities.\nThe number of people who felt they had opportunities for personal development while working in the Sony Group increased, and the engagement index remained favorable for the second year running. The survey results are used as the basis for detailed analyses of each organization and senior management discussions on effective action. The improvement initiatives are also shared with employees via the corporate intranet and general meetings, with periodic review of results to monitor progress.\n### Organizational Culture and Communication\n### Communication\n### Labor Unions\nSony values employee communication. Embracing a corporate culture that promotes the spirit of freedom and open-mindedness passed down since its founding, Sony fosters diverse forms of communication both within workplaces and across organizational boundaries in order to create value.\nThe survey results are immediately disclosed to managers at each organization to facilitate discussions with employees on improvements that can be made with regard to issues for each organization based on the results and comments from staff who provided them. Sony makes the most of these employee surveys to shed light on employee engagement and promptly incorporates results into ongoing discussion and action across its organizations.\nSony maintains excellent labor-management relations. Approximately $9 \\%$ of the overall workforce (at consolidated sites) is unionized.\n### Workplace", "chunk_word_count": 510, "section_path": "SONY > ELTRES™ > Communication Among Employees", "document_id": "Sony Sustainability Report 2023", "page": 94, "page_start": 94, "page_end": 94 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 120, "chunk_text": "# SONY\n## ELTRES™\n### Communication Between Top Management and Employees\nSony creates appealing workplaces that foster Sony’s corporate culture and make it possible for people to have diverse work styles, while encouraging employees to take on new challenges and pursuing greater employee engagement.\nSony treats communication between top management, including the CEO, and employees as a priority. Regular updates on progress made in the Group’s businesses is provided through in-house websites, and communications are exchanged via e-mail and other media. Sony also works to create many other opportunities for direct dialogue between top management and employees. For example, Sony management holds regular informal gatherings and town hall meetings with employees, which cover a wide variety of themes, from technology to management. By sharing opinions from both perspectives, not only do employees gain a closer affinity with management, but the views of employees can also be used to enhance the quality of management.\n### Fostering Sony’s Corporate Culture\nSony strives to create appealing workplaces that foster a corporate culture that will lead the company into the future. At its Sony City headquarters, Sony’s corporate culture is enhanced via a range of “Sony experiences,” such as events involving employee collaboration that transcends business boundaries. Sony has created a history wall outlining its corporate history, with quotes from the founders and a lounge in the ground floor entrance hall of the headquarters building to communicate Sony’s principles and corporate culture. Sony Group companies are also creating workplaces with their own unique identities.\n\\* Percentage of employees who did not give an unfavorable response to four questions regarding employee engagement\n### Activity-Based Working\n### Encouraging Employees to Take on New Challenges\nSony’s offices utilize open floor plans that encourage collaboration and foster the creativity and productivity of employees. Sony embraces the concept of activity-based working to create functional workplaces that flexibly adapt to different styles of working and environments according to the work objectives and situation, enabling its diverse workforce to achieve a good work-life balance.\nSony endeavors to create spaces that encourage employees to take on new challenges, guided by its vision of creativity and spirit of taking on challenges. The Creative Lounge at the Sony City headquarters building, BRIDGE TERMINAL at Sony City Osaki, and Comi-chika at the Atsugi Technology Center serve as creative collaboration spaces for open communication and idea generation, supporting employees as they take on new challenges. Sony operates the Sony Startup Acceleration Program, which is an in-house startup to support the process from idea conception to business validation and commercialization by utilizing these creative spaces.\n[IMAGE CAPTION] History wall and lounge in the entrance hall of the Sony City headquarters building\n[IMAGE CAPTION] The Sony City Minato Mirai office, designed to create a collaborative environment\n[IMAGE CAPTION] BRIDGE TERMINAL at Sony City Osaki\n### Enabling Diverse Work Styles\nWherever possible, Sony has adopted measures to boost the flexibility of its work styles and provided working environments where employees can enjoy work-life balance. As part of these measures, it has created the STATIONS satellite offices at Sony City Minato Mirai. These can be used by employees from all business segments of the Sony Group and provide an additional option to working from home or commuting to their usual work location.", "chunk_word_count": 542, "section_path": "SONY > ELTRES™ > Communication Between Top Management and Employees", "document_id": "Sony Sustainability Report 2023", "page": 94, "page_start": 94, "page_end": 95 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 121, "chunk_text": "# SONY\n## ELTRES™\n### Creating Comfortable Working Environments\nFollowing the increased establishment of working from home following measures taken during the COVID-19 pandemic, Sony has seen more widespread adoption of “hybrid work,” which combines home and office work. As the functions required of offices change, Sony is promoting innovations such as non-territorial offices and booths for online meetings.\n[IMAGE CAPTION] Photo: ©Nacása & Partners\nSony has also built systems aimed at providing workplaces to fit diverse work styles by accelerating employee communication and improving convenience. These systems enhance convenience through features such as enabling employees to share their attendance status and register their desk use at their workplace.\n### Sony Group Global OHS Medium-Term Plan\n### Occupational Health & Safety\nTo achieve its Vision Zero objectives, Sony is working to meet its OHS Medium-Term Plan, which is a globally shared plan. It is currently working to meet the targets for the period from fiscal year 2021 to fiscal year 2023.\n[IMAGE CAPTION] ISO 45001 certification\n### Global OHS Initiative\n### Sony Group Global Policy on Occupational Health & Safety: Philosophy and Vision\nSony has established the Sony Group Global Policy on Occupational Health & Safety for Sony Group companies worldwide. This policy states, “The Sony Group regards securing the health and safety of workers as a key challenge. The Sony Group is committed to reaching ZERO injury and ZERO illness, and to securing safe and engaging environment of workplace for all the workers in any business activity. To fulfill this commitment, Sony works hard to build safe, healthy working environments for everyone working at Sony. Sony has also formulated the Sony Group OHS “Vision Zero” with the ultimate objective of ensuring ZERO injury and ZERO illness.\n### Reduction of Accidents Caused by Unsafe Behavior\nThe global occurrence of OHS incidents has been trending downward each year in terms of both numbers of incidents and lost work days, but Sony is still working to further reduce risks. An analysis of OHS incidents in all regions has prompted Sony to identify collisions, slips, trips and falls due to unsafe behavior as a global priority due to the especially high number of such incidents. Accordingly, action to further reduce the number of slips, trips, falls and collisions is being promoted globally in the OHS Medium-Term Plan for fiscal years 2021 to 2023.\n### Enhancing Measures to Tackle New Risks\nNew ways of working have been established as a result of the transformation of work styles and workplace environments that started as a response to COVID-19. Sony implements measures to promote good health with the aim of enabling employees to maintain their vitality and enthusiasm for their work and professional growth while working in this more adaptable way. It implements measures that are consistent with the actual situation and characteristics of each business site; these include promoting ergonomics in order to reduce fatigue and stress when working from home.", "chunk_word_count": 486, "section_path": "SONY > ELTRES™ > Creating Comfortable Working Environments", "document_id": "Sony Sustainability Report 2023", "page": 95, "page_start": 95, "page_end": 96 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 122, "chunk_text": "# SONY\n## ELTRES™\n### Further Improvement of OHS Management System Based on ISO 45001\nSony operates an OHS management system based on the ISO 45001 international standard, covering people working in the Sony Group worldwide. It has also been working to obtain integrated ISO 45001 certification, beginning with manufacturing, logistics and R&D sites around the world and then proceeding on to other sites. Of the 60 relevant sites, 50 (1 site in the HQ OHS Office, 27 sites in Japan/East Asia, 11 sites in China, 7 sites in Pan Asia, 3 sites in Europe, and 1 site in Picture Segment) have already obtained integrated certification, an\n### Improving Management of Chemical Substances / Reducing Accidents Caused by Machinery\nSony’s R&D facilities and manufacturing sites use a wide variety of chemical substances and machinery, and reducing the risks associated with that use is an important determinant of the level of\n### HQ OHS Office\nsafety and health. Sony is establishing a risk assessment system that will not just identify hazards relating to chemical substances, machinery, and work modes, but will also check that legal requirements are met. This system will be deployed globally. Sony also carries out internal site audits and corporate audits by Headquarters and Regional Safety Offices to ascertain the state of chemical substance management at its manufacturing sites. In order to strengthen management of chemical substances, which is one of the objectives of the OHS Medium-Term Plan, substances identified as hazardous process chemicals in the Industry Focus Process Chemical List\\* have been included in the list of substances that require management with the aim of promoting thorough risk assessment.\nmeetings with regional safety officers to share examples of good practices and events in the region, and this information is used in problem solving. Regional conferences are hosted by safety officers and attended by representatives from sites in the region to gather opinions from individual workplaces and share about any issues. In addition to regularly including information on good practices collected by the HQ OHS Office in in-house newsletters, each time a significant incident occurs or information on an accident comes to light, the office also instructs that actions be taken to prevent a recurrence.\n• Carries out Sony Group’s OHS-related headquarters functions \n(governance functions) \n• Ensures compliance with OHS laws and regulations, and sets and seeks to accomplish the corporate target\n### Regional Safety Officers\n•Set and implement regional targets and plans • Establish and direct Regional Safety Offices • Direct compliance with OHS-related legislation and Group regulations, and instruct corrective action when violations occur", "chunk_word_count": 428, "section_path": "SONY > ELTRES™ > Further Improvement of OHS Management System Based on ISO 45001", "document_id": "Sony Sustainability Report 2023", "page": 96, "page_start": 96, "page_end": 97 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 123, "chunk_text": "# SONY\n## ELTRES™\n### Global Audit System\nAt Sony’s sites, internal audits, corporate audits and external audits are employed to examine the effectiveness of OHS management systems. Internal audits are conducted for sites to examine the effectiveness of their own OHS management system in order to continuously improve the system and ensure that occupational accidents are prevented. The HQ OHS Office and Regional Safety Offices carry out corporate audits to examine compliance with corporate rules. External audits are conducted to provide confirmation of the effectiveness of the $\\mathsf { O H S }$ management system by a third-party certification body. These three types of audits combine to determine the effectiveness of the Sony Group OHS management system as a whole. The HQ OHS Office is responsible for training corporate auditors and examining the effectiveness of audits carried out at the regional level. Once it has established an in-house auditor system and determined auditor qualification requirements, it conducts periodic auditor training to enhance auditing skills.\n### Regional Safety Offices\n\\* The Industry Focus Process Chemical List is a list of process chemicals for which risk management is considered necessary. It is compiled by the Responsible Business Alliance (RBA), a coalition that aims to create responsible supply chains (including procurement and production). Sony is a member of the RBA.\n• Staffed by Regional Safety Officers • Ensure that the Sony Group complies with OHS laws and regulations and accomplishes the corporate targets in their regions.\n[IMAGE CAPTION] 50 sites worldwide acquired integrated ISO 45001 certification\n### Global OHS Organization\nTo ensure that all group companies operate under a single management structure, Sony has established a global OHS system led by top management and comprised of eight Safety Offices (in Japan/East Asia, China, Pan Asia, Latin America, North America, Europe, and in the Music and Pictures segments), and appointed Regional Safety Officers who are responsible for implementing cross-regional programs. To staff the management of this system, Sony established an HQ OHS Office at Sony Group Corporation headquarters to serve as the OHS headquarters at the Sony Group. This office does the practical work to ensure compliance with laws and regulations related to health and safety, as well as to set Sony Group OHS targets and ensure that they are met.\n\\*1 Japan, South Korea and Taiwan Region \n$^ { \\star 2 }$ Mainland China and Hong Kong Region \n\\*3 Mongolia, Asian countries other than the above, the Middle East, Oceania, Africa, Tajikistan, Turkmenistan, and Uzbekistan \n\\*4 Europe, Turkey, Israel, Russia, and former Soviet Union countries (except for Tajikistan, Turkmenistan, and Uzbekistan) \n\\*5 Sites affiliated with Sony Music Entertainment \n\\*6 Sites affiliated with Sony Pictures Entertainment\n### Management Review\nThe HQ OHS Office facilitates annual management reviews conducted by the officer in charge of human resources and general affairs based on each region’s reports to evaluate OHS activities; the occurrence of occupational accidents and illnesses in each region; and the level of achievement of activity goals. Management comments set out in management reviews are reflected in the OHS Medium-Term Plan, and are fed back to each Regional Safety Office and to sites within each region.\nTop Management", "chunk_word_count": 524, "section_path": "SONY > ELTRES™ > Global Audit System", "document_id": "Sony Sustainability Report 2023", "page": 97, "page_start": 97, "page_end": 97 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 124, "chunk_text": "# SONY\n## ELTRES™\n### Activities of the Sony HQ OHS Office\n• Establish Sony Group basic OHS policies and targets \n• Establish and supervise an organization for promoting the OHS management system \n• Appoint, remove and direct Sony Group Safety Officers and Regional Safety Officers\nMonitoring\nTo achieve the Vision Zero goals, the HQ OHS Office regularly collects information on the occurrence of occupational accidents and illnesses at Sony Group companies and sites, and information on the OHS activities carried out there. To collect information, Sony holds regular\n### OHS Education\n### Occupational Health and Safety Initiatives by Region/Business\nSony provides regional education tailored to its businesses in each region. In addition, the HQ OHS Office holds training sessions for internal auditors to improve the skills of auditors in each region. In Japan/East Asia, the Japan/East Asia Regional Safety Office provides group training to ensure that OHS managers and employees of business sites have the required skills.\n### Awareness of Near-miss Accidents\nSony has integrated activities relating to near-miss accidents into employee safety training, ensuring that all employees participate and promoting efforts designed to eliminate accidents.\n### Occupational Health and Safety Initiatives in Japan/East Asia\nIn fiscal year 2022, 13 out of the 20 accidents caused by unsafe behavior that led to absence from work were due to slips and falls. The length of absences from work is increasing, particularly among employees aged 50 and older, and this trend continues to be an issue that must be addressed. Sony is working to further reduce industrial accidents through efforts such as raising awareness of accidents caused by slips and falls, measures to prevent recurrence, the lateral sharing of examples of good practices, and by requesting that external contractors cooperate in ongoing safety activities. In response to revised legislation moving toward independent management of chemical substances, Sony promotes understanding and awareness of the relevant content through monthly newsletters covering relevant changes related to health and safety. As part of emergency preparedness, Sony has also taken measures to account for the transition in working from home as part of its new work styles, including carrying out online emergency drills and storing manuals inside helmets to enable everyone to respond appropriately in the event of an emergency.\n### E-learning on Road Safety\nSony provided e-learning materials covering safety risks relating to automobiles, electric motorcycles, being a pedestrian, and traveling during business trips. This facilitated access the material, and a total of 70,000 employees in the region have now taken this training. Sony has also implemented safety activities aiming to reduce the number of accidents at manufacturing sites, including horizontal deployment of best practices with manufacturing bases in the Pan-Asia region. These efforts have led to a $60 \\%$ reduction in accidents in the China region compared to fiscal year 2021..\n[IMAGE CAPTION] 2022 Summer Safety Campaign: Road Safety E-learning Material", "chunk_word_count": 477, "section_path": "SONY > ELTRES™ > Activities of the Sony HQ OHS Office", "document_id": "Sony Sustainability Report 2023", "page": 97, "page_start": 97, "page_end": 98 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 125, "chunk_text": "# SONY\n## ELTRES™\n### Occupational Health and Safety Initiatives in China\nIn the China region, Sony completed its transition to ISO 45001 certification in fiscal year 2020 and expanded the scope of the OHS management system to include non-manufacturing sites in fiscal year 2021. Under the leadership of the China Regional Safety Office, OHS management for the entire China region has been achieved, covering both manufacturing and non-manufacturing sites. Various ongoing regional safety initiatives have been implemented since fiscal year 2015 with the aim of eliminating occupational accidents. These include raising awareness of near-miss accidents, safety simulations for electric motorbikes, and production of safety videos. In fiscal year 2022, Sony also implemented a new summer safety campaign to raise awareness of safety issues among employees.\n### Occupational Health and Safety Initiatives in North America\nSony operations in North America consist of a diverse group of companies across many fields. Operations include corporate office functions, sales and marketing, warehouse and distribution, game and network services, music and film business, biotechnology R&D, and a limited amount of manufacturing. Site headcounts range from fewer than 10 to more than 1,000 employees. The Sony Group Global Policy on Occupational Health and Safety (OHS) serves as the underlying guidance documentation. Operations strive for a wellbalanced program of safety, health and wellness initiatives, in keeping with the type and size of operation. As a manufacturing and warehouse facility, Sony DADC Terre Haute is preparing for external ISO45001 certification.\n### Emergency Preparedness\n[IMAGE CAPTION] DADC Terre Haute Employee Badge Card & Safety Slogan Contest\nThe Sony Electronics Inc. (SEL) Security Team has revamped its SharePoint site promoting emergency preparedness and highlighting additional training and resources. The site provides government and third-party resources to increase home readiness and preparedness in the office. The SEL Security team continues to host virtual emergency preparedness events for participants in the US and Canada. In addition, SEL Security delivers safety and security newsletters twice a year. In November 2022, the event featured best practices for fire safety in the office and at home.\n### Advancing Safety, Health and Well-Being\nThe tagline “Advancing Safety, Health and Well-Being” is used to communicate the objectives of Vision Zero and workplace safety. Sony Group Global Policy on Occupational Health and Safety (OHS) provides the underlying guidance for those efforts. Operations strive to implement a well-balanced program of safety, health and wellness initiatives, tailored to the specific type and size of operation.\n[IMAGE CAPTION] Emergency Preparedness Website (SEL)\n### Occupational Health and Safety Initiatives in Latin America\nIn Latin America, Sony has worked to establish OHS campaigns, internal audits focused on health, safety and has held Health Care events. Each Sony location has an emergency preparedness plan in place, tailored to meet the potential emergencies that may occur at that site.\n[IMAGE CAPTION] Advancing Safety, Health and Well-Being\n### Emergency Drills\nFirst aid and fire extinguisher training is held for security brigades.\n### Health Care", "chunk_word_count": 489, "section_path": "SONY > ELTRES™ > Occupational Health and Safety Initiatives in China", "document_id": "Sony Sustainability Report 2023", "page": 98, "page_start": 98, "page_end": 99 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 126, "chunk_text": "# SONY\n## ELTRES™\n### DADC Terre Haute Safety Slogan Contest\nAn annual health week with activities such as medical exams, visual revision, wellness coach, paddle tournament and exercise afternoon is held at Sony Inter-American (Panama).\nTo reinforce the Safety Policy, DADC Terre Haute designed badge cards with the policy displayed on one side. The other side of the card prompts employees to define the policy in their own words, as it relates to their specific job at Sony DADC. These cards have been incorporated into the employees’ badge holders and have been distributed to all current employees. They are also distributed to new hires during orientation sessions.\n### OHS Activities and Training\nSony operations in North America are committed to ensuring the safety of our employees and reducing the risk of injuries and accidents through training. In 2022, each company planned a series of safety training sessions and events to promote a culture of safety in the workplace. These included CPR and AED training, COVID-19 safety, and high-risk workplace hazards (e.g. aerial lift training, laser safety, etc.). In addition, Sony Corporation of America offered a month long Safe@Sony campaign, hosting a variety of both in person and virtual events providing employees with important information, advice, and educational sessions on safety and emergency preparedness.\n### Occupational Health and Safety Initiatives in Europe\nIn Europe, Sony has identified occupational health and safety (OHS) management as a top priority and has implemented an OHS risk reduction program. The program aims to lower OHS risk by reducing occupational accidents and strengthening the health and well-being of employees. A $2 6 \\%$ reduction in lost days was achieved Europewide after the program’s implementation.\nIn December 2022, DADC Terre Haute also gave away T-shirts that featured the Safety Policy. These projects were completed in an effort to reinforce the Safety Policy leading up to the ISO 45001 external certification audit.\n### Sony Network Communications Europe (Sweden)\nEvery Wednesday morning, a 15 minute mediation session is held both on site in Malmö and digitally via Teams. Research shows that meditation has good effects on the body and mind, and boosts creativity and reduces stress. This activity has increased the sense of wellbeing of those take part in it, with 10-20 participants consistently joining every week.\n### UK Technology Centre\nUK TEC has created a comprehensive Health & Safety online library called SafetyHub, in which employees can find Training and general information.\nWith a wide range of topics covered, from fire prevention and chemical safety, to ergonomics and overall well-being, the library provides a comprehensive and easy-to-use platform (with a variety of formats available, including videos, webinars, and interactive modules) for learning about critical health and safety topics. With up-to-date information and expert guidance, the SafetyHub helps the UK TEC team promote a culture of safety, reduce accidents and injuries, and protect their employees' health and well-being.\n[IMAGE CAPTION] Site Top Management Safety Patrol (STT, Thailand)\n[IMAGE CAPTION] Thai National Occupational Safety and Health Award 2022 (Platinum Award)", "chunk_word_count": 501, "section_path": "SONY > ELTRES™ > DADC Terre Haute Safety Slogan Contest", "document_id": "Sony Sustainability Report 2023", "page": 99, "page_start": 99, "page_end": 100 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 127, "chunk_text": "# SONY\n## ELTRES™\n### Occupational Health and Safety Initiatives in Pan Asia\nIn the Pan Asia Region, all manufacturing sites have ISO45001 certification and all sites are continually improving the OHS management system. Pan Asia Region sites will plan for further continual improvement of the OHS management system and operations concerned to reduce injuries and achieve Vision Zero.\n[IMAGE CAPTION] Safety Dojo Training (SDT, Thailand)\n### Ongoing OHS initiatives\nAll four manufacturing sites in Thailand and Malaysia were certified Sony Global ISO 45001 Certification in FY2022. In the Pan Asia Region, we are aiming to expand this global certification coverage to the India site soon.\nInjury reduction and prevention activities were maintained at all sites and focused on reducing injuries from slips, trips, falls, machines, and chemicals, including the frequency and severity of these injury cases, through additional site top management safety patrols to ensure site safety operations and a Safety Week campaign to raise general safety awareness among employees. In addition, OHS training programs were provided to all employees and workers (OHS management system training, OHS legal requirements in each country, emergency preparedness, equipment or machines, forklifts or hand lifts, ergonomics, etc.). All training programs emphasize employee safety awareness and recognize their ability to avoid and prevent the risks that may occur to them. Safety orientation programs at some sites were also adapted to include the safety risk simulation session and let new employees observe real risks for themselves. (Safety Dojo training)\n### OHS Performance\n[IMAGE CAPTION] Sony Global Trends in Lost Workdays\nSony employs a global data collection system to gather occupational health and safety data on a quarterly basis in the countries and regions in which it has operations. Sony analyzes these statistics to gain an understanding of circumstances and trends in terms of country/ region and accident type, in order to help prevent recurrences.\n### Major Causes of Injuries in Fiscal Year 2022\n1. Slips, trips and falls: 26 (same as previous year) \n2. Collisions with people or objects: 10 accidents (6 less than the previous year) \n3. Cuts and grazes: 7 accidents (4 less than the previous year)\nThese were the top three categories of unsafe behavior causing accidents in fiscal year 2022, accounting for roughly $70 \\%$ of all accidents causing absence from work. Sony has set a medium-term target of reducing accidents caused by slips, trips, falls and collisions, and is making global efforts aimed at improvement.\n[IMAGE CAPTION] Sony Global Trends in the Number of Injuries", "chunk_word_count": 415, "section_path": "SONY > ELTRES™ > Occupational Health and Safety Initiatives in Pan Asia", "document_id": "Sony Sustainability Report 2023", "page": 100, "page_start": 100, "page_end": 102 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 128, "chunk_text": "# SONY\n## ELTRES™\n### Maintaining and Promoting Health\nworkshops for employees. Sony is also promoting the creation of a system that facilitates consultation and workplaces where employees can work with peace of mind knowing that they will not be isolated even if they frequently work from home. Sony also holds informal gatherings where employees and managements can meet with clinical psychologists and is making efforts to improve literacy with regards to changes to working styles.\nThe stress check response rate is $9 2 \\%$ , and group analysis aimed at improving the work environment is carried out at a rate of $100 \\%$ . In addition to “causes of psychological burden” such as the sense of burden from work, “buffer factors” such as support from superiors and colleagues, and “mental and physical symptoms” such as fatigue and anxiety, Sony also measures a wide range of factors related to the vitality of individuals and organizations, including the sense of unity in the workplace and the significance of work. This is used to provide feedback to managements. Review meetings are held with teams of medical professionals including industrial physicians, public health nurses, and clinical psychologists. Through this and other efforts, Sony is working to build vibrant workplaces that feel rewarding to work at.\n### Creating a Workplace Culture of Wellness\nIt is essential that every employee be mentally and physically healthy if they are to perform at their best and create innovation. Sony focuses on enhancing organizational and personal well-being (health and happiness) by fostering a corporate culture that values both body and mind in order to help ensure sustained growth for both the company and employees. Sony is focused on the prevention and early detection of health problems, improving the workplace environment, and the health literacy of employees, through attentive and individualized support, education and training for management, and providing information and activities to raise awareness via a variety of channels.", "chunk_word_count": 321, "section_path": "SONY > ELTRES™ > Maintaining and Promoting Health", "document_id": "Sony Sustainability Report 2023", "page": 102, "page_start": 102, "page_end": 102 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 129, "chunk_text": "# SONY\n## ELTRES™\n### Helping Employees Receive Treatment while Working\nSony actively seeks to provide support that enables employees to strike a proper balance between cancer treatment and work, and to feel fulfilled and motivated in their work. In fiscal year 2020, Sony introduced the Symphony Plan, a program to help employees attain this particular balance. Sony provides professional support so that employees who continue to work while undergoing cancer treatment can choose from a variety of flexible work styles. This support includes consultations with occupational physicians and occupational nurses who are qualified as work-life support coordinators. Sony is also focusing on raising awareness about cancer and supporting early detection. In addition to introducing cervical cancer screenings for female employees under 35, Sony has also strengthened its stance on recommending follow-up examinations for employees who have abnormal findings during medical examinations and physical check-ups. Sony has also been working to raise awareness of cancer prevention, early detection, and early treatment through seminars and e-learning resources since fiscal year 2021.\nSupport for individual employees is also important. Sony has established health-counseling services, offering access to counseling with clinical psychologists, industrial physicians and occupational health nurses via in-person or online sessions. Sony also works with outside professional organizations to implement a program under which employees returning to work after taking mental health leave receive help readjusting to the workplace via Sony’s employee assistance program (EAP). Sony has a mental health support program in place to provide employees with psychological care in the event of natural disasters and other incidents.\nAs work styles change, Sony is using data from health checkups and stress checks to address issues involving employees’ mental health, balancing medical treatment and work, and lifestyle diseases and is taking various steps to resolve these issues.\n### Promoting Mental Health\nSony implements comprehensive mental health support measures focused particularly on preventing health problems and motivating employees and organizations.", "chunk_word_count": 318, "section_path": "SONY > ELTRES™ > Helping Employees Receive Treatment while Working", "document_id": "Sony Sustainability Report 2023", "page": 102, "page_start": 102, "page_end": 102 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 130, "chunk_text": "# SONY\n## ELTRES™\n### Health Management for Employees Who Work Long Hours\nA health management survey of approximately 40,000 people from 39 group companies showed that employees with fewer stress responses such as fatigue and anxiety tend to display higher levels of engagement. To bolster the ability of the individual to manage stress, which is a key to a vibrant organization, Sony holds mindfulness\nWorking long hours for an excessive period of time not only causes physical and mental health issues, but also reduces the job satisfaction of employees and risks the health of the organization as a whole. Sony actively works to create a better working environment in both respects. Managements, the Human Resources Department, and the Occupational Health Department work together to improve working environments, with workplace structures that do not concentrate an excessive burden on certain employees and a focus on workplace culture in which employees feel comfortable consulting with their superiors. Sony provides education and training for managements on the impact of working long hours to help them understand the health issues involved and enhance their skills of managing the work hours and health of the employees in their team. As part of comprehensive efforts to help employees stay healthy and prevent health problems, Sony employees who work long hours are seen by industrial physicians and occupational health nurses. The number of employees requiring this counseling has decreased for two consecutive years.\n### Women’s Health\n### COVID-19 Measures and Accommodating New Work Styles\nTo establish dynamic working environments where women can display their abilities, it is important to address health issues that affect women. Sony is working to increase literacy about women’s health so that women can improve their own physical and mental health and reach their full potential. Sony seeks to educate and inform employees of all genders about health issues that affect women at different stages of their lives through various initiatives including online seminars led by experts. Additionally, Sony operates a support hotline for women’s health issues through which industrial physicians, public health nurses, and midwives listen attentively to concerns and provide individualized advice about health issues that affect women.\nSony was committed to maintaining a safe working environment that ensures sufficient physical distance between employees at business sites. In consideration of governmental guidance in each country and the specific work style of each of its diverse businesses, Sony limited the number of employees allowed to report for in-person work based on attendance plans at each company and unit.\nWith many employees working from home, Sony recognizes the importance of mental health care. Sony provides tips for self-care and employee care, and is enhancing autonomy and activating workplace communication to reduce the anxiety and sense of isolation of employees working from home.", "chunk_word_count": 460, "section_path": "SONY > ELTRES™ > Health Management for Employees Who Work Long Hours", "document_id": "Sony Sustainability Report 2023", "page": 102, "page_start": 102, "page_end": 103 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 131, "chunk_text": "# SONY\n## ELTRES™\n### Helping Employees Quit Smoking and Preventing Passive Smoking\n[IMAGE CAPTION] Education and support group for employees going through menopause\nSony has also set up a counseling desk where medical professionals provide timely advice on topics such as reducing stress and improving working conditions and lifestyle habits while working from home.\nSony actively encourages employees to quit smoking and works to prevent second-hand smoke from affecting non-smokers. In order to eliminate unwanted second-hand smoke, Sony is moving forward with steps to eliminate cigarettes and smoking areas from working environments, and implemented a general ban on smoking inside its buildings in Japan in April 2022. Industrial physicians and occupational health nurses work closely with employees who are smokers to provide one-on-one counseling and support to ensure that they correctly understand the health risks to themselves and, through second-hand smoke, to those around them, and to motivate them to quit smoking. These efforts are gradually reducing the percentage of smokers in the Sony workforce. However, the increase in working from home has led to new smoking-related issues, including smoking and passive smoking at home. The emergence of heated tobacco products and other new methods of smoking is also an issue. In fiscal year 2022, Sony provided e-learning on preventing second-hand smoke and encouraging people to quit smoking in addition to an on-demand course to raise awareness of the risks associated with heated tobacco products.\n### Main Initiatives in Japan\n(Primarily for areas under restrictions during a state of emergency or quasi-state of emergency)\n• Prohibiting international and domestic business travel \n•Expanding provisions for working from home \n• Eliminating core hours in the monthly flextime system \n• Adding special leave due to temporary school closures and special measures for the COIVD-19 vaccine \n• Relaxing restrictions on commuting to include private cars and bicycles \n• Paying allowances for working from home and to support COVID-19 infection prevention \n• Ordering employees to refrain from business meals \n• Opening satellite offices to support diverse work styles \n•Implementing corporate COVID-19 vaccination drive \n•Adding special leave for the COVID-19 vaccination \n•Conducting harassment prevention training related to vaccination\n### Preventing Lifestyle-related Diseases\nPreventing lifestyle diseases caused by lack of exercise and/or sleep, irregular eating habits, and other aspects of an imbalanced lifestyle is a major challenge for corporate employees. Sony makes sure that employees undergo comprehensive medical checkups and examinations and then receive personal health advice from industrial physicians and occupational health nurses, as well as support for follow-up examinations at medical institutions if needed. Sony also focuses on counseling and advice dealing specifically with managing metabolic syndrome. Additionally, Sony implements various initiatives to set employees up for better lifestyle habits and increase health literacy. These initiatives take into account analysis of data on employee health issues compiled by organization, based on data from employee medical checkups. Starting in the last fiscal year, Sony has placed particular focus on measures to tackle a lack of exercise, which has become an issue as working from home becomes more common. Sony provides various opportunities for employees and their families, including holding seminars and online walking events aimed at forming exercise habits, and aims to create communities to maintain exercise habits.", "chunk_word_count": 533, "section_path": "SONY > ELTRES™ > Helping Employees Quit Smoking and Preventing Passive Smoking", "document_id": "Sony Sustainability Report 2023", "page": 103, "page_start": 103, "page_end": 104 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 132, "chunk_text": "# SONY\n## ELTRES™\n### Health Management for Employees Transferred Overseas\ncontinuity plans. Sony provides male employees from age groups that were not vaccinated through public rubella vaccination programs with access to rubella antibody tests when they receive their regular health checkups.\nAt present, employees of the Sony Group and their family members from Japan are stationed in 30 countries worldwide. This is why Sony has established a health management system that ensures that staff stationed overseas and their families can live and work in safety and good health. Before departing for an overseas post, in addition to receiving healthcare information, medical checkups, and vaccinations, employees are provided with information on the medical, health, hygiene conditions and medical facilities in the country where they will be stationed.\nSony is also focusing on improving the workplace environment and supporting the mental health of employees assigned to new posts through measures such as stress checks and training for managements. Sony offers employees stationed overseas the same stress checks that employees in Japan receive, and is working to improve the work environments and support mental health at the place of assignment. In addition, Sony works to prevent disease and mitigate risk, with industrial physicians tracking the situation at sites and medical facilities overseas to provide the support that employees working overseas need in order to feel secure.\n### Infectious Disease Measures\nIn addition to protecting employees who are active globally from the threat of infectious diseases by arranging for employees to receive necessary vaccinations if they work in or travel on business to countries at risk, Sony also provides information on safety and infectious diseases in specific countries before employees travel to their post. Sony also issues alerts regarding infectious disease in specific countries, and implements safety measures such as restrictions on business travel under certain circumstances.\nIn Japan, if there is an outbreak of a new strain of coronavirus, influenza, tuberculosis, rubella, measles, or another illness, Sony cooperates with the government and other entities as necessary in order to respond flexibly while staying ready to implement business\n### Looking to the Future\n### Overview\nSony aims to continue to carry out human rights due diligence, and further enhance initiatives to prevent or mitigate potential negative impact on human rights.\n### Milestones", "chunk_word_count": 379, "section_path": "SONY > ELTRES™ > Health Management for Employees Transferred Overseas", "document_id": "Sony Sustainability Report 2023", "page": 104, "page_start": 104, "page_end": 105 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 133, "chunk_text": "# SONY\n## ELTRES™\n### Basic Approach\n1987: Human Rights Office established \n1991: Human rights lectures for employees launched \n1995: Sony Group Human Rights Committee established \n1998: Counseling services on human rights and equal opportunities for employees initiated \n2000: Philosophy and basic approach to human rights established \n2003: Sony Group Code of Conduct established \n2011: Human Rights Committee changed name to Diversity Committee \n2012: Human Rights Impact Assessments \n2018: Sony Group Code of Conduct revised Sony Group AI Ethical Guidelines established Human rights impact assessment updated \n2019: Sony Group AI Ethics Committee established \n2020: Human rights impact assessment updated \n2021: Working group to implement human rights due diligence established\nSony is aware of the human rights impacts of its global business activities. Sony recognizes that respecting human rights throughout Sony’s value chain and addressing any potential human rights risks, whether the relationship with Sony’s business operation is direct or indirect, is a responsibility that a diverse range of stakeholders hold Sony accountable to. Sony has set down its fundamental human rights policy in the Sony Group Code of Conduct, which specifies that to respect human rights should be the basic stance of all Sony directors, executives, and employees.\n### Respect for Human Rights\n### Structure\nSony Group Code of Conduct [PDF: 2.78 MB] Sony Group AI Ethics Guidelines [PDF: 103 KB] Statement on Modern Slavery Act\nThe Sustainability Section at Sony Group Corporation is supervised by the Senior Executive in charge of Sustainability. It assesses human rights impact throughout Sony Group’s business activities and value chains. In 2021, the Sustainability, Legal, and Compliance sections at Headquarters launched a working group to implement human rights due diligence measures for the entire Sony Group’s business activities and its value chain, based on Sony’s human rights impact evaluation results and regulatory trends. The working group strives to prevent and/or mitigate any potential negative impact on human rights in collaboration with personnel at Sony businesses, including personnel in the human resources and procurement departments, Sony also established the Diversity Promotion Council, chaired by the senior executive in charge of human resources and general affairs, with members drawn from related departments at Headquarters. The Council provides support for group-wide initiatives to raise awareness of human rights and promote diversity.\n### Respect for Diversity, Equity and Inclusion\n### Human Rights Due Diligence\n### Identifying Priority Areas\nSony is committed to creating a workplace that respects human rights and provides equal employment opportunities that allow all individuals to make the most of their capabilities. Sony also helps to ensure that workers’ rights are safeguarded by adhering to worker protection laws, regulations, and standards in all regions where it operates.\nThe human rights risk impact assessment carried out in 2020 identified the following as potential human rights risk areas:\n• Human rights risks relating to workers in the electronics industry supply chain, including procurement of raw materials • Potential human rights risks associated with new technologies such as AI • Potential risks that customers with whom Sony has direct or indirect business relationships may engage in human rights abuse", "chunk_word_count": 511, "section_path": "SONY > ELTRES™ > Basic Approach", "document_id": "Sony Sustainability Report 2023", "page": 105, "page_start": 105, "page_end": 106 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 134, "chunk_text": "# SONY\n## ELTRES™\n### Employees\nUnder the Sony Group Code of Conduct in which Sony’s policy requiring respect for human rights is set forth, Sony established and implemented group policies specific to the human rights area. Sony engages in initiatives to prevent or mitigate any potential negative impact on human rights in line with the framework set out in the United Nations Guiding Principles on Business and Human Rights (UNGP) issued by the United Nations Human Rights Council and the OECD Guidelines for Multinational Enterprises.\nThrough the Global Social Justice Fund, Sony continues to promote diversity, equity and inclusion (DE&I) internally and externally and support organizations that promote social justice and anti-racism initiatives.\nBased on the above assessment, Sony Group has prioritized action in the following Priority Areas: (1) a responsible supply chain, (2) respect for diversity, equity, and inclusion, and (3) responsible development and use of technologies.\n### Sony’s Two Global Funds\nAccessibility: Sony is committed to an inclusive future and strives to enable and empower individuals of all abilities to share Kando (emotion) and create a world where everyone belongs by enhancing the accessibility of its products, services, and experiences. As part of this role, Sony is promoting accessibility and inclusive design initiatives group-wide so that as many customers as possible can enjoy Sony products and services. Sony has been participating in the CSUN Assistive Technology Conference, where many people with disabilities attend, to provide people with diverse needs the opportunity to experience Sony products and services and engage in dialogue with Sony.\n### Initiatives to Address Priority Areas\nSpecifically, Sony promotes human rights efforts in the following ways: (1) conducting human rights impact assessments, (2) identifying areas of human rights risk highly relevant to Sony’s business operations (Priority Areas) as based on the aforementioned assessments, (3) conducting activities to address Priority Areas, (4) providing grievance mechanisms (hotlines), and (5) communicating with stakeholders.\n### Responsible Supply Chain\nSony is a founding member of the $\\mathsf { R B A } ^ { \\star }$ and has played an active role on the RBA Board of Directors since 2020. The RBA Code of Conduct represents industry best practices; Sony was not only involved in its formulation but also adopted it as the Sony Supply Chain Code of Conduct. Sony electronics manufacturing sites and suppliers are requested to comply with the Sony Supply Chain Code of Conduct. They are also requested to carry out risk assessments, be subject to regular monitoring regarding compliance with the Supply Chain Code of Conduct, and implement any necessary improvements based on the results of the monitoring.\n### Quality and Customer Service (Accessibility) Sony Group Web Portal: Accessibility", "chunk_word_count": 444, "section_path": "SONY > ELTRES™ > Employees", "document_id": "Sony Sustainability Report 2023", "page": 106, "page_start": 106, "page_end": 106 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 135, "chunk_text": "# SONY\n## ELTRES™\n### Human Rights Risk Impact Assessments\nAdvertising Creativity and Content Services: As a company that conducts business in various regions and countries across the globe, Sony recognizes that conduct which is socially and professionally acceptable in one culture or region may be viewed differently in another culture. As such, Sony takes those differences into account in its decision making. Advertising personnel from Sony Group companies in Japan regularly meet to exchange information on and study human rights issues with respect to advertising.\nSony has conducted group-wide human rights impact assessments since 2012 in partnership with $\\mathsf { B S R ^ { \\star } }$ to identify relevant risks and to work to mitigate them. Sony draws up a list of human rights issues from international standards such as the Universal Declaration of Human Rights, the ILO International Labour Standards, and the OECD Guidelines for Multinational Enterprises. We also reference source materials from human rights experts, academics, governments, NGOs and other experts to identify potential human rights risks. This information is compared to Sony’s areas of business to identify risks most relevant to Sony’s business activities.\n\\* An alliance dedicated to supply chain responsibility encompassing human rights, labor conditions, health and safety, and the environment\nResponsible Supply Chain\nSony Interactive Entertainment (SIE) applies Computer Entertainment Rating Organization (CERO), Entertainment Software Rating Board (ESRB), and Pan European Game Information (PEGI) ratings to its PlayStation game titles, adhering to the age-based recommendations of ratings organizations in Japan, the United States, and Europe, respectively.\n\\* BSR is an independent, global, non-profit organization devoted to building a just and sustainable world.\n### Sony’s Ethics and Compliance Program\nSony Pictures Entertainment (SPE) also implements various DE&I initiatives that impact every area of its business, including its content. For example, SPE collaborates with global nonprofit organizations, including the Geena Davis Institute on Gender in Media, the American Black Film Festival, and the Gay & Lesbian Alliance Against Defamation to identify ways to increase positive and diverse gender images onscreen and among creators involved in production.\nhuman rights initiatives.\nSony established the Sony Ethics & Compliance Hotline as a mechanism for all Sony Group employees to raise concerns and to seek guidance about possible violations of laws or internal policies, including violations of the Sony Group Code of Conduct.\n### Education and Training\nHuman rights issues that corporations face today are increasingly complex and wide-ranging. Sony considers it essential to boost awareness of human rights, an awareness that underpins respect for diversity.\nSony’s Ethics and Compliance Program\n### Supplier Hotline\n### Responsible Development and Use of Technologies\nSony has established a supplier hotline as a mechanism for suppliers to report misconduct by a Sony Group company executive or employee that violates laws, regulations, the Sony Group Code of Conduct, the Sony Supply Chain Code of Conduct or the company’s agreements with suppliers.", "chunk_word_count": 479, "section_path": "SONY > ELTRES™ > Human Rights Risk Impact Assessments", "document_id": "Sony Sustainability Report 2023", "page": 106, "page_start": 106, "page_end": 107 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 136, "chunk_text": "# SONY\n## ELTRES™\n### Employee Training\nSony recognizes that our stakeholders have expectations regarding our ability to both grow our business and solve social and environmental issues through technology. Sony believes that it is an important mission of Sony to lead and contribute to the resolution of sustainability issues, not only by increasing business revenue through the technologies and products it develops, but also by having a positive impact on society and the environment. Sony, with the aim of utilizing AI technology to enrich people’s lifestyles and contribute to the development of society, will pursue accountability and transparency while actively engaging in dialogue with stakeholders. Sony will continue to promote responsible AI pursuant to the Sony Group AI Ethics Guidelines in order to maintain stakeholder trust in all of its products and services,\nAll Sony employees receive training on respecting human rights and preventing harassment in the workplace upon hire. Refresher training is also provided at least every four years thereafter. In Japan, we regularly implement various programs, such as focusing on domestic issues for all employees and using more practical content for newly appointed managers. In addition, an e-learning course focusing on the protection of human rights is provided to all employees of Sony Group Corporation as well as many Sony Group companies. In fiscal year 2022, $9 4 \\%$ of eligible employees took the e-learning course.\nSupplier Hotline (in Japanese)\n### Sony Group Policy for Responsible Supply Chain of Minerals Hotline\nSony has established a hotline for stakeholders to report misconduct that violates the Sony Group Policy for Responsible Supply Chain of Minerals.\nSony Group Policy for Responsible Supply Chain of Minerals Hotline\n### Raising Employee Awareness of Human Rights\nSony Group companies in Japan have formed their diversity promotion committees, which conduct workshops on human rights, diversity, and related matters. Based on the information obtained from those initiatives, they collaborate laterally via a diversity liaison to share best practices and study the latest information. Serious cases of harassment and communication issues related to human rights are discussed within the overall system and appropriate responses considered. Additionally, Sony works with the Industrial Federation for Human Rights, Tokyo to compile information on various aspects of the subject and improve human rights literacy in Japan. Each December, in support of Human Rights Week, Sony holds a forum for learning about themes related to human rights, in addition to presenting awards for outstanding diversity messages (human rights awareness slogans) composed by employees of Sony Group companies. Sony Group companies outside of Japan have similar programs in place to ensure respect for human rights in the workplace.\n### EEO (Equal Employee Opportunity) Hotlines\nUse of Technology Responsible AI AI Initiatives (Corporate Website)\nSony Group companies in Japan have established a hotline for equal opportunity. The hotline is available for all Sony Group employees in Japan to discuss a wide range of equal opportunity-related issues, such as harassment and support for work-life balance. In addition, Sony Group companies in Japan have also established a hotline specializing in cases to provide employee counseling by third parties with expertise on issues that employees are reluctant to raise within the company.", "chunk_word_count": 526, "section_path": "SONY > ELTRES™ > Employee Training", "document_id": "Sony Sustainability Report 2023", "page": 107, "page_start": 107, "page_end": 107 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 137, "chunk_text": "# SONY\n## ELTRES™\n### Grievance Mechanisms (Hotlines)\nSony has established the following hotlines for employees and stakeholders to report and seek advice concerning any potential violation of laws, regulations, the Sony Group Code of Conduct, the Sony Supply Chain Code of Conduct or other internal rules. Sony also has a contact point that offers consultation on equal opportunityrelated issues and support for work-life balance even in cases where no regulation or law has been violated. These hotlines equip Sony to respond quickly and appropriately, while giving full consideration to personal privacy. Sony strictly enforces confidentiality and ensures that reporters are not subject to reprisal for reporting or using these services.\n### Stakeholder Dialogue\nSony maintains local and international dialogue with investors and partners such as NGOs in addition to publicizing its efforts through its sustainability report and sustainability briefing. This dialogue helps Sony to understand stakeholders’ expectations and leads to better\n### Overview\n### Looking to the Future\nIn order to further strengthen efforts to establish a responsible supply chain, Sony will expand assessments of its own sites and its suppliers, for example by having primary suppliers request secondary suppliers to comply with the Sony Supply Chain Code of Conduct. Sony remains committed to ongoing efforts to raise awareness, educate, and provide training not only to employees, but also across the supply chain, communicating with suppliers to raise awareness and the capacity to respond effectively to responsible supply chain issues. Sony will also continue to strengthen its countermeasures of high-risk minerals in its procurement.\n### Basic Approach\nIn recent years, stakeholders have grown increasingly aware of how crucial it is that companies fulfill their overall responsibilities throughout their supply chains. Sony takes these stakeholder concerns seriously and is working closely with its suppliers on initiatives in fields such as human rights, labor conditions, health and safety, and environmental protection. These initiatives cover not only Sony’s own sites, but sites throughout the supply chain—from suppliers, to mineral mining operations, to production sites operated both by Sony and by contract manufacturers.\n### Responsible Supply Chain\n2004: Sony joins the Electronic Industry Citizenship Coalition (EICC, now the Responsible Business Alliance) as a founding member \n2005: Sony Supplier Code of Conduct established \n2006: EICC self-assessment started at electronics manufacturing sites \n2012: Sony Supplier Code of Conduct revised to create second edition \n2014: Sony Group Conflict Minerals Policy established and a survey on use of conflict minerals started \n2016: Sony Supply Chain Code of Conduct established and cobalt supply chain assessment started \n2017: Sony Group Policy for Responsible Supply Chain of Minerals established \n2021: Sony Pictures Entertainment Supplier Code of Conduct established \n2022: Sony Music Entertainment Supplier Code of Conduct established \n2023: Sony Supply Chain Code of Conduct revised to create 3.2 edition\nEach and every Sony director, executive, and employee complies with the Sony Group Code of Conduct and conducts ethical business practices. Based on this approach, Sony focuses on supply chain management and responsible procurement of minerals and works with suppliers and subcontractors to establish a responsible supply chain that ensures compliance with the Sony Supply Chain Code of Conduct and the Sony Group Policy for Responsible Supply Chain of Minerals. These efforts are undertaken in collaboration with relevant industry organizations and other stakeholders.", "chunk_word_count": 542, "section_path": "SONY > ELTRES™ > Grievance Mechanisms (Hotlines)", "document_id": "Sony Sustainability Report 2023", "page": 107, "page_start": 107, "page_end": 108 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 138, "chunk_text": "# SONY\n## ELTRES™\n### Structure\nUnder the Senior Executive in charge of Sustainability, the Sustainability Section and compliance department at the head office play central roles in promoting actions aimed toward creating a more responsible supply chain, cooperating with procurement and other related departments in our businesses, as well as management departments at manufacturing sites.\n### Supply Chain Management\nWe are engaged in supply chain management that includes the production sites of our suppliers and contract manufacturers in addition to our own electronics manufacturing sites.\n[IMAGE CAPTION] Raw Materials/Parts and OEM/ODM supplier ratio by geographic area (transaction value basis in FY2022)\n### Sony Supply Chain\nSony develops, designs, manufactures and sells a wide range of electronics and other devices, utilizing a supply chain that stretches across the entire globe. As of August 2023, we will have 12 electronics manufacturing sites in Japan, China, South Korea, Thailand, Malaysia, and the UK. Further, we procure materials and parts for Sony electronics from suppliers worldwide.\nIn fiscal year 2022, the value of transactions with raw materials/parts suppliers and contract manufacturers (OEM/ODM suppliers) by geographic area was as follows: Mainland China and Hong Kong Region $( 5 7 . 8 \\% ) _ { i }$ Japan $( 1 1 . 7 \\% )$ , Asia-Pacific $( 1 9 . 9 \\% )$ , Europe $( 4 . 7 \\% )$ , and other areas $( 5 . 9 \\% )$ .\nNote: Major countries and regions that belong to each category • Asia-Pacific: Southeast Asia, India, Oceania, Taiwan Region and South Korea • Other Areas: Middle East, Latin America, Africa, United States and Canada The amount is calculated based on the location of the company registration of supplier\n### Establishing and Promoting the Sony Supply Chain Code of Conduct\n[IMAGE CAPTION] Basic Structure of the Supply Chain\nSony recognizes the increasing importance of global companies’ responsibility to manage their supply chains responsibly as diligent members of society. This extends beyond our manufacturing sites, including those of parts suppliers and contract manufacturers. Sony works with its suppliers to address issues such as human rights, labor conditions, health and safety, and environmental protection throughout its supply chain in order to ensure a responsible supply chain.\n### Sony Supply Chain Code of Conduct\nSony was involved in establishing the RBA Code of Conduct, which indicates industry best practice, and adopted that code to establish the Sony Supply Chain Code of Conduct. Sony actively implements efforts to comply with the code for our manufacturing sites, contract manufacturers and suppliers. The RBA Code of Conduct has been translated into 26 languages including English, Chinese, Japanese, Thai, and Malay.\nCompliance with the Sony Supply Chain Code of Conduct is included in contracts signed when Sony begins doing business. As a part of the customer requirements under this Code of Conduct, contract manufacturers and raw materials/parts suppliers must comply with the Green Partner Environmental Quality Approval Program and the Sony Group Policy for Responsible Supply Chain of Minerals. Suppliers are also requested to distribute and comply with the Sony Supply Chain Code of Conduct within their own supply chain. In addition, as a founding member of the RBA, Sony also works to strengthen its supplier assessments, ongoing monitoring, and other initiatives worldwide.\n### Organizational Structure", "chunk_word_count": 546, "section_path": "SONY > ELTRES™ > Structure", "document_id": "Sony Sustainability Report 2023", "page": 108, "page_start": 108, "page_end": 111 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 139, "chunk_text": "# SONY\n## ELTRES™\n### Initiatives at Sony Electronics Manufacturing Sites\nhiring processes for technical intern trainees in Japan and the countries in which they were hired, as well as the labor conditions of trainees. The results showed that steps are continually being taken to ensure compliance with the labor standards set out in the Sony Supply Chain Code of Conduct. This includes establishment of new policy on freely chosen employment and employment fees for on-site subcontractors.\nAt Sony, the Sustainability Section and compliance groups at the head office take the lead in promoting efforts toward a responsible supply chain in cooperation with other related procurement divisions and management departments at manufacturing sites. Under the supervision of the Senior Executive in charge of Sustainability, the Sustainability Section at the head office assesses external trends and communicates with stakeholders, drawing on both to formulate basic company-wide supply chain management policy. The Senior Executive in charge of Sustainability appoints the management responsible in each relevant business unit. They are then responsible for overall operational compliance for the area in their charge, including compliance with the Sony Supply Chain Code of Conduct, as well as risk assessment, regular monitoring and remedial measures. Administrative office are responsible for overall implementation for raw materials and parts suppliers. In cases where assessments or external sources indicate any possibility of violations of the Sony Supply Chain Code of Conduct or a material legal violation, or in cases where the supplier does not provide adequate cooperation with assessments and audits, the managers responsible for implementing the rules work together with the Sustainability Section and compliance groups at the head office to determine the facts and take action deemed necessary, and the situation is reported to the Senior Executive in charge of Sustainability.\n### Conducting Regular Assessments\nAs part of its efforts to ascertain Sony manufacturing sites’ compliance with the Sony Supply Chain Code of Conduct, Sony uses standard tools provided by the RBA to check compliance, assess improvements, and implement other monitoring activities. Specifically, Sony utilizes the RBA questionnaire as an annual selfassessment survey at all of its electronics manufacturing sites to evaluate compliance designated by the Sony Supply Chain Code of Conduct in terms of labor, health and safety, ethics, environment, and management systems. At manufacturing sites where selfassessment surveys indicate issues with compliance and further evaluation and improvement in these areas are deemed necessary, appropriate measures to improve compliance are developed and implemented.\nIn fiscal year 2022, 12 manufacturing sites in Japan, China, Korea, Thailand, Malaysia and the UK, completed self-assessment surveys. The results showed that risk of noncompliance was low at all manufacturing sites. Additionally, we regularly conduct RBA or other equivalent audit at some manufacturing sites.", "chunk_word_count": 452, "section_path": "SONY > ELTRES™ > Initiatives at Sony Electronics Manufacturing Sites", "document_id": "Sony Sustainability Report 2023", "page": 111, "page_start": 111, "page_end": 111 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 140, "chunk_text": "# SONY\n## ELTRES™\n### Employment and Working Conditions of Foreign Workers\n[IMAGE CAPTION] Implementation Framework of the Sony Supply Chain Code of Condu\nIn recent years, forced labor among foreign and immigrant workers at factories that manufacture electronic products and components has become an issue both in Japan and around the world. Since fiscal year 2017, Sony has been conducting surveys of actual work conditions and risk assessments to monitor the employment status and labor conditions of foreign workers at Sony manufacturing sites in Japan. The assessments check whether the site has any foreign workers or not (in either direct or indirect employment) and confirm the hiring processes and labor conditions. The surveys of actual conditions are conducted for selected manufacturing sites. Since 2020, Sony has continued to conduct document assessments of on-site subcontractors at a number of manufacturing sites to verify their\n### Sony’s Approach to Supplier Relations\n### New Suppliers\nthose indicated in RBA standards, and include contracts and other documentation, working hours, policies, procedures and health and safety verification. If issues are found, guidance for improvement is provided, and we continue to verify and evaluate subsequent actions taken. Sony’s policy is to review its business relationship with a supplier if a serious violation (such as forced labor, child labor, inhumane working conditions, unlawful discrimination, lack of an emergency and disaster action plan, presence of risks that cause a serious lifethreatening accident to a worker, significant environmental pollution issues) of the Sony Supply Chain Code of Conduct is confirmed or if the supplier fails to cooperate fully in an investigation or audit.\nSony conducts assessments based on the supplier’s risk level for all new OEM/ODM suppliers and raw materials/parts suppliers and their manufacturing facilities. All direct suppliers and their plants are requested to comply with the Sony Supply Chain Code of Conduct. Suppliers and their plants are categorized by risk level, based on such factors as the country and region in which they are located, size of business, industry, and type of business. Suppliers and their plants conduct an assessment using questionnaires from the RBA. In assessment, questionnaires evaluate compliance with the Sony Supply Chain Code of Conduct specifically in items related to forced labor among foreign, migrant and immigrant workers, which has become a serious issue worldwide. Questionnaires returned by suppliers are analyzed to identify potential risks for individual manufacturing plants.\n### Requesting Compliance and Monitoring Compliance Status with the Sony Supply Chain Code of Conduct", "chunk_word_count": 410, "section_path": "SONY > ELTRES™ > Employment and Working Conditions of Foreign Workers", "document_id": "Sony Sustainability Report 2023", "page": 111, "page_start": 111, "page_end": 112 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 141, "chunk_text": "# SONY\n## ELTRES™\n### Requesting Compliance\nCompliance with the Sony Supply Chain Code of Conduct is included in contracts signed when Sony begins doing business with raw materials and parts suppliers. All suppliers are provided this Code of Conduct upon signing a new contract, and are kept informed of changes through updated documents. Further, Sony regularly reminds suppliers of their responsibilities and obtains a declaration of compliance from them.\n[IMAGE CAPTION] Scope of Supplier Assessment\nWe also utilize third-party screening tools to check for human rights violation risks (human trafficking, child labor, forced labor, etc.) at target supplier sites.\nWhen starting new business dealings with suppliers, Sony requests compliance with the Sony Supply Chain Code of Conduct not only from the primary supplier, but also from plants supplying materials and parts. Furthermore, if a primary supplier is a trading company, Sony acquires a declaration of compliance from the parts manufacturer and manufacturing sites through the trading company and confirms that compliance is implemented.\n### Existing Suppliers\nMajor OEM/ODM suppliers that do sizable business with Sony continue to conduct annual assessments using questionnaires from the RBA. If an assessment indicates a high risk, the OEM/ODM supplier is subject to an on-site audit, which may include an audit by a third-party.\nSony also distributes the Sony Supply Chain Code of Conduct to our own supply chain, requesting through primary suppliers that it is observed by secondary and further suppliers.\nFurthermore, with growing stakeholder interest in the issue of forced labor in the electronics industry supply chain overall, Sony has been strengthening activities related to periodic assessment of existing raw materials and parts suppliers for compliance with the Sony Supply Chain Code of Conduct since 2020. Just as for new suppliers, existing suppliers and their plants are categorized by risk level, based on such factors as the country and region in which they are located, size of business, industry, and type of business to determine if they fit criteria for assessment. Assessment using labor issues-specific questionnaire is conducted for applicable existing suppliers, and supplier response is analyzed to identify potential risks for individual manufacturing plants.\n### Supplier Assessment\n[IMAGE CAPTION] Risk-Based Supplier Assessment\nTo ascertain supplier compliance with the Sony Supply Chain Code of Conduct, Sony conducts assessments based on the supplier’s risk level for all raw materials/parts suppliers and their manufacturing facilities. If Sony does not deal directly with the manufacturing facility, the assessments are conducted through the trading company or manufacturer that is the primary supplier.\nIf a manufacturer is suspected to be in violation of the Sony Supply Chain Code of Conduct, instructions for improvement are issued, an on-site assessment is conducted and employees and managers are interviewed in person to verify the actual management situation, based on the identified potential risk. Assessments are similar to\n### Assessment Results for Fiscal Year 2022", "chunk_word_count": 474, "section_path": "SONY > ELTRES™ > Requesting Compliance", "document_id": "Sony Sustainability Report 2023", "page": 112, "page_start": 112, "page_end": 113 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 142, "chunk_text": "# SONY\n## ELTRES™\n### Examples of Instructions for Improvement Based on Observations from On-Site Assessments\nUse of appropriate personal protective equipment Observation: Appropriate respirators not being used in areas with volatile organic compounds.\nSony requested that all new and existing suppliers comply with the Sony Supply Chain Code of Conduct.\nWorking hours\nObservation: Overtime hours at a supplier (over 60 hours/week) Improvement instructions: Requested a plan for improvement of working hours, continuously monitored until improvements are completed\nImprovement instructions: Requested to use appropriate protective masks and confirmation of results.\n### New Suppliers\nAssessment using questionnaires were conducted for 79 plants. We provided written instructions for improvement to 12 supplier plants deemed to be in minor violation.\n### Installation of appropriate fire protection and\n### Employment of foreign workers\nfirefighting equipment\nWe conducted on-site assessments at 1 supplier plant suspected to be in violation, pointing out issues and issuing instructions for improvement. In either case, suppliers are asked to make a plan for improvement, manage progress and show evidence-based results.\nObservation: Passports belonging to foreign workers were being confiscated\nObservation: Fire alarms are not installed as legally required. Improvement instructions: Requested to make an appropriate fire alarm installation plan. Continuously monitored until installation is complete.\nImprovement instructions: Requested that workers be allowed to opt out of passport storage or given access to storage, and checked for improvement completion\n### Existing Suppliers\nAssessment using questionnaires were conducted for 327 plants. We provided written instructions for improvement to 63 supplier plants deemed to be in minor violation.\n[IMAGE CAPTION] Assessment Flow at Start of New Transactions with Suppliers\nWe conducted remote or on-site assessments at 44 supplier plants suspected to be in violation, pointing out issues and issuing instructions for improvement. In either case, suppliers are asked to make a plan for improvement, manage progress and show evidencebased results.\nIn addition, remote or on-site assessments and interviews were conducted regarding labor, health and safety, environment and ethics were also conducted at 19 supplier plants in Japan. We interviewed technical intern trainees to check both working and living conditions, as well as for the payment of brokerage fees to agencies in their home countries.\n### Purchasing Practices\n### Communicating with Suppliers\n### Capacity Building for Procurement Personnel\nPresenting suppliers with procurement plans and outlooks helps to mitigate impact on working conditions. Therefore, we provide a six-month procurement forecast with our primary suppliers in order to secure capacity well in advance, the content of which is reviewed weekly from the start of mass production. The lead time agreed to between the supplier and Sony is registered in the system and a purchase order is issued according to that lead time. Any major changes to the order are discussed with the supplier.\nSony is deeply committed to communicating with suppliers and is involved in a variety of measures to this effect.\n### Training and Raising Awareness in Internal Procurement Personnel", "chunk_word_count": 485, "section_path": "SONY > ELTRES™ > Examples of Instructions for Improvement Based on Observations from On-Site Assessments", "document_id": "Sony Sustainability Report 2023", "page": 113, "page_start": 113, "page_end": 114 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 143, "chunk_text": "# SONY\n## ELTRES™\n### Distributing Videos and Providing Education for Raw Materials and Parts Suppliers\nWe implement training for internal personnel who are involved in parts procurement for socially responsible procurement and the Sony Supply Chain Code of Conduct. In fiscal year 2022, we conducted training for all raw material and parts procurement personnel in order for them to better understand Sony Group initiatives aimed at achieving responsible supply chain. This training included explanations on the requirements stipulated by the Sony Supply Chain Code of Conduct, group environmental targets and procurement initiatives. We are further working to improve procurement personnel awareness through training that promotes communication and discussion between personnel, encouraging them to discuss ideal growth in terms of sustainability for future procurement.\nIn 2021, we distributed a video about sustainability to all our suppliers through a distribution system specifically for them in order to improve awareness of Sony’s sustainability activities overall, including conduct for a responsible supply chain. Available in Japanese, English and Chinese, the video explains what is required according to the Sony Group Code of Conduct and Sony Supply Chain Code of Conduct, and requests the establishment of management systems for compliance with the Sony Supply Chain Code of Conduct upstream of the supply chain. In 2022, we distributed an educational video on the reduction of greenhouse gas emissions to suppliers in order to support their efforts to reduce such emissions.\n### Supplier Hotline\nSony has established a Supplier Hotline which suppliers may use to report conduct by a Sony Group company executive or employee that violates laws, regulations, the Sony Group Code of Conduct, or the Sony Supply Chain Code of Conduct, as well as conduct that violates the company’s agreements with suppliers as a framework to facilitate sharing of concrete information.\nSupplier Hotline (in Japanese)\n### Visualizing Supplier Sustainability Efforts\nWe check for supplier compliance with the Sony Supply Chain Code of Conduct, which includes their efforts for human rights, ethics, environmental and health and safety initiatives, and this oversight is vital to our supplier selection process. In consideration of the fact that supplier sustainability activities will continue to grow more important, in fiscal year 2021, we built a system to visually identify and centrally manage supplier sustainability achievement (including compliance with the Sony Supply Chain Code of Conduct, reducing the effect on the environment), and began implementation in fiscal year 2022. Moving forward, we are working to appropriately select suppliers in consideration of their results. We communicate the meaning and social significance of these efforts, providing direct feedback to our suppliers to motivate them toward sustainable endeavors and maintain their compliance with the Sony Supply Chain Code of Conduct.\n### Responding to External Reports\n### Participation in the Responsible Business Alliance (RBA)", "chunk_word_count": 459, "section_path": "SONY > ELTRES™ > Distributing Videos and Providing Education for Raw Materials and Parts Suppliers", "document_id": "Sony Sustainability Report 2023", "page": 114, "page_start": 114, "page_end": 115 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 144, "chunk_text": "# SONY\n## ELTRES™\n### Supplier Code of Conduct in Entertainment Business\nIn cases where any possibility of violations of the Sony Supply Chain Code of Conduct is reported via external sources, such as NGOs or media reports, we work expeditiously and objectively to confirm facts regarding the report, including an RBA audit by a third-party auditor. If this determination confirms the reported violations at our electronics manufacturing sites, Sony ensures that corrective action is immediately taken. At supplier plants, we promptly request to make an improvement plan. We request progress reports for implementation of these plans and check further by conducting follow-up audits as needed. In cases where any possibility of violations is reported at a secondary supplier, Sony works with the primary supplier to ensure that remedial action is carried out. Sony’s policy is to review its business relationship with a supplier if a serious violation of the Sony Supply Chain Code of Conduct is confirmed or if the supplier fails to cooperate fully in an investigation or audit.\nSupply chains overlap considerably in the electronics industry, with multiple manufacturers of finished products sharing the same subcontractors and parts suppliers. Accordingly, there are fears that the introduction of independent, company specific standards for socially responsible management will cause confusion and constitute a significant burden on companies in the supply chain. With the aim of improving processes in the electronics industry supply chain, in 2004 Sony and other companies established the Electronic Industry Citizenship Coalition (EICC, currently the RBA). The alliance then developed the RBA Code of Conduct (formerly the EICC Code of Conduct) incorporating best industry practices. The RBA is working with its member companies to develop tools that help to establish and manage codes of conduct, Web-based systems, and skills development programs for suppliers. As of June 2023, the RBA consisted of more than 200 participating companies from Europe, the Americas and Asia, and members included manufacturers and OEM companies. The RBA has membership categories for different levels of engagement and has granted Full Member status to Sony, its highest membership category. Additionally, Sony has had a representative on the RBA Board of Directors since 2020. The RBA promotes corporate social responsibility (CSR) in supply chains through the Responsible Minerals Initiative (RMI), which addresses issues with minerals procurement, the Responsible Labor Initiative (RLI), which addresses human rights issues such as forced labor, and other programs.\nSony is committed to enhancing Sony Group’s responsible supply chain activities in the entertainment industry in order to strengthen its supplier programs related to standards for human rights, ethical business practices, safety and environment.\nIn March 2021, Sony Pictures Entertainment Inc. established the Sony Pictures Entertainment Supplier Code of Conduct. Then, in March 2022, Sony Music Entertainment established the Sony Music Entertainment Supplier Code of Conduct. These codes of conduct are based on principles similar to those of the Sony Supply Chain Code of Conduct, and we are working to raise awareness of both.\nCode of Conduct for Suppliers to Sony Pictures Entertainment Inc Sony Music Supplier Code of Conduct\n### Responsible Sourcing of Minerals", "chunk_word_count": 513, "section_path": "SONY > ELTRES™ > Supplier Code of Conduct in Entertainment Business", "document_id": "Sony Sustainability Report 2023", "page": 115, "page_start": 115, "page_end": 116 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 145, "chunk_text": "# SONY\n## ELTRES™\n### Addressing the Issue of Conflict Minerals\nof corporate social responsibility (“High-Risk Minerals”). Sony’s policy is to refrain from knowingly purchasing any products, components or materials that contain High-Risk Minerals that contribute to conflicts or serious human rights abuses in the chain of custody.\n### Addressing US Law on Conflict Minerals\nThe Democratic Republic of the Congo (DRC) and adjacent countries have been mired in conflict with armed groups perpetuating human rights abuses in that region. These armed groups have been trading in certain minerals commonly found in that region to finance their activities. These minerals, tantalum, tin, gold and tungsten (“the four minerals”) are commonly found in many products, ranging from jewelry to electronics to airplane components. Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States, which first became effective in January 2013, defines the four minerals as “conflict minerals.” This law seeks to ensure transparency and reporting related to conflict minerals and requires companies whose stock is listed on a US stock exchange, as Sony’s is, to conduct an inquiry into the origin of the four minerals in their supply chains. We have made annual disclosure mandatory since 2014. On May 26, 2023, Sony submitted its 2022 report on supply chain activities to the U.S. Securities and Exchange Commission (SEC).\n### High-Risk Minerals\nSony conducts periodic risk assessments (based on applicable legal requirements, the significance to our business operations, the corporate social responsibility viewpoints such as stakeholders’ expectations and social or environmental impacts) to identify the High-Risk Minerals and review the High-Risk Minerals based on the result of such risk assessment.\nIn recent years, stakeholders have become increasingly concerned about violations of the human rights of workers and environmental issues in the sourcing of mineral resources essential for the manufacture of electronic products. Sony is working with its suppliers to address issues related to human rights, labor conditions, health and safety, and environmental protection at production sites, as well as in its procurement of minerals.\nIn 2022, tantalum, tin, gold, tungsten and cobalt were identified as high risk.\n### Expectations for Suppliers\n### Establishing the Sony Group Policy for Responsible Supply Chain of Minerals\nSony requires its suppliers to source High-Risk Minerals from smelters determined to be compliant with the Responsible Minerals Assurance Process (the “RMAP”) \\* protocols established by the Responsible Minerals Initiative (the “RMI”), or other smelters that have been determined not to be contributing to conflicts or serious human rights abuses under other trusted traceability projects.\n### Sony’s report filed with the SEC (Form SD & Conflict Minerals Report) [PDF:599KB]\nSome minerals that are used in Sony products carry human rights and environmental risks in the extraction process.\nIn the Sony Group Code of Conduct, Sony set forth basic policies including prohibition of using any form of forced labor, specifically, child labor. Sony has established the Sony Supply Chain Code of Conduct to be complied with throughout the electronics product supply chain.\n\\* Responsible Minerals Assurance Process (RMAP) : A program in which a third party certifies that the minerals handled by the smelter are from sources that do not fund armed conflict or engage in human rights violations.", "chunk_word_count": 535, "section_path": "SONY > ELTRES™ > Addressing the Issue of Conflict Minerals", "document_id": "Sony Sustainability Report 2023", "page": 116, "page_start": 116, "page_end": 116 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 146, "chunk_text": "# SONY\n## ELTRES™\n### Survey and Results on Use of the Four Minerals\nThe four minerals enter global supply chains from numerous countries. Determining the mine of origin for these minerals requires the cooperation of many levels of suppliers and intermediaries in the supply chain. Sony is committed to working with suppliers to continuously improve supply chain transparency and reduce risk. Investigation on the origin of the four minerals used by the Sony Group overall is conducted as follows.\n### OECD Due Diligence Guidance Initiatives\nIn addition, in October 2017, Sony established the Sony Group Policy for Responsible Supply Chain of Minerals, replacing the Sony Group Conflict Minerals Policy that was established in 2014.\nSony exercises due diligence on the source and chain of custody of High-Risk Minerals in our supply chain to determine supplier compliance with our policy. We follow the Organization for Economic Cooperation and Development (the “OECD”) Due Diligence Guidance for Responsible Supply Chains of Minerals from conflict affected and high-risk areas (the “OECD Guidance”) or other internationally recognized framework when conducting such due diligence.\n1 . Every survey year, Sony checks each business group to see if there is any possibility for the four minerals being used in its products 2. Sony further looks for the presence of the four minerals in the products of the identified business group that are manufactured or outsourced for manufacturing by Sony in the survey year and identifies target products\n### Basic Policy\nIn the policy, Sony pledges that, in order to avoid contributing to conflicts or serious human rights abuses through its sourcing practices, Sony identifies certain minerals that are sourced in conflict-affected and high-risk areas and that are high-risk for Sony from the perspective\nSony Group Policy for Responsible Supply Chain of Minerals [PDF:282KB]\nParticipation in the Responsible Business Alliance (RBA)\n### Mitigating Risk in the Supply Chain\n### Managing the Cobalt Supply Chain\n3. The survey is conducted using the RMI Conflict Minerals Response Template (CMRT), the industry standard, and target suppliers are asked to participate by filling out a survey response for each product concerned in order to identify the smelters or countries of origin for the procured minerals concerned\nIn the event that Sony confirms that any of its products, components or materials may contain conflict minerals, Sony, in collaboration with relevant suppliers, shall take actions reasonably necessary to eliminate such minerals from such products, components or materials and shall request that the supplier makes necessary improvement to its sourcing practices.\nCobalt is an important mineral used in lithium-ion batteries for a wide range of products including electric vehicles and smart phones. There have been concerns about child labor and working conditions at sites where it is extracted in the DRC, a country known to have the largest reserves of cobalt in the world.", "chunk_word_count": 470, "section_path": "SONY > ELTRES™ > Survey and Results on Use of the Four Minerals", "document_id": "Sony Sustainability Report 2023", "page": 116, "page_start": 116, "page_end": 117 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 147, "chunk_text": "# SONY\n## 4. The smelters indicated in the survey responses are then carefully compared to the RMI smelters list\nIn 2023, while the results of Sony’s due diligence for the 2022 report to the SEC was not able to confirm the country of origin for all of the four minerals in Sony’s electronics products, the country of origin of these minerals was not identified as being from the DRC or adjacent countries, except for those sourced through RMAP conformant SORs. In the 2022 survey, Sony identified a total of 337 smelters and refiners as potential sources of the four minerals and, of those, 246 smelters and refiners were compliant with RMAP\\*1 or were certified by the London Bullion Market Association (LBMA). Of these, 141 smelters and refiners were identified as sourcing from the DRC\\*2.\nThis includes adoption of a conflict-free sourcing policy, increased responsiveness and accuracy of the supplier survey, and increased use of the four minerals sourced from smelters or refiners participating in the RMAP program, or who are otherwise recognized as not contributing to conflict or human rights violations through other trusted mineral traceability projects. Further, in the event that Sony confirms that a supplier has failed to cooperate sufficiently with a due diligence investigation, fails to follow Sony’s requests for remediation or has otherwise violated this policy, Sony shall take necessary actions, including without limitation, termination of business with such supplier by stopping new orders. As part of its efforts to promote RMAP-conformance among smelters, Sony identifies non-conformant smelters and works with them to gain certification. In 2022, 69 suppliers specified in their CMRT that they source from smelters that were not listed as conformant or were unwilling to undergo an RMAP assessment or similar assessment from a trusted traceability project. As a result of an improvement request by Sony, 22 suppliers conducted investigations and responded that the noncompliant smelters were not in fact in their supply chains, while we continue to request improvement from the remaining 47 suppliers. Sony has also established a hotline to allow any interested party to voice concerns regarding the circumstances of mineral extraction, trade, handling and/or export in conflict affected and other high-risk areas. In addition to its internal risk assessments, the hotline enables Sony to be alerted to risks in its supply chain.\nIn 2016, a supplier reported that some lithium-ion battery parts procured by Sony contained cobalt produced in the DRC. In response, Sony established the Sony Group Policy for Responsible Supply Chain of Minerals in October 2017. This policy is a revision of the Sony Group Conflict Minerals Policy, which targeted the four minerals. In addition to the four minerals, Sony has recognized cobalt as another High Risk mineral and launched efforts to build a responsible cobalt supply chain. Since then, Sony has continued to manage its cobalt supply chain using industry standard tools, such as the Extended Mineral Reporting Template (EMRT) developed by RMI, and by carrying out further thirdparty RMAP audits of cobalt refineries.\n\\*1 Includes smelters under RMAP assessment. \\*2 Refer to the smelter list in the aforementioned Sony report to the SEC, which includes smelters confirmed as conflict-free through Sony’s traceability program.", "chunk_word_count": 529, "section_path": "SONY > 4. The smelters indicated in the survey responses are then carefully compared to the RMI smelters list", "document_id": "Sony Sustainability Report 2023", "page": 117, "page_start": 117, "page_end": 117 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 148, "chunk_text": "# SONY\n## 4. The smelters indicated in the survey responses are then carefully compared to the RMI smelters list\nIn fiscal year 2021, Sony conducted Cobalt Reporting Template (CRT) based surveys of 8 lithium-ion battery suppliers. Within these, we identified 23 cobalt refineries in the supply chain, and confirmed that all were either RMAP-compliant or currently conducting third-party RMAP-based audits.\n### Response for Sony Suppliers of the Four Minerals\nIn fiscal year 2022, Sony conducted EMRT based surveys of 9 lithiumion battery suppliers. Within these, we identified 22 cobalt refineries in the supply chain, and confirmed that all were either RMAP-compliant, or were currently conducting or preparing to conduct third-party RMAPbased audits (as of March 2023).\nIf it is determined that any of the four minerals are used in the manufacture of products, Sony requires relevant suppliers to comply with the Sony Group Policy for Responsible Supply Chain of Minerals and to fully cooperate with its due diligence efforts regarding sourcing the four minerals in accordance with the terms of this policy. In addition, to ensure that products, components and materials delivered to Sony do not contain any conflict minerals, Sony expects suppliers to have pertinent policies, a due diligence framework and a management system consistent with the OECD guidance in place. As a part of these measures, Sony is working to propel action from suppliers who have yet to establish mineral supply chain policy. This led to establishment of policy and a strengthening of the management structure among suppliers.\n### Sony Group Policy for Responsible Supply Chain of Minerals Hotline\n### Multi-Stakeholder Cooperation\n### Donations\nSony donates to the following RMI and NGO-related funds.\n• The Initial Audit Fund (RMAP Audit Program): A fund that helps cover the costs for cobalt refineries to undergo third-party RMAP audits (donated fiscal year 2016-2019, 2021) \n• RMI-Pact partnership for supporting Alternative Livelihoods through a Vocational training program: A program in cooperation with Pact, an NGO that provides vocational support to young people in cobalt mining areas of the DRC (donated fiscal year 2020) \n• Better Mining: A project in cooperation with the RCS Global Group that aims to improve the health, safety, human rights and other risk areas for mines in parts of the DRC where artisanal and small-scale mining takes place (donated fiscal year 2020, 2022)\nSony recognizes that multi-stakeholder collaboration is the key to identifying and mitigating the adverse human rights impact that can be associated with mineral extraction in high-risk areas. Specifically, Sony continuously collaborates with various multi-stakeholder efforts such as RMI in order to participate in the development of the due diligence process and mitigate human rights risks in the supply chain.\n### Industry Initiatives and the Industry Alliance\nFor High-Risk Minerals, Sony actively participates in and supports industry groups and alliances that identify the negative effects of mineral mining in high-risk areas, and works to mitigate or prevent these effects.", "chunk_word_count": 484, "section_path": "SONY > 4. The smelters indicated in the survey responses are then carefully compared to the RMI smelters list > Response for Sony Suppliers of the Four Minerals", "document_id": "Sony Sustainability Report 2023", "page": 117, "page_start": 117, "page_end": 118 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 149, "chunk_text": "# SONY\n## RMI\nIn 2011, RBA launched the industry-leading Conflict Free Sourcing Program (CFSP, currently RMAP), then, with the aim of promoting collaboration with other industries and multiple stakeholders outside electronics, established RMI (formerly CFSI) in 2013. Sony utilizes the frameworks developed by theses industry groups and alliances as part of its efforts to ensure responsible sourcing of raw materials. RMI holds workshops for discussions with NGOs, socially responsible investors, local government representatives and other stakeholders, in which Sony participates.\n### Responsible Minerals Initiative\n### Japan Electronics and Information Technology Industries Association (JEITA)\nThe Japan Electronics and Information Technology Industries Association (JEITA) cooperates with RBA/RMI to handle conflict mineral issues. Sony participates in JEITA’s Responsible Minerals Trade Working Group.\n### Looking to the Future\n### Overview\nSony remains committed to a fundamental policy of ensuring product safety, security, and accessibility, taking its customers’ viewpoints into consideration in order to deliver product quality and customer service that exceed expectations. It will continue leveraging its worldwide network to collect and analyze information, which can then be reflected in the next releases of products and customer services.\n### Basic Approach\n### Milestones\nIn recent years, customers and other stakeholders have become increasingly concerned about the protection of consumer rights. Product safety, security, and accessibility are vital in this respect. True to its philosophy and policy for product quality and customer service, Sony is wholeheartedly committed to improving product and service quality from its customers’ viewpoints in order to maintain and enhance satisfaction, confidence, and trust. In particular, Sony is working to ensure product safety and security while also improving usability and accessibility, in the conviction that its most important goal is to remain a highly trusted partner to all customers.\n2001: Sony CS Charter established \n2004: Corporate quality standards established based on the customer’s perspective \n2006: Corporate executive in charge of product quality and safety appointed, and rules enhanced for rapid reporting of product incidents to management \n2007: Sony Pledge of Quality established (revised in 2012), and Quality officers appointed for each electronics affiliate and region \n2009: Product security system enhanced, and Quality Reliability Lab opened \n2014: Secure@Sony program established, allowing anyone to report security issues relating to Sony products, network services, or websites \n2017: Sony Product Security Incident Response Team (PSIRT) launched and external initiatives enhanced \n2019: Systematic operation of teams responsible for promoting accessibility implemented \n2020: Hiring and training of employees with human-centered design (HCD) skills enhanced, and AI ethics requirements incorporated into the electronics business commercialization process \n2021: HCD expert certification system launched\n### Quality and Customer Service", "chunk_word_count": 429, "section_path": "SONY > RMI > Responsible Minerals Initiative", "document_id": "Sony Sustainability Report 2023", "page": 118, "page_start": 118, "page_end": 119 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 150, "chunk_text": "# SONY\n## RMI\n### Philosophy and Policy\nSince the start of its operations, Sony has been firmly committed across all of its businesses to providing customer-oriented, high-quality products and services. This philosophy is also set forth in the Founding Prospectus drafted in 1946 by Sony’s co-founder, Masaru Ibuka. The Sony Group Code of Conduct mandates that Sony continuously strive to comply with or exceed legally mandated standards in all business activities to ensure the safety of its products and services. Sony has established the Sony Pledge of Quality, which lays out its basic policy on product and customer service quality. This is aimed at reinforcing awareness of Sony’s commitment to ensuring that the quality of its products and customer services exceeds the expectations of its customers around the world.\n### Quality Officers and CS Officers\n### Product Quality and Quality Management\nSony has appointed Quality officers within each business unit and tasked them with promoting activities to improve product quality and spearheading initiatives to enhance the quality of products and services in specific business areas under the direction and supervision of the Senior Vice President in charge of Quality and the head of the relevant business unit. Regular Quality officer meetings are also held to evaluate the progress of quality-oriented business plans, promote initiatives aimed at achieving targets, and debate specific activities and responses to quality-related issues and common challenges. Sony has also appointed CS officers responsible for improving the quality of customer service in markets around the world where Sony products are sold and has tasked them with spearheading a network of global-level initiatives under the supervision of the Senior Vice President in charge of Quality and the individual in charge of the relevant regional headquarters. Meetings of business unit Quality officers and regional CS officers are held to evaluate the progress of quality and customer service business plans and promote initiatives aimed at achieving targets, and to share information on customer service and product quality activities and common challenges, thereby contributing to global efforts to improve product quality and customer service.\nThe Sony Pledge of Quality declares that “Sony employees will always respect our customers’ viewpoints in striving to deliver product quality and customer service that exceed their expectations.” To this end, Sony makes continuous, decisive efforts to enhance product quality and to reinforce its quality management system.\n## SONY\nThe Sony Pledge of Quality One Sony For All Customers\nSony employees will always respect our customers' viewpoints in striving to deliver product quality and customer service that exceed their expectations.\nIn addition, Sony has also created frameworks specific to each business unit and region in order to ensure its products comply with pertinent laws and regulations.\nKenichiro Yoshida Chairman and CEO measures on an ongoing basis to improve the quality of its products and services. This section describes some examples of such measures.", "chunk_word_count": 477, "section_path": "SONY > RMI > Philosophy and Policy", "document_id": "Sony Sustainability Report 2023", "page": 119, "page_start": 119, "page_end": 120 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 151, "chunk_text": "# SONY\n## SONY\n### Senior Vice President in Charge of Quality\nThe Senior Vice President in charge of Quality is appointed with the task of coordinating efforts to improve product and customer service quality and ensuring timely responses to problems. Rules worldwide have been strengthened to ensure prompt reporting to the Senior Vice President in charge of Quality when Sony receives information about an incident involving a Sony product that affects customer safety or has the potential to do so. Based on the reports received, the Senior Vice President in charge of Quality provides the necessary follow-up and instructs the relevant divisions to investigate the incidents and respond appropriately to the customer. Under a similar system, Sony has also been addressing software security issues found in products and managing potential security issues.\n### Quality Management", "chunk_word_count": 136, "section_path": "SONY > SONY > Senior Vice President in Charge of Quality", "document_id": "Sony Sustainability Report 2023", "page": 120, "page_start": 120, "page_end": 120 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 152, "chunk_text": "# SONY\n## SONY\n### Sony’s Quality Management System Framework\nWith the aim of fulfilling the Sony Pledge of Quality, Sony has formulated mid-term and fiscal year targets for product quality and customer service initiatives and has also established key qualityrelated indicators for business plans. Business units and regional headquarters subsequently devise their own quality and customer service targets and business plans for the fiscal year, in line with which they continue to promote quality improvement initiatives. Sony holds meetings of top managers of the electronics business to deliberate and decide on key strategies related to product quality and customer service.\nSony has configured its quality management system by defining quality management mechanisms across all processes, from product planning, development, design and manufacturing to sales and customer service. This has included defining the roles, responsibilities and authority of those responsible for product and customer service quality and establishing guidelines.\nBased on this quality management system, Sony is implementing\nIt also formulates and administers quality standards applicable to\nSony’s electronics products and related customer service, focusing on criteria such as product safety and performance, labeling, \ncustomer service, usability and accessibility. These standards are updated continuously to reflect technological advances, changes in applicable legal and regulatory requirements, and social changes, with the aim of ensuring Sony’s ability to deliver quality and services that exceed the expectations of customers. \nSony has also obtained certification under ISO 9001 for all sites manufacturing electronics products.\nproduct quality groups to work together to improve product quality and strengthen product performance, reporting progress to top management on an as-needed basis. Sony is also committed to ensuring responding to security vulnerabilities in a timely manner. To this end, it has established Secure@Sony, a public hotline for customers and security researchers to submit vulnerabilities found in Sony products and network services.\nGroup employees can use the Quality Hotline, an in-house website, to send messages regarding matters that are too difficult to handle at their workplace, such as certain product or service quality issues. They can also share findings identified during customer use of products and any problems with the quality of product-related customer service as perceived by customers who have made use of those services. Upon investigating a problem to ascertain the veracity of the information received, the Quality Hotline office proposes and introduces measures to prevent previous problems from recurring and potential new problems from emerging.\nThe communication tools used by customers are becoming more diverse. In order to meet these broader customer expectations, Sony also analyzes customer feedback on social media.\n### Responding to the Customer\n### Quality Hotline", "chunk_word_count": 432, "section_path": "SONY > SONY > Sony’s Quality Management System Framework", "document_id": "Sony Sustainability Report 2023", "page": 120, "page_start": 120, "page_end": 121 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 153, "chunk_text": "# SONY\n## SONY\n### Market Quality Improvements\nSony makes active use of customer feedback to improve its products and customer service. Sony customer information centers promptly and accurately collate customer opinions, reports of malfunctions after purchase, questions regarding use, and other feedback. This feedback is aggregated into a database for the planning, design and\nIt is vital to detect product quality-related problems at the earliest stage possible. To that end, Sony has established the Quality Hotline to gather product quality-related information, including reports of problems, as well as opinions from Sony Group employees.\nSony has established dedicated quality management organizations in each of its business areas that are responsible for improving the quality of pertinent products in each market. At Sony headquarters, information related to quality issues arising in the marketplace is gathered in a timely manner from a broad range of sources in Japan and overseas and reported weekly to headquarters quality management and technical specialists. Based on the reported information, Sony ascertains whether or not issues in the marketplace have been addressed appropriately. In addition to ensuring that such issues are thoroughly addressed, Sony is accelerating its quality improvement performance by promoting measures to prevent recurrence and proactive measures in relation to quality issues.\n[IMAGE CAPTION] Utilizing Customer Feedback\n### Responses to Quality Issues\nSony recognizes that ensuring its customers’ satisfaction, confidence and trust is one of its most important management tasks and strives to prevent quality-related problems through the systems and efforts described earlier in this document.\nSony responds swiftly in the event of a quality-related issue, with the relevant departments working together to investigate facts and take appropriate action on a global scale. When such an issue arises, Sony decides upon the need for public announcements and market action for customers, and implements any needed steps after undertaking various studies of the issue, following a process common to all Sony products.\nThis process starts with the gathering of information from customer service centers worldwide and collaboration with concerned local parties to ensure an accurate grasp of the issue. Based on the information collected, Sony then works to determine the correct response by identifying the cause of the issue, implementing countermeasures and promptly verifying the effectiveness thereof, and reviewing the issue from the customer’s perspective. Sony also cooperates with CS officers at sites in each region to ensure the same level of service is provided to customers the world over. With regard to methods and media for issuing public announcements of product quality-related issues, Sony examines the effectiveness of the various means at its disposal, including websites, e-mail, notification via app, and other media.\n### Important Notices\n### Product Quality, Safety and Long-Term Reliability", "chunk_word_count": 448, "section_path": "SONY > SONY > Market Quality Improvements", "document_id": "Sony Sustainability Report 2023", "page": 121, "page_start": 121, "page_end": 123 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 154, "chunk_text": "# SONY\n## SONY\n### Improving the Long-Term Reliability of Products\ntargets and the continuous improvement of production quality. Sony has also established standard production quality rules to ensure Sony products manufactured by OEM/ODM companies are of the same high quality as those manufactured at Sony production sites.\nSony has established a Quality Reliability Lab supporting Sony’s commitment to deliver safe, durable and reliable products to customers. The Quality Reliability Lab has assigned specialists to work full time on improving technologies essential to product reliability and continues working to ensure the long-term reliability of products by developing elemental technologies for preventing age-related deterioration and corrosion of materials and parts, as well as technologies necessary to ensure the reliability of new technologies and functions required for new products and to analyze and evaluate such technologies and functions. These technologies and the information obtained through these activities are utilized to improve design and parts selection processes and increase reliability of products. Sony also presents some of its own knowledge of evaluation technologies at academic meetings and industry conferences and gatherings, seeking to go beyond its own walls and contribute to the industry.\n### Component Quality\nRecognizing the importance of parts and determined to manufacture products built for long-term use, Sony carefully selects key parts independently for each of its major product categories and is pursuing focused efforts aimed at increasing the reliability of the parts it uses through cooperation among relevant departments and the development of new reliability evaluation technology.\n### Improving the Quality of Products\nSony strives to maximize product quality by improving design, manufacturing, and parts.\n### Design Quality", "chunk_word_count": 269, "section_path": "SONY > SONY > Improving the Long-Term Reliability of Products", "document_id": "Sony Sustainability Report 2023", "page": 123, "page_start": 123, "page_end": 123 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 155, "chunk_text": "# SONY\n## SONY\n### Improving Product Safety\nIn the initial stages of the design process, the individual in charge of a particular business unit verifies new technologies and new parts and, from the user’s perspective, determines how a product is to be used. At the conclusion of the design process, the individual in charge confirms the degree to which the intended levels of product quality and reliability have been realized. In addition, in order to give customers that place their trust in the Sony brand the smoothest possible experience, Sony requires relevant departments, including original equipment manufacturer (OEM) and original design manufacturer (ODM) companies, to comply with group-wide quality standards. Compliance with these standards is also tested at the end of the design process. Such approaches prevent the occurrence of problems pertaining to new technologies and new product parts, while also ensuring that product designs incorporate consideration of user convenience.\nProviding reliable products that customers can use safely is a top priority for Sony. Accordingly, at every stage of its business activities, including product planning, development, design, manufacturing, marketing, and after-sales service for all products and services, Sony takes steps to comply with safety standards based on laws and regulations while constantly striving to surpass those standards in order to maintain the safety of its products. As part of these efforts, Sony has established a team in charge of product safety assessment from a medical perspective. When developing products employing new technologies and using new technologies at events, Sony also seeks advice on product safety from a medical perspective from outside experts in order to ensure products do not affect customer health, and this advice is then incorporated into technology assessment, product development, design and engineering. When deemed necessary, Sony also conducts evaluation tests to assess safety with the assistance of a specialized organization. If a safety-related problem involving a Sony product is reported, Sony immediately collects information and examines the facts, and then takes the steps necessary to rectify the problem.\n### Product Security\nWith more products connecting to networks, there is a heightened danger of personal information leaks, falsification or destruction of data, product hacking and other such security issues. As a consequence, it is vital to improve the quality of the security of products and network services.\nSony has a function for collecting security risk-related information from outside experts, researchers and other individuals. Sony assigns managers responsible for the software security of products and has a dedicated department for this purpose. The department coordinates with business units to address issues with the security of products. Based on the information received, the department assesses the impact of risk on customers from a software security perspective and implements appropriate measures.", "chunk_word_count": 452, "section_path": "SONY > SONY > Improving Product Safety", "document_id": "Sony Sustainability Report 2023", "page": 123, "page_start": 123, "page_end": 123 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 156, "chunk_text": "# SONY\n## SONY\n### Production Quality\nIn the effort to ensure that Sony does not receive, manufacture or ship anything with quality-related problems, Sony adheres to a policy of workmanship at all of its manufacturing sites that ensures customers can use Sony products with confidence. Initiatives include setting important targets at each manufacturing site and implementing PDCA processes to facilitate the achievement of such\nSony also implements security design and response systems in order to deliver products that customers can use with confidence. In 2012, the Sony Security Development Lifecycle was formulated as measures and rules to enhance security quality throughout each phase, from product development and network service planning right up to the time the product is discarded or the network service is terminated. As part of this process, it subjects products and network services to pre-shipping and pre-release inspections, including security risk assessments and the use of product security vulnerability detection tools. Those measures and rules are in place for all Sony products and network services. Sony has also established internal guidelines pertaining to the security of products. It regularly reviews and updates these guidelines, and continues to implement employee training programs to enhance product security.\n### Sony Security Development Lifecycle\nDue to growing concern over security issues with Internet of Things (IoT) devices, regulators in various countries/regions are developing new laws and regulations concerning IoT security. Sony has included requirements for conformance to the IoT security regulations in the Sony Security Development Lifecycle and is establishing internal frameworks for gathering and ensuring compliance with regulatory requirements in individual countries and regions.\n### Customer Service\ntraining to help customers get the greatest possible enjoyment from their Sony products.\nand services, as well as to enable them, when needed, to troubleshoot as quickly as possible. To accommodate a variety of user environments, Sony also provides support information compatible with mobile devices for greater customer convenience. Sony currently offers services through its website in 40 languages. When it comes to printed product manuals, Sony provides brief “startup guides” that focus on the information needed to begin using a product, such as how to connect and set up, and how to use the basic functions.", "chunk_word_count": 365, "section_path": "SONY > SONY > Production Quality", "document_id": "Sony Sustainability Report 2023", "page": 123, "page_start": 123, "page_end": 125 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 157, "chunk_text": "# SONY\n## SONY\n### Customer Information Centers and Customer Service Improvements\nIn addition to continuously improving product quality, Sony is taking various steps to improve its responsiveness and its customer service capabilities, in line with the commitment set forth in the Sony Pledge of Quality: “Sony employees will always respect our customers’ viewpoints in striving to deliver product quality and customer service that exceed their expectations.” In customer service, this includes responding to changing customer needs, and in repair services this includes, building organizations designed to ensure the best possible repair service quality.\nSony established its first customer information center in 1963 in Japan to respond to customer inquiries. Today, Sony has customer information centers worldwide, enabling it to provide prompt responses to customer needs that reflect customers’ perspectives, thereby helping Sony to improve the quality of its customer service. Sony currently has 29 contact centers worldwide, providing service to customers in 127 countries.\nFor some products sold globally, Sony has developed instruction manuals with minimal text and more extensive visuals, making it possible to include multiple languages in a single manual, which is expected to contribute to environmental protection by reducing paper consumption.\nIn addition to support via telephone and e-mail, in several regions, Sony provides customer support via such means as live Internet chat sessions, support using social media and messaging apps, and online community forums where customers can share information to help each other find solutions. In these ways, Sony tailors its support to meet the increasingly diverse needs of its customers in every region of the world.\n### Repair and Service Network\nCurrently, there are 3,362 Sony repair service locations worldwide. To enhance customer satisfaction, Sony is working to meet customer needs by performing immediate problem diagnosis at the repair reception desk, improving repair quality and reducing the number of days required for repairs, among other efforts. In addition, Sony is continuously enhancing its service network to ensure that it can respond appropriately to repair requests in each region for each product. By strengthening the feedback mechanism for product quality based on repair information, Sony also aims to keep enhancing quality.\n### Organizational Structure\nSony has assigned CS officers in markets around the world where Sony products are sold. Under the guidance and supervision of the Senior Vice President in charge of Quality and heads of regional headquarters, Sony has also introduced a set of key performance indicators to enhance customer service quality on a global level. Sony has also established a network of bases through which it provides services tailored to the needs of customers in each region.\nIn addition, Sony conducts surveys to determine customer satisfaction at various touchpoints, and makes improvements based on the survey results in its efforts to continually improve customer satisfaction.\n### More Convenient, Eco-Friendly Instruction Manuals", "chunk_word_count": 468, "section_path": "SONY > SONY > Customer Information Centers and Customer Service Improvements", "document_id": "Sony Sustainability Report 2023", "page": 125, "page_start": 125, "page_end": 125 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 158, "chunk_text": "# SONY\n## SONY\n### Training for Customer Support Staff\nTo provide better explanations on how to use its products, Sony is bolstering its online support and providing online instruction manuals for improved searchability and greater convenience so that users are able to quickly find what they are looking for.\nSony is committed to providing high-quality services to customers around the world. To achieve this, it provides ongoing training for both its own employees and those service partners. In addition to focusing on the acquisition of new service technologies and the sharing of solutions to ensure issues are addressed swiftly and effectively, Sony is also making efforts to improve customer service and implement new tools. Staff also receive comprehensive ongoing\nThe Sony website has a support section that offers not only information on the products themselves but also additional support information on software upgrades and network service updates. This is designed to help users better understand Sony products, software,\n### Improving the User Experience\n[IMAGE CAPTION] Usability testing\nUser experience is an essential aspect of quality at Sony. In order to gain an accurate understanding of the increasingly diverse needs of customers and to deliver user experiences that meet those needs, Sony has adopted Human-Centered Design (HCD) processes and ensures that its design efforts always take the customer’s perspective.\n### Formulating Internal Standards and Applying Acquired Expertise\n### System\nProduct and service designers from across the Sony Group meet to formulate guidelines for elements such as interactions, use of words and icons on screens. Some of these aspects are also included in Sony Group's quality standards, which are quality requirements that products and services must comply with. As such, they are continuously managed and implemented through the quality management system. The knowledge gained through user research and testing, the expertise of the product development departments, and case studies of the application of user experience (UX) design are shared across the Group as well.\nHuman-Centered Design (HCD)\nSony is promoting HCD via collaboration between relevant departments such as business groups. This initiative is driven by a team that promotes activities across the Group and is overseen by the corporate executive officer in charge of product quality. Products and services are becoming more multi-functional all the time, and their user interfaces also tend to become more complex with the advance of technology. Sony employs intradepartmental cooperation on development to deliver products and services that people can use with ease and comfort.", "chunk_word_count": 409, "section_path": "SONY > SONY > Training for Customer Support Staff", "document_id": "Sony Sustainability Report 2023", "page": 125, "page_start": 125, "page_end": 126 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 159, "chunk_text": "# SONY\n## SONY\n### Systems for User Research and Testing\nSony has built an environment and established systems that ensure user research and testing can be carried out quickly and efficiently via group-wide collaboration spanning sites in Japan and overseas. Through steps such as the introduction of online systems, it has ensured that the necessary user research and testing can be carried out in spite of physical constraints such as those imposed during the COVID-19 pandemic. There is also an internal monitor program through which employees and their families participate in questionnaire surveys, interviews, and usability tests. These systems and programs enable Sony to deliver a superior user experience and keep creating products that are easy to use.\nDocumentation containing the relevant guidelines and expertise is posted on Sony’s internal portal site to ensure that everyone at the Sony Group has access to them. This information is used in product and service development as Sony continues to work to enhance usability for customers.\n### Using Human-Centered Design in Product and Service Development\nSony is working to improve product usability and create experiences that meet the core needs of customers. It conducts worldwide user research including home visits and user interviews. These efforts are part of a continuing cycle of issue identification and product improvement, which includes prototyping and usability testing in the upstream stage of design. Employees also conduct long-term usage surveys, including interviews with customers, both before and after product release. In addition, Sony analyzes how customers feel and behave when they use a service, and then works to improve the user experience by sharing customer feedback with relevant personnel. With the WF-1000XM4 Fully Wireless Headphones, this HCD-based approach enabled Sony to achieve both compact, simple packaging design and a seamless setup experience for customers. The product packaging not only protects the product itself from external shocks, but also provides the customer with foolproof guidance on how to start using the product with the greatest of ease. As customers unpack the product, they are intuitively given the information they need to complete necessary operations. While this customer experience was actually achieved with the previous WF-1000XM3 model, Sony enlisted our HCD experts, planners, designers, and design staff to work together on conducting operational log analysis, prototyping, and usability testing to ensure that the WF-1000XM4’s smaller packaging design did not compromise this in any way.", "chunk_word_count": 395, "section_path": "SONY > SONY > Systems for User Research and Testing", "document_id": "Sony Sustainability Report 2023", "page": 126, "page_start": 126, "page_end": 126 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 160, "chunk_text": "# SONY\n## SONY\n### Human Resource Development and Awareness-raising Activities on HCD\nIn order to further deepen employee understanding of HCD, Sony also holds lectures open to all employees featuring internal and external experts and provides an e-learning course for all employees covering HCD.\nIt is also working to hire and train employees with HCD-related skills. Sony is continuously implementing programs to develop employees who are ready to lead customer-focused initiatives, including training to learn techniques for creating experiences that reflect customers’ needs and systematic study of HCD processes and methods over the course of approximately six months. Through these activities, employees involved in various aspects of product and service creation are working to acquire the knowledge and skills necessary to master HCD.\nIn 2021, Sony launched a system to certify employees with a high level of expertise and experience as HCD experts. These experts will play a leading role in the workplace. Five HCD experts were certified in 2022, and Sony is working to ensure that HCD becomes further entrenched in development departments.\n### Accessibility\nproducts and services, please visit the Accessibility page of the Sony Group Portal website.\n\n### Employee Education\nSony Group holds forums and seminars led by experts to increase employee understanding of accessibility.\nWith the purpose of “filling the world with emotion, through the power of creativity and technology,” Sony continues to pursue accessibility initiatives in order to contribute to a future where everyone can share Kando (emotion) equally.\nThe principal Sony Group companies offer e-learning training that fosters a deeper understanding of accessibility. Approximately 50,000 employees had taken the course as of the end of fiscal year 2022. More than $1 , 0 0 0 ^ { \\star 2 }$ employees also took part in Sony’s inclusive design workshops, which were mainly targeted towards managers working in $\\mathsf { E T } \\& \\mathsf { S }$ . During these workshops, managers formed teams together with people with disabilities to conduct fieldwork, identify issues, and come up with ideas.\n### Collaboration with Partners\nSony is also accelerating collaborations with other companies to enhance accessibility and inclusion. Sony also participates in the “With My Eyes” project to bring the “difficult to see” into “clearer sight” for people with low vision. QD Laser, Inc.’s laser retinal projection technology can be attached to Sony cameras, enabling even more people to enjoy shooting video and still images. Through its partnership with WS Audiology, Sony has also entered the over-the-counter (OTC) hearing aid market in the United States with the aim of people with hearing impairment and people who have hearing problems to enjoy more enriching conversations and experiences.", "chunk_word_count": 441, "section_path": "SONY > SONY > Human Resource Development and Awareness-raising Activities on HCD", "document_id": "Sony Sustainability Report 2023", "page": 126, "page_start": 126, "page_end": 128 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 161, "chunk_text": "# SONY\n## SONY\n### Organizational Structure\nUnder the Senior Executive in charge of Sustainability, a team that promotes accessibility and inclusive design\\*1 across the group stands at the core of efforts involving cooperation with the people responsible for promoting accessibility in the business units. Having established a globally consistent set of standards and systems, we are using them as the basis for continuous improvements.\nEvery year, on Global Accessibility Awareness Day $( G A A D ) ^ { \\star 3 }$ , Sony Group companies hold lectures and events to enhance employee understanding of accessibility. For example, Sony Pictures Entertainment (SPE) once again held a lecture for its employees to coincide with this year’s GAAD. SPE is also a sponsor of the Easterseals Disability Film Challenge, which gives creators with disabilities the opportunity to showcase their talent in a variety of ways. This year, we will host the 10th anniversary awards ceremony at the Sony Pictures studio lot in Culver City. Some of the winners from 2022 received the opportunity to work on SPT’s Lucky Hank and Sony Pictures Animation’s Spider-Man: Across the Spider-verse.\n\\*1 Inclusive design is an approach that obtains new insights into designs for all by ensuring that the needs of a wide range of users are understood and included.\n### Pictures Segment Initiatives\n### Ensuring That More Customers Can Enjoy Sony Products and Services\nSony Pictures Entertainment (SPE) is developing a process for creating audio descriptions and captions\\*4 for use when movies are screened in cinemas or released on DVD or Blu-ray. The audio description system is primarily intended for people with visual impairments and uses audio to convey information, such as people’s movements, the content of movie scenes, captions, and on-screen messages. Captions are primarily for people with hearing disabilities. They show the names of the people speaking and their lines as well as onscreen information relating to meaningful audio, such as music, sound effects, and ambient noises. Audio description and captions enable more people to enjoy movies and videos.\n\\*2 Number of participants in Japan. \n\\*3 Global Accessibility Awareness Day is a day to talk, think and learn about accessibility and the people who need it.\nIn December 2019, Sony joined The Valuable 500, an international initiative to help promote participation by individuals with disabilities so that they can demonstrate their latent potential to bring value to business, society, and the economy. From amongst the 500 signatories, Sony was selected as one of the Iconic Companies that will play a leading role in their country, region and industry. As part of this role, Sony is promoting accessibility and inclusive design initiatives group-wide so that as many customers as possible can enjoy Sony products and services. For information on accessible", "chunk_word_count": 457, "section_path": "SONY > SONY > Organizational Structure", "document_id": "Sony Sustainability Report 2023", "page": 128, "page_start": 128, "page_end": 128 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 162, "chunk_text": "# SONY\n## SONY\n### Inclusive Design\nTo enhance accessibility and enable more people, including people with disabilities, to enjoy its products and services, Sony employs inclusive design. Sony incorporates feedback gained through interviews with people with disabilities, usability tests, and the participation of employees with disabilities in the planning and development process. For example, in developing televisions, Sony asks users with visual and hearing impairments to try products for a designated period of time, participate in hands-on experiences and provide feedback on how to improve product design. Sony also interviews employees and users with disabilities during the development of its digital cameras so that their perspectives can be incorporated into the final products. In terms of games and network services, the PlayStation®5 game God of War Ragnarök featured more than 70 accessibility features when it was released in 2022. They were developed by employees with disabilities alongside external accessibility consultants and other employees with diverse backgrounds.\n\\*4 Movies for which these features are supported vary by country and region.\n### Independent Employee Initiatives\n### Standardization for Accessibility Improvements", "chunk_word_count": 179, "section_path": "SONY > SONY > Inclusive Design", "document_id": "Sony Sustainability Report 2023", "page": 128, "page_start": 128, "page_end": 129 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 163, "chunk_text": "# SONY\n## SONY\n### Creating an Environment for Carefree Internet Use\nGroups of employees (Employee Resource Groups) at Sony are taking the lead in improving accessibility.\nSony has established its own evaluation standards for accessibility, based on industry standards and designed to improve the quality of accessibility in its products and services. These standards are implemented company-wide. Periodic product assessments are carried out using the standards, with a particular focus on electronics products such as BRAVIA and Xperia. The results of those assessments are then leveraged in ongoing efforts to improve products and services.\nAt Sony North America and Sony Interactive Entertainment, employee networks are leading the way in supporting employees with disabilities and regularly disseminating information to raise awareness of accessibility within the company. For example, the diverse range of perspectives brought by Sony Interactive Entertainment’s employee network in Europe and America played a central role in the development of the ABLE@PlayStation Inclusive Language Guide. This guide helps to resolve mutual misunderstandings, improve communication, and boost awareness. It has also been made available for external use to support inclusivity for all outside of Sony. Sony Europe also held Accessibility Empathy Lab experience events at various workplaces. Through the use of simulation tools, participants’ mobility or vision were artificially reduced to allow a deeper understanding of the challenges faced, with demonstrations to show how technology can support people living with disabilities.\nSony Interactive Entertainment (SIE) will continue to develop the PlayStation business for users in all age groups.\nConsole game industry organizations have responded to the proliferation of new game genres by introducing rating systems for customers in Japan, the United States and Europe (CERO, ESRB and PEGI, respectively), based on games’ target age groups. Sony has applied the U.S. system for more than 20 years, offering parents and guardians suggested age categories and descriptions that detail the contents of a game. PEGI is endorsed by the European Commission as a paradigm of self-regulation in the entertainment industry. In Japan, measures are being promoted to make the system more effective, including, with the cooperation of retailers, the voluntary refusal to sell software rated Z (for ages 18 and above) by CERO to underage customers.\nSony is also proactively involved in standardization\\*5 activities aimed at driving improvements in accessibility throughout the industry.\n\\*5 IEC 62731 Text-to-speech for television; IEC 62944 Digital Television Accessibility; IEC TC 100/TA 16 Active Assisted Living (AAL), accessibility and user interfaces\n### Working to Enhance Sony Website Accessibility\nSIE has enhanced its parental controls features on its game consoles, including PlayStation5. This enables parents to navigate the play experience of their family in a way that works best for their needs. For example, the family manager can control the settings so their children can only use the console to enjoy games that are suitable for their age group, offering added safety and peace of mind. The feature also allows a parent to limit screen time and block the ability to chat with other remote users.\nSony has established the Sony Group Web Accessibility Policy which sets forth the accessibility standards and compliance requirements for all Sony Group Companies’ websites.", "chunk_word_count": 523, "section_path": "SONY > SONY > Creating an Environment for Carefree Internet Use", "document_id": "Sony Sustainability Report 2023", "page": 129, "page_start": 129, "page_end": 129 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 164, "chunk_text": "# SONY\n## SONY\n### Making the Most of Diverse Customer Feedback\nSony exhibits at accessibility-related events in order to gather consumer feedback and use it to continuously improve products and services. At the TechShare Pro conference gathering for accessibility experts held in November 2022, Sony once again participated as a Silver Sponsor and featured its products online. In March 2023, it was a bronze sponsor of the CSUN Assistive Technology Conference (CSUN), the world’s largest international showcase for accessibility. BRAVIA™, PlayStation5, LinkBuds truly wireless headphones, Alpha™ Interchangeable-Lens Cameras, Xperia™ and other Sony products designed for accessibility were on display at the event. Sony sites also provide opportunities for regular dialogue with organizations of people with disabilities as part of efforts to make Sony’s products and services even easier to use.\nWith the use of websites and other digital platforms continuing to rise, the policy seeks to ensure that Sony Group companies’ websites are designed and developed in a way that is accessible to all, including members of the disabled community and the elderly.\nSony Group’s web accessibility requirements are aligned with the Web Content Accessibility Guidelines (WCAG) published by the World Wide Web Consortium (W3C).\nSony offers various services to facilitate inquiries from a diverse range of customers. Sony Life Insurance Co., Ltd. and Sony Assurance Inc. provide sign language and written communication services to facilitate inquiries from customers with hearing or speech disabilities. Working through videophones, sign language and conversation-inwriting service operators are available to facilitate communication by customers. Sony Europe has partnered with Be My Eyes. Their app enables customers with visual impairments to communicate their inquiry to an operator who can give sighted assistance via video call. Currently, seven European languages are supported.\nSony has been working with companies within the Sony Group in implementing the web accessibility policy and conducting checks to ensure compliance of our websites. Sony is also actively working towards providing more accessible video content that includes captions, transcripts and audio description.\nTo promote these efforts, Sony has regularly conducted a range of web accessibility training targeting different roles in the organization and will continue to do so in the future.\n[IMAGE CAPTION] Processing inquiries using sign language and written communications\n### Overview\nSony’s foundations and science museum, is involved in initiatives tailored to local needs. These efforts often include cooperation with international organizations and NGOs. Employees are also encouraged to play an active role in their communities by participating in activities such as volunteer programs and fundraising.\n### Looking to the Future", "chunk_word_count": 421, "section_path": "SONY > SONY > Making the Most of Diverse Customer Feedback", "document_id": "Sony Sustainability Report 2023", "page": 129, "page_start": 129, "page_end": 131 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 165, "chunk_text": "# SONY\n## SONY\n### Basic Approach\nSony strives to make the most of its products, content, technologies, and the strengths of its employees, leveraging stakeholder partnerships to help address global issues and meet various needs in local communities.\nSony can only create sustainable social value based on its Purpose when the global environment is healthy and people can live in society with comfort. It is Sony’s responsibility as a global company to recognize various social issues and contribute to the creation of a sustainable society via community engagement activities. Doing so helps Sony to build relationships of trust with communities. Under the slogan “For the Next Generation,” Sony engages in various ways with communities everywhere it does business by making the most of Sony Group products, content, technologies, stakeholder partnerships, and the strengths of its employees.\n### Community Engagement\n### The Vision of Sony’s Founder\nIn Sony’s Founding Prospectus, Masaru Ibuka, one of the founders, set “the promotion of education in science among the general public” as a primary goal. He was convinced that enhancing scientific literacy would be critical for the recovery of postwar Japan and that science education for children was the key. In 1959, 13 years after Sony’s establishment, he set up the Sony Fund for the Promotion of Science Education to support elementary and junior high schools in the pursuit of science education excellence. His vision lives on in Sony’s community engagement activities.\nSocial Contribution Initiative History of Sony’s Social Contribution Activities\n### Organizational Structure\nSony’s global projects are spearheaded by Sony Group Corporation in Tokyo. In addition, each group company worldwide, along with\n### Results of Community Engagement Initiatives\n### Focus Areas and Results\nIn fiscal year 2022, Sony Group contributed approximately 5.1 billion yen\\* to community engagement initiatives. By category, more than $40 \\%$ of the expenditure went to supporting education. Significant amounts also went to arts/culture. By business segment, $3 5 \\%$ of the total expenditure was contributed by HQ/others, followed by pictures $( 2 3 \\% )$ and entertainment, technology, and services $( 1 8 \\% )$ .", "chunk_word_count": 347, "section_path": "SONY > SONY > Basic Approach", "document_id": "Sony Sustainability Report 2023", "page": 131, "page_start": 131, "page_end": 132 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 166, "chunk_text": "# SONY\n## SONY\n### Areas of Focus\nUnder the slogan “For the Next Generation,” Sony engages with communities everywhere it does business, with particular focus on four key areas, bringing to bear all of the its resources, including products, content, technologies, stakeholder partnerships, and the strength of its employees.\n\\* Cumulative figure. In addition to donations, sponsorships and independent program expenses (including facility operation expenses), this amount includes the market value of products donated. It does not include expenditures from the Sony Global Relief Fund for COVID-19 and Global Social Justice Fund. Please see “Sony’s Two Global Funds” for details about their expenditures.\nInheriting the vision of its founders, Sony leverages its strengths to roll out initiatives in support of education in the STEAM\\* fields. Through the companies of the Sony Group, Sony’s charitable foundations, and partnerships with external organizations, we offer learning opportunities for children to empower their curiosity, support their dreams and help them gain the power to change the world. Sony also provides humanitarian aid in response to large-scale disasters and emergency crises around the world, taking into account the degree of urgency and its relationship with the region.\n[IMAGE CAPTION] Community Engagement Expenditure by Segment (Fiscal Year 2022)\n[IMAGE CAPTION] Community Engagement Expenditure by Field (Fiscal Year 2022)\n\\* STEAM stands for science, technology, engineering, art and mathematics.\n### Support for Education\n### Restarting STEM Educational Programmes in Europe\norganization to evaluate and report the program’s social impact so as to make the program more effective and to enhance discussions with the wider community on rectifying educational disparities. A third-party assessment in fiscal year 2022, following the result of fiscal year 2021, found that a long-term educational program offering multiple programs over a half-year period at each facility, improves children’s non-cognitive competency indicators such as creativity and curiosity, which is the aim of the program.\nWith COVID-19 restrictions easing considerably across Europe during 2022, Sony restarted its face-to-face educational programmes for school children and young adults across the region to inspire the next generation.", "chunk_word_count": 339, "section_path": "SONY > SONY > Areas of Focus", "document_id": "Sony Sustainability Report 2023", "page": 132, "page_start": 132, "page_end": 133 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 167, "chunk_text": "# SONY\n## SONY\n### Sony Group’s Educational Program “CurioStep with Sony”\nThese include those run at Sony’s UK Technology Centre manufacturing facility which has been educating and exciting over 23,000 young children in creative and STEM subjects through its onsite and online workshops since 2012. These include “Learn 2 Code”, a one-day workshop during which children code the worldfamous Raspberry Pi credit-card sized computer manufactured under contract on site by Sony. In another, the “Film in a Day” workshop, children are taught how to use Sony professional cameras and green screens to direct and create their very own short films. Additionally, through the “Kids in Focus” photography workshops conducted throughout Europe, Sony works with professional photographers to inspire children in the art of photography and NGOs to engage them in caring for the planet and its people. In September 2022, for example, children from a number of schools in Sylt, Germany were shown how to capture expert photographs using Sony’s Alpha cameras based on the theme of “Plastic in the Environment” at a local beach. The workshops were run in collaboration with Ocean. Now!, an ocean conservation organization, and Bye Bye Plastik, which aims to increase awareness of the importance of reducing plastic usage. The cameras used during the workshops are donated to the schools to further enhance the expertise of the current children and those that follow them.\nCurioStep with Sony KANDO Experience Program", "chunk_word_count": 236, "section_path": "SONY > SONY > Sony Group’s Educational Program “CurioStep with Sony”", "document_id": "Sony Sustainability Report 2023", "page": 133, "page_start": 133, "page_end": 133 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 168, "chunk_text": "# SONY\n## SONY\n### Sony ExploraScience (SES)\nCurioStep with Sony is an educational program that aims to provide children with opportunities to experience creativity and technology, and to expand their curiosity and creativity while fostering problemsolving skills and acceptance of diversity. The program is being rolled out globally. Sony holds an annual toy-making competition, the Sony Creative Science Award (SCSA), in Singapore and Taiwan, which celebrated their respective 25th and 10th anniversaries in fiscal year 2022. A total of 110,000 students have participated in the competition since the inaugural SCSA in 1998. Following the previous event held in 2021, Sony held the CurioStep Summer Challenge 2022 in Japan to coincide with the school holidays. To enable children to choose what they enjoy, eight categories of events were offered, mainly online, and roughly 3,600 children participated. The events included programming and science craft workshops, environment- and game-themed talk events, and a computational thinking contest.\nSony ExploraScience (SES) is a non-profit science museum in China fully-funded by Sony. In fiscal year 2022, SES carried out regular indoor activities as much as possible at the intervals of COVID-19 outbreaks. At the same time, we explored other possibilities to increase visitor number, including shooting more short science videos online, building SES science theatres in other science museums, setting up science toy DIY workshops.These efforts have won SES 82,099 visitors and 44,112 new online fans (Weibo, Wechat, Tiktok and Bilibili), and the total views of all our official websites amounts to 25.5 million. SES has been implementing “SES Popular Science Journey” aiming to bring SES and Sony’s engaging and educational science resources all over China, especially to underdeveloped areas. Aside from SES science shows, science dramas, DIY science toy workshops, we kept adding our latest innovation to the activity: from the $\\because \\angle K$ Science Series” to local science staff training (operation, etiquette and stage-performance), to KOOV®/toio™ demo class and finally, to SES first 4K3D sci-fi movie. In fiscal year 2022, we conducted our program in 12 cities and wowed a total audience of 14,978 with our signature activities such as Air cannon, Floating bowling ball, balloon rockets, etc.\nSCSA (Singapore) \npromotes science learning through a creative \ntoy-making competition\n### Sony ExploraScience (in Chinese)\nSony also runs the KANDO Experience Program, an initiative to address educational disparities among children in Japan. The program conducts a wide variety of workshops for elementary school-aged children in collaboration with NPOs and other external organizations. Since fiscal year 2020, Sony has been working with a third-party\n### Disaster Relief and Humanitarian Aid", "chunk_word_count": 424, "section_path": "SONY > SONY > Sony ExploraScience (SES)", "document_id": "Sony Sustainability Report 2023", "page": 133, "page_start": 133, "page_end": 134 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 169, "chunk_text": "# SONY\n## SONY\n### Humanitarian Relief for the Ukraine Emergency\nSony Group provided monetary contributions and product donations to support humanitarian aid efforts for affected populations in Ukraine and the neighboring countries in fiscal year 2021. In fiscal year 2022, Sony Corporation of America (SCA) donated 1 million U.S. dollars (approx. 132 million yen\\*) to support UNICEF’s Learning Passport in these areas. The funds are being used to provide children and families in Ukraine and surrounding countries with continued access to quality learning opportunities and critical resources. Overall, Sony has contributed approximately 6.6 million U.S. dollars (893 million yen\\*) in total to these activities.\nSony Group provides humanitarian aid in response to large-scale disasters and emergency crises around the world, taking into account the degree of urgency and its relationship with the region.\nRecognizing the importance of building the frameworks that improve the disaster preparedness in addition to past emergency and recovery support, Save the Children and Sony announced in March 2021 that they will jointly promote the development of resilient communities against disasters. As part of this new partnership, Sony provides support for the Safe Schools program. This program, carried out by Save the Children in over 40 countries, is an all-inclusive, all-hazards approach to keep children safe in and around schools. As part of the Safe Schools program, disaster preparedness educational programs have been provided since June 2021 at elementary and junior high schools in India to help students and teachers enhance their disaster responsiveness and also establish task forces to strengthen the safety management mechanisms at schools and create safe learning environments for students. Partnerships and collaboration with the government and local communities are also being strengthened. Save the Children and Sony will provide insights gained through the Safe Schools program in India to further strengthen and expand its initiatives globally, aiming to replicate them in other countries. Sony will donate a total of 45 million yen to Save the Children over the period up to fiscal year 2023 in order to promote these initiatives, and is considering dispatching employees on-site as part of its effort to solve social issues with Sony technologies and personnel.\n### Sony Group’s Disaster Relief and Humanitarian Aid\n\\* Yearly average exchange rate for 2022 (1 USD $=$ 135.40 JPY)\n### The Türkiye–Syria Earthquake\nIn fiscal year 2022, Sony Group provided donations and other assistance to areas and victims affected by the following natural disasters and humanitarian crises.\nAs of the end of March 2023, Sony Group has donated about 79 million yen in total toward humanitarian aid for people affected by the February 2023 earthquake that hit southeastern Türkiye and northern Syria. This figure includes 31 million yen in donations to international aid organizations such as Save the Children, the United Nations Children’s Fund (UNICEF), the United Nations High Commissioner for Refugees (UNHCR), and Médecins Sans Frontières (MSF). The figure also includes contributions by Sony Group employees, which were matched by Sony Group companies in Japan.", "chunk_word_count": 496, "section_path": "SONY > SONY > Humanitarian Relief for the Ukraine Emergency", "document_id": "Sony Sustainability Report 2023", "page": 134, "page_start": 134, "page_end": 134 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 170, "chunk_text": "# SONY\n## SONY\n### Partnership with Save the Children\nIn 2016, in partnership with Save the Children, Sony co-established the Emergency Disaster and Recovery Fund for Children, which provides immediate support upon the sudden onset of natural disasters or humanitarian crises as well as providing medium- to long-term recovery support to children. The fund pools a certain amount of funds at all times, which enables a rapid response to crises around the world by making monetary disbursements to Save the Children’s emergency response. The funds are used to provide daily commodities and hygiene kits, to establish Child Friendly Spaces which are safe and secured settings for children to play and spend time in, and to train people to provide Psychological First Aid for children, which is an approach used to reduce the initial distress of children exposed to crisis situations. As of March 31 2023, the Emergency Disaster and Recovery Fund for Children has disbursed around 160 million yen which is to be used for Save the Children’s relief activities in response to disasters around the world.\n### Emergency Disaster and Recovery Fund for Children\n### Sony Global Relief Fund for COVID-19\n### Global Social Justice Fund\n### Initiatives for Global Issues\nThrough the Global Social Justice Fund, Sony has continued to support initiatives to promote social justice and human rights and foster DE&I around the world. Sony offers support to organizations working in the areas of civic and community engagement, criminal justice reform, education, and diversity through impact, and the fund has invested in more than 500 organizations, with activities spread across 9 regions and over 70 countries.\nThe fund provides ongoing support in the medical and educational fields, and for the creative community. In the three years since the fund was established, it has given a total of 7.7 billion yen in support to over 5,600 organizations. The creative community received the greatest support, followed by the medical and then the educational field. One example of this support is the Sony Music Foundation’s COVID-19 Special Support Project. This project has collected, produced, and published educational videos about classical music to support young musicians and children who respectively lost opportunities to perform and listen to good music due to the pandemic. These Sony Music Foundation’s classical music videos for children feature themes such as musicians who become game characters and perform music with an original twist in a woodwind trio while on a quest, and collaborations with notable musicians or comedians. These videos are produced and published to help children learn about famous classical composers.", "chunk_word_count": 427, "section_path": "SONY > SONY > Partnership with Save the Children", "document_id": "Sony Sustainability Report 2023", "page": 134, "page_start": 134, "page_end": 135 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 171, "chunk_text": "# SONY\n## SONY\n### Sony’s Two Global Funds\nTo mark the fund’s second anniversary in 2022, a Global Social Justice Fund Impact Report detailing support efforts made by Sony Music Group (SMG) , Sony Interactive Entertainment (SIE) , Sony Pictures Entertainment (SPE) , SCA, and Sony Electronics was published. One of the fund’s initiatives is the funding of vocational training for young people who may otherwise turn to crime due to extreme poverty. SMG provided opportunities to create songs with Sony artists to young people with histories of arrest to help them along their path to rehabilitation. All profits from the music are returned to the support organization to be used as funds for new activities, creating a positive cycle. SPE also works to promote DE&I by sponsoring film festivals that screen films about communities of color tackling social and economic challenges. SIE is working on building a scholarship system that provides internships and career paths in the technology and gaming industries.\nIn April 2020, Sony Group established the Sony Global Relief Fund for COVID-19, a 100-million-U.S. dollar fund to support people around the world affected by COVID-19. The fund donates to external organizations in the medical and educational fields, and to the creative community, and engages in initiatives that leverage Sony Group businesses and technologies.\nIn June 2020, Sony also established the Global Social Justice Fund, a 100-million-U.S. dollar fund to support initiatives that promote social justice and human rights, and to foster diversity, equity and inclusion (DE&I) around the world.\nCOVID-19 Special Support Project (in Japanese) Classical Music for Kids by Sony Music Foundation (YouTube) (in Japanese)\nThe various forms of support via these two global funds are driven by the ideas and aspirations of the Sony Group’s diverse workforce.\nSony Global Relief Fund for COVID-19 Global Social Justice Fund\n[IMAGE CAPTION] The “Search for the Secrets of Composers!” series presents famous composers in a lighthearted format for children\n### Global Social Justice Fund Impact Report\n[IMAGE CAPTION] Global Social Justice Fund Impact Report cover art by New York artist Ebony Bolt.\n### Support for Communities", "chunk_word_count": 349, "section_path": "SONY > SONY > Sony’s Two Global Funds", "document_id": "Sony Sustainability Report 2023", "page": 135, "page_start": 135, "page_end": 136 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 172, "chunk_text": "# SONY\n## SONY\n### Sony India\nMasaru Ibuka, who began to provide school subsidies in 1959 out of a desire to see children foster a “scientific mindset”. In fiscal year 2022, Sony Education Foundation received about 300 educational programs and papers on practical education from elementary and junior high schools as well as papers on practical childcare from kindergartens and nurseries, and provided educational subsidies and Sony products. The foundation is working to grow its network of childcare providers and teachers involved in education to better support the next generation. Support is also provided for holding the Sony Monozukuri (Craftmanship) workshops for children, at which Sony Group employees serve as teachers in order to strengthen interest in science.\nSince 2016, Sony India has been collaborating with NIIT Foundation, a locally established NGO with the mission of making a positive difference in the lives of the underprivileged people through educational initiatives and skill development programs, to conduct the “Hole-inthe-Wall” project in the field of education as part of Sony India’s CSR contribution. The main objective of this project is to bridge the “Digital Divide” by offering effective education and learning experiences which positively impact the outcomes of elementary education. In this project, learning kiosks with original educational contents for various subjects—such as English, mathematics, computer skills, etc.— have been provided for children aged 6–14 who live in slum or rural areas in Delhi and Rajasthan. Each kiosk features a Sony BRAVIA™ TV powered by a solar battery developed by Sony Group. Facilitators trained by the NIIT Foundation provide assistance. The kiosks enable children with limited access to digital equipment to learn enjoyably while interacting with computers and technology under the facilitators’ guidance.", "chunk_word_count": 282, "section_path": "SONY > SONY > Sony India", "document_id": "Sony Sustainability Report 2023", "page": 136, "page_start": 136, "page_end": 136 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 173, "chunk_text": "# SONY\n## SONY\n### Support for Special Olympics Nippon Foundation\nSony Music Foundation is active in four primary areas: (I) To provide high quality music to children, (II) to create opportunities for everyone to enjoy classical music, (III) to support nurturing young classical musicians, and (IV) to support educational activities and initiatives for children through music. In fiscal year 2022, the foundation held the Music Festival for Children and Young People, one of the world’s largest classical music concerts for children. Roughly 30,000 people attended, and about 100,000 watched the free live broadcast. Since the beginning of the COVID-19 pandemic, the foundation has also provided children with opportunities to experience classical music by producing videos for children, offering free smartphone apps, and providing content online.\nSony Life has run the Sony Life Volunteer Club since 1995 to encourage employees to work to solve problems in their local community on their own initiative. The club’s activities range from providing aid after earthquakes to supporting youth development. For over 20 years, the club has supported the Special Olympics Nippon Foundation to help people with intellectual disabilities.\nThe Special Olympics Nippon Foundation holds sports competitions and provides training for people with intellectual disabilities to “bring about a society where diverse people can succeed.” Sony Life has supported the Special Olympics as a national partner since 1996. At the national games that are held in summer and winter every four years, Sony Life employees also participate as volunteers on a scale unmatched by any other supporting company. At the Special Olympics Nippon National Summer Games HIROSHIMA in November 2022, a cumulative total of roughly 450 Sony Life employees participated as volunteers. The volunteers shared their impressions and experiences upon their return, inspiring interest in their colleagues.\nSony India has recently expanded its efforts beyond kiosks, supporting initiatives to offer children various activities in connection with India’s seasonal festivals and cultural events. The activities help children to improve their social aptitude, creativity, intellectual ability, communication skills, confidence, teamwork skills, and other abilities. It is expected that the “Hole-in-the-Wall” project will enable underprivileged children to have better learning experiences and gain more opportunities for higher education.\nSony Foundation Australia (SFA) unites the Sony Group of companies in Australia to deliver sustainable social impact and positive emotion to empower the next generation. One core initiative, “You Can” aims to improve cancer care for young Australians. In FY2022, SFA opened the fifth and largest age-appropriate cancer centre of excellence in Australia for 15–25 year olds (donation of US\\$1,013,610), and provided $6 { , } 3 0 0 +$ nights of free accommodation for regional youth cancer patients who must travel to the city for life-saving treatment (donation of $\\mathsf { U S } \\$ 963,928 +$ ). SFA also donated $\\mathsf { U S S 2 1 9 , 0 0 0 + }$ to the SFA Children’s Holiday Camp Program, providing a holiday of a lifetime to $7 7 0 +$ children with disability and access to free overnight respite care for their parents/ carers. Uniquely, the care is provided by ${ \\hat { 1 } } , 4 0 0 +$ high school and university student volunteers fostering a platform for social inclusion.\n### Sony India", "chunk_word_count": 541, "section_path": "SONY > SONY > Support for Special Olympics Nippon Foundation", "document_id": "Sony Sustainability Report 2023", "page": 136, "page_start": 136, "page_end": 136 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 174, "chunk_text": "# SONY\n## SONY\n### Support for Special Olympics Nippon (in Japanese)\n[IMAGE CAPTION] An employee volunteer welcomes an athlete with an intellectual disability\nChildren studying at the learning station with BRAVIA TV\n### Fund Initiatives\nSony Education Foundation follows in the spirit of Sony’s founder\n### Leave for Volunteering Purposes\n### Employee Engagement\nTo support employee participation in volunteer activities, Sony Group Corporation has an employee volunteer support system that offers accumulated leave and volunteer leave. Employees participate as volunteers in educational support and disaster relief activities.\n### Employee Engagement in Social Contribution Initiatives\n### Employee Initiatives for Addressing Social Issues\nSony uses a three-step approach to provide its employees with opportunities to participate in social contribution initiatives: raise awareness of social issues, volunteer, and leverage job skills. There are programs for each approach. E-learning, sustainability forums and in-house newsletters are provided to raise awareness of social issues. Opportunities to participate in volunteer work and donations (funds, goods, books) include donations for emergency humanitarian assistance, volunteer work in areas affected by natural disasters, and participation in community cleanups and greening programs. For those who wish to leverage their job skills, opportunities are provided to serve as educational program lecturers or staff, or as career-oriented class instructors.\nSony has various initiatives to enable employees to address social issues. SPE runs the Sony Pictures Giving Portal, an online platform providing information for employees who wish to participate in social contribution activities or its matching gift program. SIE drives community partnerships, financial or in-kind donations, and employee volunteerism focused on social issues via PlayStation Cares, its corporate giving platform available to employees in the US, Canada, Europe, Australia, New Zealand, and Brazil.\n### Charitable Donation Systems for Employees\nSony has been introducing matching gift programs where the company matches donations made by employees to support aid organizations in times of disasters and emergency humanitarian crises. In fiscal year 2022, Sony Group donated 4.8 million yen in employee donations and matching gifts toward humanitarian aid for people affected by the February 2023 earthquake that hit southeastern Türkiye and northern Syria.\nIn fiscal year 2022, as one of its fund-raising methods, Sony introduced an employee ID card donation initiative. Some Sony Group employee ID cards have a function that allows electronic money payments. When employee ID cards need to be reissued for organizational changes, employees have a choice to donate the amount that is left in the old ID card when returning them to the company. In fiscal year\n### Looking to the Future\n### Overview\nSony continuously assesses its risks and engages in ongoing reviews and program improvements to maintain and elevate an ethical corporate culture. Senior management continues to allocate necessary resources to achieve Sony’s goal of ethical and responsible business conduct and compliance with all applicable laws and regulations by all Sony Group personnel.\n### Basic Approach", "chunk_word_count": 476, "section_path": "SONY > SONY > Support for Special Olympics Nippon (in Japanese)", "document_id": "Sony Sustainability Report 2023", "page": 136, "page_start": 136, "page_end": 138 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 175, "chunk_text": "# SONY\n## SONY\n### Milestones\nAlignment of our Purpose & Values through ethical and responsible conduct earns trust for the Sony brand and supports Sony’s value creation.\n2001: Established the Compliance Division in Sony Corporation (Current “Compliance & Privacy Department, Sony Group Corporation”) \n2003: Adopted the Sony Group Code of Conduct Refresher training on the Sony Group Code of Conduct Establishment of the Compliance Hotline (Current “Sony Ethics & Compliance Hotline”) was delivered to all employees. Establishment of the Global Compliance Network which consists of regional offices of Global Entertainment & Americas, Europe, Japan, East- Asia and Pan-Asia \n2008: Established the Compliance Monitoring Function \n2009: Established the Compliance Leadership Team \n2018: Revision of Sony Group Code of Conduct\n### Ethics and Compliance\nWith this in mind, Sony’s ethics and compliance program is designed to comply with laws, manage key group-wide risks and foster an ethical corporate culture. The program is continuously improved based on both best practices and global regulatory expectations.\nSony has also adopted in-depth group-wide policies, procedures and controls for key risk areas such as antitrust, anti-corruption, and privacy and personal information management. Senior management evidences its commitment to ethical business conduct by repeatedly communicating the importance of staying true to the Code and leading by example.\n### Structure\nSony instituted a global ethics & compliance network to ensure effective oversight and implementation of our program by all Sony Group companies.\n### Global Ethics & Compliance Network\n### The Sony Group Corporation Compliance & Privacy Department:\nDesigns and oversees the Global Network and Sony’s group-wide ethics & compliance program with support of the Compliance Leadership Team. It also works with the Compliance Leadership Team members, local business unit leaders, and compliance members to conduct comprehensive risk assessments and implement compliance policies, procedures, and internal controls to prevent and detect unethical behavior. It provides oversight of investigations related to potential legal or policy violations.\n### Overview\nSony’s global ethics & compliance program is designed to support ethical and responsible business conduct. It is a shared endeavor among directors, management, and employees at all levels here at Sony, with each person taking ownership and responsibility for ethical business conduct and compliance with the law and in every interaction. Sony established a group-wide ethics & compliance network of experienced compliance personnel (the “Global Network”) to strengthen effective implementation of the ethics & compliance program throughout Sony Group. The Global Network (i) establishes a centralized risk management framework in line with best practices; (ii) provides necessary support and guidance to compliance personnel embedded in the business; and (iii) monitors compliance with the risk management framework to provide effective oversight, address gaps between the ethics & compliance program’s requirements and actual operations, and drives consistency and continuous program improvement across all Sony Group companies.\n### The Compliance Leadership Team:\nAssists in identifying, developing, and implementing best practices in compliance strategies and compliance-related measures. The team is comprised of the Senior Executive in charge of Compliance, all Regional Compliance Officers, the Ethics & Compliance Strategy Leaders and the Head of Compliance Monitoring.\n### Oversight by the Board of Directors and Audit Committee", "chunk_word_count": 519, "section_path": "SONY > SONY > Milestones", "document_id": "Sony Sustainability Report 2023", "page": 138, "page_start": 138, "page_end": 139 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 176, "chunk_text": "# SONY\n## SONY\n### The Compliance Monitoring Function:\nThe Sony Group Corporation Board of Director’s Audit Committee provides oversight of Sony’s program. The Audit Committee receives monthly reports as well as periodic, in-person updates concerning the ethics & compliance program’s activities. Reports to the Audit Committee include information about global regulatory developments, top and emerging risks, and data used to inform program design, implementation and effectiveness such as data derived from program assessments, audit and investigation results, compliance hotline metrics, ethics culture survey results, and employee training data. It also includes information about program improvements. The Sony Group Corporation Board of Directors also receives annual updates on compliance related risks and Sony’s global ethics & compliance program.\nHelps to measure the effectiveness and maturity of Sony’s global ethics & compliance program by conducting periodic and globalbased assessments on program implementation and by undertaking risk-based compliance audits and validations of internal controls.\n### Regional Compliance Officers:\nAre appointed by the Senior Vice President in charge of Compliance and are responsible for implementing and overseeing the ethics & compliance program at all Sony Group companies in their region to promote ethical and responsible business conduct and prevent and detect violations of laws, regulations, and/or company policies. Each Regional Compliance Officer must also ensure that each Sony Group company in their region has designated appropriate personnel and resources to ensure effective implementation of Sony’s global ethics & compliance program.\n### Roles\nExecutives in charge of Compliance: Provide top-level leadership for the Global Network and oversee Sony’s global ethics and compliance program.\n### The Sony Group Code of Conduct\n• Fair dealing (fair business practices) \n• Privacy (e.g., data privacy of employees, customers, consumers) and cyber security \n• Respect for human rights \n• Financial integrity and anti-fraud \n• Speaking up / no retaliation \n• Tax compliance\nworking for Sony. Sony provides additional translations as necessitated by changing workforce demographics.\n### Sony Group Code of Conduct [PDF: 2.63MB]", "chunk_word_count": 324, "section_path": "SONY > SONY > The Compliance Monitoring Function:", "document_id": "Sony Sustainability Report 2023", "page": 139, "page_start": 139, "page_end": 140 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 177, "chunk_text": "# SONY\n## SONY\n### Sony’s Code for Ethical and Responsible Business Conduct\nSony periodically updates the Code as part of its continued effort to maintain the Code’s effectiveness and provide clear direction and resources to all Sony Group personnel on Sony’s key risk areas and ethical principles.\nThe Code is the cornerstone of Sony’s ethics and compliance program and applies to all Sony board members, officers and employees (“Sony Group personnel”).\nSony also recognizes its responsibility as a member of a global society. The Code reflects principles set out in relevant ethical guidelines, which include (among others):\nThe Sony Group Code of Conduct shows how we should earn trust for the Sony brand through ethical and responsible conduct, in line with Sony’s Purpose & Values, specifically the Value of Integrity and Sincerity. The Code provides a set of guiding principles to conduct our business activities on a principled path. Staying true to the Code helps ensure Sony’s long-term success, which in turn is based on the trust of stakeholders.\n• Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational Enterprises \n• The United Nations Global Compact \n• The United Nations Guiding Principles on Business and Human Rights \n• The United Nations Universal Declaration of Human Rights \n• Sustainable Development Goals (SDGs)\nSony engages with colleagues, business partners and the communities in which Sony does business based on the Code.\nSony also actively participates in Keidanren (Japan Business Federation), an alliance of Japan’s leading corporations and observes the standards in the Charter of Corporate Behavior of Keidanren. These standards are also embodied in the Code.\nPlease refer to the below page for the overview of the Code.\n### The Sony Group Code of Conduct / Approach to Sustainability\nThe Code confirms Sony’s commitment to its core ethical values in every aspect of its business operations and includes guidance on key risk areas such as:\nThe Code was approved by the Sony Group Corporation Board of Directors and adopted by the decision-making bodies of every Sony Group company (“Sony Group” or “Sony Group companies”) as their respective code of conduct. Sony Group managers, at all levels, are responsible for promoting the Code as part of their ongoing commitment to creating a culture of integrity and ensuring ethical and responsible business conduct. The Code, which is available on Sony’s website and on each Sony Group company’s intranet, has been translated into 22 languages to help ensure that it is clearly understood by Sony Group personnel and relevant third parties\n• Accurate recordkeeping \n• Anti-corruption / bribery \n• Antitrust / fair competition \n• Avoiding conflicts of interest \n• Diversity / anti-discrimination / equal employment opportunity / \nfair labor and employment practice / Workplace health and safety\n### Sony’s Ethics and Compliance Program\n### Risk Assessment Areas under Ethics & Compliance Program", "chunk_word_count": 469, "section_path": "SONY > SONY > Sony’s Code for Ethical and Responsible Business Conduct", "document_id": "Sony Sustainability Report 2023", "page": 140, "page_start": 140, "page_end": 141 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 178, "chunk_text": "# SONY\n## SONY\n### Policies and Procedures\nSony’s global policies provide necessary rules and procedures to help ensure ethical and responsible business conduct and compliance with applicable laws and regulations. For example, Sony maintains global policies in each of the following risk areas:\nSony conducts ongoing risk assessments to help assure that Sony’s ethics and compliance program activities effectively mitigates and manages relevanttop risks. When conducting risk assessments, the Regional Compliance Officer for each region evaluates relevant compliance risks for each Sony Group company in the region in conjunction with each such company’s management and compliance personnel.\n• Sony Group Anti-Bribery Policy \n• Sony Group Third Party Engagement Policy \n• Sony Group Record Retention Policy \n• Sony Group Global Policy on Antitrust / Competition Law Compliance \n• Global Insider Trading Prevention Policy\n### The Basics\nSony’s ethics & compliance program starts with “Tone from the Top.” Senior management continuously communicates the importance of being true to Sony’s core ethical values. Their commitment is supported by a robust ethics & compliance program aligned with business processes, including ongoing risk assessments, policies and procedures, training and messaging, third party management, reporting mechanisms, and monitoring and audits. Sony continuously improves its program in accordance with regulatory guidance and other leading practices that organizations with mature ethics & compliance programs have found to be effective. The following chart shows the key elements of our compliance program, based on regulatory guidance and leading practices.\nKey legal and compliance risk areas assessed include:\nThese policies are regularly communicated to all Sony Group personnel and relevant third parties as appropriate. Policies are regularly reviewed to ensure that they clearly state Sony’s direction on important matters, reflect current legal and business requirements, and are effectively implemented by the relevant business units.\n• Antitrust \n• Bribery \n• Conflict of Interest \n•Economic Sanctions Laws \n•Environmental Laws \n•Financial Laws \n•Fraud \n• Information Security Laws \n• Infringement of Intellectual Property \n• Insider Trading \n•Labor and Employment Laws \n•Money Laundering \n• Privacy / Personal Information Protection Laws \n•Product Safety / Product Compliance \n• Securities Laws \n•Supply Chain Laws \n•Trade Compliance \n•Other Laws\n### Antitrust and Competition Law Compliance\nSony seeks to outperform competition based on the merits of its products and services, not by unfair business practices. Sony complies with all antitrust and competition laws and does its part to promote a fair and competitive marketplace. Sony has implemented the Sony Group Policy on Antitrust / Competition Law Compliance, which explains the purpose of competition laws and guides employees on compliance with such laws. Sony personnel monitor changes and developments in competition laws and maintain up-to-date controls, policies, and procedures for compliance with these laws. \\* Sony has also developed robust, customized training courses to raise awareness regarding competition laws and to reinforce the policy requirements.\n\\* Sony’s material legal and regulatory proceedings in FY2022 are disclosed in our Form 20-F: “Item 8. Financial Information A. Consolidated Statements and Other Financial Information. Legal Proceedings,” p. 87.\n### Anti-Bribery and Corruption\n### Training and Messaging", "chunk_word_count": 502, "section_path": "SONY > SONY > Policies and Procedures", "document_id": "Sony Sustainability Report 2023", "page": 141, "page_start": 141, "page_end": 142 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 179, "chunk_text": "# SONY\n## SONY\n### Third Party Management\nSony believes that corruption negatively impacts the communities and economies where we do business and that it must be eliminated to realize a sustainable, inclusive, and transparent society. One of the core principles set forth in the Code is the need to give due consideration to the impact of our business activities on the interest of our stakeholders. The Code prohibits all types of corrupt practices. Sony also adopted a global policies (“Sony Group Anti-Bribery Policy” and “Sony Group Third Party Engagement Policy”) that contains rules and procedures designed to prevent corruption involving government officials.\nSony adopted a “Compliance Education Protocol” to ensure that minimum ethics & compliance training and communications in critical risk areas are provided to all employees and relevant third parties working for Sony. For example, all Sony Group personnel and relevant third parties working for Sony are required to complete comprehensive Code of Conduct training and Proper Workplace Conduct training within 90 days of first providing services to Sony. Refresher comprehensive Code of Conduct training must also be completed at least every four years. In addition, in-depth training on key Code of Conduct topics must be completed at least once every two years and training on information security and privacy must be completed at least annually. Additional compliance training is mandated based upon risk assessments and employee and third-party roles and responsibilities. Key ethics & compliance training includes:\nSony established internal rules and procedures to help ensure compliance with applicable laws and regulations related to potential third party risks, which include: anti-corruption, anti-money laundering, economic sanctions, trade controls, tax matters, and supply chain laws related to the procurement of electronics products. These rules are designed to help assure that Sony only does business with reputable third parties.\n### Third Party Due Diligence\nSony closely monitors global anti-corruption laws and enforcement trends to ensure that Sony’s global ethics & compliance program and internal controls properly address these evolving risks.\nThe Sony Group Third Party Engagement Policy was established to help ensure compliance with applicable laws and regulations related to potential third party risks, which include: anti-corruption, anti-money laundering, economic sanctions, trade controls, tax matters, and supply chain laws related to the procurement of electronics products. This policy describes the methodology for assessing the risk profile for higher risk transactions and includes risk-based due diligence and pre-approval requirements. Required due diligence is performed by the employees responsible for the transaction with support from legal, finance and accounting as appropriate. The results of due diligence determine whether the transaction can proceed or whether it can only proceed subject to additional safeguards. Ongoing monitoring for red flags is required and due diligence must be refreshed periodically after the commencement of the transaction. All personnel involved in third party onboarding, including relevant personnel in Sony’s finance, accounting, trade controls and legal functions are required to receive training on this policy.\n• Anti-Bribery \n• Third Party Engagement \n• Antitrust and Fair Competition \n• Import / Export Trade Compliance \n• Manager Training\n[IMAGE CAPTION] Sony’s Anti-Bribery and Corruption Program\nFurthermore, frequent messaging concerning Code topics and key risk areas is provided to all Sony Group personnel and relevant third parties working for Sony.", "chunk_word_count": 538, "section_path": "SONY > SONY > Third Party Management", "document_id": "Sony Sustainability Report 2023", "page": 142, "page_start": 142, "page_end": 142 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 180, "chunk_text": "# SONY\n## SONY\n### Policies\n• The Code prohibits improper payments in every transaction, whether with a government official or with a private party. \n• The Sony Group Anti-Bribery Policy provides rules and procedures designed to prevent government corruption including pre-approval rules and limitations on the amount and type of permitted expenditures. \n• The Sony Group Third Party Engagement Policy provides rules and risk-based procedures, including due diligence and pre-approvals for any third party that may interact with a government official on Sony’s behalf.\n### Communication through Training\ncorruption laws and regulations and Sony’s Anti-Bribery Policy and Third Party Engagement Policy.\n• Sony provides extensive training and support to assist local management with policy compliance. For example, all Sony employees receive training on anti-bribery and corruption expectations as part of the Code of Conduct training upon hire. Refresher training is also provided at least every four years thereafter.\n• Concerns are promptly investigated via the Global Network and legal department of each subsidiary. Appropriate action for the case such as disciplinary, remedial and/or corrective action is considered and implemented. Such remediation activities are monitored until completed.\n• In addition, employees who are at a higher risk for interactions with government officials (i.e., senior management, marketing, sales, procurement and any other employees identified as dealing with government officials) receive more focused anti-corruption training at least every two years and more frequently if indicated by risk assessments. This enhanced training includes training on Sony’s specific policy pre-approval and due diligence requirements.\n### Risk Assessment & Updating Policy\n• Sony conducts periodic anti-corruption assessments and audits of its business to raise overall awareness, detect potential misconduct, and monitor compliance with anti-corruption laws and policy. • Based on these assessments, Sony updated the Sony Group Anti-Bribery Policy and adopted the Sony Group Third Party Engagement Policy in 2023.\n• For personnel in Sony’s control functions (legal, finance, accounting, other control personnel) the above described training is supplemented by live, in-person training.\nSony continues to leverage opportunities to share both knowledge and best practices across its system.\\*\n### Robust Procedures & Internal Controls\n\\* Sony’s material legal and regulatory proceedings in FY2022 are disclosed in our Form 20-F: “Item 8. Financial Information A. Consolidated Statements and Other Financial Information. Legal Proceedings,” p. 87.\n• Sony has implemented robust internal controls and accounting processes designed to detect and prevent violations of company policies relating to improper payment risks and to ensure accurate books and records.", "chunk_word_count": 410, "section_path": "SONY > SONY > Policies", "document_id": "Sony Sustainability Report 2023", "page": 142, "page_start": 142, "page_end": 143 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 181, "chunk_text": "# SONY\n## SONY\n### Elimination of Anti-Social Forces\n• Third parties (including intermediaries such as distributors and subagents) who interact with government officials on Sony’s behalf, joint venture partners, parties to acquisition targets and certain investments are subject to risk based due diligence. In accordance with the due diligence procedures specified based on risk levels, including but not limited to whether the transaction involves any red flags or high risk territories that Sony specifically identifies in its polices, types of transactions and whether the transaction involves any intermediaries such as distributors and sub-agents, employees handling the transaction and professional functions such as financial department, accounting department, or the legal department in each company perform due diligence together as appropriate. Due diligence is performed periodically thereafter if the transaction is continuous in its nature. Any transacting parties (including intermediaries such as distributors and sub-agents) who pose high risks must also agree to abide by applicable anti-\nSony strongly opposes anti-social forces that threaten to disrupt the order and safety of the community. Sony will not entertain relationships with members of anti-social forces. Furthermore, Sony will not give economic benefits to, or accept illegal demands from, any anti-social force. Sony ensures that it does not do business with members of organized crime and other anti-social forces by performing due diligence procedures on its business partners and providing relevant communications to its employees.\n### How Sony Operates the Hotline / How Sony Investigates Reported Matters\n### Reporting Mechanism (Sony Ethics & Compliance Hotline)\n[IMAGE CAPTION] FY2022 Reported Concerns by category Notes: The figures in percentages are rounded to the nearest whole number wherefore the total does not sum up to one hundred percent.\nSony believes that a “speak up / listen up” culture—where employees are encouraged to raise concerns and feel confident that they can do so without fear of retaliation—is a key to early detection and prevention of ethical and regulatory problems.", "chunk_word_count": 321, "section_path": "SONY > SONY > Elimination of Anti-Social Forces", "document_id": "Sony Sustainability Report 2023", "page": 143, "page_start": 143, "page_end": 144 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 182, "chunk_text": "# SONY\n## SONY\n### Multiple Reporting Channels\nSony provides many different types of resources to employees to enable them to raise concerns, including the Sony Group Ethics & Compliance Hotline (“Hotline”).\nAll concerns raised through the Hotline are investigated independently of ordinary internal reporting structures. Third party representatives, following the receipt of concerns, check possible conflicts of interest before providing necessary information to the appropriate Regional Compliance Office (the “Office”). The Office reviews the information and determines what initial actions are appropriate. The Office investigates the allegation (or ask appropriate department to investigate the allegation) under the oversight of the Regional Compliance Officer, collect more information, or take other actions as appropriate. The Office also works with legal and/or other subject matter experts to determine how best to investigate and resolve the allegations. Management will take corrective action to improve business operating systems or take disciplinary action against employees who have violated the law or company policy, when the facts warrant doing so. Each Regional Compliance Officer reviews all reports and responses in their region, as an added check to help assure matters are fully and fairly addressed. The status of raised concerns is also reported monthly to the Sony Group Corporation Compliance & Privacy Department, which, in turn provides a report to the Sony Group Corporation Audit Committee.\nIn FY2022, 53 concerns were substantiated and remediated as appropriate. The remainder includes cases which were unsubstantiated, and cases under investigation, among others.\nThe Hotline is available online (in 33 different languages) or by phone, 24 hours a day, seven days a week. The phone lines are staffed by specially trained third-party representatives, with translators in up to 50 different languages. All information provided to the Hotline is handled confidentially. Calls to the Hotline are not recorded or traced, and reporters may remain anonymous to the extent permitted by law.\nIn FY2022, the Hotline received 451 concerns. The pie chart below shows the total number of concerns received in FY2022 by category. $70 \\%$ of raised concerns was related to employees, diversity, and\n### Monitoring / Audit\nThe table below are examples of issues raised through our Hotline, including information about how these issues were addressed.\nSony has multiple mechanisms to measure the effectiveness and maturity of Sony’s global ethics & compliance program. These mechanisms include: conducting reviews of program implementation on a global basis and using advanced analytics on data from various sources such as hotline and ethical culture survey results, third party benchmark information and audit/review results. Sony also conducts risk-based compliance reviews, audits and validations of controls.\n### Compliance Program Review\nSony’s Compliance Monitoring function is focused on monitoring Sony’s ethics and compliance program. One of its key monitoring activities is conducting periodic Compliance Program Reviews. The Compliance Program Review is a collaborative, educational, automated, and real-time process designed to confirm the status of program implementation at Sony Group companies in coordination with each of the compliance personnel. For each finding/gap identified through the review process, action plans are developed, and the remediation progress is monitored. Sony intends to continue conducting periodic reviews to ensure continuous compliance program improvement.\n### How Sony Promotes Speak-Up Resources", "chunk_word_count": 528, "section_path": "SONY > SONY > Multiple Reporting Channels", "document_id": "Sony Sustainability Report 2023", "page": 144, "page_start": 144, "page_end": 145 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 183, "chunk_text": "# SONY\n## SONY\n### No Retaliation\nSony continuously promotes both the need to raise concerns as well as the various resources available for employees to raise their concerns. The Code clearly states that every employee is responsible for speaking up to protect their colleagues and Sony. Code of Conduct training and ongoing messages also promote the importance of reporting concerns and advise employees that their concerns can be directed to either their manager, human resources personnel, legal and compliance personnel, or the Sony Ethics & Compliance Hotline. Since Sony understands that employees may prefer to raise concerns with their manager in the first instance, training is also provided to all managers on how to create an environment where employees feel comfortable speaking up when they observe unethical behavior. This training instructs managers on how to handle concerns and prevent any appearance of retaliation.\nSony strictly prohibits retaliation in any form. The Code and other internal rules explicitly provide that Sony does not tolerate any form of retaliation against anyone for making a good faith report or for cooperating in an investigation of a report. Sony keeps information provided to the Hotline confidential to the extent possible. Sony promotes its policy against retaliation in trainings and communications to all Sony Group personnel and imposes appropriate consequences in the event anyone is found to have engaged in retaliatory behavior.\n### Ethical Culture Survey\nSony periodically conducts an anonymous global survey containing detailed perceptions of Sony’s ethical culture. The survey is designed to measure ethical culture and compliance program effectiveness. Each Regional Compliance Officer works with Sony group companies in their region to analyze survey results and to take appropriate actions to improve ethical culture and compliance program effectiveness. The results of the FY2022 survey showed improvement in key areas of focus based on the prior survey results.\n### Privacy and Personal Information Management\nSony routinely reviews and revises these policies and standards to address changes in the risk landscape, and the regulatory environment. For example, Sony recently introduced a set of Ethical Privacy Principles via its global privacy management framework which are designed to ensure trust with our customers, employees and other stakeholders through the proper and ethical handling of personal information.\nprocessing activities.\nTo maintain the stakeholders’ trust, Sony continuously looks for ways to improve practices, implement stronger controls, and provide more robust security to protect personal information and other information entrusted to its care.", "chunk_word_count": 405, "section_path": "SONY > SONY > No Retaliation", "document_id": "Sony Sustainability Report 2023", "page": 145, "page_start": 145, "page_end": 146 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 184, "chunk_text": "# SONY\n## SONY\n### Employee Training\nSony believes it is important to protect the personal information of Sony’s customers, employees and other stakeholders and thus ensure trust.\nSony Group Corporation’s Senior Vice President responsible for Legal, Compliance & Privacy monitors the global implementation of and compliance with those policies. Sony has a Compliance Monitoring program in place to periodically assess the Group’s compliance with Sony’s overarching privacy management framework and to proactively identify and manage potential privacy risks.\nSony believes every employee has a role to play in safeguarding privacy. To increase the education and awareness of our workforce, Sony requires all employees to receive information security and privacy training. In addition, Sony provides privacy specialist personnel with bi-annual training and awareness on new privacy requirements and hot topics, as well as occasional training and awareness through privacy working groups and group-wide projects.\nSony has entered a new digital age, where the global privacy landscape and advancements in information and communication technology are changing at a faster pace than ever before. New global privacy laws continue to emerge, raising the bar for privacy compliance across the world. Rapidly evolving cloud-based solutions, social media platforms, Big Data and transformative technologies such as AI, means Sony faces new privacy challenges and risks every day. To be able to respond to these changes and to ensure Sony continues to earn stakeholders’ trust, Sony maintains a robust global privacy program. Sony’s approach to privacy continues to be grounded in a group-wide governance structure that enables the effective management of potential risks and incorporates privacy controls into business processes, systems and products to safeguard the personal information of Sony customers, employees and other stakeholders.\nUnder the direction of Sony Group Corporation’s Senior Vice President responsible for Legal, Compliance & Privacy, the Sony Group Corporation Privacy Section, Privacy Officers and legal departments responsible for privacy and personal information management at Sony Group companies work together and ensure effective implementation of policies and standards. Sony has established a Privacy Leadership Team consisting of privacy leaders from across Sony. This team is responsible for advising on and supporting Sony Group Corporation’s Senior Vice President responsible for Legal, Compliance & Privacy, with setting privacy strategy and direction. Strong executive support for, and governance of privacy are essential. Accordingly, executives at Sony headquarter and each Sony Group company take responsibility for playing an active role in managing privacy risks within their organizations and instilling a culture that respects privacy and builds trust.\n### Privacy Governance\nLed by Sony Group Corporation’s Senior Vice President responsible for Legal, Compliance & Privacy, Sony has a governance structure of privacy and personal information management that covers the entire Sony Group. Sony’s privacy management is governed by a set of global policies and standards, which are based on applicable laws, principles and best practices. These policies set forth Sony’s groupwide commitment to privacy and define practices and procedures to be followed by Sony executives and employees to ensure appropriate handling and protection of the personal information that Sony collects, stores and/or processes.", "chunk_word_count": 508, "section_path": "SONY > SONY > Employee Training", "document_id": "Sony Sustainability Report 2023", "page": 146, "page_start": 146, "page_end": 146 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 185, "chunk_text": "# SONY\n## SONY\n### Safeguarding Privacy and Personal Information\nSony continues to enhance protection of personal information by evaluating and addressing privacy risks through the use of a global privacy management framework that promotes the integration of privacy principles and requirements into Sony’s data\n### Customer-first Business Operations\nSony Financial Group is in charge of Sony’s financial services business and pursues business operations from a customer-oriented perspective throughout. As a financial holding company, Sony Financial Group Inc. has clarified this initiative as its customer-first business operation policy and, as subsidiaries, Sony Life Insurance Co., Ltd., Sony Assurance Inc. and Sony Bank Inc. each go further to establish business operation policies fine-tuned to their respective activities. These policies are reviewed periodically to respond to factors such as changes in the business environment, and the progress of their initiatives is reported regularly to the respective companies’ boards of directors or relevant senior managements and disclosed on their websites.\n### “Customer-first Business Operation Policy” and Relevant Initiatives\nSony Financial Group Inc. \nSony Life Insurance Co., Ltd. (in Japanese) \nSony Assurance Inc. (in Japanese) \nSony Bank Inc. \n[Customer-first Business Operation Policy] Performance of Fiscal 2022 Initiatives (in Japanese)\n### Overview\n### Structure\nIn furtherance of these efforts, Sony Group Corporation has adopted a “Company with Three Committees” corporate governance system under the Companies Act of Japan (Kaishaho) and related regulations (collectively the “Companies Act”). Under this system, Sony Group Corporation has introduced its own requirements to help improve and maintain the soundness and transparency of its governance by strengthening the separation of the Directors’ function from that of management; maintaining what the company believes is an appropriate Board size, which enables the members of the Board to actively contribute to discussion; and advancing the proper functioning of the statutory committees.\n### Basic Approach\nHistorically, Sony Group Corporation has consistently focused on effective group management by evolving its governance while diversifying its businesses, the regions it serves and its capital procurement methods. Sony Group Corporation therefore continuously strives to strengthen its corporate governance system based on the understanding that corporate governance is an essential basis to promote our management in order to fulfill the company’s corporate social responsibility and increases corporate value over the mid- and long-term. To operate Sony effectively, Sony Group Corporation continues to approach its corporate governance through two basic precepts:\n### Corporate Governance\n### Milestones\n1961: Issued American Depositary Receipts (ADRs); Started US-GAAP \naccounting \n1970: Listed on the New York Stock Exchange and disclosing quarterly \nearnings release \n1971: Started appointing independent directors \n1997: Introduced a new corporate executive officer system \n2003: Adopted a company with three committees system \n2005: Majority of the board became independent \n2015: Split out business units as subsidiaries \n2021: Launched Sony Group Corporation", "chunk_word_count": 457, "section_path": "SONY > SONY > Safeguarding Privacy and Personal Information", "document_id": "Sony Sustainability Report 2023", "page": 146, "page_start": 146, "page_end": 148 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 186, "chunk_text": "# SONY\n## SONY\n### Corporate Governance\n(a) The Board of Directors (the “Board”) , a majority of which is comprised of independent Outside Directors, focuses on effective oversight of management’s operation of the business and maintains a sound and transparent governance framework by utilizing the Nominating Committee, the Audit Committee and the Compensation Committees; and\n(b) The Board determines Sony’s fundamental management policies and other material matters and delegates to each of the Senior Executives that assume important roles for the management of Sony, including the Corporate Executive Officers, decision-making authority to conduct Sony’s business operations broadly in line with their respective responsibilities, as defined with a view to promoting timely and efficient decision-making within Sony.\n### Corporate Strategy, Business Strategy and Other Policies\nUnder the Companies Act, a “Company with Three Committees” is required to have three committees: a Nominating Committee, an Audit Committee and a Compensation Committee, each consisting of Directors appointed by the Board. The Companies Act also requires the Board to appoint Corporate Executive Officers (Shikko-yaku), who make decisions regarding the execution of Sony’s business activities within the scope of the authority delegated to them by the Board. Sony Group Corporation has appointed its Chief Executive Officer $( \" \\mathsf { C E O } ^ { \\prime \\prime } )$ , who is responsible for Sony’s overall management, and other officers who are responsible for important and extensive\nheadquarters functions as Corporate Executive Officers. Sony Group Corporation has also appointed Corporate Executive Officers, including the CEO and other executives, that assume important roles for the management of Sony as Senior Executives. In addition, Sony grants titles, such as Executive Deputy President, Senior Executive Vice President, Executive Vice President and Senior Vice President, to management team members in accordance with their respective roles and responsibilities.\nThe Board sets and determines the fundamental management policy, including the mid-term plan and annual business plan pursuant to the Charter of the Board by fully examining various the thinking of management led by the CEO, from multiple perspectives. Please refer to the pages below for Sony’s Purpose & Values, the Mid-Term Corporate Strategy for Sony, the business strategy for each business segment, and the vision of Sony’s founder:\n### Executives\n[IMAGE CAPTION] Corporate Governance Structure\nAbout Sony \nCorporate Strategy \nBusiness Briefing \nVision of Founder and Approach to Sustainability \nThe Founding Prospectus\nFor details such as policies, approaches, plans and initiatives on sustainability, please refer to the pages below.\nApproach to Sustainability Environment Respect for Human Rights Diversity, Equity and Inclusion\n### Governance Framework\nSony Group Corporation is governed by the Board, the members of which are elected at the Ordinary General Meeting of Shareholders.\n### The Board of Directors\n### Purpose/Authority", "chunk_word_count": 452, "section_path": "SONY > SONY > Corporate Governance", "document_id": "Sony Sustainability Report 2023", "page": 148, "page_start": 148, "page_end": 151 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 187, "chunk_text": "# SONY\n## SONY\n### Qualifications for Directors and Limitation of Re-election\n•To determine Sony’s fundamental management policies • To oversee the management of Sony’s business operations as an entity independent from Sony’s management •To appoint and dismiss the statutory committee members • To appoint and dismiss Corporate Executive Officers, and oversee the status of appointment/dismissal of Senior Executives except for Corporate Executive Officers •To appoint and dismiss Representative Corporate Executive Officers\nThe qualifications for Directors of Sony Group Corporation under the Board Charter are generally as summarized below. As of June 20, 2023, all Directors satisfy the qualifications for Directors as set forth below, and all outside Directors satisfy the additional qualifications for outside Directors and are also qualified and designated as Independent Directors under the Securities Listing Regulations of the Tokyo Stock Exchange.\n### Matters Related to Outside Directors\nSony Group Corporation expects that each outside Director play an important role in ensuring proper business decisions by Sony and effective input and oversight by the Board through actively exchanging opinions and having discussions about Sony’s business based on his or her various and broad experience, knowledge and expertise. Considering these expectations, the policy and procedures on the election of Director candidates, including independent outside Director candidates, are set forth as described above. As of June 20, 2023, the Board has 10 Directors, eight of whom are outside Directors. The Chairman of the Board is an outside Director; all members of the Nominating Committee, the Compensation Committee and the Audit Committee are outside Directors.\n### Director Qualifications\nFor the matters to be decided by the Board and the matters to be reported to the Board, refer to the page below.\n• He/she shall not be a director, a statutory auditor, a corporate executive officer, a general manager or other employee of any company in competition with Sony in any of Sony’s principal businesses (a “Competing Company”) or own $3 \\%$ or more of the shares of any Competing Company. \n• He/she shall not be or have been a representative partner or partner of Sony’s independent auditor the past three years before being nominated as a Director. \n• He/she shall not have any connection with any matter that may cause a material conflict of interest in performing the duties of a Director.\nThe Board Charter [PDF:176KB]", "chunk_word_count": 386, "section_path": "SONY > SONY > Qualifications for Directors and Limitation of Re-election", "document_id": "Sony Sustainability Report 2023", "page": 151, "page_start": 151, "page_end": 151 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 188, "chunk_text": "# SONY\n## SONY\n### Policy Regarding Composition of the Board\nWith a view toward securing effective input and oversight by the Board, the Nominating Committee reviews and selects candidates for the Board with the aim of assuring that a substantial part of the Board is comprised of qualified outside Directors that satisfy the independence requirements established by Sony and by law. The Nominating Committee selects candidates that it views as well-suited to be Directors in light of the Board’s purpose of enhancing Sony’s corporate value. The Nominating Committee broadly considers various relevant factors, including a candidate’s capabilities (such as the candidate’s work and other experience, achievements and expertise), availability, and independence, as well as diversity, including gender and internationality, in the boardroom, the appropriate size of the Board, and the knowledge, experiences and talent needed for the role. Under the Charter of the Board (the “Board Charter”), Sony Group Corporation also requires that the Board consist of not fewer than 8 Directors and not more than 14 Directors. In addition, since 2005 the majority of the members of the Board have been outside Directors.\n### Policy and Procedure for Selection and Dismissal of Senior Executives\n### Additional Qualifications for Outside Directors\nSony Group Corporation appoints Corporate Executive Officers including the CEO and other officers that assume important roles for the management of Sony as “Senior Executives.”\n• He/she shall not have received directly from Sony, during any consecutive twelve-month period within the last three years, more than an amount equivalent to 120,000 USD, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service) . • He/she shall not be an executive director, corporate executive officer, general manager or other employee of any company whose aggregate amount of transactions with Sony, in any of the last three fiscal years, exceeds the greater of an amount equivalent to 1,000,000 USD, or two percent of the annual consolidated sales of such company.\nThe Board has the authority to appoint and dismiss and assign the roles and responsibilities of or to request a report regarding such matters for Senior Executives, including the CEO, and exercises such authority as necessary.\nIn making decisions on the appointment of Corporate Executive Officers, including the CEO, the Board considers whether candidates for CEO meet certain qualifications for the CEO position which are set by the Nominating Committee and whether candidates for other Corporate Executive Officer positions have the necessary skills, capabilities, experiences and achievements that correspond to such Corporate Executive Officers’ expected roles and responsibilities. The Board also receives a report on the status of appointment and dismissal of Senior Executives other than Corporate Executive Officers.\nAlso, each outside Director may be nominated as a Director candidate for re-election up to five times (six years, in total), and thereafter by resolution of the Nominating Committee and by consent of all of the Directors. Even with the consent of all of the Directors, in no event may any outside Director be re-elected more than eight times (nine years, in total).\n### Policy Regarding Composition of the Nominating Committee", "chunk_word_count": 529, "section_path": "SONY > SONY > Policy Regarding Composition of the Board", "document_id": "Sony Sustainability Report 2023", "page": 151, "page_start": 151, "page_end": 152 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 189, "chunk_text": "# SONY\n## SONY\n### Strengthening the Sony Group’s Management Structure\nThe term of office of Senior Executives, including the CEO, is one year. The Board discusses, determines and/or oversees their reappointment upon the expiration of each term considering the factors described above as well as their latest performance. The Board dismisses a Corporate Executive Officer, as necessary, in the event that the Board recognizes such Corporate Executive Officer is disqualified after discussions amongst the members of the Board or the Nominating Committee, even in the middle of the term for such Corporate Executive Officer.\nUnder the Companies Act, the Nominating Committee must consist of at least three Directors, the majority of whom must be outside Directors. In addition, under the Board Charter, the chair is to be selected from among the outside Directors. In determining whether to appoint or remove a member of the Nominating Committee, continuity of the Nominating Committee shall be duly taken into account. As of June 20, 2023, the Nominating Committee is comprised of three outside Directors.\nIn July 2022, considering the business environment is changing dramatically on a global scale, the management team proposed to Mr. Sumi, Chairman of the Board and Chair of the Nominating Committee, a recommendation to newly appoint Hiroki Totoki, Executive Deputy President and CFO as President and COO to further strengthen the Sony Group's management structure. After multifaceted analysis at Nominating Committee, including assessment of the need of COO and Totoki's suitability for the role of President and COO, and individual interviews between members of Nominating Committee and Totoki, it was also discussed at and unanimously approved by the Board at the Board meeting in February 2023. Finally, on April 1, 2023, Totoki became the President, COO and CFO, as the management partner of Yoshida, who became Chairman and CEO, and this made clearer the new structure that these two persons mainly lead Sony.\n### Nominating Committee\n### Management Succession Plans\nManagement Succession\nSony places priority on CEO succession to realize sustainable value creation throughout the Sony Group. In the CEO succession planning process, the Nominating Committee, composed entirely of independent outside directors, vets potential successors based on the Sony CEO’s qualification. It does so in frequent consultation with executives, including the CEO, and reports its recommendations to the Board of Directors. In addition to CEO succession planning, the Nominating Committee assesses succession plans for Senior Executives with key management responsibilities for individual business units and headquarters functions, based on reports from management side, including the CEO.\n### Audit Committee\n### Purpose/Authority\n• To determine the content of proposals to be submitted for approval at the General Meeting of Shareholders regarding the appointment and dismissal of Directors • To evaluate management succession plans, which the CEO develops, for the CEO and other executives designated by the Nominating Committee", "chunk_word_count": 469, "section_path": "SONY > SONY > Strengthening the Sony Group’s Management Structure", "document_id": "Sony Sustainability Report 2023", "page": 152, "page_start": 152, "page_end": 152 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 190, "chunk_text": "# SONY\n## SONY\n### CEO Succession Planning Process\nCEO succession planning involves defining the qualifications that Sony seeks in CEOs able to manage its diverse businesses as a unified Group, screening both internal and external candidates, and comparing the two groups, so as to ensure the thoroughly objective evaluation of successor candidates. Sony looks for candidates both internally and externally on a year-round basis. The Nominating Committee narrows down the pool of candidates by vetting them in light of their potential to fulfill the CEO role, and then reviews both near-term and longer-term CEO successor candidates based on their anticipated timelines toward becoming CEO.\n### Purpose/Authority\nThe Nominating Committee determines the content of proposals regarding the appointment and dismissal of Directors, considering the policy on composition of the Board, the qualifications for Directors and the limitation of re-election of Directors. Please refer to the page below for more details.\n• To monitor the performance of duties by Directors and Corporate Executive Officers\n•To oversee and evaluate the independent auditor\nThe Board of Directors\n### Policy of Composition of the Audit Committee\n### Policy on Selection of Independent Auditor Candidates and Independence of Independent Auditor", "chunk_word_count": 195, "section_path": "SONY > SONY > CEO Succession Planning Process", "document_id": "Sony Sustainability Report 2023", "page": 152, "page_start": 152, "page_end": 153 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 191, "chunk_text": "# SONY\n## SONY\n### Policy Regarding Composition of the Compensation Committee\nUnder the Companies Act, the Audit Committee shall consist of at least three Directors, the majority of whom shall be outside Directors. In addition, under the Board Charter, each member of the Audit Committee (“Audit Committee Member”) shall satisfy all of the following qualifications: • he/she shall not be a Director engaged in the business operations of Sony Group Corporation or any of its subsidiaries, a Corporate Executive Officer, an accounting counselor, a general manager or other employee of Sony and\nUnder the Companies Act, the Compensation Committee must consist of at least three Directors, the majority of whom must be outside Directors. In addition, the chair is to be selected from among the outside Directors. A Director who is a CEO, a Chief Operating Officer (“COO”) or a Chief Financial Officer (“CFO”) of Sony Group Corporation or who holds any equivalent position shall not be a member of the Compensation Committee. In determining whether to appoint or remove a member of the Compensation Committee, continuity of the Compensation Committee shall be duly taken into account. As of June 20, 2023, the Compensation Committee is comprised of three outside Directors.\nWith respect to the candidates for independent auditor nominated by the CEO and other Corporate Executive Officers, the Audit Committee evaluates the nomination, prior to making a decision on the candidates. The Audit Committee continues to evaluate the independence, the qualification and the reasonableness as well as the performance, of the independent auditor so appointed. For more details on activities of the Audit Committee, please refer to the page below.\n• he/she shall meet the independence requirements or such other equivalent requirements of the U.S. securities laws and regulations as may from time to time be applicable to Sony Group Corporation. The chair is to be selected from among the outside Directors. The Audit Committee Members shall be selected from among the persons who possess appropriate experience and talent as well as the necessary finance, accounting and legal knowledge to serve on the Audit Committee. In determining whether to appoint or remove the Audit Committee Member, continuity of the Audit Committee shall be duly taken into account.\nStructure of Audit by the Audit Committee, Internal Audit and Accounting Audit, and Status Thereof\n### Basic Policy for Director and Senior Executive Remuneration\n### Compensation Committee\nThe basic policy regarding remuneration for Directors and Senior Executives, as determined by the Compensation Committee, is as follows:\nMoreover, at least one Audit Committee Member shall meet the audit committee financial expert requirements or such other equivalent requirements of the U.S. securities laws and regulations as may from time to time be applicable to Sony Group Corporation. The Board makes a determination on whether or not such Audit Committee Members meet these requirements. As of June 20, 2023, the Audit Committee is comprised of three outside Directors, two of whom (Toshiko Oka and Keiko Kishigami) are “audit committee financial experts” within the meaning of Item 16A of Form 20-F under the Securities Exchange Act of 1934, as amended.", "chunk_word_count": 515, "section_path": "SONY > SONY > Policy Regarding Composition of the Compensation Committee", "document_id": "Sony Sustainability Report 2023", "page": 153, "page_start": 153, "page_end": 153 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 192, "chunk_text": "# SONY\n## SONY\n### Purpose/Authority\n• To set policy on the content of individual compensation for Directors, Senior Executives and other officers • To determine the amount and content of individual compensation of Directors and Corporate Executive Officers in accordance with the policy, and oversee the determination regarding the amount and content of individual compensation of Senior Executives other than Corporate Executive Officers\n### Basic Policy Regarding Director Remuneration\nThe primary duty of Directors is to oversee management’s operation of Sony, which is a global company, the following two elements have been established as the basic policy for the determination of remuneration of Directors in order to improve that oversight function. No Director remuneration is paid to those Directors who concurrently serve as Corporate Executive Officers.\n• Securing a talent pool of Directors possessing requisite abilities from a global perspective; and\n• Ensuring the effectiveness of the supervisory function of the Directors.\nBased on the above, Director remuneration shall consist of the following components. The amount of each component and its percentage of total remuneration shall be set at an appropriate level determined in accordance with the basic policy above and research conducted by a third party regarding remuneration of directors of both Japanese and non-Japanese companies.\n### Basic Policy Regarding Senior Executive Remuneration\nenior Executives are key members of management responsible for executing the operations of Sony as a whole, or of their respective businesses. In order to further improve the business results of Sony, the following two ements have been established as the basic policy for determining the remuneration of Senior Executives.\n• Securing a talent pool possessing requisite abilities from a global perspective; and\n• Providing effective incentives to improve business results on a short-, medium- and long-term basis.\nBased on the above, Senior Executive remuneration shall primarily consist of the following components. The amount of each component and its percentage of total remuneration shall be at an appropriate level determined in accordance with the above basic policy and the individual’s level of responsibility. The amount and percentage will also be based on research conducted by a third party regarding remuneration of management of both Japanese and non-Japanese companies, with an emphasis on linking Senior Executive remuneration to business results and shareholder value.", "chunk_word_count": 377, "section_path": "SONY > SONY > Purpose/Authority", "document_id": "Sony Sustainability Report 2023", "page": 153, "page_start": 153, "page_end": 156 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 193, "chunk_text": "# SONY\n## SONY\n### (Reference: Executive Compensation Package Design to Focus on Long-Term Management “Fiscal Year ended on March 31, 2023”)\nshareholder value.\nthan Corporate Executive Officers.\nThe details of such stock-based compensation, including vesting conditions, recipients and number of grants, are determined or supervised by the Compensation Committee based on research conducted by a third party regarding stock-based compensation of both Japanese and non-Japanese companies. In addition, in determining the number of shares or units to be granted, the impact on dilution of the value of the shares of Sony Group Corporation is monitored.\nThe amount of compensation of each Director and Senior Executive, including Corporate Executive Officers, for the fiscal year ended March 31, 2023 was also determined by the Compensation Committee or otherwise under supervision by the Compensation Committee according to the procedure above. The Compensation Committee concluded that the amount and content of the compensation was in accordance with the policy set forth in section above.\nThe bar chart below shows the components of remuneration for Corporate Executive Officers for the fiscal year ended March 31, 2023. The standard payment amount is used to depict remuneration linked to business results and Stock-based Compensation is calculated based on the fair value of stock acquisition rights and the issue price of restricted stock as of the date granted in the fiscal year ended March 31, 2023. Accordingly, the proportion of each component based on the amount actually paid will differ from the chart below.\n### Corporate Executive Officer Remuneration Linked to Business Results for the Fiscal Year Ended March 31, 2023", "chunk_word_count": 264, "section_path": "SONY > SONY > (Reference: Executive Compensation Package Design to Focus on Long-Term Management “Fiscal Year ended on March 31, 2023”)", "document_id": "Sony Sustainability Report 2023", "page": 156, "page_start": 156, "page_end": 156 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 194, "chunk_text": "# SONY\n## SONY\n### Procedures to Determine Remuneration of Directors and Senior Executives\nFor the fiscal year ended March 31, 2023, the standard payment amount for remuneration linked to business results for Corporate Executive Officers was determined to be between $60 \\%$ and $100 \\%$ of the amount of their fixed remuneration depending on their level of responsibility. The financial performance KPIs and the weighting of such financial performance KPIs primarily used for Corporate Executive Officers in the fiscal year ended March 31, 2023 were as follows:\n[IMAGE CAPTION] Notes: Due to rounding, individual sums may not total 100%.\nBased on the policy outlined above, the amount and content of the compensation for each Director and Senior Executive including Corporate Executive Officers are determined by the Compensation Committee or otherwise under the supervision of the Compensation Committee. Specifically, in principle, as for Directors, each year at the meeting of the Compensation Committee held after the Ordinary General Meeting of the Shareholders, the amount of basic remuneration and the content of compensation for the corresponding fiscal year are determined. Thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the final amount of compensation of each Director is determined. As for the Senior Executives, each year at the meeting of the Compensation Committee held at the end of the previous fiscal year, in principle, the amount of basic remuneration and the content of compensation for the corresponding fiscal year are determined or supervised. Thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the final amount of compensation for each Senior Executive is determined or supervised. For determining the amount of the remuneration linked to business results for each Senior Executive, the Business Results-Linked Standard Payment Amount, the targets for the Financial Performance KPIs and the individual targets for each Senior Executive are determined and thereafter, the amount of such remuneration is determined based on the level of achievement of such targets at the meeting of the Compensation Committee held after the corresponding fiscal year end for Corporate Executive Officers or otherwise under supervision by Compensation Committee for Senior Executives other\n\\*1 Standard payment amount was determined to be between 60 to $100 \\%$ of the amount of fixed remuneration of each Corporate Executive Officer. \\*2 Payment rate of remuneration linked to business results was determined, in principle, to be between 0 to $200 \\%$ based on the achievement of (i) financial performance KPIs for the area(s) for which each Corporate Executive Officer is responsible and (ii) individual performance in the area(s) for which each Corporate Executive Officer is responsible.", "chunk_word_count": 440, "section_path": "SONY > SONY > Procedures to Determine Remuneration of Directors and Senior Executives", "document_id": "Sony Sustainability Report 2023", "page": 156, "page_start": 156, "page_end": 156 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 195, "chunk_text": "# SONY\n## SONY\n### (Reference: Stock-Based Compensation)\nSony Group Corporation introduced stock acquisition rights, restricted stock and RSUs as forms of stockbased compensation, granted to the Directors and the Senior Executives including Corporate Executive Officers.\nThe purpose of the stock-based compensation for outside Directors is to incentivize these Directors to develop and maintain a sound and transparent management system by further promoting shared values between the shareholders and these Directors. Furthermore, the purpose of the stock-based compensations for the Senior Executives including Corporate Executive Officers is to further reinforce management’s alignment with shareholder value, and to incentivize management to improve mid- to long- term performance and increase\nThe financial performance KPIs and the weighting of such financial performance KPIs used for Corporate Executive Officers in the fiscal year ended March 31, 2023 were as follows:\nExecutive remuneration,” remuneration linked to business results for Senior Executives for the fiscal year ended March 31, 2023 was determined based on the level of achievement of the indicators which were selected based on the areas of responsibility of the relevant Senior Executive and the individual performance of such areas of responsibility. The amounts to be paid to the Senior Executives were, in principle, determined within the range from $0 \\%$ to $200 \\%$ of the Business Results Linked Standard Payment Amount. As a result, the ratio of remuneration linked to business results of Corporate Executive Officers for the fiscal year ended March 31, 2023 varied from $1 5 5 . 2 \\%$ to $1 7 8 . 5 \\%$ of the Business Results Linked Standard Payment Amount.\n\\*1 “Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization)” $=$ net income attributable to Sony Group Corporation’s stockholders $^ +$ net income attributable to noncontrolling interests $^ +$ income taxes $^ +$ interest expenses, net, recorded in financial income and financial expense – gain on revaluation of equity instruments, net, recorded in financial income and financial expense $^ +$ depreciation and amortization expense excluding amortization for film costs, broadcasting rights and internally developed game content and master recordings included in content assets, as well as for deferred insurance acquisition costs – the profit and loss amount that Sony deems non-recurring.", "chunk_word_count": 365, "section_path": "SONY > SONY > (Reference: Stock-Based Compensation)", "document_id": "Sony Sustainability Report 2023", "page": 156, "page_start": 156, "page_end": 157 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 196, "chunk_text": "# SONY\n## SONY\n### (Reference: Stock-Based Compensation)\nAdjusted EBITDA, which is the most important performance KPI under the fourth mid-range plan, was selected as a Financial Performance KPI to enhance the growth potential of the entire Sony Group under the fourth mid-range plan. Adjusted EPS was selected to incentivize awareness of shareholder value and capital efficiency. For the target to be achieved for Adjusted EBITDA for the fiscal year ended March 31, 2023, an amount that the Compensation Committee determined as appropriate was set in order to achieve the Adjusted EBITDA target under Sony’s fourth mid-range plan of 4.3 trillion yen for the threeyear period from the fiscal year ended March 31, 2022. The target for Adjusted EPS for the fiscal year ended March 31, 2023 was 659.3 yen, which was obtained by dividing the forecast of net income attributable to Sony Group Corporation’s stockholders for the fiscal year ended March 31, 2023, which was disclosed in May, 2022 (830 billion yen) by the number of diluted shares outstanding at the beginning of the fiscal year. The results for the Financial Performance KPIs for the fiscal year ended March 31, 2023 were as follows: Adjusted EBITDA: 1,703.4 billion yen (while net income attributable to Sony Group Corporation’s stockholders for the fiscal year ended March 31, 2023 was 937.1 billion),\\*3 and Adjusted EPS: 737.06 yen,\\*4 each exceeding the targeted amount.\n\\* For further information about the profit and loss amount that Sony deems to be non-recurring, refer to “Issues Facing Sony and Management’s Response to those Issues: Fourth Mid-Range Plan—Financial Targets and their Progress” in “Item 5. Operating and Financial Review and Prospects” in Sony Group Corporation’s Form 20-F (Annual Report) for Fiscal Year ended on March 31, 2023.\n$^ { \\star 2 }$ “EPS (Earning Per Share)” means net income attributable to Sony Group Corporation’s stockholders per share. “Adjusted EPS” is calculated by using the value excluding the profit and loss amount that Sony deems to be non-recurring from the value of the net income attributable to Sony Group Corporation’s stockholders.\nForm 20-F (Annual Report) for Fiscal Year ended on March 31, 2023\n\\*3 The following table shows a reconciliation of net income attributable to Sony Group Corporation’s stockholders reported in accordance with IFRS to Adjusted EBITDA for the fiscal year ended March 31, 2023.\n\\*4 Adjusted EPS result for the fiscal year ended March 31, 2023 is calculated by dividing adjusted net income attributable to Sony Group Corporation’s stockholders for the fiscal year ended March 31, 2023 by diluted weighted average number of shares during the fiscal year. The following table shows a reconciliation of net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation reported in accordance with IFRS to Adjusted EPS for the fiscal year ended March 31, 2023.\nAs outlined above under “Basic Policy Regarding Director and Senior\n### Secretariat Offices for the Board and Each Committee", "chunk_word_count": 484, "section_path": "SONY > SONY > (Reference: Stock-Based Compensation)", "document_id": "Sony Sustainability Report 2023", "page": 157, "page_start": 157, "page_end": 157 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 197, "chunk_text": "# SONY\n## SONY\n### Support for Activities of Directors, the Board and the Committees\nThe company has established secretariat offices for the Board and each Committee to support the activities of the members and encourage constructive and proactive discussion at the meetings of the Board and each Committee. Each secretariat office endeavors to distribute necessary materials for the meetings in advance and to provide other information such as accounting information, organizational charts, press releases, external analyst reports and credit rating reports, as appropriate. Each secretariat office explains the meeting agenda to the members and provides them with presentation materials in advance of each meeting date and facilitates deliberation in separate meetings or briefing sessions depending on the nature of matters to be discussed. Each secretariat office also provides the absent members with a follow up briefing, as appropriate. In addition, each secretariat office shares the annual schedule of the meetings and anticipated agenda items in advance with the members, in order to appropriately set the frequency of meetings and the number of agenda items to be deliberated at each meeting.\nSony Group Corporation engages in various activities to enhance the oversight function of the Board over management’s operation of Sony’s business as follows:\n### Outside Director Initiatives\nThe Chairman of the Board, who is an outside Director, leads the Board’s activities and secures the appropriate cooperation, communication and arrangement among outside Directors and Senior Executives. As an example of such initiatives, the outside Directors’ meetings have been held, generally on the same day as each Board Meeting, for the purpose of exchanging information and sharing information with respect to recognized issues among outside Directors. The Board also conducted Directors’ corporate strategic workshops with managements, business site visits by Directors, and meetings with the Chairman and the CEO. All of these activities were aimed at securing better understanding by outside Directors of Sony’s business and management’s challenges and encouraging corporate strategic discussions among Directors. In September 2022, the Directors visited the Kumamoto Technology Centre of Sony Semiconductor Solutions Corporation located in Kumamoto Prefecture, Japan, where they observed manufacturing lines of image sensor products and discussed with the image sensor business’s management the current challenges and future strategies of the business. At a workshop held over two days in December 2022, through direct dialogue with executives in charge of Sony’s main business segments, the Directors intensively discussed a variety of matters, including the business environment and challenges surrounding each of Sony’s businesses and corresponding strategies, as well as Sony’s internal and external conditions related to sustainability and geopolitical risks, which are becoming increasingly important, in addition to Sony’s business portfolio.\n### Form 20-F (Annual Report) for Fiscal Year ended on March 31, 2023\n\\*2 This amount is calculated by subtracting the tax effect of 5.6 billion yen from 27.8 billion yen, the total amount of profit and loss that Sony deems nonrecurring, included in income before income tax. For further information about the profit and loss amount that Sony deems to be non-recurring, refer to “Issues Facing Sony and Management’s Response to those Issues: Fourth Mid-Range Plan—Financial Targets and their Progress” in “Item 5. Operating and Financial Review and Prospects” in Sony Group Corporation’s Form 20-F (Annual Report) for Fiscal Year ended on March 31, 2023.", "chunk_word_count": 545, "section_path": "SONY > SONY > Support for Activities of Directors, the Board and the Committees", "document_id": "Sony Sustainability Report 2023", "page": 158, "page_start": 158, "page_end": 158 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 198, "chunk_text": "# SONY\n## SONY\n### Provision of Necessary Information\nWhen the company is requested to provide additional information by Directors, each secretariat office endeavors to provide the members such information promptly. Also, each secretariat office verifies appropriately whether requested information is provided smoothly. In the event that the members consult with external specialists, participate in various seminars and so on to perform their duties, the costs and expenses in connection with such activities are borne by the company in accordance with applicable internal rules.\nForm 20-F (Annual Report) for Fiscal Year ended on March 31, 2023\n### The Audit Committee Aide\n### Evaluation of the Board and the Committees’ Effectiveness\n• Gathered responses to a questionnaire from each Director about the current status and practices of the Board and each Committee, such as the composition of the Board, operation of the Board, commitments of each Director, activities of each Committee and procedures of the previous Evaluation; \n• Interviewed all the Directors including through the Peer Review\\*; and \n• Researched other global companies’ practices in Japan, the United States and Europe, and compared them with the company’s practices.\nWith the approval of the Board and with the consent by the Audit Committee, the company has established the Audit Committee Aide to support the activities of the Audit Committee. The Audit Committee Aide does not concurrently hold positions related to the business operations of Sony and, upon instruction by each Audit Committee member, conducts investigations into and analyses of auditing matters and engages in physical inspections or visiting audits either by him/herself or by cooperating with relevant departments in order to support the Audit Committee.\n### Policy for Evaluation\nSony Group Corporation believes that it is important to endeavor to improve the effectiveness of the Board and each Committee in order to support Sony’s business operations and enhance the corporate value of Sony. To achieve this goal, Sony Group Corporation conducts evaluations of the effectiveness of the Board and of each Committee (the “Evaluation”) at least annually.\nThe Board then received, reviewed and discussed the Outside Counsel’s report on the results of its evaluation. The Board confirmed the effectiveness of the Board and the Committees.\n### Policy for Training Directors", "chunk_word_count": 368, "section_path": "SONY > SONY > Provision of Necessary Information", "document_id": "Sony Sustainability Report 2023", "page": 158, "page_start": 158, "page_end": 159 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 199, "chunk_text": "# SONY\n## SONY\n### Recent Evaluation\nNewly appointed Directors receive briefings by Senior Executives and outside experts regarding their expected roles and responsibilities, including their legal duties, as a Director or a member of the Committees. In addition, newly appointed outside Directors receive briefings about the business, financial status, organization and governance structure of Sony. Also, throughout their tenure, each Director receives compliance-related training in accordance with internal protocols and briefings on matters relevant to each Director’s fulfillment of his/her roles and responsibilities including the current status of Sony’s business.\n\\* Peer Review: Mutual evaluation by Directors. We conducted the Evaluation through interviews in the presence of the Chairman or Vice Chairman of the Board.\nFrom February through April 2023, under the leadership of the Chairman and the Vice Chairman of the Board, the Board conducted the Evaluation mainly in respect of Board and Committee activities in the fiscal year ended March 31, 2023 after confirming that actions proposed in response to the results of the previous Evaluation were appropriately taken. The recent Evaluation was conducted, with the support of a third-party outside counsel with expertise in Japanese and global corporate governance practices (the “Outside Counsel”) in order to ensure transparency and objectivity and to obtain professional advice.\n### Summary of the Results of the Recent Evaluation\nBased on the following findings, the Outside Counsel reported that, as assessed in the previous Evaluation, the Board is established and operated in a manner sufficient to be highly evaluated:\n• The results of the questionnaire and interviews show that many Directors rate the effectiveness of the Board highly overall. \n• Outward factors such as the composition of the Board are comparable with global companies in Europe and North America as well as Japan. \n• In addition, the Peer Review was conducted in the fiscal year ended on March 31, 2023, and the involvement of the Board in the process of appointment of the new president was appropriate. \n• The Board also received a favorable assessment on its response to the suggestions made by the Outside Counsel in the previous Evaluation and on its overall operations.\n### Procedures for Recent Evaluation\nFirst, the Board confirmed that the actions proposed to be taken in response to the results of the previous Evaluation were taken, and discussed and confirmed the proposed procedures for the Evaluation for the fiscal year ended March 31, 2023. Thereafter, the third-party evaluation was conducted by the Outside Counsel in accordance with the following steps:\nFollowing discussions and analysis based on the Outside Counsel’s report, the Board re-affirmed that the Board and each Committee were functioning effectively as of April 2023. The Outside Counsel also suggested several possible options for the Board and Committees to further improve their own effectiveness.\n• Reviewed relevant material, such as the minutes of Board meetings, and attended a Board meeting; • Confirmed with the Board secretariat office and each Committee’s secretariat office how meetings of the Board and Committees were conducted;\n### Actions in Response to the Results of the Evaluation\n### Senior Executives and Other Officers\n### Details of Actions Taken by the Board and Committees", "chunk_word_count": 523, "section_path": "SONY > SONY > Recent Evaluation", "document_id": "Sony Sustainability Report 2023", "page": 159, "page_start": 159, "page_end": 160 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 200, "chunk_text": "# SONY\n## SONY\n### Senior Executives (In Sony Group Corporation, Corporate Executive Officer Senior Executive Vice President and Executive Vice President)\nIn order to increase the corporate value of Sony, Sony Group Corporation will take appropriate actions to further enhance functions of the Board and the Committees in response to the results of the Evaluation, as well as various comments and opinions given by Directors and the Outside Counsel during the Evaluation process.\n### Details of Actions Taken by the Board\nTotal number of Senior Executives: 15 (including 6 Corporate Executive Officers) (as of June 20, 2023)\nDuring the fiscal year ended on March 31, 2023, the Board convened 9 times. The attendance records of respective Directors are as follows.\nExecutives\nFor reference, after the previous Evaluation conducted from February through May 2022, Sony Group Corporation took the following actions, among others, to help improve the effectiveness of the Board:\n### Purpose/Authority\n• Continuously made periodic reports to the Board on sustainability related matters (environmental and social) • Risk management—enhanced Board’s supervision over risks regarding geopolitics and information security; • Conducted deeper discussions about Sony’s strategies on growth areas and new businesses (gaming, metaverse and mobility); and • Promoted and enhanced engagement with investors.\nDetermines and executes Sony’s business activities in accordance with their roles and responsibilities\n### Delegation of Authority from the Board\nThe Board determines the fundamental management policies and other material matters related to the operation of Sony’s business. The Board assigns the duties of Corporate Executive Officers including the CEO, by determining the areas over which each Corporate Executive Officer is in charge and by determining the scope of Senior Executives. Then, it delegates its decision-making authority to the CEO with a view to promoting timely and efficient decision-making within Sony. The CEO further subdelegates a part of such authority to other Senior Executives.\n### Other Officers (In Sony Group Corporation, Senior Vice President)\nDuring the fiscal year ended on March 31, 2023, the Board of Directors discussed a variety of matters, such as supervision of the progress of the fourth mid-range plan, formulation of a business plan for the fiscal year ending on March 31, 2024, enhancement of Sony’s management structure (including the appointment of Hiroki Totoki as President, COO and CFO), Sony’s business portfolio, strategically important M&A and capital investments, effectiveness of internal control (including the ethics and compliance program and information security), approach to new risks (including geopolitical risks), and Sony’s situation and initiatives related to sustainability and environment, as well as Sony’s strategy related to new technologies (including generative AI).\nTotal number of other officers: 10 (as of June 20, 2023)\nCarries out business operations their assignments within designated areas, such as business units, headquarters functions and/or research and development, in accordance with the fundamental policies determined by the Board and Senior Executives.\n### Details of Actions Taken by the Nomination Committee\nand CFO. After a multifaceted review and discussion, including interviews by the Nominating Committee members, the proposal was shared with the outside Directors other than the Nominating Committee members and confirmed.\nDuring the fiscal year ended on March 31, 2023, the Nomination Committee convened 5 times. The attendance records of respective Directors are as follows.", "chunk_word_count": 536, "section_path": "SONY > SONY > Senior Executives (In Sony Group Corporation, Corporate Executive Officer Senior Executive Vice President and Executive Vice President)", "document_id": "Sony Sustainability Report 2023", "page": 160, "page_start": 160, "page_end": 161 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 201, "chunk_text": "# SONY\n## SONY\n### Details of Actions Taken by the Audit Committee\nDuring the fiscal year ended on March 31, 2023, the Audit Committee convened 6 times. For further information about the attendance records of respective Directors and specific considerations by the Audit Committee during the fiscal year ended on March 31, 2023, refer to “Structure of Audit by the Audit Committee, Internal Audit and Accounting Audit, and Status Thereof.”\n\\*1 The numbers of the Meeting Records and the Attendance Records are those applicable to the fiscal year ended on March 31, 2023.\n$^ { \\star 2 }$ Shuzo Sumi, who was a member of the Nomination Committee during the fiscal year ended on March 31, 2023, retired both as a Director and a member of the Nomination Committee at the conclusion of the Ordinary General Meeting of Shareholders on June 20, 2023. Accordingly, Toshiko Oka was newly appointed as a member of the Nomination Committee pursuant to the resolution at the Board meeting held on June 20, 2023.", "chunk_word_count": 170, "section_path": "SONY > SONY > Details of Actions Taken by the Audit Committee", "document_id": "Sony Sustainability Report 2023", "page": 161, "page_start": 161, "page_end": 161 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 202, "chunk_text": "# SONY\n## SONY\n### Details of Actions Taken by the Compensation Committee\nDuring the fiscal year ended on March 31, 2023, the Compensation Committee convened 5 times. The attendance records of respective Directors are as follows.\nDuring the fiscal year ended on March 31, 2023, the matters given consideration by the Nominating Committee included policies on selecting outside Director candidates, exploring Director prospects, and CEO succession. In addition, the Nominating Committee assessed succession plans for Senior Executives with key management responsibilities for individual business units and headquarters functions, based on management, including CEO, reports. With respect to the selection of candidates for outside Directors, as a priority item for the current fiscal year, the Nominating Committee confirmed the policy that candidates for outside Directors should be selected from persons who have experience as CEOs of major global companies, backgrounds in technology and/or knowledge of the entertainment industry, and the Nomination Committee held discussions based on such policy. As a result, two new outside Director candidates were appointed based on this policy. Regarding the appointment of Senior Executives, Kenichiro Yoshida, Representative Corporate Executive Officer, Chairman, President and CEO, proposed to the Nominating Committee that Hiroki Totoki, Representative Corporate Executive Officer, Executive Deputy President and CFO, assume the position of President, COO\nThe specific matters given consideration by the Compensation Committee included the Corporation’s policy regarding the determination of individual remuneration for Directors and Senior Executives, including Corporate Executive Officers, for each fiscal year, and the amount and content of such remuneration. The Committee also considered the total number of stock acquisition rights to be issued for the purpose of granting stock options to Corporate Executive Officers, employees of the Corporation, Directors and other officers of the Corporation’s subsidiaries, and other stock-based compensation utilizing shares of the Corporation’s stock. In the fiscal year ended March 31, 2023, the Corporation newly introduced RSUs for the purpose of giving the recipients an incentive to contribute towards the improvement of the business performance of the Sony Group, and the Committee confirmed and discussed the scope of and plans for the recipients and the decision-making authority for the grant of RSUs. For the fiscal year ending March 31, 2024 and beyond, the Committee conducted a comprehensive review and discussion on the ideal KPIs for remuneration linked to business results and the ideal governance of executive compensation, with consideration of other companies’ trends and regulatory developments in Japan and other countries.\n[IMAGE CAPTION] Annual Activity Cycle of the Board and Committees (Fiscal Year ended on March 31, 2023)", "chunk_word_count": 422, "section_path": "SONY > SONY > Details of Actions Taken by the Compensation Committee", "document_id": "Sony Sustainability Report 2023", "page": 161, "page_start": 161, "page_end": 163 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 203, "chunk_text": "# SONY\n## SONY\n### Internal Control and Governance Framework\nover financial reporting, including documenting, testing and evaluating internal controls and overseeing and assessing the global evaluation. Based on the evaluation by Sony Group Corporation, CEO and CFO have concluded that Sony maintained effective internal control over financial reporting as of March 31, 2023.\nProcedures, Sony Group Corporation has established the “Disclosure Committee,” which is comprised of members of senior management of Sony who are in charge of a part of Sony’s headquarters functions. In order to assure appropriate and timely disclosure, the Disclosure Committee shall evaluate events that are reported from the important business units, subsidiaries, affiliated companies and corporate divisions in accordance with Sony’s internal rules in light of their materiality to Sony. Based on such evaluation, the Disclosure Committee shall review the necessity of disclosure in accordance with applicable securities laws, regulations and rules, as well as the listing standards of the relevant stock exchanges, and report to the CEO and the CFO for their determination.\n### Disclosure Framework\nAt a Board meeting held on April 26, 2006, the Board reaffirmed the internal control and governance framework in effect as of the date thereof and resolved to continue to evaluate and improve such framework going forward, as appropriate. At Board meetings held on May 13, 2009 and April 30, 2015, the Board amended and updated the internal control and governance framework, and with the resolution of the Board dated as of April 28, 2023, the Board reaffirmed the framework in effect and determined to continue to evaluate and improve such framework going forward, as appropriate. These determinations were required by and met the requirements of the Companies Act of Japan. For the content of the reaffirmation and the status of its implementation determined by the resolution of the Board dated as of April 28, 2023, please refer to the page below.\nThe securities of Sony Group Corporation, the ultimate parent of all Sony companies, are listed for trading on exchanges in Japan and the U.S. As a result, Sony is obligated to make various disclosures to the public in accordance with applicable securities laws, regulations and rules in those countries and listing standards of the stock exchanges on which Sony Group Corporation’s shares are listed. Sony is committed to full compliance with all requirements applicable to its public disclosures.", "chunk_word_count": 392, "section_path": "SONY > SONY > Internal Control and Governance Framework", "document_id": "Sony Sustainability Report 2023", "page": 163, "page_start": 163, "page_end": 163 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 204, "chunk_text": "# SONY\n## SONY\n### Risk Management System Framework\nEach business unit, subsidiary / affiliated company and corporate division of Sony periodically reviews and assesses risks for the area of which it is in charge and works on finding, reporting, assessing and responding to the risks. In addition, Senior Executives including Corporate Executive Officers, of Sony Group Corporation have established and maintain a system to identify and control risks that may cause losses to Sony Group regarding the areas of which they are in charge. The Corporate Executive Officer in charge of group risk control comprehensively promotes and manages the establishment and maintenance of the system stated above through the activities with related departments.\nSony Group Corporation’s policy on investor relations activities is to aim to disclose accurate information in a timely and fair manner, as well as to endeavor to promote constructive dialogue with shareholders and investors, with a view to maximizing Sony’s corporate value by building a relationship of trust with shareholders and investors. Sony Group Corporation has established disclosure controls and procedures as an approach to implement this policy. All personnel responsible for the preparation of submissions to and filings with the Tokyo Stock Exchange, the U.S. Securities and Exchange Commission and other regulatory entities, or for other public communications made on behalf of Sony, or who provide information as part of that process, have a responsibility to ensure that such disclosures and information are full, fair, accurate, timely and understandable, and in compliance with the established disclosure controls and procedures.\nBoard of Directors’ Determination Regarding Internal Control and Governance Framework Pursuant to the Japanese Companies Act and Status for Implementing the Internal Control and Governance Framework\nAs for the summary of the principal frameworks of the internal control and governance framework based on the Board determination above, please refer to each page below.\nExamples of risks that may significantly impact investor judgements include reduced market relevance and profitability due to intensifying competition from competitors; newly incurred costs to comply with laws and regulations in countries and regions where Sony operates; impact on global operations due to trade restrictions and economic sanctions imposed by certain countries and retaliatory measures to them; impairment of long-lived assets; and changes in consumption behavior caused by the increasing prevalence of new technologies and distribution platforms.\n### Financial Reporting Framework\nSony’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Internal Financial Reporting Standards (IFRS). Sony formed a cross-functional steering committee comprised of management in charge of the principal Sony headquarters functions to monitor the actions necessary to maintain effective internal control\nSony Group Corporation has established “Disclosure Controls and Procedures,” outlining the process through which potentially material information is reported from important business units, subsidiaries, affiliated companies and corporate divisions and is reviewed and considered for disclosure in light of its materiality to Sony. As a body to assist the CEO and the CFO of Sony Group Corporation, in designing, implementing and evaluating the Disclosure Controls and\n“D. Risk Factors” in “Item 3. Key Information” in Sony Group Corporation’s Form 20-F (Annual Report) for Fiscal Year ended on March 31, 2023:", "chunk_word_count": 540, "section_path": "SONY > SONY > Risk Management System Framework", "document_id": "Sony Sustainability Report 2023", "page": 163, "page_start": 163, "page_end": 164 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 205, "chunk_text": "# SONY\n## SONY\n### Crisis Management System Framework\nGroup. In order to boost the effectiveness of Sony’s business continuity planning, top management and Headquarters carry out exercises based on scenarios such as a Nankai Trough earthquake or other natural disasters posited by the Japanese government. In response to the COVID-19 pandemic, Sony established a group crisis management system, placing the highest priority on ensuring safety and preventing the spread of the virus, as well as taking swift action to minimize the impact on Sony businesses. At that time, Sony secured business continuity through its global coordination while implementing measures in accordance with internal guidelines and preparing emergency supplies.\nOne aspect of risk management is the proper handling of crises if and when they arise, and the proper preparation for such crises. Sony Group’s crisis management and business continuity activities predominately occur at the business and operational level closest to the events Sony Group may encounter. Since some events can have a significant impact on the entire Sony as a whole, Sony Group Corporation has established a group crisis management procedure to enable a swift and organized group-wide response to crises as needed.\nCountermeasures Against Flood-Related Damage Sony has completed a survey of climate change-related flood risks at vulnerable business sites. Preventative measures will be taken depending on the situation to mitigate damage in the event of a flood and ensure that operations can be rapidly restored.\nAdditionally, each domestic and international Sony Group business establishes and maintains crisis management and business continuity frameworks to minimize the impact of business interruptions. Sony also continues to strengthen rapid recovery potential by strengthening cooperation among relevant companies and organizations and conducting realistic exercises. Sony regards its BCP as an important part of its business strategy. Sony will continue to implement effective, practical measures, such as enhancing risk management across its group-wide supply chains.\n### Case Example for Reducing Business Disruption Risks\n### Framework on Business Continuity Planning\nSemiconductor Manufacturing Site: Seismic Isolation Structure and Initiatives to Reduce Fire Risks\nThe Nagasaki Technology Center of Sony Semiconductor Manufacturing Corporation became the first manufacturing site of the Sony Group to adopt a seismic isolation structure. This is being incorporated in its expansion building, which will be completed in stages from 2021 onwards. The seismic isolation system employs a hybrid seismic isolation structure with multiple base isolation devices to mitigate earthquake motion, and micro-vibration control essential for a semiconductor plant.\nSony has strengthened its business continuity planning (BCP) to enhance risk management throughout the supply chain. The group identifies, analyzes, and evaluates business risks to mitigate the risk of business disruptions due to such emergencies as earthquakes, natural disasters, and accidents.", "chunk_word_count": 446, "section_path": "SONY > SONY > Crisis Management System Framework", "document_id": "Sony Sustainability Report 2023", "page": 164, "page_start": 164, "page_end": 164 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 206, "chunk_text": "# SONY\n## SONY\n### Main Initiatives for Reducing Business Disruption Risks for Building and Equipment\nCountermeasures Against Earthquakes\nSony’s electronics business struggled to cope with the impact of the Great East Japan Earthquake and severe flooding in Thailand in 2011, and with the impact of the earthquakes in Japan’s Kumamoto region in 2016. Nevertheless, Sony’s employees and top management rallied together, capitalizing on their experiences in implementing measures to ensure business continuity, and succeeded in minimizing the impact of production disruptions. Knowledge gained from recovery efforts after the Kumamoto earthquakes was shared with relevant companies and local firms through industry bodies, to enhance the competitiveness of Japanese industry and strengthen supply chains.\nUtilizing lessons learned from the Kumamoto earthquakes, Sony is establishing guidelines for seismic measures for Sony group companies in Japan. These measures, which are essential to the safety of employees, are established by determining the seismic wave activity at each business site and conducting simulations to assess risk. The seismic measures apply to building structures and utility facilities as well as non-structural materials such as ceiling materials, to enhance safety in an earthquake. Sony is implementing safety measures that are particularly high in priority.\nThe expansion building is compliant with the Sony Group’s global guidelines on building and equipment specifications, to reduce fire risk. For example, the building features an NFPA\\* compliant highsensitivity smoke detection system and sprinklers, non-flammable exterior walls and exhaust ducts, and fire barrier walls between distribution transformers, for early fire detection and protection against the spread of fire.\n\\* The National Fire Protection Association (NFPA) is a US-based organization that develops standards for fire prevention.\nSony Group Corporation has established policies for a group-wide crisis management and business continuity framework. This framework, which continues to be improved, is for reviewing crisis management and BCP at each Sony business and preparing for incidents and business disruptions that would significantly impact the entire Sony\n### Countermeasures Against Fire\nThe Sony Group has global guidelines to facilitate early fire detection and protection against the spread of fire in buildings and equipment. Under the guidelines, Sony’s manufacturing sites around the world implement annual self-checks and are regularly audited on-site by the department in charge of Headquarters to verify compliance with them. Manufacturing sites implement Plan-Do-Check-Act (PDCA) cycles to address any uncovered issues and establish improvement plans to effectively reduce risks.", "chunk_word_count": 393, "section_path": "SONY > SONY > Main Initiatives for Reducing Business Disruption Risks for Building and Equipment", "document_id": "Sony Sustainability Report 2023", "page": 164, "page_start": 164, "page_end": 165 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 207, "chunk_text": "# SONY\n## SONY\n### Information Security\n[IMAGE CAPTION] Hybrid seismic isolation structure\nSenior Executive in charge of information security of Sony Group Corporation are regularly informed of cybersecurity risk and information security program activities. The Directors of Sony Group Corporation in charge of information security review information security activities frequently, and the CISO briefs the Board of Directors regularly on the activities. Senior Executives of Sony Group Corporation and senior managements of respective group companies also review security activities regularly and play an active role in managing risks within their respective organizations and work to instill a culture of security awareness in all employees. Sony group companies have set up information security management committees to fulfill this responsibility.\nLike many companies, Sony faces increasingly sophisticated cybersecurity threats, so the importance of information security continues to grow. In recent years, malicious actors seeking to compromise the information of global companies continue to grow in number, and their attack methods are becoming more advanced. To address this situation and ensure that Sony continues to earn customers’ trust, Sony maintains and enhances a robust information security program. Led by the Chief Information Security Officer (CISO) under supervision by the Senior Executive in charge of information security, Sony’s information security program is grounded in a company-wide governance structure. Sony manages potential risks effectively, incorporates security controls into systems and products to safeguard information, trains officers, employees and business partners to understand how their actions can introduce information security risk, and deploys 24/7 monitoring and response capabilities to swiftly address attacks.\n### Employee Training as a Key Component of Information Security\n### Semiconductor Manufacturing Site: Deployment of Earthquake Motion Prediction System\nEvery employee has a critical role to play in protecting Sony’s most sensitive information. To increase Sony employees’ awareness of information security threats, Sony requires all personnel to receive annual information security training, where they learn how to report incidents and study the types of behaviors they must avoid in order to reduce risk. Sony employees also regularly receive phishing awareness training, which tests employees’ knowledge of how to spot and avoid cyber-attacks delivered through fraudulent emails.\nSony Semiconductor Manufacturing Corporation completed the deployment of an earthquake motion detection system for its major business sites in 2018. The system detects initial P waves (primary waves) from earthquakes and uses the data to predict the magnitude of subsequent S waves (secondary waves). If necessary, critical semiconductor manufacturing equipment is shut down before S waves reach the site, protecting equipment and products. Peripheral observation points are linked in a network with central observation points at business sites, enabling the system to respond to inland earthquakes and provide warnings with greater speed and accuracy.", "chunk_word_count": 448, "section_path": "SONY > SONY > Information Security", "document_id": "Sony Sustainability Report 2023", "page": 165, "page_start": 165, "page_end": 165 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 208, "chunk_text": "# SONY\n## SONY\n### Information Security Governance\nSony’s information security program is governed by a set of global policies and standards based on internationally accepted industry best practices. These policies set forth Sony’s commitment to information security and define practices and procedures to be followed by Sony executives and employees to help protect information resources and information systems from unauthorized access, leakage, falsification, loss, destruction, and other security risks. Sony routinely reviews and revises these policies and standards to address changes in the risk landscape, threats, and the regulatory environment. The CISO monitors the global implementation of and compliance with those policies.\n### Monitoring and Response Measures\nSony has a 24/7 global security operations center equipped with advanced technical capabilities to prevent and manage information security incidents. Sony’s incident response team defends the company’s information infrastructure by using threat intelligence and analysis, monitoring and detection of malicious activity, rapid response and containment, and sophisticated forensics capabilities.\n### Semiconductor Manufacturing Site: Initiatives Against Flood Damage\nSony Semiconductor Manufacturing Corporation evaluates disaster impact for each of its manufacturing sites based on flood risk simulations and other assessments. It is gradually deploying measures such as the installation of water stop logs to mitigate damage at critical facilities.\nThe CISO’s office coordinates with the Executive Information Security Officers (EISOs) responsible for information security at Sony’s major business units to create a group-wide information security management system. These officers ensure effective implementation of policies and standards.\nStrong Board of Directors and executive support for, and governance of, information security is essential. The Board of Directors and the\n### Internal Audit Structure and Status\n### Strengthening Measures Against New Threats\ntimes during the fiscal year ended March 31, 2023.\nSony is committed to safeguarding the trust of customers, employees against threat regarding information security and business partners. Sony continuously looks for ways to improve practices, implement stronger controls, and provide more robust security against new threats, all in order to protect the personal data information entrusted to its care. To do this, Sony employs and invests in a workforce of information security professionals and subject matter experts.\nDuring the fiscal year ended on March 31, 2023, the Audit Committee convened six times. The attendance records of respective Directors are as follows.\nSony Group Corporation established a department in charge of internal audit, the Risk & Control Department (which is composed of approximately thirty members), which coordinates closely with the internal audit departments of major subsidiaries around the world, and Sony Group Internal Audit Charter, and endeavors to maintain and enhance the internal audit structure of Sony in order to promote Sony’s internal audit activities on a global basis. The Risk & Control Department and each internal audit department of major subsidiaries of Sony (“Internal Audit Department”) play an important function in maintaining Sony’s governance in order to strengthen Sony’s management structure, promote efficiency of management, and maintain and avoid any loss of material assets, including Sony’s brand image, by evaluating the effectiveness of the internal control system and risk management structure of Sony through independent and objective audit.", "chunk_word_count": 513, "section_path": "SONY > SONY > Information Security Governance", "document_id": "Sony Sustainability Report 2023", "page": 165, "page_start": 165, "page_end": 166 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 209, "chunk_text": "# SONY\n## SONY\n### Structure of Audit by the Audit Committee, Internal Audit and Accounting Audit, and Status Thereof\nSpecific considerations by the Audit Committee include review of audit plans in three-way audits, identification and audit of priority audit items for each fiscal year, review of financial results and disclosure documents related to financial results, review of development and operation of internal control systems, audit of financial reports and SOX 404-related activities, audit of internal audit activities, review of the content and process for determining the compensation of the independent auditors, audit of the appropriateness of audit by the independent auditors and evaluation of the independent auditors. In addition to these, the Audit Committee held interviews with Senior Executives to receive reports on matters such as the recognition of issues and the status of risk management in the respective areas of responsibility of each business and headquarter function, and engaged in dialogue. The priority audit items for the fiscal year ended on March 31, 2023 were disclosure of non-financial information and risk management. Through audit activities conducted in cooperation with the internal audit division and the divisions of the Sony Group responsible for internal control, the Audit Committee was informed about the latest trends in Japan and overseas regarding the disclosure of nonfinancial information such as climate change disclosure and risk management such as information security, and confirmed the status of internal responses.\nThe Risk & Control Department and each Internal Audit Department conduct the internal audit of each department or subsidiary that they supervise, in accordance with the annual audit plan that is established based on the risk assessments conducted in the beginning of each fiscal year and any matters proposed by Sony’s management or the Audit Committee. Each internal audit is conducted under the planned audit procedure. Afterward, each Internal Audit Department follows up until the completion of any improvement plan developed based on the audit result.", "chunk_word_count": 320, "section_path": "SONY > SONY > Structure of Audit by the Audit Committee, Internal Audit and Accounting Audit, and Status Thereof", "document_id": "Sony Sustainability Report 2023", "page": 166, "page_start": 166, "page_end": 166 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 210, "chunk_text": "# SONY\n## SONY\n### Audit Structure and Status of the Audit Committee\nThe Audit Committee conducts the audit of the performance of duties by Directors and Corporate Executive Officers pursuant to applicable laws and regulations, and the Charter of the Audit Committee established by the Board, through deliberation at Audit Committee meetings (held six times during the fiscal year ended March 31, 2023), activities of Audit Committee Members (for example, reviewing reports relating to the execution of duties by the Corporate Executive Officers and employees of Sony Group Corporation, or directors, statutory auditors and employees of major subsidiaries of Sony and visiting audits at Sony’s business sites), and activities of the Audit Committee supporting personnel (the Audit Committee Aide) . In addition, the Audit Committee conducts the “organizational audit” in cooperation with divisions in charge of internal audit and divisions in charge of internal control of Sony. Through the process, the Audit Committee receives periodical reports from these divisions at the Audit Committee meetings or other meetings to be held from time to time, requests them to conduct necessary investigation, and receives reports on its process and result. Furthermore, the meetings with divisions in charge of internal control of Sony were held eleven times, and the meetings with the independent auditor were held twelve\nIn order to ensure its independence, fairness and objectiveness, the appointment and dismissal of the head of the Risk & Control Department is subject to the prior approval of the Audit Committee. The appointment and dismissal of the person in charge of each Internal Audit Department also require the prior approval of the head of the Risk & Control Department.\nThe Risk & Control Department makes periodic presentations on the result of internal audit to the Audit Committee, and the Senior Executive in charge of internal audit.\nThe Risk & Control Department also make periodic reports to the independent auditor on the status of the internal audit activities and the result of the audit. The audit report issued by the independent auditor is used for the planning of the internal audit and conducting the internal audit.\n### Accounting Audit Status\nThe jurisdictions in which Sony does business may offer various tax incentives such as enhanced deductions, credits and exemptions for certain types of income and expense to meet local policy objectives such as encouraging inward investment. Sony Group Corporation believes it has a duty to its shareholders to take advantage of such incentives where they are generally available to all taxpayers who meet the relevant criteria and the requirements to claim the incentive do not conflict with broader business objectives.\nSony’s accounting audit has been conducted by PricewaterhouseCoopers Aarata LLC under an agreement since 2007. The certified public accountants who conducted the accounting audit of Sony for the fiscal year ended March 31, 2023, are as follows: Takeaki Ishibashi,\\* Yuko Harada,\\* Kenichi Shishido,\\* and Masafumi Mitsuhiro.\\* The team at PricewaterhouseCoopers Aarata LLC that conducted Sony’s accounting audit is composed of 39 certified public accountants and 91 other staff members.\n[IMAGE CAPTION] GTO Report Line\n\\* The number of years of continuous audit-related work is not stated because it is within 7 years.", "chunk_word_count": 527, "section_path": "SONY > SONY > Audit Structure and Status of the Audit Committee", "document_id": "Sony Sustainability Report 2023", "page": 166, "page_start": 166, "page_end": 167 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 211, "chunk_text": "# SONY\n## SONY\n### Tax Risks\nSony employs diligent professional care and judgement in assessing tax risk, and may take advice from third-party specialists and where appropriate consult with or obtain rulings from relevant tax authorities to support the decision-making process. However, tax law is not always clear and unambiguous, and differences in interpretation can arise. Sony monitors its tax positions closely and will not record an accounting benefit unless it determines based on consideration of the facts and the law that it is more likely than not that the position will be sustained.\n### Policy and Governance Framework on Tax Strategy\nThe GTO has implemented a series of processes and controls to identify, manage and report tax risk appropriately. These include regular updates with Finance teams, documented review processes, regular training for staff involved in tax return preparation and review, and regular updates with the global head of the GTO. Transactional taxes such as VAT and sales taxes, Customs Duty, Employment Taxes and others are the ultimate responsibility of the relevant divisional Finance Director for each business. The GTO has strong links with these divisional Finance Directors to ensure that in the event of material risks being identified or errors made, the GTO provides support including where necessary liaising with the relevant tax authority.\n### Tax Policy\nSony conducts its business, including managing its tax obligations, honestly, ethically and with integrity. Sony Group Code of Conduct defines that it is Sony’s policy to comply with all applicable tax laws and regulations of each country and region where Sony conducts business as well as the common rules and guidance regarding international taxation. Sony understands and complies with both the spirit and letter of the laws and regulations that apply to their businesses.\n### Dealings with Tax Authorities\nSony seeks to maintain good professional relationships with tax authorities. When providing responses to Tax Authority questions, all responses are based on an honest and accurate representation of the facts as Sony understands them.\n### Governance Structure\n### Approach to Tax Planning\nBased on the above global tax policy, each Sony group company has the responsibility to understand and comply with tax laws and regulations applicable to its businesses, with support from Sony’s Global Tax Office (the GTO) , which is in charge of Sony’s overall tax position. The global head of the GTO as Sony Group Corporation’s Senior Vice President in charge of Global Tax reports directly to Sony Group Corporation’s CFO based in Japan, who is a board member. Significant tax events are reported to the Audit Committee.", "chunk_word_count": 428, "section_path": "SONY > SONY > Tax Risks", "document_id": "Sony Sustainability Report 2023", "page": 167, "page_start": 167, "page_end": 167 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 212, "chunk_text": "# SONY\n## SONY\n### Transparency\nSony operates diverse businesses within a complex global environment, in which tax is an important factor. Sony believes in taking a principled and responsible approach to managing its tax affairs, in line with business objectives and operations. Sony does not engage in transactions where the sole aim is to achieve tax avoidance or profit shifting which are against the spirit of tax laws. The tax function provides appropriate input as part of the approval process for business proposals to ensure the tax consequences are clearly understood. Sony is committed to fulfilling its obligation both to comply with applicable tax laws and to safeguard Sony’s reputation.\nSony Group Corporation prepares and files annually a country by country report in accordance with Japanese law and prepares and files a transfer pricing master file in accordance with the laws of the countries where Sony does businesses.\n### Status of Dialogue with Shareholders\n### Relationship with Shareholders and Other Stakeholders\nFor the details of Sony Group Corporation’s “Disclosure Controls and Procedures” and IR activities, please refer to the website below.\nIn the fiscal year ended March 31, 2023, in addition to individual interviews and group meetings conducted by IR SVP and IR Department, the management team of Sony Group Corporation, including the CEO, CFO, CTO, other corporate executives, and the head of each business segment, conducted dialogs for investors, including Corporate Strategy Meeting, Business Segment Meeting, Sustainability Briefings, and R&D Strategy Briefing, etc., as well as individual interviews and group meetings conducted after these events with a wide range of institutional investors from both in and outside of Japan, such as portfolio managers, analysts and governance/voting managers of major investment funds. Sony Group Corporation also arranged opportunities for individual dialogues between certain Outside Directors and institutional investors. The interests of investors at these dialogues cover, in addition to an overview of financial results, the business environment/competitive advantage/potential growth of the entertainment and the image sensor businesses, initiatives in new areas such as metaverse and mobility, policy regarding the business portfolio, progress of the Mid-Range Plan and capital allocation, approach to shareholder returns and environmental and other sustainability initiatives. The interests/opinions of investors obtained through such dialogues are fed back to the Board and management team to enhance Sony’s disclosure and future dialogues.\nDisclosure Framework Investor Relations\n### Administration of the General Shareholders’ Meeting\nSony’s core corporate responsibility to society is to strive to enhance its corporate value through innovation and sound business practice. Sony recognizes that its business activities have direct and indirect impacts on the societies in which Sony operates, and therefore sound business practice requires that Sony’s business decisions give due consideration to the interests of Sony’s stakeholders, including shareholders, customers, employees, suppliers, business partners, local communities and other organizations. Sony Group’s officers and employees must endeavor to conduct the business of Sony accordingly.\nSony Group Corporation’s policy on administration of the general shareholders meeting is as follows.\n### Basic Policy for the General Shareholders’ Meeting\nSony Group Corporation endeavors to develop an open environment where each shareholder could easily make a statement by the following two points, as the basic policy for the general shareholders meeting.", "chunk_word_count": 531, "section_path": "SONY > SONY > Transparency", "document_id": "Sony Sustainability Report 2023", "page": 167, "page_start": 167, "page_end": 168 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 213, "chunk_text": "# SONY\n## SONY\n### Policy and Status of Dialogue with Shareholders\n• Take any necessary measures to encourage the shareholders who find it difficult to attend the shareholders’ meeting to vote • Encourage direct communications between the shareholders who attend the general shareholders meeting and Sony Group Corporation’s management\nSony Group Corporation’s basic policy for investor relations is to make public disclosures which are timely and fair, accurate and easily understandable, and provide a comprehensive picture, with the goal of maximizing enterprise value of Sony Group Corporation by building a relationship of trust with shareholders and investors. Pursuant to this policy, the Board appoints the CFO as the Corporate Executive Officer in charge of IR activities. Under the CFO’s leadership, the Senior Vice President in charge of IR (the “IR SVP”) and the department in charge of IR (the “IR Department”) work to promote constructive dialogue with shareholders and investors. Collection of the information necessary to promote such dialogue is primarily carried out by the IR Department, in cooperation with relevant departments such as corporate planning, finance, accounting and corporate communications, as well as business units.\nIn addition to dialogue with institutional investors, Sony Group Corporation conducted multiple briefings for individual investors by IR SVP, providing opportunities to explain the overview and strategy of each business, as well as Sony’s views on sustainability and shareholder returns, for the purpose of encouraging active dialogue with individual investors.\nSony Group Corporation sets the date of the general shareholders meeting appropriately, depending on venue availability. Further, Sony Group Corporation displays the voting results gathered before the general shareholders meeting date on the screen of the meeting hall during voting in order to operate the general shareholders meeting in a transparent manner. In addition, Sony Group Corporation has provided streaming live video of the general Shareholders meeting (hybrid virtual shareholder meetings) in 2021. Also since 2022, Sony Group Corporation has started to accept questions from the shareholders who are watching the streaming live video.\nSony’s policy is not to disclose insider information when communicating with shareholders and investors. The IR Department reviews information to be disclosed in advance with other relevant departments, such as the legal department, and outside experts, as appropriate. In principle, a set of materials related to earnings announcements, materials for investor briefings such as Corporate Strategy Meetings, as well as timely disclosures are disclosed simultaneously in both Japanese and English.\n### Activities to Secure the Rights of Shareholders", "chunk_word_count": 409, "section_path": "SONY > SONY > Policy and Status of Dialogue with Shareholders", "document_id": "Sony Sustainability Report 2023", "page": 168, "page_start": 168, "page_end": 169 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 214, "chunk_text": "# SONY\n## SONY\n### Relationship with Other Stakeholders\nenhancing Sony’s relationships with the companies whose shares it holds. Sony’s policy regarding shareholdings of listed companies (excluding Sony’s subsidiaries), and its policy for exercising voting rights are as follows:\nSony Group Corporation endeavors to develop an environment in which shareholders can exercise their rights appropriately and effectively, to secure equal treatment of shareholders, including institutional investors who hold shares in a street name, and to consider the concerns of minority shareholders and foreign shareholders adequately, through confirming shareholder composition quarterly. As a part of these activities, Sony Group Corporation prepares the convocation notice, giving consideration to the accuracy of the information provided therein and the readability of such notice to facilitate informed voting by shareholders, both in Japanese and English. Sony Group Corporation strives to send the convocation notice for the general shareholders meeting early enough to give shareholders sufficient time (about three weeks before the date of the general shareholders meeting) to consider the agenda, and posts it on its website in advance. Sony Group Corporation also uses an electronic voting platform to allow electronic voting through the internet (via PC or smartphone). For more information on the general shareholders meeting, please refer to the page below.\nAs a part of the Sony Group Code of Conduct, the CEO communicates and implements our thoughts and initiatives about Sony Group Corporation’s social responsibility and relationship with stakeholders of Sony. The Board periodically receives report on the status of the communications and the implementation of the Code of Conduct and reviews such report.\n### Policy Regarding Shareholdings of Listed Companies\nShareholding Policy\n### The Sony Group Code of Conduct Stakeholder Engagement\nSony Group Corporation and its subsidiaries decide whether to acquire or continue to hold shares of listed companies (excluding the acquisition and holding of shares by Sony Group Corporation’s listed subsidiaries, and Sony Group Corporation’s shareholding in its own listed subsidiaries) based on an appropriate examination of each investment, and choose to engage in such shareholding only if it is judged to meet Sony’s business purposes and to have sufficient economic rationale. If it is determined that investments do not meet these criteria, Sony Group Corporation and its subsidiaries will avoid or reduce exposure to such holdings.\nSony Group Corporation understands that there are various challenges in society, such as fulfilling the Sustainable Development Goals (SDGs) and identifies material challenges highly relevant with Sony’s business operations, such as environmental challenges, diversity, and inclusion, through CSR Materiality Assessment. Sony Group Corporation will aim to engage in CSR activities with an understanding of such material challenges.\nApproach to Sustainability \nEnvironmental Policies and Targets \nDiversity, Equity and Inclusion \nSupporting Active Contributions by Diverse Employees\n### Method of Assessing Rationale for Shareholding", "chunk_word_count": 458, "section_path": "SONY > SONY > Relationship with Other Stakeholders", "document_id": "Sony Sustainability Report 2023", "page": 169, "page_start": 169, "page_end": 169 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 215, "chunk_text": "# SONY\n## SONY\n### Shareholders’ Meeting\nIn all cases where Sony Group Corporation and its subsidiaries hold shares in listed companies (excluding shares held by Sony Group Corporation’s listed subsidiaries, and Sony Group Corporation’s shareholdings in its own listed subsidiaries) for reasons other than for the sole purpose of investment, Sony Group Corporation carries out a timely review to assess qualitatively the rationale for shareholding, the importance of Sony’s business relationship with each company whose shares it holds (taking into account the progress of, and outlook for, any anticipated business collaboration between Sony and said company), and any anticipated positive impact of such shareholdings on Sony’s business relationship with the company. In addition, Sony Group Corporation also assesses the appropriateness of these shareholdings via a quantitative assessment of expected return on investment and cost of capital. These evaluations are first carried out on the management side, after which the Board, which is responsible for overseeing business operation, carries out its own assessment based on the result of the evaluations by the management side.\n### Review of Voting Results\nThe Board periodically receives report on the status of addressing such material challenges or the implementation of the Code of Conduct and reviews such report. The Board also confirms whether the risk management structure would be established properly, and necessary actions would be planned and conducted with a recognition of sustainability as one of Sony’s challenges within the risk management structure.\nThe voting results for each agenda item of the general shareholders meeting and its analysis are reported to and reviewed by the Board as appropriate. The IR Department then takes any appropriate followup measures, such as engaging in dialogue with shareholders.\n### Shareholdings in Other Listed Companies\nSony Group Corporation and its subsidiaries may acquire and/or hold shares of other listed companies for the purpose of expanding Sony’s business portfolio, promoting certain businesses within Sony, and\n### Details of the Assessment by the Board of Directors of Whether Individual Shareholdings Are Appropriate", "chunk_word_count": 332, "section_path": "SONY > SONY > Shareholders’ Meeting", "document_id": "Sony Sustainability Report 2023", "page": 169, "page_start": 169, "page_end": 170 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 216, "chunk_text": "# SONY\n## SONY\n### Anti-Hostile Takeover Measures\nshareholders. It is the policy of Sony Group Corporation to utilize retained earnings, after ensuring the perpetuation of stable dividends, to carry out various investments that contribute to an increase in corporate value, such as those that ensure future growth and strengthen competitiveness. Going forward, Sony Group Corporation will determine the amount of dividends based on an overall consideration of its consolidated operating results, financial condition and future business expectations.\nBased on the above policy, at the Board meeting held on June 20, 2023, Sony Group Corporation carried out an assessment of the rationale for its and its subsidiaries’ shareholdings in listed companies (excluding shares held by Sony Group Corporation’s listed subsidiaries, and Sony’s shareholdings in its own listed subsidiaries) for reasons other than for the sole purpose of investment as of March 31, 2023. Based on the assessment, Sony will consider reducing its exposure to shareholdings for which it was determined that a reduction should be considered.\nSony Group Corporation has not adopted any anti-hostile takeover measures. Sony Group Corporation will fully examine the necessity and rationale with respect to measures that could materially affect the interests of shareholders, such as the adoption of anti-hostile takeover measures, Sony’s response in the event that its shares are subject to a tender offer and the implementation of capital policies resulting in a change in control or a major dilution, with the Board and/or the Audit Comittee. Once this examination is complete, Sony will provide sufficient explanation to shareholders.\n### Roles of Corporate Pension Funds as Asset Owners\n### Policy for Exercising Voting Rights", "chunk_word_count": 270, "section_path": "SONY > SONY > Anti-Hostile Takeover Measures", "document_id": "Sony Sustainability Report 2023", "page": 170, "page_start": 170, "page_end": 170 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 217, "chunk_text": "# SONY\n## SONY\n### Related-Party Transactions\nSony Group Corporation owns, as a domestic corporate pension plan, a closed-end defined-benefit corporate pension (the “Pension Plan”) . The Pension Plan manages its assets in line with its Basic Pension Plan Management Policy (the “Basic Management Policy”) which was set to secure beneficiaries’ right of benefit and to increase the benefit. In order to realize a prudential and appropriate asset management structure in the Pension Plan, Sony Group Corporation appoints an asset management director of the Pension Plan who should have proper knowledge and skills, based on the nomination by the Senior General Manager of Sony Group Corporation’s Finance Department, and an external advisor to supplement their specialties in asset management. Any decisions on fund management are made by the person who has the ultimate authority in accordance with the Basic Management Policy, after deliberation at the pension committee, which is composed of heads and/or personnel of the HR Department, the Accounting Department and the Finance Department which are related to the management of the Pension Plan, and then, any potential conflict of interests between Sony Group Corporation and the Pension Plan is properly controlled.\nSony Group Corporation believes in the importance of enhancing the corporate value of the listed companies whose shares it holds, and Sony Group Corporation’s own corporate value in turn, through the exercise of its voting rights. Accordingly, Sony aims to exercise its voting rights with the intention of increasing each company’s mid- to long-term corporate value, after conducting a comprehensive consideration of both the significance and economic rationale of its shareholdings, and reviewing the details of proposals. For example, Sony Group Corporation has established internal rules determining what factors should be taken into account when considering proposals about matters such as the appropriation of retained earnings, the appointment of directors, statutory auditors and accounting auditors, as well as shareholder proposals. Through these rules, Sony Group Corporation makes appropriate decisions regarding how it exercises its voting rights.\nAs a part of the Sony Group Code of Conduct established by the Board, Sony Group Corporation’s officers and employees are prohibited from committing any conduct where their loyalties may be divided between Sony Group Corporation’s interests and their own interests. To help ensure compliance with these requirements, Sony Group Corporation regularly reviews the status of related-party transactions, whether financial or otherwise, between Sony companies and officers in Sony or their close relatives. Furthermore, Sony Group Corporation requires its Directors and officers to obtain approval of the Board in connection with transactions between Sony Group Corporation and the Director or officer in accordance with applicable laws and regulations, the Board Charter and any other applicable internal rules. The Board is expected to approve any such related-party transactions only after an appropriate examination of the size and nature of the transaction, the requirements of applicable laws and regulations, the Board Charter and any other applicable internal rules, and after concluding that the interests of Sony Group Corporation and its shareholders are not adversely affected.", "chunk_word_count": 502, "section_path": "SONY > SONY > Related-Party Transactions", "document_id": "Sony Sustainability Report 2023", "page": 170, "page_start": 170, "page_end": 170 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 218, "chunk_text": "# SONY\n## SONY\n### Business Relations with Companies who Invest in Sony Group Corporation\nShould a company who holds shares of Sony Group Corporation’s stock express the intention to sell such shares, Sony Group Corporation will not attempt to obstruct the sale by threatening to limit business transactions with the company, and will not engage in any transactions that would harm the common interests of the company or its shareholders.\nIn addition, when asset management begins, the asset management guidelines which show matters to be complied with in asset composition, management method, etc., are issued to the managing trustee, and the compliance status pursuant to the guidelines is periodically reviewed and evaluated.\n### Policy for Shareholder Returns\nSony Group Corporation believes that continuously increasing corporate value and providing dividends are essential to rewarding\n### Datasheet\n### Data Section\nDatasheet\nEnvironmental Data Collection Methods and Rationale\nIndependent Assurance Statement\nGRI Standards Content Index ☑ were assured by PricewaterhouseCoopers Sustainability LLC\n\\*1 The figure for fiscal year 2020 and 2021 were corrected from that of previous year reports \n\\*2 Metric tons per unit of consolidated sales \n\\*3 Excludes amount unavoidably landfilled due to the laws and administrative guidance of individual regions \n\\*4 The figure for fiscal year 2022 is as of July 2023. The figure for fiscal year 2021 was corrected from that of previous year's report \n\\*5 End-of-life products collected and counted may vary by region \n\\*6 Figures for fiscal year 2019 are total volume minus amount for water conservation (water recharging). Figures from fiscal year 2020 are before subtraction \n$^ { \\star 7 }$ The figures have been changed to only those of sites that are legally regulated since FY2022 (Until FY2021, the figures were calculated by adding the figures of sites with voluntary measurement in addition to those regulated by law)\nDatasheet\nEnvironmental Data Collection Methods and Rationale\nIndependent Assurance Statement\nGRI Standards Content Index\nDatasheet\nEnvironmental Data Collection Methods and Rationale\nIndependent Assurance Statement\nGRI Standards Content Index\nDatasheet\nEnvironmental Data Collection Methods and Rationale\nIndependent Assurance Statement\nGRI Standards Content Index", "chunk_word_count": 345, "section_path": "SONY > SONY > Business Relations with Companies who Invest in Sony Group Corporation", "document_id": "Sony Sustainability Report 2023", "page": 170, "page_start": 170, "page_end": 175 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 219, "chunk_text": "# SONY\n## SONY\n### Data Section\nDatasheet\nEnvironmental Data Collection Methods and Rationale\nIndependent Assurance Statement\nGRI Standards Content Index\n\\*1 Japan: Total of Sony Group companies including Sony Group Corporation \n\\*2 Numbers rounded to the nearest hundred employees \n\\*3 Employees included in these data are those for whom gender has been applied. Therefore, the sum of women and men employees is not equal to the total number of employees. \n\\*4 Refer to the “Composition of Sony Group Corporation’s Board of Directors” datasheet for the latest figures. \n\\*5 Excluding people who serve on the Board of Directors. \n\\*6 Southeast Asia, Oceania, India, South Korea and Taiwan Region \n\\*7 Middle East, Latin America, Africa, and Canada \n\\*8 The definition of “manager” varies in different countries, regions and companies. \n\\*9 Figures were corrected from those published in previous year’s report for data review. \n\\*10 Figures for fiscal year 2020 include employees hired by Sony Group Corporation and dispatched to Group companies after hire. Fiscal year 2021 and 2022 figures exclude employees dispatched to Group companies as of the date of hire. \n\\*11 Figures include only general employment contracts (regular employees) \n\\*12 Only voluntary turnover of regular employees. \n\\*13 Figures fiscal 2020 and 2021 were updated due to a change in the calculation method. \n\\*14 Employees included in these data are those who work for Sony Group Corporation \n\\*15 Only companies with 101 or more employees, including special-purpose subsidiaries. Figures as of March, 2023 \n\\*16 A collective term for telework, remote work, working from home, etc. \n\\*17 Figures of Sony Group Corporation and fiscal 2022 Japan: Percentage of employees who used the programs during the current fiscal year among employees with newborns during the current fiscal year (Fiscal 2020 and 2021: Percentage of employees who used the programs during the previous and current fiscal year among employees with newborns during the previous year) \n\\*18 Percentage of employees who returned to work, among employees who completed their leave of absence by the end of fiscal year 2022 \n\\*19 Percentage of employees who did not give an unfavorable response to four questions regarding employee engagement \n\\*20 Scope of da ta for fiscal year 2022: 60 sites in Japan and 121 sites outside of Japan \n\\*21 Totals include external contractors. Figures in parenthesis indicate accident data for non-Sony employees \n\\*22 Number of sites subject to ISO 45001 certification: functional organizations at headquarters, manufacturing sites, logistics sites, and R&D sites; total of 60\n### Responsible Supply Chain\n## (FY)\n### Data Section\nDatasheet\nEnvironmental Data Collection Methods and Rationale\nIndependent Assurance Statement\nGRI Standards Content Index\n### Ethics and Compliance\n### Corporate Governance\nDatasheet\nEnvironmental Data Collection Methods and Rationale\nIndependent Assurance Statement\nGRI Standards Content Index\n### Environmental Data Collection Methods and Rationale\n### Product data\nData for some semi-manufactured products, components, and some products produced and sold overseas may be slightly less accurate than other data.\n### Renewable Electricity Rate\nRenewable energy includes using electrical power generated from renewable energy sources, purchasing electrical power produced from renewable energy sources, and purchasing renewable energy certificates and other carbon offset credits. Renewable electricity rates are calculated by the following equation.\n### Greenhouse Gas Related Data Collection Methods and Rationale\n### Scope, Collection Period, and Accuracy of Compiled Data", "chunk_word_count": 542, "section_path": "SONY > SONY > Data Section", "document_id": "Sony Sustainability Report 2023", "page": 175, "page_start": 175, "page_end": 178 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 220, "chunk_text": "# SONY\n## (FY)\n### Greenhouse Gas Emissions from Sites\nRenewable electricity rate $=$ renewable electricity consumption $\\div$ total consumption of sites $\\times 1 0 0$\nCalculated based on energy-related emissions (power, heat, and fuel usage) and non energy-related emissions (used for manufacturing processes, facilities) from sites.\nCollection Period: April 1, 2022 - March 31, 2023\nIn principle, data for results was compiled in the period stated above. Estimates have been used, however, at some sites where the impact on overall results is deemed to be extremely minor.\n### $\\ b { \\subset } \\ b { 0 } _ { 2 }$ Emissions from Capital Goods\nCO2 emissions from energy consumption (energy-related) $\\mathsf { C O } _ { 2 }$ emissions from energy consumption are calculated by multiplying the quantity of electrical power, heat and fuel (including fuel for motor vehicles, etc.) used at sites by the $\\mathsf { C O } _ { 2 }$ conversion rate. For energy consumption using renewable energy including certificates, the $C O _ { 2 }$ conversion rate is zero.\n$C O _ { 2 }$ emissions are aggregated for the production of capital goods invested in by the Sony Group. These are calculated by multiplying the amount invested in facilities, etc. by an emissions intensity for household electronic appliances from the Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver. 3.3), (6) the emissions intensity per unit price of capital goods, published by the Ministry of the Environment and the Ministry of Economy, Trade and Industry (Japan).\n### Scope of Data Collection\n### Site data\nAs of March 31, 2023, 91 sites were ISO14001 certified. Among Sony Group consolidated sites, all manufacturing sites, distribution sites with 100 or more employees, and non-manufacturing sites with 1,000 or more employees are, in principle, expected to obtain ISO 14001 certification.\n### Emissions of PFCs and other greenhouse gases\n(non energy-related)\n### Data Section\nEmissions of PFCs and other greenhouse gases are converted to $\\mathsf { C O } _ { 2 }$ by multiplying greenhouse gas emissions from each site by global warming potentials.\nDatasheet\nEnvironmental Data Collection Methods and Rationale\n### Product data\nGlobal warming potentials are based on the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC).\nData covers all products manufactured by the Sony Group and sold outside the Group. Accessories, semi-manufactured products and components are included. Weight data includes the weight of packaging materials.\nIndependent Assurance Statement\n### CO2 conversion rates\nGRI Standards Content Index\n### [Electricity]\nJapan: Latest rate published each year by contracted power companies. Outside Japan: Latest rate published each year by contracted power companies or that for the relevant country/region published by the International Energy Agency.\n### Data Accuracy\nSite data\nChemical substance data and environmental cost data collected from certain sites may be slightly less accurate than other data.\n[Fuel and Heat]\nWorldwide: Rates based on Japan’s Act on Promotion of Global\n### $\\ b { \\subset } \\ b { 0 } _ { 2 }$ Emissions from Product Use", "chunk_word_count": 518, "section_path": "SONY > (FY) > Greenhouse Gas Emissions from Sites", "document_id": "Sony Sustainability Report 2023", "page": 178, "page_start": 178, "page_end": 179 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 221, "chunk_text": "# SONY\n## (FY)\n### $\\mathsf { C O } _ { 2 }$ Emissions from Fuel- and Energy-related Activities (not included in Scope 1 or Scope 2)\n$C O _ { 2 }$ emissions are aggregated for major Sony Group G&NS and ET&S electronics products, specifically AC equipment (video game consoles, televisions, audio equipment, cameras, etc.) whose main functions require power from commercial sources. These are calculated by multiplying the assumed lifetime power consumption (including standby) of products sold this fiscal year by an emissions intensity. (Please note that this is not the amount of $C O _ { 2 }$ actually emitted during use this fiscal year.) In theory, $C O _ { 2 }$ emissions during product use in the current fiscal year should be calculated from the total quantity of electrical power consumed by previously sold Sony products that are still in use by consumers in the current fiscal year. However, given the difficulty of determining how many previously sold Sony products are still in use by consumers of the total number of Sony products sold to date, Sony uses the estimated total quantity of electrical power consumed while in use over the lifetime of Sony products sold in the current fiscal year to calculate $C O _ { 2 }$ emissions during use. The hours of operation per year, standby time per year, and years of product use are calculated based on data obtained by various surveys. In Japan, Sony uses the latest emissions intensity provided by the Electric Power Council for a Low Carbon Society. Outside of Japan, it uses country or region-specific $C O _ { 2 }$ conversion rates (from the end of the applicable period) provided by the International Energy Agency (IEA).\n$\\mathsf { C O } _ { 2 }$ emissions are aggregated for upstream from the procurement of fuel used by ISO14001 certified Sony Group sites, and from the production process of electricity and heat. These are calculated based on the Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver. 3.3), (7) Emissions Intensity from Electricity / Heat Usage, published by the Ministry of the Environment and the Ministry of Economy, Trade and Industry (Japan), which contain the total products sold for the fiscal year, as well as IDEA Ver 3.1 emissions intensity.\n### $\\mathsf { C O } _ { 2 }$ Emissions from Waste Generated in Operations\n$\\mathsf { C O } _ { 2 }$ emissions are aggregated for those related to the disposal and treatment of waste (excluding valuable waste) not generated at ISO14001 certified Sony Group sites.", "chunk_word_count": 441, "section_path": "SONY > (FY) > $\\mathsf { C O } _ { 2 }$ Emissions from Fuel- and Energy-related Activities (not included in Scope 1 or Scope 2)", "document_id": "Sony Sustainability Report 2023", "page": 179, "page_start": 179, "page_end": 179 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 222, "chunk_text": "# SONY\n## (FY)\n### $\\mathsf { C O } _ { 2 }$ Emissions from Logistics\n$\\mathsf { C O } _ { 2 }$ emissions are aggregated for those from international transport of Sony Group G&NS, ET&S, I&SS segments and other major electronics products (video game consoles, televisions, audio equipment, cameras, smartphones, image sensors, etc.), as well as regional transport of ET&S products in Japan, the US, Europe and Asia. For Japan, transportation for some G&NS and music products is included. These are calculated by multiplying ton-kilometers transported (weight of goods transported x distance traveled) by an emissions intensity. In certain instances, $C O _ { 2 }$ emissions arising from transport by truck are calculated by multiplying an amount of fuel used (fuel consumption per kilometer x number of kilometers traveled) by an emissions intensity. For international transport by ship, the calculation uses the weight of goods transported including the weight of shipping containers. Emissions intensity $( k g - C O _ { 2 }$ / ton-kilometer) used for calculation uses the following values for international transportation.\nThese are calculated by multiplying amount of waste processed and recycled by type at sites by the emission intensity from the Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver. 3.3), (8) Emissions Intensity by Waste Type/Processing Method, published by the Ministry of the Environment and the Ministry of Economy, Trade and Industry (Japan), as well as IDEA Ver 3.1 emissions intensity.\n### Data Section\n### $\\mathbf { C O } _ { 2 }$ Emissions from Employee Business Trips\nDatasheet\n$\\mathsf { C O } _ { 2 }$ emissions are aggregated for frights traveled by Sony Group employee on business trip in Japan, China, Europe, North America and South America which airline tickets are managed globally. These are calculated by multiplying the travel distance by the number of employees traveling, multiplied by an emissions intensity $( k \\mathsf { g } - \\mathsf { C O } _ { 2 }$ / person $/ \\left| k \\mathsf { m } \\right|$ ) for each class below.", "chunk_word_count": 357, "section_path": "SONY > (FY) > $\\mathsf { C O } _ { 2 }$ Emissions from Logistics", "document_id": "Sony Sustainability Report 2023", "page": 179, "page_start": 179, "page_end": 179 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 223, "chunk_text": "# SONY\n## (FY)\n### $\\mathsf { C O } _ { 2 }$ Emissions from End-of-Life Treatment of Sold Products\nEnvironmental Data Collection Methods and Rationale\nIndependent Assurance Statement\n$C O _ { 2 }$ emissions are aggregated for those associated with the recycling or disposal of major electronic products (video game consoles, televisions, audio equipment, cameras, smartphones, image sensors, etc.) handled by the Sony Group’s G&NS, ET&S, I&SS segments and other disc businesses. These are calculated by multiplying the total amount for products sold for the fiscal year by an emissions intensity from the Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver. 3.3), (8) Emissions Intensity by Waste Type / Processing Method, published by the Ministry of the Environment and the Ministry of Economy, Trade and Industry (Japan), as well as IDEA Ver 3.1 emissions intensity.\nGRI Standards Content Index\nRegional transport emissions are calculated by prioritizing the emissions intensity supplied by the applicable region or country. For Japanese domestic transport, Sony refers the factor of the amount of fuel used per unit of freight transported (Ministry of Economy, Trade and Industry Notification No. 66 (2006), No. 67 (2009)), based on the Act on Rationalizing Energy Use, and the emissions factor related to fuel usage (Greenhouse Gas Emissions Calculation and Reporting Manual Ver4.8), based on the Act on Promotion of Global Warming Countermeasures. For transport in the United States, Sony uses the emissions intensity supplied by the SmartWay Transport Partnership, which is administered by the U.S. Environmental Protection Agency (EPA).\n### Data Section\nDatasheet\nEnvironmental Data Collection Methods and Rationale\nIndependent Assurance Statement\nGRI Standards Content Index\n### Resource Related Data Collection Methods and Rationale\nLatin America. Some amounts calculated based on the recycling expenses are included. The collection period may vary by region.\nVolume of Waste Generated at Sites\n### Other Data Collection Methods and Rationale\nTotal volume of industrial waste and non-industrial waste.\n### Amount of Waste Landfilled\n### Volume of Chemical Substances Handled / Emitted\nTotal amount of landfilled waste generated at sites.\nClass 3 and Class 4 chemical substances for which the amount handled annually is 100kg (Class3) / 1,000kg (Class4) or more are subject to reporting.\n### Volume of Water Consumption / Intake / Discharged\nVolume of water consumption\nVolume of chemical substances handled The volume of chemical substances used at sites; purchase volume is substituted when exact volume of usage cannot be determined.\nThe total volume of water used at sites (municipal water, industrial water, well water). This does not include water recycled outside the company or rainwater.\nVolume of chemical substances emitted Volume of chemical substances released from sites in relation to their operation; calculations are based on purchase volume x distribution coefficient.\nVolume of water intake\nThe volume of water generated outside the company and rainwater, in addition to water consumed.\nVolume of water discharged", "chunk_word_count": 484, "section_path": "SONY > (FY) > $\\mathsf { C O } _ { 2 }$ Emissions from End-of-Life Treatment of Sold Products", "document_id": "Sony Sustainability Report 2023", "page": 179, "page_start": 179, "page_end": 181 }, { "report": "Sony Sustainability Report 2023.pdf", "chunk_idx": 224, "chunk_text": "# SONY\n## (FY)\n### Emissions of Water Pollutants (BOD, COD)\nThe sum of discharged water to rivers and sewerage. For Sony sites where it is not possible to accurately grasp actual discharge volume, a calculation based on the volume of water used x average per-site rate for volume of water discharged is substituted.\nDatasheet\nConcentrations in water emitted x volume of water emitted. Sites that are requested by law and / or by other demands such as contracts are subjected to this data collection.\nEnvironmental Data Collection Methods and Rationale\nIndependent Assurance Statement\n### Product Resource Input\n### Emissions of Air Pollutants (NOx, SOx)\nGRI Standards Content Index\nTotal volume of resources used in products, accessories, manuals and packaging materials. Total weight of products shipped is used as a substitute.\nVolume calculated by multiplying emission volume by emission concentration. Sites that are requested by law and / or by other demands such as contracts are subjected to this data collection.\n### Take-back of End-of-Life Products Record\nTake-back of end-of-life products record is the weight of recycled products in Japan/East Asia, Europe, North America, Pan Asia, and\n### Independent Assurance Statement\n### 【Note]\n### Purpose and Scope of Assurance\nThe original “Independent Practitioner's Limited Assurance Report”is in Japanese. This English translation is forreaders'convenience and reading this translation is not a substitute for reading the original assurance report inJapanese.\nSony has obtained third-party assurance for environmental data since fiscal year 2001 to ensure the credibility of data reported and facilitate the ongoing improvement of its environmental management. Fiscal year 2022 data assurance was handled by Pricewaterhouse Coopers, with related procedures including on-site inspection of manufacturing sites. Environmental data has been verified by a third party in accordance with ISAE3000 and ISAE3410.\n### Independent Practitioner's Limited Assurance Report (English Translation)\nTo Mr. Kenichiro Yoshida, Chairman and CEO Representative Corporate Executive Offcer of Sony Group Corporation\nPricewaterhouseCoopers Sustainability LLC Otemachi Park Building, 1-1-1,Otemachi,Chiyoda-ku,Tokyo\nToru Yoshioka Partner\nIndependent Assurance Statement (full text) [PDF:211KB]\nWe have undertaken a limited assurance engagement in respect of the information listed below and identifiedwitha√(checkmark) (the“IdentifiedSustainabilityInformation\")inSonyGroup Corporation's (the“Company\") Sustainability Report for the year ended March 31,2O23 (the “Sustainability Report 2023\").\n### Identified Sustainability Information\n### GRI Standards Contents Content Index\nSony’s Sustainability reporting refers to international standards and guidelines related to Sustainability activity reporting. Below GRI Sustainability Reporting Standards Content Index includes related information available on Sony websites.\nGRI 204: Procurement Practices 2016\n## 5. Stakeholder engagement\nGRI 207: Tax 2019\nGRI 201: Economic Performance 2016\nGRI 409: Forced or Compulsory Labor 2016\nGRI 410: Security Practices 2016\nGRI 411: Rights of Indigenous Peoples 2016\nGRI 412: Human Rights Assessment 2016\n## SONY", "chunk_word_count": 443, "section_path": "SONY > (FY) > Emissions of Water Pollutants (BOD, COD)", "document_id": "Sony Sustainability Report 2023", "page": 181, "page_start": 181, "page_end": 187 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 0, "chunk_text": "# GLOBAL\n## ENVIRONMENTAL & SOCIAL IMPACT report\nS TA R B U C K S 2 0 2 2F I S C A L 2 0 2 2\n## When Starbucks opened in 1971, our vision for success was to be a different kind of company.\nStarting in fiscal year 2022 (FY22), we embarked on an ambitious journey to reinvent ourselves, building on more than 50 years of global impact. This journey includes making key investments in Environmental, Social and Corporate Governance (ESG) strategies that help us uplift our partners and customers, give back more than we take from our planet, create responsible growth for our company and operate in a manner that supports the resilience of our business.\nT H R E E P R I O R I T I E S G U I D E O U R O N G O I N G E F F O R T S :\n$\\textcircled{1}$ Investing in our Partners \n$\\textcircled{2}$ Building a More Sustainable, Equitable and Resilient Future for Coffee, our Communities and our Planet \n$\\textcircled{3}$ Leadership and Governance\nAs always, we are approaching our ESG priorities with the same creativity and consistency our partners (employees) bring to their work every single day. Through our ESG efforts, we are working to modernize and transform the Starbucks experience in our stores and recreate an environment that is welcoming and safe for all — where we uplift one another with dignity, respect and kindness.\nOur commitment to transparency, intentionality and accountability underpins all our efforts to share extensive data on our progress against our ambitious ESG goals, business practices, work in sustainability and our commitment to the communities we serve. Since 2001, we have proactively published this annual update on key ESG programs and progress.\n## table of contents\n## 5 Partner Experience 17 Partner Engagement 22 Fiscal 2023 Highlights\n### S E C T I O N I I B U I L D I N G A M O R E E Q U I TA B L E , S U S T A I N A B L E A N D R E S I L I E N T F U T U R E F O R C O F F E E , O U R C O M M U N I T I E S A N D O U R P L A N E T\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### L E A D E R S H I P A N D G OV E R N A N C E\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### S U P P O R T I N G D O C U M E N T S A N D D ATA TA B L E S\n56\n57 Goals Summary Scorecard 64 Our Planet: Data 68 SASB Reporting 72 Human Rights \n74 Occupational Health and Safety Standard 77 External Auditor Assurance Letters\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### INVESTING in our PARTNERS", "chunk_word_count": 527, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > L E A D E R S H I P A N D G OV E R N A N C E", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 1, "page_start": 1, "page_end": 4 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 1, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### partner experience\nI N V E S T I N G I N O U R PA R T N E R S\nAt Starbucks, we like to say that we are not in the coffee business serving people, but in the people business serving coffee. Here, our employees — who we call partners — are the heart of the Starbucks experience. Starbucks took significant action in FY22 to improve our partner experience through increased wages, additional training, equipment upgrades and expanded benefits. Our wage increases, training program expansion and equipment upgrades for U.S. retail partners in FY22 totaled \\$1 billion. Starbucks effort to improve our partners’ experience is founded on a deep commitment to advance inclusion, diversity and equity—and the belief that we are at our best when we create inclusive and welcoming environments.\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### P R O U D LY S E R V I N G T H E B E S T B E N E F I T S I N T H E U . S . F O R H O U R LY R E T A I L W O R K\nStarbucks is proud to offer a wide range of benefits that allow our partners to choose the plans and programs that best support their individual needs and goals. In the U.S., benefits provided to all eligible part- and full-time partners include comprehensive health coverage, annual Bean Stock grants, retirement savings matching, Lyra for mental health, commuter benefits, Spotify Premium, paid time-off, paid parental leave, fertility benefits — and more.\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### F U T U R E R O A S T 4 0 1 ( K )\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### S T A R B U C K S C O L L E G E\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### F A M I L Y E X P A N S I O N\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### M E D I C A L , D E N TA L A N D V I S I O N\nA C H I E V E M E N T P L A N\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### R E I M B U R S E M E N T\nStarbucks matches 100% of the first 5% contributed each pay period (regardless of whether the contribution is 401(k) pre-tax, Roth after-tax or a combination of both)\nComprehensive medical, dental and vision coverage with choices for partners, their spouse or domestic partner and children\nPartners can earn their first bachelor’s degree online with 100% tuition and fees ered upfront through Arizona State University’s online degree programs\nFinancial assistance for partners who are growing their families through adoption, rrogacy or intrauterine insemination (IUI), up to \\$40,000 per partner", "chunk_word_count": 514, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > partner experience", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 2, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### M E N TA L H E A LT H B E N E F I T\nSTUDENT LOAN MANAGEMENT\nPA I D PA R E N TA L L E AV E Paid leave for birth and non-birth parents\nB E A N S TO C K\nFree mental health therapy for partners, their spouse or domestic partner and children\nYearly grant of restricted stock units, which vest over two years\nAccess to resources to help better manage student debt\nG I V I N G M ATC H\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### PA RT N E R A N D FAM I LY S I C K T I M E\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### D A C A F E E R E I M B U R S E M E N T", "chunk_word_count": 168, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > M E N TA L H E A LT H B E N E F I T", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 6, "page_start": 6, "page_end": 6 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 3, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### I N C E N T I V I Z E D S AV I N G S P R O G RA M\nStarbucks matches up to \\$1,000 per year per partner in volunteer hours and financial donations to qualified non-profit organizations\nReimbursement for governmentmandated DACA renewal fees\nIncentivized savings plan for short-term goals and unplanned financial challenges\nPaid sick time for partners to care for themselves and their families\nOur benefits reflect our mission and commitment to put our people first — including more than 250,000 U.S. partners representing diverse communities. We offer the highest-rated benefits in the U.S. for hourly employees1 — inspired by direct collaboration with partners. As an industry leader in compensation and pay equity, we’re constantly expanding benefits and opportunities. We proudly offer our worldclass benefits to eligible part-time and full-time partners across retail, manufacturing and enterprise (corporate), including:\nKey initiatives launched in the U.K. and Europe, Middle East & Africa (EMEA) regions include pay increases, maintaining a premium to national living wage, free food on shift and an extra holiday. Partners in these regions also received a “share of success” bonus in FY22, amounting to £4.3 million in bonus payments.\nTata Starbucks Limited, a joint venture, became the first food and beverage company in India to establish a company-wide, five-day work week for all partners. The company also embraces flexibility through its ‘connected workplaces’ program, where its non-retail support partners work in hybrid, field support and remote roles, and store partners can experience both part-time and full-time roles. Tata Starbucks also provides meaningful opportunities and comprehensive benefits for partners including providing a graduation support program to all full-time and part-time Tata Starbucks partners. The company offers many health and wellness programs including free mental and emotional counseling to partners and their family members, and an optional company-subsidized parental insurance program. In 2021, Tata Starbucks inaugurated the Two-Wheeler Mobility Support Program to help partners purchase a two-wheeler vehicle for professional or personal use, enhancing their independence and commuting experience.\n• Comprehensive health coverage (medical, dental and vision). • A highly competitive 401(k) program with company match. • Bean Stock — Starbucks continues to be one of the only retailers to offer a stock program that includes part-time retail hourly partners.\nAs part of the $\\$ 1$ billion in investments to improve our U.S. partner experience, our industry-leading core benefits package expanded and evolved in FY22 to meet their needs — with plans for continuous improvement and updates in progress.", "chunk_word_count": 438, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > I N C E N T I V I Z E D S AV I N G S P R O G RA M", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 4, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### I N C E N T I V I Z E D S AV I N G S P R O G RA M\nWe also offer global Starbucks partners relevant benefits that help address unique needs in different parts of the world. In 2017, Starbucks China introduced a first-of-its-kind program to provide critical illness insurance for parents of eligible partners. Just last year, it launched “14th Month Pay,” a pioneering initiative giving retail partners an additional month’s salary as a bonus on top of the 13th month pay they are eligible for, to be paid out at the end of every financial year. Partners can also select from a wide array of innovative flexible benefits such as HPV vaccinations and ‘pawternal’ care for new pets. Starbucks China partners also enjoy opportunities to pursue their coffee passion and career aspirations through initiatives such as talent exchange and barista championships.\n“Core to offering innovative benefits that truly make a difference in partners’ lives is us working together with our partners to evolve those benefits and co-create Starbucks future. I firmly believe that when we invest in our partners, we invest in the success of Starbucks.”\nS A R A K E L LY, E X E C U T I V E V I C E P R E S I D E N T A N D C H I E F PA R T N E R O F F I C E R", "chunk_word_count": 268, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > I N C E N T I V I Z E D S AV I N G S P R O G RA M", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 7, "page_start": 7, "page_end": 7 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 5, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Total Compensation and Retirement\nIn FY22, Starbucks announced that the company:\n$\\bullet$ Increased minimum starting pay rate for all U.S. hourly partners to \\$15/hour. \n$\\bullet$ Achieved an average national pay rate for all U.S. hourly partners of nearly \\$17/hour. \n• Provided Starbucks shares via the Bean Stock program to more than 230,000 partners in 21 markets.\nWe are invested in the total health of our partners — including their financial health. In FY22, we announced that the minimum starting rate for all U.S. retail hourly partners is $\\$ 15$ /hour. On average, Starbucks hourly partners earned nearly $\\$ 17$ /hour nationally, which has improved to $\\$ 17.50$ /hour in FY23. Our eligible tenured hourly partners received at least a $5 \\%$ raise for two to five years of service, and at least a $7 \\%$ raise after five years.\nWe help our partners save for emergencies, the future and retirement in an ever-changing economy. In FY22, we announced the addition of two new programs to help partners manage their savings and income. The Starbucks Financial Resilience Toolkit includes topics ranging from budgeting and short-term savings to longterm savings and retirement tips and guidance. We know that many of our partners have student debt, so a new program provided by Tuition.io provides partners with payment strategies, student loan management coaches and links to take action.\nThe Starbucks Financial Resilience Toolkit and the Tuition.io initiatives join our robust savings and retirement benefits. Starbucks Future Roast, our signature 401(k) savings plan, allows partners to contribute pre-tax or Roth after-tax dollars, with a Starbucks match for contributions. In partnership with Fidelity, all eligible U.S. partners can now participate in My Starbucks Savings, a way to save for the unexpected, including a Starbucks match of $\\$ 25$ and $\\$ 50$ credits at key savings milestones up to a total of $\\$ 250$ per partner.\nWe know that our partners are the foundation of our success, so we want them to share in that success through Starbucks stock ownership. Bean Stock began in 1991, on the same day Starbucks opened its 100th store. The landmark program that awards partners with company stock was the first of its kind in the retail industry. During FY22, more than 230,000 partners in 21 markets received Bean Stock, including Austria, Great Britain, Italy, Switzerland, Japan, China, Canada and the United States. Partners in North America can also take advantage of the Starbucks Stock Investment Plan (S.I.P.), a quarterly stock purchase plan that allows Starbucks partners to buy Starbucks stock at a $5 \\%$ discount.\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Partner Experience Innovation Center", "chunk_word_count": 459, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > Total Compensation and Retirement", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 6, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Launched the Partner Experience Innovation Center to reimagine and improve the partner experience.\nRetail partners create thousands of meaningful moments each day for our customers, all around the world. At the same time, we know that our partners have endured a challenging few years — from a global pandemic upending our day-to-day lives, to facing the ongoing impacts of a strained supply chain.\nIn FY22, we announced approximately $\\$ 1$ billion in investments in wages, benefits, training and equipment to radically improve the U.S. retail partner experience — the result of dozens of collaboration sessions across the country where hundreds of retail partners and leaders met to co-create the future of Starbucks. The newly-formed Partner Experience Innovation Center (PEIC) was created to reimagine the partner experience and build trust with our partners by addressing their biggest challenges.\nWhen we meaningfully invest in an experience that enables our partners to thrive, they become more engaged and better connected with our customers, which drives our business performance. Thriving partners are a catalyst to building a stronger Starbucks business and brand.\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Inclusive Healthcare\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Starbucks College Achievement Plan\nWe will always work to ensure that our partners have access to quality healthcare and the support services they need. In FY22, we added to our extensive healthcare benefits with a healthcare reimbursement program to ensure that all partners can receive reimbursement for travel expenses for abortion or gender-affirming procedures when they cannot legally access services in their state of residence and do not have a provider within 100 miles of their home. In FY22, we also broadened the Starbucks Family Expansion Reimbursement program, which assists partners with the costs of growing their families through adoption, surrogacy or fertility treatments.", "chunk_word_count": 323, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > Launched the Partner Experience Innovation Center to reimagine and improve the partner experience.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 9, "page_start": 9, "page_end": 10 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 7, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Nearly 2,150 partners graduated from college using Starbucks College Achievement Plan (SCAP), with more than 23,000 partners participating in the program in FY22.\nAs part of our commitment to help our partners succeed in career and life — even beyond Starbucks — we offer $100 \\%$ upfront tuition coverage for a first-time bachelor’s degree to eligible partners in the U.S. through SCAP, in partnership with Arizona State University (ASU). SCAP participants have access to more than 140 bachelor’s degree programs, and since the start of the program more than 9,100 partners have used SCAP to graduate from college.\nThese efforts in FY22 build on our long-standing commitment to ensuring that our partners have access to quality healthcare regardless of where they live or what they believe. In 2018, Starbucks broadened its health insurance options for transgender partners beyond gender reassignment surgery (which had been covered since 2013), to include procedures that had previously been considered cosmetic. All U.S. partners who welcome a new child by birth, foster or adoption can access paid parental leave. Starbucks also provides all U.S. partners and qualified family members access to 20 free sessions a year with a mental health therapist or coach through Lyra Health, and free access to Headspace. We also offer all U.S. partners the option to work with Starbucks Advocates — a team of individuals dedicated to working directly with partners year-round — who are knowledgeable about healthcare coverage and available to help partners with complex health benefits questions.\nStarbucks also offers the Pathway to Admission program, an expansion of the SCAP benefit. Through this program, Starbucks and ASU provide an admissions pathway for partners who do not initially qualify for admission. Through Pathway to Admission, partners can take up to 10 college-level courses to earn their admission into the university, with credit conversion costs fully covered. Partners who are Veterans can extend an additional SCAP benefit to a qualifying family member.\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### T RA I N I N G & D E V E LO P M E N T\nTraining and educational resources are designed to recruit and retain talented people and affirm Starbucks as one of the very best employers in retail globally. The way we hire, develop and advance our partners is a critical pillar in our journey to ensure that all of our partners have the opportunity to thrive at — and beyond — Starbucks.\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Barista First 30 & Continuous Learning Journey", "chunk_word_count": 444, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > Nearly 2,150 partners graduated from college using Starbucks College Achievement Plan (SCAP), with more than 23,000 partners participating in the program in FY22.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 10, "page_start": 10, "page_end": 11 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 8, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Talent Attraction & Development\n• More than 160,000 baristas were hired in the U.S. $\\cdot$ More than $60 \\%$ of U.S. retail leadership roles were filled from internal partners.\nBaristas in the U.S. receive 42 training hours.\nAs part of our $\\$ 1$ billion investment in improving the retail partner experience, we evolved the Starbucks training program known as Barista Basics into Barista First 30, a 42-hour training program to be completed in the first 30 days of employment that covers all the foundations of being a Starbucks partner from mission and culture to the skills needed to serve customers in our stores. Barista First 30 nearly doubles the number of training hours provided in the previous program and is followed by a continuous learning journey that coincides with the 90-day check-in and 180-day milestone. Our newly designed shift supervisors training program includes nearly 30 hours of training that provides the essential knowledge needed for the role. Taken together, our training ensures that Starbucks store partners can provide a great experience for customers while gaining the skills and information they need to thrive in their roles.\nStarbucks has a long history as a leading company to attract and develop diverse talent. Starbucks is working side-by-side with partners to ensure that we remain at the top of our field for talent acquisition and development. In FY22, the total partner turnover in North America (U.S. and Canada) was nearly $6 5 \\%$ , significantly lower than industry2 turnover rates.\nIn FY22, we also invested in coffee education through the Coffee Master Program. Starbucks partners are certified as Coffee Masters after completing coursework and an exploration of Starbucks coffees in Starbucks Coffee Academy. The Coffee Master program acknowledges partners’ knowledge and skill with the special designation of the black apron after they finish the robust curriculum. Partners who complete the Coffee Master program are eligible to attend Origin Experience trips — trips to coffee-growing regions to experience coffee farms and meet farmers, suppliers and community members. More than 4,500 partners have completed Coffee Masters and earned the black apron since the re-launch in June 2022. In FY23, nearly 1,500 partners completed Coffee Masters, with an additional 1,000 partners enrolled in the program.\nI N C L U S I O N , D I V E R S I T Y A N D E Q U I T Y\nWe are dedicated to creating a culture of warmth and belonging, where everyone is welcome and respected. Our work to advance inclusion, diversity and equity at Starbucks has already led to important policies, programs and initiatives. There is still more to be done, and we are committed to taking further actions toward tangible and lasting change.", "chunk_word_count": 476, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > Talent Attraction & Development", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 9, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### RA C I A L & S O C I A L E Q U I T Y G O A L S & R E P R E S E N T AT I O N\nWe are on a journey to advance racial and social equity for our partners, our community and our society. We are building on the work in our prior Civil Rights Assessments, conducted by Covington & Burling, to meet racial, ethnic and gender diversity representation goals across the company. Our goal is to achieve racial and ethnic diversity of at least $30 \\%$ at all corporate levels and at least $40 \\%$ at all retail and manufacturing roles by 2025. We also aim to achieve at least $50 \\%$ women working across all corporate levels, $5 5 \\%$ women working across all retail roles and $30 \\%$ women working in manufacturing roles.\nGoals and FY22 results3 :\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Representation of POC and women in retail roles\nGoal: At least $40 \\%$ People of Color (POC) representation and $5 5 \\%$ women in all retail roles (regional vice president, regional director, district manager, store manager, shift supervisor, barista) by 2025\nGoal: At least $40 \\%$ POC representation and $30 \\%$ women in all manufacturing roles (director, manager, individual contributor) by 2025\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Representation of POC and women in enterprise roles\nGoal: At least $30 \\%$ POC representation and $50 \\%$ women for all enterprise roles (senior vice president $^ +$ , vice president, director, manager, individual contributor) by 2025\nAs disclosed in our 2023 Proxy Statement: Our Board of Directors has $3 8 \\%$ person of color representation (three out of eight members) and $2 5 \\%$ representation of women (two out of eight members).\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Inclusion & Diversity Mentorship Program\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Supporting LGBTQIA2+ Partners\nWhat began as a pilot in 2021 has quickly become a sought-after learning and development opportunity for partners. Designed to support partners who have been historically marginalized, including Veterans, women, LGBTQIA2 $^ +$ partners and those living with disabilities, the Starbucks Inclusion & Diversity Mentorship Program connects partners to senior leaders, providing 1:1 sessions and ongoing guidance.", "chunk_word_count": 408, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > RA C I A L & S O C I A L E Q U I T Y G O A L S & R E P R E S E N T AT I O N", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 13, "page_start": 13, "page_end": 14 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 10, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Starbucks scored $100 \\%$ on the Human Rights Campaign Corporate Equality Index for the 12th year in a row.\nStarbucks is committed to building a culture where everyone is welcome and continue our deep and longstanding commitment to remaining a top employer for LGBTQIA2 $^ +$ people. In FY22, we joined more than 170 organizations and the Human Rights Campaign in urging the U.S. Senate to pass the Respect for Marriage Act, which was signed and passed in December 2022, and we joined other businesses in an advocacy statement to address and oppose policy actions or legislation that discriminate against the LGBTQIA2 $^ +$ community. Our efforts were recognized in 2022, and Starbucks was listed once again as a Best Place to Work for LGBTQIA2 $^ +$ Equality by the Human Rights Campaign. The Starbucks Foundation donated more than $\\$ 700,000$ to support nonprofits serving LGBTQIA2 $^ +$ communities in FY22. We are working to implement our vision of an inclusive and equitable company for all through our work directly with our partners — like our expanding benefits for our transgender partners to access gender-affirming care, regardless of where they live. At the same time, we are working to ensure our partners are supported through inclusive policies around the country.\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Global Equity in Pay4\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Starbucks has achieved and maintained $100 \\%$ pay equity for women and men and people of all races performing similar work in the U.S. and maintained $100 \\%$ gender equity in pay in Canada.\nIn 2018, Starbucks achieved pay equity for all partners in the U.S. performing similar work and has maintained equity every year. In FY22, Starbucks once again maintained $100 \\%$ pay equity for women and men and people of all races performing similar work in the U.S. As of the end of FY22, median pay ratio in the U.S. was $100 \\%$ for women and partners of all races. We also maintained gender equity in pay in Canada and are working to leverage knowledge and lessons learned in markets where we have achieved pay equity to develop applicable principles for our global markets and share with other leading employers. We continue to work with licensed partners to prioritize pay equity for all partners in all markets.\n“In every community we serve, Starbucks is committed to building a culture where all feel welcome. While each of our markets is unique, what unites us as partners is our values – our commitment to diversity, equity and inclusion, and our shared goal of creating places of belonging for our partners and customers.”\nM I C H A E L C O N WAY, G R O U P P R E S I D E N T, I N T E R N AT I O N A L A N D C H A N N E L D E V E LO P M E N T", "chunk_word_count": 522, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > Starbucks scored $100 \\%$ on the Human Rights Campaign Corporate Equality Index for the 12th year in a row.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 14, "page_start": 14, "page_end": 15 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 11, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Inclusive & Accessible Design\nWe know that when we design with and for people who have lived experience with disability, it improves the experience for all partners, customers and communities. That’s why Starbucks is committed to designing, testing and scaling more inclusive design standards and experiences across our store portfolio, starting in the U.S. and then expanding standards globally, with the goal of ensuring that physical and digital Starbucks environments will meet an elevated standard of accessibility by 2030. These standards will provide customers with more options to enjoy both their in-store and digital Starbucks experiences by creating more ways to communicate both visually and audibly and by offering more tools to help customers navigate physical store environments.\nTo advance these standards, Starbucks is testing technology solutions in select store locations including:\n• Speech-to-text technology that provides a live visual display of speech for partners and customers to reference when placing or picking up an order. \n• Order readiness notifications through a customer order status board that visually provides an update and confirms when an order is ready.\nThese efforts build on other accessible design improvements over the last year. Since 2021, Starbucks has offered free Aira service, which connects people who are blind or have low-vision to trained, professional visual interpreters who provide instant access to visual information about the customer’s surroundings through a smartphone app. Starbucks also offers multiple formats of the menu including large-print and Braille menus in all stores in the U.S. and Canada. Globally, Starbucks operates 16 Signing Stores that provide a space for the Deaf and hard of hearing community to connect through sign language and celebrate Deaf culture.\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Disability Inclusion\nStarbucks scored $100 \\%$ on the Disability Equality Index. Starbucks is recognized as one of the DEI Best Places to Work for Disability Inclusion.\nOver 1 billion people have a disability across the globe, and it is a strength. And at Starbucks, we believe it is our responsibility to raise the bar when it comes to creating a more inclusive environment for our partners and customers living with apparent and nonapparent disabilities. Together with our community partners, we are increasing accessibility resources and supporting the development of evolving employer practices on Access and Disability Inclusion. As a member of Disability:IN’s Inclusion Works program, a national forum for peer employers, Starbucks remains committed to Disability:IN’s pledge, Are You In — committing to advance disability inclusion in the workplace.\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Refugee Support\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Veterans & Military Families5\nMore than 1,100 refugees hired in the U.S., Canada and EMEA in FY22, bringing the total of refugees hired to more than 4,000 since 2017. More than $\\$ 1.3$ million donated to support nonprofits serving refugee communities from The Starbucks Foundation.", "chunk_word_count": 498, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > Inclusive & Accessible Design", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 12, "chunk_text": "# GLOBAL\n## 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### Hired an additional 4,580 Veterans and military spouses.\nOur goal is to hire 5,000 military Veterans and military spouses annually, and in FY22 we hired more than 4,500 Veterans and military spouses across U.S. Starbucks roles. These intentional hiring commitments are intended to welcome new partners from communities that may experience barriers to employment.\nWe have a longstanding history of creating opportunity and investing in the people who are a part of the communities where we do business. While we did not meet our 2022 goal of hiring 10,000 refugees globally, we remain committed to the refugee community and staying transparent with partners, customers and stakeholders on our progress.\nOur support for Veterans and their families includes our partnerships with nonprofit organizations like Blue Star Families, which helped foster connections in over 200 military communities nationwide. In partnership with Operation Gratitude, we donated more than 5,000 comfort items to our nation’s Veterans and caregivers in military treatment facilities nationwide. And because coffee is at our core, Starbucks donated more than 6.8 million cups of coffee to our Veteran and military communities in FY22.\nOur support goes beyond employment opportunities. In FY22, The Starbucks Foundation has awarded more than $\\$ 1.3$ million to support nonprofits providing humanitarian assistance and other programs to help refugees find safety and rebuild their lives. This includes support to more than 200 grassroots nonprofits across the U.S. and Canada that provide resources and services for refugees and where Starbucks partners are engaged.\nWe also support our military partners and their families with Military Family Stores. Please refer to Our Communities for more information on these specialized stores.\n45 Fiscal 2023 Highlights 46 Starbucks Accolades\n### partner engagement\nI N V E S T I N G I N O U R PA R T N E R S\nBeing a Starbucks partner means aspiring to become part of something bigger: inspiring positive change in the world and growing in career and in community. To make that vision a reality, we invest in our partners’ well-being, professional learning and community and civic engagement.\n## M M X X I I\n### Partner Surveys6\n### $43 \\%$ of U.S. store partners, $54 \\%$ America non-store partners completed the Partner Experience survey.\nStarbucks has a long history of direct engagement with our partners, and we make it a priority to routinely create the space for open and honest twoway conversations. We have established a cross-functional Support Partner Experience team, made up of partners across business units. This team focuses on key areas of opportunity that partners have shared and will host design sprints on specific topics shared in collaboration sessions. The partner surveys leverage a census approach, with all U.S. company-operated partners invited to participate and paid time for hourly partners, including retail partners, to complete the survey. The feedback from these surveys is used to inform the partner experience.", "chunk_word_count": 504, "section_path": "GLOBAL > 25 Our Communities 31 Our Planet 38 Coffee and Our Supply Chain \n45 Fiscal 2023 Highlights 46 Starbucks Accolades > Hired an additional 4,580 Veterans and military spouses.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 16, "page_start": 16, "page_end": 18 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 13, "chunk_text": "# GLOBAL\n## M M X X I I\n### S TA R B U C K S G LO B A L A C A D E M Y\nStarbucks Global Academy is a free, open-access platform for Starbucks partners, customers, suppliers and community members worldwide to access top-quality educational content centered around Starbucks areas of passion and expertise. Developed in collaboration with Arizona State University, the Starbucks Global Academy offers learners the opportunity to expand their understanding of key Starbucks initiatives and select coursework from a collection of more than 100 carefully selected courses.\n### To Be Welcoming7\n### Community Champions Course7\n### More than 21,000 people enrolled in the course with more than 12,000 completions.\n### Developed and launched new, open-source Community Champion Fundamentals course on Starbucks Global Academy.\nOur dedication to equal opportunity involves creating a workplace where diversity is celebrated and establishing a workplace culture that promotes inclusiveness. In 2018, we partnered with Arizona State University to develop the To Be Welcoming anti-bias program for our partners. In 2020, we made this 15-course curriculum available to the public for free. We exceeded our goal of enrolling 100,000 cumulative learners in FY22, reaching nearly 109,000 enrollments and more than 45,000 total course completions. Because the course is open to partners, customers and community members, our program helps individuals across our community engage with challenging subjects through research-based content. We are excited to report that $8 1 \\%$ of people who have completed the course since 2018 are Starbucks partners and $1 9 \\%$ are non-partner learners.\nStarbucks empowers our partners, customers and communities to take action and make a difference at home and around the world as Community Champions. Community Champions serve their communities in big and small ways to make a positive impact for people and the planet. In FY22, we created a new Community Champion Fundamentals course on Starbucks Global Academy to help partners and community members understand how to identify community needs and then align those needs with their own passions and motivators for doing good.\n### Starbucks Coffee Academy\n### Nearly 150,000 enrollments and more than 96,000 course completions.\nThe Starbucks Coffee Academy offers an in-depth review of the coffee industry and Starbucks pioneering role in responsible sourcing, roasting, blending, brewing and crafting. The modular learning format is open to everyone, and enables learners to select their coffee education journey. Since its launch, more than 285,000 people have enrolled in Starbucks Coffee Academy with more than 160,000 course completions.\n### Greener Apron7\n### More than 15,500 partners enrolled in the course with nearly 9,000 completions.\nThe Greener Apron course is open to partners and the public and equips learners with the information they need to learn about sustainability and the skills and tools to become changemakers at work, at home and in their communities. In FY22, the course was updated in partnership with the World Wildlife Fund and Intersectional Environmentalists to be shorter and more relevant and accessible to partners. Since its launch, nearly 52,000 people have enrolled in the course, with nearly 25,000 completions.\n### Third Place Development Series", "chunk_word_count": 518, "section_path": "GLOBAL > M M X X I I > S TA R B U C K S G LO B A L A C A D E M Y", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 14, "chunk_text": "# GLOBAL\n## M M X X I I\n### Four sessions designed and implemented, with nearly 3,000 people enrolled and more than 300 course completions.\nStarbucks seeks to create a third place — a warm and inviting place where people can convene and connect. Through videos and discussion prompts, the Third Place Development Series intends to spark insights and confront biases as we strive to create more inclusive practices in our communities. Starbucks collaborates with external experts to discuss important issues and create a welcoming space for all to form meaningful connections and challenge our own biases through diverse lived experiences. Since its launch, nearly 3,000 people have enrolled in the course with more than 300 completions.\n### Partner Networks8\n### U . S . PA R T N E R N E T W O R K S\n### Partners are engaged in 12 Partner Networks and 114 regional chapters across the U.S. 26 Partner Networks are available globally.\nSTARBUCKS Black Partner Network\nOur Partner Networks launched in 1996 with the Pride Alliance partner affinity group. These partner-led groups bring together partners and have been celebrated across the global business community as a leading example of employee-led thought leadership. Through shared power, shared accountability and shared success, Partner Networks have helped us define the systems and programs that have proven critical to advancing a culture of equity and belonging.\n## STARBUCKS ARMED FORCES NETWORK\n## E S T. 2 0 0 7\n\n## E S T. 2 0 0 6\nWelcome, engage and empower Veterans, military spouses and advocates in cultivating a strong community that embraces Veterans in the workplace and enriches the Starbucks Experience.\nShare the heritage of the African diaspora to develop partners, advise our business and enrich Starbucks contribution to our customers and communities.\nFoster a community of awareness, inclusion and accessibility for partners with apparent and non-apparent disabilities.\n## INDIAPARTNERNETWORK\n\n## E S T. 2 0 1 3\n## E S T. 2 0 2 0\nCelebrate the Latinx culture, develop partners and positively impact our customers and communities.\nDevelop a global community contributing to the growth of the India market, celebrate Indian culture and support the growth of partners from the region.\nPreserve and celebrate Indigenous cultural values and interweave communities by teaching and understanding our heritage.\n## PARTNERS FOR SUSTAINABILITY\n## E S T. 2 0 1 5\n\n## E S T. 2 0 2 1\nSupport and empower the next generation of Starbucks leadership.\nFoster meaningful connections and elevate the impact of Pan-Asian partners and allies within Starbucks and the community.\nEducate, engage and empower partners to drive sustainable change.\n## WOMEN'S IMPACT NETWORK\nE S T. 1 9 9 6\nE S T. 2 0 1 8\nE S T. 2 0 0 8\nStrive to cultivate an equitable, dynamic and supportive environment for LGBTQ partners, allies and customers.\nWelcome, empower and advocate for refugee partners and allies while strengthening and enriching their global Starbucks Experience.\nIgnite the power of women to make an impact through partners, allies and community.", "chunk_word_count": 510, "section_path": "GLOBAL > M M X X I I > Four sessions designed and implemented, with nearly 3,000 people enrolled and more than 300 course completions.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 19, "page_start": 19, "page_end": 20 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 15, "chunk_text": "# GLOBAL\n## WOMEN'S IMPACT NETWORK\n### Civic Engagement Resources\nIn FY22, more than 600 people, including customers and partners, accessed voter registration and election information (via Fuel Our Democracy) while more than 17,000 partners used civic education resources via Starbucks Partners Vote.\nTo fulfill our commitment to civic engagement, Starbucks offers various tools and resources to our partners, enabling them to exercise their right to vote in every election. We provide voter education resources to help partners create a voting plan, and facilitate conversations between managers and partners to ensure that partners can participate in elections.\n### Giving Match9\n### Nearly \\$1.5 million donated to nonprofit organizations.\nThrough the Starbucks Giving Match program, Starbucks recognizes and supports partners’ individual contributions of eligible financial donations and volunteer time to qualified nonprofit organizations. All active Starbucks full- and part-time partners can request up to $\\$ 1,000$ in matching funds per fiscal year, using any combination of volunteer hours and financial donations to qualified nonprofit organizations. At the end of FY21 and into FY22, our policy was enhanced to allow more access and equity to partners by reducing the minimum volunteering threshold from five hours to one hour $\\$ 5$ per hour in Giving Match) and more recently, by reducing the financial giving minimum threshold from $\\$ 25$ to $\\$ 5$ . This change reflects Starbucks desire to support all of our partners in volunteering and giving whether their contributions are big or small. Because of increased partner engagement and utilization of the Giving Match, Starbucks donated nearly $\\$ 1.5$ million to nonprofit organizations in the U.S. and Canada in $\\mathsf { F Y } 2 2 -$ representing a nearly $50 \\%$ increase in Giving Match donations from FY21.\n### fiscal 2023 highlights\n### Achieved an average national pay rate for all U.S. hourly partners of more than \\$17.50/hour, with a range of $\\$ 15$ to $\\$ 24$ /hour.\n### Partner Investment: Origin Experience\nFrom January through March 2023, 800 Starbucks partners (employees) from the U.S. and Canada were selected to travel to Hacienda Alsacia – the Starbucks research and development farm in Costa Rica for Origin Experience.\nStarbucks Origin Experience is an optional development incentive for eligible partners – Coffee Masters who represent a variety of roles within the company, from barista to manufacturing to operations leaders – to learn, see and experience the hard work, dedication and passion that goes into producing the coffee we serve every day in our stores.\nPartners see first-hand examples of how Starbucks is leading in the industry and hear from experts in agronomy, processing, buying, farmer support, quality and more throughout a learning visit during Costa Rica’s coffee harvest season.\n### Continued Commitment to Our Hometown\nTo help alleviate the burden on partners of trying to address some of the challenges facing Seattle, Starbucks continued its commitment to a unique public-private partnership in Seattle – Partnership for Zero.\nStarbucks will offer some of its downtown stores to be a safe, clean and welcoming space where Partnership for Zero System Advocates – case managers with lived experience being homeless – can connect with those needing to navigate social services, fill out paperwork and get on the path to permanent housing.", "chunk_word_count": 536, "section_path": "GLOBAL > WOMEN'S IMPACT NETWORK > Civic Engagement Resources", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 16, "chunk_text": "# GLOBAL\n## WOMEN'S IMPACT NETWORK\n### Expanding Mentorship Across Starbucks\nBuilding on the initial success of Starbucks mentorship program, we announced the expansion of mentorship opportunities to include over 400 U.S. based retail partners, bringing the total number of participants to 1,395.\nbuilding a more equitable, sustainable and resilient\n## FUTURE FOR COFFEE, OUR COMMUNITIES AND OUR PLANET\nWe believe it is our responsibility to build a more sustainable, equitable and resilient future for coffee, our communities and our planet. We are working to create the future we dream of through the lens of humanity, with a deep commitment to global human rights, responsible and ethical sourcing, community leadership from our partners and a focus on giving more than we take from the planet.\nF U T U R E F O R C O F F E E , O U R C O M M U N I T I E S A N D O U R P L A N E T\n### our communities\nEvery day, across the globe, Starbucks works to enhance the wellbeing of all who connect with the brand, through actions and programs rooted in opportunity and inclusion. Our work is informed by our partners, who live and work in the communities we aim to support. From service projects to spreading messages of hope, together we are working to nurture the limitless possibilities of human connection.\n## M M X X I I\n## O U R S T O R E S\n### Community Stores10\n### Military Family Stores\n### Signing Stores\n### In the U.S., seven Community Stores opened in FY22, bringing our total U.S. Community Stores to 28. In Asia, eight Community Stores opened in FY22, bringing our total international Community Stores to 19 stores.\n### Opened 33 Military Family Stores, bringing our total Military Family Stores to 111 stores.", "chunk_word_count": 312, "section_path": "GLOBAL > WOMEN'S IMPACT NETWORK > Expanding Mentorship Across Starbucks", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 22, "page_start": 22, "page_end": 25 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 17, "chunk_text": "# GLOBAL\n## O U R S T O R E S\n### Five new Signing Stores opened globally, bringing our total to 16 Signing Stores.\nStarbucks Military Family Stores serve as a central gathering place for active military personnel, Veterans, their families and surrounding communities. These stores, located near major military bases, provide a sense of connection and support for military families who are often far from their loved ones. Additionally, the stores collaborate with Veterans Service Organizations to link local Veterans and their families with important resources and services. At the end of FY22, 111 total Military Family stores were open and serving our Veterans and their families. While we did not meet our goal to open 132 stores by 2022, we will continue to update on our progress annually and anticipate reassessing this goal in the coming fiscal year.\nStarbucks Community Stores are spaces that aim to help uplift communities in locally relevant ways. The stores are inclusive of several store models from serving under-resourced and historically underresourced communities, to empowering farmers, youth and women and creating impact in partnership with local nonprofit organizations.\nStarbucks Signing Stores are staffed by store partners who are proficient in sign language. These stores provide a space for the Deaf and hard of hearing community to connect and celebrate Deaf culture through sign language. Starbucks opened 5 Signing Stores in FY22, and currently operates 16 Signing Stores worldwide.\nThese store concepts — led by partners who directly connect to the initiative or cause of that store — provide intentional and dedicated programming and experiences that support economic opportunity in communities, create pathways to opportunity for Starbucks partners and amplify the positive impact of Starbucks partners and the Third Place. In FY22, 15 new Community Stores opened across the nation and around the world. There are 28 Community Stores in the U.S. and 19 outside of the U.S. These stores have provided approximately 175 job opportunities in underserved communities in FY22, bringing overall employment in Community Stores to nearly 700 job opportunities to date. Community Stores also serve as a community gathering space. In FY22, our Community Stores provided four new community rooms, adding to our total of 28 community spaces across all Community Stores. Our goal is to open 100 Community Stores by the end of 2025 in the United States.\n### The Starbucks Foundation11\n### Origin Grants11\n### Youth Equity Grants\n### Provided $\\$ 17.5$ million in grants to nonprofit organizations.\nAchieved our goal of empowering 250,000 women and girls in coffee, tea and cocoa-growing communities, three years ahead of schedule. Announced new goal to positively impact 1 million women and girls in coffee, tea and cocoa-growing communities by 2030.", "chunk_word_count": 450, "section_path": "GLOBAL > O U R S T O R E S > Five new Signing Stores opened globally, bringing our total to 16 Signing Stores.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 18, "chunk_text": "# GLOBAL\n## O U R S T O R E S\n### 251,715 youth impacted and \\$1.2 million provided in grants.\nEstablished in 1997, The Starbucks Foundation is a distinct Section 501(c)(3) charitable organization under U.S. law and receives funding primarily from Starbucks Corporation.\nIn FY22, The Starbucks Foundation achieved its commitment to invest $\\$ 5$ million in organizations serving young people of color in the U.S. Over the last two years, The Starbucks Foundation’s Youth Equity Grants have supported organizations delivering diversity, equity and inclusion initiatives, youth mentorship and leadership development programs, and life skills for youth through nationaland local-level programs. In partnership with organizations like Big Brothers Big Sisters of America, City Year, Covenant House and YWCA USA, the Foundation’s grants have supported more than 375,000 youth since 2020.\nWomen play a vital role in their families, on farms and in communities, and they are disproportionately affected by challenges like the climate crisis. To support this effort, The Starbucks Foundation Origin Grants promote women’s leadership, advance economic opportunities and provide access to WASH in coffee-, tea- and cocoa-growing communities for women and girls.\nWith the mission to strengthen humanity by transforming lives across the world, The Starbucks Foundation provided $\\$ 17.5$ million to over 3,000 nonprofit organizations to enable community resiliency and prosperity in FY22. The Starbucks Foundation makes strategic investments from the first 10 feet in coffee-growing communities to the last 10 feet in neighborhoods where coffee is served, with hyperlocal grants in partnership with partners and licensees, to youth-focused initiatives and in disaster response and resiliency efforts. In addition to the grants made in these key areas, The Starbucks Foundation invested in programs creating a positive impact for people and communities, such as water, sanitation and hygiene (WASH) access, refugee support and to organizations delivering services in our hometown of Seattle.\nThe Starbucks Foundation exceeded its original goal of empowering 250,000 women and girls by 2025 and now aims to empower 1 million women and girls by 2030. Since announcing its original aspiration in 2018, the Foundation has positively impacted nearly 340,000 women and girls in origin communities. In FY22, the Foundation awarded nine grants totaling nearly $\\$ 3$ million in seven countries, including its first-ever origin grants focused on women farmers in Brazil and Mexico.\n### Neighborhood Grants12\n### Awarded $\\$ 4.5$ million in Neighborhood Grants bringing our total invested in hyperlocal nonprofits to more than $\\$ 10$ million, thanks to more than 45,000 nominations from partners since program launch.\nThe Starbucks Foundation provides Neighborhood Grants to nonprofit organizations nominated by Starbucks partners from the U.S. & Canada to help build sustained impact and inspire increased partner volunteerism in our communities. In FY22, the Foundation received nominations from nearly 30,000 partners and awarded $\\$ 4.5$ million through nearly 3,000 Neighborhood Grants to hyperlocal organizations making a difference in the communities where our partners live and work. Since the launch of the Neighborhood Grants program, the Foundation has awarded more than $\\$ 10$ million to nonprofit organizations.\n### Global Community Impact Grants13", "chunk_word_count": 507, "section_path": "GLOBAL > O U R S T O R E S > 251,715 youth impacted and \\$1.2 million provided in grants.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 19, "chunk_text": "# GLOBAL\n## O U R S T O R E S\n### Awarded over $\\$ 3.2$ million to nearly 90 nonprofits across 42 markets.\nIn March 2022, The Starbucks Foundation announced a goal to invest $\\$ 30$ million by 2030 in a new Global Community Impact Grants portfolio designed to drive locally relevant impact in the communities where Starbucks operates around the world. To realize and scale the initiative, The Starbucks Foundation invites Starbucks licensees that operate Starbucks stores across its three international regions — Asia Pacific; EMEA; and Latin America & the Caribbean — to nominate local nonprofit organizations for grants and coinvest alongside the Foundation to drive additional impact around the world at the local and regional level.\nIn FY22, The Starbucks Foundation grants and corresponding donations from licensees totaled over $\\$ 3.2$ million to nearly 90 nonprofits across 42 markets. In Indonesia, The Starbucks Foundation and PT. Sari Coffee Indonesia, which operates Starbucks stores in Indonesia, have worked with Prestasi Junior Indonesia since 2019 in support of teaching youth about entrepreneurship through experiential learning. In 2021, more than 450 volunteers were mobilized to conduct experiences with 1,250 students in six cities. Now one of the first recipients of a Global Community Impact Grant in 2022, Prestasi Junior Indonesia will continue to deepen impact through a creative youth entrepreneurship program that will support youth in gaining business skills and building their own microenterprises over the coming school year.\n### Disaster Response13\n### Awarded \\$3.75 million in grants and activated more than \\$400,000 in customer donations.\nAs part of our mission to uplift communities affected by disaster, The Starbucks Foundation provides grants to help communities prepare for and respond to disasters, as well as build long-term community resilience. This includes national and global support to the American Red Cross and World Central Kitchen, along with local investments based on community needs identified in partnership with Starbucks partners and community-based nonprofits. In FY22, the Foundation responded to support impacted communities, ranging from the Jackson, Mississippi water crisis to the Uvalde, Texas shooting, and engaged customers to join us in supporting hurricane relief efforts in North America and the Caribbean and humanitarian relief efforts for Ukraine.", "chunk_word_count": 366, "section_path": "GLOBAL > O U R S T O R E S > Awarded over $\\$ 3.2$ million to nearly 90 nonprofits across 42 markets.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 28, "page_start": 28, "page_end": 28 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 20, "chunk_text": "# GLOBAL\n## O U R S T O R E S\n### Starbucks® FoodShare and Hunger Relief14\n$\\cdot$ Nearly 13 million pounds of food in the U.S. has been diverted from waste streams and donated to hunger-relief organizations — which is the equivalent of nearly 11 million meals.15 $\\cdot$ More than 1 million pounds of food in Canada has been diverted from waste streams and donated to hunger-relief organizations — which is the equivalent of more than 1 million meals. • More than $\\$ 10$ million re-invested into hunger relief efforts in communities.\nSince 2016, Starbucks has been committed to supporting hunger relief through its innovative Starbucks FoodShare food donation program in partnership with Feeding America®, Second Harvest Canada and other hunger-relief organizations. Since then, Starbucks has invested more than $\\$ 60$ million into hunger relief efforts in the U.S., and in FY21 made a commitment to reinvest $\\$ 100$ million by 2030 in hunger relief initiatives.\nSince Starbucks FoodShare was launched in the U.S. in 2016, 60 million pounds of food have been diverted from waste streams and donated to hunger-relief organizations — which is the equivalent of 50 million meals. Starbucks FoodShare in Canada launched in 2019, and cumulatively through the end of FY22, nearly 2 million pounds of food have been diverted from waste streams and donated to hunger-relief organizations—which is the equivalent of nearly 2 million meals. Programs to support hunger relief are also operating in international markets including the Dominican Republic, India, Japan, Mexico, New Zealand, Philippines, Singapore, Thailand and the United Kingdom.\nIn FY22, we furthered our commitments to help increase equitable access to nutritious food.\n• Since 2021, $\\$ 3.3$ million, including $\\$ 1.6$ million in FY22, has been invested with 16 Feeding America partner food banks to implement initiatives that address equity in food access by supporting households with individuals who are Black, indigenous, and people of color residing in communities experiencing high food insecurity rates. These 16 food banks are in metropolitan areas with Starbucks Community Stores. • In FY22, Starbucks made a $\\$ 1$ million investment with No Kid Hungry to support sustainable and scalable solutions for schools and community organizations feeding children. The investment is aimed at increasing equitable access to nutritious food in high need and historically underserved communities.\n### Community Resilience Fund\n### Community Champions\n### \\$21 million invested through the Community Resilience Fund.", "chunk_word_count": 398, "section_path": "GLOBAL > O U R S T O R E S > Starbucks® FoodShare and Hunger Relief14", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 29, "page_start": 29, "page_end": 29 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 21, "chunk_text": "# GLOBAL\n## O U R S T O R E S\n### Globally, more than 43,000 partners took action as Community Champions, volunteering more than 143,000 hours in support of more than 5,000 nonprofit organizations.\nIn 2021, Starbucks established the Community Resilience Fund with the goal to invest $\\$ 100$ million in the expansion of small businesses and the development of community projects in communities of color. In December 2021 and January 2022, Starbucks invested $\\$ 21$ million in the first seven Community Development Financial Institutions (CDFIs) to receive funding from the Community Resilience Fund. The fund’s initial investments are centered around 12 metropolitan regions and their surrounding areas in the United States, including Atlanta, Detroit, Houston, Los Angeles, Miami, Minneapolis, New Orleans, New York City, Philadelphia, the San Francisco Bay Area, Seattle and Washington, D.C.\nAs Community Champions, Starbucks partners make a difference in the communities where they live and work. Community Champions cultivate connections in and out of stores and create a positive impact for people and the planet through volunteerism, donations, acts of kindness and by learning more about ways to make a positive impact in their community. Starbucks provides partners with tools to engage as Community Champions, build local relationships with nonprofits and empowers partners to grow their impact through resources like a newly launched Community Champion course on Starbucks Global Academy, which is also open to the public. Every U.S. and Canadian partner can access the Community Champion Portal, an online platform that serves as a onestop-shop for volunteering, giving, requesting a Giving Match, learning about community engagement opportunities and tracking contributions. Partners are taking action as Community Champions in 28 Starbucks markets outside of the U.S., up from five global markets reported in FY21. In the U.S., nearly 17,000 partners took action as Community Champions, volunteering more than 71,000 hours in support of nearly 4,000 nonprofits. Outside of the U.S., more than 26,000 partners took action as Community Champions, volunteering more than 72,000 hours in support of more than 1,000 nonprofits.\n### Outreach Worker Program", "chunk_word_count": 342, "section_path": "GLOBAL > O U R S T O R E S > Globally, more than 43,000 partners took action as Community Champions, volunteering more than 143,000 hours in support of more than 5,000 nonprofit organizations.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 30, "page_start": 30, "page_end": 30 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 22, "chunk_text": "# GLOBAL\n## O U R S T O R E S\n### Outreach workers across eight cities made more than 12,000 customer engagements and more than 1,800 referrals to a stabilizing program and resources.\nThe Outreach Worker program was introduced as a pilot in FY20 to connect partners with local street outreach and social workers who are skilled in directing individuals to stabilizing programs and resources. The program partners with local nonprofit organizations that specialize in connecting individuals facing homelessness, mental health issues and substance use disorders to relevant resources specific to their city. During FY22, the Outreach Worker program scaled to Denver and San Diego, in addition to continuing operations in Chicago, Los Angeles, New York City, Philadelphia, Seattle and Washington, D.C.\nIn FY22, Starbucks announced nearly $\\$ 500,000$ in investments to advance solutions that support those experiencing chronic homelessness in our hometown - the greater Seattle region. These efforts include partnering with the We Are In Coalition to support Partnership for Zero, led by the King County Regional Homelessness Authority (KCRHA), expanding support for nonprofits providing dignified access to basic needs including bathrooms, showers and laundry services for individuals experiencing chronic homelessness, expanding its commitments to the chronically homeless population by supporting Plymouth Housing and extending its investment in Northwest Harvest as part of our Starbucks FoodShare program.\nF U T U R E F O R C O F F E E , O U R C O M M U N I T I E S A N D O U R P L A N E T\nStarbucks strives to give more than we take from the planet and to cut our climate, water and waste footprints by half by 2030. We do so with a stronger than ever commitment to a more sustainable, resilient future for our planet and for our communities. We are proud to partner with global organizations like Conservation International, the World Wildlife Fund and the United Nations. Feedback from these groups is essential to our journey towards a sustainable future. To support ongoing collaboration across sectors, Starbucks is a founding member of Transform to Net Zero (TONZ), established in FY20. The initiative works to accelerate the transition to a net zero global economy no later than 2050 by developing and delivering research, guidance and roadmaps to guide businesses in achieving net zero emissions.\n## 2 0 3 0 G O A L S\n### Climate\n### Water\n### Waste\n50% absolute reduction in scope 1, 2 and 3 greenhouse (GHG) emissions representing all of Starbucks direct operations and value chain.\n50% of water withdrawals will be conserved or replenished across Starbucks direct operations, stores, packaging and agricultural supply chain, prioritizing action in highrisk water basins while supporting watershed health, ecosystem resilience and water equity.\n50% reduction in waste sent to landfill from stores (including packaging that leaves stores) and direct operations, driven by a broader shift toward a circular economy.", "chunk_word_count": 491, "section_path": "GLOBAL > O U R S T O R E S > Outreach workers across eight cities made more than 12,000 customer engagements and more than 1,800 referrals to a stabilizing program and resources.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 30, "page_start": 30, "page_end": 33 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 23, "chunk_text": "# GLOBAL\n## 2030 Goals\nDriven by the passion of our partners, we have set ambitious goals to give back more than we take from the planet and to cut our climate, water and waste footprints in half by 2030, working from a FY19 baseline. We are continuously working towards this bold promise in collaboration with our stakeholders – partners, suppliers, non-profit organizations, industry partners, government, farmers and customers. We are proud to partner with global organizations — such as Conservation International and the World Wildlife Fund — to accelerate collective action for environmental stewardship. Through membership in the United Nations’ Water Resilience Coalition (WRC), we’re helping preserve freshwater globally and as a founding member of Transform to Net Zero (TONZ) we’re collaborating across the private sector to drive the transition to a net zero global economy no later than 2050.\n### FY22 Results\nStarbucks is committed to cutting our climate, water and waste footprints in half by 2030.\nWe set ambitious goals because our commitment to building a more sustainable and resilient future for our planet and our communities is stronger than ever. As we reflect on progress toward our 2030 goals, we are at a crucial point on our journey to becoming a resource positive company. We remain dedicated to collaborating with industry experts to advance scalable solutions across our global business, innovating to drive solutions at scale and working with our partners to engage our customers and communities in our efforts.\nCompared to our FY19 baseline, GHG emissions increased $6 \\% ^ { \\star }$ , water withdrawals increased by $1 5 \\%$ and operational waste sent to landfill increased $5 \\%$ . At this stage in our sustainability efforts, increases in GHG emissions, water, and operational waste are expected as we see our business grow. We have seen positive progress in our waste diversion rate from $2 6 \\%$ in FY19 to $2 8 \\%$ in FY22, driven by increased in-store recycling. Broadly, to drive progress towards our 2030 targets, we continue to identify, test, and scale innovative solutions across our global operations, while increasing engagement with our value chain partners and developing our measurement systems. Please find Starbucks comprehensive environmental data and reporting on page 64.\nGrounded in Starbucks Mission and Values, our climate goal was validated as science-based by the Science Based Targets Initiative (SBTi) in FY21.\nWe govern our sustainability commitments through the Starbucks Global Environmental Council, which is comprised of senior leaders from across Starbucks whose compensation is linked to the achievement of our ambitious goals. We also receive input from our Board of Directors and seek advice from external advisors who are experts and leaders in the sustainability field.\n### S T R AT E G I E S F O R C H A N G E", "chunk_word_count": 467, "section_path": "GLOBAL > 2030 Goals > FY22 Results", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 33, "page_start": 33, "page_end": 33 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 24, "chunk_text": "# GLOBAL\n## 2030 Goals\n### Renewable Energy and Clean Technology16\nUsing our test-and-learn approach, we set five key strategies to meet our 2030 goals that are rooted in science, grounded in Starbucks Mission and Values and informed by our stakeholders, along with comprehensive research and trials:\nIn FY22, Starbucks in the U.S. and Canada maintained $100 \\%$ renewable energy for company-operated retail operations. Starbucks U.K. companyoperated market has achieved the same since FY18. Renewable energy powered $7 2 \\%$ of company-operated facilities globally.\n$\\textcircled{1}$ Shift away from single-use to reusable packaging $\\textcircled{2}$ Invest in regenerative agriculture, reforestation, forest conservation and water replenishment in our supply chain $\\textcircled{3}$ Invest in better ways to manage our waste $\\textcircled{4}$ Innovate to develop more sustainable stores, operations, manufacturing and delivery\nStarbucks U.K. company-operated market has achieved the same since FY18. For the first time in FY22, Starbucks achieved $100 \\%$ renewable energy for all North America company-operated facilities, including offices and manufacturing facilities.\nWe remain committed to our effort to expand renewable energy projects in Starbucks markets. Starbucks continues to support the growth of green energy through long-term electricity contracts, direct ownership and by contracting for renewable energy certificates from new projects. In FY22, Starbucks completed its investment in 20 new community solar projects in New York, which are supplying solar energy to more than 24,000 households, small businesses, nonprofits, churches, universities and Starbucks stores. By 2030, Starbucks aspires to lead the retail industry in decarbonization solutions, including electric vehicle charging and onsite solar availability at stores and in adjacent locations. For example, in FY22, Starbucks launched a pilot-program with Volvo Cars to electrify the driving route from the Colorado Rockies to the Starbucks Support Center in Seattle, providing a string of familiar, reliable, clean and safe places to recharge themselves and their battery-powered vehicles. Volvo-branded electric vehicle chargers, powered by ChargePoint, will be available at up to 15 Starbucks stores, roughly every 100 miles on the route, with the first EV chargers online at the Provo, Utah store.\n$\\textcircled{5}$ Expand plant-based menu options\n### Greener Stores17", "chunk_word_count": 344, "section_path": "GLOBAL > 2030 Goals > Renewable Energy and Clean Technology16", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 25, "chunk_text": "# GLOBAL\n## 2030 Goals\n### More than 3,500 Greener Stores are certified, including four internationally.\nThe Starbucks Greener Stores Framework, which was announced in 2018 and developed in partnership with the World Wildlife Fund, aims to drive the transformation of retail towards stores with lower environmental impact. The framework includes performance-based standards that cover the entire lifecycle of a store and aim to reduce carbon emissions, water usage and landfill waste. With a goal to build and operate 10,000 Greener Stores globally by 2025, Starbucks verified 3,508 Greener Stores in FY22.\nIn FY22, our work also focused on continuous improvement in the program, launch of innovation measurements and global expansion. Building on the success of our first Greener Store opening outside of North America in Shanghai, in September 2021, we opened Japan’s first Greener Store in Tokyo in November 2021, which will help inform Starbucks Greener Stores expansion across Japan, and the first Starbucks Greener Store opened in Chile in June 2022.\nAs part of our commitment to open-source educational materials, Starbucks launched the Greener Store Practitioner course on Starbucks Global Academy in FY22 to make the Greener Stores program more accessible to retailers around the world. The course features educational content on sustainability that is broadly applicable and shares the fundamental structure of Greener Stores. Starbucks will translate the course into multiple languages through 2024 and is committed to sharing insights through the Starbucks Global Academy platform as we work to continue to grow and scale the program globally.\nStarbucks has opened 52 Greener Stores in Latin America and the Caribbean, five in Europe, the Middle East and Africa, five in Asia-Pacific, 18 in Japan and eight in China.\nThe Greener Store of the Year is awarded annually to celebrate stores that work to meet the Greener Store parameters for essential energy, water and waste reduction efforts, along with key initiatives to support partners in their work and communities. The Starbucks Greener Store of the Year in FY22 was the Beverly and Atlantic store in Los Angeles, which features $1 0 0 \\%$ renewable energy coverage, landfill diversion programming, solar panels water recycling and sustainable materials in its design.", "chunk_word_count": 361, "section_path": "GLOBAL > 2030 Goals > More than 3,500 Greener Stores are certified, including four internationally.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 26, "chunk_text": "# GLOBAL\n## 2030 Goals\n### Reducing Single-Use Plastics & Packaging Waste18\nAs a founding member of the NextGen Consortium, Starbucks has been working to address single-use food packaging alongside leading food and beverage companies globally. In FY22, Starbucks and McDonald’s announced a joint $\\$ 10$ million investment in the NextGen Consortium to identify, accelerate and scale commercially viable, circular foodservice packaging solutions. Starbucks committed an additional $\\$ 5$ million with NextGen Consoritum in FY22 to innovate to a more sustainable hot cup. The consortium works together to do research and development for more sustainable single-use cup options while also working with waste infrastructure stakeholders to advance the recovery of foodservice packaging. Starbucks has invested $\\$ 15$ million with NextGen Consortium since 2018.\nStarbucks continues its efforts to shift away from single-use plastics. In FY22, Starbucks expanded its test-and-learn strategy to help make reusables more convenient for customers. The company piloted reusable or returnable cup programs through 20 tests across North America, EMEA and China Asia-Pacific. These tests focus on multiple reusable cup programs or operating models including Starbucks “Borrow-A-Cup” program, $100 \\%$ reusable operating models, financial incentives and promotions, new customer experience upgrades and an emphasis on personal cups and forhere ware. While COVID-19 challenged Starbucks aspirations to increase the use of personal reusable cups in stores, the company remains on track to meet its goal of ensuring customers have the option to use their own personal reusable cup for every Starbucks visit in the U.S. and Canada — including in café, drive-thru and mobile order and pay.\nIn FY22, Starbucks also launched a new Starbucks Partner Waste and Recycling App, developed by partners as part of the Greener Stores Innovation Challenge, to help partners navigate complex and unique store recycling guidelines. The app puts everything partners need to know to reduce waste and recycle in one place, and features store-specific information and notifications, a sorting guide and the option to create store-specific signage to help partners and customers reduce waste. As we work with stakeholders and continue to learn, we are working to ensure our waste goals align with our industry-leading standards and meet the expectations of our partners, customers stakeholders.\nRecycling is a key component to reducing single-use plastics and remains a priority for the company. To support that effort, Starbucks works with recycling and municipal stakeholders across the country to advance recycling access for our packaging. Through the NextGen Consortium with Closed Loop Partners, the Foodservice Packaging Institute and The Recycling Partnership, we are increasing access to recycling and our work to find a more sustainable cup solution continues. In FY22, Starbucks launched an improved and more sustainable hot cup that is easier to recycle, and beginning in FY22, customers in the U.S. can now recycle their hot cups in Columbus, Cleveland, Dayton, Memphis, Houston and Buffalo. Starbucks is also working to add waste services to stores where possible, ensuring we have recycling services where they are commercially available.\n### Forest Conservation & Restoration\n### Water Stewardship", "chunk_word_count": 501, "section_path": "GLOBAL > 2030 Goals > Reducing Single-Use Plastics & Packaging Waste18", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 27, "chunk_text": "# GLOBAL\n## 2030 Goals\n### Plant-Based Menu\nOur goal is to provide our customers with a variety of food and beverage choices in addition to sustainable dairy, and we have collaborated with plant-based innovators so that today nearly all stores across our markets offer plant-based food and beverage menu items. Our customers can customize any beverage on the menu with a variety of plantbased dairy alternatives, including soymilk, coconutmilk, almondmilk, and oatmilk. There is currently no additional charge for customizing beverages with plant-based dairy alternatives in our Companyoperated markets in the United Kingdom or Japan or licensed markets in France, Belgium, the Netherlands or Luxembourg. In the United States, adding a splash of any plant-based dairy alternative to Brewed Coffee, Iced Coffee, Cold Brew, and Americano beverages is offered to our customers free of charge.", "chunk_word_count": 136, "section_path": "GLOBAL > 2030 Goals > Plant-Based Menu", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 37, "page_start": 37, "page_end": 37 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 28, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### In FY22, we provided nearly $\\$ 2$ million to support new and ongoing water stewardship projects.\nLand-use change and deforestation are among the greatest climate risks facing the coffee industry. We are committed to pursuing zero net deforestation across our coffee supply chain. Building on initiatives launched in FY21 with Conservation International in Huila, Colombia and San Martin, Peru, Starbucks continued its efforts to protect and restore critical forests that coffee communities depend on in FY22. Working with more than 16 coffee farming communities, Starbucks and Conservation International supported training and education for farmers on more sustainable practices and helped farmers monitor carbon and water impacts on and around their farms. The goal of these projects is not only to achieve carbon neutrality, but also to enhance freshwater ecosystems and biodiversity. Our support of farmers extends into the community as we work together to build capacity of local plant nurseries, advance community and stakeholder engagement, and work to improve the water quality in surrounding water sheds.\nAs part of Starbucks holistic water strategy, we are investing in water replenishment and WASH projects in high-risk basins, to help support watershed health, ecosystem resilience and water equity. As part of this strategy, our goal is to empower 5 million people with enhanced water access, sanitation and hygiene through community-driven solutions with a focus on women, girls and marginalized groups. In FY22, we provided nearly $\\$ 2$ million to support new and ongoing water replenishment and WASH projects in Brazil, Colombia, China, Ethiopia, Guatemala, Mexico, Peru and several projects in the United States. Because collective action is critical to supporting sustainable watershed health and restoration, we continue to prioritize partnerships and projects through the United Nations Water Resilience Coalition (UNWRC) where Starbucks serves as a leadership committee member. In this capacity, Starbucks is working closely with other peer companies and key NGO partners including Water.org, WaterAid, The Nature Conservancy, and the World Wildlife Fund to accelerate progress in critical basins around the world.\nStarbucks Farmer Support Centers also play an important role in coffee communities to promote biodiversity and support restoration activities. For example, the Colombia Farmer Support Center distributed 38,000 native trees to farms in FY22. These trees are critical to restore conservation areas, support improved shade management systems, and to protect water resources. We also engaged customers in Colombia by offering a promotion that donated a portion of the sales of packaged coffee to purchase tree seedlings for local coffee farmers. Through this promotion, 1,500 native trees were donated to farmers located in Nariño, Colombia.\nGrants from The Starbucks Foundation support nonprofit organizations working to expand access to clean water, hygiene and sanitation around the world. In FY22, The Starbucks Foundation supported programs to help expand household and community water access in coffee-growing communities, water towers installed by Starbucks partners in 10 countries in Asia and Latin America, mobile shower programs that bring hygiene and sanitation services along with other wraparound services to individuals experiencing homelessness in U.S. cities.", "chunk_word_count": 517, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > In FY22, we provided nearly $\\$ 2$ million to support new and ongoing water stewardship projects.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 37, "page_start": 37, "page_end": 37 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 29, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### coffee and our supply chain\nF U T U R E F O R C O F F E E , OUR C O M M U N I T I E S A N D O U R P L A N E T\nFrom the merchandise on our shelves, to the furniture in our stores and the aprons worn by our baristas, Starbucks cares about the way in which these products are made and about the workers who make them. Our sourcing teams work directly with a diverse set of suppliers who share our commitment to ethical sourcing and social and environmental standards. We are committed to conducting business responsibly and supporting the communities where we operate, from sourcing beans to delivering coffee to your cup. Helping people thrive helps ensure the long-term sustainability of the premium products we provide. Whether it’s arabica coffee, tea, cocoa or manufactured goods, we’re committed to offering ethically purchased and responsibly produced products of the highest quality.", "chunk_word_count": 184, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > coffee and our supply chain", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 38, "page_start": 38, "page_end": 38 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 30, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### Farmer Support Centers19\nStarbucks operates 10 Farmer Support Centers (FSCs) as part of our work to assist farmers in coffee-producing countries and support the implementation of C.A.F.E. Practices across Starbucks coffee supply chain globally. These centers offer free training directly to farmers and to technical specialists through a train-the-trainer approach, benefiting over 31,000 people worldwide in FY22. Farmers receive the latest insights from Starbucks agronomists, including techniques that support farmer profitability and sustainable growing practices. To help demonstrate farming best practices, in FY22, FSCs launched a program called Model Farms, which serve as learning locations for the community to learn and teach sustainable practices. In partnership with suppliers and farmers, Starbucks FSCs have established more than 70 Model Farms. In FY22, the FSCs also developed an open-source manual on coffee quality to increase access to information on important practices after harvesting the coffee cherries to maintain quality. Starbucks FSCs are also supporting deployment of our environmental sustainability projects, like providing fertilizer recommendations based on soil analysis reports for optimized use of fertilizers and providing training related to new processing equipment to significantly reduce the water used during coffee processing.\n• $9 8 . 2 \\%$ of coffee ethically sourced and verified through C.A.F.E. Practices. \n$\\cdot$ More than 31,000 people trained in best practices in agronomy and social responsibility as per C.A.F.E. practices program through 10 Farmer Support Centers globally. \n$\\cdot$ More than 43,000 bags of coffee traced using the Digital Traceability tool with more than 122,000 unique visitors accessing the tool.\nLaunched in 2004 in collaboration with Conservation International, Coffee and Farmer Equity Practices (C.A.F.E. Practices) is a verification program that assesses the supply chain based on economic, social and environmental criteria, aimed at promoting sustainable, profitable and transparent coffee-growing practices while ensuring the welfare of coffee farmers, workers, their families and communities. Since 2004, the program has grown to include the participation of more than 400,000 farmers in over 30 countries. Starbucks recently made several operational changes to strengthen the program’s verification approach, including increasing the frequency of audits and incorporating unannounced audits.\nOur goal is to source and verify $100 \\%$ of Starbucks coffee through C.A.F.E. Practices. In FY22, we achieved $9 8 . 2 \\%$ ethically sourced coffee as verified through C.A.F.E. Practices. Despite the easing of challenges brought on by the pandemic to verify and transport coffee, we did see minor pandemicrelated impacts continue in FY22 though significant improvements were seen from the previous year. In FY21, $9 5 \\%$ of coffee was verified through C.A.F.E. Practices.", "chunk_word_count": 440, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > Farmer Support Centers19", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 39, "page_start": 39, "page_end": 39 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 31, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### Digital Traceability20\nWe know where our coffee comes from — from the farmers who grow our coffee to the baristas who serve it with care — and we want to share that journey with our customers. In 2020, Starbucks introduced its Digital Traceability tool in North American retail stores, giving coffee enthusiasts an opportunity to learn the stories of the people and places who grow and share the coffee we enjoy. Since the launch of our tool in 2020, nearly 400,000 unique users have visited our site to trace their coffee. Through digital traceability we aim to empower partners and customers with information about the people and places behind every cup.\nLearn more about ethically-sourced coffee and our work with Conservation International.\n### S U S T A I N A B L E F U T U R E F O R C O F F E E\n### Carbon Neutral Green Coffee by 2030\n### Climate-Tolerant Coffee Trees\n• Nearly 14,000 additional soil samples were processed across six priority countries. $\\cdot$ To date, contracted more than 1,300 eco-wet mills.", "chunk_word_count": 200, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > Digital Traceability20", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 32, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### More than 9.5 million climate-tolerant coffee trees distributed globally through Starbucks 100 million tree commitment.\nStarbucks committed to a 10-year, 100 million-tree initiative to boost the quality and output of coffee crops in El Salvador, Guatemala and Mexico by 2025. Starbucks has distributed nearly 70 million trees that are resistant to rust, a disease linked to climate change. We are working to help farmers improve their farms and increase their output and income.\nTo protect the resiliency of the coffee supply chain, the people that make it possible and the planet we all share, Starbucks set goals to achieve carbon neutral green coffee and conserve water usage in green coffee processing by $50 \\%$ by 2030. In FY22, we worked to refine the methodology we use to calculate the carbon and water footprint of green coffee. This work is foundational to begin reporting progress in the years to come and connects directly with industry efforts, including the Sustainable Coffee Challenge.\nSince making the commitment in 2016, we have learned a lot along the way about deploying a program at this scale. One opportunity we identified was the material the containers are made of that are used to grow the seedlings, so in 2019, we began exploring the use of reusable and environmentally friendly pots for the coffee trees. Thanks to extensive research and piloting, in FY22 more than 1 million trees were produced using paper pots, and 1.6 million trees were produced in reusable tubes. Both the paper pots and reusable tubes protect seedling roots and are more efficient for transporting trees to farms.\nPrecision agriculture in coffee farming has great potential to reduce our on-farm carbon footprint. Starbucks is working to identify innovative ways to better understand the specific nutrients and fertilizer needed to grow high-quality coffee while reducing carbon emissions. In FY22, we continued to provide financial support to promote soil analysis as a mechanism for farmers to understand soil nutrition requirements, replacing generic fertilizer recommendations with a specific recommendation for producers. Building on our efforts last year, 13,811 additional soil samples were processed across six priority countries.\nWet mills are used in C.A.F.E. Practices supply chains to separate the fruit of the coffee cherry from the coffee bean. By using eco-wet mills, Starbucks has an opportunity to conserve water by ensuring farmers have access to more environmentally-friendly machines, which also standardizes quality and increases processing efficiency for farmers. In FY22, Starbucks contracted additional centralized eco-mills, expanding the scope of the effort to additional countries including Honduras and Uganda. The preliminary results have demonstrated up to $90 \\%$ water savings is possible in coffee processing using the new equipment. In FY22, we have been carefully studying and working with our suppliers to evaluate any impact that changes to processing may have on quality. Results are showing that eliminating traditional fermentation and the use of water saving equipment is not impacting coffee quality in the countries where we are deploying new equipment.", "chunk_word_count": 512, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > More than 9.5 million climate-tolerant coffee trees distributed globally through Starbucks 100 million tree commitment.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 40, "page_start": 40, "page_end": 40 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 33, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### F U T U R E F O R C O F F E E , O U R COMMU N I T I E S A N D O U R P L A N E T\n### coffee and our supply chain\nIn addition to the 100 million tree commitment, Starbucks is focused on growing, transporting and distributing the next generation of coffee trees with an eye on sustainability for the entire sector:\n### Childcare Centers for Farming Families\n### Five new childcare centers opened in Guatemala.\n• In FY21, we set a new target to distribute over 45 million coffee trees to C.A.F.E. Practice-verified farmers in Colombia by 2023. Working alongside the Colombian Federation of Coffee Growers (FNC), we provided more than 19 million seedlings in FY22. We have also provided financial support to ensure nutritional needs for seedlings are met when planted for early growth and tree success.\nChildcare centers help provide safe spaces for local and migrant workers’ children to continue their education during the coffee harvest season in Guatemala. For the 2022-2023 harvest season, we opened five new centers, bringing the total number of childcare centers supported by Starbucks in Guatemala to 14.\n• Starbucks focus on sustainability for coffee trees goes beyond our supply chain to the entire coffee industry. We are developing and sharing research about coffee tree hybrids that provide resistance to pests and disease, increase productivity and have a good cup profile to help farmers adapt to climate change and support farmer profitability.\n• Under our open-source strategy, we are donating more than 3 million seeds per year from our core collection at Hacienda Alsacia to farmers globally to help the coffee sector adapt to the impacts of climate change while we increase crop productivity and income for many coffee farming families.\n### Global Farmer Fund21\n### Three new loans issued bringing total to \\$65.8 million in loans deployed since FY18 and $\\$ 80.8 M$ since inception\nThe Starbucks Global Farmer Fund was established to enhance the resilience of the supply chain and secure a long-term source of coffee by addressing the unfulfilled business financing needs of farmers. Farmers often cannot access traditional banking options for business loans due to excessive interest rates and an inability to meet minimum qualifications. The loans offered through our Global Farmer Fund enable farmers to plant new trees, enhance their infrastructure and bolster their financial stability in the face of changes in climate and markets. Our goal is to supply $\\$ 100$ million in farmer loans by the end of 2025. In FY22, we issued three new loans including a climate note to support farmers to adapt to the impacts of climate change and another directed to women in agriculture, both through Root Capital.\n### Responsible Sourcing for Tea\n### Responsible Sourcing for Cocoa\n### $9 9 . 7 \\%$ of tea sourced by the global tea sourcing team was verified as responsibly sourced.", "chunk_word_count": 509, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > F U T U R E F O R C O F F E E , O U R COMMU N I T I E S A N D O U R P L A N E T", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 34, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### The company’s global cocoa sourcing team directly purchased 12 million kilograms of Rainforest Alliance certified, segregated cocoa beans from Côte d’Ivoire .\nOur approach to sourcing cocoa responsibly is built on a foundation of traceability, responsible purchasing practices and a commitment to supporting resilient livelihoods for cocoa producers and their families, including reducing – and collectively working towards eliminating – the risks of child labor and cocoa-driven deforestation.\nOur tea suppliers and tea gardens are audited against rigorous human rights and environmental standards. In FY22, the global tea sourcing team sourced $9 9 . 7 \\%$ of its tea from Rainforest Alliance Certified tea gardens. In FY22, all of our tea suppliers were in the process of transitioning to the new Rainforest Alliance certification standard focused on greater impact, increased transparency and stronger assurance that farms are working towards a more responsible and sustainable future of tea.\nWe pay a sustainability premium per metric ton of cocoa sourced to implement activities with cocoa producers, cooperatives and communities. For example, in FY22 nearly 11,000 cocoa producers were trained in Good Agricultural Practices and more than 2,800 cocoa producers were informed, trained and/or consulted on the new forest code, law enforcement, forest protection and restoration. Four cocoa communities now have an active forest restoration and protection program to promote forest protection and restoration. By conducting deforestation risk assessments we are supporting no further conversion of any forest land for cocoa production. Over 70,000 multi-purpose trees were distributed for on-farm planting to promote sustainable livelihoods and income diversification for cocoa producers. We supported 30 Village Savings and Loan Association groups to promote financial inclusion and innovation to deepen farmer’s access to working capital and investments funds for production and farm renovation.\nWe are committed to transparency of our tea supply chain, and in FY22 we released a complete list of the tea gardens that supply our tea. In addition to buying certified tea, Starbucks invests directly in tea communities in projects that support gender empowerment, water, sanitation and hygiene (WASH), youth education and environmental sustainability, each responding to specific needs in tea communities. In FY22, we supported eight projects in Argentina, China, Indonesia, Kenya and Rwanda.\nAddressing the salient challenges across the cocoa industry requires aligned collective action. In FY22, Starbucks became a signatory member of the Cocoa & Forest Initiative’s (CFI) framework to help end deforestation in Ivory Coast and a member of the International Cocoa Initiative (ICI) and the Swiss Platform for Sustainable Cocoa (SWISSCO) to evolve and strengthen our approach to responsibly-sourced cocoa. By engaging in these sector initiatives, we are committed to working with stakeholders to advance effective solutions and strengthen our contribution to the cocoa sector.\nWe also believe that by working with others in the tea industry we can have greater impact. Starbucks has been a member of the Ethical Tea Partnership (ETP) for more than a decade. ETP’s mission is to create a fairer, better and more sustainable tea industry for workers, farmers and the environment. Through the ETP platform, we engage with the global tea sector, international brands and buyers.", "chunk_word_count": 534, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > The company’s global cocoa sourcing team directly purchased 12 million kilograms of Rainforest Alliance certified, segregated cocoa beans from Côte d’Ivoire .", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 35, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### The company’s global cocoa sourcing team directly purchased 12 million kilograms of Rainforest Alliance certified, segregated cocoa beans from Côte d’Ivoire .\nIn FY22, The Starbucks Foundation made its first grant to support cocoa communities in Côte d’Ivoire. The grant to CARE aims to reach 2,000 women in cocoa communities in Côte d’Ivoire with economic opportunities, increasing their access to resources and markets and integrating gender, nutrition, hygiene and sanitation.\nIn FY23, we will continue to support all these efforts that support a more equitable, sustainable and resilient future for cocoa, communities and our planet.\n### Responsible Sourcing for Manufactured Goods and Services\n$\\cdot$ Maintained $9 7 \\%$ transparency in factories assessed globally. \n$\\cdot$ Increased annual factory assessments to 306 from 213 in FY22.\nOur ethical sourcing program includes our standards for manufactured goods and services, including beverages, food, merchandise, equipment and furniture. We partner with manufacturing factories in 40 countries globally and hold our suppliers and ourselves accountable for more than 87,000 workers through stringent worker welfare conditions. Commitment to continuous improvement is the cornerstone of our program, and on-site factory assessments to identify potential or actual violations to our standard have been a key part of our strategy since 2006. As factories focused on COVID recovery, we increased our factory assessments from 213 in FY21 to 306 in FY22. We are proud that our third-party auditors confirm that we maintained $9 7 \\%$ transparency in factories we have audited around the world, as defined by having full access to factory records, documents and operations. Please refer to our data tables at the end of this report to review the number and type of non-compliant items identified in FY22.\n### Supplier Diversity and Inclusion22\n### Nearly \\$900 million spent with Tier 1 diverse suppliers.23\nThe Starbucks Supplier Diversity and Inclusion program drives inclusion of qualified businesses with a focus on suppliers of all sizes and categories. In January 2022, we expanded our commitment. In FY22, Starbucks spent nearly $\\$ 900$ million with Tier 1 direct diverse suppliers. In addition, our spending with diverse suppliers supports more than 7,200 jobs in the U.S. and Canada.\nOver the last two years we have expanded our program to include Tier 2 supplier24 program participation. We will continue to work with all suppliers in our program to exponentially affect increased economic impact and representation of diverse-owned suppliers in our supply chain.\nWe know that our commitment to diversity and inclusion includes the way we communicate with our customers. In FY21, we committed to allotting $1 5 \\%$ of our paid media budget to minority-owned and targeted media companies. We are proud to share that we exceeded our goal in FY22, investing $1 8 \\%$ of our paid media budget to reach diverse audiences.\n### A N I M A L W E L F A R E\nCage-Free Eggs\n### Antibiotics\n### Sow Housing", "chunk_word_count": 500, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > The company’s global cocoa sourcing team directly purchased 12 million kilograms of Rainforest Alliance certified, segregated cocoa beans from Côte d’Ivoire .", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 42, "page_start": 42, "page_end": 44 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 36, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### Sustainable Dairy\nIn our North American companyoperated stores $100 \\%$ of eggs are cage-free, inclusive of branded products supplied to our licensee business partners in North America. In our EMEA and U.K. company-operated markets, $9 9 . 9 \\%$ of eggs are cage-free.25\n### $100 \\%$ of poultry raised without routine use of medically important antibiotics.", "chunk_word_count": 75, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > Sustainable Dairy", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 44, "page_start": 44, "page_end": 44 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 37, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### $2 2 \\%$ of pork is group-housed for U.S. and Canada.26\n• Piloted aspects of Starbucks new Sustainable Dairy Program across the U.S., China, and U.K.-company-operated markets. $\\bullet$ Invested $\\$ 2$ million in the U.S. Dairy Net Zero Initiative as part of its \\$10 million commitment.\nGroup housing significantly reduces a sow’s time in a gestation stall. We aim to phase out the excessive use of gestation stalls for mother pigs (sows) in our supply chain by 2030. This includes stalls where the pigs are unable to move freely. This commitment extends to all Starbucks branded products, including those supplied to our licensee business partners in the U.S. and Canada.\nStarbucks engaged with our suppliers and set a goal to serve only poultry raised without the routine use of medically important antibiotics in all companyoperated U.S. stores by 2020. We met that goal in 2018 and proudly continue to serve poultry raised without the routine use of medically important antibiotics.\nAs a company that works with and relies on the farming community every day, it is Starbucks responsibility to help drive solutions that support both people and our planet and that help ensure a sustainable future of dairy. In FY22, the United States, China and U.K. company-operated markets piloted key aspects of a new Sustainable Dairy Program to help refine and scale an approach to sustainable dairy and environmental stewardship for the betterment of people, planet and animals. These markets focused primarily on baselining GHG emissions on several dairy farms within their supply chains and piloted key aspects of a new on-farm holistic standard. Insights from these pilots will be applied in FY23 and FY24 as the program rolls out to several global markets. As Starbucks continues to offer more plant-based options on our global menus, dairy remains an important option for many customers. However, dairy is a significant contributor to our carbon and water footprints. To meet our 2030 planet goals, we are working to source dairy in a responsible and sustainable way. Starbucks is dedicated to providing farmers access to environmentally and economically sound practices and technologies, covering everything from feed production to cow care and energy efficiency. Starbucks has invested $\\$ 4$ million in the U.S. Dairy Net Zero Initiative since joining in FY21.27\nIn Asia markets where Starbucks operates, such as China and Japan, cage-free egg production is limited and supply is not yet widely available. We remain committed to increasing cage-free egg supply in all company-operated stores globally, in partnership with industry stakeholders.\nTo reach our goal of phasing out the excessive use of gestation stalls, we will specify $100 \\%$ “group housed” pork as a requirement of our pork suppliers in the U.S. and Canada and take steps to ensure a “group housed” pork supply by 2024.\n### Broiler Chickens\nWe are actively reviewing our broiler chicken commitment to identify the best path forward for implementation within our supply chain. Over the next year, we will be setting baseline targets for implementation, which will be included in the FY23 GESI report.\n### fiscal 2023 highlights", "chunk_word_count": 530, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > $2 2 \\%$ of pork is group-housed for U.S. and Canada.26", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 44, "page_start": 44, "page_end": 44 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 38, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### Reducing Single-Use Plastics & Packaging Waste\nWe are committed to achieving a $50 \\%$ reduction in waste sent to landfill from stores (including packaging that leaves stores) and direct operations, driven by a broader shift toward a circular economy by 2030. We have deployed several initiatives as part of our test-and-learn model to reduce our waste footprint. For example, in FY23, we launched the Borrow A Cup program in 60 stores in Taiwan to encourage customers to shift away from single use cups. By the end of 2023 in the U.S., customers will be able to use their own personal reusable cup for every Starbucks visit.\nWe also committed to ensuring that our hot cups contain $20 \\%$ recycled content in FY23. We are proud to have achieved that goal, and have achieved $30 \\%$ recycled content in our new, more sustainable holiday cups. Building on the success of the holiday cups, Starbucks North America has begun a transition to a more sustainable hot cup that is light-weight and uses less plastic in the liner and less fiber in the cup.\n### Water Investment Fund with WaterEquity\nIn support of our expanded water commitment of $50 \\%$ of water withdrawal conserved or replenished across our direct operations, stores, packaging and agricultural supply chain by 2030, Starbucks announced an initial anchor investment of up to $\\$ 25$ million into WaterEquity’s Global Access Fund IV.\nThis investment will support improvements in water access and quality for low-income populations in countries across South and Southeast Asia, Sub-Saharan Africa and Latin America through microfinance loans for the purchase of WASH products and services.\n### \\$10M Waste Investment in Closed Loop Circular Services Waste Hauling\nIn another key step to reduce our environmental impact and bolster a more robust recycling industry, Starbucks announced a $\\$ 10$ million investment in Circular Services to reduce landfill waste and drive innovate efforts to shift towards a circular economy in the United States.\nCircular Services is the largest privately held recycling company in the United States, helping major cities meet their waste goals when other waste companies have not been moving fast enough. For Starbucks, this investment will not only bring recycling access to Starbucks stores, but also create a partnership with leading waste industry stakeholders to collaborate on recycling solutions for packaging types with limited access to recycling programs such as Starbucks hot cup.\n### More Electric Vehicle Charging Stations Online\nThe first electric vehicle charging stations in partnership with Volvo and powered by ChargePoint were installed at Starbucks stores in Provo, Twin Falls and Unitah, Utah, Hermiston and La Grande, Oregon, and at the Starbucks Support Center in Seattle, Washington. This pilot plan, announced in March, is part of Starbucks expansion of renewable energy and decarbonization projects in the U.S. Up to 60 DC fast chargers will be built on the picturesque 1,350-mile route from Seattle to Denver, along I-90, I-84 and I-70.\nSTARBUCKS accolades\n### We are proud of the recognition we have received for our work to help our partners, communities and planet thrive.", "chunk_word_count": 528, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > Reducing Single-Use Plastics & Packaging Waste", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 45, "page_start": 45, "page_end": 46 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 39, "chunk_text": "# GLOBAL\n## 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia.\n### F Y 2 2\n$100 \\%$ on the Disability Equality Index by Disability:IN \n$100 \\%$ on the Human Rights Campaign Equality Index \nWorld’s Most Ethical Companies by Ethisphere \nFortune’s World’s Most Admired Companies \nGrade A in Arjuna Capital’s Racial and Gender Pay Scorecard \n100 Most JUST Companies by JUST Capital, ranked 1st in the \nRestaurant and Leisure industry \nInvestor Relations Magazine’s Award for Best ESG \nEngagement Program \nBarron’s 100 Most Sustainable Companies \n“Gold” rating by Newsweek as America’s Most Trusted \nBrands, #1 in coffee shop category\n## F Y 2 3 T O D AT E\nDiversity First’s 2023 Top 50 Companies for Diversity Newsweek’s 2023 America’s Greatest Workplaces for Diversity Fortune’s 2023 World’s Most Admired Companies World’s Most Ethical Companies by Ethisphere $100 \\%$ on the Human Rights Campaign Equality Index 100 Most JUST Companies by JUST Capital, #1 in the Restaurant & Leisure industry Diversity First’s 2023 Top 50 Companies for Diversity\nBARRON'S \nMost \nSustainable \nCompanies \n2022\nLEADERSHIP and GOVERNANC\n### Board Oversight of ESG Issues\n### Executive Compensation Tied to ESG Performance\nOur ESG goals remain tightly tied to our company’s overall strategic direction. Every year, our board considers our impact agenda in connection with our strategic plan. The Nominating and Corporate Governance Committee is specifically responsible for overseeing the effectiveness of our environmental and social responsibility policies, goals and programs, including a review of our annual Global Environmental and Social Impact Report, and making recommendations as necessary. Other board committees are also involved in assessing and managing our environmental and social priorities through their oversight responsibilities, such as risk management and talent management. Additionally, we regularly engage with sustainability experts and influencers as informal advisors to further our environmental and social goals.\nIn FY22, we continued implementation of our executive compensation programs, which were updated in 2021 to prioritize sustainability and creating inclusive and diverse teams. To align with our vision of giving back more than we take from the planet, and to ensure the sustainability of coffee and other materials that are vital to our business operations, the annual bonus program for FY22 included a $10 \\%$ of the overall bonus payout calculation for Starbucks senior vice president and above population is linked to planet-positive results and another $10 \\%$ of the overall bonus payout calculation was tied to fostering an inclusive environment where all employees feel valued and included, as we believe the strength, diversity, and inclusiveness of our workforce are integral to our global brand’s success.\n## B O A R D\nOur board is responsible for ensuring ESG risks and opportunities are integrated into Starbucks long-term strategy.\n### N O M I N A T I N G / G O V E R N A N C E C O M M I T T E E\nOversees, reviews and assesses the effectiveness of Starbucks ESG strategies, policies, practices, goals and programs; annually reviews Starbucks corporate political contributions and expenditures to ensure alignment with Starbucks policies and values.\n### C O M P E N S A T I O N C O M M I T T E E", "chunk_word_count": 538, "section_path": "GLOBAL > 560 hectares of forest restored and 1,000 hectares of forest protected in Peru and Colombia. > F Y 2 2", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 47, "page_start": 47, "page_end": 49 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 40, "chunk_text": "# GLOBAL\n## B O A R D\n### A U D I T C O M M I T T E E\nOversees the development, implementation and effectiveness of Starbucks practices, policies and strategies relating to human capital management as they relate to Starbucks workforce generally.\nOversees certain ESG risks, as part of overall risk management, and also reviews ESG disclosures for future regulatory reporting.\n### Ethics & Compliance\n### Speaking Up\nPartners are empowered to ask for guidance and voice concerns when they experience or see conduct that is inconsistent with our Standards of Business Conduct, company policies or Mission and Values. While Starbucks receives concerns through various channels, including line managers, direct contact with Ethics & Compliance partners, and our Partner Resources Support Center, the vast majority of concerns are received via our Helpline and Webline. An independent third party manages our Ethics & Compliance Helpline and Webline, both of which allow partners and others to ask questions and voice concerns 24 hours a day, seven days a week, with interpreters available. Reports may be made anonymously and are treated in a confidential manner.", "chunk_word_count": 187, "section_path": "GLOBAL > B O A R D > A U D I T C O M M I T T E E", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 41, "chunk_text": "# GLOBAL\n## B O A R D\n### Starbucks was recognized by Ethisphere as one of the World’s Most Ethical Companies for the 15th year.\nStarbucks Ethics & Compliance program supports our Mission and Values and helps protect our culture by fostering an environment that is committed to ethical leadership and conducting business with integrity. The Ethics & Compliance program makes regular reports to the Board of Director’s Audit and Compliance Committee, including formal sessions several times each year.\nAt Starbucks, our goal is to help our partners do the right thing the right way. Our strategy is to innovate, elevate and educate as we increase awareness of Ethics & Compliance as a trusted resource for partners. The approach to training and communications starts with onboarding new partners based on their role and level, followed by quarterly training for all partners on various Ethics & Compliance topics and risk areas, including but not limited to Anti-Harassment, Anti-Discrimination, Insider Trading and Conflicts of Interest. We employ leadership messages, our online community and other cross functional channels to regularly reinforce these topics. Throughout the year, we analyze results and behaviors and conduct benchmarking to continue to create innovative training and communications that inform and inspire our partners globally.\nWe are committed to providing safe, confidential, and accessible channels to all individuals connected to Starbucks, while maintaining a strict Anti-Retaliation Policy in compliance with our Global Human Rights Statement. Starbucks will not tolerate retaliation against anyone who raises concerns or questions about a potential violation of the Standards of Business Conduct or any Starbucks policy that they reasonably believe to have occurred. In addition, anyone else who participates in the investigation of such concerns (for example, as a witness) is also protected from retaliation.\nWe provide all Starbucks partners with our Standards of Business Conduct, a framework to help them make ethical decisions at work. The Standards of Business Conduct are supported by other robust global company policies and training for our partners. Our internal policies cover ethics and human rights issues such as Anti-Harassment, Anti-Discrimination, Conflicts of Interest, Gifts & Entertainment, Anti-Bribery and Equal Employment Opportunity.\nIn 2022, we launched 23,774 online courses to our corporate partners in 13 countries, which included nine different risk areas. All our corporate partners receive training annually on our Standards of Business Conduct and Harassment Prevention to help them recommit to our company values and policies. The training is branched to include individual contributor and manager-specific content. This year’s Standards of Business Conduct course featured artificial intelligence that leveraged a learner’s previous score in the same course and then focused training content on their individual areas of opportunity. Those who demonstrated proficiency received a tailored learning experience and were required to review and acknowledge the associated policies and standards.", "chunk_word_count": 464, "section_path": "GLOBAL > B O A R D > Starbucks was recognized by Ethisphere as one of the World’s Most Ethical Companies for the 15th year.", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 50, "page_start": 50, "page_end": 50 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 42, "chunk_text": "# GLOBAL\n## B O A R D\n### Commitment to a Respectful Workplace\nAt Starbucks, our Mission and Values are at the heart of everything that we do. Partners treat each other with dignity and respect and connect with transparency. We embrace diversity and inclusion to create a place where each partner can be themselves. Discrimination, harassment, bullying and retaliation have no place at Starbucks, and no partner is expected to tolerate such prohibited conduct while at work or when engaged in work-related activities.\nStarbucks has a large retail partner audience. As part of retail onboarding, all partners discuss and acknowledge the Standards of Business Conduct and Speaking Up resources in a one-on-one discussion with their manager. The retail management audience receives annual online renewal training of risk-relevant topics and in 2022 achieved a $9 6 \\%$ completion rate of our Standards of Business Conduct course. In 2022, we provided online courses on five different topics to more than 105,000 of our retail partners. We continue to find new avenues to reach and train our retail hourly audience, and in 2023 we will provide annual training to 180,000 additional partners that cover Starbucks risks and policies.\n### How We Conduct Investigations", "chunk_word_count": 202, "section_path": "GLOBAL > B O A R D > Commitment to a Respectful Workplace", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 50, "page_start": 50, "page_end": 50 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 43, "chunk_text": "# GLOBAL\n## B O A R D\n### Responsible Tax Policies\nStarbucks captures concerns from all channels in our case management system, and cases are categorized and assigned by Ethics & Compliance to the in-market investigations team best equipped to address the concern. If a concern was received that presented potential material financial or reputational risk, that matter would be assigned to specially trained and highly experienced Ethics & Compliance investigators. Concerns are addressed in a prompt, thorough, and respectful manner, with investigators reaching out to the reporter to gather information, relevant documentation, and witness names with knowledge of the alleged incident. Interviews may be held with other partners, contractors, or individuals who are the subject of a reported concern to inform an impartial decision.\nAs a socially responsible business, we strive to manage our global tax responsibilities in line with our mission and values. Our tax approach connects our requirements and long-term interests of all our stakeholders, including governments, shareholders, partners and the communities where we operate and source products. In order to accomplish this, we follow several guiding principles:\n• We always consider the company’s corporate and social responsibilities, brand and reputation when considering tax affairs. \n• We aim for our tax affairs to be sustainable and equitable, and we recognize the importance of tax systems in helping governments fund policies and programs to meet the needs of their communities and residents. \n• We ensure that the location in which our taxable profits are reported is aligned with the location of value creation as dictated by our business model. \n• We engage with all tax authorities in an open, transparent and respectful manner. \n• We support initiatives to improve transparency on tax matters, including Organisation for Economic Co-operation and Development (OECD) measures on country-by-country reporting and automatic exchange of information. \n• We comply with the financial and tax related disclosure and transparency requirements of the U.S. Securities and Exchange Commission (SEC), as well as other government institutions that require financial and tax reporting in each jurisdiction where we have operations.\nWhen an investigation is complete, Ethics & Compliance shares findings with the individual(s) who reported the concern. Depending on the findings of the investigation and the severity of any substantiated wrongdoing, there are a number of possible outcomes to an investigation, including coaching, retraining, written documentation or separation from employment.\n### ESG Issue Prioritization Assessment", "chunk_word_count": 398, "section_path": "GLOBAL > B O A R D > Responsible Tax Policies", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 51, "page_start": 51, "page_end": 51 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 44, "chunk_text": "# GLOBAL\n## B O A R D\n### Stakeholder Engagement\nStarbucks presence in 84 markets globally means that our business is intrinsically linked to both global and local ESG issues. To meet the expectations of our partners, customers, shareholders, stakeholders and the Starbucks community, we work to align our business performance with our ESG impacts. Achieving this requires a comprehensive understanding of the key ESG issues that matter most to these groups.\nOur ESG goals are created and evaluated through a thorough review process that involves examining materiality and identifying critical issues for our business. By engaging with both internal and external stakeholders throughout this process, we ensure that our strategy and goals are tailored towards key areas where we can make the greatest impact and generate positive outcomes. This review process involves reaching out to stakeholders directly, hosting public forums and participating in industry working groups. We intend to continue leveraging these channels on an ongoing basis. In addition, in FY23, we significantly bolstered our stakeholder engagement efforts through an ESG Issue Prioritization Assessment conducted with a third party.\nIn FY23, we undertook a robust, third-party evaluation process to identify and prioritize the ESG topics most important to our stakeholders and which issues are essential for Starbucks to focus our strategy to advance our aspirations for our people, our planet and communities. Through this ESG Issue Prioritization Assessment, we conducted surveys and interviews across global stakeholder groups to understand the relative importance of ESG topics for Starbucks.\nStarbucks has an Enterprise Risk Management program (ERM) to assess risks to the organization across a broad spectrum of strategic, operational, financial, and regulatory risks which include financial, brand and other nonfinancial impacts and is further described on page 53. These risks incorporate the various ESG issues as part of our comprehensive management of risks and opportunities which are assessed at a business unit, functional and enterprise level.\nAt the local level, our operations teams — including regional, district and store managers — are readily available and often actively respond to local stakeholder inquiries and concerns. If an issue goes beyond their jurisdiction, they escalate it to the Starbucks Support Center (our headquarters). Any ESG-related concerns are directed to the Global Social Impact and Global Public Policy team for a response or further action.\nThe purpose of this ESG assessment is to support the prioritization of the most critical ESG topics on which Starbucks should focus. In FY24, we will use the results of this assessment to further inform the Starbucks ERM program, our ESG program strategies, and reporting priorities going forward to advance our leadership position on the most critical ESG topics.\n### Political Expenditures", "chunk_word_count": 445, "section_path": "GLOBAL > B O A R D > Stakeholder Engagement", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 51, "page_start": 51, "page_end": 51 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 45, "chunk_text": "# GLOBAL\n## B O A R D\n### Global Human Rights\nAt Starbucks, we are dedicated to actively engaging with the communities we serve, and this commitment extends to our approach to public policy. We recognize that it is our responsibility to advocate for policies that promote the well-being of our business, partners and communities. To better communicate these efforts, we have implemented a policy to increase transparency regarding our corporate political contributions and expenditures. This policy serves our interests by allowing us to promote public policies that are important to our company and to educate elected and public officials about our business. It also provides important information to our partners, customers and shareholders. We are committed to conducting our business ethically and with integrity, in accordance with the law. As part of this commitment, we adhere to the rules, regulations and standards governing our interactions with the government, including our disclosure and accountability regarding political contributions and expenditures.\nAt Starbucks, we are committed to respecting human rights, as outlined in our Global Human Rights Statement. In 2004, Starbucks joined the U.N. Global Compact — the world’s largest corporate sustainability initiative — with a commitment to implement universal sustainability principles and to support U.N. goals. Throughout FY22, we continued to work diligently to demonstrate our commitment to human rights and human rights due diligence, from ensuring that the coffee we serve to our customers is ethically sourced to advancing racial and social equity, LGBTQIA2 $^ +$ rights and disability inclusion throughout our operations.\nFor instance, within our coffee supply chain, we leveraged our flagship C.A.F.E. Practices program to identify and initiate corrective action plans for 268 non-conformances in FY22. With all actual or potential violations that were brought to our attention through C.A.F.E. Practices, we swiftly addressed them by working closely with our suppliers and our on-the-ground, third-party partners to pursue corrective actions, including, where appropriate, providing remedy for the impacted individuals. See our program scorecard for the full list of human rights topics we cover.\nOn the manufactured goods side, whether it’s the merchandise on our shelves or the furniture we place in our stores, we continued to implement our ethical sourcing program and standards for manufactured goods and services, which includes on-the-ground factory assessments and assurance measures to identify and remediate potential and actual violations. While the COVID-19 pandemic limited our ability to conduct these on-the-ground assessments, we were nevertheless able to achieve a significant milestone in FY22: the mapping of and transparency into $9 7 \\%$ of our Tier 1 manufactured goods supply chain. Going forward, we now have the transparency we need to influence, measure and report the performance of nearly our entire Tier 1 manufactured goods supply base.", "chunk_word_count": 454, "section_path": "GLOBAL > B O A R D > Global Human Rights", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 52, "page_start": 52, "page_end": 52 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 46, "chunk_text": "# GLOBAL\n## B O A R D\n### Public Policy Positions & Advocacy\nStarbucks is committed to being a force for global good by advancing equity and civic engagement so our partners can share their vision for stronger communities. We provide tools and resources to our partners in the U.S. to help them participate in local and national elections. Globally, we work with partners, licensees and business partners to advocate for local and national policies that support our partners, the health of our business and the communities we serve. Our work to advance equity and civic engagement is always done through the lens of our Mission and Values.\nThroughout FY22, we also made significant strides in embedding human rights into our day-to-day management, starting with developing a more standardized intake system for tracking and reporting human rights related concerns. These concerns can range from the items we proactively identify through our due diligence efforts to inquiries and grievances we receive from stakeholders and impacted individuals. Going forward, this intake system will enable Starbucks to share more comprehensive information, trends and insights to key internal and external stakeholders. In FY23, Starbucks is undertaking an independent, third-party human rights impact assessment, which will include a deeper-level review of the principles of freedom of association and the right to collective bargaining and is intended to help inform the partner experience. We expect to make the results of the human rights impact assessment available to shareholders, stakeholders, and other interested parties, subject to legal privilege considerations.\nSee data tables at the back of this report for FY22 performance results and trends.\n### Enterprise Risk Management", "chunk_word_count": 272, "section_path": "GLOBAL > B O A R D > Public Policy Positions & Advocacy", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 52, "page_start": 52, "page_end": 52 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 47, "chunk_text": "# GLOBAL\n## B O A R D\n### Information Security/Cybersecurity & System Availability\nThe Starbucks enterprise risk management (ERM) program assesses risks to the organization across a broad spectrum of strategic, operational, financial, and regulatory risks which include financial, brand and other non-financial impacts. These risks are assessed at a business unit, functional, and enterprise level and are reviewed by the managementled Risk Committee and the executive leadership team. The Board of Directors has overall responsibility for risk oversight and the Audit and Compliance Committee is specifically charged with overseeing the company’s risk assessment, risk management practices and policies, periodically reviewing major and emerging risks to the company, including financial, operational, legal and regulatory risks. The Audit and Compliance Committee reviews, with management, steps taken to monitor and control such risk exposures, including with respect to cybersecurity, data privacy, ethics and compliance among others. The committee also oversees various ESG risks including environmental and sustainability as part of its overall risk management, and reviews various disclosures in SEC filings. The committee regularly reports on the substance of its reviews and discussions with management to the full Starbucks Board of Directors.\nOur company is dedicated to ensuring the safety and security of our information assets. We have implemented comprehensive technologies and programs to protect against data privacy and cybersecurity risks. Our security monitoring programs regularly oversee both internal and external threats to maintain the confidentiality, availability and integrity of our systems. We continually evaluate our security program and invest in our capabilities to ensure the safety of our customers, partners and information assets. Our chief information security officer is responsible for implementing controls that align with industry guidelines, statutes and regulations to identify threats, detect attacks and protect our information assets. Our security monitoring capabilities alert us to suspicious activity, and our incident response program is designed to restore business operations quickly and efficiently in the event of a breach.\nAdditionally, our partners participate in mandatory annual trainings to increase awareness of the cybersecurity environment throughout the company. Our Audit and Compliance Committee, composed entirely of independent directors, oversees data privacy and cybersecurity risk matters. One member of the committee has significant work experience related to information security issues and oversight. We report security instances to the Audit and Compliance Committee as they occur and provide multiple summaries per year. The chief information security officer also meets with the Board of Directors or the Audit and Compliance Committee at least twice annually to brief them on technology and information security matters. We carry insurance to protect against potential losses from cybersecurity incidents. Over the last three years, we have incurred immaterial expenses related to information security breach incidences and no penalties or settlements.", "chunk_word_count": 453, "section_path": "GLOBAL > B O A R D > Information Security/Cybersecurity & System Availability", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 53, "page_start": 53, "page_end": 53 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 48, "chunk_text": "# GLOBAL\n## B O A R D\n### Data Privacy\nStarbucks has a global responsibility to ensure all personal data collected from customers or partners are managed securely. Our Privacy Policy describes how Starbucks collects, uses and shares data, and outlines the rights and choices partners and customers have with respect to their information. We leverage Privacy Impact Assessments to ensure all data use is assessed by a cross-divisional team and that the data collected is used appropriately. We also deploy global training programs to ensure that partners are trained on the appropriate use of any data collected.", "chunk_word_count": 99, "section_path": "GLOBAL > B O A R D > Data Privacy", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 53, "page_start": 53, "page_end": 53 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 49, "chunk_text": "# GLOBAL\n## B O A R D\n### Working Directly with Our Partners\nStarbucks is working side-by-side with all partners to create meaningful change toward a better future for each other, our customers and the communities we serve. For our stores that have elected union representation, we respect that outcome and will continue to meaningfully and directly engage in the National Labor Relations Board’s (NLRB) good faith collective bargaining process. Starbucks is proud to announce a new nationwide labor relations team established to support our U.S. store managers and retail leaders. The investments make sure operations and human resource leaders have access to a dedicated labor relations team for real-time counsel and support, help reinforce best-practices and ensure our adherence to company policies and compliance with applicable laws — including the National Labor Relations Act (NLRA). As of FY22, 232 U.S. stores had certified union representation. The one.starbucks.com website was created to help anyone receive up-to-date information and resources regarding labor activities.\nrestrictions; the resurgence of COVID-19 infections and the circulation of novel variants of COVID-19; fluctuations in U.S. and international economies and currencies; our ability to preserve, grow and leverage our brands; the ability of our business partners and third-party providers to fulfill their responsibilities and commitments; potential negative effects of incidents involving food or beverage-borne illnesses, tampering, adulteration, contamination or mislabeling; potential negative effects of material breaches of our information technology systems to the extent we experience a material breach; material failures of our information technology systems; costs associated with, and the successful execution of, the Company’s initiatives and plans; new initiatives and plans or revisions to existing initiatives or plans; our ability to obtain financing on acceptable terms; the acceptance of the Company’s products by our customers, evolving consumer preferences and tastes and changes in consumer spending behavior; partner investments, changes in the availability and cost of labor including any union organizing efforts and our responses to such efforts; failure to attract or retain key executive or employee talent or successfully transition executives; significant increased logistics costs; inflationary pressures; the impact of competition; inherent risks of operating a global business including any potential negative effects stemming from the Russian invasion of Ukraine; the prices and availability of coffee, dairy and other raw materials; the effect of legal proceedings; and the effects of changes in tax laws and related guidance and regulations that may be implemented, including the Inflation Reduction Act of 2022 and other risks detailed in our filings with the Securities and Exchange Commission, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings.", "chunk_word_count": 454, "section_path": "GLOBAL > B O A R D > Working Directly with Our Partners", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 50, "chunk_text": "# GLOBAL\n## B O A R D\n### Working Directly with Our Partners\nactions; the conversion of certain market operations to fully licensed models; our plans for streamlining our operations, including store openings, closures and changes in store formats and models; the success of our licensing relationship with Nestlé, of our consumer packaged goods and foodservice business and its effects on our Channel Development segment results; tax rates; business opportunities, expansions and new initiatives, including Starbucks Odyssey; strategic acquisitions; our dividends programs; commodity costs and our mitigation strategies; our liquidity, cash flow from operations, investments, borrowing capacity and use of proceeds; continuing compliance with our covenants under our credit facilities and commercial paper program; repatriation of cash to the U.S.; the likelihood of the issuance of additional debt and the applicable interest rate; the continuing impact of the COVID-19 pandemic on our financial results and future availability of governmental subsidies for COVID-19 or other public health events; our ceo transition; our share repurchase program; our use of cash and cash requirements; the expected effects of new accounting pronouncements and the estimated impact of changes in U.S. tax law, including on tax rates, investments funded by these changes and potential outcomes; and effects of legal proceedings. Such statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual future results and trends may differ materially depending on a variety of factors, including, but not limited to: the continuing impact of COVID-19 on our business; regulatory measures or voluntary actions that may be put in place to limit the spread of COVID-19, including restrictions on business operations or social distancing requirements, and the duration and efficacy of such\n### Information Integrity", "chunk_word_count": 289, "section_path": "GLOBAL > B O A R D > Working Directly with Our Partners", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 55, "page_start": 55, "page_end": 55 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 51, "chunk_text": "# GLOBAL\n## B O A R D\n### Scope\nOur Global Environmental and Social Impact report for FY22 focuses on the goals in our two key social impact areas: People and Planet. We’ve also included links to information and resources publicly available at stories.starbucks.com and starbucks.com regarding financial, corporate governance work, workplace and diversity policies and performance, because these commitments are directly tied to our business. The geographic scope of all data points in the report are tracked against U.S. company operations unless otherwise noted. Starbucks is committed to United Nations Sustainable Development Goals and uses these goals as a lens for our social impact programs and collaborations with others. Based on our stakeholder engagement efforts, we also believe these areas are important to our customers, our partners, nongovernmental organizations (NGOs) and investors.\nStarbucks management is responsible for the preparation and integrity of the information reported for fiscal 2022. Through a system of internal controls, including a comprehensive verification process involving internal subject matter experts, we believe this information accurately represents our global responsibility activities and performance results for the fiscal year. External verification over specified metrics is provided by Moss Adams LLP and Burns & McDonnell Engineering Inc.\nA forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. We are under no obligation to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.\n### Forward-Looking Statements\n### Stay Up-to-Date\nOur reporting on global responsibility for fiscal 2022 includes “forwardlooking” statements within the meaning of applicable securities laws and regulations. Generally, these statements can be identified by the use of words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements may include statements relating to trends in or expectations relating to the effects of our existing and any future initiatives, strategies, investments and plans, including our Reinvention plan, as well as trends in or expectations regarding our financial results and long-term growth model and drivers; our operations in the U.S. and China; our environmental, social and governance efforts; our partners; economic and consumer trends, including the impact of inflationary pressures; impact of foreign currency translation; strategic pricing\nVisit stories.starbucks.com for the latest company information.\n### Reporting Year\nStarbucks fiscal year 2022 or “FY22” is October 4, 2021 through October 2, 2022, unless otherwise noted.\n### Currency\nAll references to currency are in U.S. dollars, unless otherwise noted.\n### Previous Reports\nStarbucks has produced an annual global social impact report since 2001. Previous annual reports \nare available on our website. \nWe also respond to key industry \nquestionnaires such as the Dow Jones Sustainability Index and the CDP \nClimate Change, Water and Forests \nQuestionnaires.\n### report appendix", "chunk_word_count": 510, "section_path": "GLOBAL > B O A R D > Scope", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 55, "page_start": 55, "page_end": 55 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 52, "chunk_text": "# GLOBAL\n## SUPPORTING DOCUMENTS & DATA TABLES\n57 Goals Summary Scorecard 64 Our Planet: Data 68 SASB Reporting 72 Human Rights \n74 Occupational Health and Safety Standard 77 External Auditor Assurance Letters\n### goals summary scorecard\nS U P P O R T I N G D O C UM E N T S & D ATA TA B L E S\nThe following is a snapshot of our goals and progress for FY22.\n## M M X X I I\n### I N V E S T I N G I N O U R PA R T N E R S\n### Partner Experience & Engagement\n### Our Communities\n## G O A L\nF Y 2 2 R E S U L T\nIn the U.S., 7 Community Stores opened in FY22, bringing our total U.S. Community Stores to 28. In Asia, 8 Community Stores opened in FY22, bringing our total international Community Stores to 19 stores.\n### Community Stores\nOpen 100 U.S. Community Stores by 2025; open or dedicate 1,000 Starbucks Community Stores globally by 2030.\nOpened 33 Military Family Stores, bringing our total Military Family Stores to 111 stores.\n### Military Family Stores\nOpen 132 stores by 2022.\n• Nearly 13 million pounds of food in the U.S. has been diverted from waste streams and donated to hunger-relief organizations — which is the equivalent of nearly 11 million meals.\n### FoodShare and Hunger Relief\nReinvest $\\$ 100$ million into hunger relief efforts in the U.S. \nby 2030.\n• More than 1 million pounds of food in Canada has been diverted from waste streams and donated to hungerrelief organizations.\n• More than $\\$ 10$ million re-invested into hunger relief efforts in communities.\n• Programs to support hunger relief are operating in 9 international markets in addition to U.S. and Canada\n### Community Resilience Fund\n$\\$ 21$ million invested in 12 cities through the Community Resilience Fund.\nInvest $\\$ 100$ million in 12 cities by 2025.\n### Our Communities: The Starbucks Foundation\nAchieved our goal of empowering 250,000 women and girls in coffee, tea and cocoa-growing communities, three ocoa- years ahead of schedule. Announced new goal to positively impact one million women and girls in coffee, tea and cocoa-growing communities by 2030.\n### Origin Grants for Women and Families\nAwarded $\\$ 4.5$ million in Neighborhood Grants bringing our total invested in hyper-local nonprofits to more than nprofits by 2030. $\\$ 10$ million, thanks to more than 45,000 nominations from partners since program launch.\n### Neighborhood Grants\nYouth Equity Grants\n251,715 youth impacted and $\\$ 12$ million provided in grants.\nAwarded over $\\$ 3.2$ million to nearly 90 nonprofits across 42 markets.\n### Global Community Impact Grants\nReach 25,000 hyperlocal nonprofits by 2030 and commitment to invest $\\$ 30$ million by 2030.\n### Our Planet", "chunk_word_count": 468, "section_path": "GLOBAL > SUPPORTING DOCUMENTS & DATA TABLES", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 56, "page_start": 56, "page_end": 59 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 53, "chunk_text": "# GLOBAL\n## G O A L\nF Y 2 2 R E S U L T\n### Climate 2030 Goals\n$6 \\% ^ { \\star }$ increase compared to FY19. An increase at this stage in our journey towards significant reductions in our GHG emissions is expected. We are focused on identifying and testing innovative solutions that we can scale across our global operations and engaging with our value chain while improving our measurement systems.\n$50 \\%$ absolute reduction in scope 1, 2 and 3 greenhouse (GHG) emissions representing all of Starbucks direct operations and value chain.\nIn March 2021, Starbucks GHG reduction goal was validated as science-based by the SBTi, which confirmed our target is aligned with a 1.5 degree Celsius pathway.\n$1 4 . 8 \\%$ increase compared to FY19. Water withdrawals increased in FY22 due to increased purchasing of key commodities, including packaging, non-dairy milk products, food, and tea.\n### Water 2030 Goals\n$50 \\%$ of water withdrawals will be conserved or replenished across Starbucks direct operations, stores, packaging and agricultural supply chain, prioritizing action in high-risk water basins while supporting watershed health, ecosystem resilience and water equity.\nIn August 2021, we announced an expanded water target increasing the projected water conserved or replenished and catalyzing holistic watershed health improvements in high risk basins. In FY22, Starbucks began a water replenishment program, funding eight projects in eight global priority watersheds. The eight projects will continue to be implemented throughout FY23. Starbucks will report on the volumetric water benefit associated with these programs in our FY23 GESI report.\n$4 . 7 \\%$ increase in operational waste sent to landfill compared to FY19. In FY22, $2 8 \\%$ of operational waste was diverted from landfill, a 2-percentage point increase over FY19.2\n### Waste 2030 Goals\n$50 \\%$ reduction in waste sent to landfill from stores (including packaging that leaves stores) and direct operations, driven by a broader shift toward a circular economy.\nAdditionally, $4 9 \\%$ of Starbucks packaging, by weight, was reusable, recyclable, or compostable in FY22.\n### Strategies for Change\n## F Y 2 2 R E S U L T", "chunk_word_count": 355, "section_path": "GLOBAL > G O A L", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 60, "page_start": 60, "page_end": 60 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 54, "chunk_text": "# GLOBAL\n## G O A L\n### Renewable Energy\nIn FY22, Starbucks in the U.S. and Canada maintained $100 \\%$ renewable energy for company-operated retail operations. Starbucks U.K. company-operated market has achieved the same since FY18. Renewable energy powered $7 2 \\%$ of company-operated facilities globally.\n$100 \\%$ renewable energy for global operations by 2020.\n3,508 Starbucks stores were certified Greener Stores in FY22, including four internationally\n### Greener Stores\nBuild and operate 10,000 Greener Stores globally by 2025.\n### Strategies for Change\n### Ellen MacArthur Foundation Global Commitment\n### B U I L D I N G A M O R E E Q U I T A B L E , S U S T A I N A B L E A N D R E S I L I E N T F U T U R E F O R C O F F E E , O U R C O M M U N I T I E S A N D O U R P L A N E T\n### Coffee and Our Supply Chain\n### B U I L D I N G A M O R E E Q U I T A B L E , S U S T A I N A B L E A N D R E S I L I E N T F U T U R E F O R C O F F E E , O U R C O M M U N I T I E S A N D O U R P L A N E T\n### Animal Welfare\nF Y 2 2 R E S U L T\nIn our North American company-operated stores, $100 \\%$ of eggs are cage-free, inclusive of branded products supplied to our licensee business partners in North America. In our EMEA and U.K. company-operated markets, $9 9 . 9 \\%$ of eggs are cage-free.\n### Cage-Free Eggs\n$100 \\%$ cage-free eggs and egg products in company-operated stores globally.\n$100 \\%$ of poultry raised without routine use of medically important antibiotics.\n### Antibiotics\nServe only poultry raised without the routine use of medically important antibiotics in all company-operated U.S. stores by 2020.\n$2 2 \\%$ of pork is group-housed for U.S. and Canada.\n### Sow Housing\nWe will specify $100 \\%$ “group housed” pork as a requirement of our pork suppliers in the U.S. and Canada and take steps to ensure a “group housed” pork supply by 2024; Phase out the excessive use of gestation stalls for the sows in our supply chain by 2030.\n### Broiler Chickens\nWe are actively reviewing our broiler chicken commitment to identify the best path forward for implementation within our supply chain. Over the next year, we will be setting baseline targets for implementation, which will be included in the FY23 GESI report.\nWe are committed to improve conditions for broiler chickens and are working with our suppliers, licensees, and others in the industry to help ensure that by 2024 the chicken we buy for our U.S. stores is produced in alignment with Global Animal Partnership (GAP) standards as assessed by a third-party auditor.", "chunk_word_count": 533, "section_path": "GLOBAL > G O A L > Cage-Free Eggs", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 60, "page_start": 60, "page_end": 63 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 55, "chunk_text": "# GLOBAL\n## G O A L\n### our planet: data\nS U P P O R T I N G D O C UM E N T S & D ATA TA B L E S\nAnnual update of Planet Positive progress:1,2,3 The following metrics represent detailed reporting of Starbucks environmental performance in FY19, the baseline year for our 2030 environmental targets, FY21, and FY22. We made significant updates to our inventory methodologies this year and recalculated FY19 and FY21 results, which will differ from the FY19 and FY21 data previously reported. We did not update our FY20 calculations because reduced business activity in FY20 from COVID-19 make this year difficult to use for comparisons.4 In FY22, we were not expecting significant reductions in our environmental impacts and progress towards our 2030 targets as we are focused on identifying and testing innovative solutions that we can scale across our global operations. We are committed to enhancing measurement systems and coordination across Starbucks and our value chain, including with our licensee partners.\nM M X X I I\n5In gigajoules, total energy consumption in FY22 equals \n9,347,393 GJ, and total fuel consumed in FY22 equals \n2,171,912 GJ.\n6Fuel types consumed include natural gas, stationary diesel and gasoline, propane, aviation fuel, and mobile vehicle fuel.\n7 Starbucks presents greenhouse gas emissions in accordance with the GHG Protocol and uses global warming potential values from the IPCC Fourth Assessment.\n8FY22 data has been third-party verified by Burns and McDonnell. Their report is available on p. 79.\n9Refrigerant emissions from retail HVAC equipment have only been estimated for China and the UK. Global refrigerant emissions from non-retail facilities were not estimated.\na Scope 1 emissions have been revised since original publication on April 20th, 2023 to reflect corrections to nitrous oxide consumption data.\n10Scope 3 emissions utilize location-based values.\n11Category 1 emissions includes land use change (LUC) for purchases of coffee, tea, cocoa, and food and other beverage ingredients and dairy and non-dairy milks. LUC is defined as a change from one land-use category to another as a result of human activity. We use the Quantis LUC methodology, which accounts for year-to-year, countrylevel LUC over 20-year intervals, including primary and secondary forest loss; peatland drainage and degradation; and soil erosion and degradation.\n12Category 1 emissions include the emissions from the purchased goods and services made by Starbucks Corporation. Purchases made by licensees for key commodities are included in category 14 as recommended by the GHG Protocol.\n13Starbucks does not have significant upstream leased assets. 14Downstream transportation emissions were calculated for the first time for FY19, FY21 and FY22. Sources of emissions include delivery and vehicle idling in drive-thru lines.\n15Starbucks does not act as a lessor.\n16A methodology change was made to Category 14 to include refrigerant, fugitive and process gas emissions for licensee stores and to exclude transportation data (not paid for by Starbucks) per the GHGP guidance.\nbScope 3, Category 14 emissions have been revised since original publication on April 20th, 2023 to reflect corrections to nitrous oxide consumption data.\n\\*Progress against our GHG emissions target has been restated since original publication on April 20th, 2023 due to revised calculations regarding nitrous oxide consumption data.", "chunk_word_count": 534, "section_path": "GLOBAL > G O A L > our planet: data", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 64, "page_start": 64, "page_end": 65 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 56, "chunk_text": "# GLOBAL\n## G O A L\n### our planet: data\n17Total GHG emissions from fluid dairy purchases is inclusive of fluid dairy categorized in scope 3 category 1 and category 14, and include estimated LUC associated with these purchases.\n18Total GHG emissions from green coffee purchases is inclusive of estimated LUC associated with these purchases included in scope 3 category 1.\n19Total FY21 GHG emissions from green coffee purchases is estimated based on FY22 country-specific emission factors and total purchases from relevant countries.\n$^ { 2 0 } | { \\mathsf { n } }$ FY22, Starbucks began a water replenishment program, funding eight projects in eight global priority watersheds. Starbucks aims to report on the volumetric water benefit associated with these programs in our FY23 GESI report.\n21Water withdrawal from stores includes both primary and estimated data. Where primary data is not available, water withdrawal is estimated by applying an average water withdrawal factor derived from U.S. and Canada company-owned stores.\n22Starbucks withdraws water strictly from local water utilities or similar relevant entities, and as such all of our water withdrawals are categorized as sourced from third-party water.\n23High risk basins refers to water withdrawals from facilities located in regions of high or extremely-high baseline water stress as defined by WRI Aqueduct tool, which was used to conduct this assessment.\n24Water withdrawal from packaging and agricultural commodities is estimated using country-level or regional data from the World Food Lifecycle Database (WFLDB). Reporting of this category aligns with our GHG inventory, scope 3, category 1.\n25A methodology change was made in the FY19 and FY21 inventories to update operational waste values and classifications to be consistent with internal data tracking and estimation methodology improvements established in FY22. We are not reporting on waste discarded by customers out of stores and instead have expanded our reporting of packaging materials.\n26Reporting of this category aligns with the GHG inventory, scope 3, category 5.\n27We measure diversion as waste materials recycled, remarketed, composted, donated, or sold to be processed in cattle feed. Diversion does not include materials sent to landfill, incineration (with or without energy recovery) or liquid waste sent down the drain (excludes water).\n28Licensed store non-hazardous waste is estimated based on company-owned store information. This does not include construction & demolition waste or e-waste. Reporting of this category aligns with the GHG inventory, scope 3, category 14.\n29Data represents packaging materials used in our direct operations and licensed stores and all other packaging materials purchased by Starbucks Corporation. This aligns with our GHG Inventory and Ellen MacArthur Foundation Global Commitment reporting boundaries. Starbucks branded products sold outside of our stores is part of a licensed model of the Global Coffee Alliance with Nestlé, while our global ready-to-drink businesses operate under collaborative relationships with PepsiCo and others. The Starbucks branded packaging used by Channel Development business partners are part of their commitments and reporting.\n33FY19 and FY21 inventories have been recalculated to align to methodology changes and data quality improvements made as part of the FY22 inventory. These results may differ from what has been previously submitted to Ellen MacArthur Foundation Global Commitment and WWF ReSource Plastic and we anticipate restating these metrics in our 2023 reporting to these organizations.", "chunk_word_count": 539, "section_path": "GLOBAL > G O A L > our planet: data", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 66, "page_start": 66, "page_end": 67 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 57, "chunk_text": "# GLOBAL\n## G O A L\n### our planet: data\n34In assessing the recyclability of our portfolio Starbucks has aligned with the New Plastics Economy 2022 Recycling Rate Survey results.\n### sasb reporting\nS U P P O R T I N G D O C UM E N T S & D ATA TA B L E S\nSustainability Accounting Standards Board Reporting", "chunk_word_count": 65, "section_path": "GLOBAL > G O A L > our planet: data", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 67, "page_start": 67, "page_end": 69 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 58, "chunk_text": "# GLOBAL\n## S A S B C O D E\n### Energy Management\n(1) Total energy consumed, (2) percentage grid electricity, (3) percentage renewable FB-RN-130a.1\nSee FY22 Global Environmental & Social Impact Report narrative, p. 34. \nSee Our Planet: Data, p. 64. \nAdditional information is available in our CDP Climate Change response.\n### Water Management\n(1) Total water withdrawn, (2) total water consumed, percentage of each in regions FB-RN-140a.1 with High or Extremely High Baseline Water Stress\nSee FY22 Global Environmental & Social Impact Report narrative, p. 37.\nSee Our Planet: Data, p. 64.\nAdditional information is available in our CDP Water Stewardship response.\nTotal volume of water consumption is not monitored as we do not typically have discharge meters in our stores and do not track how much water goes into beverages. Therefore, we are disclosing on water withdrawn from regions with high or extremely high baseline water stress.\n### Food & Packaging Waste Management\n(1) Total amount of waste, (2) percentage food waste, and (3) percentage diverted FB-RN-150a.1\nSee Our Planet: Data, p. 64.\n(1) Total weight of packaging, (2) percentage made from recycled and/or renewable FB-RN-150a.2 materials, and (3) percentage that is recyclable, reusable, and/or compostable\nAdditional information about our packaging is available via our reporting to WWF ReSource and the Ellen MacArthur Foundation Global commitment.\n### Food Safety\nStarbucks is always committed to the health and safety of our customers and partners. We regularly audit and review product quality and food safety practices. We validate our policies and procedures to ensure they are effective and up to date. We actively communicate with our partners and customers through starbucks.com and other communication channels on product-related nutritional and safety information.\n### Nutritional Content\nStarbucks provides transparent information to ingredients, calories and other nutritional information. Additional information is available on starbucks.com.\nStarbucks reviews our marketing and advertising for compliance with all applicable laws, including the Federal Trade Commission’s truth-in advertising standards. We also design our digital content to be compliant with the Children’s Online Privacy Protection Act (COPPA). Additional information is available in Starbucks Global Human Rights Statement.\n### Labor Practices\nStarbucks is committed to being an employer of choice and maintaining the strength of our workforce. In FY22, the total partner turnover in North America (U.S. and Canada) was nearly $6 5 \\%$ , significantly lower than industry turnover rates. Starbucks makes available online our Commitment to Partners and our workforce data for the U.S. business. There is additional information available on Human Capital Management in our Form 10-K Filing, p. 2.\nAs of FY22, $100 \\%$ of U.S. partners earn above minimum wage. As of FY22, Starbucks hourly partners earn nearly $\\$ 17$ /hour in the U.S. Additional information about Starbucks labor practices is available at Starbucks Commitment to Partners.\n### Supply Chain Management & Food Sourcing\nStarbucks ethical sourcing approach integrates social and environmental standards and is an expectation for suppliers and business partners. Additional information is available in the Starbucks Global Human Rights Statement, Our Supply Chain.\nSee FY22 Global Environmental & Social Impact Report narrative, p. 43.", "chunk_word_count": 514, "section_path": "GLOBAL > S A S B C O D E", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 69, "page_start": 69, "page_end": 71 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 59, "chunk_text": "# GLOBAL\n## S A S B C O D E\n### Activity Metrics\nAs of October 2, 2022, Starbucks operated 18,253 Company-Operated and 17,458 Licensed locations. Additional information is available in the Starbucks Fiscal 2022 Annual Report, p. 6 and p. 8.\nAs of October 2, 2022, Starbucks employed approximately 402,000 people worldwide. Additional information is available in the Starbucks Fiscal 2022 Annual Report, p. 4\n### human rights\nS U P P O R T I N G D O C UM E N T S & D ATA TA B L E S\nCoffee and Farmer Equity (C.A.F.E.) Practices is our ethical sourcing verification program with a comprehensive list of zero tolerance indicators that measures farms against economic, social and environmental criteria, designed to promote transparent, profitable and sustainable coffee growing practices while protecting the well-being of coffee farmers and workers, their families and their communities.\n### Coffee\nStarbucks ethical sourcing program is dedicated to monitoring $100 \\%$ of our C.A.F.E. Practices-approved coffee supply chains, which today represents more than 400,000 farmers around the world.1 A nonconformity as reported in this table is a breach of any one of Starbucks zero tolerance indicators. Multiple nonconformities could be identified in a single location. In FY22, we verified or audited 644 coffee supply chains and identified 268 zero tolerance nonconformities in 83 supply chains.2 For each zero tolerance non-conformity brought to our attention through C.A.F.E. Practices, we swiftly address them by working closely with our suppliers and our on-the-ground, third-party partners to pursue corrective actions, including, where appropriate, providing remedy for the impacted individuals. At the time of producing this report, $8 4 \\%$ of zero tolerances identified through audits that occurred during FY22 have been remediated. Due to the seasonal nature of coffee production, some zero tolerance indicators may only be closed during the harvest period when the majority of temporary workers are present and therefore fully closing these indicators may require waiting until the next coffee harvest. In the event a zero tolerance indicator cannot be resolved in a timely and comprehensive manner, a supply chain will be considered Non Compliant and not eligible for C.A.F.E. Practices approval until resolution is possible. For more information on our responsible sourcing practices for Manufactured Goods and Services, see page 43.", "chunk_word_count": 381, "section_path": "GLOBAL > S A S B C O D E > Activity Metrics", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 71, "page_start": 71, "page_end": 73 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 60, "chunk_text": "# GLOBAL\n## S A S B C O D E\n### Manufactured Goods\n1 A “coffee supply chain” is a network of farms, mills, and warehouses. We work with more than 1,100 coffee supply chains, which are made up of more than 400,000 individual farms.\n2All coffee supply chains are verified or audited at regular intervals by approved verification organizations and with oversight provided by SCS Global Services that includes additional audits. While exceptions exist, as a general rule, we audit all supply chains with large-scale farms every year and supply chains with small and medium farms every two years. 3 Includes pesticides classified as Type 1a or 1b by the World Health Organization.\noccupational health and safety standard\nS U P P O R T I N G D O C UM E N T S & D ATA TA B L E S\nStarbucks is committed to the safety of our partners, customers and physical assets. The Global Safety and Security Policy provides the structure for maintaining a safe and secure working environment. The purpose of this Standard is to provide requirements in alignment with occupational health and safety regulations.\n## M M X X I I\n### S U P P O R T I N G D O C U M E N T S & D ATA TA B L E S\nAnnually, Occupational Health and Safety (OH&S) program elements (written program, training, and assessments), are reviewed, edited, and endorsed by Starbucks senior leadership. Adherence to this Standard ensures a current and compliant program defined under OH&S Code expectations.\nFollowing this Standard reduces hazards, injuries, prevents physical and psychological illnesses, and nurtures the core safety need for protection from elements, security, order, law, stability, and freedom from fear.\nThis Standard applies to all employees (partners) of Starbucks Corporation and its wholly-owned subsidiaries in North America for the following locations:\n• All company-operated retail stores in the United States and Canada \n• All Siren retail locations, which include Princi, and commissary kitchens (excludes roasting facilities) \n• Support centers \n• It also applies to non-partner workers engaged by Starbucks, including vendors, suppliers, and professional service providers in these locations", "chunk_word_count": 363, "section_path": "GLOBAL > S A S B C O D E > Manufactured Goods", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 73, "page_start": 73, "page_end": 75 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 61, "chunk_text": "# GLOBAL\n## M M X X I I\n### Requirements\nThe below outlines expectations of partners for the purpose of maintaining an OH&S compliant program:\n• Partners must complete occupational safety training comprised of new hire orientation, on-going reiterative content, and other occupational safety training as determined by the Starbucks Global Safety and Compliance team. \n• Partners must utilize the occupational health and safety guidelines described in the Safety and Security Manual. \n• Non-Support Center partners are responsible for completing occupational safety self-assessments as described in Operational Resources, as applicable. \n• When hazards are identified, non-Support Center partners are required to report them using a selfassessment, as referenced above. \n• Non-Support Center partners have a duty to ensure that all Operational Resource documents are archived per the Starbucks Record Retention Schedule. \n• Partners must report incidents of workplace injury or illness to Starbucks third party administrator in the U.S. and Canada, and/or harassment to the Ethics & Compliance team. \n• Partners must follow the guidance of Store Evacuation/Shelter-in-Place Procedures available to retail partners and Emergency Actions Plans available on the Partner Hub to Support Center partners, and as described in the Safety and Security Manual. \n• Managers are responsible for ensuring partners are aware of and following the above requirements. • Failure to comply with this Standard and related governance tools may result in disciplinary action, up to and including termination of employment. Decisions regarding corrective action, or immediate termination, rests within the sole discretion of Starbucks management. \n• The OH&S program must strive for continuous improvement to ensure the safest working \nenvironment for all partners, and program feedback should be addressed to the Global Safety & Compliance team by email.\nexternal auditor assurance letters\nS U P P O R T I N G D O C UM E N T S & D ATA TA B L E S", "chunk_word_count": 312, "section_path": "GLOBAL > M M X X I I > Requirements", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 76, "page_start": 76, "page_end": 77 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 62, "chunk_text": "# GLOBAL\n## M M X X I I\n### Report of Independent Accountants\nTo the Stakeholders of Starbucks Coffee Company\nWe have examined the data identified below (the Data) contained within Starbucks Coffee Company’s Global Environmental and Social Impact Report (the Report) for the fiscal year ended October 2, 2022. Starbucks Coffee Company’s management is responsible for presenting the Data for the fiscal year ended October 2, 2022 in accordance with the criteria contained in the respective sections of the Report indicated below (the Criteria). Our responsibility is to express an opinion on the Data based on our examination:\n• $9 8 . 2 \\%$ ethically sourced coffee purchases as contained in the Ethical Sourcing Performance (C.A.F.E Practices) section on page 39 of the Report; $9 9 . 7 \\%$ ethically sourced tea purchases as contained in the Responsible Sourcing for Tea section on page 42 of the Report; \n• 12 million kilograms of segregated cocoa beans purchased from Cargill as contained in the Responsible Sourcing for Cocoa section on page 42 of the Report; \n• Investment in farmer loans since FY18 of $\\$ 65.8$ million as contained in the Global Farmer Fund section on page 41 of the Report.\nOur examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Data is in accordance with the Criteria, in all material respects. An examination involves performing procedures to obtain evidence about the Data. Those procedures are described in more detail in the paragraph below. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material misstatement of the Data, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.\nOur evidence-gathering procedures included, among other activities, the following:\n• Testing the effectiveness of the internal reporting system used to collect and compile information on the Data which is included in the Report; \n• Performing specific procedures, on a sample basis, to validate the Data, through communications with Starbucks Coffee Trading Company buying operations in Lausanne, Switzerland, and Corporate headquarters in Seattle, Washington; Interviewing partners (employees) responsible for data collection and reporting; \n• Reviewing relevant documentation, including corporate policies, management and reporting structures; \n• Performing tests, on a sample basis, of documentation and systems used to collect, analyze and compile the Data that is included in the Report, and \n• Confirming certain of the Data to third-party confirmations and reports.\nWe are required to be independent of Starbucks Coffee Company and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our examination engagement.\nIn our opinion, the Data for the fiscal year ended October 2, 2022, is presented in accordance with the Criteria, in all material respects.\nSeattle, Washington April 17, 2023", "chunk_word_count": 496, "section_path": "GLOBAL > M M X X I I > Report of Independent Accountants", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 78, "page_start": 78, "page_end": 78 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 63, "chunk_text": "# GLOBAL\n## M M X X I I\n### Memorandum\nDate: June 1, 2023\nTo: To the Board of Directors and Stakeholders of Starbucks Coffee Company\nFrom: Emily Robbins – Burns & McDonnell\nSubject: Verification Report for FY2022 Greenhouse Gas Inventory, Water Withdrawals Inventory, and Operational Waste Inventory\nBurns & McDonnell Engineering Company, Inc. (Burns & McDonnell) was retained by Starbucks Corporation (Starbucks) to verify and provide a third-party assessment of the 2022 Greenhouse Gas (GHG) Emissions Inventory, Water Withdrawals Inventory, and Operational Waste Inventory for Fiscal Year (FY) 2022. The purpose of assessment was to verify that the FY2022 GHG Emissions Inventory, Water Withdrawals Inventory, and Operational Waste Inventory represents a reasonable and accurate account of Starbuck’s GHG emissions, water withdrawals and operational waste.\n### Inventory Summary\nVerified values for Starbucks’ FY 2022 GHG, Water Withdrawals, and Operational Waste Inventories are shown below in Table 1.\n### Greenhouse Gas Emissions Inventory\nBurns & McDonnell reviewed Scope 1, Scope 2, and Scope 3 GHG emissions as presented in the “FY22 SBUX Scopes 1 & 2 and Operational Water Inventory 10MAR2023.xlsx” and “FY22 SBUX Scope 3 and Indirect Water Inventory_15MAR202.xlsx” excel workbooks for the fiscal period October 4, 2021 through October 2, 2022. The GHG emissions data included in the emissions inventory that were subject to review consisted of the following for each Scope:\n### Scope 1: Direct GHG Emissions\nFuel combustion (retail and non-retail facilities, roasting) • Process emissions from roasting Refrigerant losses from stationary equipment\nJune 1, 2023 \nPage 2\nProcess emissions of nitrous oxide (whipped cream chargers) \nCorporate jet fuel use \nPlant vehicle fuel use\n### Scope 2: Indirect GHG Emissions\n• Purchased electricity usage (market based and location based) • District heating and cooling", "chunk_word_count": 288, "section_path": "GLOBAL > M M X X I I > Memorandum", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 79, "page_start": 79, "page_end": 80 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 64, "chunk_text": "# GLOBAL\n## M M X X I I\n### Scope 3: Corporate Value Chain\n• Category 1 – Purchased Goods and Services \n• Category 2 – Capital Goods \n• Category 3 – Fuel- and Energy-Related Activities Category 4 – Upstream Transportation and Distribution Category 5 – Waste Generated in Operations \n• Category 6 – Business Travel Category 7 – Employee Commuting \n• Category 9 – Downstream Transportation and Distribution \n• Category 10 – Processing of Sold Products Category 11 – Use of Sold Products \n• Category 12 – End of Life Treatment of Sold Products \n• Category 14 – Franchises Category 15 – Investments\nIt should be noted that this inventory is based on the Fourth Assessment Report (AR4) Global Warming Potential Values developed by the Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report.\nThe GHG inventory assurance review was conducted in accordance with the ISO 14064-3 Standard and World Resources Institute GHG Protocol based on evidence of the reliability of the procedures undertaken to develop the GHG Emissions Footprint. To the best of our knowledge, Burns & McDonnell has found with moderate assurance that Starbucks has satisfactorily compiled a reasonable and fair account of their GHG emissions for FY 2022. The verified values for Scope 1, 2 and 3 are shown below in Table 1.\nWater Withdrawals Inventory\nIn order to complete this moderate assurance of Starbucks’ FY2022 Water Withdrawals Inventory, Burns & McDonnell utilized the AA1000AS Quality Assurance Standard and obtained, analyzed and verified data related to water withdrawals as described below. Data were reviewed as presented in “FY22 SBUX Scopes 1 & 2 and Operational Water Inventory\nJune 1, 2023 \nPage 3\n10MAR2023.xlsx” and “FY22 SBUX Scope 3 and Indirect Water Inventory_15MAR202.xlsx” excel workbooks for the fiscal period October 4, 2021 through October 2, 2022. This review included:\n• A review of Starbuck’s operations and facility activities for the purposes of verifying the water withdrawals. \n• A qualitative review evaluating water withdrawals potentially omitted from the FY2022 Water Withdrawals Inventory and the impact on the overall inventory accuracy. \n• A review of the processes and procedures utilized to gather data for and develop the FY2022 Water Withdrawals Inventory. \n• An examination of Starbucks’ 2022 Water Withdrawals Inventory report and electronic workbook spreadsheets utilized to calculate water withdrawals.\n### Operational Waste Inventory\nIn order to complete this moderate assurance of Starbucks’ FY2022 Operational Waste Inventory, Burns & McDonnell utilized the AA1000AS Quality Assurance Standard and obtained, analyzed and verified data related to operational waste as described below. Data were reviewed as presented in “FY19 - FY22 SBUX Global Operational Waste Inventory 13MAR2023.xlsx”. This review included:\n1. A review of Starbuck’s operations and facility activities for the purposes of verifying the operational waste inventory. \n2. A qualitative review evaluating operational waste potentially omitted from the FY2022 Operational Waste Inventory and the impact on the overall inventory accuracy. \n3. A review of the processes and procedures utilized to gather data for and develop the FY2022 Operational Waste Inventory. \n4. An examination of Starbucks’ 2022 Operational Waste Inventory report and electronic workbook spreadsheets utilized to calculate operational waste for FY2022. \n5. Burns & McDonnell generally assumed that raw source data provided were accurate.", "chunk_word_count": 534, "section_path": "GLOBAL > M M X X I I > Scope 3: Corporate Value Chain", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 80, "page_start": 80, "page_end": 81 }, { "report": "Starbucks Environmental & Social Impact Report 2022.pdf", "chunk_idx": 65, "chunk_text": "# GLOBAL\n## M M X X I I\n### Statement of Independence\nThis verification and third-party assessment was performed with no conflicts of interest in relation to providing the assurance of the FY2022 Greenhouse Gas Inventory, Water Withdrawals Inventory, and Operational Waste Inventory for Starbucks.", "chunk_word_count": 46, "section_path": "GLOBAL > M M X X I I > Statement of Independence", "document_id": "Starbucks Environmental & Social Impact Report 2022", "page": 81, "page_start": 81, "page_end": 82 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 0, "chunk_text": "# Report on Sustainability 2023\n## Table of contents\n## Our approach 3\n## Governance 53\nExecutive messages 4 \nQ&A with our Chief Sustainability Officer 7 \nData restatements 9 \n2022 summary 11\nEthics 54 \nCorporate governance 55 \nRisk management 58 \nSupply chain 61\n## Environment 13\n## n Appendix 63\nClimate change 14 \nAir quality 15 \nWaste management 17 \nEnvironmental incidents 18 \nWater stewardship 20 \nTailings management 25 \nLand and reclamation 28 \nBiodiversity 30\nAbout our report 64 \nGlossary 67 \nESG disclosure index 71 \nPerformance data 72 \nPerformance data footnotes 81 \nIndependent practitioner’s limited 91 \nassurance report\n## Advisories 94\n## n Social 33\nSafety 34 \nHealth and wellness 38 \nWorkforce 40 \nInclusion and diversity 42 \nIndigenous relations 45 \nSocial investment 49 \nHuman rights 51\n## Our approach\nExecutive messages \nQ&A with our Chief Sustainability Officer \nData restatements 2022 summary\nTo live Suncor’s purpose of providing trusted energy that enhances people’s lives while caring for each other and the Earth, our corporate strategy focuses on sustainable energy development, long-term thinking and becoming a net-zero company by 2050.\n## Executive messages\nSince joining Suncor earlier this year as President and CEO, my focus has been to drive performance improvement across all aspects of our business to support industry-leading safety, integrity, reliability and profitability. A strong, high performing base business enables superior returns to shareholders and ensures a strong balance sheet to fund investments in climate, air, reclamation, biodiversity, people and communities.\n## Foundation for success\n## Funding the future\nI am committed to upholding and growing Suncor’s long legacy of sustainability leadership. Our ability to deliver on our environmental, social and governance (ESG) goals depends on our core competitive advantages: a hard-to-replicate physically integrated asset portfolio, long-life reserves without exploration risk, and excellence in the operation and management of those assets. We have a history of collaboration and co-investments with partners, including historic equity partnerships with our Indigenous neighbours in the Regional Municipality of Wood Buffalo, to generate shared prosperity from our operations.\nAs we continue to build on our existing strengths, we also look to the future and investment in decarbonization, including carbon capture and sequestration, hydrogen and low-carbon fuels. Our net zero by 2050 climate ambition depends on timely and prudent investments in new technology as well as ongoing collaborations and engagement with industry partners, governments and other stakeholders. In this way, we are building a prosperous and sustainable future not only for Suncor, but for all our people, partners, communities and nation.\nRich Kruger\nPresident and Chief Executive Officer\n## Kris Smith\nChief Financial Officer and Executive Vice President, Corporate Development\nSuncor continued to diligently advance our sustainability goals this past year, leveraging operational excellence, technological innovation and ongoing collaboration and co-investments with our industry peers, governments, associations and communities to accelerate our progress. Supplying secure and reliable energy, underpinned by sound environmental, social and governance (ESG) performance, sets the conditions for a stronger and more resilient business – and world.\n## Evolving our safety journey", "chunk_word_count": 498, "section_path": "Report on Sustainability 2023 > Table of contents", "document_id": "Suncor Sustainability Report 2023", "page": 2, "page_start": 2, "page_end": 5 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 1, "chunk_text": "# Report on Sustainability 2023\n## Advancing our climate commitment\nOur progress towards our net zero by 2050 objective – with an interim target of reducing emissions by 10 megatonnes by 2030 across our value chain – is well underway. Our coke boiler replacement project, an example of fuel switching from coke combustion to natural gas cogeneration, is expected to be commissioned in late 2024. Our proposed carbon capture and storage (CCS) project in northern Alberta with the Pathways Alliance, a consortium of Canada’s six largest oil sands producers working together with federal and provincial governments to address climate change, achieved a critical milestone. The Alliance’s recent agreement with the Government of Alberta means the project can advance to detailed engineering studies and fieldwork to assess the feasibility of the proposed carbon storage hub. CCS has been globally recognized as one of the most effective ways to reduce industrial greenhouse gas emissions, and Alberta’s geology makes this one of the most ideally suited places in the world to safely inject and permanently store ${ \\mathsf { C O } } _ { 2 }$ .\nOperational excellence is foundational to Suncor delivering strong ESG performance. That starts with safety, which is why we’ve been taking substantial steps to improve our safety performance. We’re supporting our frontline leaders and workers with a centralized operational and risk management team. We’re making sure we have effective controls to prevent incidents as well as controls to help us fail safely if a mistake is made. In tandem, we’ve also reduced the number of contractors on site. We’re leveraging technology wherever possible to have fewer people on site and less potential for injury.\nWe supplemented these initiatives with leadership training, exercises and workshops to reinforce and standardize safety standards, practices and reporting. These actions align with our company-wide adoption of Human and Organizational Performance principles, a globally accepted operating philosophy that outlines how we work together to learn from incidents and develop practical solutions to improve.\n## I encourage you to read our 2023 Report on Sustainability to discover more about what we have achieved and where we need to do better.", "chunk_word_count": 357, "section_path": "Report on Sustainability 2023 > Advancing our climate commitment", "document_id": "Suncor Sustainability Report 2023", "page": 5, "page_start": 5, "page_end": 5 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 2, "chunk_text": "# Report on Sustainability 2023\n## Promoting trust and inclusion\nOur relationships with Indigenous People and journey of reconciliation is at the core of our commitment to sustainability. Ventures such as Astisiy – our collaboration with eight Indigenous communities in the Regional Municipality of Wood Buffalo to acquire a $1 5 \\%$ stake in the Northern Courier Pipeline – and the Thebacha partnership where the East Tank Farm is jointly owned with the Fort McKay and Mikisew Cree First Nations, represent ground-breaking opportunities for shared prosperity. Thanks to revenue from the Astisiy partnership, for example, the Willow Lake Métis Nation was able to purchase over 200 hectares of land in 2022 to give their community a permanent and sustainable home.\nKris Smith \nChief Financial Officer and \nExecutive Vice President, Corporate Development\nOur partnerships with Indigenous Peoples are based on trust, deep dialogue and meaningful action. In tandem, within Suncor we are shifting toward greater diversity, equity and inclusion to create a culture of performance that embodies these same values and actions in our leadership, governance and everyday actions.\nIn 2022 we allocated approximately $\\$ 540$ million, or $\\harpoonleft$ of total capital, to low-carbon initiatives. These initiatives – already integral to our business and where we have deep understanding and experience – are an extension of our integrated model that continues to drive value for our shareholders. We are also focused on engaging with suppliers committed to high sustainability standards in order to reduce our scope 3 emissions and providing low-carbon alternatives to support our customers on their own sustainability journeys.\nI encourage you to read our 2023 Report on Sustainability to discover more about what we have achieved and where we need to do better. The size of our challenges is not insignificant, but we will continue to take action to create a strong company and society. Thank you to all our partners, and our people at Suncor, who make our progress possible.\n## Prioritizing water management\nOil sands water management is one our most pressing environmental priorities in the Regional Municipality of Wood Buffalo. Collaboration with Indigenous Peoples, governments, local communities and stakeholders is ongoing to develop a policy and regulatory framework to safely manage treated water from our oil sands sites. Once the criteria for managing water on our oil sands sites is established, we can work with Indigenous communities as well as the provincial and federal governments to design the appropriate plan from a suite of technologies. Our goals are to reduce the amount of water used and stored on site, avoid disturbing more land to build additional water storage, and return the landscapes to self-sustaining ecosystems that align with Indigenous treaty rights.\n## Kris Smith\nChief Financial Officer and Executive Vice President, Corporate Development\n## Q&A with our Chief Sustainability Officer\n## There’s been a spotlight on Suncor’s safety record. What steps have been taken to improve performance?", "chunk_word_count": 482, "section_path": "Report on Sustainability 2023 > Promoting trust and inclusion", "document_id": "Suncor Sustainability Report 2023", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 3, "chunk_text": "# Report on Sustainability 2023\n## Water management has been highlighted as a critical issue for the industry. What is Suncor doing to address it?\nOur core value is safety above all else. That means people need to go home safely at the end of every day to their families and friends. We knew we had work to do in this area and have taken significant steps to address this issue in the past year. First and foremost, this involves frontline assurance and having leaders spend more time in the field so we understand the risks and address them. We are working to simplify our processes and policies so they are easy to access and are understandable. And we’ve involved our frontline workers to help identify solutions.\nWater management is critical to how we run our business and it’s equally important to the First Nation and Métis communities who live near our operations. Water is sacred to them and intrinsic to their relationship with the Earth and each other. This is a shared issue that we need to work on together. The starting point is finding agreement on water quality and what is required for Indigenous communities to implement their treaty rights. That will help guide what steps we need to take to safely manage accumulated water and tailings on our sites.\nWe’ve also adopted a new philosophy called Human and Organizational Principles. Our focus is on continuous improvement and ensuring that if we make a mistake, we fail safely. And we’ve made significant investments in technologies such as the collision avoidance system we’re installing in every vehicle at each of our mines as well as the fatigue management system that uses facial recognition technology to alert operators if it detects signs of drowsiness.\nThe other related challenge is minimizing our tailings inventory and reclaiming the land we’ve disturbed. This will require reducing the amount of water we store on our sites. We’ve made real progress at our Base Plant operation in reducing the amount of fresh water we take in. But we also need to manage every single drop of water that falls on our sites, whether it is rain, snow melt or run off. Storing that water slows down our ability to reclaim the land we’ve disturbed. Moving it around uses energy, which creates greenhouse gas (GHG) emissions. There are opportunities to address these challenges. For us, the starting point is working with Indigenous Peoples to find agreements on the solutions to manage water and how we reclaim the land. Finding that common ground is important as government works to finalize regulations in this area.\nWe also identified contractor management as another critical area. We’ve added more structure around how many contractors are working on our sites while ensuring they have the training and tools to stay safe while performing critical work for us.\n## Both you and Suncor have been very strong advocates for implementing the Truth and Reconciliation’s Commission Calls to Action. Why is this so important?", "chunk_word_count": 501, "section_path": "Report on Sustainability 2023 > Water management has been highlighted as a critical issue for the industry. What is Suncor doing to address it?", "document_id": "Suncor Sustainability Report 2023", "page": 7, "page_start": 7, "page_end": 7 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 4, "chunk_text": "# Report on Sustainability 2023\n## You’ve spoken about your personal pride in seeing the advancement of inclusion and diversity at Suncor. Is there one initiative that stands out for you in this area?\nI love that what I believe in personally is connected to the work that I do. The Journey of Reconciliation is critical to our future as a company and a country. Acknowledging what happened in the past is an important step in moving forward. I feel a tremendous personal obligation to be part of reconciliation and I’m also proud we’ve made these commitments as a company. I hope it enables us to walk side-by-side with Indigenous Peoples and be open to learning new ways of seeing and doing things.\nThere’s a deep connection between creating a respectful work environment and having a safe work environment. I’m very proud of the progress we’ve made, whether it’s marching in Calgary’s Pride parade for the first time ever in 2022 or publishing our guidebook for employees who are undergoing gender transition so their leaders can help support them; and having lactation rooms at our operating facilities for new parents who have recently returned to work. At the same time, our frontline workers have told us there’s more work to do in having an inclusive and respectful workplace.\nIt’s extremely important to Suncor because so many of our operations are located on or contiguous with traditional Indigenous lands. And we believe our business should also benefit the Indigenous communities that live near our operations. There are huge opportunities in working together with Indigenous Peoples. A good example is the Willow Lake Métis Nation, who purchased 205 acres of land in their traditional territory for their community. They were able to raise the capital for this purchase through their participation in the Astisiy Limited Partnership with Suncor and seven other Indigenous and Métis communities.\nI feel fortunate to live in Alberta, which continues to be enriched by its diversity. My husband often talks about it as a gift, whether it is receiving a plate of sweets from a friend to mark Ramadan or being invited to a teepee pole skinning ceremony at the Piikani First Nation. I’ve seen and experienced the progress we’ve made in this area. I recognize we have more travelling on this journey as an organization but we are committed to moving towards the right destination.\nYou recently joined the steering committee for the Pathways Alliance, the consortium of Canada’s largest oil sands producers who are working together to address climate change. What do you hope to accomplish in that role?\nIt’s a tremendous honour to be a part of that group. I give the people who came before me a ton of credit for getting us to where we are and it’s a privilege to continue their work.", "chunk_word_count": 471, "section_path": "Report on Sustainability 2023 > You’ve spoken about your personal pride in seeing the advancement of inclusion and diversity at Suncor. Is there one initiative that stands out for you in this area?", "document_id": "Suncor Sustainability Report 2023", "page": 8, "page_start": 8, "page_end": 8 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 5, "chunk_text": "# Report on Sustainability 2023\n## Arlene Strom\nChief Sustainability Officer\nOne of the things that gets me up in the morning is that I can do meaningful work that helps us to contribute to the energy transition and reconciliation. The Pathways Alliance to net zero is squarely in the middle of both of those issues.\nWe want to make significant progress on our foundational project – carbon capture and storage. There’s a lot of work to do and we need to begin a regulatory process. We need to work with First Nations and Métis communities to understand their concerns and the opportunity. We also must get our commercial agreements in place among the six companies that make up Pathways. We need a framework in place with provincial and federal governments. By the end of 2023, I hope we are significantly closer to this foundational project becoming a reality. There’s a lot of work ahead, but it’s exciting.\n## Data restatements", "chunk_word_count": 161, "section_path": "Report on Sustainability 2023 > Arlene Strom", "document_id": "Suncor Sustainability Report 2023", "page": 8, "page_start": 8, "page_end": 8 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 6, "chunk_text": "# Report on Sustainability 2023\n## We are changing the way our data is presented within our reports to better represent our integrated model and reflect full operatorship of the Syncrude Project.\nSuncor is an integrated energy company focused on oil sands mining and in situ operations, refining and upgrading, and crude and product marketing. We upgrade and refine bitumen into synthetic crude oil and refined products. We sell bitumen and synthetic crude oil to other producers for refining and upgrading. The scale and strength of our physical integration across the value chain, from production to retail sales is difficult to replicate. Our oil sands base business is supplemented by offshore oil production and we have made strategic investments in low-carbon power and biofuels to complement our base business. Our energy trading activities focus primarily on the marketing and trading of bitumen, crude oil, refined products and power.\n[IMAGE CAPTION] Suncor’s production activities and resulting products\nGiven the complexity of our integrated model, we are updating our reporting methodology to capture total production as the sum of all liquid hydrocarbons produced from our business activities. This recognizes that emissions occur from each production activity, regardless of whether the resulting salable products are internally consumed. This method differs from our Annual Report, which uses production values based on final products sold to market. Our previous reporting deducted product transfers within our business and did not reflect the many activities involved in making both intermediate and final products. Due to this change in methodology, our new and updated production value is significantly greater than our previous production methodology.\\* Therefore, our corporate intensity values are lower than previously reported, although absolute values remain the same.\\* To better support peer comparisons, we are also reporting greenhouse gas (GHG) data by product type, in addition to providing it by facility and business unit.\nSince assuming operatorship of the Syncrude Project in September 2021, we have focused on sharing best practices, integrating management processes and incorporating operational and workforce data into Suncor’s reporting systems. The data alignment is largely complete and we will continue to provide updates as further improvements are made.\nAll 2018-2022 performance data in the 2023 Report on Sustainability and Climate Report now includes Syncrude, unless otherwise stated. Five-year performance data (2018-2022) for Suncor-operated facilities, including Syncrude, may be found in our 2023 Sustainability Performance Data document.\n[IMAGE CAPTION] Please see footnotes 4i, 5.4t and 8l which describe the changes to our production value, water intensity and GHG intensity respecti", "chunk_word_count": 417, "section_path": "Report on Sustainability 2023 > We are changing the way our data is presented within our reports to better represent our integrated model and reflect full operatorship of the Syncrude Project.", "document_id": "Suncor Sustainability Report 2023", "page": 9, "page_start": 9, "page_end": 10 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 7, "chunk_text": "# Report on Sustainability 2023\n## 2022 summary\n### Our purpose\n### Our climate objectives\nTo provide trusted energy that enhances people’s lives, while caring for each other and the Earth.\nWe will focus on objectives that build on our strategy and create long-term shareholder value:\n• Achieve net-zero emissions (scope 1 and 2) by 2050 and a 10 megatonne reduction in emissions by 2030 across our value chain • Reduce emissions in our base business and expand our low-emissions businesses • Work with others to reduce emissions\n### Our strategy\nTo be Canada’s leading energy company by optimizing our existing hydrocarbon business and transforming our greenhouse gas (GHG) footprint, while growing our business in low GHG fuels, electricity and hydrogen, all enabled by our expertise, long-life resources, integrated business model, strong connection to customers and world-class environmental, social and governance (ESG) performance.\n### 59.6 million cubic metres of bitumen production\nl 27.2 million cubic metres of refined liquid hydrocarbon production\n## 57 Petro-Canada™ stations forming Canada’s Electric Highway™ – a coast-to-coast electric vehicle fast-charging network\n### 36.2 million cubic metres of synthetic crude production\n### 10.7 million MWh of oil sands electricity generation\nl $\\$ 545$ million in technology development, deployment and digital transformation\n## 358 thousand cubic metres produced at Canada’s largest ethanol facility\n### 1.6 million cubic metres of renewable fuels blended\nLargest producer and consumer of hydrogen in Canada\n### Environment\n### Social\n### 益 Governance\n## GHG\n### Safety\n### Supply chain\n• 35.0 megatonnes $\\mathsf { C O } _ { 2 } \\mathrm { e }$ absolute GHG scope 1 and 2 emissions \n(operational basis) \n• 28.8 megatonnes $\\mathsf { C O } _ { 2 } \\mathrm { e }$ absolute GHG scope 1 and 2 emissions \n(equity basis) \n• Pathways Alliance selected by the Alberta government to advance \nexploratory work for proposed CCS network\n• Integration of Human and Organizational Performance principles Implementing new safety technology in mining Doubled weighting for safety performance in incentive compensation plans\n• 6,636 vendors across Canada and 28 countries \n• $\\$ 15.5$ billion spent on goods and services $\\$ 3.1$ billion spent with indigenous businesses over and above our equity participation agreements $2 0 \\%$ of Suncor’s overall supplier expenditures with Indigenous businesses\n### Workforce\n• 17,111 employees\n### Water\n### Inclusion and diversity\n• 66.4 million $\\mathsf { m } ^ { 3 }$ freshwater consumption \n• $9 4 \\%$ water recycle rate at Base Plant, Fort Hills, Syncrude and in situ facilities \n• $5 \\%$ reduction in water withdrawal from 2021\n### Economic\n• $5 \\%$ Indigenous representation • $2 2 \\%$ female representation $2 6 \\%$ management)\n• $\\$ 7.7$ billion distributed to investors through share repurchases and dividends • $\\$ 5.1$ billion in share buybacks • $\\$ 9.3$ billion in royalties and taxes paid • $\\$ 8.0$ billion spent on employee and contractor services\n### Learning and development\n• $\\$ 18.9$ million and $\\sim 3 0 5 . 0 0 0$ hours spent on training and development \\~1,400 employees have completed our Inclusion Starts With Me web-based training", "chunk_word_count": 517, "section_path": "Report on Sustainability 2023 > GHG > Safety", "document_id": "Suncor Sustainability Report 2023", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 8, "chunk_text": "# Report on Sustainability 2023\n## GHG\n### Land\n• 48,726 cumulative hectares disturbed \n• 9,189 cumulative hectares reclaimed \n• ${ > } \\mathcal { 1 }$ million seedlings planted at Base Plant and Syncrude\n### Corporate governance\n• $3 1 \\%$ female board representation \n• Indigenous representation on the board since 2000 \n• Climate performance share units first issued in 2022\n### Social investment\n• $\\$ 40.4$ million in social investments \\~105,000 hours volunteered by Suncor employees in their local communities\n### Tailings\n• 1 surface reclaimed tailings facility \n• 5 tailings facilities advancing to closure\n### Indigenous relations\n• $9 1 \\%$ of employees have completed Indigenous web-based training • 63 Petro-Canada™ arrangements with Indigenous communities\n### Environment\n$>$ Climate change \n$>$ Air quality \n$>$ Waste management \n$>$ Environmental incidents \n$>$ Water stewardship \n$>$ Tailings management \n$>$ Land and reclamation \n$>$ Biodiversity\nWe believe a resilient environment and vibrant communities are foundational to business success. We operate our business in a manner that aims to minimize our impact on air, water, land, biodiversity and climate.\n### Climate change\nAddressing climate change and providing the world with secure and reliable energy requires investment, technological advancement, product innovation, regulatory support and collaborative partnerships.\n### Be a net-zero greenhouse gas emissions company by 2050 (scope 1 and 2) and contribute to society’s net-zero goals\nBy 2030, reduce annual emissions by 10 megatonnes across our value chain\nGrow low-emissions energy businesses in renewable fuels, electricity and hydrogen\nReduce greenhouse gas emissions through base business improvements\nWork with others to reduce emissions\nOur objective is to reach net zero greenhouse gas (GHG) emissions in our operations by 2050 and contribute to Canada’s goals to reduce emissions. We’ve set an interim objective to reduce emissions by 10 megatonnes per year across our value chain by 2030. We see many opportunities to work with customers, suppliers, governments and other partners to help reduce emissions throughout our value chain (including scope 3).\nWe are advancing a suite of projects to reach our objective. Our focus is on reducing base business emissions with fuel switching, energy efficiency, carbon capture and storage, and other technologies. We also want to grow segments that are already core to our business, such as low-carbon power, renewable fuels and hydrogen. We expect to spend approximately $ 1 0 \\%$ of our annual capital budget, on average, through 2025 on projects aimed at lowering our emissions and advancing our low-carbon energy offerings that also provide strong, double-digit returns. In 2022, we allocated approximately $\\$ 540$ million, or $1 1 \\%$ of total capital and $3 5 \\%$ of economic capital, to low-carbon initiatives.\nFor more information and detailed performance data on how we’re addressing climate change and our perspective on the energy future, please read our 2023 Climate Report.\n### Air quality\n### We are committed to improving air quality and reducing emissions near all our operations.\nWe monitor and manage our emissions to protect air quality for our workforce, the environment and communities where we operate. We work to minimize emissions and odours through operational excellence, project design and technological advances.", "chunk_word_count": 519, "section_path": "Report on Sustainability 2023 > GHG > Land", "document_id": "Suncor Sustainability Report 2023", "page": 12, "page_start": 12, "page_end": 15 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 9, "chunk_text": "# Report on Sustainability 2023\n## GHG\n### Compliance and monitoring\nOur operations have controls and procedures to manage emissions and assure compliance with regulatory requirements. We support independent air monitoring and the timely provision of our results to the public and regulatory agencies in all areas where we operate.\nWe started fenceline monitoring at all our upgraders and refineries in 2022 to closely track the levels of benzene, toluene, ethylbenzene, xylene and 1,3-butadiene. This supplementary data helps us manage facility-wide emissions effectively.\n### Collaboration\nWe regularly engage with communities, stakeholders, governments and other external agencies to discuss air pollutant and odour management strategies and best practices. This includes collaborative industry efforts such as Canada’s Oil Sands Innovation Alliance (COSIA) to support research and test new technologies to monitor fugitive emissions. We also developed an enhanced air monitoring program, Commerce City – North Denver (CCND) Air Monitoring, in collaboration with existing air monitoring networks in the Commerce City and North Denver communities. Montrose Air Quality Services, a third-party team of engineers, scientists, analysts and technicians, runs CCND Air Monitoring and provides the community with easy-to-access information from sensors reporting in near real time, as well as through laboratory analysis and a mobile monitoring van.\n### Air class in session\nSuncor and scientists from Montrose Air Quality Services hold public sessions with community members in Commerce City and North Denver to talk about Suncor’s air monitoring program. This included going back to class at Alsup Elementary School, where one of the 10 air monitoring stations is located. “With summer school in session, we also saw an opportunity to educate younger community members, so we invited teachers to bring their students out,” says Dr. Michael Lumpkin, a Senior Toxicologist with the consulting firm CTEH. “And you know what? It was terrific. They had all kinds of different questions for us that you might not normally get in an open house or town hall. But they were curious and it’s important for them to know what we are doing in their community.” To learn more, read this story.\nOur Air Issue Network, a collaboration network, is internally responsible for identifying potential new and emerging air emissions policies and regulations. This proactive approach allows us to take timely and effective measures to manage regulatory compliance and maximize opportunities to improve our performance.\n### Continuous improvement\nWe have several initiatives at our sites to reduce releases of air pollutants, including investigating new technologies. We have operational protocols, strategies and best practices that minimize air emissions from process streams. Examples of technologies and measures that mitigate air emissions include:\n• retrofitting existing boilers and heaters to low nitrogen oxide $( \\mathsf { N O } _ { \\times } )$ burners \n• converting mine fleet engines to low $\\mathsf { N O } _ { \\times }$ Tier 4 engines \ncontinuing to minimize flaring at every opportunity during the plant operations through existing flare management plan.", "chunk_word_count": 490, "section_path": "Report on Sustainability 2023 > GHG > Compliance and monitoring", "document_id": "Suncor Sustainability Report 2023", "page": 15, "page_start": 15, "page_end": 15 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 10, "chunk_text": "# Report on Sustainability 2023\n## GHG\n### Reduced flaring cuts sulphur dioxide (SO )\n“We gathered a large sum of data available to us to help us connect how much SO was being emitted from flaring,” says Matt Galachiuk, Manager, Process Engineering, Energy and Utilities at Mildred Lake. “We put it into a very clear and simple chart and presented it to the teams. They accepted the challenge and took steps to change how they operate.” As a result, we reduced Mildred Lake’s SO emissions from flaring by $\\pmb { \\mathcal { E } } ( \\pmb { \\mathcal { V } } ( \\pmb { \\mathcal { V } } )$ from the previous five-year average, a new record low that was recognized with a 2022 Suncor Excellence Award in November. To learn more, read this story.\n### Air quality performance\n$\\mathsf { S O } _ { 2 }$ emissions g/m3intensity kg/m3\nOur air emissions monitoring and reduction efforts are centred around three key areas: $\\mathsf { S O } _ { 2 ^ { \\prime } }$ $\\mathsf { N O } _ { \\times }$ and volatile organic compounds (VOCs). While each facility has its own specific priorities and target parameters, these three elements are consistently tracked and reported on in our assessments.\n### Sulphur dioxide\nThe primary source of ${ \\mathsf { S O } } _ { 2 }$ emissions from our facilities is fuel combustion that contains sulphur in our stationary combustion equipment. Flaring can also result in ${ \\mathsf { S O } } _ { 2 }$ emissions. Most of our sites with significant ${ \\mathsf { S O } } _ { 2 }$ emissions are equipped with ${ \\mathsf { S O } } _ { 2 }$ abatement equipment to help prevent the release of ${ \\mathsf { S O } } _ { 2 }$ into the atmosphere.\nIn 2022, Suncor-wide absolute ${ \\mathsf { S O } } _ { 2 }$ emissions and intensity increased by $1 1 \\%$ and $5 \\%$ , respectively, compared to 2021. The increase in ${ \\mathsf { S O } } _ { 2 }$ emissions can be attributed mainly to short-term outages at a few of our sites in 2022. Overall Suncor-wide ${ \\mathsf { S O } } _ { 2 }$ emissions intensity in the last five years has trended relatively consistently.\nOx emissions intensity NO emissions Xintensity uncor totkg/m3", "chunk_word_count": 415, "section_path": "Report on Sustainability 2023 > GHG > Reduced flaring cuts sulphur dioxide (SO )", "document_id": "Suncor Sustainability Report 2023", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 11, "chunk_text": "# Report on Sustainability 2023\n## GHG\n### Nitrogen oxides\nStationary and mobile combustion equipment are the primary sources of $\\mathsf { N O } _ { \\times }$ emissions from our facilities, mainly resulting from fuel combustion.\nIn 2022, we saw an increase of $5 \\%$ in Suncor-wide absolute $\\mathsf { N O } _ { \\mathsf { X } }$ emissions compared to 2021. $\\mathsf { N O } _ { \\times }$ emissions intensity remained flat with minimal year-over-year change. The increase in absolute $\\mathsf { N O } _ { \\mathsf { x } }$ emissions was mainly from the increased use of stationary diesel generators at our upstream facilities. There was no significant change at our downstream facilities.\nOverall, the five-year $\\mathsf { N O } _ { \\mathsf { x } }$ emissions intensity trend remains consistent with no appreciable change. We continue to upgrade equipment and improve their combustion efficiency to minimize $\\mathsf { N O } _ { \\mathsf { X } }$ emissions.\nOC emissions intensity g/m3VOC emissions \nintensity \nuncor totkg/m3\n### Volatile organic compounds\nVOCs are a group of more than 1,000 organic substances that easily vapourize and undergo photochemical reactions in the atmosphere. The main sources of VOCs from oil sands operations are tailings facilities and mine faces. VOC emission sources from processing facilities such as upgraders and refineries include various process streams, storage tanks, loading operations, fuel combustion, flaring and fugitive equipment leaks.\nIn 2022, Suncor-wide absolute VOC emissions increased by approximately $1 1 \\% ,$ while emissions intensity increased slightly, by $5 \\% ,$ , compared to 2021. The rise in absolute VOC emissions is mainly attributed to an increase in fugitive emissions monitored from mining areas, dedicated disposal sites and tailings facilities.\nWe continue to explore new monitoring technologies to quantify fugitive VOC emissions from area sources more effectively and reliably.\n### Waste management\n### Working with contractors, suppliers and waste receivers, we use a mitigation hierarchy to continuously improve waste management at our job sites.\nThe hierarchy starts with avoiding creating waste, followed by reducing, reusing, recycling, treating and disposing as the final option. We also collaborate with industry peers to identify and act on shared waste management opportunities. In addition to complying with all regulatory waste material production, control and disposal requirements, we see waste recycling, reuse and recovery as an opportunity to generate economic, social and environmental benefits.\n[IMAGE CAPTION] Waste generated thousand tonnes\n### Resource circularity\nOne way we work to reduce waste is by integrating concepts of a circular economy, whereby we reuse, repair and recycle materials for as long as possible in our operations and across our value chain. Through this lens, we look at how commodities flow through our own business. We treat waste as design flaws to eliminate. We look for efficiencies to reduce raw material consumption and improve environmental performance. By reducing our environmental impacts through strategies such as growing our low-emissions energy portfolio and reducing greenhouse gas emissions in our base business, we can play a valuable role in providing the additional energy needs associated with material circularity.", "chunk_word_count": 522, "section_path": "Report on Sustainability 2023 > GHG > Nitrogen oxides", "document_id": "Suncor Sustainability Report 2023", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 12, "chunk_text": "# Report on Sustainability 2023\n## GHG\n### Boiler byproduct into battery producer\nA new project at our Base Plant operations is extracting vanadium from fly ash, a byproduct produced at coke-fired boilers. Vanadium produces the electrolyte used in flow batteries, making it a valuable and important element for many applications, including the energy storage market. Increasing the use of lowercost vanadium for the energy storage industry is anticipated to support increased integration of renewable electricity generation into the energy system. Emissions Reduction Alberta has invested $\\$ 7$ million through the Circular Economy Challenge to support this initiative. It will ultimately contribute to the low-cost energy storage solutions required to enable greater adoption of low-carbon sources of electricity generation.\nFor additional information about this chart and its data, please refer to performance data footnote #9.\n### Waste performance\nWe handle large volumes of different types of waste. Construction materials and process water constitute the largest volumes. Waste volumes and hazardous and non-hazardous materials depend upon on-site activities – including construction and periodic equipment maintenance – and may fluctuate annually. In 2022, our waste generation remained relatively consistent compared to 2021 at $3 , 0 6 1$ thousand tonnes. We were able to send 99,700 tonnes of waste off-site for recycling, reuse and recovery, also similar to last year.\nThe team at our St. Clair ethanol plant launched a new recycling initiative in collaboration with Cytiva. A zero-waste box was installed to collect syringe filters used for testing at the lab. After a successful trial in April 2022, the program fully launched and has successfully diverted more than 11,000 used syringe filters from the landfill.\n### Environmental incidents\n### We are committed to operating our facilities safely and reliably, which includes preventing environmental incidents such as spills and exceedances.\nIf an incident occurs, we activate incident management to minimize or mitigate any environmental impacts, starting with our emergency response. Environmental incident management includes responding, investigating root causes and applying the findings to our operational plans and processes.\n### Environmental emergency response\nWe have emergency response plans for all our locations that include responding to environmental incidents. We conduct regular emergency response training, drills and exercises supporting regulatory requirements and individual site needs. These include drills, tabletop exercises, on-water training exercises and/or other mock exercises as part of our emergency preparedness plans, which cover a variety of scenarios. From these exercises, we review lessons learned and follow-up actions to continuously improve our emergency management.", "chunk_word_count": 412, "section_path": "Report on Sustainability 2023 > GHG > Boiler byproduct into battery producer", "document_id": "Suncor Sustainability Report 2023", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 13, "chunk_text": "# Report on Sustainability 2023\n## GHG\n### Environmental incident prevention\nPreventing environmental incidents and regulatory non-compliance is a critical part of our business. Suncor has the following controls to help prevent or manage incidents:\n• asset reliability and integrity monitoring, preventative maintenance, and equipment inspection programs \n• monitoring equipment to automatically detect incidents to more efficiently manage events and releases \ninfrastructure, such as secondary containment, to mitigate spills from affecting sensitive environmental receptors \nequipment and technology designed for our different operating environments.\nWe work with other industry partners and spill-response organizations and leverage mutual aid agreements to share knowledge, experience and resources for emergency response.\nDuring an emergency response, people and the environment are our top priority. Should an incident take place, we immediately implement mitigation and remedial actions. We investigate significant incidents to determine the root cause, improve the internal critical controls and minimize the likelihood of recurrence.\nSuncor shares best practices through an environmental incident enterprise-wide network with representatives from all our assets. The network regularly discusses any significant environmental regulatory incidents to improve preventative measures for all relevant assets.\nWe completed 532 emergency exercises and drills across the organization in 2022.\n### Environmental incident management\nOur environmental incident reporting, including reporting on spills, adheres to industry standards and regulatory requirements. We share incident classifications internally through our Environmental Regulatory Incident Community of Practice. We also produce internal reports to increase awareness and improve alignment with internal tools and processes to mitigate the risks of future incidents.\n## 2022 environmental incidents and non-compliance\nWe investigate the root cause of major incidents, such as significant spills\\*\\* and their impact on the environment, local communities and our business. We develop and implement action plans to prevent occurrences at other assets.\nWe continue to focus on asset reliability, improving internal critical controls, monitoring to decrease spills or regulatory exceedances, and when required, timely remediation.\nWe upgraded our technology in 2022 by improving our incidenttracking database to allow more detailed data entry and improved classification for environmental incidents. This allows us to better assess our environmental performance and identify areas for continuous improvement. We also increased our tracking and analysis of low consequence environmental incidents in 2022 to improve preventative measures.\n### Incident reporting goes digital\nAs part of a strategy to connect frontline workers in the field to mobile apps and systems, we provide iPhones to our workers where it is safe to do so. One app allows workers to complete safety inspections and critical control assurance digitally. The second app lets people report hazards and incidents in the field. These new digital tools are making it easier for our frontline workers to enter safety data and record hazards. The new process is improving efficiency and data quality, as well as raising real-time awareness of potential incidents so action can be taken.\n### Water stewardship", "chunk_word_count": 475, "section_path": "Report on Sustainability 2023 > GHG > Environmental incident prevention", "document_id": "Suncor Sustainability Report 2023", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 14, "chunk_text": "# Report on Sustainability 2023\n## 2022 environmental incidents and non-compliance\n### Effective water management is crucial to our business today and in the future.\nThe Athabasca watershed has a deep cultural significance for the region’s Indigenous Peoples. We acknowledge its spiritual importance to community members and the understanding that the health of the rivers, landscape, wildlife and people are all interconnected. We believe in meaningful engagement that respects the unique and constitutional rights of Indigenous Peoples, including treaty rights and their deep connection with land and water. By continuing to learn about the rights, history, customs, beliefs, traditions and aspirations of Indigenous Peoples, we can apply this knowledge to our water management practices.\nEven with these practices in place, we face a serious challenge in managing the volume of water currently stored on our mine sites. This includes water used in our extraction and production processes, precipitation and surface runoff that comes into contact with our mines. In addition to our efforts to reduce, reuse and recycle water, safely removing and returning treated water from our sites to the watershed is a necessary step to achieving progressive reclamation and mine closure. Working together with Indigenous communities, we will strive to identify solutions to achieve progressive reclamation and our mine closure outcomes and commitments.\nThis journey starts with the understanding that we all share the same aspiration for a healthy ecosystem. Water is an essential part of our operations so it’s important to effectively manage its use across our business. To date, these efforts include minimizing withdrawal of fresh water, recycling water and storing it safely.\nEducating Rodney\nWith a PhD in Environmental Science, Rodney Guest is an accomplished researcher with many years of experience working on water issues.\nBut members of Indigenous communities living near the Athabasca River are also educating Rodney and his team about managing water safely. “It really is listening to the things that they talk about that are important when it comes to the water,” says Rodney, Suncor’s director of Closure Environmental Integrity. “So, you sit, and you listen to their stories, their knowledge.”\nSuncor values water as a precious natural resource, which is why we are committed to safely returning treated water to the Athabasca River, a necessary step toward closing and reclaiming a mine. Making sure this work is done right has become a personal mission for Rodney. “I’ve learned we do have shared values around water,” he says. “I’m personally invested in the work I do to make sure the water is safe to return to the environment.”\nreleased and protect the environment (fish, insects, birds, plants, animals) and downstream users. Once the criteria for releasing treated water are established, we can design treatment plans to meet these objectives. Regulations are key in our efforts to achieve our reclamation and closure plans, which require reducing the amount of water stored on site, avoiding the need to disturb more land for additional water storage and returning the landscape to a self-sustaining ecosystem.", "chunk_word_count": 499, "section_path": "Report on Sustainability 2023 > 2022 environmental incidents and non-compliance > Effective water management is crucial to our business today and in the future.", "document_id": "Suncor Sustainability Report 2023", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 15, "chunk_text": "# Report on Sustainability 2023\n## 2022 environmental incidents and non-compliance\n### Regulatory requirements\nWhile we regularly submit updates of our reclamation and closure plans to the Alberta Energy Regulator, we are waiting for the federal and provincial governments to finalize the criteria for safely releasing treated water. Returning treated water is a global best practice used by municipal, commercial, industrial and agricultural sectors. Governments regulate water releases to protect the receiving waterbodies and downstream users. Other types of Canadian mines – including copper, nickel, iron ore, diamond and gold operations – have regulations to treat and release water used in their processes. The federal government is committed to developing these regulations for the oil sands by 2025.\nWe will continue to work with governments, communities and stakeholders to develop the policy and regulatory framework to enable the safe release of treated mine water from our oil sands sites and reduce the need for more tailings facilities. Working together with Indigenous communities, we will work to identify water management solutions that respect their unique constitutional and treaty rights and acknowledge their deep connection with the land and water.\nHaving these regulations in place will allow us to restore and reconnect ecosystems in areas where we’ve operated. Our systems, combined with strict regulations, will ensure water can be safely\n[IMAGE CAPTION] Upstream water management\n### Our approach\nSuncor reports to CDP, an independent not-for-profit organization that records corporate water information. We have completed annual CDP water responses since 2010 to provide visibility and accountability to stakeholders on water-related information. Please visit our CDP water response on our Sustainability reporting website for more details.\nA holistic approach to water management is necessary to sustainably develop our oil sands mines and meet our commitments to reclaiming disturbed lands. This approach needs to consider all components of water management, including reducing, recycling, reusing and releasing treated mine water.\nWater at oil sands mines contains components such as sand, silt, clay, organics, salts, and a range of metals. These constituents are largely common to process water used in other types of mining and many other industrial activities. There is a wide range of proven technologies already in use in Canada and globally to treat process water so that it is safe for release.\nWe have made significant investments in applying, adapting and testing different water management approaches and the effectiveness of various treatment processes and technologies on oil sands mine water to achieve levels safe for release to the environment.\nEvery site is different and requires flexibility when choosing appropriate technologies for treatment. Our solutions for water management will continue to include reuse and recycling and where water release is appropriate, it will be protective of the environment and be considered with the input and knowledge of Indigenous communities.", "chunk_word_count": 464, "section_path": "Report on Sustainability 2023 > 2022 environmental incidents and non-compliance > Regulatory requirements", "document_id": "Suncor Sustainability Report 2023", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 16, "chunk_text": "# Report on Sustainability 2023\n## 2022 environmental incidents and non-compliance\n### Monitoring\nMonitoring is critical for measuring the effectiveness of our water management processes. We are required to monitor water quality on our sites and assess ecosystem impacts in the watersheds where we operate. We also participate in the Oil Sands Monitoring (OSM) program along with Indigenous communities and government stakeholders to conduct regional monitoring. The OSM program is specifically focused on tracking potential environmental impacts from oil sands facilities. It also assesses potential cumulative environmental effects from oil sands development to help inform future monitoring, mitigation and management decisions.\n### Turning down the taps\nMike d’Entremont has a master’s degree in chemical engineering, but he doesn’t need it to explain why Suncor embarked on an ambitious plan to reduce its intake of fresh water at Base Plant. “If you are sitting in the bathtub and it’s about to overflow, do you call a plumber and get them to build another bathtub and start bailing water into it? Or do you turn off the tap? When you explain the problem in simple, compelling terms, people understand it,” he says. “Base Plant’s water intake from the Athabasca River was reduced to only a quarter of our annual withdrawal limit. The strategy started with small high-value projects such as sharing water with Firebag and then we needed a bigger solution. A big step was treating and recycling wastewater inside our utilities and upgrading areas to reduce river water intake. All the projects combined allowed us to slow the tap for the filling bathtub.” Mike is currently looking at applying this same approach at the Mildred Lake operations. “I’m excited about what we’re doing. We understand the importance of water in operations and beyond. Taking care of it is important. Not doing anything really isn’t an option. I’m pleased with what we’ve achieved and there’s more to come.”\n### Water performance\nWe achieved an average $9 3 \\%$ recycling rate at our Base Plant, Fort Hills and Syncrude mining operations.\n### Mining\nWhile our oil sands mines do not operate in a water-stressed region,\\* our water management practices focus on minimizing Athabasca River water diversion, maximizing the recycling of process-affected water and minimizing the onsite storage of water. We continue to operate well below our annual water licences.", "chunk_word_count": 386, "section_path": "Report on Sustainability 2023 > 2022 environmental incidents and non-compliance > Monitoring", "document_id": "Suncor Sustainability Report 2023", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 17, "chunk_text": "# Report on Sustainability 2023\n## 2022 environmental incidents and non-compliance\n### Freshwater withdrawal from surface water and groundwater million m3\nWater consumption efficiency at our mining and upgrading facilities is largely affected by design and configuration. Water withdrawal often depends on the amount of annual precipitation. Suncor’s water withdrawal remained relatively consistent in 2022.\nmillion m3)Intensity million m3 /m3 liquid hydrocarbon\nIn 2022, Base Plant decreased both freshwater consumption and intensity by $8 \\%$ at $1 2 . 2 5 \\mathsf { M m } ^ { 3 }$ and $0 . 6 7 ~ \\mathsf { m } ^ { 3 } / \\mathsf { m } ^ { 3 }$ of hydrocarbon production respectfully. This is due to improved water management, along with more accurate tracking systems. Fort Hills’ freshwater consumption decreased by approximately $2 0 \\%$ in 2022 to $8 . 5 2 \\ \\mathsf { M m } ^ { 3 }$ with an intensity of $0 . 9 0 ~ \\mathsf { m } ^ { 3 } / \\mathsf { m } ^ { 3 }$ of hydrocarbon production as less water was required in the operation. At Syncrude, annual freshwater consumption totaled $3 9 . 8 7 ~ \\mathsf { M m } ^ { 3 } ,$ increasing by $8 \\%$ due to higher production rates compared to last year. Syncrude had a freshwater consumption intensity of $2 . 3 1 ~ \\mathsf { m } ^ { 3 } / \\mathsf { m } ^ { 3 }$ of hydrocarbon production.\nBoth Suncor and Syncrude report within the Mining Association of Canada’s Towards Sustainable Mining Water Stewardship protocol. This protocol is comprised of four focus indicators that help guide our performance: water governance, operational water management, watershed-scale planning, and water reporting and performance indicators. All of our mining operations have been assessed at an AAA score for the watershed-scale planning indicator and an A score in the other three indicators.\n### Freshwater consumption million m3\nreshwater consntensity (m3/BOIntensity million m3 /m3 liquid hydrocarbon\n### In Situ\nFor our Firebag and MacKay River in situ sites, water is drawn from recycled wastewater from our oil sands upgrading and utilities operations. We also use surface runoff water collected within the facility boundaries and groundwater wells. In 2022, the average water recycling rate at our in situ sites was approximately $9 8 \\% ,$ reflecting continued operational efficiencies and further site water optimization.\nIn 2022, approximately $4 4 \\%$ of the total water used at the Edmonton refinery was from recycled wastewater supplied from the Gold Bar Wastewater Treatment Plant in Edmonton.", "chunk_word_count": 439, "section_path": "Report on Sustainability 2023 > 2022 environmental incidents and non-compliance > Freshwater withdrawal from surface water and groundwater million m3", "document_id": "Suncor Sustainability Report 2023", "page": 23, "page_start": 23, "page_end": 23 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 18, "chunk_text": "# Report on Sustainability 2023\n## 2022 environmental incidents and non-compliance\n### Refining and logistics\nThe Water Technology Development Centre is one site where Suncor can test new water technologies. Located at our Firebag in situ facility in northern Alberta, the centre is a first-of-its-kind demonstration site for COSIA partner companies to pilot water treatment technologies. Read more here.\nOur refineries use fresh water for heating and cooling. All refineries have unique requirements and considerations based on the watersheds in which they operate. The refining and logistics freshwater consumption intensity stayed consistent at $0 . 2 3 ~ \\mathsf { m } ^ { 3 } / \\mathsf { m } ^ { 3 }$ refined liquid hydrocarbon production. We continue to explore and implement local initiatives that will result in more efficient water use, with less fresh water drawn from local water sources.\n### Exploration and production\nNone of our assets operate in areas of high risk of water stress. However, Suncor’s Commerce City refinery in Colorado operates in a region that is classified as moderate risk, where water supply shortages would require bringing in water by pipeline or truck. We continue to monitor the status of the basin while focusing on implementing industry-leading innovation at our facilities to reduce, reuse and return water.\nIn our East Coast Canada offshore operations, water is either produced offshore through desalination, or is transferred via vessel from St. John’s, N.L. Water data for our Terra Nova Floating, Production and Offloading facility will be reported in 2024.\n### Signs of progress at the micro level\nPeter Dunfield has spent a long and distinguished career poking around rice paddies, peatlands, volcanoes and tailings facilities searching for nature’s tiniest grazers, single-celled microorganisms that chew up methane. That quest led the University of Calgary microbiologist to Mildred Lake West’s in-pit tailings facility in 2012, where he and his team isolated, identified and described two new micro-organisms – Methylicorpusculum oleiharenae and Oleiharenicola alkalitolerans. “You have to use Latin when describing new species. The first means smallbodied methyl-eater while the second one is alkali-tolerating oil sands dweller,” says Peter. “Identifying these new species is fun, although our main job is to monitor the microbial communities in Base Mine Lake using DNA signatures and compare them to an active tailings facility and a natural lake.” In the case of Methylicorpusculum oleiharenae – the small-bodied methane eater – what interests Peter is that the micro-organism is now almost nonexistent in Base Mine Lake eight years later. “That particular micro-organism has now almost disappeared from Base Mine Lake, which is an indication the lake is no longer a tailings facility,” he says. “There are still methane-eating bacteria in Base Mine Lake, but different ones have colonized the lake because the conditions have changed and that’s a sign of progress. There have been dramatic changes in the microbes in the lake over the past six years – it really doesn’t resemble a tailings facility anymore. It’s somewhere in between a tailings facility and a natural lake now.” Read more here\nIt really doesn’t resemble a tailings facility anymore. It’s somewhere in between a tailings facility and a natural lake now.\nPeter Dunfield University of Calgary\n### Tailings management", "chunk_word_count": 536, "section_path": "Report on Sustainability 2023 > 2022 environmental incidents and non-compliance > Refining and logistics", "document_id": "Suncor Sustainability Report 2023", "page": 24, "page_start": 24, "page_end": 24 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 19, "chunk_text": "# Report on Sustainability 2023\n## 2022 environmental incidents and non-compliance\n### We use world-leading practices to responsibly manage tailings at our mine sites.\nWhen tailings are poured, the sand quickly separates to form coarse tailings deposits. Smaller particles of clay and silt remain suspended in water and form fluid tailings. Treatment of fluid tailings expedites the separation of the suspended clay and silt particles from the water. Many of our technology improvements focus on treating fluid tailings. Treating fluid tailings quickly and cost-effectively, as well as safely releasing water from our sites once regulations are in place, is critical to improving our overall reclamation performance and moving toward mine closure.\nWe use the coarse tailings to backfill completed mine areas and build dam structures. Coarse tailings are ready for use in reclamation once they are placed in their final location and incorporated into the closure landscape. We use robust operational management systems that emphasize:\n• corporate accountability for tailings management • effective operations integrity and governance • robust dam safety management.\nWe currently treat more fluid tailings than we produce at our Base Plant site due to our holistic tailings management approach and permanent aquatic storage structure (PASS) treatment process. We are also progressing several tailings facilities to closure and will be increasing treatment capacity in the next few years. Our work to treat and dewater fluid tailings supports our reclamation and closure plans.\nThe continued integration of Syncrude and the adoption of a regional operating model has allowed for more effective sharing of best practices across our mining and tailings operations.\n[IMAGE CAPTION] Tailings management Treating and reclaiming tailings\n### Regulatory requirements\n## CDAACB\nThe Alberta government developed the current Tailings Management Framework (TMF) in the Lower Athabasca Regional Plan to provide direction to manage fluid tailings volumes. The Alberta Energy Regulator also implemented Directive 085: Fluid Tailings Management for Oil Sands Mining Projects, as a key part of TMF implementation, to minimize fluid tailings inventories through treatment and progressive reclamation during the life of a project.\n### Dam safety recognized\nThe Canadian Dam Association recognized Suncor for excellence in dam management with its 2021 corporate award. Our dam safety program protects the integrity of tailings structures through extensive checks and balances for design, construction and operations, as well as a series of internal and external reviews and formal audits. Responsible management of our tailings facilities is also a key component of the Mining Association of Canada’s (MAC) Towards Sustainable Mining (TSM) initiative. As a member, Suncor follows industry best practices in safe tailings dam operations. Internal assessments are required annually, with an independent, external verification every three years. Through our membership in the MAC TSM, we continue to monitor our alignment with the expectations outlined in the Global Industry Standard on Tailings Management. Read more here.\nOur tailings management plans align with the TMF and Directive 085. These plans incorporate what we’ve learned by implementing various treatment technologies, sharing information and best practices with Canada’s Oil Sands Innovation Alliance (COSIA) members and extensive engagement with communities.", "chunk_word_count": 509, "section_path": "Report on Sustainability 2023 > 2022 environmental incidents and non-compliance > We use world-leading practices to responsibly manage tailings at our mine sites.", "document_id": "Suncor Sustainability Report 2023", "page": 25, "page_start": 25, "page_end": 26 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 20, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Dam safety and integrity\nWe ensure integrity of tailings dam structures through extensive checks and balances for design, construction and monitoring. This includes a series of internal and external reviews.\nStrict requirements govern tailings and dam safety in Canada. The Alberta government has established industry-leading practices for dam safety management. We use a panel of external experts to conduct annual reviews.\nOur dam safety programs are world-class and consistent with the Alberta Dam Safety Directive. One aspect of this comprehensive directive requires operators to test dam-breach emergency preparedness with external stakeholders. Industry conducts exercises from time to time, including with the Regional Municipality of Wood Buffalo’s (RMWB) Regional Emergency Services Centre. Suncor Base Plant conducted a regional test with external stakeholders in March 2023.\nOur tailings management and dam safety practices follow our Operational Excellence Management System. This directs inclusion of improvements from the ongoing development of geotechnical engineering practices and industry-leading tailings and dam safety guidelines and regulations. We employ specialized and experienced engineers – referred to as engineers of record – for each tailings facility and their associated dam structures. These individuals are qualified to lead the design work for those facilities. They work with internationally experienced design consultants, referred to as designers of record. Independent external boards also review and critique ongoing design, construction and operation of our tailings facilities several times a year. We also report to our Environment, Health, Safety and Sustainable Development committee of the Board. The Executive Vice President Operations for Mining and Upgrading is the executive responsible for dam safety.\n### Engagement\nWe engage and work with Indigenous communities and stakeholders to review our approach to tailings management and share progress and challenges. We also incorporate feedback into future engagement plans to improve information sharing. Annual engagement sessions are hosted for communities to offer feedback on our approach to tailings management. We were pleased to welcome back Indigenous community members and government representatives for in-person tours of reclaimed sites and projects when pandemic restrictions lifted in 2022.\n### Technology\n### Flocculated tailings\nFinding ways to manage tailings is critical to reclamation planning and performance. What works for one mine may not work for another due to site-specific conditions. We have implemented a suite of technologies to manage tailings inventories and are developing more.\nIn 2007, Syncrude began developing a new low-energy technology to treat fluid tailings. This involves treating fluid tailings with a coagulant, followed by in-line flocculation with a polymer to produce a material called flocculated tailings. This material is hydraulically placed in deep deposits for terrestrial reclamation. A pilot plant operated successfully for a number of years and Syncrude is now commercializing the technology in a staged approach.\nAt Base Plant, implementation of the TRO™ and the PASS fluid tailings treatment processes have reduced fluid tailings volumes. The Syncrude mines, Mildred Lake and Aurora, have made progress through technologies such as centrifuging and composite tailings as well as a commercial-scale pit lake demonstration.\nWe share our research and development findings with other operators through organizations such as COSIA to continuously improve tailings management.", "chunk_word_count": 521, "section_path": "Report on Sustainability 2023 > CDAACB > Dam safety and integrity", "document_id": "Suncor Sustainability Report 2023", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 21, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Tailings performance\nWork continues to manage and treat tailings. As mining operations have expanded, the volume of fluid tailings has increased. We manage and treat our fluid tailings based on approved and regulated plans for each of our sites.\n[IMAGE CAPTION] For additional information about this chart and its data, please refer to performance data footnote #10.\nWe continue to implement new technologies to increase treatment capacity in support of accelerated reclamation. The integration of our mining operations will lead to further opportunities to share best practices towards reducing tailings fluid volumes. Our Fort Hills mine is early in its life cycle and will benefit from the treatment technologies developed, tested and implemented at our legacy mines.\nIn addition to managing fluid tailings inventories, all assets must manage annual precipitation, which adds to our fluid storage volume. Without effluent regulations allowing for the safe release of treated water, we continue to manage any additional water by adding it to our stored fluid inventory. Despite the increase in stored water, we continue to focus on progressive reclamation and progress toward mine closure by advancing more tailings facilities to closure in a safe and environmentally responsible way.\n### Tailings facilities status to closure\n### Land and reclamation\n### Energy development disturbs land. To help address this, we create and implement detailed reclamation plans to mitigate the impact of our operations.\nAt Suncor, we find ways to reduce the amount of land we disturb and focus on facilitating the return of a biologically diverse landscape and naturally sustainable ecosystems after project development. To do this, we are:\n• reducing the impact of our operations on the environment through scientific research and implementing best management practices • collaborating with neighbouring companies to reduce cumulative effects of development\nprogressively reclaiming disturbed lands no longer required to support operations\nWe’re committed to preserving and promoting biodiversity in all areas where we work. This includes conserving habitat and reclaiming the landscape we’ve disturbed. To read more about how we do this, see our Biodiversity section on page 30.\n• working with industry peers and multi-stakeholder organizations on initiatives to conserve and reclaim habitat for birds, mammals, fish and other species\nWe engage with Indigenous communities on our reclamation practices. To read more about this, see our Indigenous relations section on page 45.\n• integrating traditional knowledge from Indigenous Peoples.\nHow the land will be used following reclamation and closure is referred to as end land use. This is an important consideration throughout the life cycle of a project, from initial planning through to final reclamation.\\* This includes considerations such as what species of trees and shrubs to plant and when and where to plant them. Before developing a new mine or in situ project, our plans outline the life of the project through to reclamation and closure. We update plans regularly throughout the project and incorporate changes, new knowledge and technologies as they are developed. The Alberta Energy Regulator must authorize reclamation and closure plans for all new projects in Alberta and approve updated plans as they are developed.\n### Reclamation process\n### Reclamation performance\n### Study sees natural progress in reclaimed lands", "chunk_word_count": 534, "section_path": "Report on Sustainability 2023 > CDAACB > Tailings performance", "document_id": "Suncor Sustainability Report 2023", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 22, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Mining\nSince Suncor began Base Plant operations in 1967, we have reclaimed approximately $1 1 \\%$ of the total active footprint, bringing our cumulative total to 2,496 hectares (ha). In 2022, the total land disturbed at Base Plant increased slightly to a cumulative 18,313 ha. We planted approximately 107,750 tree and shrub seedlings, bringing the total cumulative seedlings planted to more than nine million. With the mineable resource at Base Plant’s Millennium and North Steepbank Extension mines anticipated to be depleted in the next decade (2030s), we are working to add detail to our plan for reclamation and closure of the site. This will include further engagement with local Indigenous communities.\nA new study looking at almost four decades of data identified a wide variety of native plants, usually found in natural undisturbed boreal landscapes, have returned to reclaimed sites. “Our reclaimed sites demonstrated promising and accelerating patterns of convergence toward those found in undisturbed boreal sites,” says Craig Farnden, a revegetation specialist who analyzed data from almost 200 reclamation sites across Mildred Lake, with the earliest planted in 1980. “Our reclamation practices have evolved over time to better conserve seeds and vegetative fragments in reclamation soils that can grow into entire plants, and better facilitate native species immigration. This sets the stage for nature to do what nature typically does. Through this work, we are meeting the expectations that neighbours and regulators place on us to do it right.” Learn more here.\nOur Fort Hills site started production in 2018 and has disturbed 7,099 cumulative ha, which is $6 \\%$ higher than 2021. Fort Hills is in the early stage of development with limited reclamation opportunities at this time. We plan to progress reclamation as quickly as possible when areas are no longer required for operations.\nSyncrude started operating in 1978 and since that time, more than 6,000 ha has been reclaimed, in addition to 104 ha of land certified and returned to the Crown. This represents about $1 9 \\%$ of the land disturbed to date. In 2022, approximately 894,000 seedlings were planted, bringing the total to 12.7 million trees and seedlings.\n### In Situ\nSince our Firebag and MacKay River in situ projects began operating in 2004 and 2002 respectively, approximately 76 ha of land have been permanently reclaimed and are being monitored. We also received 11 reclamation certificates from the Alberta Energy Regulator in 2022 for borrow pits used to construct the East Athabasca Highway, the main access road into the Firebag site. More than 21,500 trees and shrubs were planted at Firebag in 2022. The seedlings were grown from locally sourced stock and included species of interest to Indigenous communities.\nLand disturbed cumulative hectares", "chunk_word_count": 457, "section_path": "Report on Sustainability 2023 > CDAACB > Mining", "document_id": "Suncor Sustainability Report 2023", "page": 29, "page_start": 29, "page_end": 29 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 23, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Finding fens naturally\nMother Nature always finds a way. That’s something Jon Hornung – Sustainability Advisor for Technology Innovation – has learned in more than 20 years of studying life everywhere from the boreal forest of northern Alberta to rainforests in central America. The environmental scientist has seen that unfold again on reclaimed landscapes. “We have found wetlands forming, even in areas that were originally planted as upland forests decades ago. And that’s very important given how important wetlands are for boreal ecosystems,” says Jon. To find the right areas with the right soil moisture for future wetlands, Suncor used remote sensing from satellites across its reclaimed areas. “It shows we have opportunities to help create wetlands without the costs associated with engineered landforms,” Jon says. “We don’t have to over-engineer wetlands. These things happen on their own and we need to understand how that happens and encourage it on our reclaimed landscapes.”\n### Biodiversity\n### We’re committed to preserving and promoting biodiversity in all areas where we work. This includes conserving habitat and reclaiming the landscape we’ve disturbed.\n### Our approach\nThroughout the life cycle of our projects, we seek to avoid, minimize, restore and/or offset impacts to biodiversity from our operations. We do this by:\n• employing mitigations such as wildlife crossings, low-impact seismic, waste management procedures and managing humanwildlife interaction to reduce conflicts\n• incorporating the principles of the mitigation hierarchy,\\* integrated land use and management planning processes into project design, construction, operation, reclamation and closure\n• measuring and reporting our performance against the Mining Association of Canada’s Towards Sustainable Mining Biodiversity Protocol • engaging with local Indigenous communities (read more about this in our Indigenous relations section)\n• mapping our disturbance footprint and using monitoring tools such as wildlife sweeps to understand and ensure our development activities avoid sensitive environmental areas and wildlife potentially affected by our activities\n• working internally, with industry peers and with multi-stakeholder organizations to monitor, conserve, restore and reclaim habitat for birds, mammals, fish and other species, including species at risk such as caribou.\n• minimizing disturbances to the greatest extent possible while considering multiple factors, including safety, operations and the environment\n### Monitoring to protect wetland diversity\nTo consider the potential impacts mining has on biodiversity within the McClelland Lake wetland complex (MLWC) at Fort Hills, we developed the mitigations and monitoring measures in the MLWC Operational Plan after extensive work and a thorough review by the regulator. These include an ongoing monitoring and response framework approach with increasing levels of monitoring, investigation and mitigation, as required, for the life of the mine. Combined with ongoing evaluation and oversight by the MLWC sustainability committee, the operational plan is intended to protect biodiversity of the MLWC through mine closure. No Net Loss Lake has been constructed to compensate for changes to fish habitat that will happen as a result of the Fort Hills mine development. Working with Fisheries and Oceans Canada, the lake was created to provide an ideal fish environment. Local Indigenous communities reviewed monitoring programs and are kept informed on an ongoing basis with respect to the monitoring and evolution of this lake.\n### Mitigation hierarchy", "chunk_word_count": 535, "section_path": "Report on Sustainability 2023 > CDAACB > Finding fens naturally", "document_id": "Suncor Sustainability Report 2023", "page": 29, "page_start": 29, "page_end": 30 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 24, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Potential impacts\nAvoid\nMinimize\nRestore\nOffset\nBefore we begin we aim to avoid or prevent impacts\nIf impacts cannot be avoided, we strive to minimize them\nWe take action to address the negative impacts created by our activities\nEven after undertaking mitigative measures, there may still be residual impacts as a result of our activities\n### Biodiversity monitoring and evaluation\nWe monitor biodiversity in and around our operations and reclaimed sites in accordance with our regulatory commitments and aligned with broader regional initiatives such as the Canada-Alberta Oil Sands Monitoring (OSM) Program. Reclaimed terrestrial, wetland and aquatic areas are monitored according to site-specific reclamation monitoring plans that assess the components of biodiversity while vegetation regrows and ecosystems develop over time. This monitoring allows us to collect soil, vegetation, wildlife use and water quality information to support reclamation certificate applications once it’s determined requirements have been met. We further evaluate biodiversity across our sites through wildlife monitoring. This is conducted in accordance with approved site-level wildlife mitigation plans that include bird deterrents at ponds; the use of wildlife crossings over above-ground piplines; and strategies to manage human wildlife interactions.", "chunk_word_count": 196, "section_path": "Report on Sustainability 2023 > CDAACB > Potential impacts", "document_id": "Suncor Sustainability Report 2023", "page": 30, "page_start": 30, "page_end": 31 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 25, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Lessons learned at COP15\nSuncor representatives attended the Conference of the Parties (COP) 15, the United Nations Biodiversity Conference, held in Montreal in December 2022. All the member states at COP15 agreed to adopt a Global Biodiversity Framework, which includes a pledge to protect $3 0 \\%$ of the world’s lands and oceans by 2030. Other goals and targets include reducing the loss of biodiversity, restoring ecosystems and protecting Indigenous rights. “As an organization, we understand the importance of biodiversity and Canada’s commitment to goals and targets of the framework. Being at COP15 highlighted the increased expectations of global stakeholders and reinforced the urgency to address biodiversity loss along with climate change and not waiting until we’ve met net-zero commitments,” says Mark Boulton, Suncor’s Biodiversity and Land Use Policy lead, who attended COP15. “At the end of the day, we’re trying find a way to balance our disturbance with reclamation, conservation and protection. It will all be important as we work toward contributing positively to biodiversity and strive for more nature tomorrow than we have today.” Read more about Mark’s thoughts on COP15 here.\nApproximately $5 0 \\%$ of Suncor’s oil sands lease areas in northern Alberta are within or near the range boundaries of the caribou, which is listed as vulnerable on the IUCN Red List of Threatened Species. These leases are also entirely within the geographic range of little brown bats and are located along the migratory route of whooping cranes. Both of these species are listed as endangered. Through remote cameras, we are able to monitor wildlife both in reclaimed areas and in proximity to our oil sands operating sites. Notable species observed using reclaimed habitat include the Canadian toad, Canada warbler and olive-sided flycatcher.\nIn collaboration with our industry peers, stakeholders and regulatory agencies, we work with organizations such as the Alberta Biodiversity Monitoring Institute, the OSM Program and Canada’s Oil Sands Innovation Alliance (COSIA) to:\n• mitigate and monitor the impacts of our operations, such as waterfowl landings on our tailings facilities\n• understand and reduce the cumulative effects of oil sands development\n• address regional biodiversity risk.\nWe have partnered with Alberta Environment and Protected Areas and the University of Alberta on a project to better understand bear behaviour near industrial sites and improve worker and bear safety. “The collaring project – a first in industry that started May 2022 and will conclude in September 2023 – will provide a better understanding of how bears move around our facilities and react to our programs,” says Rebecca Paton, Suncor’s Wildlife Specialist. Up to 50 Black bears will be collared on or near our Firebag and Base Plant facilities with highly visible orange, yellow, and tan collars. As the collared bears move around, they may be observed both inside and outside our operating area.", "chunk_word_count": 476, "section_path": "Report on Sustainability 2023 > CDAACB > Lessons learned at COP15", "document_id": "Suncor Sustainability Report 2023", "page": 31, "page_start": 31, "page_end": 31 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 26, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Lessons learned at COP15\nThe OSM Program was formed out of a recognized need to create a robust, reputable and science- and traditional knowledge-based monitoring system in the oil sands region. The goal for the program is to provide assurance to local communities, the province, the country and the international community that oil sands resources are being developed responsibly. As key funders, we have significant interests in ensuring the program succeeds. We believe we add value as the OSM Program aims to highlight key questions and pursues increased transparency, improved governance and meaningful stakeholder engagement.\n### Caribou recovery and conservation\nComplex combinations of natural- and human-caused factors in the oil sands region have created landscape changes and indirectly increased predation, resulting in declining caribou populations. We recognize that we must contribute to caribou recovery and conservation while mitigating our impacts on the environment.\nWe are a member of COSIA’s Regional Industry Caribou Collaboration joint industry project. The project works with academics, the Government of Alberta and the Alberta Biodiversity Monitoring Institute Caribou Monitoring Unit to co-ordinate restoration in priority areas, find new ways to improve biodiversity understanding, and restore habitat throughout northeast Alberta. These efforts all play a role in caribou recovery.\n### Land conservation\nWe value multi-stakeholder approaches to address industry impacts on the environment.\nWe have partnered with the Alberta Conservation Association for nearly 20 years through the Boreal Habitat Conservation Initiative to help secure more than 4,000 hectares of ecologically sensitive land across 43 different conservation sites in Alberta. As voluntary offsets, these areas of intact boreal forest and wetlands have served to preserve biodiversity by ensuring the components of the larger boreal forest ecosystem have remained undisturbed.\n### Protecting Pacific marine habitats\nKeeping wildlife at a safe distance from our operations isn’t easy, especially since none of our employees have wings. That’s where the falcons trained by Predator Bird Services come in handy. They prevent ravens from roosting at our plants in the Wood Buffalo region. Learn more here.\nSuncor relinquished three legacy exploration permits off the coast of British Columbia in 2022. These licences, which cover an area about two-thirds the size of Vancouver Island, overlap with two sensitive marine habitats. Both contain diverse marine ecosystems that include the highest concentration of breeding seabirds on Canada’s Pacific Coast and the largest living example of glass sponge reefs in the world. Scientists thought the reefs had been extinct for more than 40 million years before their discovery in 1984. “Surrendering these licences aligns with our values as a company and is something that everyone at Suncor can be extremely proud of,” explains Ken Saunders, Vice President, Engineering & Geoscience. Learn more here.\n### Social\nSafety \nHealth and wellness \nWorkforce \nInclusion and diversity \nIndigenous relations \nSocial investment \nHuman rights\nWe’re working hard to create a safe and inclusive work environment while building and maintaining relationships with local communities, Indigenous Peoples and stakeholders.", "chunk_word_count": 493, "section_path": "Report on Sustainability 2023 > CDAACB > Lessons learned at COP15", "document_id": "Suncor Sustainability Report 2023", "page": 31, "page_start": 31, "page_end": 33 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 27, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Safety above all else.\nThe importance of safety is reflected in the steps we have taken to address our performance.\nWe are executing a clear and accelerated plan to improve our safety performance. It emphasizes these key areas and is aligned with our Operational Excellence Management System:\nFatalities occurred at our Base Plant site on January 6 and July 7, 2022. The first incident happened when a heavy haul truck rear-ended another heavy haul truck while they were both driving up a mine ramp. The second involved a falling piece of equipment from a crane striking a technician who was performing scheduled maintenance activities on a mining shovel.\n• strengthening operational risk management, including ensuring appropriate mitigations are in place to fail safely \n• creating leadership capacity and engaging with frontline workers • learning with purpose \n• improving contractor management \n• adopting technologies to prevent incidents.\nWe know we must do better. We are committed to the well-being of everybody who sets foot on our sites, whether they are visitors, contractors or employees. It’s important to build a culture where people can confidently raise concerns, report hazards and encourage each other to be safety leaders.\nWe’re fully committed to improving our safety performance and ensuring all our workers go home safely every day.\n### Human and Organizational Performance principles\nWe have taken clear steps to address our performance.\nWe diagnosed gaps to understand where we could improve through a 2021 assessment led by third-party safety experts, where we benchmarked global best practices with an emphasis on mining.\nWe have begun integrating Human and Organizational Performance (HOP) principles in our approach to managing safety. We introduced this philosophy, which has been recently adopted by major international companies, to our mines in 2021. We have scaled this to the rest of our organization in the fall of 2022. HOP helps us to understand how humans perform and gives us a framework for building a more robust, resilient organization that can fail safely when inevitable errors occur.\nWe applied those findings to bolster our leadership capacity and capability. We also increased the weighting for safety for our annual incentive in 2023.\n### The five HOP principles\n### People make mistakes\n### Learning is vital", "chunk_word_count": 379, "section_path": "Report on Sustainability 2023 > CDAACB > Safety above all else.", "document_id": "Suncor Sustainability Report 2023", "page": 34, "page_start": 34, "page_end": 34 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 28, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Response matters\nAlthough error is not desirable, this is simply an acknowledgement that errors are inevitable and normal.\nIf we don’t learn about the conditions in which work is happening, we don’t change them, and we spend time fixing the wrong things.\nLeaders need to understand that how they respond matters. Leaders need to actively manage their response to failure in ways that enable learning and growth.\nBlame fixes nothing\nContext drives behaviour\nPeople involved in incidents play an important role in the process of learning from those incidents. Shifting our culture from blame to accountability will enable better learning and create better outcomes.\nEmpathy and curiosity help us understand the reasons why people make decisions. By understanding why people do what they do, we can improve the conditions that may lead someone else to make the same mistake in the future.\nApplying HOP principles is a critical step in building a culture grounded in trust and engagement. This will drive a safety culture change that:\n• has visible leaders who engage more with our frontline workforce to hear their solutions to complex safety challenges and design systems to mitigate serious harm when incidents do occur \n• simplifies the safety procedures, documents, roles and activities that exist on the ground and online \n• builds field leadership capability and capacity so our frontline leaders have the tools, training, resources and time needed to drive safe and reliable operations.\n### Operational excellence\nThe Operational Excellence Management System (OEMS) ensures we use standardized processes, data and tools to reduce risk, simplify work and improve performance. It promotes:\n• systematic management of operational risk \n• achievement of our operational objectives \n• prevention and mitigation of adverse environmental and social impacts • development and sharing of best practices.", "chunk_word_count": 301, "section_path": "Report on Sustainability 2023 > CDAACB > Response matters", "document_id": "Suncor Sustainability Report 2023", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 29, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Rewriting to improve safety\nAaron Gordon deals with a lot of forms and paperwork as a Process Operator at Base Plant’s Steepbank Extraction facility. So when he was asked to help rewrite the Field Level Hazard Assessment, a key safety tool to help him and other workers in his area recognize potential hazards while they are working, Aaron jumped at the chance. “People were willing to give feedback because it was driven by their peers on the front line rather than having upper management roll something out without getting input from frontline workers,” he says. “And having this assessment document makes me feel safer when I go to work. I know people working in my area are identifying the potentially serious hazards because they are having to think about them, not completing a boxchecking exercise.” Read more here.\nWe restructured the senior leadership team in 2021 to increase operational experience at the executive level and created a centralized Operational Risk Management (ORM) organization. These moves strengthened operational excellence and safety performance and are aligned with global best practices.\nThe ORM team has increased the support of our OEMS, including risk management support by consolidating key services into one function. These changes will improve our performance by providing operations with the necessary support, processes and tools to effectively identify and manage risk.\nWe have started the rollout of the Operational Excellence Leadership Experience at all leadership levels in operations. This program is focused on how to lead and create a culture of operational excellence. It is designed to cascade right to the frontline workers in our organization.\n### Contractor management\nContractors perform a lot of critical work at our operations. We have a process in place to pre-qualify contractor companies to ensure they can safely execute work on our sites. We are examining ways to improve that qualification process.\n… having this assessment document makes me feel safer when I go to work.\nWe have shared with contractors the safety tools used with our employees. These include toolbox talks that provide safety messages and information for frontline workers, findings from incident investigations and other documentation and programs.\nWe have also started a process called “risk levelling” for contractors to assess what is required for specific projects or activities performed by their workers through a job hazard analysis. If there is an elevated level of risk, they must complete specific safety plans to perform that work.\nAaron Gordon Process Operator\n### Operational controls\nWe’re identifying and maximizing opportunities for safe work practices and procedures across the organization. We conduct audits and management reviews to ensure our practices are effective. This includes using technology for operational controls, such as electronic permitting systems at many of our sites. Frontline workers help create these new systems as we seek additional opportunities for standardizing how we work that will include input of those workers.", "chunk_word_count": 486, "section_path": "Report on Sustainability 2023 > CDAACB > Rewriting to improve safety", "document_id": "Suncor Sustainability Report 2023", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 30, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Emergency management\nEffective emergency management protects people, property and the environment. All our assets follow the principles of the international Incident Command System. This global system provides a standardized enterprise-wide approach to improve effectiveness and efficiency when responding to an incident. It also aligns our practices to those of our governments, regulators and peers. Our operating sites follow a schedule of tabletop and field-based emergency drills.\n### A “game changer” for safety\nJason Mercer has operated heavy equipment in mines for more than two decades, with the last 17 years at the Aurora mine, about 75 kilometres northeast of Fort McMurray. And he sees the collision awareness system as a “game changer” for safety. “Given the size of the equipment, some of the tasks we perform and the operating conditions, this new system is, by far, one of the best things I’ve seen during my time in mining,” says Jason, a frontline leader who now coaches operators at the mine. Suncor will install the system on more than 1,000 pieces of mining equipment and vehicles. This system will be fully implemented at all Suncor mine sites. Read more here.\n### Ensuring alertness at the wheel\nFatigue is a normal part of our lives. For haul truck operators, managing fatigue plays a crucial role in workplace safety. Suncor has tested the Driver Safety System, an in-cab technology with a camera that monitors the operator’s facial and eye movements through a 24-point scan. The system is activated by a microsleep or distraction event and alerts the operator through an audio alarm and seat vibration. After a successful pilot, we’ve started installing this system on our haul truck fleet at Base Plant. This system will be fully implemented at all Suncor mine sites. Read more here.\n### Training\nMore than 95,000 hours in 2022 were spent on environment, health and safety training across the organization. This includes self-directed, instructor-led classroom and on-the-job training, in addition to peer-delivered training.\nMore than 5,000 hours of formal simulator-facilitated training was delivered to approximately 165 control room operators.\nMobile equipment and mine simulators also provide regular training practice to frontline mine workers.\nFor additional information about this chart and its data, please refer to performance data footnote #12. Due to methodology differences, Syncrude SIF events are only included in the Suncor total starting in 2021 to align with operational control. Methodologies are being assessed for future alignment and reporting.\n### Health and safety performance\n### Serious Injury and Fatality (SIF)\nWe are focused on eliminating fatalities and serious injuries. Increasing the visibility of SIF exposures allows us to identify and address their precursors. It encourages learning and improved safety performance across our operations. We tragically experienced four SIF events in 2022, two fatalities and two serious life-altering injuries. We expect enhanced guidelines and a targeted focus on critical controls to identify and reduce SIF incident risks.\nRecordable Recordable injury frequencyinjury frequency Injuries per 200,000 hoInjuries per 200,000 hours worked\nWe have also strengthened the alignment of our incentive compensation plans by doubling the weighting related to safety performance.", "chunk_word_count": 519, "section_path": "Report on Sustainability 2023 > CDAACB > Emergency management", "document_id": "Suncor Sustainability Report 2023", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 31, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Recordable Injury Frequency (RIF)\nSuncor operating sites recorded a full-year RIF of 0.37 in 2022. Suncor has maintained a low RIF trend for the last five years with an $8 \\%$ decrease since 2018. As we learn from these events, we continue to focus on injury prevention and determining root causes.\nLost Time injury fLost time njuries per 200,000 hours workedinjury frequency Injuries per 200,000 hours worked\n### Lost Time Injury Frequency (LTIF)\nOur LTIF has remained stable over the past five years. Similar to RIF, the main causes of injury continue to be slips, trips and falls, and “line of fire” (being in the path of a moving object, release of energy or hazardous substance). Programs have been implemented to address these safety issues and include enhanced awareness of safety processes, personal protective equipment and identifying hazards before starting activities. An example of this is the mandatory use of traction aids for icy and/or slippery conditions.\n### Process safety and loss of primary containment incidents\nAlberta Mine Safety Association (AMSA), International Association of Oil & Gas Producers (IOGP) and Energy Safety Canada safety data is used for benchmarking purposes, and is based on the most recent and best available data sets. For additional information about this chart and its data, please refer to performance data footnote #12.\nIn 2022, our loss of primary containment (LOPC) events increased due to cold weather-related incidents that occurred in the first and fourth quarters. To reduce the likelihood of these events, we are focusing on strengthening our operational controls related to winterization.\nWe are also making progress in our application of critical process safety programs. This includes identifying instrumented safeguards; implementing and stewarding maintenance programs to achieve the required level of risk mitigation; and monitoring and reporting impacts to our operating parameters. Our ongoing focus on process hazard analysis and management of change ensures we keep an objective eye on reducing risks in our operating areas. We continue to implement new digital technologies across the enterprise to improve safety, productivity and reliability, and to reduce costs.\n[IMAGE CAPTION] Not all LOPC incidents are environmental in nature, but they are all related to process safety. For additional information about this chart and its data, please refer to performance data footnote #12.\n### Health and wellness\n### Our people’s safety and well-being are of the utmost importance.\nWe are building a culture that reflects our values and is grounded in trust and inclusion. This allows our employees to be their best and contribute their best every day in the workplace, at home and within their communities. We take a holistic approach to wellness by understanding the interconnected four elements of well-being – social, psychological, financial and physical – and their effect on overall health. We strive to foster a resilient and thriving workplace where we take care of each other and people feel safe and supported.", "chunk_word_count": 489, "section_path": "Report on Sustainability 2023 > CDAACB > Recordable Injury Frequency (RIF)", "document_id": "Suncor Sustainability Report 2023", "page": 37, "page_start": 37, "page_end": 38 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 32, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### A focus on psychological safety and employee well-being\nFoundational safety principles, such as mind on task, can only be achieved when we are healthy and well, both physically and mentally. We continue to evaluate the needs of our team and provide support to focus on overall well-being, including psychological well-being. Indicators of psychological well-being include a person’s level of happiness, life satisfaction, contribution and positive mental health. These are critical components of being fit for duty. Those struggling with mental health issues can experience cognitive and physical fatigue. This could impair decision-making, decrease reaction time and attention to detail, resulting in injury.\n[IMAGE CAPTION] 4 pillars of well-being\n### Mental Health 101\nEven during the darkest days of the COVID-19 pandemic, Iordanka Petzanova saw a silver lining. “There was an increased awareness about mental health issues and the need to address them in the workplace. And the data was showing the highest instances of disability claims for mental health were occurring in our frontline workers and leaders at Base Plant,” says Iordanka, Suncor’s Mental Health Specialist. She created a training package for frontline leaders at Base Plant to recognize warning signs for people struggling with their mental health, how to have conversations about the topic and how to use Suncor’s health and wellness resources. More than 55% of leaders at Base Plant have completed the training. Suncor is now in the process of expanding the training to the rest of its operations. Industry peers have also expressed interest in the content.\n### Resources and support\nResources are available year-round, including counselling support, to help people manage their mental health and work safely. These tools and resources empower leaders and individuals to take responsibility for well-being and embed that mindset across the organization.\nOur training programs and resources aim to promote a psychologically safe environment and break the stigma around mental health issues. One example is the Mindfulicity webbased program, launched in 2020. The program has 10 modules relating to mental health and is designed to help people focus attention, emotions and sensations in the present, while creating a psychologically safe and inclusive space for all. The program is available to employees, their families and contractors.\nWe also support workers and their families through the Employee and Family Assistance Program (EFAP). EFAP is accessible 24 hours a day, and includes clinical counselling, workhealth-life services, professional advice and a learning portal. Counselling services and the portal are available in English and French.\n### A café with well-being on the menu", "chunk_word_count": 426, "section_path": "Report on Sustainability 2023 > CDAACB > A focus on psychological safety and employee well-being", "document_id": "Suncor Sustainability Report 2023", "page": 38, "page_start": 38, "page_end": 39 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 33, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Ergonomics\nWhether you prefer Starbucks, Tim Horton’s or an independent coffeehouse, many of us use those venues to connect with friends and catch up on their lives. That was the inspiration for the Well-Being Café, a virtual equivalent for Suncor workers. “It started as Feel-Good Fridays, where we could connect virtually and informally, as if you were at a café having a conversation with a friend,” says Jen Huebner, Suncor’s Well-being Advisor. “The most important thing is they were interactive, whether you posted in the chat or shared directly during the 45 minutes.” Those weekly sessions have evolved into the Well-Being Café, where different subject matter experts give a short presentation on different areas of well-being. “There’s a wide range of topics because we cover all four pillars of well-being – physical, psychological, social and financial. One week, it might be something on benefits. Another week, it could be on our SunCares program for employee volunteers.” The sessions are recorded and edited so field workers have access to presentations in toolbox talks and other non-wired venues. “Wellbeing is important wherever you work.”\n“Whether you work at home, in the mine or in the field, your main tool is your body. You need to look after it. Most of us don’t know our strengths and limitations,” says Suncor’s Ergonomist and Human Factors Specialist Danielle Lemay. “When you better understand this, you can better use it and listen to it.” Danielle joined Suncor four years ago and is developing governance to better manage ergonomics and human factorrelated hazards in the workplace with the aim of preventing musculoskeletal injuries. This will include ergonomics training and assessments for office and field workers. “No matter where you work, we want to make sure you are healthy and safe.”\n### Workforce\nA safe, talented, productive and engaged workforce is key to our success. The ongoing care of and for our people at all levels of the organization will enable us to be a highperforming organization.\n### Workforce changes\nSuncor has undergone changes to its workforce in recent years to improve efficiencies and our overall cost structure. We will continue to monitor our organizational model and total cost of workforce to achieve efficiency and effectiveness.\n### Recruitment and development\nWhile we’re working to develop the team we need today, we’re also planning for future workforce needs. We use integrated workforce planning to identify the skills and capabilities we need across the organization. We hire locally where possible. This work allows us to strategize for and recruit the right balance of early talent, mid-career employees and senior contributors, ensuring our workforce meets our strategic needs now and in the future. We continue to monitor economic conditions to understand the labour market.\nTo build the skills and knowledge needed for careers in trades and operations, we partner with community and non-profit organizations as well as post-secondary institutions that offer training for our workforce. We also offer opportunities to students through internships, co-op terms and an Indigenous Student Program.", "chunk_word_count": 507, "section_path": "Report on Sustainability 2023 > CDAACB > Ergonomics", "document_id": "Suncor Sustainability Report 2023", "page": 39, "page_start": 39, "page_end": 40 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 34, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Hiring local\nSuncor rolled out a new program to hire and train heavy equipment operators (HEOs) in the Wood Buffalo region. A growing shortage of temporary HEOs demonstrated we needed a new program to address a critical skill. We partnered with Keyano College to train haul truck operators and attract people committed to the region and Suncor. The Family Referral Program encourages employees to refer their immediate family members to work as a HEO at Base Plant. We launched a program for Indigenous communities within the region seeking members to work as HEOs. Candidates were pre-screened and received training at Keyano. The program addresses our business needs while fostering relationships with Indigenous communities and promotes belonging, inclusion and diversity.\nFor additional information about our total workforce value, which does not include long-term contractors, please see the performance data section in the appendix, and for more information about this chart and its data, please refer to performance data footnote #13.\nI’m proud of the way we connect people with the right opportunities to reach their potential and help us achieve our goals. This is an amazing place to build a meaningful career. Learn more here.\nChristina Healy \nSenior Talent Advisor, Talent & Culture, \nHuman Resources\n### Training, rewards and retention\nOur training and development function drives the value of learning and world-class performance by assuring competence and the capability to perform. A blend of online, classroom, virtual instructor-led courses and on-the-job training programs help develop and sustain necessary capabilities and behaviours to support our values of safety above all else and operational discipline. A variety of required and personal development courses and programs consistently drive our value of curiosity and lifelong learning. We also have a rigorous competence assurance structure that provides risk mitigation for safe and reliable operations through the support of strategic initiatives.", "chunk_word_count": 312, "section_path": "Report on Sustainability 2023 > CDAACB > Hiring local", "document_id": "Suncor Sustainability Report 2023", "page": 40, "page_start": 40, "page_end": 41 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 35, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Coaching leadership\nWe have established an internal sustainability learning site for every employee to further their knowledge and understanding of sustainability content and concepts. This on-demand sustainability learning resource increases the collective competency of our employees and improves decision-making across the organization.\nWhen Chris Mooney started as an equipment operator at Mildred Lake in 1985, he never foresaw himself discussing applied behaviourial science for leaders, let alone teaching it. “It shows how much we’ve changed when it comes to helping our leaders as an organization,” says Chris, who heads up an innovative coaching program to improve skills for leaders at different levels of the organization. “This program has trained field coaches who shadow leaders for 14 months. They watch them in meetings and follow them on field tours. The coaches act as a fly on the wall and give them real-time feedback. There’s a lot of focus on soft skills, particularly on having tricky conversations. A good example would be how to intervene when you see an unsafe work practice or behaviour.” The program is being expanded due to its success, which gratifies Chris. “When we work with our leaders, we grow with them. Twelve of 22 people in the program have returned to the organization in elevated positions. When I look back at my own career, especially starting out as a 19-year-old kid, I was too intimidated to bring up a concern if I didn’t feel safe. When I see the environment that we’re creating today, it’s just so much better. Workers can feel confident having those conversations because of how we are helping leaders.”\nIn 2022, employees participated in 305,000 hours of training and development, averaging 24 hours per full-time equivalent employee. The investment in these training and development programs was \\$18.9 million.\nBeing purpose-driven and a leading energy company are key elements of our employee value proposition. With a comprehensive rewards package and diverse career opportunities, we attract, recruit and retain some of the most capable individuals in the industry. Our total rewards approach for employees is robust and includes competitive compensation, health and insurance benefits, career development, pensions and savings plans. Additional programs are also designed to enhance the quality of life for employees and their families such as time-off programs; the employee and family assistance program; scholarships for dependent children; and volunteer programs.\nPhoto: Chris (left) and an operational leader having a coaching and skills development conversation.\nSuncor responded to the evolving needs of employees around work and life balance and flexibility by introducing new guidelines for the workplace. The Hybrid Work Guidance, introduced in 2021, gives office-based employees the flexibility to work from home up to two days per week. We also introduced the Flexible Dress Code Guideline, a new standard for office dress that reflects the organization’s trust and respect for the diversity and professionalism of employees. Suncor is learning from valuable employee feedback and continues to ensure alignment of these guidelines with business needs, goals and values.", "chunk_word_count": 503, "section_path": "Report on Sustainability 2023 > CDAACB > Coaching leadership", "document_id": "Suncor Sustainability Report 2023", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 36, "chunk_text": "# Report on Sustainability 2023\n## CDAACB\n### Parent Leave Top-up Plan\nGrowing your family can be both an exciting and stressful time. As a parent, you balance work with making the best decisions for your family, including which parent takes time off to be there with your new baby. Suncor introduced the Parent Leave Top-up Plan in 2021 for our Canadian employees. It recognizes both birth and adoptive families and provides a top-up payment at 65% of annual base salary/wage to an employee taking parental leave, and in receipt of government benefits, for up to 20 weeks. If both parents are Suncor employees and share their parental leave, an additional top-up of up to five weeks is available to the second parent.\n### Inclusion and diversity\n### We are building a culture of performance based on trust and inclusion.\nWe want to create a work environment where everyone can meaningfully contribute while feeling safe, valued and respected. A trust-based and inclusive culture with a diverse workforce will improve our performance and achieve social responsibilities. Suncor’s inclusion and diversity strategy has four priorities:\nOur Inclusion Starts With Me web-based training program highlights the importance of an inclusive and diverse workplace and how each of us can contribute to a great workplace for everyone. Almost 1,400 employees have completed the training since it launched in 2021. A Diversity, Inclusion and Belonging training course is also available to employees and contractors.\n• leadership • employee education and involvement • people, programs and processes • Indigenous workforce development.\n### Leadership\nOngoing development activities ensure leaders at all levels understand our expectations about inclusion and diversity and possess the necessary competencies to foster an inclusive environment.\nLeadership teams also use insights from our internal surveys with employees and diversity metrics to work with their business areas to create inclusive, fair and respectful environments.\n### Employee education and involvement\nMany formal and informal learning opportunities are available to employees throughout the year. These include company-wide inclusion events; story-telling videos shared at events and meetings; lunch and learns and panel discussions; and programs covering topics such as unconscious bias, inclusive leadership and Indigenous cultural awareness. One type of event led by Suncor’s Culture, Inclusion and Diversity Council, made up of senior leaders, is the Action for Inclusion: A conversation series. This quarterly event covers a variety of inclusion and diversity (I&D) themes to bring people together. In 2022, one of the sessions focused on the role of data transparency in advancing inclusion, diversity and equity in our organization. It also highlighted the I&D metrics we monitor and how they are used to inform our strategy and business area commitments. Our data was presented at the enterprise level to share key insights and talk about how employees can help us advance in our I&D journey.\n### Suncor’s employee inclusion networks and resource groups", "chunk_word_count": 476, "section_path": "Report on Sustainability 2023 > CDAACB > Parent Leave Top-up Plan", "document_id": "Suncor Sustainability Report 2023", "page": 41, "page_start": 41, "page_end": 42 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 37, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\nWiN\nSupports Indigenous \ninclusion, and creates \na safe and supportive workplace culture for Indigenous employees.\nResource group for Black, people of colour and allies to positively influence Suncor’s people and culture journey.\nShares learnings and creates a safe space for people who are part of the 2SLGBTQ+ community, or who are allies.\nWorkplace Inclusion Network focused on cultivating an inclusive work culture that values diversity throughout Suncor and its operations.\nCreates a more \ninclusive environment \nfor women by \nconnecting, learning \nand influencing.\nEnables persons with disabilities and allies to learn, connect and take action.\n### Marching with Pride\nIt was a march four years in the making. Suncor was invited to participate in the Calgary Pride Parade for the first time in June 2022. And the time was right for PRISM, Suncor’s 2SLGBTQ+ Employee Inclusion Network. “We had an informal coffee group that started for 2SLGBTQ+ employees more than three years ago and somebody approached us very excitedly and asked, ‘Wouldn’t it be great if Suncor marched in the Pride Parade?’ And we said, ‘No, it wouldn’t. You need to do more for us as an organization, make it easier for this community, before you go external with an event like the Pride Parade,’” says Steph Hansen, a Senior Business Process Advisor and co-chair of PRISM. “And that is what happened over the past three years. There are policies in place that make it easier and more accepting for our community. There’s been a real cultural shift within Suncor so it was the right time. You cannot fake this. You need to be authentic.” You can read more about Steph’s story here.\nSuncor’s Employee Inclusion Networks are established by and for people with shared characteristics, ethnicities, interests or life experiences, and those interested in supporting or learning more about ways to build an inclusive workplace. The networks build a sense of belonging and community among members. They help inform the I&D strategy for the company, foster learning and build allyship. They also contribute to our ability to recruit and retain a diverse workforce. Two networks launched in 2022. MOSAIC is a network representing Blacks, people of colour and allies. EnABLE is a network for persons with disabilities and allies.", "chunk_word_count": 377, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Marching with Pride", "document_id": "Suncor Sustainability Report 2023", "page": 42, "page_start": 42, "page_end": 43 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 38, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### People, programs and processes\nSuncor develops programs, policies and practices for fair and equitable access to opportunity, development, recognition and advancement. Our Equal Opportunity and Inclusion Policy and supporting Respectful Workplace Standard outline our commitments to eliminating discrimination; celebrating and supporting the unique experiences and voices of our employees; and undertaking special efforts to attract diverse workers.\nComing out\nFor as long as she can remember, Rachel Elser wanted to identify as female. “As an adult, I finally found the courage to identify as transgender and transition socially,” says Rachel, a Project Operations Lead at Mildred Lake. “I needed tools and information to establish myself both personally and professionally.” The lessons learned by Rachel and others led to Suncor releasing a guidebook for employees undergoing gender transition and their leaders to help support them. It provides education on gender transition and terminology, guidance on inclusive language and best practices for employees, leaders and peers. It was released on October 11 to coincide with National Coming Out Day. “It has been a privilege to share my experiences and work with other employees to improve inclusion and diversity at Suncor as well as participate in the development of the guidebook.” Read more about Rachel’s story here.\n### Workforce representation\nWe believe our workforce should reflect the communities where we operate. Suncor’s Indigenous representation is $5 . 4 \\%$ and we have set a goal to increase this further. We created a team to implement our Indigenous Workforce Development Strategy towards meeting this goal. The strategy has four key pillars:\nbuilding and maintaining relationships and partnerships with Indigenous communities and organizations \n• building capacity and training for employment \nproviding direct and indirect employment \n• building an inclusive workplace with opportunities for career advancement to retain Indigenous employees.\nSuncor workforce representation of visible minorities and persons with disabilities has slightly decreased over the last two years. This is due to the workforce integration of Syncrude, which did not have established processes to formally track this data.\nIntegration and organizational changes have also influenced gender representation for individuals in management roles, with women accounting for $2 6 \\%$ and men representing $7 4 \\%$ . We held focus groups in 2022 to continue to identify opportunities for improvement.", "chunk_word_count": 382, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > People, programs and processes", "document_id": "Suncor Sustainability Report 2023", "page": 43, "page_start": 43, "page_end": 44 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 39, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### A change in the locker rooms\nLockers are where occupational workers such as Robin Hebbard start and end their shift. “There is a lot of gear we have to wear to protect ourselves, from hardhats to coveralls to steel-toed boots,” says the heavy equipment operator at Aurora. But the growing number of female workers at Aurora created locker shortages and congestion in the change room. “Women make up more than 30 per cent of our teams today (at Aurora) thanks to initiatives such as Women Building Futures,” she says. “We had females doubling or even tripling up in a single locker.” Switching that locker room with a larger one used by male operators with spare capacity solved the problem. Robin also appreciates the support from male co-workers and leadership to help support the change. “There’s a real small-town feel at Aurora, it’s like a comfort blanket,’ she says. “That’s a big reason why this is still my dream job.” To learn more, read A change in the locker rooms.\nFor additional information about this chart and its data, please refer to performance data footnote #17.\n### Indigenous relations\n### Partnering with Indigenous communities is foundational to successful energy development.\nIn the spirit of reconciliation, we acknowledge our head office in Calgary or Mohkinstsis is in Treaty 7, the traditional territory of the Blackfoot Confederacy (Siksika, Kainai, Piikani), Stoney Nakoda (Chiniki, Bearspaw, Goodstoney) and Tsuut’ina First Nations, and home to Métis Nation of Alberta, Region 3. We also operate and do business in many Indigenous territories across Turtle Island.\nWe are guided by the reconciliation framework outlined in the United Nations Declaration on the Rights of Indigenous Peoples, and work to apply its principles in our activities involving Indigenous Peoples, their land and resources. We are also informed and guided by the Truth and Reconciliation Commission of Canada and the National Inquiry into Missing and Murdered Indigenous Women and Girls.\nWe also measure and report our performance against the Mining Association of Canada’s Towards Sustainable Mining Indigenous and Community Relationships Protocol.\n### Our approach\nWe seek to build authentic, meaningful and mutually beneficial relationships with Indigenous Peoples. We have agreements with a number of Indigenous communities near our operations. These agreements reflect how we work together on a range of matters from project consultation to realizing the benefits of commercial and business opportunities, as well as supporting skills, employment and training programs.\n### Progressive Aboriginal Relations certification\nOne way we measure the effectiveness of our efforts is through the Canadian Council for Aboriginal Business Progressive Aboriginal Relations (PAR) program. Suncor and Syncrude have each certified at the gold level multiple times, with Suncor last certifying in 2020 and Syncrude in 2021. A joint recertification will be undertaken in 2024. PAR is Canada’s only certification program focused on best practices in Indigenous relations.\nAll employees and contractors, as well as our joint venture partners, are responsible for following our policies. Our Chief Executive Officer is accountable to the Board of Directors for ensuring the Stakeholder Relations and Indigenous Relations policies are implemented.", "chunk_word_count": 519, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > A change in the locker rooms", "document_id": "Suncor Sustainability Report 2023", "page": 44, "page_start": 44, "page_end": 45 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 40, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Journey of Reconciliation\n[IMAGE CAPTION] of the Medicine Wheel was granted byPermission to use this Blackfoot concept of the Elder Casey Eagle Speaker Medicine Wheel was granted by Elder Casey Eagle Speaker\nThe Journey of Reconciliation reflects the continued transformation within our organization and in our relationships with Indigenous Peoples. It represents our commitment to learn about Indigenous culture and history with open hearts and minds, to expand our perspectives, and build genuine relationships with Indigenous Peoples based on mutual trust and respect. Through this Journey of Reconciliation, Suncor aspires to progress the way we think and act to learn and better understand Indigenous perspectives and reflect Indigenous knowledge in what we do. We work to recognize the impacts of Suncor’s operations on Indigenous communities and incorporate that knowledge into our business activities.\nReconciliation is critical to healing and deepening relationships with Indigenous Peoples. We are taking an active and meaningful role as outlined by the Truth and Reconciliation Commission call to action #92. We believe it is the right thing to do from a societal and business standpoint. Including Indigenous perspectives brings about innovation and different ways of approaching our work. Building strong relationships with Indigenous communities earns the trust and respect of true partners that helps propel our business and navigate the ever-changing landscape.\nThe Journey of Reconciliation is fundamental to our purpose. It supports our strategy of becoming a leader in sustainability and the energy transition.\n### Valuing Indigenous worldviews\n[IMAGE CAPTION] The values represented do not reflect Syncrude data. Work continues to integrate this data.\nWe continue to learn and understand Indigenous ways of knowing and being through training and experiential learning opportunities. We continually work to improve and update our training content to keep it relevant. Our web-based Indigenous Awareness training course is available both internally and to the public on our website.\\* It will be relaunched in 2023. We also offer employees in-depth training, Canada’s History with Indigenous Peoples, which we updated and relaunched in the latter part of 2022. Advisors on our Indigenous and Community Relations team plan and deliver cultural experiences and learning opportunities for teams.\nWe’re also working to include Indigenous perspectives and traditional knowledge in our operations where possible. This is supported through advisory groups that include Indigenous Elders and knowledge keepers.\nWe are proud to share inspiring stories and celebrate Indigenous Peoples in the areas we operate through Pathways Magazine. Syncrude started this publication more than a decade ago to profile the people, communities and initiatives in northeastern Alberta. We are continuing with the publication after assuming operatorship of the Syncrude joint venture project in September 2021. It’s another way that represents our ongoing commitment to the Journey of Reconciliation. You can learn more and read the magazine here.\n[IMAGE CAPTION] Former National Chief of the Assembly of First Nations Phil Fontaine was at our Calgary office for a conversation about reconciliation and Canada’s path forward on the National Day for Truth and Reconciliation. Taking questions from our employees, he shared his insights from his decades of leadership and advocacy for Indigenous communities.\n[IMAGE CAPTION] For additional information about this chart and its data, please refer to performance data footnote #17.", "chunk_word_count": 541, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Journey of Reconciliation", "document_id": "Suncor Sustainability Report 2023", "page": 46, "page_start": 46, "page_end": 47 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 41, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### The wisdom of Elders\nWhen it comes to reclamation, designing and forming the land underneath plays a critical role. “The closure design has so much influence over what the reclamation will do. If you want Rat Root to grow, you need a wetland. And for that, you need to form a low-lying area with access to water,” says Glen Miller, a geotechnical engineer who is responsible for closure designs at Mildred Lake. Glen’s recent discussions with the Reclamation Engagement Focus Group, where members from local Indigenous communities provide feedback on reclamation, has changed land formations and design features in Mildred Lake’s former East In-Pit mine. “I have learned so much about the importance of wetlands and birds from the community members,” Glen says. “I had seen a sand bluff in another area at our site with a V-shaped gulley that supported bank swallows so I decided to incorporate it into the design for this area. When we took community members on a field tour in the summer of 2022, an Elder told me it would be better to establish the bluff further north on a south-facing slope if I wanted to attract birds to use it. I changed the design based on that guidance to incorporate their wisdom.” Mildred Lake’s Sand Placement team, led by bulldozer operator Chad Switzer, ensured the land was formed in time for winter soil placement by the Civil Works team. Glen and the rest of the team are eagerly looking forward to the community members’ return to the area in 2023 for planting trees and other vegetation in the area. “We take it very seriously because we value their knowledge.”\n### Partnering with Indigenous business and communities\nIt starts with open and honest relationship building to understand common interests and how we can partner together for mutual benefit. Meaningful participation requires the ability to understand each other’s desired outcomes, strengths and limitations.\nWhen it comes to our supply chain, our Indigenous Business Participation Strategy supports sourcing activity across the company. Working with local Indigenous businesses provides close and reliable talent and services. It also supports companies to invest revenues back into their communities. In 2022, we spent approximately $2 7 \\%$ more with Indigenous suppliers than in 2021. Twenty percent of our overall spending – worth approximately $\\$ 3.1$ billion – was with Indigenous suppliers. This was achieved by focusing on increased engagement and new relationships with suppliers that were established over the past few years. Doing business with Indigenous suppliers is embedded in our way of working, which is why we no longer set an annual spending target.\nSuncor’s work with Indigenous communities also remains strong through our Petro-Canada™ business. As of 2022, we have 63 Petro-Canada™ branded retail stations and wholesale marketing arrangements with First Nation and Métis communities. Not only do the retail stations service the community, but, in some instances, they act as a place for community members to gather.", "chunk_word_count": 498, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > The wisdom of Elders", "document_id": "Suncor Sustainability Report 2023", "page": 47, "page_start": 47, "page_end": 47 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 42, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Strengthening Indigenous workforce and inclusion\nWe want Suncor to be an inclusive and diverse work environment where everyone feels valued and respected. We believe this supports strong business performance, differentiates us in our communities and helps us to attract and retain Indigenous employees who want to build meaningful careers for the long term. Based on data from voluntary self-identification, as of 2022, Suncor has 923 Indigenous employees, which is $5 . 4 \\%$ of our workforce.\nJourneys, Suncor’s Indigenous employee inclusion network, plays an important role in supporting Indigenous employees to feel a sense of safety, pride and belonging within the company. Journeys has been pivotal in creating deep connections between Indigenous and non-Indigenous employees. The network hosts numerous events and cultural experiences\nthroughout the year, including medicine harvests, sharing circles and Indigenous Awareness Week events, inspiring employees to learn and take actions in reconciliation.\nWe have a Diversity, Talent and Sourcing Advisor, who manages all skills, employment and training for agreements with Indigenous communities. The advisor also works on initiatives such as training-to-employment programs in areas where we operate, and the Oil Sands Regional Workforce committee, led by the Oil Sands Community Alliance, to take a regional approach focused on mentorship and careers for youth in the Wood Buffalo region. The advisor is a resource to advise leaders and employees on Indigenous culture, protocols and knowledge and co-leads Journeys. Additional resources for Indigenous employees include the Indigenous Employee Mentorship Program, and Indigenous Programs for post-secondary students.\nAnother way we partner with Indigenous youth is through postsecondary institutions across Canada. Since 2019, a member of Suncor’s Indigenous and Community Relations team in Sarnia, Ontario, has been part of a Lambton College planning committee designing an Indigenous Outdoor Gathering Space for youth on campus. Indigenous members of the committee oversaw the entire process and provided valuable direction on the purpose and design of the space. Students at the college will use this space for ceremonies, learning and gathering year-round. It will also be a place where Indigenous and non-Indigenous students and members of the community can walk the reconciliation path together. Construction is expected to start in 2023.\n### Partnering with Indigenous youth\nIndigenous youth and their voices represent the future. The Indigenous Youth Advisory Council (IYAC) works with Suncor, the Suncor Energy Foundation (SEF), our Indigenous and Community Relations team and various senior leaders to listen, share, reflect and act on issues of mutual interest that are affecting Indigenous communities and the lives of Indigenous youth. It also supports young Indigenous leaders in developing their leadership potential while providing opportunities to participate in the energy system. IYAC further strengthened its relationships with leaders in 2021 through the formation of the IYAC Mentorship Program. The program focuses on reciprocal two-way mentorship between members of the SEF board and IYAC to support one-on-one human connections that are important for strengthening relationships.", "chunk_word_count": 488, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Strengthening Indigenous workforce and inclusion", "document_id": "Suncor Sustainability Report 2023", "page": 47, "page_start": 47, "page_end": 48 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 43, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### A learning legacy\nEvery time Elissa Whiteknife walks into Elsie Fabian School in Fort McKay, she walks under a giant portrait of her mother. The school bears her name and her presence. “Education was my mother’s passion – she was on the Northlands School Board for 26 years – and this school would have made her proud. I love walking into the building and being greeted by my mom’s photograph on the wall. It makes my heart full,” says Elissa, the Elsie Fabian School parent liaison. “She would have been very pleased to see how the Cree and Dene culture and language are infused into curriculum.” The school opened in September 2022 and serves 140 students in the community. “There are Cree and Dene speakers on staff and our lessons for all grade levels are taught in a combination of Dene, Cree and English. Parents were blown away when their kids came home and spoke to them in Dene.” The Grade 1 class learned Jingle Bells in Cree for the holiday concert, she adds. There is also a goal that 40% of the school’s curriculum be made up of land-based and traditional learning, which includes input from community members. “For example, we have presentations at different grade levels for topics like identifying wildlife,” says Elissa, whose two grandchildren attend the school while her daughter works there as an education assistant. “Some students made ribbon skirts and ribbon shirts for one of the option classes.\nThey helped with sewing those garments, which they can wear to special occasions and ceremonies.” The school, which received funding from Syncrude to help with construction, is a fitting tribute for a passionate advocate of learning, Elissa says. “My mom passed away in 2013 and I thought, with everything she has done on this earth, how would she be remembered? She would be very happy with this school as a legacy.”\n### Social investment\nSuncor contributes to the communities where we operate by making direct investments to support social, economic and environmental solutions through Suncor, Petro-Canada™ and Syncrude.\nThis work is supported by the programs of the Suncor Energy Foundation and the Petro-Canada CareMakers Foundation™. Suncor independently contributed approximately $\\$ 40$ million in 2022 to community, charitable and non-profit groups.\n### The Suncor Energy Foundation\nThe Suncor Energy Foundation (SEF) embodies our purpose of caring for each other and the Earth by working directly with communities seeking solutions to challenges today and for generations ahead. SEF combines community and Suncor strengths to find social, economic and environmental solutions to complex challenges. To bring this work to life, we focus on three interconnected pillars: strategic funding priorities, social innovation capacity and community presence. SEF increased its donations in these areas to approximately $\\$ 18$ million in 2022.\nFor additional information about this chart and its data, please refer to performance data footnote #16.\n### Strategic funding priorities\nThrough SEF’s funding priorities, we are learning from and with Indigenous Peoples and others to strengthen community while the world is going through an energy transition. We are collectively experiencing many changes, but we believe Indigenous knowledge and community strengths will help us all adapt.", "chunk_word_count": 534, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > A learning legacy", "document_id": "Suncor Sustainability Report 2023", "page": 48, "page_start": 48, "page_end": 49 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 44, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### The Resilience Institute\nLaura Lynes began her journey into a new mission and career at the bottom of a glacier deposit about a dozen years ago. “I was overcome with this thought we were not doing enough about climate change. There was a big disconnect between what scientists studying that glacial deposit were seeing and what the rest of us were doing in our everyday lives. I felt moved to do something.” That epiphany led to the creation of The Resilience Institute, which works with communities and organizations on adapting to climate change and energy transition. And that work is supported by the Suncor Energy Foundation. “The Foundation’s contributions have allowed us to do deeper work with communities faster. One example of where we’ve put their funding to work is understanding how traditional plants, such as sweetgrass, can sequester carbon to mitigate future climate change, as well as be integrated into landscape planning as an adaptation strategy,” she says. Learn more about the Resilience Institute by visiting their website.\nFor additional information about this chart and its data, please refer to performance data footnote #16.\nCommunity presence\nSuncor and SEF both invest in local communities where we have operations across Canada and internationally. We also offer employee engagement, volunteering and donation opportunities through the SunCares program. SunCares inspires employees to contribute to communities and support the causes that are important to them.\n27% employees participated \ncompany-wide \n105,000 hours volunteered by Suncor \nemployees in the community \n1,700 community organizations \nsupported\nThrough SunCares, almost $\\$ 6.2$ million was contributed to communities in 2022.\n### Syncrude\nSyncrude has played a key role for decades in supporting essential community services and initiatives in the Regional Municipality of Wood Buffalo and beyond.\nThrough Syncrude, $\\$ 4.2$ million was donated to community organizations in 2022, totalling more than $\\$ 44$ million since 2015. Whether it is investing in local infrastructure, stocking the food bank or opening the doors to learning, these contributions made a difference in the communities where employees live and work. This also included donations through the Good Neighbours program (employee volunteering and educational matching grants) and support to the United Way.\nFor additional information about this chart and its data, please refer to performance data footnote #16.", "chunk_word_count": 383, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > The Resilience Institute", "document_id": "Suncor Sustainability Report 2023", "page": 49, "page_start": 49, "page_end": 50 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 45, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Petro-Canada CareMakers Foundation™\nSince introducing the Petro-Canada CareMakers Foundation™ in 2020, we’ve made a difference in the lives of caregivers who devote their lives to helping loved ones. The CareMakers Foundation™ creates awareness about family caregiving in Canada. We inspire Canadians to help by raising funds for Canadian charitable organizations to provide critical programs and resources for family caregivers.\nCareMakers receives contributions from Suncor, the proud owner of Petro-Canada™, as well as other corporate and individual donors. The foundation has awarded more than $\\$ 4$ million in grants to date, including $\\$ 1.7$ million in national grants in 2022. It also approved approximately $\\$ 0.5$ million through local grants across nine provinces last year.\nThe foundation launched an innovative campaign and website in 2022 called 24 Hours of Care. Visit 24HoursofCare to see the experience of real-life caregivers.\nSuncor is recognized as an Imagine Canada Caring Company for its leadership in community investment.\nAs its profile grows among Canadians, CareMakers continues to demonstrate our purpose and complements our social investment activities.\n### Supporting caregivers\nThe Mount Pleasant Neighbourhood House supports family caregivers and those in their care in Vancouver, BC. It’s one of the many charitable organizations across Canada supported by financial grants from the Petro-Canada CareMakers Foundation. These funds enable organizations to provide critical programs and resources for caregivers. For Lupita Muñoz, it meant accessing Neighbourhood House’s support group as she navigates her caregiving journey for her husband Warren.\n### Human rights\n### Suncor is committed to preserving and protecting internationally recognized human rights.\nWe work to avoid infringing on the rights of individuals and groups. These rights include those set out in the United Nations Declaration on Human Rights and the International Labor Organization Declaration on Fundamental Principles and Rights at Work. Our approach to human rights applies to all our business activities and extends to our business relationships. We are working to align our practices with the United Nations Guiding Principles on Business and Human Rights. We are guided by the reconciliation framework outlined in the United Nations Declaration on the Rights of Indigenous Peoples and work to apply its principles in our activities involving Indigenous Peoples, their land and resources. We are also informed and guided by the Truth and Reconciliation Commission Calls to Action and the National Inquiry into Missing and Murdered Indigenous Women and Girls. We are committed to implementing these protocols and principles as well as being open to feedback about how our performance can improve.\nWe have begun updating our Human Rights policy in response to emerging trends and legislation in this area. We have four focus areas for human rights: supply chain, communities, security and workforce.\n### Supply chain", "chunk_word_count": 457, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Petro-Canada CareMakers Foundation™", "document_id": "Suncor Sustainability Report 2023", "page": 50, "page_start": 50, "page_end": 51 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 46, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Communities\nOur Supplier Code of Conduct (COC) highlights values important to Suncor. The COC:\nWe’re developing and maintaining positive, meaningful relationships with stakeholders, communities and Indigenous Peoples by:\nguides the standard of behaviour required of all suppliers, contractors, consultants and other third parties with whom we do business \naddresses topics such as safety, human rights, harassment, bribery and corruption, and confidential information, among others \nreinforces our focus on sustainable development and \nencourages our business associates to work with us to seek ways to reduce environmental impacts, support the communities in which we operate and collectively achieve economic growth.\n• working to positively contribute to the communities where we operate\n• working with local Indigenous Peoples, stakeholders and communities to define an appropriate way to:\n– share information consider interests and impacts incorporate feedback, at all stages, in a manner that respects local and traditional decision-making processes \nworking to minimize our impact on the environment and \nrecognize its cultural significance to the communities where \nwe operate \nrecognizing the unique legal and constitutional rights of \nIndigenous Peoples, including Treaty rights \nseeking to understand and respect Indigenous Peoples’ \nhistories, customs, beliefs and traditions \ncontinuing on our Journey of Reconciliation to progress the \nway we think and act to build mutual trust and respect with \nIndigenous Peoples.\nCompliance with the COC is a standard requirement for all Suncor supply chain contracts.\nSupplier Code of Conduct\n### Supplier Qualification\nOur supply chain considers human rights in selecting suppliers:\n• We updated our pre-qualification and qualification for potential vendors with additional questions related to human rights, specifically related to child and forced labour. We conduct technical audits on existing and potential suppliers that incorporate human rights considerations.\nCanadian Aboriginal Relations Policy\\*\nStakeholder Relations Policy\n### Security", "chunk_word_count": 299, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Communities", "document_id": "Suncor Sustainability Report 2023", "page": 51, "page_start": 51, "page_end": 51 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 47, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Workforce\nWe are committed to advancing responsible labour practices. We treat our personnel with respect and dignity. We endeavour to provide an environment free from discrimination, harassment and violence:\nWe respect the human rights of our workforce and nearby communities, while maintaining the safety and security of our personnel, assets and operations:\n• Our security policies and guidelines honour the spirit of international human rights principles and the laws of the jurisdictions where we operate.\n• Our employment policies adhere to all applicable domestic laws, and are consistent with internationally accepted labour standards, regarding freedom of association and collective bargaining, non-discrimination, no use of forced labour and no use of underage workers. This will also include the Government of Canada’s proposed Bill S-211, Fighting Against Forced Labour and Child Labour Act, which is expected to come into effect in 2024.\nWe adhere to the Voluntary Principles on Security and Human Rights set out in 2000 by a group of companies, governments and NGOs.\nCorporate Security Policy\nAs part of the Towards Sustainable Mining standards, Suncor and Syncrude’s mining operations undergo thirdparty assessments every three years related to preventing child and forced labour. Suncor underwent evaluation in 2022 and was confirmed to have appropriate processes in place. Syncrude will undergo assessment in 2023.\n• We want our workplace to be an inclusive and diverse environment. This includes removing systemic and programmatic barriers to workplace participation and progression so individuals can fully contribute and pursue their potential. For more information on how we do this, please see our inclusion and diversity section on page 42.\n• We value safety above all else and believe it is everyone’s shared responsibility.\n• We champion the physical, psychological, social and financial well-being of our employees and communities.\nEqual Opportunity & Inclusion Policy\nEnvironment, Health & Safety Policy\nAccess to remedy\nEngaging with communities is an important part of our approach to managing human rights and providing access to rectify, or remedy, a situation. We have region-specific processes and grievance mechanisms in place. Our Stakeholder Information Management System is Suncor’s primary database for:\n• documenting and reporting on consultation activities, legal requirements and commitments • recording stakeholder engagement activities to better understand interests and concerns • supporting institutional memory and other internal processes (e.g., grievances, complaints).\nWe provide and facilitate access to remedies through the Suncor Integrity Hotline, which is available 24/7 to employees, contractors and the public. All reports are taken seriously and are investigated. More information and a detailed breakdown on the hotline’s report themes and reporting volume for 2022 can be found in our Ethics section on page 54.\n### Governance\nEthics \nCorporate governance \nRisk management \nSupply chain\nTo live Suncor’s purpose of providing trusted energy, we embrace long-term thinking and strategies. With sound governance and committed leadership, we have created a strong foundation for resilient and sustainable energy development.\n### Ethics\n### Acting with integrity is one of our core values and is embedded in how we conduct business.", "chunk_word_count": 506, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Workforce", "document_id": "Suncor Sustainability Report 2023", "page": 52, "page_start": 52, "page_end": 53 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 48, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Our approach\n92% of employees completed the Annual Standards of Business Conduct training.\nOur Standards of Business Conduct Code sets out basic rules, standards and behaviours for all employees, contractors, suppliers and our Board of Directors. It addresses topics that centre on ethical decision-making, including conflicts of interest, harassment, bribery, corruption, insider trading, competition, accounting and business controls. For more information on our requirements for suppliers, see our Supply Chain section.\nOur Compliance and Ethics Program supports the Code and promotes a culture of integrity within Suncor. This requires ethical conduct and compliance with the law.\nSuncor personnel complete annual training about our Code. This includes affirming they’ve read The Way We Do Business and have complied with the Code. The Way We Do Business summarizes all of Suncor’s policies, guidance and standards that make up the Code.\nWe encourage people to raise concerns about suspected violations of the Code without fear of reprisal with these teams/departments:\n• Management • Legal – compliance • Corporate Security • Human Resources • Internal Audit.\n[IMAGE CAPTION] The data represented in these charts reflect the inclusion of Syncrude.\nPeople may also confidentially raise concerns through Suncor’s Integrity Hotline, available 24/7 to employees, contractors and the public. All reports are taken seriously and investigated by our Corporate Security or Human Resources teams. Our report volume reflects a well-functioning hotline reporting system and our efforts to increase hotline awareness throughout the organization.\nOur Compliance and Ethics Program is mature and well-established. We monitor best practices and look for opportunities for improvement.\nOther key policies that support this program include the Equal Opportunity and Inclusion Policy, which highlights and reinforces Suncor’s commitment to providing an equalopportunity, non-discriminatory and inclusive work environment. Our Respectful Workplace Standard describes the requirements for supporting an inclusive and respectful work environment at Suncor.\n### Corporate governance\nSound governance creates a strong foundation for Suncor’s resilience in energy development. Our commitment to robust governance is recognized by the Globe and Mail’s annual Board Games, which has ranked Suncor as one of the top energy companies for its governance practices nine years in a row.\nOur governance structure includes our Board of Directors and its committees, together with our executive team.\nFor more information on the board’s skills and demographics see our 2023 Management Proxy Circular. This document includes the board’s Inclusion and Diversity policy and targets.\nThe board’s responsibilities include governance, strategic planning and stewardship of Suncor. This includes identifying and mitigating principal risks, such as carbon risk.\n### A diverse and experienced board\nSuncor’s board includes directors with a range of perspectives, insights and views on the issues affecting the organization. We search for individuals having regard to gender, members of visible minorities, Indigenous status, age, persons with disabilities, business and operational experience, professional expertise, personal skills, stakeholder perspectives, geographic background and other attributes. We have a diverse and experienced board, with Indigenous representation for more than two decades, and $3 1 \\%$ female directors.\n[IMAGE CAPTION] 2022 board diversity", "chunk_word_count": 508, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Our approach", "document_id": "Suncor Sustainability Report 2023", "page": 54, "page_start": 54, "page_end": 55 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 49, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Environment, social and governance (ESG)\nWe embed ESG in director recruitment, board evaluation and committee representation. The board’s skills matrix was revised in 2021 to separate “EHS (Environment, Health and Safety) and Social Responsibility” into two skills: “EHS” and “Social Performance”. Descriptions for all skills are available in the Management Proxy Circular.\n### Executive compensation\nCorporate performance on ESG initiatives affects management remuneration. Climate performance share units were introduced in 2022 to link executive compensation to Suncor’s sustainability performance. Annual awards will vest based on progress towards our 2030 commitment to reduce annual greenhouse gas emissions by 10 megatonnes across our value chain. The program is applicable to people in vice president or higher roles. This is in addition to safety and sustainability measures included in the annual incentive plan.\nSuncor’s board considers ESG factors for performance evaluation and compensation by:\n• evaluating senior executive performance annually against well-defined goals that support and reinforce our business objectives, including ESG performance \nconsidering our performance against enterprise-wide sustainability goals related to safety, environmental and social performance, as factors in determining the annual incentive payment amounts for the Chief Executive Officer and the rest of the executive management team \ndoubling the weighting on safety in the 2023 annual incentive plan that all executives and salaried employees participate in.\nData represented in this chart is as of March 6, 2023 to align with our 2023 Annual Information Form.\n### Environment, Health, Safety and Sustainable Development Committee\n### Suncor’s governance structure\nOur governance starts with our Board of Directors and its committees, which have clearly defined and distinct oversight roles to protect the interests of our shareholders and the best interests of the company as a whole. In addition to our standing committees, from time to time we appoint ad hoc committees to review specific issues on behalf of the Board.\nThe Environment, Health, Safety and Sustainable Development (EHS&SD) Committee oversees matters relating to environmental, health, safety and sustainable development. The committee reviews Suncor’s Operational Excellence Management System, an overarching framework to manage operational risk. It selects, monitors and reviews the independence, effectiveness and stewardship reports of the Operations Integrity Audit group. It makes recommendations to the board about Suncor’s EHS&SD strategies and policies. The committee is responsible for reviewing management’s performance and emerging issues in this space to anticipate future challenges and position the company to\nOur executive management team executes governance with key operational and functional accountabilities for maximum efficiency and effectiveness. The executive management team also includes a Chief Sustainability Officer, supporting our 25-plus years of dedication to improving sustainability and increasing transparency and reporting across Suncor.\nminimize risks. The committee reviews and makes recommendations to the Board (and to the Human Resources and Compensation Committee for the purposes of executive incentive plans) regarding the safety and environment-related performance goals and to assess whether such goals have been met. Committee members review stewardship reports and the findings of significant environmental, health and safety investigations, assessments and audits, and monitor the adequacy of Suncor’s internal controls as they relate to operational risks of its physical assets and matters of environment, health, safety and sustainable development. This committee also reviews annual sustainability and climate disclosure.", "chunk_word_count": 540, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Environment, social and governance (ESG)", "document_id": "Suncor Sustainability Report 2023", "page": 55, "page_start": 55, "page_end": 57 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 50, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Audit Committee\nThe Audit Committee monitors the effectiveness and integrity of the Corporation’s internal controls of Suncor’s business processes, including financial and management reporting systems and internal control systems. It also monitors and reviews financial reports and other financial matters, and approves certain delegated financial matters on behalf of the board. In addition, the committee selects, monitors and reviews the independence and effectiveness of external auditors, as well as exercises general oversight over the internal audit function. Suncor’s Internal Audit group reports directly to the committee.\n### Lorraine Mitchelmore\nChair of the Environment, Health, Safety and Sustainable Development Committee\n### Human Resources and Compensation Committee\nThe Human Resources and Compensation Committee oversees matters relating to executive compensation, incentive plans and talent management. It directs executive compensation and the compensation guidelines that support Suncor’s overall business strategic objectives. The committee supports matters related to succession planning for the CEO and executive roles. It oversees any significant incentive, pension and benefits programs for employees. The committee reviews industry, regulatory and compensation governance principles and their possible effect on Suncor’s human resources policies and practices. It provides oversight of human capital management, including culture, alignment and employee engagement. It reviews plans and processes for promoting equity, inclusion and diversity.\n### Governance Committee\nThe committee oversees matters relating to Suncor’s corporate governance practices and principles. The committee assesses and makes recommendations on the board’s compensation, structure, composition and processes. It evaluates the board’s effectiveness, and facilitates director onboarding as well as the continuing education needs of the directors. It acts as a sounding board for management on key strategic initiatives and reviews and assesses the processes related to long-range planning and budgeting. The committee also reviews matters pertaining to corporate culture, values, beliefs and standards of ethical conduct and any principal risks that have been delegated to the committee for oversight.\n### Risk management\n### Risk management is fundamental to achieving our business goals and requires a culture of operational discipline.\nWe are governed by our guiding principles for risk management. This requires ongoing identification, assessment, treatment and monitoring of risks inherent to our assets, activities and operations. Some of these risks are common to operations; some are unique to Suncor. Our risk management program is aligned with the International Organization for Standardization guidelines (the ISO 31000 Risk Management – Guidelines), which were also adopted by the Standards Council of Canada. The guidelines provide principles, a framework and a process for managing risk.\nOur risk management practice is governed by our risk management policy and supported through processes and tools. These include a risk matrix, an integrated common risk framework and a risk management enterprise database.\n### Identifying principal risks\nPrincipal risks are those with the potential to materially affect our ability to meet or support our strategic objectives. New risks continue to emerge while established risks could take on new forms or orders of magnitude. We manage identification of new principal risks through our risk processes. These risks are further outlined in our Management’s Discussion and Analysis, and include:", "chunk_word_count": 515, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Audit Committee", "document_id": "Suncor Sustainability Report 2023", "page": 57, "page_start": 57, "page_end": 58 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 51, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Principal risks\nStrong risk management means looking at what’s coming at the organization and proactively managing those challenges and opportunities. Suncor’s risk management approach allows us to look at emerging trends and issues and figure out what we need to do before the situation forces us to react.\nPrincipal risks related to global climate change\nCommodity price Volatility in price of commodities\nCarbon risk Adapting in a carbon competitive market\nGovernment/regulatory policy risk Uncertain political, regulatory and policy environment\nMarket access Inadequate logistical capacity\nStrategic agility \nEfficiently and effectively adapt corporate strategy to \nevolving conditions\nTailings management, dam integrity & mine closure Disciplined approach to managing fluid tailings\nGary Millard Manager, Sustainability Integration\nMajor operational incident Effective management of operational hazards\nDigital & cybersecurity Management of privacy and cybersecurity\nCumulative impact & pace of change Accelerated and high volume of change\nactivities, all climate- and sustainability-related principal risks undergo an annual review by the board’s Environment, Health, Safety and Sustainable Development Committee.\n### Risk governance\nSuncor’s Board of Directors and Audit Committee oversee our principal risks and ensure systems are in place to manage their impact. All principal risks are reviewed annually with the board. This includes details on what’s being done to address the risks, how they are being monitored and any changes in the risk profile.\n### Risk assessment and evaluation\nWe use a single risk matrix tool to consistently assess risks in terms of magnitude, consequence and likelihood. A single risk matrix aligns the company on terminology and approach. It also helps to assign responsibility for different levels of residual risk. The consequences are based on the following five receptors on the risk matrix:\nIndividual business units and functional teams mitigate and report on critical risks in their areas of business. Risk oversight roles are assigned to manage identified risks. Dedicated risk co-ordinators in each operating business area support this work. Measures are in place to effectively implement and monitor risk management decisions. The overall process is managed and reported out to the board by the Vice President, Enterprise Risk and Audit.\n• health and safety environmental regulatory reputation • financial impact.\nOur Annual Information Form (dated March 6, 2023) provides a comprehensive overview of significant risks to Suncor and its businesses. We have included carbon risk as a principal risk since 2016. With climate-related risks and opportunities featuring more prominently in our business planning and risk management\nWe also use the matrix to provide enhanced guidance on emerging risks and their impact on the business. Examples of emerging risks include cybersecurity relating to supply chain, inflationary pressures and geopolitics.\n[IMAGE CAPTION] Risk management process\nThe Enterprise Risk Management Program identifies, assesses and reports on the significant risks to Suncor’s business and management’s strategies to address risk. The program is overseen by the Board of Directors, which ensures systems are in place to effectively identify, manage and monitor the principal risks of Suncor’s business and mitigate their impact. A principal risk is generally considered to be an exposure with the potential to materially impact Suncor’s ability to meet or support its strategic objectives.", "chunk_word_count": 525, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Principal risks", "document_id": "Suncor Sustainability Report 2023", "page": 58, "page_start": 58, "page_end": 60 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 52, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Sustainability considerations in project development\nIntegrating sustainability into project development aims to improve how emerging policy, environmental and social considerations are factored into development decisions. Over time, this promotes organizational understanding of sustainability considerations and competencies, which results in further opportunities for environmental and social performance improvements. It leverages technology and advances the sustainability mindset to drive toward our purpose.\n### Strengthening cybersecurity\nOur project development framework ensures we embed sustainability considerations into planning and decision-making for new projects. We’re committed to improving environmental performance, thoughtful collaboration and meaningful stakeholder relationships that underpin our performance. Strategic guidance is further integrated into our investment evaluation process, which includes a focus on environmental, social and governance considerations, and supports our objectives.\nWe use complex systems and interconnected technologies that are crucial to extract, refine and deliver energy products. Our internal Cybersecurity Policy outlines Suncor’s commitment to protecting sensitive information and technology assets from potential internal and external cybersecurity threats and inherent vulnerabilities in our business processes, systems and people. A fully dedicated team focuses on intelligence-based threat detection and response, education and awareness, ensuring compliance with regulatory requirements and developing operating procedures to align with industry standards.\nSuncor’s strategic priorities drive decisions at the portfolio level consistent with project development and execution efforts. Our Asset Development Execution Model ensures collaboration and engagement early in the project development cycle and articulates multi-criteria requirements including:\n### Operational Excellence Management System (OEMS)\n• early categorization and screening of environmental and social impact risks, as well as opportunities \n• differentiating development options based on alignment with strategic priorities and goals, and establishing project-specific sustainability criteria through the concept selection process \n• incorporating sustainability risks into the project’s risk-management process and identifying related enterprise risks or opportunities \n• defining project sustainability performance effects, which inform leadership decision-making \n• identifying opportunities for evaluating and deploying new technologies that help us achieve sustainability goals.\nOEMS is an integral part of our risk management process. Details about OEMS can be found in the Safety section on page 35.\nOur ISO 14001- and 9001-certified facilities, primarily our refineries, are subject to verification audits. The internal assessment teams conduct a process-based audit focusing on significant aspects, risks and objectives required by the ISO 14001 standard. Suncor’s business units must conduct annual self-assessments against the requirements of the OEMS standard and are also subject to OEMS audits.\nA new OEMS dashboard allows leaders to prioritize and make data-informed decisions and improvements based on trends. Standardizing metrics helps us mitigate risk.\n### Supply chain\n### We continue to integrate sustainability within our supply chain management and field logistics business.\nWe are addressing environmental and social effects of our procurement decisions while increasing the value to our business and generating mutual efficiencies with competitive businesses and suppliers. The sustainability focus within our supply chain processes and partnerships demonstrates leadership in environmental and social governance.", "chunk_word_count": 488, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Sustainability considerations in project development", "document_id": "Suncor Sustainability Report 2023", "page": 60, "page_start": 60, "page_end": 61 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 53, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Working with our suppliers to understand social and environmental impacts\nWe engage with our key suppliers and industry partners to accelerate innovation and sustainability performance. Suncor and our key suppliers share best practices to achieve continuous improvement in performance on sustainability and safety throughout the value chain. These discussions also contribute to a different way of assessing our suppliers’ service offerings. There is increased awareness within Suncor about opportunities to improve our social and environmental outcomes across our operations. An example would be in inclusion and diversity, where our MOSAIC employee inclusion network, which represents Blacks, people of colour and their allies, joined with Blacks At Microsoft and Calgary Black Chambers to share best practices at an event to kick off Black History Month.\nWe partner with suppliers who share our values and align with our strategic objectives. This means seeking opportunities to reduce environmental impacts, support the communities where we work and live, and collectively contribute to economic growth. We engage with our suppliers on their sustainability performance by:\nassessing sustainability performance as part of pre-qualification, awarding of work and ongoing supplier performance gathering data to understand the effects of our supply chain to help us make more informed decisions \nevaluating sustainability risks and opportunities in our supply chain \n• building relationships with like-minded suppliers to accelerate innovation and sustainability performance.\n### Cutting costs and emissions\nAir compressors are important for Atul Patel and his team at an ore preparation unit at Base Plant. Facing ongoing issues of costs and reliability of rental diesel units to supplement the two legacy compressors in the plant, Atul and his team worked with Supply Chain and contractors to find a solution. Replacing the plant’s two legacy units with new compressors decreased costs by several hundred thousand dollars annually in rentals and maintenance. But it also significantly cut greenhouse gas and nitrogen oxide emissions to support Suncor’s sustainability goals. “The big lesson is discovering unknown value when you bring people together to challenge the status quo and find a better way,” Atul says. The success of the initiative has led another ore preparation plant that used rental diesel compressors to replace its legacy compressors, achieving similar savings and emission reductions.\n### Sustainable development approach\nAll businesses and suppliers must pre-qualify to perform work or to provide services or materials to Suncor by answering a series of questions addressing topics such as safety goals and programs, Indigenous relations/participation, climate change, human rights, inclusion and diversity, social investment and social innovation. Our Supply Chain Qualify and Select Supplier process follows the prequalification process and helps inform purchasing decisions.\nSuncor’s Contractor Management program governs the process and requirements so all purchased goods meet quality standards while ensuring all services are conducted in a safe, environmentally sound and cost-effective manner.", "chunk_word_count": 472, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Working with our suppliers to understand social and environmental impacts", "document_id": "Suncor Sustainability Report 2023", "page": 61, "page_start": 61, "page_end": 61 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 54, "chunk_text": "# Report on Sustainability 2023\n## PRISM LGBTQ2S+\n### Working with Indigenous suppliers\nAll suppliers must comply with Suncor’s Supplier Code of Conduct (COC). We are proud to be a leader in the energy sector in this space. We began asking suppliers if they had their own COC in 2021 and if they expected their suppliers to have a similar COC.\nIndigenous suppliers are a key part of our supply chain. Our Indigenous Business Participation Strategy supports our approach to meeting our commitments and meaningful engagement, while ensuring agreements are mutually beneficial. To advance Indigenous business activities, employees use a self-serve tool to identify current and potential Indigenous suppliers. There is significant rigour around relationship management, annual priority setting and introductory meetings with Indigenous suppliers to discuss new service offerings and opportunities. Additional information on our work with Indigenous businesses and communities can be found on page 47.\nOur progress\nOur suppliers are located across Canada and in 28 countries. Suncor spent approximately $\\$ 15.5$ billion with our suppliers in 2022. This represents an $1 8 \\%$ increase compared to the previous year, mainly due to expenditures that were deferred during the pandemic.\nWe look for ways to involve Indigenous businesses in new and existing procurement opportunities. We’ve seen substantial growth in our year-over-year spending with businesses that provide cost-competitive services and supplies throughout our operations. Suncor and Syncrude have spent more than $\\$ 15$ billion combined with Indigenous businesses and suppliers across Canada since the early 1990s. Our overall spending with Indigenous businesses increased by $2 7 \\%$ in 2022 to reach $\\$ 3.1$ billion. Doing business with Indigenous businesses is embedded in our way of working, which is why we no longer set an annual spending target. This approach allows us to maintain our commitments to advance Indigenous business, as well as focus on quality improvements that go beyond spend, such as employment and direct impact to communities. This has happened throughout our organization: for example, spending with Indigenous suppliers has increased fourfold in our downstream operations since 2018.\n## PROJECT MAMAWI|LL△\n### Project Mâmawi\nTurnarounds – shorthand for planned maintenance – are large, complex events. At the Mildred Lake upgrader, they even get their own name. The annual projects bring in thousands of skilled trades from across Canada. Workers inspect equipment, perform repairs, replace parts, upgrade technologies and restart plants in less than two months. “Our Indigenous and Community Relations team recommended naming the turnaround Mâmawi, which is Cree for ‘together,’ to us. They also made themselves available to speak to our workforce and answered questions about its meaning and other important issues related to Indigenous communities,” says Mike Wheeler, the turnaround event manager. “I’ve learned so much personally that’s helped my understanding about Indigenous issues. It’s helped my own journey of reconciliation.” Project Mâmawi also brings benefits to the wider region with 24 Indigenous-owned vendors supplying goods and services to the turnaround. “About 25 per cent of our total budget for goods and services was with Indigenous-owned suppliers in the Wood Buffalo region,” he says. “They understand the expectations about working safely and reliably. Local firms have skin in the game – these are people who live in our town and region. They care and are committed to Project Mâmawi’s success.”", "chunk_word_count": 545, "section_path": "Report on Sustainability 2023 > PRISM LGBTQ2S+ > Working with Indigenous suppliers", "document_id": "Suncor Sustainability Report 2023", "page": 61, "page_start": 61, "page_end": 62 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 55, "chunk_text": "# Report on Sustainability 2023\n## PROJECT MAMAWI|LL△\n### Supplier spending\n### Appendix\n$>$ About our report \n$>$ Glossary \n$>$ ESG disclosure index \n$>$ Performance data \n$>$ Performance data footnotes \n$>$ Independent practitioner’s limited assurance report \n$>$ Advisories\n### About our report\nOur Report on Sustainability reflects our commitment to continually monitor and assess the impacts and benefits of our business, and effectively share these efforts. We value disclosure as a foundation for engagement and support efforts to drive consistency and comparability of sustainability performance data.\n### Restatements\nHistoric numbers are sometimes adjusted due to, for example, changes in reporting principles, calculation errors, changes of calculation factors used by authorities, or re-classification of incidents after investigations. We restate historic numbers and explain the changes if the adjustment meets our restatement minimum threshold.\n### Scope\nWe present our sustainability priorities and key performance metrics, reflecting consolidated company-wide data only for the assets we have operated for an entire calendar year (unless otherwise stated). More detailed facility and business segment performance, where applicable, is available on suncor.com. Five-year performance data (2018-2022) for Suncor-operated facilities, including Syncrude, may be found in our 2023 sustainability performance data document available on suncor.com. Facilities that are purchased/sold and subsequently operated by Suncor in the reporting year are not included in reported totals unless owned or operated for the entire year (12 months). Our 2022 Annual Report provides financial performance and information about our business.\nAs of the 2023 report, we have updated our reporting methodology to capture total production as the sum of all liquid hydrocarbons produced from our business activities. Accordingly, all intensity values from 2018-2021 have been restated using this methodology. In addition, all data presented reflects full operatorship of the Syncrude Project unless otherwise stated. For more information, refer to pages 9-10.\n### Reporting frameworks\nWe use several reporting frameworks to identify and report on our material sustainability factors, including:\n• Global Reporting Initiative Standards – in accordance with universal and topic standards, and informed by oil and gas sector standards\nOur 2023 Management Proxy Circular provides information regarding our Board of Directors and compensation practices.\n### Reporting period\n• IPIECA – sector-specific sustainability reporting guidance for the oil and gas industry\nPerformance data presented in this report reflects our activities from January 1 to December 31, 2022, unless otherwise stated. Where possible (or as appropriate) we’ve included historical data trends. The 2022 and historic data is available for download on suncor.com for all material Suncor assets. Within the Report on Sustainability, information regarding events or activities from first half of 2023 may also be included. Third party limited assurance is completed by KPMG LLP on select performance indicators for the yearended December 31, 2022, driven by various reporting reporting frameworks and sector disclosures. All material assets have been included in the performance indicators selected for assurance. Refer to the 2023 Independent practitioner’s assurance report on page 91.\n• Sustainability Accounting Standards Board – industry-specific standards\n• Task Force on Climate-related Financial Disclosures – recommendations\n• United Nations Sustainable Development Goals – we support these 2030 global development priorities, and we share our perspectives on contributing to a number of the goals through our work.", "chunk_word_count": 532, "section_path": "Report on Sustainability 2023 > PROJECT MAMAWI|LL△ > Supplier spending", "document_id": "Suncor Sustainability Report 2023", "page": 62, "page_start": 62, "page_end": 64 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 56, "chunk_text": "# Report on Sustainability 2023\n## 4. Ongoing engagement\n### Materiality: Identifying sustainability priorities\nWe operate in a complex environment with increasingly polarizing views about the energy industry. We believe that engaging with others will help us find solutions to our shared challenges.\nAn important step in preparing our Report on Sustainability is reviewing the most relevant sustainability priorities for our business and those that matter most to our stakeholders. In 2023 we used the formal materiality assessment completed throughout 2020 to 2021 as it accurately considered a broad range of perspectives. We appreciate all feedback and engagement received from internal and external stakeholders as it provided an opportunity to evaluate our priority topics for our Report on Sustainability. Through 2020 and 2021, we reviewed priorities for our report to define issues of relative significance to environmental, social and governance priorities and their impacts (both positive and negative) both to our business and to our stakeholders. The following internal practices were used to identify and assess sustainability priorities across our business and topics for our report.\nWe work to ensure Suncor is regarded as a Canadian business leader on all dimensions of sustainability – economic, environmental and social – so that we are a welcomed and influential participant and contributor to the energy system transformation.\nTo support our position as a Canadian business leader, we engage with a wide range of diverse stakeholders to consider their issues and concerns about our operations and the effects of proposed development. This includes working together to mitigate potential social, environmental and economic impacts, and ensuring that local communities benefit from development. We engage with stakeholders in multiple ways, including meetings, workshops and conferences. Not only does broad engagement support the operation of our base business, it also helps us to:\n## 1. Input\n• Stakeholder engagement: Build and maintain relationships with local communities, Indigenous Peoples and stakeholders, and meaningfully consider: their issues and concerns affected by our operations; and, through their actions, affect our business. \nIssues research: Conduct ad hoc issue research, peer benchmarking and review of previously identified priority sustainability topics. \n• Trends: Assess trends and conduct best practice analysis, including reporting best practices.\n• assess our impacts and identify solutions • explore new business opportunities • support research, technology and innovation across the company • embed sustainability across our entire energy system.\nWe seek to engage with partners in an atmosphere of mutual respect, knowing there will be times when we work with partners that don’t support elements of our business or have different perspectives than ours. We welcome different opinions and perspectives that help us work toward the greater good and drive positive change.\n## 2. Analysis\n• Rank and prioritize topics considering a range of perspectives internally and externally through surveys, workshops and knowledge sharing. \n• Evaluate in line with our annual enterprise risk management process. \n• Determine relevance, informed by various sustainability reporting frameworks.\nWhen it comes to our workforce, we believe in engaging our employees and building a culture where feedback is encouraged. Employee engagement is especially important in maintaining strong business delivery in times of change.", "chunk_word_count": 520, "section_path": "Report on Sustainability 2023 > 4. Ongoing engagement", "document_id": "Suncor Sustainability Report 2023", "page": 65, "page_start": 65, "page_end": 65 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 57, "chunk_text": "# Report on Sustainability 2023\n## 3. Assessment\n• Prioritize topics, which could have a significant impact on Suncor’s business success or that would substantively influence the assessments and decisions of stakeholders over the next one to three years.\n### Sustainability priorities\nOur stakeholders consider these priorities to be critically important, and, for our business to be successful, these priorities require innovative, strategic approaches and a commitment to operational excellence across all functions of our organization.\nClimate change and energy transition Safety Indigenous relations \n. Ethics \nWater stewardship Tailings management Innovation\nWe identified other significant priorities and our performance or approach to these priorities is included throughout our report. Topics that were evaluated, but not reported on, are managed, tracked internally and monitored in the context of an ever-changing external landscape. Our approach to technology and innovation is a key theme of this report and is closely related to many of the priorities identified in our materiality assessment.\nEnvironmental incidents Land and reclamation • Air quality Biodiversity • Waste\nInclusion and diversity \nEconomic impact \nCommunity relations \nEmployee attraction, \nretention and engagement \n• Local employment \nLabour relations \nHuman rights \nRisk management \nStakeholder engagement \nCorporate governance \nPurpose \nSupply chain \nMarket access \nPublic policy and lobbying\n### Glossary\n### Acronyms & organizations\n### Terms\n### ESG disclosure index\nSuncor participates in a number of environment, social and governance (ESG) frameworks and standards that help shape the content and materiality of the Report on Sustainability. Details on alignment and our responses are available in our ESG Disclosure Index. This document addresses the following: Global Reporting\nInitiative (GRI) Standards, IPIECA, Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD) and United Nations Sustainable Development Goals (UN SDG).\n### Recognition\nBloomberg’s Climate Transition Scores ranked Suncor among the top 10 publicly traded oil and gas companies in 2021 on preparedness for a low-carbon world\n### Bloomberg\nCDP: Score of B for climate change and B for water security disclosure in 2022. Suncor has been named a top reporter by the CDP for many years.\nMember of \nDow Jones \nSustainability Indices \nPowered by the S&P Global CSA\nNamed to the Dow Jones Sustainability North American Index (DJSI), which marks 26 consecutive years on the DJSI. Additionally, Suncor was recognized as a 2022 Sustainability Yearbook Member.\nSuncor has been listed on the FTSE4Good Index since 2009.\nIn 2022, Suncor received a rating of A in the MSCI ESG\\* Ratings assessment.\nSuncor has been honoured at the highest level for our work in Indigenous relations. In 2020, Suncor was re-certified at Gold Level in the Canadian Council for Aboriginal Business’s Progressive Aboriginal Relations (PAR) program.\nSince 2021, Suncor has been assessed by the Transition Pathway Initiative for its management of greenhouse gas emissions and the opportunities related to the low-carbon transition.", "chunk_word_count": 465, "section_path": "Report on Sustainability 2023 > 3. Assessment > Sustainability priorities", "document_id": "Suncor Sustainability Report 2023", "page": 65, "page_start": 65, "page_end": 71 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 58, "chunk_text": "# Report on Sustainability 2023\n## 3. Assessment\n### Performance data\nOur sustainability performance data provides annual (January 1 to December 31) environmental, social, governance (ESG) and economic information, with five-year trends, where available. Data reflects assets owned and operated by Suncor unless otherwise stated. Greenhouse gas and production data are reported on both, an operated and equity basis. Some values, including corporate totals and year-over-year calculations, may not work out exactly as shown due to rounding. Any 2022 data points accompanied by the (A) symbol were included in the KPMG LLP limited assurance engagement scope. See page 91 for KPMG’s limited assurance report. Due to different reporting methods and boundaries, not all data is consistent with our 2022 Annual Report.\nAdditional data can be found in our 2023 Sustainability Performance Data document.\n\n### Performance data footnotes\n## 1 Overview\nThese notes provide additional details on reporting boundaries, calculations, and changes in methodologies, definitions, business segment structures and historical data. In 2023, we updated our reporting methodology to capture total production as the sum of all liquid hydrocarbons produced from our business activities. This method differs from our Annual Report, which uses production values based on final products sold to market. Our previous reporting for corporate intensities deducted product transfers within our business and did not reflect the many activities involved in making both intermediate and final products. Accordingly, performance data will now be reported using total production rather than final product sold to market, unless otherwise noted. Due to this change, corporate intensity values are lower than previously reported, although absolute emissions remain the same. Some values, including corporate totals and year-over-year calculations, may not work out as shown due to rounding.\n## 2 Reporting boundaries\na. Performance data is reported for Suncor-operated facilities ( $1 0 0 \\%$ and on an equity basis (reflecting our ownership share). \nb. Production data in this report may not match our 2022 Annual Report due to different reporting methods and boundaries. \nc. As of January 2023, we do not operate or have equity interest in renewable power facilities. \nd. Facilities are subject to annual planned and unplanned maintenance activities, which may impact the consistency of year-over-year trends. \ne. Facilities that are purchased and subsequently operated by Suncor in a reporting year may not be included in totals, unless own or operated for the entire year (12 months).", "chunk_word_count": 395, "section_path": "Report on Sustainability 2023 > 3. Assessment > Performance data", "document_id": "Suncor Sustainability Report 2023", "page": 72, "page_start": 72, "page_end": 81 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 59, "chunk_text": "# Report on Sustainability 2023\n## 3 Summary of business segments and operations included in performance data\na. Suncor totals reflect consolidation of data where relevant and applicable.\nb. Upstream (Base Plant) includes Millennium and North Steepbank mining, extraction and integrated upgrading facilities, the integrated Poplar Creek cogeneration facility (owned and operated by Suncor as of 2015), and associated infrastructure for these assets.\nc. Upstream (Fort Hills), includes East Tank Farm.\nd. Upstream (Oil Sands in situ operations) data includes the Firebag and MacKay River operations and supporting infrastructure.\ne. Upstream Exploration and Production (E&P) includes:\n• E&P Terra Nova Floating Production Storage and Offloading facility situated off the east coast of Canada. Production at Terra Nova has been shut in since the fourth quarter of 2019. • Suncor holds non-operated interests in other Canadian and International E&P assets. Please visit www.suncor.com.\nf. Downstream (Refining and Logistics) includes refining operations in Montreal, Quebec; Sarnia, Ontario; Edmonton, Alberta; and Commerce City, Colorado. Other assets include a petrochemical plant and sulphur recovery facility in Montreal, and product pipelines and terminals in Canada and the United States (including the Portland Montreal Pipeline and the Northern Currier Pipeline). Additional information about our downstream business is available at www.suncor.com.\ng. Renewable Fuels includes the St. Clair ethanol plant, located in Ontario. As of January 2023, Suncor no longer operates any wind powe facilities, environmental data will be included for the 2022 year, but will not be reported in 2023.\nh. Suncor assumed operatorship of the Syncrude Project on September 30, 2021. Syncrude includes both the Mildred Lake and Aurora North sites. Syncrude’s data alignment is largely complete, but any further updates will be reflected in future reports. All 2018-2022 performance data in the 2023 Report on Sustainability and Climate Report now include Syncrude, unless otherwise stated. Fiveyear performance data (2018-2022) for Suncor-operated facilities, including Syncrude, and business units may be found in our 2023 sustainability performance data document.\n## i. Any information or data pertaining to the Libya or Syria assets are not included within this report.", "chunk_word_count": 342, "section_path": "Report on Sustainability 2023 > 3 Summary of business segments and operations included in performance data", "document_id": "Suncor Sustainability Report 2023", "page": 81, "page_start": 81, "page_end": 81 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 60, "chunk_text": "# Report on Sustainability 2023\n## 4 Notes on operational performance and production\na. The sum of liquid hydrocarbon production represents total production throughout our business, including bitumen, synthetic crude, offshore crude, refined liquid hydrocarbons and renewable fuels. Internal consumption is not deducted from this total. This value includes highly viscous liquid and semi-solid hydrocarbons and excludes solids, gases and non-hydrocarbons.\nb. Bitumen production is the total volume of bitumen produced at our sites and includes upgraded and non-upgraded volumes. This value is compiled from Base Plant, Syncrude, Fort Hills and in situ.\nc. Synthetic crude production is a mixture of liquid hydrocarbons derived by upgrading bitumen and includes products such as synthetic crude oil blends, diesel, diluents and intermediates. This value excludes solids, gases and non-hydrocarbons such as petroleum coke, fuel gas and sulphur. This value is compiled from Base Plant and Syncrude.\nd. Offshore crude production is crude oil that is produced by offshore facilities and excludes gases associated with petroleum gas. It includes production from the Terra Nova facility, which has been shut in since the fourth quarter of 2019.\ne. Refined liquid hydrocarbon production is the salable yield of liquid hydrocarbons produced at refineries and includes products such as gasoline, distillates, liquified petroleum gases, intermediates, heavy fuel oils, petrochemical feedstocks, and highly viscous liquid or semi-solid hydrocarbons like asphalt. It excludes solids and non-hydrocarbons such as petroleum coke, sodium bisulphite and sulphur. This production value is compiled with data from our refineries in Sarnia, Montreal, Commerce City and Edmonton.\nf. Renewable liquid fuel production represents liquid fuels produced from renewable sources, which currently includes our St. Clair ethanol plant.\ng. Oil sands electricity generation represents oil sands and in situ cogeneration, gas generation and steam turbine generation, and excludes electricity from mobile generators. It is disaggregated into internally consumed and exported electricity.\nh. Wind power generation is reported only on an operated basis.\ni. There were changes made to specific sites production values to align with the new methodologies listed above. Significant changes listed as follows: Base Plant production now includes both Bitumen and Synthetic crude, where only Synthetic crude was reported in the past (resulting in an average of a ${ \\sim } 9 0 \\%$ increase), Syncrude production including both Bitumen and Synthetic crude (resulting in an average of a $\\sim 1 2 0 \\%$ increase), where only Syncrude Sweet Product was reported in the past and Sarnia including values from hydrotreated volumes previously not included (resulting in an average of a ${ \\sim } 2 0 \\%$ increase).", "chunk_word_count": 425, "section_path": "Report on Sustainability 2023 > 4 Notes on operational performance and production", "document_id": "Suncor Sustainability Report 2023", "page": 82, "page_start": 82, "page_end": 82 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 61, "chunk_text": "# Report on Sustainability 2023\n## 5 Notes on GHG emissions\n### 5.1 GHG emissions factors\nGHG emissions from our activities (e.g., production and fuel consumption) are estimated using emission factors and expressed in tonnes of carbon dioxide equivalent $( \\mathsf { C O } _ { 2 } \\mathsf { e } )$ . This metric represents different gases based on their global warming potential (GWP) compared to carbon dioxide (which has a GWP of 1), using a common unit. Our 2015-2021 reporting used the 100-year GWP factors issued by the Intergovernmental Panel on Climate Change (IPCC) fourth assessment report (2007), which is aligned with the reporting conventions of agencies like Environment Canada and the U.S. Environmental Protection Agency (EPA). Starting with our 2023 report we are using the 100-year GWP factors issues by the IPCC fifth assessment report (2014), which is aligned with the Environment and Climate Change Canada (ECCC) Greenhouse Gas Reporting Program (GHGRP).\n### 5.2 Measuring potential GHG emission sources\nAs our operations span multiple jurisdictions, sectors and types of operations, we use several protocols, including those of regulatory bodies (e.g., US EPA, Western Climate Initiative, Government of Alberta) and the World Resources Institute to develop facility-specific emission calculations. We determine the appropriate calculation protocol(s) based on jurisdiction, type of facility, emission source, and fuel type and composition. If there is no prescribed protocol for a specific equipment, a combination of standardized methodologies and sector-specific approaches are used.\nWhenever possible, emission factors used in these calculations are derived from actual measured data rather than default factors. Factors that are derived from direct measurement, inferred from compositional data or are manufacturer-supplied provide the highestquality data. In addition to using fuel-specific emission factors that rely on volumes, some emissions are calculated using process- or equipment-specific consumption rates in units such as run-hours. Due to the diversity of our operations, we have more than 1,400 standard factors in our database. This does not include thousands of other factors calculated daily for different fuels and sites based on fuel composition analysis.", "chunk_word_count": 341, "section_path": "Report on Sustainability 2023 > 5 Notes on GHG emissions > 5.1 GHG emissions factors", "document_id": "Suncor Sustainability Report 2023", "page": 82, "page_start": 82, "page_end": 83 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 62, "chunk_text": "# Report on Sustainability 2023\n## 5 Notes on GHG emissions\n### 5.3 GHG standard practices and methodologies\nExternal agencies have developed standard, industry-specific methodologies that operators can choose to use in the absence of prescribed methods. The standard practices and methodologies we follow are widely accepted and documented so the numbers produced are verifiable by governments and third parties and are consistently applied from year to year.\nThese methodologies and guidance documents include:\n• American Petroleum Institute (API) Compendium of Greenhouse Gas Emissions Methodologies for the Natural Gas Industry, 2009 \n• US EPA Mandatory Reporting of Greenhouse Gases Rule \n• IPCC Fifth Assessment Report, 2014 \n• World Business Council for Sustainable Development/World Resources Institute Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, 2004 \n• 2006 IPCC Guidelines for National Greenhouse Gas Inventories \n• Western Climate Initiative Design for the WCI Regional Program, July 2010 \n• Western Climate Initiative Final Essential Requirements of Mandatory Reporting: Amended for Canadian Harmonization, 2013 \n• Alberta Greenhouse Gas Quantification Methodologies, Technology Innovation and Emissions Reduction Regulation, Version 2.2 \n• Quebec’s regulation respecting mandatory reporting of certain emissions of contaminants into the atmosphere, 2022 \n• Canada’s Greenhouse Gas Quantification Requirements, Greenhouse Gas Reporting Program, 2022 \n• Environment Canada National Inventory Report, 1990-2020 \n• EPA eGRID2021 for US assets\n### 5.4 Additional GHG notes\na. Total GHG emissions are the sum of scope 1 (direct) and scope 2 (indirect) emissions. • Operated emissions represent $ 1 0 0 \\%$ of operated assets. • Equity emissions are based on Suncor’s working interest in operated and non-operated assets. \nb. Total GHG emissions do not consider our low-carbon power exports as a benefit, to align with regulatory reporting. This benefit is calculated using the quantity of cogeneration power exports and the difference between cogeneration power intensity and the Alberta grid intensity. The benefit is included in the calculation of our GHG emission intensities. \nc. The aggregate Suncor intensity calculation incorporates the sum of liquid hydrocarbon production, resulting in a production value reflective of our activities as an integrated company. The aggregate Suncor intensity will therefore not equal the weighted-average of product intensities. \nd. MacKay River scope 2 emissions include purchased electricity from the grid, and purchased electricity and steam from the third-party TransCanada cogeneration units. \ne. The Base Plant, Fort Hills, Syncrude and Firebag cogeneration units are operated by Suncor and $\\mathcal { 1 } 0 0 \\%$ of cogeneration emissions contribute to total scope 1 emissions, including emissions associated with electricity that is sold to the Alberta grid. \nf. Refining and Logistics scope 1 emissions do not deduct CO2 transfers to third parties. \ng. Scope 2 emissions are calculated based on actual supplier data if available and published literature if supplier data is unavailable. \nh. Scope 2 GHG emissions for MacKay River have been restated from 2018-2021 to reflect updated methodology calculations. \ni. Scope 3 GHG emissions provided in our Climate Report include fuel- and energy-related activities (category 3), processing of sold products (category 10) and use of sold products (category 11).", "chunk_word_count": 505, "section_path": "Report on Sustainability 2023 > 5 Notes on GHG emissions > 5.3 GHG standard practices and methodologies", "document_id": "Suncor Sustainability Report 2023", "page": 83, "page_start": 83, "page_end": 83 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 63, "chunk_text": "# Report on Sustainability 2023\n## 5 Notes on GHG emissions\n### Performance data footnotes\nj. Category 3 emissions are estimated based on the total volume of natural gas used in Suncor’s oil sands mining, in situ and refining operations, on an equity interest basis. Suncor estimates the extraction, production and transportation emissions associated with natural gas supplied to our operations. Diesel use is excluded.\nk. Category 10 emissions are estimated based on the volume of intermediate products sold by Suncor to other refineries and the regions to which they were sold, on an equity interest basis. Intermediate products assessed include bitumen, synthetic crude oil and offshore crude oil.\nl. Category 11 emissions are estimated based on the following methods, on an equity interest basis:\n• Upstream production: The sum of upstream hydrocarbon production, assuming it is processed into refined products and combusted. Includes net shipped quantities of bitumen, synthetic crude, offshore crude and petroleum coke. GHG emission factors were sourced from the US EPA 2022 GHG Emission Factors Hub and the 2021 API Compendium of GHG Emission Methodologies.\n• Refinery throughput: The sum of refined products at our Edmonton, Commerce City, Sarnia and Montreal refineries. Includes gasoline, distillates, and combustibles such as propane, butane, petcoke and heavy fuel oil. GHG emission factors were sourced from the US EPA 2022 GHG Emission Factors Hub and the 2021 API Compendium of GHG Emission Methodologies.\n• Branded sales: The sum of refined product sales to retail customers within Canada and the US, excluding wholesale products. Carbon dioxide emissions from renewable fuels that are blended with the refined products have been subtracted, as renewable fuel combustion emissions are considered carbon neutral.\nm. Our GHG objectives encourage emission reductions throughout our value chain. To support tracking our progress, Suncor has a methodology that quantifies direct reductions from our operations and indirect reductions from the use of our products.\nn. Regulations, such as Alberta’s TIER, require that we have our facility emissions third-party verified at a reasonable level of assurance. Since regulatory and sustainability reporting timelines do not necessarily align, not all regulatory verifications may have been final at the time of publication of this report.\no. Emissions data from operations in which we have an equity interest may not have been verified and is subject to change.\np. No credit is taken in our scope 1 and 2 GHG performance data for the benefits associated with internally generated performance credits, purchased offsets, ethanol life-cycle GHG reductions or wind-generated offsets.\nq. GHG emission allocations by liquid hydrocarbon production (i.e., bitumen, synthetic crude, offshore crude, refined liquid hydrocarbons and renewable fuels) are based on guidance provided in the GHG Protocol and internal engineering methodologies.\nr. The sum of liquid hydrocarbon production emissions and oil sands electricity export emissions equals total scope 1 & 2 GHG emissions.\ns. 2020 GHG data for Terra Nova is included within the offshore crude production GHG (scope 1 and 2) emissions value.\nt. Due to the new production methodology, our resulting sum of liquid hydrocarbon production GHG (scope 1 & 2) intensity value has decreased by $\\sim 3 0 \\%$ , although the absolute value has remained the same.", "chunk_word_count": 528, "section_path": "Report on Sustainability 2023 > 5 Notes on GHG emissions > Performance data footnotes", "document_id": "Suncor Sustainability Report 2023", "page": 84, "page_start": 84, "page_end": 84 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 64, "chunk_text": "# Report on Sustainability 2023\n## 6 Notes on energy use\na. Total energy is equal to the sum of direct and indirect energy. Electricity that was produced and sold to provincial grids by oil sands and in situ cogeneration units and operated wind farms is converted to an equivalent amount in gigajoules and deducted from total energy use.\nb. Direct energy is primary energy consumed on site by Suncor-operated facilities.\nc. Indirect energy includes imported electricity, steam, heating and cooling from third parties. The indirect energy calculation method credits operations for electricity exported to external users.\nd. Indirect energy consumption has been restated for MacKay River from 2018-2021 to reflect updated methodology calculations.\ne. Energy use is reported only on an operated basis.\nf. The emissions factors used in this report are the most recently published values for Canada from the National Inventory Report (NIR) taken as of December 31 of the reporting year, which is the NIR 2022 factors for 2019. The exception to this is the Commerce City refinery, which used the eGRID2021 factor for 2021.\n## 7 Notes on other air emissions\na. Air emissions data reported $( \\mathsf { N O } _ { \\mathsf { x } } , \\mathsf { S O } _ { 2 }$ and VOC) include point and non-point sources.\nb. Suncor and Syncrude report to the Canadian National Pollutant Release Inventory annually. Suncor also reports to the U.S. Toxic Release Inventory annually. Additional information on performance can be found through these reporting mechanisms.\nc. Graphs associated with $\\mathsf { S O } _ { 2 ^ { \\prime } } \\mathsf { N O } _ { \\times }$ and VOC emissions intensity only include facilities that are material sources of these emissions for our business. Oil Sands and Syncrude estimation accuracy for VOC emissions intensity is greater than $+ / .$ - $ 1 0 \\%$ and is limited by currently accepted methodology and measurement instruments.\nd. The VOC quantification methodology from equipment leaks has been updated to reflect the changes in the new federal VOC regulation for the Petroleum Sector (SOR/2020-231) for some of our refineries in 2022 and moving forward.\ne. $\\mathsf { P M } _ { 1 0 }$ values have been restated at Syncrude to better align with Suncor’s methodology; a value for $\\mathsf { P M } _ { 1 0 }$ in 2018 for Syncrude is unavailable and therefore not included; values from 2019-2021 are more similarly aligned and the value for 2022 is fully aligned with Suncor’s methodology. ${ \\mathsf { S O } } _ { 2 }$ values in 2022 and moving forward at our Sarnia refinery will be higher due to updates in calculation methodology. Minor adjustments were made to 2020 and 2021 ${ \\mathsf { S O } } _ { 2 }$ emissions due to calculation corrections at our In Situ facilities.", "chunk_word_count": 488, "section_path": "Report on Sustainability 2023 > 6 Notes on energy use", "document_id": "Suncor Sustainability Report 2023", "page": 84, "page_start": 84, "page_end": 85 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 65, "chunk_text": "# Report on Sustainability 2023\n## 8 Notes on water use and return\na. Total water withdrawal is the removal or purchase of water from any source, either permanently or temporarily. It is also referred to as water abstraction or water intake, and it includes both fresh and non-freshwater sources. This value does not include produced water. Further efforts to align definitions across sites will be considered in future reporting periods.\nb. Total water return is the sum of effluents and other water leaving the organization’s boundary and released to surface water, and to third parties over the course of the reporting year. We also discharge underground in deep well disposals, but not into groundwater.\nc. Fresh water is characterized by a low total dissolved solids content for which limits are defined by regulation in the jurisdiction of Suncor activity. Where no regulatory definition of fresh water exists, we default to the Alberta Environment limit of fresh water having less than $4 , 0 0 0 \\mathrm { m g / L }$ of total dissolved solids.\nd. Water consumption is the total water withdrawn minus water returned and reflects quantity of water used and not returned to its proximate source or no longer available in its original form.\ne. Freshwater consumption and intensity graph: Oil Sands Base Plant, Fort Hills and Syncrude in this graph do not include industrial runoff water, which is subject to annual variances based on precipitation. Withdrawal and consumption including industrial runoff volumes are shown in the performance data tables. Water measurement and estimation methodology on select Refining & Logistics operations is greater than $+ / -$ - $ 1 0 \\%$ uncertainty.\nf. Freshwater consumption intensity is the volume of fresh water consumed $( \\mathsf { m } ^ { 3 } )$ per volume of liquid hydrocarbon products.\ng. Freshwater withdrawal and intensity graph: Includes freshwater withdrawal from surface water and ground water. This value does not include industrial runoff, municipality/city/district water or treated wastewater withdrawal volumes. Water measurement and estimation methodology on select Refining & Logistics operations is greater than $+ / -$ $ 1 0 \\%$ uncertainty.\nh. Oil Sands Base Plant, Fort Hills and Syncrude mining water withdrawal includes surface water, groundwater and industrial run off water as per regulatory withdrawal licences and are subject to annual variances based on precipitation. Water returned includes treated industrial wastewater and runoff from non-process areas that gets collected, diverted and eventually discharged to the environment (destination is the Athabasca River).\n## i. In Situ water withdrawal includes licensed groundwater wells, treated wastewater and industrial runoff water.\nj. Refining and Logistics surface water withdrawal sources and return destinations vary by refinery facility locatio k. Freshwater consumption at Base Plant was restated for 2021 to reflect a corrected value in our calculation.\nl. Due to the new production methodology, our resulting water withdrawal intensity value has decreased by $\\sim 3 0 \\% ,$ although the absolute value has remained the same.\nm. Treated wastewater withdrawal was restated for the 2021 corporate total to reflect a corrected calculation.", "chunk_word_count": 512, "section_path": "Report on Sustainability 2023 > 8 Notes on water use and return", "document_id": "Suncor Sustainability Report 2023", "page": 85, "page_start": 85, "page_end": 85 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 66, "chunk_text": "# Report on Sustainability 2023\n## 9 Notes on waste management\na. Waste volumes depend on site activities or periodic equipment maintenance and may fluctuate annually.\nb. In Situ waste that is sent to deep well injection is primarily related to blowdown from our steam-assisted gravity drainage operations at Firebag, consisting of concentrated water impurities that accumulate during the steam generation process. This boiler feedwater is intentionally wasted from the boilers to avoid concentration of impurities during continuing evaporation of steam. Deepwell disposal methods of this nature are safe, viable and part of normal operating parameters and our operations are within the disposal limits for these waste streams (regulated by the Alberta Energy Regulator). Our operations also have exceptionally high water recycling rates, above regulated levels.\nc. Hazardous waste is defined as hazardous, toxic, dangerous, listed, priority, special or some other similar term as defined by an appropriate country, regulatory agency or authority. Under regulatory law, wastes that, when present in quantities and concentrations that are high enough, pose a threat to human health or the environment if they are improperly stored, transported, treated or disposed.\nd. Non-hazardous waste is considered less harmful to the environment or human health as defined by an appropriate country, regulatory agency or authority.", "chunk_word_count": 209, "section_path": "Report on Sustainability 2023 > 9 Notes on waste management", "document_id": "Suncor Sustainability Report 2023", "page": 86, "page_start": 86, "page_end": 86 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 67, "chunk_text": "# Report on Sustainability 2023\n## 10 Notes on land disturbance and reclamation/tailings\na. Total active footprint includes cumulative hectares for land cleared, land disturbed, land that is ready for or under reclamation and total land reclaimed. Certified land is not included in this value. The categories and definitions used are consistent with reporting to the Alberta Energy Regulator (AER) in the annual reports.\nb. At the mines, land cleared includes areas where vegetation has been removed for preparation for activities (as per AER’s SED 003). At our in situ sites, land cleared includes areas that are under construction and land that was cleared and now support active and inactive operations (as per AER’s SED 001).\nc. At our mines, land disturbed includes areas that will be used for the project, where soil has been removed (as per AER’s SED 003). At our in situ sites, land disturbed includes areas that are under construction and active or inactive operations where soil has been removed (as per AER’s SED 001).\nd. At the mines, ready for reclamation/undergoing permanent reclamation includes land tracked as ready for reclamation and land that has had soil placed as per SED 001 definitions. At our in situ sites, the category includes cleared and disturbed land tracked as ready for reclamation and land undergoing permanent reclamation activities. This includes:\n• areas that are no longer required for activities, where reclamation will occur but has not started • areas where activities are taking place to support land reclamation • areas where activities related to reclamation have occurred (such as soil placement; not including revegetation).\ne. Land reclaimed is land that is no longer being used for mine, plant or in situ production purposes and has been permanently or temporarily reclaimed (as per AER’s SED 001 or SED 003). Reclamation is presented as a cumulative number; therefore, the total number of hectares reported from year to year will change depending on whether reclamation has occurred or whether redisturbance of previously reclaimed areas was required. Permanently reclaimed lands have met the authorized plans for soil placement and revegetation, and have not been certified by the Alberta Energy Regulator.\nf. The dam safety regulation in Alberta is through the Water (Ministerial) Regulation and detailed in the Dam and Canal Safety Directive. The regulation and directive govern dam safety requirements for all dams and canals in the province, including defining dam classifications:\n• Active is defined as in operation for either ongoing tailings management or progressing to closure • Inactive is defined as not in operation but not yet closed • Closed or reclaimed surface is defined as having completed closure activities but still owned by the operator.\ng. The fluid tailings volumetric estimate for 2020 is in alignment with Base Plant’s updated ready to reclaim targets approved by the Alberta Energy Regulator in the first quarter of 2021.\nh. Syncrude tailings values were restated from 2018-2021 to align with Suncor’s reporting methodology.", "chunk_word_count": 491, "section_path": "Report on Sustainability 2023 > 10 Notes on land disturbance and reclamation/tailings", "document_id": "Suncor Sustainability Report 2023", "page": 86, "page_start": 86, "page_end": 86 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 68, "chunk_text": "# Report on Sustainability 2023\n## 10 Notes on land disturbance and reclamation/tailings\n### Performance data footnotes\ni. In 2022 a decision to further delineate the total active footprint resulted in the need to represent the values for 2018 through 2022 using the updated approach that is more representative of the detailed categories used in the annual reports provided to the AER.\nj. Total fluid tailings volumes is the net value, where ready to reclaim volumes that meet regulatory criteria are deducted from a gross fluid tailings volume.\n## 11 Notes on environmental compliance\na. Starting in the 2022 Sustainability report, the environmental incident and non-compliance metric replaces the metric in previous reports titled “Environmental non-compliance.” The updated metric includes all incidents previously reported as “environmental noncompliance” as well as an additional subset of incidents that corresponds to a lower threshold on Suncor’s risk matrix.\nb. Environmental incidents and non-compliance data represent incidents with higher environmental and regulatory risk that aligns with Suncor’s risk matrix and reflect, at minimum, an event triggering regulatory reporting or non-compliance to regulatory requirements.\nc. Significant spills reflect the unplanned or accidental release of material whose impact is either off property and takes longer than seven months to remediate or is on property and takes one year or more to remediate or reclaim.\n• A reportable spill ${ > } \\mathcal { 1 }$ bbl reaching the environment reflects an unplanned or accidental release of material with off-property impact or on-property impact requiring remediation or reclamation.\nd. The threshold for a reportable spill ${ > } \\mathcal { 1 }$ bbl reaching the environment is lower than “Significant Spill”.\ne. Both reportable spills $>$ 1bbl that reach the environment and significant spills are subcategories of an Environment Incident and Non-compliance.\nf. Based off IPIECA guidance (International Petroleum Industry Environmental Conservation Association), the following substances are in scope for reportable spills: hydrocarbon liquids, chemicals, produced water and other process-related non-hydrocarbons.\ng. An incident may be excluded as a reportable spill ${ > } \\mathcal { 1 }$ bbl that reaches the environment based on substance type; however, the incident would still be included as an Environmental Incident and Non-compliance.\nh. Environmental regulatory fines align to our risk matrix, and reflect financial penalties levied by the regulator, or the courts, and are paid in the reporting year as a result of a regulatory non-compliance or exceedance. The threshold for reporting is for fines, penalties or settlements $> \\$ 10,000$ CDN or USD.\n• the year that a fine is paid does not necessarily correlate to the year that the incident occurred\n• the environmental-related fines paid during the reporting period were due to violating air requirements.\n## i. Previous years’ compliance data is not subject to restatement for the Report on Sustainability.", "chunk_word_count": 465, "section_path": "Report on Sustainability 2023 > 10 Notes on land disturbance and reclamation/tailings > Performance data footnotes", "document_id": "Suncor Sustainability Report 2023", "page": 87, "page_start": 87, "page_end": 87 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 69, "chunk_text": "# Report on Sustainability 2023\n## 12 Notes on health and safety\na. All health and safety information reported in this filing is based on data as of February 2, 2023. Suncor total values reflect the inclusion of Syncrude data.\nb. Health and safety data are subject to restatement for a full year as events are updated and reclassified to ensure consistency and accuracy in publicly available information.\nc. Downstream Refining and Logistics health and safety data includes our St. Clair ethanol plant. Our U.S. operations use the Occupational Health and Safety Administration definitions to classify their injuries, which differ slightly from Canadian standards.\nd. Lost time injury is a work-related injury that results in lost days from work. Fatalities are included in lost time injuries. Frequency is calculated as the number of lost time injuries multiplied by 200,000 (based on 100 workers working full time for one year) divided by the measured employee and contractor exposure hours. Prime contractor incident data is excluded from this metric.\ne. Recordable injury is a work-related injury that results in recordable injuries (including medical treatment, restricted work access and lost time). Frequency is calculated as the number of lost time injuries multiplied by 200,000 (based on 100 workers working full time for one year) divided by the measured employee and contractor exposure hours. Prime contractor incident data is excluded from this metric.\n### Performance data footnotes\nf. Serious Injury and Fatality (SIF) events include the following incident types: fatalities; any injury that requires immediate life-preserving rescue action, and if not applied immediately would likely result in the death of that person (life-threatening); and any injury that results in permanent or long-term impairment or loss of an internal organ, body function or body part (life-altering).\ng. Due to methodology differences, Syncrude SIF events are only included in the Suncor total starting in October 2021 to align with operational control. Methodologies are being assessed for future alignment and reporting. Contractors refer to any organization, company or individual who provides goods and/or services to Suncor.\nh. Fatalities are reported for employees and contractors (excluding prime contractors). The prime contractor for a work site is (a) the person in control of the work site, or (b) a person designated in writing by the person in control of the work site. Prime contractors have full care, custody and control, meaning they manage their own work and are responsible for maintaining safe working environments.\ni. Process Safety Tier 1 and 2 Loss of Primary Containment (LOPC) events are unplanned or uncontrolled release of any material from primary containment resulting in consequences as specified by American Petroleum Institute Recommended Practice 754 Second Edition, 2016, and International Association Oil & Gas Producers Report 456: Process Safety Recommended Practice on Key Performance Indicators Version 2.0, 2018. The LOPC data is a sum of Tier 1 and 2 LOPC events.", "chunk_word_count": 477, "section_path": "Report on Sustainability 2023 > 12 Notes on health and safety", "document_id": "Suncor Sustainability Report 2023", "page": 87, "page_start": 87, "page_end": 88 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 70, "chunk_text": "# Report on Sustainability 2023\n## 13 Notes on workforce\na. In 2022, Suncor shifted to a new HR system resulting in re-categorization of workforce groups. Indigenous representation pulled from multiple internal sources of data. Syncrude is included in the total Suncor employees for 2018 to 2022. Syncrude is not included within the breakdown of employees into categories for 2018 to 2020.\nb. New employee hires are any externally or internally hired regular full-time or part-time employees whose permanent start date falls within the reporting period.\nc. Employee turnover is the percentage of employees who leave Suncor under any circumstance in the reporting year. Only terminations are included for full-time and part-time employees.\nd. Suncor employees include regular full-time, regular part-time, casuals and temporary employees. Leaves are not included.\ne. Long-term contractors are individual workers engaged as contractors to support short-term, variable work and have been determined by the number of contractors holding a position at Suncor in the organizational structure. This would only include independent contractors, and exclude contract services, contract retailers and consultants.\nf. Unionized workforce data is only applicable in areas where there is a unionized environment. This number reflects integration with Syncrude, which had no unionized workers.\ng. All workforce information reported in this filing is based on data as of December 31, 2022. The workforce data provided may not align with that in the 2022 Annual Report due to different methodologies.", "chunk_word_count": 236, "section_path": "Report on Sustainability 2023 > 13 Notes on workforce", "document_id": "Suncor Sustainability Report 2023", "page": 88, "page_start": 88, "page_end": 88 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 71, "chunk_text": "# Report on Sustainability 2023\n## 14 Notes on economic performance\na. Select economic figures have been calculated according to International Financial Reporting Standards. For complete disclosure of ou financial information, see our 2022 Annual Report.\nb. Beginning in 2021, operating revenues and other income have been updated to be presented as gross revenues plus other income (loss), and exclude royalties.\nc. Operating, selling and general (OS&G) expenses are subject to historical restatements due to reclassifications within our income statement. In 2021, prior period amounts of OS&G expense were reclassified to align with the current year presentation. Employee and contract service costs are reported in our annual report under OS&G and include salaries, benefits, and share-based compensation, professional service costs and other related costs.\nd. In 2022, we added contract service costs into our employee cost line item. This is now the combined costs our employee and contract service and value has been restated back to 2018.\ne. Royalty expense and taxes paid include monies remitted to government, including income, property and other taxes, Crown royalties, and lease bonuses and rentals. For simplicity, royalty expense is provided, which may differ from when royalties are paid.\n### Performance data footnotes\nf. Payments to providers of capital includes dividends paid on common shares and interest on debt.\ng. Under GRI Standard 201-1, economic value retained reflects the direct economic value generated (revenues) minus economic value distributed (operating costs (including employee costs), royalty expense and taxes paid, payments to providers of capital and community investments).\nh. Enterprise value includes market capitalization from equity plus total debt (which includes short-term debt, current portion of longterm debt, current portion of long-term lease liabilities, long-term debt and long-term lease liabilities), less cash and cash equivalents.\ni. Capital and exploration expenditures include capitalized interest for all periods presented. Capital and exploration expenditures excludes capital expenditures related to assets held for sale of \\$133 million in 2022.\nj. As of June 1, 2016, Suncor no longer makes political contributions as a matter of policy, except in exceptional circumstances. Any such contributions will continue to be disclosed in this report.", "chunk_word_count": 351, "section_path": "Report on Sustainability 2023 > 14 Notes on economic performance", "document_id": "Suncor Sustainability Report 2023", "page": 88, "page_start": 88, "page_end": 89 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 72, "chunk_text": "# Report on Sustainability 2023\n## 15 Notes on supply chain\na. Indigenous supplier spend:\n• Direct spend is considered contracting work directly with an Indigenous business that includes those with a minimum of $5 1 \\%$ ownership by Indigenous individuals or organizations\n• Indirect spend is considered contracting with a non-Indigenous supplier who sub-contracts to an Indigenous business that is greater than or equal to $5 1 \\%$ owned for work that is being performed on behalf of Suncor, contracting with an Indigenous supplier who has a minority ownership in a non-Indigenous business, or a non-Indigenous supplier who has a commercial agreement where revenue received from work being performed for Suncor goes back to the community.\nb. Values reported for Indigenous supplier revenues reflect amounts captured in our enterprise software data management system, minus $5 \\%$ GST.\nc. Inclusion of contracts in the reporting year is based on the payment date, not the date of services rendered.\nd. The Indigenous supplier spend direct value for 2018 has been updated to reflect a corrected value.\ne. All supply chain information reported in this filing is based on data as of December 31, 2022, aligned with internal stewardship reporting to ensure consistency and accuracy in publicly available information.\nf. Total supply base for Suncor and Syncrude was counted separately as data is tracked in two different systems and will not be merged until Q3 2023. All other supply chain data was restated for 2018-2021 to include Suncor and Syncrude combined. Syncrude did not historically track indirect Indigenous supplier spend so that value only reflects Suncor’s indirect spend. All other supply chain data was restated for 2018-2021 to include Suncor and Syncrude combined.", "chunk_word_count": 281, "section_path": "Report on Sustainability 2023 > 15 Notes on supply chain", "document_id": "Suncor Sustainability Report 2023", "page": 89, "page_start": 89, "page_end": 89 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 73, "chunk_text": "# Report on Sustainability 2023\n## 16 Notes on social investments\na. Value for social investment is calculated by Suncor and is generally unaudited except for donations made by the Suncor Energy Foundation (SEF) and the Petro-Canada CareMakers Foundation™ (PCCF). The SEF and PCCF’s financial statements are audited annually by KPMG. The value of total community investment includes cash, volunteer rewards and in-kind donations.\nb. Value of management cost donations from 2015 to 2022 is for SEF only.\nc. The SEF is limited to providing donations to registered Canadian charitable organizations, and Suncor’s contribution to SEF supports donations, operating budget and appropriate allocations to a reserve fund that protects multi-year commitments going forward.\nd. Suncor launched a new SunCares employee program in 2017. Suncor and SEF donations support volunteer rewards and matching donations. Employee personal donations include employee and retiree donations and donations made through the public SunCares Community Impact Portal.\ne. The Petro-Canada CareMakers Foundation™ (PCCF) was launched by Suncor, owner of Petro-Canada™, in November 2020. The PCCF is a registered public foundation, which engages in fundraising, awareness building and providing donations to registered charitable organizations who support family caregivers. Suncor’s contribution to PCCF represents donations only. At this time all operating costs for PCCF are paid by Suncor. See www.caremakers.ca.\n### Performance data footnotes\nf. Syncrude Joint Venture Project donations are the total investments to registered charitable organizations and community groups; this value represents $ 1 0 0 \\%$ of Syncrude’s donations. As a Joint Venture Participant, Suncor contributes $5 8 . 7 4 \\%$ of Syncrude’s donations; this value is included in Suncor’s total contributions. Values from 2019-2021 are not verified.\ng. The 2021 value of cash donation value was restated to reflect donations that were not included within last year’s report. The total contributions to charitable, non-charitable and community groups value has been updated to reflect this change.", "chunk_word_count": 312, "section_path": "Report on Sustainability 2023 > 16 Notes on social investments", "document_id": "Suncor Sustainability Report 2023", "page": 89, "page_start": 89, "page_end": 90 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 74, "chunk_text": "# Report on Sustainability 2023\n## 17 Notes on diversity\na. In 2022, Suncor shifted to a new HR system resulting in re-categorization of workforce groups. Syncrude diversity data has been integrated into the 2022 indicators where data is available. Syncrude is not included in the 2018 to 2021 values due to data availability.\nb. Certain operating regions prohibit collecting information on gender; therefore, diversity gender data may not reflect our entire workforce due to data availability. Workforce diversity data is calculated based on information provided voluntarily by employees. Indicators referring to ethnicity and disability reflect only those employees who have voluntarily self-identified; these indicators were not collected by Syncrude in the past.\nc. Management is classified as members of the management committee or members of the corporate committee, which is Vice Presidents (VPs) and above. ELT (formerly management committee) or senior leader (formerly corporate committee) or mid-level leader or front-line leader.\nd. All workforce information reported in this filing is based on data as of December 31, 2022. The workforce data provided may not align with that in the 2022 Annual Report due to different methodologies.\ne. Ratio of basic salary and remuneration of women to men:\n• for the purpose of this calculation females are the numerator and males are the denominator \n• ratio only reflects full-time and part-time, salaried, casuals and temporary (and including unionized and non-unionized employees) • excludes unknown gender, and insufficient information from salary bands \n• salary band is used to calculate the ratio at each salary band level to group similarly paid individuals. A weighted average is applied to each salary band level to obtain the overall ratio for management and individual contributor categories \n• annual salary conversion was applied based on the Finance department’s 2022 conversion rate.\nf. The Board of directors data presented within this report is as of March 6, 2023 to align with our 2023 Annual Information Form.\n### Independent practitioner’s limited assurance report\n### To the management of Suncor Energy Inc. (‘the Entity’)\nWe have undertaken a limited assurance engagement on certain key performance indicators of the Entity, included in the 2023 Report on Sustainability and Climate Report (collectively ‘the Reports’) and as described below, as at and for the year ended December 31 2022.\n### Subject matter information and applicable criteria\nThe scope of our limited assurance engagement, as agreed with management, comprises the following performance information (collectively the ‘subject matter information’):\nOther than as described in the preceding table, we did not perform assurance procedures on the remaining information included in the Reports, and accordingly, we do not express a conclusion on this information. The assured subject matter information, contained within the Reports and denoted by the symbol $^ { \\prime \\prime } ( \\mathsf { A } ) ^ { \\prime \\prime } ,$ has been determined by management on the basis of the Entity’s assessment of the material issues contributing to their sustainability performance and most relevant to their stakeholders.", "chunk_word_count": 496, "section_path": "Report on Sustainability 2023 > 17 Notes on diversity > Independent practitioner’s limited assurance report", "document_id": "Suncor Sustainability Report 2023", "page": 90, "page_start": 90, "page_end": 92 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 75, "chunk_text": "# Report on Sustainability 2023\n## 17 Notes on diversity\n### Management’s responsibilities\nManagement is responsible for the preparation and presentation of the subject matter information in accordance with the applicable criteria.\nThere are no mandatory requirements for the preparation, publication or review of sustainability metrics. As such, the Entity applies the applicable criteria, including its own internal reporting guidelines and definitions for sustainability reporting, which can be found in the footnotes found on pages 81-90 of the 2023 Report on Sustainability.\nManagement is responsible for determining the appropriateness of the use of the applicable criteria.\nManagement is also responsible for determining the Entity’s objectives in respect of sustainability performance and reporting, including the identification of stakeholders and material issues.\nManagement is also responsible for such internal control as management determines necessary to enable the preparation and presentation of the subject matter information that is free from material misstatement, whether due to fraud or error.", "chunk_word_count": 155, "section_path": "Report on Sustainability 2023 > 17 Notes on diversity > Management’s responsibilities", "document_id": "Suncor Sustainability Report 2023", "page": 92, "page_start": 92, "page_end": 92 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 76, "chunk_text": "# Report on Sustainability 2023\n## 17 Notes on diversity\n### Practitioner’s requirements\nOur responsibility is to express a limited assurance conclusion on the subject matter information based on evidence we have obtained. We conducted our limited assurance engagement in accordance with International Standards on Assurance Engagements (ISAE) 3000, Attestation Engagements Other than Audits or Reviews of Historical Financial Information and ISAE 3410, Assurance Engagements on Greenhouse Gas Statements, issued by the International Auditing and Assurance Standards Board. ISAE 3000 and ISAE 3410 require that we plan and perform our engagement to obtain limited assurance about whether based on the procedures performed and evidence obtained, any matter(s) has come to our attention to cause us to believe that the subject matter information is materially misstated.\nThe procedures performed in a limited assurance engagement vary in nature and timing from and are less in extent than for a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. Accordingly, it is not a guarantee that a limited assurance engagement conducted in accordance with this standard will always detect a matter that causes the practitioner to believe that the subject matter information is materially misstated.\nMisstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users of our report.\nThe nature, timing and extent of procedures performed depends on our professional judgment, including an assessment of the risks of material misstatement, whether due to fraud or error, and involves obtaining evidence about the subject matter information.\nOur engagement included assessing the appropriateness of underlying subject matter, the suitability of the criteria used by the Entity in preparing the subject matter information in the circumstances of the engagement and evaluating the appropriateness of the methods, policies and procedures, and models used in the preparation of subject matter information and the reasonableness of estimates made by the Entity.\nOur engagement included, amongst others, the following procedures:\n• Inquiries with relevant staff at the corporate and facility level to understand the data collection and reporting processes for the subject matter information; • Assessment of the suitability and application of the criteria in respect of the subject matter information;\n• Where relevant, performing walkthroughs of data collection and reporting processes for the subject matter information; • Comparing a sample of the reported data for the subject matter information to underlying data sources; • Inquiries of management regarding key assumptions and, where relevant, the re-performance of key calculations; • Completion of a site visit to the Syncrude facility, including a site walkthrough of data collection and reporting processes, interviews with senior management and relevant staff and site inspection and tour; and • Reviewing the presentation of the subject matter information in the Reports to determine whether the information presented is consistent with our overall knowledge of, and experience with the sustainability performance of the Entity.\nThe engagement was conducted by a multidisciplinary team which included professionals with suitable skills and experience in both assurance and in the applicable subject matter, including environmental, social and governance aspects.", "chunk_word_count": 538, "section_path": "Report on Sustainability 2023 > 17 Notes on diversity > Practitioner’s requirements", "document_id": "Suncor Sustainability Report 2023", "page": 92, "page_start": 92, "page_end": 93 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 77, "chunk_text": "# Report on Sustainability 2023\n## 17 Notes on diversity\n### Practitioner’s independence and quality management\nWe have complied with the relevant rules of professional conduct/code of ethics applicable to the practice of public accounting and related to assurance engagements, issued by various professional accounting bodies, which are founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.\nThe firm applies Canadian Standard on Quality Management 1, Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services Engagements which requires the firm to design, implement and operate a system of quality management, including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.\n### Significant Inherent limitations\nHistorical non-financial information, such as that contained in the Reports, is subject to more inherent limitations than historical financial information, given the characteristics of the underlying subject matter and methods used for determining this information. The absence of a significant body of established practice on which to draw allows for the selection of different but acceptable evaluation techniques, which can result in materially different measurements and can impact comparability. The nature and methods used to determine such information, as described in the applicable criteria, may change over time, and it is important to read the Entity’s reporting methodology available in the footnotes on pages 81-90 of the 2023 Report on Sustainability.\n### Our conclusion\nOur conclusion has been formed on the basis of, and is subject to, the matters outlined in this report. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. Based on the procedures performed and evidence obtained, no matters have come to our attention to cause us to believe that the Entity’s subject matter information, as described above and disclosed in the Reports, for the year ended December 31, 2022, is not prepared and presented, in all material respects, in accordance with the applicable criteria.\n### KPMGLuP\nChartered Professional Accountants \nCalgary, Canada \nJuly 18, 2023\n### Advisories", "chunk_word_count": 347, "section_path": "Report on Sustainability 2023 > 17 Notes on diversity > Practitioner’s independence and quality management", "document_id": "Suncor Sustainability Report 2023", "page": 93, "page_start": 93, "page_end": 93 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 78, "chunk_text": "# Report on Sustainability 2023\n## 17 Notes on diversity\n### Forward-looking statements\nSuncor’s 2023 Report on Sustainability contains certain forward-looking statements and forward-looking information (collectively, “forwardlooking statements”) within the meaning of applicable Canadian and U.S. securities laws. Forward-looking statements in Suncor’s 2023 Report on Sustainability include references to: Suncor’s climate-related goal of becoming a net zero company by 2050 (scope 1 and 2); our 2030 interim target to reduce emissions by 10 megatonnes across our value chain; statements and beliefs about our strategy to be Canada’s leading energy company and our climate objectives; that integrating sustainability into project development aims to improve how emerging policy, environmental and social considerations are factored into development decisions; that we are committed to improving environmental performance, thoughtful collaboration and meaningful stakeholder relationships that underpin our performance; that our coke boiler replacement project is expected to be commissioned in late 2024; expectations and beliefs about the Pathways Alliance; that we are addressing environmental and social effects of our procurement decisions while increasing the value to our business and generating mutual efficiencies with competitive businesses and suppliers; that we are seeking opportunities to reduce environmental impacts, support the communities where we work and live, and collectively contribute to economic growth; the belief that our Indigenous Business Participation Strategy supports our approach to meeting our commitments and supporting meaningful engagement, while ensuring agreements are mutually beneficial; that we are committed to improving air quality and reducing emissions near all our operations; the belief that supplementary data, obtained through fenceline monitoring, helps us manage facility-wide emissions more efficiently; that we seek to avoid, minimize, restore and/or offset impacts to biodiversity from our operations; that Suncor’s operational plan is intended to protect biodiversity of the McClelland Lake Wetland Complex through mine closure; expectations about changes to fish habitat that will happen as a result of the Fort Hills mine development; statements about the goals, targets, beliefs and expectations of the COP15Global Biodiversity Framework and Suncor’s beliefs and goals related thereto; the belief that site-specific reclamation monitoring plans assess the components of biodiversity while vegetation regrows and ecosystems develop over time; that we work to mitigate and monitor the impacts of our operations, understand and reduce the cumulative effects of oils sands development and address regional biodiversity risk; the goal of the OSM Program to provide assurance to local communities, the province, the country and the international community that oil sands resources are being developed responsibly; that we see many opportunities to work with customers, suppliers, governments and other partners to help reduce emissions through out value chain; that we are advancing a suite of projects to reach our objective; that focus on reducing base business emissions with fuel switching, energy efficiency, carbon capture and storage, and other technologies; that we expect to spend approximately $ 1 0 \\%$ of our annual capital budget, on average, through 2025 on projects aimed at lowering our emissions and advancing our low-carbon energy offerings that also provide strong, double-digit returns; that we are committed to operating our facilities safely and reliably, which includes trying to prevent environmental incidents such as spills and exceedances; that we continue to focus on asset reliability, improving internal critical controls, monitoring to decrease spills or regulatory exceedances, and when required, timely remediation; that we are committed to", "chunk_word_count": 550, "section_path": "Report on Sustainability 2023 > 17 Notes on diversity > Forward-looking statements", "document_id": "Suncor Sustainability Report 2023", "page": 94, "page_start": 94, "page_end": 94 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 79, "chunk_text": "# Report on Sustainability 2023\n## 17 Notes on diversity\n### Forward-looking statements\npreserving and promoting biodiversity in all areas where we work; the expectation that the mineable resources at Base Plant’s Millennium and North Steepbank Extension mines will be depleted in the next decade (2030s), and that we are working to add detail to our plan for reclamation and closure of the site, which will include further engagement with local Indigenous communities; that we plan to progress reclamation as quickly as possible when areas are no longer required for operations; the belief that through our reclamation work we are meeting the expectations that neighbours and regulators place on us to do it right; the expectation that we are progressing several tailings facilities to closure and will be increasing treatment capacity in the next few years; that we continue to focus on progressive reclamation and progress toward mine closure by advancing more tailings facilities to closure in a safe and environmentally responsible way; that we can play a valuable role in providing the additional energy needs associated with material circularity; the belief that increasing the use of lower-cost vanadium for the energy storage industry is anticipated to support increased integration of renewable electricity generation into the energy system; the expectation that this initiative will ultimately the low-cost energy storage solutions required to enable greater adoption of low-carbon sources of electricity generation; the belief that we are building a culture that reflects our values and is grounded in trust and inclusion; that our programs and resources aim to promote a psychologically safe environment and break the stigma around metal health issues; that Suncor is committed to preserving and protecting internationally recognized human rights; that we have begun updating our Human Rights policy in response to emerging tends and legislation in this area; the expectation that Syncrude will undergo an assessment in 2023 with respect to preventing child and forced labour; that we expect the federal government’s Bill S-211, Fighting Against Forced Labour and Child Labour Act to come into force in 2024; the belief that we are building a culture of performance based on trust and inclusion; that we want to create a work environment where everyone can meaningfully contribute while feeling safe, valued and respected; the belief that ongoing development activities ensure leaders at all levels understand our expectations about inclusion and diversity and possess the necessary competencies; that we have set a goal to increase our Indigenous workforce; that we seek to build authentic, meaningful and mutually beneficial relationships with Indigenous Peoples; that Suncor aspires to progress the way we think and act to learn and better understand Indigenous perspectives and reflect Indigenous", "chunk_word_count": 444, "section_path": "Report on Sustainability 2023 > 17 Notes on diversity > Forward-looking statements", "document_id": "Suncor Sustainability Report 2023", "page": 94, "page_start": 94, "page_end": 94 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 80, "chunk_text": "# Report on Sustainability 2023\n## 17 Notes on diversity\n### Forward-looking statements\nknowledge in what we do; that we are continuing with the Pathways Magazine Syncrude started; that we continue to learn and understand Indigenous ways of knowing and being through training and experiential learning opportunities; the belief that we continually work to improve and update our training content to keep it relevant; the expectation that our web-based Indigenous Awareness training course will be relaunched in 2023; that we are working to include Indigenous perspectives and traditional knowledge in our operations where possible; the expectation that members from local Indigenous communities will return to the Mildred Lake area in 2023 for planting trees and other vegetation in the area; that we want Suncor to be an inclusive and diverse work environment where everyone feels valued and respected and that we believe this supports strong business performance, differentiates us in our communities and helps us to attract an retain Indigenous employees who want to build meaningful careers for the long term; the belief that Indigenous youth and their voices represent the future; the belief that the Indigenous Youth Advisory Council supports young Indigenous leaders in developing their leadership potential while providing opportunities to participate in the energy system; expectations about the Indigenous Outdoor Gathering Space, its use and construction timing; the belief that we are executing a clear and accelerated plan to improve our safety performance and the areas it focuses on; the belief that applying HOP principles is a critical step in building a culture grounded in trust and inclusion and the belief that it will drive a safety culture change and statements about what that culture change will include; expectations about the Operational Excellence Leadership Experience; that frontline workers help create new systems as we seek additional opportunities for standardizing how we work; the expectation that we can minimize the risks of loss of primary containment incidents by focusing on strengthening our operational controls related to winterization; that we continue to implement new digital technologies across the enterprise to improve safety, productivity, reliability and reduce costs; that we will continue to work with government, communities and stakeholders to develop the policy and regulatory framework to safely release treated mine water from our oil sands sites; and the expectation that water data from our Terra Nova Floating, Production, Storage and Offloading facility will be reported in 2024; and the expectation that up to 50 black bears will be collared on or near our Firebag and Base Plant facilities with highly visible orange, yellow, and tan collars; that collision awareness system will be fully implemented at all Suncor mine sites; that fatigue management system will be fully implemented at all Suncor mine sites; the belief that we will continue to monitor our organizational model and total cost of workforce to achieve efficiency and effectiveness; and the belief that working together with Indigenous communities, we will identify water management solutions that respect their unique constitutional and treaty rights and acknowledge their deep connection with the land and water.", "chunk_word_count": 507, "section_path": "Report on Sustainability 2023 > 17 Notes on diversity > Forward-looking statements", "document_id": "Suncor Sustainability Report 2023", "page": 95, "page_start": 95, "page_end": 95 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 81, "chunk_text": "# Report on Sustainability 2023\n## 17 Notes on diversity\n### Forward-looking statements\nSome of the forward-looking statements and information may be identified by words like “expected”, “anticipated”, “will”, “estimates”, “plan”, “scheduled”, “intended”, “believes”, “projected”, “indicates”, “could”, “focus”, “vision”, “mission”, strategy”, “goal”, “outlook”, “proposed”, “target”, “objective”, “continue”, “should”, “may”, “aim”, “strives”, “would”, “potential”, “committed”, “opportunity” and similar expressions. Forwardlooking statements are based on Suncor’s current expectations, estimates, projections and assumptions that were made by the company in light of information available at the time the statement was made and consider Suncor’s experience and its perception of historical trends, including expectations and assumptions concerning: the accuracy of reserves and resources estimates; commodity prices and interest and foreign exchange rates; the performance of assets and equipment; capital efficiencies and cost-savings; applicable laws and government policies, future production rates; the sufficiency of budgeted capital expenditures in carrying out planned activities; the availability and cost of labour, services and infrastructure; the satisfaction by third parties of their obligations to Suncor; the development and execution of projects; the receipt, in a timely manner, of regulatory and third-party approvals; assumptions relating to demand for oil, natural gas, distillates, gasoline, diesel and other energy sources; the development and performance of technology; population growth and dynamics; assumptions relating to long-term energy future scenarios; and Suncor’s carbon price outlook. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, some that are similar to other oil and gas companies and some that are unique to Suncor. Suncor’s actual results may differ materially from those expressed or implied by its forward-looking statements, so readers are cautioned not to place undue reliance on them. Risks, uncertainties and other factors that could influence the financial and operating performance of all of Suncor’s operating segments and activities include, but are not limited to, changes in general economic, market and business conditions, such as commodity prices, interest rates and currency exchange rates (including as a result of and the actions of OPEC and non-OPEC countries); fluctuations in supply and demand for Suncor’s products; the successful and timely implementation of capital projects, including growth projects and regulatory projects; risks associated with the development and execution of Suncor’s major projects and the commissioning and integration of new facilities; the possibility that completed maintenance activities may not improve operational performance or the output of related facilities; the risk that projects and initiatives intended to achieve cash flow growth and/or reductions in operating costs may not achieve the expected results in the time anticipated or at all; competitive actions of other companies, including increased competition from other oil and gas companies or from companies that provide alternative sources of energy; labour and material shortages; actions by government authorities, including the imposition or reassessment of, or changes to, taxes, fees, royalties, duties, and other government-imposed compliance costs; changes to laws and government policies that could impact the company’s business, including environmental (including climate change), royalty and tax laws and policies; the ability and willingness", "chunk_word_count": 501, "section_path": "Report on Sustainability 2023 > 17 Notes on diversity > Forward-looking statements", "document_id": "Suncor Sustainability Report 2023", "page": 95, "page_start": 95, "page_end": 95 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 82, "chunk_text": "# Report on Sustainability 2023\n## 17 Notes on diversity\n### Advisories\nof parties with whom Suncor has material relationships to perform their obligations to the company; the unavailability of, or outages to, third-party infrastructure that could cause disruptions to production or prevent the company from being able to transport its products; the occurrence of a protracted operational outage, a major safety or environmental incident, or unexpected events such as fires (including forest fires), equipment failures and other similar events affecting Suncor or other parties whose operations or assets directly or indirectly affect Suncor; the potential for security breaches of Suncor’s information technology and infrastructure by malicious persons or entities, and the unavailability or failure of such systems to perform as anticipated as a result of such breaches; security threats and terrorist or activist activities; the risk that competing business objectives may exceed Suncor’s capacity to adopt and implement change; risks and uncertainties associated with obtaining regulatory, third-party and stakeholder approvals outside of Suncor’s control for the company’s operations, projects, initiatives and exploration and development activities and the satisfaction of any conditions to approvals; the potential for disruptions to operations and construction projects as a result of Suncor’s relationships with labour unions that represent employees at the company’s facilities; our ability to find new oil and gas reserves that can be developed economically; the accuracy of Suncor’s reserves, resources and future production estimates; market instability affecting Suncor’s ability to borrow in the capital debt markets at acceptable rates or to issue other securities at acceptable prices; maintaining an optimal debt-to-cash-flow ratio; the success of the company’s marketing and logistics activities using derivatives and other financial instruments; the cost of compliance with current and future environmental laws, including climate change laws; risks relating to increased activism and public opposition to fossil fuels and oil sands; risks and uncertainties associated with closing a transaction for the purchase or sale of a business, asset or oil and gas property, including estimates of the final consideration to be paid or received, the ability of counterparties to comply with their obligations in a timely manner; risks associated with joint arrangements in which the company has an interest; the risk the company may be subject to litigation; the impact of technology and risks associated with developing and implementing new technologies; and the accuracy of cost estimates, some of which are provided at the conceptual or other preliminary stage of projects and prior to commencement or conception of the detailed engineering that is needed to reduce the margin of error and increase the level of accuracy. The foregoing important factors are not exhaustive.", "chunk_word_count": 436, "section_path": "Report on Sustainability 2023 > 17 Notes on diversity > Advisories", "document_id": "Suncor Sustainability Report 2023", "page": 96, "page_start": 96, "page_end": 96 }, { "report": "Suncor Sustainability Report 2023.pdf", "chunk_idx": 83, "chunk_text": "# Report on Sustainability 2023\n## 17 Notes on diversity\n### Advisories\nSuncor’s Management’s Discussion and Analysis for the first quarter of 2023 dated May 8, 2023, its Annual Information Form, Annual Report to Shareholders, and Form 40-F each dated March 6, 2023, and other documents it files from time to time with securities regulatory authorities describe the risks, uncertainties, material assumptions and other factors that could influence actual results, and such factors are incorporated herein by reference. Copies of these documents are available without charge from Suncor at 150 6th Avenue S.W., Calgary, Alberta T2P 3E3, by calling 1-800-558-9071, or by email request to info@suncor.com or by referring to the company’s profile on SEDAR at sedar.com or EDGAR at sec. gov. Except as required by applicable securities laws, Suncor disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.\n### Reclamation and revegetation plans\nReclamation Land is considered permanently reclaimed when landform construction and contouring, clean material placement (as required), reclamation material placement and revegetation has taken place. Land cannot be listed under permanent reclamation until revegetation has occurred which is reflective of the approved reclamation and revegetation plans.\n### Suncor\nSuncor Energy Inc. has numerous direct and indirect subsidiaries, partnerships and joint arrangements (“affiliates”), which own and operate assets and conduct activities in different jurisdictions. The terms ‘‘we’’, ‘‘our’’, ‘‘Suncor’’, or ‘‘the company’’ are used herein for simplicity of communication and only mean that there is an affiliation with Suncor Energy Inc., without necessarily identifying the specific nature of the affiliation. The use of such terms in any statement herein does not mean that they apply to Suncor Energy Inc. or any particular affiliate and does not waive the corporate separateness of any affiliate.\nPartnerships\nThe use of “partnership” throughout Suncor’s 2023 Report on Sustainability does not necessarily mean a partnership in the legal context.\nCurrency\nUnless otherwise stated, references to “dollars” or $\" \\$ 1 7$ means Canadian dollars.", "chunk_word_count": 336, "section_path": "Report on Sustainability 2023 > 17 Notes on diversity > Advisories", "document_id": "Suncor Sustainability Report 2023", "page": 96, "page_start": 96, "page_end": 96 }, { "report": "University of Oxford 2022 Sustainability Report.pdf", "chunk_idx": 0, "chunk_text": "# University of Oxford Environmental Sustainability\nAnnual Report 2021-22\n## Contents\n## Section 1: Introduction 4\nForeword by Harriet Waters 4 \nIntroduction 5 \nOverview 6 \nStructure 7\n## section 2: Carbon 8\nThe Carbon Management Scheme 9 \nOxford Sustainability Fund 10 \nCarbon Management Fund in numbers 10 \nCarbon reduction projects 12 \nReducing Scope 3 Emissions 13 \nInternational Travel Policy 13 \nWaste 14 \nCapital projects 15\n## Section 3: Biodiversity 16\nBiodiversity impact report 17 \nNature Positive Universities Network 17 \nBiodiversity Research and Learning 18 \nWytham Woods 19 \nBiodiversity Action 19\n## Section 4: In case you missed it 20\nLEAF 20 \nThe Queen's Platinum Jubilee Challenge 20 \nEnergy Invoicing and reporting 21 \nUtility contracts 21 \nConclusions 22 \nGet in touch 22\n## Section 1: Introduction\n## Foreword by Harriet Waters\n## Introduction\n2021 - 2022 has been a fascinating time for the Environmental Sustainability team. The Environmental Sustainability Strategy had been adopted the previous year, committing us to achieving net zero carbon and net gain in biodiversity by 2O35,but this year we started working in earnest to reach these goals.\nto raising awareness and engagement with biodiversity was highlighted across the University by events such as the Meat the Future exhibition at the Museum of Natural History, numerous events and activities at Wytham, and the celebration of the 400th anniversary of the Oxford Botar", "chunk_word_count": 224, "section_path": "University of Oxford Environmental Sustainability > Contents", "document_id": "University of Oxford 2022 Sustainability Report", "page": 1, "page_start": 1, "page_end": 3 }, { "report": "University of Oxford 2022 Sustainability Report.pdf", "chunk_idx": 1, "chunk_text": "# University of Oxford Environmental Sustainability\n## This report reviews the environmental sustainability work of the University of Oxford between August 2021 and July 2022.\nIt focuses on the University's functional estate - the buildings that are used for its day-to-day activities.It includes allthe buildings and facilities that either support or directly deliver research or education,such as specialist research buildings, teaching laboratories, lecture has,sports facilities,libraries,museums,offices,and ceremonial buildings.\nWe have spent much of the year in planning mode, whilst we set up the mechanisms behind the Oxford Sustainability Fund and developed policies and targets to support the implementation of the strategy. Crucially we have brought in an international travel policy, with a flight reduction target, more sustainability-focused guidance and a carbon levy on flights paid for by the University. Tackling emissions from flying which have traditionally been an increasing indirect (Scope 3) set of emissions is a really important development and shows that there are actions that can be taken to reduce our Scope 3 emissions. Another way of tackling indirect emissions is the work we have done on waste reduction. We now have waste reduction and recycling targets, with a pilot scheme which willincrease our knowledge of what the barriers are to reaching these. Reducing flights and waste will also reduce our supply chain impact on biodiversity, a true win-win.\nInformation relating to carbon emissions has been based on invoiced consumption or value.The carbon footprint has been calculated in line with the University of Oxford Emissons Report.The report does not cover the operations or buildings of the colleges or of Oxford University Press, which are independent entities.\nThis year, for the first time since summer 2019, we celebrated the Vice Chancellor's Environmental Sustainability Awards. At last, we could come together with the hundreds of people across the University who are delivering the day-to-day work and decisions to promote environmental sustainability in University departments and colleges. Over a hundred LEAF (Laboratory Eficiency Assessment Framework) and Green Impact teams worked this year, hundreds of students,academics and colleges, groups and individual initiatives,are all part of the growing movement in the University dedicated to leading the way for environmental sustainability.\nWe trust that you willfind the information useful.We would welcome feedback from our readers to help us continue to improve the way we communicate our environmental sustainability performance.\nFor more information, contact the Environmental Sustainability team. Email: sustainability@admin.ox.ac.uk \nPhone: $\\pm \\ 4 4$ (0) 1865 6 14605 \nWebsite: sustainability.admin.ox.ac.uk\nF @oxfordEnvSust\nIn order to deliver the strategies, polices and initiatives needed to achieve our goals, our team will be expanding over the coming year. Implementing the strategy over the coming years is not going to be easy. In some areas we are not yet sure how to do it. But there is a real sense of hope and enthusiasm, which we hope to harness.\nDirect emissions from Universitybuildings are stilla very high priority, but we now have a published approach for how we account for these,and we have started to develop four clear workstreams to progress towards our ultimate net zero goal.", "chunk_word_count": 508, "section_path": "University of Oxford Environmental Sustainability > This report reviews the environmental sustainability work of the University of Oxford between August 2021 and July 2022.", "document_id": "University of Oxford 2022 Sustainability Report", "page": 3, "page_start": 3, "page_end": 3 }, { "report": "University of Oxford 2022 Sustainability Report.pdf", "chunk_idx": 2, "chunk_text": "# University of Oxford Environmental Sustainability\n## This report reviews the environmental sustainability work of the University of Oxford between August 2021 and July 2022.\nWith the upcoming legislative requirements for biodiversity net gain, biodiversity on our estate will be increasingly important in the next year. With that in mind, we are assessing the data available on our estate, repeating our environmental profit and loss report to look for any biodiversity impact trends and taking on a biodiversity officer. Our commitment\nHarriet Waters Head of Environmental Sustainability\n\"Resilience\",image by Daphne Parramon-Dhaw, 2022 Winner, Sustainability Photographer of the Year.\n## Overview\n## Structure\nThe ESSC Biodiversity subgroup identified the priority actions needed for the attainment of biodiversity net gain.Meanwhile, the University continued to lead global action on ecosystem restoration and serve as a centre for biodiversity education and research.The University launched the Alliance of Nature-Positive Universities in collaboration with the United Nations Environment Programme (UNEP).Wytham Woods,the University's research woodland, marked the 75th anniversary of the Great Tit study - the longest running study on an individually marked animal population in the world.\nThis year has seen many significant developments in environmental sustainability. In November 2O21,world leaders gathered at the COP26 conference to agree a path towards fulfilling the Paris Agreement. Extreme weather events became more frequent and severe, from record-breaking world-wide temperatures to raging wild-fires and floods,providing a glaring and unavoidable message that urgent action is needed to reduce global emissions and support biodiversity. Meanwhile, the global energy crisis placed discussions of energy supply, usage,and efficiency centre-stage.\nThis report presents the highlights of the environmental sustainability work within the fields of carbon emissions and biodiversity.It details the progress made towards the headline Environmental Sustainability Strategy goals of net zero carbon and biodiversity net gain by 2035 up to July 2022.\nThe report presents carbon accounting and biodiversity profit and loss due, to University activity in the recent year.The data is also available in the University's Financial Statements.The methodologies to calculate and present carbon emissions and biodiversity impact are detailed in the 2O19-2O2O Emission Accounting report and Environmental Profit and Loss report respectively.\nThe report also lists several further activities delivered by the Environmental Sustainability team and others,as examples of the actions taken to deliver the environmental strategic goals.\nThis report details the bold, necessary action the University is taking in response to the climate crisis.\nAdditionally,the Oxford Environmental Sustainability team continued to offer opportunities to engage with environmental issues through the Green Impact and LEAF(Laboratory Efficiency Assessment Framework) schemes.\n\"Let it grow!\" Image by Jack Frowde, 2022 Sustainability Photographer of the Year.\n2021-22 saw significant progress toward the Environmental Sustainability Strategy's headline target of achieving net zero carbon and biodiversity net gain by 2035.\nThe Environmental Sustainability Subcommitee (ESSC) approved important targets and policies aimed at reducing carbon emissions.This included the Carbon Management Scheme,setting out the University's approach to net zero carbon emissions. Alongside this, the Oxford Sustainability Fund (OSF) was set up, providing £20O million over 15 years for University sustainability initiatives.The introduction of a new travel policy seeks to reduce indirect (Scope 3)emissions,including a flight reduction target,and a carbon levy for all University related flights.", "chunk_word_count": 526, "section_path": "University of Oxford Environmental Sustainability > This report reviews the environmental sustainability work of the University of Oxford between August 2021 and July 2022.", "document_id": "University of Oxford 2022 Sustainability Report", "page": 3, "page_start": 3, "page_end": 4 }, { "report": "University of Oxford 2022 Sustainability Report.pdf", "chunk_idx": 3, "chunk_text": "# University of Oxford Environmental Sustainability\n## Section 2:Carbon\nThe University's Environmental Sustainability Strategy, approved by Council in 2O21,states the University's commitments to achieving net zero carbon emissions and a net gain in biodiversity by 2O35. The strategy lists ten priority focuses for achieving these goals.\nusing physical measurements and UK conversion factors. Between 2019-20 and 2021-22, Scope 1 carbon emissions increased by $10 \\%$ . This reflects residual additional heating demand to accommodate COVID mitigation measures. It should be noted that this overall increase represents a $20 \\%$ improvement on 2020/21 figures when gas use increased significantly to maintain heated,fresh air in University buildings. Scope 2 carbon emissions fell by $9 \\%$ over the same period, following a demand reduction of $2 \\%$ and a fallin the UK grid carbon factor. Scope 3 emissions dropped by $31 \\%$ between 2019/20 and 2020/21 before increasing back to trend in 2021/22. This is mainly due to a dip in purchased goods and services, employee commuting and business travel.\n## The Carbon Management Scheme\nIn 2022,the Environmental Sustainability Strategy Subcommittee (ESSC)approved the Carbon Management Scheme.The scheme outlines the University's approach to meeting the target of net zero carbon emissions by 2035.\nIn 2022 the University published our own approach to carbon emission reporting tailored to the needs of the institution. This approach, based on existing protocols,offers a reliable measuring and reporting of carbon equivalent emissions from University operations, including direct sources and indirect sources. The table below offers a categorised summary of emissions from the University. The emissions, representing data for 2021-22 academic year are calculated, where possible,\nThe scheme consists of four key measures that work together to move the University toward a carbon-fre future:\n## Energy Efficiency\nThe University will reduce its carbon footprint by investing in projects to improve the energy efficiency of buildings. These projects work on a'spend to save' basis - investment in installations and upgrades to lighting, heating,and building materials willreduce carbon emissions while also saving money in the long term. The Carbon Management Fund allocates £1 million per year for this purpose.\n[IMAGE CAPTION] Oxford University Annual Carbon Emissions\n## Heat Decarbonisation\nHeating buildings is a major source of the University's carbon emissions. Making the switch to low carbon heating systems willplay an important part in reaching net zero. This year, f298,0Oo BElS funding was secured to identify options and begin planning the decarbonisation of heat at the University. This would include sites in the Old Road Campus and the Science Area. Low carbon heating systems are now being piloted in the Oxford city centre and in rural locations.", "chunk_word_count": 434, "section_path": "University of Oxford Environmental Sustainability > Section 2:Carbon", "document_id": "University of Oxford 2022 Sustainability Report", "page": 5, "page_start": 5, "page_end": 5 }, { "report": "University of Oxford 2022 Sustainability Report.pdf", "chunk_idx": 4, "chunk_text": "# University of Oxford Environmental Sustainability\n## Low-carbon Standards\nThis year, the Mechanical and Electrical Design (M&E) philosophy, which sets the standard for all new University builds,is being re-launched witha greater focus on energy efficiency and environmental sustainability. Work has also started to review the University Sustainability Design Guide to ensure that capital investment projects over the value of £1 million are subject to rigorous environmental sustainability standards.\nCarbon Offsetting\nThe University prioritises the reduction and removal of carbon emissions. However, some carbon emissions are unavoidable. Reaching net zero willrequire offsetting these unavoidable carbon emissions. Carbon offsetting is included in this report for completeness but is not due to be adopted until 2030.\nThe following charts present projects delivered by the CMF between the years 2013-2022.\n## Oxford Sustainability Fund\nIn 2022,the Oxford Sustainability Fund(OSF) was established to provide £2OO millon over 15 years for sustainability initiatives within the University.The OSFwillplayan important role inreaching the targets of net zero carbon and biodiversity net gain by 2O35 through funding vital projects and initiatives.\nThe OSF is a step forward from the existing Carbon Management Fund,which has supported carbon reduction projects since 2013.\nThe following table accounts for the sum spent on carbon management projects during 2O21-2022.\n[IMAGE CAPTION] Pipeline projects, to be delivered by OSF Note: Bubble size reflects carbon savings.\n## Carbon Management Fund in numbers\n+0\nTotal spend \nsince 2013 \n£7,485,316\nAnnual \nenergy savings \n£1,884,376\nCarbon savings tC02e/ year 7,121\nProject average payback period 3YEARS\n## Carbon Reduction Projects\n## Reducing Scope 3 Emissions\nScope 3 emissions include allindirect emissions, which come from sources owned or controlled by other entities in the value chain and third-party payments.\nThese include materials suppliers,third-party logistics providers, waste management,travel, etc.\n## Below are some examples of carbon reduction projects from across the University:\nScope 3 emissions are more diffcult to capture,manage and thus reduce.The University's supply chain is varied and distributed which requires addressing data from diverse and dispersed sources.\n## Draught proofing system\nInstalling an innovative draught proofing system to reduce draughts from glazing across the University, assists in reducing heat and energy losses. The system, suitable for listed buildings, has been tested and successfully installed in the Weston and Old Bodleian buildings and is now approved for installation in more than 60 other University buildings.\nThe new technology adjusts the cooling system in line with the server load rather than running it at a set level the whole time,thus saving energy at times when server usage is lower. Three IT server rooms now have this technology installed.\n## International Travel Policy\nThe University has taken steps to reduce its Scope 3 emissions due to flights.\nThe systems are expected to reduce energy spent on cooling by at least $40 \\%$ . The next step will include capturing the heat generated by the servers for use elsewhere, thus increasing the efficiency of the building as a whole.\nFlights are a significant source of the University's Scope 3 emissions.During spring 2O22,the Planning and Resource Allocation Committee (PRAC) approved a travel policy setting a flight reduction target of $20 \\%$ by 2024/25 against the 2018- 2019 base line. Additional targets were set to achieve an additional $10 \\%$ reduction by 2030/31,anda further $5 \\%$ reduction by 2034/35.", "chunk_word_count": 543, "section_path": "University of Oxford Environmental Sustainability > Low-carbon Standards", "document_id": "University of Oxford 2022 Sustainability Report", "page": 5, "page_start": 5, "page_end": 7 }, { "report": "University of Oxford 2022 Sustainability Report.pdf", "chunk_idx": 5, "chunk_text": "# University of Oxford Environmental Sustainability\n## Glassblowing workshop project\nThe glassblowing workshop, located in the department of Chemistry, designs, constructs and repairs glass scientific research equipment.\nThe travel policy sets out a range of measures to reduce carbon emissions from business flights taken by the University.\nThe project was initiated by the building managers with the aim of improving ventilation in the glassblowing workshop, managed by Inorganic Chemistry Laboratories.\n## These include:\n1 Introducing a travel hierarchy for business travel. \n2 Setting a flight levy of £3O/tCO2e on allflights made on University business,to compensate for flights'carbon emissions.The levy will be allocated to the OSF to fund reduction of carbon emissions from University buildings.The flight levy rate willbe reviewed every two years. \n3 Setting rail as the default for domestic journeys under seven hours. \n4 Setting Eurostar as the default means of transport to Paris and Brussels. \n5 Not permitting first-class flights. \n6 Required pre-approval process for premium economy and business-class flights.\nThe project addressed ventilation, heat recovery, energy eficiency and maintenance requirements. The result has been a more comfortable working environment, alongside a reduction in heat and energy demands.\n## IT efficiency projects - IT server room improvement\nThis project is an example of how a holistic approach can reduce energy demands as well as improve working conditions in the space.\nFollowing a successful pilot in the department of Engineering Science which reduced the energy expended on cooling by over $70 \\%$ , the University is now making similar changes in larger scale IT server rooms.\n## Waste\n## Capital Projects", "chunk_word_count": 262, "section_path": "University of Oxford Environmental Sustainability > Glassblowing workshop project", "document_id": "University of Oxford 2022 Sustainability Report", "page": 7, "page_start": 7, "page_end": 7 }, { "report": "University of Oxford 2022 Sustainability Report.pdf", "chunk_idx": 6, "chunk_text": "# University of Oxford Environmental Sustainability\n## Institute for Global Health building at Old Road Campus.\nIn 2017 the University adopted its Sustainability Desigr Guide (SDG) with a focus on reducing carbon emissions from capital projects through a 'fabric first'approach. The guide has led to a reduction in carbon emissions in new builds. However, the guide fals short in setting principles for use by the University when required to decide the best value for money with regard to sustainability interventions.\nAs part of the implementation of the strategy, the subcommittee set two major waste reduction and recycling targets:\nAn approximately 4,5OO square meters building that is set to be used for research,teaching and ofice space.\n$\\mathbf { I } _ { 0 } ^ { \\bullet }$ reduction in total waste mass per staff and student, and $\\pmb { L } \\pmb { ( 0 ) } \\pmb { ( \\nu ) }$ recycling rate from total waste mass by 2025.\nThe building is designed to meet Passivhaus certification requirements.It is designed to have robust insulation and excellent energy efficiency.The building will be fully powered by electricity,eliminating all building related Scope 1 carbon emissions.\nAdditionally,a pilot project in two University buildings examined the barriers to increasing recycling rates and offered solutions that are being tested during the 2O22-23 academic year. These solutions relate to areas including infrastructure, staff and student engagement, and modifying cleaning contracts.\nIn 2022 the following refurbishment principles were agreed:\nStating that refurbishing buildings should be prioritised over rebuilding them,as this will have lower lifecycle carbon emissions in most cases; setting minimum effciency principles for building fabric improvements (e.g.draught proof,insulation, etc.); and removal of gas heat sources should be prioritised and supported by other low carbon technologies.\n## The Stephen A.Schwarzman Centre for the Humanities building\nWork done by interns in summer 2022 identified additional means to reach waste reduction targets, such as assessing single-use plastic use in laboratories.\nThe Stephen A.Schwarzman Centre for the Humanities building is aiming for Passivhaus certification.The building is shaped to reduce surface area with architectural detailing to minimise thermal bridges and improve insulation to deliver superb energy efficiency and user comfort.The building will not have an independent gas connection,although at least in the early stages it will be able to draw heat from gas boilers at the neighbouring Andrew Wiles Building if necessary. This willbe among the biggest buildings in Europe to incorporate these technological and design elements.\nWaste and recycling engagement at the Manor Road building as part of a pilot project to reduce waste and increase recycling rates.\nThe SDG is currently being updated.The new version will include more principles for use at the design stage of a project,including a framework for making decisions on refurbishment vs demolition,a flexible approach to certification to various standards and a strengthened biodiversity requirement. In addition,lifetime cost of carbon has been set as the favoured metric to assess the benefit of future interventions.\nArchitecture image of the proposed Institute for Global Health Building\n## UNIVERSITY RECYCLING easyas1,2,3\n## Section 3: Biodiversity", "chunk_word_count": 508, "section_path": "University of Oxford Environmental Sustainability > Institute for Global Health building at Old Road Campus.", "document_id": "University of Oxford 2022 Sustainability Report", "page": 8, "page_start": 8, "page_end": 8 }, { "report": "University of Oxford 2022 Sustainability Report.pdf", "chunk_idx": 7, "chunk_text": "# University of Oxford Environmental Sustainability\n## Biodiversity impact report\nBiodiversity is crucial to supporting all life on Earth. In the context of the precipitous decline of animal and plant species in recent years, positive biodiversity impact must be a goal for organisational environmental sustainability strategies.\nIn the 2020/21 Financial Statement, the University introduced quantified reporting on biodiversity net gain for the first time. This identifies and addresses University biodiversity impacts across operations and the supply chain,and aims to ofer means to enhance biodiversity on the University estate. Oxford University has set the strategic ambition to achieve a net gain in biodiversity by 2035.\nThe analysis represented in this chart confirms that the majority of the impact on biodiversity associated with University activities is caused by greenhouse gas emissions (GHG). This finding confirms that throughout the supply chain, greenhouse gas emissions associated with that supply chain have the greatest impact on global biodiversity.\nThe strategy has a headline target of biodiversity net gain by 2035. Addressng the University's principal biodiversity impacts through its operations and supply chain,as wellas, enhancing biodiversity on the University's estate.\nThe accounts are scheduled to be brought up to date, including 2021/22 data by summer 2023. Allupdated reports willbe available on the University Environmental Sustainability website.\nThe first biodiversity impact assessment performed for Oxford in 2020 considered the 2018/19 year. The second, in 2021,considers the 2019/20 year and\nThis year,a biodiversity subgroup identified priority actions for the academic year, which willbegin with a comprehensive mapping of the ecological data available across the University estate.This data willenable the University to identify priority areas where biodiversity on the University estate can be enhanced. Meanwhile,the University continued to be a global pioneer and play an important role in bidiversity action, learning,and research.\napplies different methodology, in line with rapidly progressing scientific literature on the topic. The assessment methodology has been refined and these results are presented here, for years 2018/19 and 2019/20. The variation in resource use is likely to be caused by reduced spend on goods and services due to COVID closures. Paper and cardboard, for instance, have a high supply chain impact.\n[IMAGE CAPTION] Biodiversity impacts by year across aspect\n\"Dragon\", image by Vikki Rose, 2020 Sustainability Photographer of the Year\n## Nature Positive Universities Network\nIn November 2021,the United Nations Environment Programme (UNEP)and the University of Oxford launched the network of Nature Positive Universities - an alliance of universities world-wide on a mission to restore biodiversity within their operations and supply chains.\nThe network is part of the UN Decade of Ecosystem Restoration,post-2O20 Biodiversity Framework,and the Sustainable Development Goals.It demonstrates the collaborative, global approach needed for impactful institutional action to preserve the natural environment.\nSo far over 3OO universities have expressed an interest in joining the alliance. Which willimplement changes to research, teaching and other activities to restore biodiversity in their campuses, cities,the wider communities in which they are embedded,and beyond.\n## Biodiversity Research and Learning", "chunk_word_count": 490, "section_path": "University of Oxford Environmental Sustainability > Biodiversity impact report", "document_id": "University of Oxford 2022 Sustainability Report", "page": 9, "page_start": 9, "page_end": 9 }, { "report": "University of Oxford 2022 Sustainability Report.pdf", "chunk_idx": 8, "chunk_text": "# University of Oxford Environmental Sustainability\n## Wytham Woods\nIn April 2022,the Oxford Department of Zoology, Environmental Sustainability team,and the University of Kent published an assessment of the University of Oxford's biodiversity impact in the leading scientific journal, Nature.\nWytham Woods also continued to serve as an important space for citizen environmental education. Wytham researchers brought environmental science to Glastonbury Festival 2022 as part of 'Sex & Bugs & Rock 'n Roll' campaign. The Woods also received a Vice-Chancellor's Award for the'Classroom with Leaves' project educating students on woodlands.\n## The Great Tit study is the longest continuous study of an individually marked animal population in the world.\nThis year, Wytham Woods, the University's research woodland northwest of Oxford, marked the 75th anniversary of the Wytham Woods Great Tit study - the longest running study on an individually marked animal population in the world. Notably, University of Oxford scientists found that the Great tit population are hatching a month earlier in 2O22 than when the study started in 1947 - a clear indication of how animal populations are responding to the changing environment.\nThe study is ground-breaking for being the first of its kind to provide a methodology to assess the biodiversity footprint of large organisations.\nThe research sets a baseline for the University's biodiversity impact and modelled options for the University to pursue actions to address the impact.\nWorking closely with the University's Estates team, researchers conducted a comprehensive assessment of the broader environmental impact and biodiversity losses associated with day-to-day running of the University, including factors such as purchasing data,travel bookings and utility bils, from the 2018-19 and 2019-20 academic years.\n\"Oxford has a wealth of world-leading expertise in climate and environmental science, and a major strength of the University's Sustainability Strategy is that it was developed and evidenced in collaboration with our own researchers.\"\nWytham Woods contributing to new science area based in the Green Futures Field at Glastonbury Festival.\n## Biodiversity Action\nThe Environmental Sustainability team continues to promote opportunities for individual and group action and engagement on biodiversity.\nHarriet Waters, Head of Environmental Sustainability at Oxford University,and a co-author of the study.\nThe Green Impact Scheme once again encouraged the University community to take positive action on biodiversity,from growing produce to setting up bug hotels and bird feeders. This year 13 Green Impact teams took action to improve biodiversity in their area by adding wildlife habitats and wildflower patches.\nImages from Oxford University Nature Conservation Society social media\nNature Conservation Society\nThis year, an exciting project led by the Oxford University Nature Conservation Society saw students establish a biodiversity garden on the History Faculty grounds. This pilot project showcases the native wildflower and grasses of Oxford,as well as providing a functional space for nesting and feeding.\n## Section 4: In case you missed it\n## The Queen's Platinum Jubilee Challenge\n## Energy Invoicing and reporting\n## Utility contracts", "chunk_word_count": 483, "section_path": "University of Oxford Environmental Sustainability > Wytham Woods", "document_id": "University of Oxford 2022 Sustainability Report", "page": 10, "page_start": 10, "page_end": 10 }, { "report": "University of Oxford 2022 Sustainability Report.pdf", "chunk_idx": 9, "chunk_text": "# University of Oxford Environmental Sustainability\n## LEAF\nThis was the second year that the University offered the Laboratory Eficiency Assessment Framework (LEAF) scheme. The scheme helps laboratory managers to identify practical steps to make their labs more sustainable, covering all aspects of lab operation and use.\nThe Environmental Sustainability team is always working on ways to manage and improve the University's utility contracts. This year, the University signed a new contract with EDF, ensuring the ongoing purchase of renewable energy. Additionally, the University's water contract was switched to Wave, a company that has established its credentials in assuring efcient water use,supplying us with automatic meter readings and data on water consumption. Alongside this, the team successfully implemented a strategy to control expenditure and protect the University from energy price spikes.\nThis year, representatives of Oxford University took part in the Queen's Platinum Jubilee Challenge aiming to encourage leading UK universitiesand further education colleges to work together to tackle challenges of the higher education sector in reaching net zero carbon. The Queen’s Platinum Jubilee Challenge includes a Student Challenge that aims to encourage innovative thinking from students. Nine teams of Oxford students submitted a project proposal to the challenge presenting a variety of briliant ideas to reduce carbon emissions and promote sustainable behaviours at the University.\nAccurate energy usage reporting is crucial to environmental sustainability.\nEach year, Oxford Environmental Sustainability processes over 10,OO0 invoices for the University estate. We record a range of data including energy certificates, metre readings and waste.\nParticipation rose from 23 to 77 lab teams across the Medical Sciences, MPLS,and Social Sciences divisions. The scheme was also recognised for the first time at the Vice-Chancellor's Awards.\nAll buildings and facilities within the University's functional estate can request access to view their energy usage by contacting: energyteam@admin.ox.ac.uk.\nIn the coming year, we seek to engage more labs in the scheme,and to collect precise data on the carbon and financial savings made by participating labs.", "chunk_word_count": 327, "section_path": "University of Oxford Environmental Sustainability > LEAF", "document_id": "University of Oxford 2022 Sustainability Report", "page": 11, "page_start": 11, "page_end": 11 }, { "report": "University of Oxford 2022 Sustainability Report.pdf", "chunk_idx": 10, "chunk_text": "# University of Oxford Environmental Sustainability\n## LEAF\n### Conclusion\nMoving forward with implementing the University's strategic goals for environmental sustainability is a complex process that requires cooperation with all colleagues from across the University community.\nThe immediate challenge facing the University at the time of writing this report comes from the soaring energy pricesand predictions of further price increases beyond 2O22.These lead to unplanned operational costs for the University.The University's gas and power purchases are over $80 \\%$ hedged through the 2O22/23 financial year.This provides a degree of budget certainty for the current financial year.The remaining cover willbe sought as rates and market liquidity improve.\nAs part of the Environmental Sustainability Strategy and with the goal of reducing carbon emissions in mind,the University has been putting efforts into reducing its energy consumption,particularly gas. Energy efficiency and reducing demand remain the primary measures for mitigating price risks. A reduction of $10 \\%$ in gas consumption would reduce costs by $1 7 \\%$ A reduction of $10 \\%$ in electricity consumption would reduce costs by $1 9 \\%$ The University has reduced much of the excess gas demand seen during 2020/21 as a part of efforts to mitigate COVID risks. Gross emissions from electricity continue on a downward trend.\nOverall,Scope 1,2 and 3 carbon emissions have remained constant between 2019/20 and 2021/22.A significant drop in emissions 2020/21 was experienced. This was mainly due to reduced purchased goods and services,employee commuting and business travel.\nThe coming year is expected to offer plenty of opportunities for staff and students to engage with environmental sustainability through Green Impact,LEAF,and Sustainable Students Oxford (SSO) network.We extend an invitation to all staff and students to take action and pursue better environmental practices in their department,building,lab or team.\n### Get in touch\nEmail: sustainability@admin.ox.ac.uk Phone: $+ 4 4$ (O) 1865 614605 Website: sustainability.admin.ox.ac.uk", "chunk_word_count": 305, "section_path": "University of Oxford Environmental Sustainability > LEAF > Conclusion", "document_id": "University of Oxford 2022 Sustainability Report", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 0, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n2023\n## 2 - 3 ESG – THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\nEstelle Brachlianoff, Chief Executive Officer of Veolia\n4 - 15 \nABOUT \nTHE VEOLIA GROUP \n– Veolia – the world leader for decarbonizing, saving and regenerating resources, and depolluting \n– Ecological transformation, that is our Purpose \n– Proactive governance \n– A commitment to multifaceted performance \n– An approach of shared progress with and for our stakeholders \n16 - 23 \nOUR AMBITION \nAND OUR \nSTRATEGY\n## 24 - 46 OUR ESG AIMS AND CHALLENGES – To be the benchmark company for ecological transformation\n– To address the climate emergency \nand its impacts on human activity \n– To grow the circular economy and save \nand regenerate water resources \n– To depollute to protect environments \nand biodiversity \n– To create wealth locally \n– To provide access to essential services \n– To engage and protect employees, promote \ninclusion and diversity, and share value \n– To ensure robust governance, compliance \nand risk management\n– To create solutions to decarbonize, save and regenerate resources, and depollute – To direct our investments toward ecological transformation\nAppendix: our ESG performance indicators", "chunk_word_count": 192, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > 2 - 3 ESG – THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE", "document_id": "Veolia ESG Report 2023", "page": 1, "page_start": 1, "page_end": 2 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 1, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## 24 - 46 OUR ESG AIMS AND CHALLENGES – To be the benchmark company for ecological transformation\n### ESG – the heart of Veolia’s multifaceted performance\nESTELLE BRACHLIANOFF Chief Executive Officer of Veolia\nWe therefore devote equal attention to all our stakeholders by setting ourselves clear performance targets in five areas: commercial, economic/financial, environmental, human resources, and social, all underpinned by robust, proactive governance.\nIn its 170-year history, the Group has helped reshape the way we use resources to be more respectful of ecosystems and meet everyone’s basic needs.\n– by advocating for recognition of the emissions we reduce, avoid or eliminate for our customers,\n– by restating that our role is to provide drinking water for people in regions often subject to water stress; that we lead the way in identifying and anticipating risks to our own and our customers’ infrastructure; and above all, that we are there to provide solutions (efficient networks, wastewater reuse, etc.) to help improve their resilience.\nDecarbonizing, saving and regenerating resources, and depolluting: this trio of ecological transformation is enshrined in our Purpose and sets a clear goal: to improve health and quality of life for human communities. This is a huge ambition that motivates the 220,000 employees in our water, waste management and recovery, and energy businesses.\nThis multifaceted performance guides not only our development choices but also the way in which we run our businesses. These are just a few of many examples:\nWhen it comes to assessing companies’ ESG performance, the co-benefits of their activities for their own value chains and those of their customers are not given sufficient recognition. For Veolia, these co-benefits come in the form of emissions avoided, resources untapped, and water not extracted.\nWe made the responsible rather than the easy choice by investing significantly to eliminate coal from our heat networks in Central and Eastern Europe, resisting the temptation to simply divest these businesses, and we are investing in biogas capture at our landfill sites in Latin America;\n“Everywhere Veolia operates, our stakeholders must see a ‘before’ and an ‘after’ thanks to our solutions, our standards of excellence, and our multifaceted performance approach.”\nAnd we have the results to prove it! In 2022 14 million metric tons of CO2 were eliminated from our customers’ carbon trajectories, and more than 320 million cubic meters of water saved, equivalent to the annual consumption of Singapore. In terms of social responsibility and governance, the Group launched numerous initiatives: basic package of social benefits for all employees worldwide; a purchasing policy of spending $8 5 \\%$ in the places where we operate; gender balance on the Board of Directors; and a policy to encourage employee share ownership which has made them the Group’s leading shareholder in January 2022.\nWe increased the proportion of our business engaged in the circular economy (€8.4 billion in 2022), especially in plastics recycling (490,000 t of plastics recycled in 2022);\nThe purpose of this document is to highlight Veolia’s ESG achievements since 2020. Since our strategic plan launched in 2020, we have constantly pursued our ESG targets to ensure the consistency and success of our multifaceted performance. And we will introduce our strategic plan for 2024-2027 at the beginning of next year with renewed determination.", "chunk_word_count": 548, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > 24 - 46 OUR ESG AIMS AND CHALLENGES – To be the benchmark company for ecological transformation > ESG – the heart of Veolia’s multifaceted performance", "document_id": "Veolia ESG Report 2023", "page": 3, "page_start": 3, "page_end": 3 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 2, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## 24 - 46 OUR ESG AIMS AND CHALLENGES – To be the benchmark company for ecological transformation\n### ESG – the heart of Veolia’s multifaceted performance\n$ |$ n our historically rather maledominated business areas, we are now showing strong growth in female representation in our teams $( 2 5 . 2 \\%$ in 2022 vs. $1 8 . 2 \\%$ in 2019) and $30 \\%$ female managers;\nis derived from the combination of our business areas, which allows us to offer our customers groundbreaking solutions for ecological transformation.\nIn 2020, with the launch of our strategic plan Impact 2023, we made environmental, social and governance (ESG) criteria central to the Group’s operations through multifaceted performance. More than a simple reporting method and more than just a communication plan, this is a genuine tool for steering and transforming the Group. This multifaceted performance is second nature to Veolia, which defines its success by its usefulness, and views economic, social and environmental concerns as an indivisible whole.\n$ \\mathsf { W e }$ are pursuing an ambitious policy regarding top management compensation, with a bonus that is $50 \\%$ based on quantitative criteria, with $50 \\%$ relating to non-financial criteria.\nA simple message to end on: everywhere Veolia operates, our stakeholders must see a “before” and an “after” thanks to our solutions, our standards of excellence, and our multifaceted performance approach, which combines ESG and corporate strategy.\nCommitted to working tirelessly to support our customers in their ecological transformation, we are also acting to reduce our own environmental footprint:\nAnd we’ll keep building on this momentum! But we will also continue to explain the unique features of our business models and activities, as Veolia has become a unique company in the world, the first to achieve top-tier status simultaneously in water, waste and energy. Our strength\n– by intensifying our efforts towards Net Zero Carbon by 2050, while explaining how some of the activities that inflate our carbon figures – converting assets on behalf of our customers, eliminating hazardous waste, etc. – are actually good news for the planet,\n## GROUP\n## FOR DECARBONIZING, SAVING AND REGENERATING RESOURCES, AND DEPOLLUTING\n### Ecological transformation, that is our Purpose\n[IMAGE CAPTION] A CONSOLIDATED GEOGRAPHICAL PRESENCE\nEcological transformation means acting to reconcile human progress and environmental protection.\nWe develop and implement locally solutions to depollute our vital resources and preserve them from depletion, solutions to decarbonize our ways of living and producing and adapt them to the consequences of climate change.\nAll over the world, attuned to local cultures, we strive to improve the health and quality of life of communities.\nAt Veolia, we tackle economic, social and environmental issues as an inseparable whole to the benefit of the largest number of people.\n## ALMOST \n220,000 \nEMPLOYEES\n€42.9 billion IN REVENUE\n## 58 COUNTRIES(1)\nFind the full version of our Purpose at veolia.com\n## OUR ACTIVITIES", "chunk_word_count": 490, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > 24 - 46 OUR ESG AIMS AND CHALLENGES – To be the benchmark company for ecological transformation > ESG – the heart of Veolia’s multifaceted performance", "document_id": "Veolia ESG Report 2023", "page": 3, "page_start": 3, "page_end": 5 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 3, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## OUR IMPACT\nCreated in consultation with our various stakeholders and approved by our Board of Directors, our Purpose is aligned with Veolia’s 170-year mission of “Resourcing the world.” As both a marker for the Group’s chosen direction and a means of rooting its actions more deeply in the long term, it expresses the fundamental meaning of what we do.\n320 million m3 OF WATER SAVED(2) \n14 MtCO 2eq. \nAVOIDED \n$91 \\%$ \nOF VEOLIA’S EXPENDITURE \nREINVESTED LOCALLY \n$89 \\%$ \nOF EMPLOYEES ENGAGED AND SATISFIED\n## BREAKDOWN OF THE GROUP’S CUSTOMER BASE\n## BREAKDOWN OF REVENUEBY BUSINESS LINE\n[IMAGE CAPTION] Figures as of December 31, 2022.\nVeolia’s Purpose is shared with all our stakeholders – employees, customers, suppliers, shareholders, partners and the regions where the Group operates – so that they are aware of its meaning and participate in its effective application.\n## PROACTIVEGOVERNANCE\nFrom its inception through to its implementation, Veolia’s Purpose has been steered and supported at the highest level within the Group. As a source of inspiration and management tool for the Impact 2023 strategic plan, it is widely distributed and shared throughout the Group.\nThe Board of Directors validated the text and the multifaceted performance objectives and related indicators, and controls its proper application, in particular through a dedicated Purpose Committee.\n## THE FIVE BOARD STEERING COMMITTEES\nThe Group Executive Committee and Management Committee oversee its effective implementation. In 2022, a member of the Executive Committee was tasked specifically with stakeholder issues. The aim is to innovate in this area and support Business Units in its application.\nCorporate social responsibility (CSR) issues are addressed at the highest level of Veolia’s governance through several dedicated Board committees.\n3. The Compensation Committee validates the compensation awarded to company directors, ensuring in particular that it is consistent with the Group’s multifaceted performance commitments\nThe Critical Friends Committee of highlevel independent experts is regularly asked for its opinion, with the aim of challenging the company and helping it stay on course.\n## 1. The Purpose Committee\nmonitors the Group’s progress and guides its decisions with reference to its Purpose and to multifaceted performance.\n### Variable compensation taking multifaceted performance fully into account\nThe Purpose Steering Committee, made up of Executive Committee members and representatives of functional departments, is responsible for coordinating and promoting the initiative within the Group.\n## LONG-TERM COMPENSATION FOR EXECUTIVES, HIGH-POTENTIAL EMPLOYEES AND KEY CONTRIBUTORS (1) 2022 CRITERIA\n## ANNUAL VARIABLE COMPENSATION OF THE CHIEF EXECUTIVE OFFICER\n2. The Research, Innovation and Sustainable Development Committee focused its efforts in 2022 on Veolia’s stance in terms of carbon neutrality, the Group’s CSR and non-financial ratings performance, and the rollout status of its sustainable development commitments. It received an annual progress report on Veolia’s plan to phase out energy production from coal.", "chunk_word_count": 469, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > OUR IMPACT", "document_id": "Veolia ESG Report 2023", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 4, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## 2022 CRITERIA\n4. The Accounts and Audit Committee includes in its work the review of the risk management system, including the risk mapping and materiality matrix (incorporating CSR issues) and the Group’s insurance plan.\nThe Strategy and Innovation department steers Veolia’s strategy with a view to achieving a multifaceted performance in line with the company’s Purpose.\nTogether with staff representative bodies, Veolia has set up a Purpose monitoring committee to encourage all employees to take ownership of the Purpose.\n12,5% Climate \n12,5% Diversity \n12,5% Access to essential services \n12,5% Circular economy/Plastics \n(1) Approximately 450 beneficiaries.\n5. The Nominations Committee is responsible for making recommendations on the future composition of the company’s governing bodies and assists the Board in its periodic evaluation work.\n## A COMMITMENT TO MULTIFACETED PERFORMANCE\nTo implement its Purpose, Veolia has developed a fundamental lever for transformation: multifaceted performance.\n## IMPLEMENTATION AT LOCAL LEVEL", "chunk_word_count": 155, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > 2022 CRITERIA", "document_id": "Veolia ESG Report 2023", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 5, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## MULTIFACETED PERFORMANCE RECOGNIZED BY NON-FINANCIAL RATING AGENCIES\nEach multifaceted and indicator performance objective is co-managed by two people – an Executive Committee sponsor and a Group Objective key expert:\n2022\nDJSI: inclusion in the World \nand European indices \nFTSE4Good: inclusion \nin the index \nMoody’s ESG Solutions \n(formerly Vigeo Eiris): 71, \nsector no. 1 \nISS-ESG: Prime, top $\\pmb { 1 0 \\% } ,$ B- \nCDP Climate Change: A \nCDP Water Security: A \nEcoVadis: 75/100 \n– 98th percentile\nExecutive Committee sponsors are appointed to support the objectives at the highest level within the Group.\nGroup Objective key experts: – define an objective attainment strategy for the Group, – propose ways to cascade this strategy through the different operational and functional entities concerned, – participate in the design and analysis of action plans, monitoring and supporting performance, – consolidate the Group multifaceted performance indicators at global level.\nIn its Purpose, Veolia expresses an ambition to meet the expectations of its stakeholders – employees, customers, shareholders, and advocates for society and the planet – in creating and sharing value.\nThe Group has therefore committed to multifaceted performance organized around 18 objectives for 2023 as part of the Impact 2023 plan. In pursuit of an impact balanced between its five main categories of stakeholders, the Group applies the same level of attention and rigor to its economic and financial, commercial, human resources, social, and environmental performance.\n2020\nDJSI: inclusion in the World \nand European indices \nFTSE4Good: inclusion \nin the index \nMoody’s ESG Solutions \n(formerly Vigeo Eiris): 68 \nISS-ESG: B \nCDP Climate Change: A- \nCDP Water Security: A- \nEcoVadis: 70/100 \n– 98th percentile\nTo strengthen the roll-out of multifaceted performance in all Group geographies, in 2021, a network of Purpose Officers was created to:\n– share best practice, \n– monitor progress in their area of responsibility, \n– reflect collectively on continuous improvement in this approach.\nEach of the indicators associated with these objectives is measured and audited annually by independent third-party bodies to help monitor our progress. They will also be used to calculate the variable compensation of Veolia’s senior executives. This requirement is applied to all Group processes, to ensure that our multifaceted performance objectives guide the management of all our activities.\n[IMAGE CAPTION] (4) Investment budget in new forms of energy aimed at eliminating coal in Europe by 2030 was initially estimated at €1.274 billion between 2019 and 2030. It was revalued at €1.584 billion at the end of 2022. (5) Emissions factors (EF IEA) for electricity used to set the Impact 2023 plan target. (6) The 2021 EF IEA updated in the Global Report reporting tool in 2021 show a value of 13 million metric tons of CO2 eq. in 2022. (7) Since 2021, this indicator includes plastic volumes recycled in Veolia transformation plants processing WEEE and volumes recycled in plants acquired or sold by Veolia during the year. In 2022, in the case of non-consolidated joint ventures, the indicator includes volumes of recycled plastics in proportion to Veolia’s stake in these joint ventures. (8) 2019-2022 pro forma data. (9) For networks serving over 50,000 inhabitants. At constant scope. (10) 2022 data excluding the scope integrating employees transferred on the Suez merger: 85%.", "chunk_word_count": 539, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > MULTIFACETED PERFORMANCE RECOGNIZED BY NON-FINANCIAL RATING AGENCIES", "document_id": "Veolia ESG Report 2023", "page": 7, "page_start": 7, "page_end": 8 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 6, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## MULTIFACETED PERFORMANCE RECOGNIZED BY NON-FINANCIAL RATING AGENCIES\n[IMAGE CAPTION] (1) 2022 data excluding the scope integrating employees transferred on the Suez merger: 88%. (2) Formerly referred to as the Top 500 senior executives of the Group. (3) 2022 data excluding the scope integrating activities transferred on the Suez combination (no 2021 reference). The 10 largest business units in this scope have a score of 45 with 85% of revenue covered.\n## AN APPROACHOF SHARED PROGRESSWITH AND FOR OUR STAKEHOLDERS\nTo combine corporate social responsibility (CSR) and commercial challenges, and to suggest a shared goal for collective action: these are the challenges facing the $\" + 1 ,$ the ecology turned into actions” initiative. Half think-tank, half do-tank, this Veolia initiative, launched in 2021, brings together Group stakeholders from different backgrounds – employees, customers, shareholders, society, and planet – to hold frank discussions and foster new interactions. This is a way of amplifying cooperation and ideas to create more concerted solutions for ecological transformation.\ngeographical zones, and subjects. Any willing participant, from inside or outside Veolia, can therefore take ownership of the process. Indeed, it has already been applied to a Group contract – Arianeo for Nice Côte d’Azur. It is also currently being employed for a Group Business Unit in Ireland, and the Group partner Cercle français de l’eau (French water circle), with the objective to engage local stakeholders with a new water narrative. As for creating Veolia’s next strategic plan (2024-2027), the $^ { \\dprime } { + } 1 ^ { \\dprime }$ method offers the opportunity for a consultation with Group stakeholders in all its geographical zones and underpins dialogue with employee representatives from the French and European organizations.\nOver 250 \nVEOLIA STAKEHOLDERS \nHAVE EXPERIMENTED \nTHE “+1” METHOD 12 \nCOLLECTIVES FORMED SINCE 2021\nGiven the scale and urgency of the ecological challenges we all face, Veolia is making use of collective intelligence through dialogue between stakeholders from different backgrounds.\n## GEOGRAPHICAL ZONES MOBILIZED\nThis search for constant dialogue with its ecosystem is based on voluntary and regular Group exchanges, particularly between its leadership bodies, via various discussion forums: the Critical Friends Committee, the Veolia Institute Foresight Committee, the $^ { \\dprime } { + 1 }$ , the ecology turned into actions” consultation process, working groups, conferences, and international events.\nBased on collective intelligence, the $^ { \\dprime } { + } 1 ^ { \\dprime }$ method is available in open-source format and can be applied to a range of contexts,\n(Australia and New Zealand, \nColombia, Czech Republic, \nFrance, Italy, Japan, \nUnited Kingdom, \nUnited States)", "chunk_word_count": 437, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > MULTIFACETED PERFORMANCE RECOGNIZED BY NON-FINANCIAL RATING AGENCIES", "document_id": "Veolia ESG Report 2023", "page": 8, "page_start": 8, "page_end": 9 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 7, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## THE CRITICAL FRIENDS COMMITTEE\nSince 2013, Veolia’s Executive Management has been supported by the Critical Friends Committee, a collective discussion forum. External observers offer their viewpoints on strategic topics in relation to the Group’s corporate responsibility, to foster and support its drive for continuous progress. Chaired by Jean-Michel Severino, CEO of the ethical fund Investisseurs & Partenaires, the committee is today made up of about twelve independent experts in human resources and social and environmental issues, from institutions, the academic community, non-profit organizations, and company partners, including a representative of young climate activists. Committees in China and Japan are following this model to discuss Veolia’s strategic direction with experts in their own countries.\nThe Group works with and for its stakeholders to find points of convergence to genuinely drive ecological transformation. Veolia’s approach to stakeholder relations focuses on three areas: listening and exchanging, co-construction and seeking solutions, and commitment and sincerity with regard to the impact created.\nThis is an opportunity for Veolia to ascertain the expectations of all its different local, national and international stakeholders (employees, customers, suppliers, investors, public authorities, civil society, international organizations, multi-stakeholder platforms, local communities, consumers, etc.). The aim is to establish the Group locally, co-create useful solutions with a strong positive impact for all, and roll these out as widely as possible.\n## AMBITION AND OUR STRATEGY\n## TO BE THE BENCHMARK COMPANY FOR ECOLOGICAL TRANSFORMATION\n## TO BECOME THE GLOBAL CHAMPION FOR ECOLOGICAL TRANSFORMATION\nVeolia is now the uncontested world leader in water and waste management, and a major playor in energy services. Its portfolio of complementary activities allow it to reinforce its positions and accelerate its growth potential in added-value solutions to support its customers in their ecological transformation and help them to decarbonize, save and regenerate resources, and depollute.\nAs it positions itself as the go-to company for regions and manufacturers looking to achieve their ecological transformation, Veolia is showcasing practical solutions for the water, energy and waste sectors for decarbonizing, saving and regenerating resources, and depolluting.\n### The merger with Suez strengthened our positions and increased our potential for growth across all our business segments.\n• WATER SERVICES: no.1 worldwide, no.1 in Europe and no.3 in the United States \n• WATER TECHNOLOGIES: no.1 worldwide \n• SOLID WASTE: no.1 in Europe, no.2 in France, no.1 in the United Kingdom, no. 2 in Germany, no. 1 in Australia \n• HAZARDOUS WASTE: no.1 worldwide, no.1 in Europe, no.3 in the United States \n• DISTRICT HEATING: no.2 in Europe \n• ENERGY EFFICIENCY: no.2 in Europe\nA WORLDWIDE CHAMPION AS WELL AS IN TOP 3 IN ALL KEY COUNTRIES & ACTIVITIES\nConvinced that economic, environmental, human resources and social concerns must form an indivisible whole, the Group is moving forward hand in hand with its stakeholders to:\n### A BALANCED PORTFOLIO OF COMPLEMENTARY ACTIVITIES 2022 REVENUE(1) (in €bn)\n## A MORE INTERNATIONAL GROUP\nEnable local authority, industrial and commercial customers to anticipate environmental risks, reduce the impact of their activities, improve their resilience and adapt their models in favor of sustainable growth;", "chunk_word_count": 515, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > THE CRITICAL FRIENDS COMMITTEE", "document_id": "Veolia ESG Report 2023", "page": 9, "page_start": 9, "page_end": 11 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 8, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## 2022 REVENUE BY WORLD REGION (in %)\nProvide individuals with new solutions and methods that allow them to reconcile their strong commitment to environmental protection with maintaining their quality of life;\nAllow Group employees to contribute to a meaningful communal effort that produces useful, concrete results that serve the environment;\nof which: \nWater Operations $2 4 . 6 \\%$ \nWater Technologies & Works 13.2% \nSolid Waste $2 3 . 2 \\%$ \nHazardous Waste $9 . 8 \\%$ \nLocal Loops of energy 15.6% \nBuilding Energy Services 6.7% \nOn Site Services for industry 6.9%\nOffer Veolia shareholders a sustainable growth model that is both financially profitable and socially responsible;\n$ \\mathsf { A C t }$ to protect and ensure the sustainability of the planet’s resources, and fight against all forms of pollution and climate change.\n## TO CREATE SOLUTIONS\n## INNOVATION HAS DRIVEN A STRONG GROWTH: 3 EXAMPLES IMPACT 2023\n## FOR DECARBONIZING, SAVING AND REGENERATING RESOURCES, AND DEPOLLUTING\n### Decarbonization\nTo fight climate change, deal with pollution, and save and regenerate resources, Veolia can draw on an enhanced capacity for innovation at every level of the Group. Veolia has the power to accelerate the roll-out of existing ecological transformation solutions while simultaneously creating the solutions of tomorrow.\n$ 6$ TWh of biogas produced in 2022 from waste and wastewater activities\nAlready 15 Biomethane production sites in waste and wastewater activities\n## ACCELERATE RESEARCH AND INNOVATION WITH ENLARGED CAPABILITIES\n## HUGE MARKET GROWING AT A FAST PACE\nEconomy and regeneration of resources\n## INNOVATION HUBS\nPlastic recycling 490,000 tons of plastic recycled in 2022 Food grade quality standards\n## 14 RESEARCH & TECHNOLOGY CENTERS\n## 600 FTES FULLY DEDICATED TO R&I\n## 7 BUSINESS AREAS ADDRESSING THESE ISSUES\n### Depollution\n## MORE THAN \n4,800 \nPATENTS X2 COMPARED \nTO 2021\nMicroelectronics market €100 M revenues Fast-pace growing market\n• ENERGY SERVICES TO BUILDINGS • LOCAL LOOPS OF ENERGY • ON SITE SERVICES FOR INDUSTRY • ACCESS TO WATER AND SANITATION • WATER TECHNOLOGIES • SOLID WASTE AND RECYCLING • HAZARDOUS AND LIQUID WASTE\nServing key industry players with Ultrapure Water and Zero Liquid Discharge solutions with water, acid and solvent recovery\n€165 m INVESTED IN R&I IN 2022\n## TO DIRECT OUR INVESTMENTS\n### Micropollutants removal in drinking water\n### A WATER TECHNOLOGY PLATFORM STRENGTHENED BY VWT AND WTS TO MEET MARKET NEEDS", "chunk_word_count": 399, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > 2022 REVENUE BY WORLD REGION (in %)", "document_id": "Veolia ESG Report 2023", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 9, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## TOWARD ECOLOGICAL TRANSFORMATION\n### Municipal market Food & Beverage\nLeverage a combination of drinking water technologies to treat emerging pollutants such as PFAS and residues of pesticides.\nWith $50 \\%$ of its 2022 revenue already eligible for the European taxonomy for sustainable activities – two-thirds of which are aligned with the sustainability criteria – Veolia confirms its position as the benchmark company for ecological transformation.\n### Wastewater and reuse\n### Municipal market All Industries\nLeverage membrane technologies for Reuse needs up to human consumption standard for direct potable reuse.\n### Veolia analyzes the European Union’s ESG criteria at the level of its 20,000 local operations.\nWith the green taxonomy’s implementation, the Group is now able to analyze financial flows according to ESG criteria, at the level of its 20,000 local operations. The nearly €43 billion in revenue from 2022 was therefore sifted through using a digital application called GreenGrideo, which places this complex system within the reach of operational teams.\n### Zero liquid discharge\nLithium recovery Microelectronics Food & Beverage\nMaximize water recovery, minimize chemical & energy consumption. Reduced waste generation by recovering acid and solvents.\nThe result: $3 3 \\%$ of 2022 revenue is sustainable according to the taxonomy’s climate requirements, i.e. more than two-thirds of eligible climate activities. The extension of company auditing to cover the taxonomy’s other environmental topics is pending. A Group creation, GreenGrideo will be an essential part of our response to increasingly stringent auditing requirements for information provided to our stakeholders over the next few years.\n## 2022 REVENUE ANALYSIS ACCORDING TO GREEN TAXONOMY CRITERIA\n### Ultrapure Water\n### Microelectronics Pharmaceuticals\nProduce water meeting very high quality requirements for key applications in microelectronics and pharmaceuticals industries.\nDesalination\nMunicipal Power Mining\nReduce energy & optimized space footprint with modular desalination solutions (seawater, brine…).\n## AIMS\n## CHALLENGES\n## TO ADDRESS THE CLIMATE EMERGENCY AND ITS IMPACTS ON HUMAN ACTIVITY\n## OUR COMMITMENTS IN THE FIGHT AGAINST GLOBAL WARMING\n### Decarbonization solutions in all our businesses\n### Our action levers\n### To reduce our total GHG emissions across Scopes 1, 2 and 3:\nPlanned massive \ninvestment to phase out \ncoal by 2030: €1.5 billion, \n$- 2 . 7 \\ : M \\mathrm { t C O } _ { 2 } ,$ \nMethane capture \ninvestment plan: €70 million in Latin America, -1.5 MtCO2 eq.; \nReSource plan: \n€150 million investment \nin two years to reduce \nour energy consumption \nby $5 \\%$ and increase our \nenergy production by $5 \\%$ .\nPhasing out coal in Europe by 2030; Increasing methane capture: target of $5 5 \\%$ by 2023;\nSupport to reduce consumption; Efficiency and energy performance; Electricity flexibility; Recovery of waste energy; Local production of low-carbon energy (biogas, refuse-derived fuel, heat pumps, decentralized solar, energy recovery from waste, hydrogen, etc.);\nNet Zero trajectory: definition of a trajectory for 2050 in the 2024-2027 strategic plan;", "chunk_word_count": 484, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > TOWARD ECOLOGICAL TRANSFORMATION", "document_id": "Veolia ESG Report 2023", "page": 13, "page_start": 13, "page_end": 15 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 10, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## CHALLENGES AND AMBITIONS\n$ 3 0 \\%$ reduction in carbon intensity of Veolia activities since 2018.\nVeolia has committed itself and its customers to rolling out solutions for reducing greenhouse gas emissions across a number of action areas:\n### To help our customers avoid GHG emissions through the circular economy and the recovery of waste energy:\nReclamation of materials from waste: recycling (plastic, paper/card, metal, waste electrical and electronic equipment), solvent reclamation, compost/fertilizer production from organic waste;\nReducing GHG emissions across the entire value chain of the Group’s activities (Scopes 1, 2 and 3). This notably includes major investment in the Group’s own production assets in line with its commitment to eliminate coal from its European operations by 2030, at an estimated cost of €1.5 billion (€382 million already invested as of 2022) and to ramp up methane capture in its non-hazardous waste storage facilities.\n$ \\mathsf { F r o m } \\ 1 2 . 1 \\mathsf { M t C O } _ { 2 } \\mathsf { e }$ q. avoided in 2019 to $\\ d { 1 4 } \\mathrm { M t C O } _ { 2 }$ eq. avoided in 2022 – target of $1 5 \\mathrm { \\ : M t C } 0 _ { 2 }$ eq. avoided in 2023.\nEnergy recovery from water and sanitation networks (micro-turbines and waste heat recovery);\n### To reduce our own and our customers’ energy consumption; to produce more renewable and recovered energy:\nNature-based water technologies that are less energy intensive.\n$ 1 . 1$ million MWh in 2022, up $1 3 . 4 \\%$ since 2019;\nTarget of energy self-sufficiency in France by 2027.\n## RECOGNITION OF A FOURTH SCOPE OF EMISSIONS\nTo more accurately evaluate its climate action and support decarbonization solutions, Veolia advocates changes to ESG rating criteria and the inclusion of a Scope 4: emissions avoided compared with other existing solutions, currently a blind spot in environmental ratings. This scope would allow recognition of the efforts some organizations are making to decarbonize the economy.\nare water stress and flooding. These risks are included in the Group’s corporate risk management process. In its 2020-2023 environmental plan, Veolia identified all its sites at high risk of water stress, with the aim of performing a full analysis over the duration of the plan.\nTo innovate to capture $\\mathbf { \\boldsymbol { c } } \\mathbf { \\boldsymbol { o } } _ { 2 } \\mathrm { : }$ in our installations, in new material loops, and through nature-based solutions.\n## MASSIVE INVESTMENT IN DECARBONIZATION", "chunk_word_count": 441, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > CHALLENGES AND AMBITIONS", "document_id": "Veolia ESG Report 2023", "page": 15, "page_start": 15, "page_end": 15 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 11, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## NET ZERO TARGET 2050\n€1.5 billion invested by 2030 (€382 million already invested by end 2022)\nIn September 2021, Veolia signed the Science-based Targets initiative’s \nBusiness Ambition for \n$1 . 5 ^ { \\circ } \\mathsf { C }$ and joined the \nUNFCCC Race to Zero. \nIn line with this \ncommitment, the Group’s roadmap will be \nsubmitted to the SBTi by the end of 2023 and will take into account the \nhuge changes to Veolia’s scope with the acquisition of Suez.\nThe aim of these investments is to exit from coal in Eastern Europe.\nIn its sixth assessment report,(1) the IPCC estimates that global warming will reach $\\pmb { 1 . 5 } \\pmb { \\circ } \\pmb { C }$ by the early 2030s. The rapid reduction of net global ${ \\mathsf { C O } } _ { 2 }$ emissions to zero is one of its priority solutions for limiting warming to $1 . 5 ^ { \\circ } \\mathsf { C }$ . Efforts to adapt infrastructure and lifestyles to new climate conditions must continue at the same time. Climate change demands that business transitions more quickly to a low-carbon economy and poses physical risks to which Veolia and its customers must now adapt. However, these conditions also present a wealth of business opportunities for the Group.\n## BREAKDOWN OF SCOPE 1 EMISSIONS BY ACTIVITY IN 2022\n## BREAKDOWN OF SCOPE 2 EMISSIONS BY ACTIVITY IN 2022\nDeveloping solutions to enable its customers to avoid emissions, which need (to be recognized as part of a future Scope 4), through wider application of its circular economy solutions (production of secondary raw materials and renewable energy from waste and wastewater) and the recovery of waste energy;\n## EMISSIONS AVOIDED THANKS TO VEOLIA SOLUTIONS\n### 28.6 MtCO2 eq.\n## 5 MtCO2 eq.\n[IMAGE CAPTION] (1) Including distribution network loss.\n## 14 MtCO2 eq. avoided in 2022 This is equivalent to eliminating 14 million return flights between Paris and New York.\n$ \\mathbb { C O } _ { 2 }$ capture and voluntary offsetting will ultimately be introduced during implementation of the Group’s trajectory toward carbon neutrality.\nWhen it comes to adapting to climate change, the two main evolving physical risks likely to negatively impact Veolia’s activities\n[IMAGE CAPTION] Sustainable Development Goals\n## TO GROW THE CIRCULAR ECONOMY AND SAVE AND REGENERATE WATER RESOURCES\n## CHALLENGES AND AMBITIONS\nIn particular, Veolia’s proven expertise in the sustainable management of water resources enables it to make ambitious commitments on behalf of its municipal and industrial customers in relation to preventing water risks and meeting public expectations. This is based on a range of technical, business and behavioral solutions across the entire value chain. For example:\nThe worldwide explosion in consumption of natural resources is causing depletion of, and pressure on, strategic supplies for the digital and energy transitions. In addition, the intensive use of these resources is having major environmental impacts, including excessive water use, harm to biodiversity, and greenhouse gas emissions.\n## VEOLIA’S ADAPTATION GOALS AND SOLUTIONS\n### Our goals\nGeneral access to public water and sanitation services;", "chunk_word_count": 526, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > NET ZERO TARGET 2050", "document_id": "Veolia ESG Report 2023", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 12, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## VEOLIA’S GREENPATH ADAPTATION OFFER\nManage urban sanitation networks in rainy weather to limit the risk of flooding and the impacts on public health, biodiversity, watercourses and beaches;\nTo prepare ourselves and support the regions by offering adaptation solutions to increase their resilience and protect their water resources.\nTreatment of industrial wastewater and leachates, collection and treatment of hazardous liquid waste, sludge recovery, and soil decontamination;\nThe very essence of Veolia’s business is to preserve natural resources. That is why the Group is offering its customers a range of solutions to achieve exactly that:\nFactor in extreme events when designing factories for our customers, to ensure the protection of assets and continuity in essential services (water purification, distribution and treatment);\nReusing treated wastewater to preserve resources and safeguard access to water in troubled locations;\n### Our approach\nMapping the natural risks and associated impacts on activities (water stress and flooding) in the short, medium, and long-term, and assessing the financial impact of doing nothing;\nProduction of “secondary raw materials” from waste (recycled plastics, rare metals from electronic waste, reclaimed solvents, compost, etc.);\nCollection, management and recovery of solid waste (plastics, etc.) to keep it from entering the environment;\nProvide effective crisis management and continuity plans for essential services (water, energy, waste management, etc.) when extreme events occur.\nProduction of renewable and recovered energy from waste and wastewater, and recovery of waste energy;\nOptimizing operational efficiency for heat networks, industrial services, and building management.\nAnalysis of exposure and vulnerabilities affecting activities;\nDefining solutions for adapting our activities.\nReuse of treated wastewater; Energy efficiency in buildings and industrial facilities;\n## TOWARDS NET ZERO WATER\n### Adaptation solutions\nSynergies from multi-client sites (local industrial ecology, biomass heat networks).\nIn 2022, Veolia saved \n320 million m3 \nof water compared with 2019, \nequivalent to the annual consumption of Singapore. \nIn 2022, Veolia reused \n1 billion m3 \nof wastewater.\n### to protect water resources\nPromote the conservation and efficient use of water;\nVeolia is also contributing to the mobilization of all public and private stakeholders to accelerate the implementation of circular economy solutions, for example, the debate around the anti-waste and circular economy law in France, and the European Union Green Deal and circular economy action plan.\nProtect the resource through sustainable management of the large water cycle and by combating leaks for the small water cycle;\nCreate suitable uses and business models for reusing treated wastewater;\n[IMAGE CAPTION] Sustainable Development Goals\n## TO DEPOLLUTE TO PROTECT ENVIRONMENTS AND BIODIVERSITY\n### Our goals\n### Our action levers\n### Our solutions\n→Plastic recycling and \nrecovery strategy; \nLarge-scale partnerships for optimal resource \nmanagement; \nSolutions for sustainable agriculture (fertilizers, \nwastewater reuse); \nDefinition of new circular business models.\n### To promote the circular economy\n## CIRCULAR ECONOMY SOLUTIONS IN ALL OUR BUSINESSES\nSecondary raw materials, wastewater reuse, renewable energy, recovered waste; energy, and energy performance in buildings;\nProduction of “secondary raw materials” from waste (recycled plastics, rare metals from electronic waste, reclaimed solvents, compost, etc.);", "chunk_word_count": 502, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > VEOLIA’S GREENPATH ADAPTATION OFFER", "document_id": "Veolia ESG Report 2023", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 13, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## CHALLENGES AND AMBITIONS\nIncreased revenue linked to the circular economy: €8.4 billion in 2022; target of €6.3 billion in 2023.\nPlastiLoop, a new global plastics recycling solution;\nWorldwide, only $56 \\%$ of domestic wastewater is safely treated.(1) Reliable sanitation services are key to public health, but are lacking for 4.2 billion people, more than half the world’s population.(2) UNICEF and the WHO estimate that $80 \\%$ of wastewater worldwide is discharged untreated into the environment.(3) Soil quality and the chemical and ecological status of watercourses continue to deteriorate.\n### To reclaim waste and reduce consumption of raw materials\nProduction of renewable and recovered energy from waste and wastewater, and recovery of waste energy;\nReclaim customer waste and residual waste, and limit the production of final waste;\nReuse of treated wastewater; Energy efficiency in buildings and industrial facilities;\n$ 6 1 . 3$ Mt of waste treated in 2022 with a material recovery rate of $1 7 \\%$ (12 Mt);\nPlastic: $3 5 0 { , } 0 0 0 \\mathrm { t }$ of plastics recycled in 2019 and 490,000 t in 2022 – target of 610,000 t in 2023.\nSynergies from multi-client sites (local industrial ecology, biomass heat networks).\n[IMAGE CAPTION] REVENUE LINKED TO THECIRCULAR ECONOMY(in € billion)\nVeolia’s activities help to preserve natural environments and reduce a number of pressures on biodiversity (climate change, pollution, and overuse of natural resources including water). Sanitation activities ensure that high-quality water is discharged into the natural environment, helping maintain watercourses (flow-rate support and the creation of good ecological conditions) and protecting water resources against pollution. The development of centralized urban heat networks, constantly monitored and subject to strict regulation, and the selection of certified biomass streams to power them, also reduce environmental impacts compared with more polluting systems. Collecting and treating waste limits the spread of urban and industrial pollution into soils, bodies of water and the atmosphere. Veolia’s activities prevent and repair the harm caused by toxic pollution, treating and recovering toxic waste to protect health and the environment, activities that require a high level of expertise.\n### To sustainably manage water resources\n## WATER RESOURCE\nDrinking water network efficiency (volume of drinking water consumed/volume produced): $7 6 . 3 \\%$ in 2022; target of $> 7 5 \\%$ in 2023, equivalent to 320 million $\\mathsf { m } ^ { 3 }$ of water not extracted in 2022 (compared with 2019) thanks to improved network efficiency;", "chunk_word_count": 415, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > CHALLENGES AND AMBITIONS", "document_id": "Veolia ESG Report 2023", "page": 17, "page_start": 17, "page_end": 17 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 14, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## MANAGEMENT SOLUTIONS\nAnalyze and reduce the water footprint; Protect existing resources; Optimize resource use management; Promote responsible use and digitalization;\nThese include the consumption of natural resources through site activities, the residual pollution contained in operational discharges, the sites’ greenhouse gas emissions, and the potential impact of their footprint on habitats. Control of these risks, which are classed as operational risks, is an integral part of the Group’s environmental policy.\nWastewater reuse: from 401 million $\\mathsf { m } ^ { 3 }$ in 2019 to 989 million $\\mathsf { m } ^ { 3 }$ in 2022;\nDevelop alternative resources: reuse of wastewater and desalinated water;\nSustainable Development Goals\nRollout of smart meters: from 5.8 million in 2019 to 9.5 million in 2022.\nContribute to international projects for sustainable water resource management.\n## RECOVERY RATE FOR ASH FROM INCINERATION AND SLUDGE FROM WASTEWATER TREATMENT\nEach of Veolia’s activities is dependent on ecosystem services:\nDrinking water production correlates directly with correct functioning of the large water cycle and the capacity of natural environments to purify themselves;\nSanitation activities depend on ecological factors: microbial activity and the capacity of aquatic environments to assimilate residual loads are critical to wastewater purification;\nIndustrial activities taking place on Group-operated sites can have direct or indirect negative local environmental impacts, though these are minuscule compared with the reduction in its customers’ impacts.\nFor energy, biomass activity requires a sustainable supply of fuelwood or plant waste.\n## TO CREATE WEALTH LOCALLY\nVeolia manages all the sites where it operates in such a way as to mitigate all their local impacts, even transforming them into biodiversity reservoirs. Within the multifaceted performance framework, more than a hundred “priority” sites have been identified worldwide due to their sensitive location and/or the type of activity carried out there, and specific action plans have been assigned to them.\nAdditionally, the Group is in the process of extending its ecological soil management and “zero pesticide” policies to all its facilities.\nLastly, in line with TNFD recommendations, the Group has reviewed all its value chain’s impacts and nature dependencies. It is now incorporating the results into its processes, particularly its environmental risk management and purchasing policy.\n## VEOLIA’S WEALTH-CREATION AND IMPACT GOALS", "chunk_word_count": 377, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > MANAGEMENT SOLUTIONS", "document_id": "Veolia ESG Report 2023", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 15, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## CHALLENGES AND AMBITIONS\nThe Group contributes on many levels to employment and development in the regions where it operates, through its management, its local facilities, its human resources and purchasing policies, the Veolia Foundation’s activities, its policy of permanent dialogue with local and institutional stakeholders, and its business partnerships, plus its schemes supporting innovation and entrepreneurship and facilitating wider access to services.\n### Our goals\n### To create local jobs and wealth\nContribute to local economic and social vitality;\nSupport innovation and entrepreneurship;\nMeasure our socioeconomic impact;\nBuild responsible relationships with the Group’s suppliers (decarbonization, circular economy, human rights protection, etc.) to create value together in the regions;\n### Our action levers\n### Our solutions for reducing human pressure on biodiversity and protecting environments\n### Our goals\nBiomass traceability: 99.5% of the (wood) biomass; \nallocated to energy production in thermal installations selling more than 100 GWh annually is fully traceable – target of \n$9 8 \\%$ in 2023; \nBiodiversity action plans \naimed at improving the impact on environments and \nbiodiversity on sensitive sites; Implementation of \necological management on \nsites with more than 1 hectare of green space; \nZero use of pesticides; \nE-learning courses \non biodiversity.\n### To increase our positive impacts\nReduce the carbon footprint of municipal and industrial activities;\nThrough these activities, Veolia contributes to:\nPromote social and professional inclusion;\nLimit pollutant discharge into water by sanitation processes;\nEconomic and social vitality in the regions where it operates;\nSupport development projects with the Veolia Foundation.\nSanitation services for almost 97 million people worldwide and 3,506 urban wastewater treatment plans in operation; Solutions for ecological restoration and remediation of soil; Water supply protection solutions; Solutions for a smaller environmental footprint; Treatment of waste, including hazardous waste.\nLimit the environmental impacts of discharges into the air, water and soil;\nLocal resilience and adaptation to new challenges;\nIncrease the circularity of resources (water and waste);\nContinuous dialogue with local communities and the co-construction of innovative services tailored to local contexts;\nOptimize land-use conditions.\n### To reduce the negative impacts of Veolia’s and its customers’ activities\nSolidarity and the fight against exclusion, especially through the Veolia Foundation;\n[IMAGE CAPTION] Sustainable Development Goals\nLimit atmospheric pollutants $- \\mathsf { S O x } ,$ , NOx, dust, etc. – from thermal installations producing over 100 GWh per year and waste incinerators;\nBuilding responsible relationships with its suppliers.\nAs part of its Purpose and the Impact 2023 strategic plan, Veolia committed to amplifying this support for local development, especially in terms of job creation. To illustrate this commitment, each year the Group uses the Local Footprint method to evaluate its socioeconomic impact in terms of employment in all the countries where it operates.\nTake increased account of protection for environments and biodiversity in our Group standard, and in particular, limit our sites’ impacts;\nRaise awareness as much as possible both internally and externally, and boost stakeholder engagement with our undertaking to protect environments and biodiversity.\n## ENHANCED BIODIVERSITY PROTECTION ON OUR SITES\nCumulative surface area of sites under ecological management (in hectares)", "chunk_word_count": 515, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > CHALLENGES AND AMBITIONS", "document_id": "Veolia ESG Report 2023", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 16, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## TO PROVIDE ACCESS TO ESSENTIAL SERVICES\n### Our impact\n### Our goals\n91% of our expenditure \nwas reinvested locally in 2022; target of $80 \\%$ in 2023; \nFor every euro of added value Veolia creates, €2.30 more are generated in the economy; \n$ 1 , 1 4 7 , 2 3 8$ full-time \nequivalent jobs sustained \nin 2022; \n→ €12.1 million earmarked for local development via spending with the protected workers’ \nsector in France; \n$ 9 3 \\%$ of our suppliers signed a contract containing \nsustainable development \nclauses in 2022; \n$ 7 . 7$ GWh saved in 2022, \nequivalent to 413 metric tons of $C O _ { 2 }$ emissions avoided, \nthanks to our pumping \nequipment purchasing policy; More than 40,000 SMEs \nand midcap companies benefit from Veolia activity: over $70 \\%$ of Veolia’s purchases in France are from SMEs and $14 \\%$ from \nmidcap companies; \n$ 9 3 \\%$ of our contracts with \nsuppliers include sustainable development clauses – target of $9 5 \\%$ in 2023.\n6.92 million people benefit from inclusive measures for access to water and sanitation as part of Veolia contracts $- 2 2 \\%$ increase on 2019 at constant scope of consolidation; Since 2015, Veolia has facilitated access to drinking water for 7.1 million people, and sanitation services for 8 million people; $ 9 9 . 8 \\%$ compliance rate with local regulations and contractual obligations on bacteriological parameters for the water distributed\n– 99.7% compliance with physical-chemical parameters – target to keep these rates above $9 9 \\%$ in 2023; Numerous partnerships forged in emergency humanitarian aid and development: with UNICEF, the UNHCR, the Red Cross, Médecins sans Frontières, and local charities; $ 1 4$ Veoliaforce emergency humanitarian and development missions by Veolia employees in 2022.\n### To develop and maintain access to essential services\nDevelop solutions for access to water and sanitation services in developing countries;\nPromote aid for the most vulnerable and most excluded from these services all around the world;\n## OUR VALUE CREATION\n## RESOLUTELY LOCAL VALUE CREATION\nDevelop inclusive mechanisms for access to services and their maintenance, tailored to the local situation;\nPayroll, taxes, dividends paid to shareholders, purchases from local suppliers, sponsorships, etc. The revenue generated by Veolia creates value for the regions through various redistribution mechanisms.\nImplement measures to protect consumer health and safety;\nTake part in international development and solidarity efforts with the Veolia Foundation.\n$91 \\%$ of Veolia’s expenditure was reinvested locally in 2022\nAchieving these goals requires active dialogue with local communities, stakeholders and civil society.\nREDISTRIBUTION \nOF REVENUE \n€42,885.30 M \nRevenue \nEMPLOYEES \n€9,340.90 M \nPayroll \nSHAREHOLDERS \n€688.00 M \nDividends \nSUPPLIERS \n€29,699.40 M \nPurchases and other \nSTATES AND LOCAL \nAUTHORITIES \n€2,412.00 M(1) \nTaxes \nBANKS \n€707.30 M \nNet bank charges \nNONPROFITS AND \nCOMMUNITIES \n€37.70 M \nSponsorships, studies and grant\nStates and local authorities 5.6% Shareholders 1.6% Banks $1 . 6 \\%$\nThis dialogue is also embodied in local actions: raising awareness of environmental protection, visits to Group-operated sites, innovation challenges, etc.\n## SYSTEMATIC PROGRESS TOWARD THE INCLUSION OF SUSTAINABLE DEVELOPMENT CLAUSES\nProportion of supplier contracts that include the clause\n(1) 2021 data before the integration of Suez.", "chunk_word_count": 531, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > TO PROVIDE ACCESS TO ESSENTIAL SERVICES", "document_id": "Veolia ESG Report 2023", "page": 19, "page_start": 19, "page_end": 19 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 17, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## TO ENGAGE AND PROTECT EMPLOYEES, PROMOTE INCLUSION AND DIVERSITY, AND SHARE VALUE\n### VEOLIA’S GOALS AND ACTION LEVERS TO ENSURE A SAFE AND SECURE WORK ENVIRONMENT\n### Our goals\nEnsure employee \nwellbeing and support \nRollout of the So’Well \nprogram: 50 Wellbeing \nOfficers appointed to raise awareness and promote the Group’s wellbeing strategy to improve quality of life at work and foster cohesion; Implementation of \nVeolia Cares: a global social benefits program that \nprotects all employees and their families. → A center of excellence \nmade up of international \nexperts. \nCommunicate and discuss \nHealth and Safety Week \norganized annually; \nBelieve News: monthly round-up of initiatives \nbased on best practice. \nTrain and engage \nall employees \nRollout of the Paths \n(Prevention & training on \nhealth and safety) program: 62% of staff covered in 2022; $ 7 4 . 3 \\%$ of employees \nreceived safety training, and $4 2 . 3 \\%$ of training hours were devoted to safety. \nMonitor and control health and safety performance \n→ A tool to analyze exposure to professional illnesses \n– health and safety data \ncollected every three months and analyzed using an \nin-house tool.\nReinforce our safety culture and keep up accident prevention efforts;\n## CHALLENGES AND AMBITIONS\nCollectively commit to reducing the number of accidents to achieve a workplace accident frequency rate of five or lower in 2023, and to continue toward the “Zero accidents – a choice” target;\n## MORE COMMITTED AND ENTHUSIASTIC EMPLOYEES\n89% Employee engagement rate in 2022 Every year since 2019, Veolia employees are invited to answer an online-only questionnaire available in 28 languages and tailored to suit a wide variety of profiles. Ipsos, the third-largest market research firm in the world, ensures that all answers remain confidential. The fourth edition of the engagement survey Voice of Resourcers covered 55 countries in 2022, and its scope was greatly extended to include all managers in every geographical area where the Group operates, along with former Suez employees. Our teams’ engagement increased by two points between 2021 and 2022.\nHuman resources are at the heart of Veolia’s Purpose. They are an essential pillar of a culture that is common to all the Group’s efforts, based on its five values: responsibility, solidarity, respect, innovation, and customer focus.\nEnsure employee wellbeing and support.\n### Our action levers\nVeolia has a duty of care for its employees’ health, wellbeing, development and fulfilment. It is particularly concerned with cohesion, social dialogue – including within staff representative bodies – and promoting professional equality. Its global performance also depends on its ability to attract and retain talent. Veolia spares no effort to be, now more than ever, an employer of choice for people all over the world.\n### Sustainable Development Goals\nEngage the entire \nmanagement chain \n132,000 management \nsafety visits. \nControl risks linked to health and safety \nDistribution of 10 standards for managing high-risk \nactivities and 12 “Lifesaving Rules”: a course of \n11 e-learning modules;\n[IMAGE CAPTION] $\\sqsubset$ Number of employees included in the panel $\\sqsubset$ Employee engagement rate in $\\%$ (survey result)\n## WORKPLACE ACCIDENT FREQUENCY RATE CUT BY ALMOST THREE-QUARTERS SINCE 2010\n## VEOLIA’S GOALS AND ACTION LEVERS TO PROMOTE PROFESSIONAL DEVELOPMENT", "chunk_word_count": 530, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > TO ENGAGE AND PROTECT EMPLOYEES, PROMOTE INCLUSION AND DIVERSITY, AND SHARE VALUE", "document_id": "Veolia ESG Report 2023", "page": 20, "page_start": 20, "page_end": 20 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 18, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## VEOLIA’S GOALS AND ACTION LEVERS TO ENSURE RESPECT FOR HUMAN RIGHTS\n### Our action levers\n### Our goals\nPromote the quality \nand development \nof social dialogue \n1,533 new collective \nagreements signed \nin 2022, and $8 5 \\%$ of \nemployees covered by \na social dialogue scheme; \nSocial dialogue based \non a French and European Group committee; \nVeolia is a participant \nin the United Nations \nGlobal Compact; \nVeolia participates in \nGlobal Deal France working groups on the future of work and changing skill sets. \nPromote diversity \nand inclusion \nRollout of a diversity \nand inclusion action plan \nsupported by a network \nof facilitators and based \non four priority targets: \ndiversity, gender identity, \ndisability, and social and \nethnic origin; \nPartnerships with \norganizations that promote diversity; \nProfessional equality \ninitiatives: WEDO (internal network dedicated to \ndiversity with more than \n3,200 members); Yes WEDO – Women in Leadership \nWeek (a program aimed \nat creating career \nprogression opportunities for female managers in \nthe organization); raising \nawareness to combat \neveryday sexism; etc.; \nSupport for the United \nNations’ five standards of \nconduct for business to \ntackle discrimination against lesbian, gay, bisexual, \ntransgender and intersex \n(LGBTI) people; \nSignature of the \nInternational Labor \nOrganization Business and Disability Network Charter, committing the Group to its 10 principles, and of the \nFrench Manifesto for the \nInclusion of Disabled People in Business Life; \nMa Ville en vert inclusivity program: discovering careers in ecological transformation for students aged 13 \nto 18 from disadvantaged \nbackgrounds.\n### To train, develop and engage every employee\nDevelop strategic skills and boost e-learning;\nDevelop employability and deliver 23 hours of training per employee in 2023;\nSustainable Development Goals\nPropagate a shared Group culture, foster employee engagement, and keep their engagement rate above $80 \\%$ for 2023;\nPromote mobility and flexible career paths.\n\n### To ensure respect for diversity, human and social rights, and social cohesion", "chunk_word_count": 312, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > VEOLIA’S GOALS AND ACTION LEVERS TO ENSURE RESPECT FOR HUMAN RIGHTS > Our action levers", "document_id": "Veolia ESG Report 2023", "page": 21, "page_start": 21, "page_end": 21 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 19, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## VEOLIA’S GOALS AND ACTION LEVERS TO ENSURE RESPECT FOR HUMAN RIGHTS\n### Our action levers\nEnsure fair, non-discriminatory HR processes from onboarding to career end for all categories of staff;\nProvide training for all \n$ 5 . 3$ million hours \nof training delivered; \n$91 \\%$ of employees \nreceived training; \n$- 7 9 \\%$ of training \nhours devoted to non \nmanagement employees \nin 2022. \nDevelop strategic skills \nand meet the challenges \nof ecological transformation Establishment of five \nacademies to deliver \na training offer tailored \nto each business; \nRollout of acculturation programs (ecological \ntransformation fresco, \netc.) and new training \nprograms designed \nto support business \ndevelopments. \nAccelerate e-learning \nRollout of new programs developed by Veolia \n(onboarding, biodiversity, \ndisability, digital \npassport, etc.); \n60,000 employees \naccessed e-learning via the Group’s platform \nin 2022; contract \nsigned between the \nGroup and LinkedIn \nLearning (9,000 items \nof multilingual \ntraining content). \nCareer management: \nsourcing, identification \nand development tools \nImplementation \nof TalentApp to enhance mobility and cooperation through the secondment of employees to short \nmissions; \nDevelopment of levers to attract and develop \ntalent: people review, \nsuccession plan, programs for talent (Excellence, \nAccelerate, etc.) and \nexecutives, mentoring, \nand Pangeo (program \nfor young talent on \nVIE contracts). \nIncrease and manage \nemployee commitment Employee share \nownership with Sequoia: Veolia employees are the Group’s main shareholder with $6 . 5 \\%$ of its capital; Voice of \nResourcers survey: \n160,000 employees \nsurveyed and an \nengagement rate \nof $89 \\%$ in 2022.\nEnsure non-discriminatory access to employment at Veolia (age/background disability/gender/sexual orientation social and ethnic origin/etc.;\nDevelop social dialogue and freedom of expression for employees, with more than $9 5 \\%$ of employees covered by a social dialogue scheme by 2023;\nAchieve targets relating to female representation: $50 \\%$ women appointed as Executive Resourcers between 2020 and 2023; $30 \\%$ female managers in 2023; $3 5 \\%$ female management recruitment annually.\n### INCREASING AVERAGE TRAINING HOURS PER EMPLOYEE (in hours)\n## TO ENSURE ROBUST GOVERNANCE, COMPLIANCE, AND RISK MANAGEMENT\nSo-called “non-negotiable” risk factors appear in bold type below. Over the long term, the Group is reinforcing its risk control system though a prevention approach that minimizes the likelihood of this type of risk occurring. The risk factors rated “CSR” have dual materiality.\n### The risks inherent to Veolia’s businesses are the focus of an annual mapping exercise involving all the Group’s subsidiaries and functions.", "chunk_word_count": 396, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > VEOLIA’S GOALS AND ACTION LEVERS TO ENSURE RESPECT FOR HUMAN RIGHTS > Our action levers", "document_id": "Veolia ESG Report 2023", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "Veolia ESG Report 2023.pdf", "chunk_idx": 20, "chunk_text": "# THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE\n## OUR GOALS\n### To ensure Veolia’s ethics and compliance\nAdoption of an anti-corruption code of conduct by the Executive Committee in 2018;\nA reflection of the Group’s exposure, the risk matrix is updated yearly and includes the risk control measures implemented to reduce their likelihood and impact.\nPrograms to prevent corruption, anti-competitive practices, and fraud: 29,700 managers took the mandatory online training in 2022;\nVeolia is uncompromising in the application of internal rules and standards relating to workplace safety, ethics and compliance deemed “non-negotiable.”\nImplementation of an Ethics Guide, Ethics Committee, and a Group Ethics Alert tool;\nRisks are categorized according to their potential impact and how likely they are to occur, and ranked within each category.\nAny employee can alert the Ethics Committee (using the Group Ethics Alert tool) if they suspect any contravention of the values and rules of conduct set out in the Ethics Guide and believe it would be inappropriate to inform their line managers directly or are not satisfied with the management response;\nImplementation, based on businessspecific risks, of a tool to assess suppliers, major customers, and other particularly sensitive third parties such as brokers or partners involved in the Group’s development project.\n### To ensure respect\nEnhance compliance with support from the Compliance Department, reporting to the Group General Counsel, and a network of officers covering the whole Group, reporting operationally to the Chief Compliance Officer;\n### for human rights\nHuman rights policy based on eight priority issues;\nMapping of human rights risks, assessed by a third party;\nOne-point increase annually since 2020 on the question in the annual employee engagement survey about adherence to Veolia’s values and ethics in their organization, reaching $8 5 \\%$ in 2022.\nParticipant since 2003 in the United Nations Global Compact.\n### Data protection and cybersecurity\n### To prevent corruption, anti-competitive practices, and fraud\nOrganization to ensure the application of national and European regulations relating to processing an individual’s personal data (GDPR);\nMeasures aimed at meeting the highest international standards and the principles and recommendations of international bodies such as the OECD, World Bank, United Nations, and Transparency International;\nEstablishment since 2013 of an organization responsible for information systems security, along with a special crisis cell, e-learning courses, and some entities gaining ISO 27001, NIST, or equivalent certification.\n## OUR ESG PERFORMANCE INDICATORS\nTo make it easier to access quantitative non-financial data, this table includes the Group’s main ESG performance indicators, supplementing the multifaceted performance indicators. The table also takes account of the most commonly used European or international standards (GRI, SASB, the SFDR’s Principle Adverse Impact indicators).\nThrough the Climate Solidarity Initiative, the carbon footprint of the present report has been offset by supporting conservation and agroforestry projects in France and Peru organized by the Pur Projet nonprofit organization.\nThis document was prepared by Veolia’s Strategy & Innovation and Communications Departments.\nChief Editors: Sophie Duval Duwart, Sixtine Debatte, Pierre Maurin, Fanny Demulier, Feryel Gadhoum, Jean-Pierre Maugendre, Vanessa Filhol.\n### Resourcing the world", "chunk_word_count": 503, "section_path": "THE HEART OF VEOLIA’S MULTIFACETED PERFORMANCE > OUR GOALS", "document_id": "Veolia ESG Report 2023", "page": 22, "page_start": 22, "page_end": 26 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 0, "chunk_text": "# Walmart \\*\n## Environmental, Social, and Governance Highlights\n## Contents\n## INTRODUCTION\n## ETHICS & INTEGRITY\n## ESG REPORTING SOURCES\n## SUSTAINABILITY\n## 4 Leadership Letters \n6 Awards & Recognition \n7 Our Company \n8 Our Approach to ESG\nESG Issue Briefs →\nESG Reporting Data\n## OPPORTUNITY\n11 Opportunity Highlights \n12 Human Capital: Good Jobs \n& Advancement for Associates \n13 Human Capital Spotlight \n14 Equity & Inclusion at Walmart & Beyond \n15 Supplier Opportunity \n17 Sustainability Highlights \n18 Product Supply Chain Sustainability \n19 Climate Change \n20 Climate Change Spotlight \n21 Regeneration of Natural Resources: \nForests, Land, Oceans \n22 Waste: Circular Economy \n23 People in Supply Chains\n## COMMUNITY\n## APPENDIX\n25 Community Highlights \n26 Serving Communities \n27 Safer, Healthier Food & Other Products \n28 Disaster Preparedness & Response \n29 Disaster Preparedness & Response \nSpotlight \n31 Ethics & Integrity Highlights \n32 Ethics & Compliance \n33 Corporate Governance \n34 Engagement in Public Policy \n35 Digital Citizenship: Ethical Use of \nData & Responsible Use of Technology \n36 Digital Citizenship Spotlight \n37 Human Rights\n## 39 About Our Reporting \n40 Forward-Looking Statements \n41 Endnotes\n### Introduction", "chunk_word_count": 183, "section_path": "Walmart \\* > Environmental, Social, and Governance Highlights", "document_id": "Walmart ESG Highlights 2023", "page": 2, "page_start": 2, "page_end": 3 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 1, "chunk_text": "# Walmart \\*\n## LEADERSHIP LETTERS\n### A Message from our Chief Executive Officer\nIt was Sam Walton’s purpose to help people live better lives. He wanted to help them save money so they could invest in their families and their communities. He wanted to help people build something meaningful and worthwhile and to live a better life. He wanted to leave things better than he’d found them. That’s the legacy he left our company, and we remain committed to being a force for good in the communities we serve, all over the world. For Walmart, this means actively addressing the environmental and societal issues most relevant to our business and stakeholders, and we win when our customers, associates, suppliers, communities, and planet are better off because of Walmart.\nWe’re also making progress toward our environmental goals around the world. In partnership with our suppliers, we’ve made supply chains healthier by embedding regenerative practices and reducing carbon emissions, and we’re especially proud that Walmart is now three-quarters of the way toward reaching our Project Gigaton goal of reducing or avoiding one billion metric tons of greenhouse gases by 2030.\nAt the same time, we’re mindful that none of this would be possible without our associates taking action and bringing these goals to life. We’re grateful for our associates’ hard work and positive mindsets, their flexibility and their resilience, and it’s important to Walmart that we create opportunities and invest in the people who have invested in our mission. We want to build careers, not just jobs. In the U.S. alone, about $7 5 \\%$ of salaried store, club, and supply chain management started their careers as hourly associates. And Live Better U now allows associates to choose from more than 70 programs in areas like business management and data analytics. Walmart pays for $100 \\%$ of the tuition and books. These are just a couple of examples of our commitment to helping our associates live better lives, too.\nTogether, we’re working every day to help people live better lives, both locally and globally. That’s the promise we make to our stakeholders. We’re committed to this mission, and we believe that our success depends upon keeping this promise. And I believe we can do it. We are doing it. And by working together there’s no limit to what we can accomplish.\nIn our 61 years, we’ve shown that we’re capable of big things. We’ve embraced change and innovation while staying true to our roots, and we’ve grown and expanded without forgetting our purpose. We’re a people-led, tech-powered omni-channel retailer dedicated to helping people save money and live better, and we’re still built upon our original foundation of timeless values.", "chunk_word_count": 448, "section_path": "Walmart \\* > LEADERSHIP LETTERS > A Message from our Chief Executive Officer", "document_id": "Walmart ESG Highlights 2023", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 2, "chunk_text": "# Walmart \\*\n## LEADERSHIP LETTERS\n### Doug McMillon\nPresident and CEO Walmart Inc.\nThroughout our ESG Issue Briefs and these ESG Highlights, you’ll see the ways our commitments build on this foundation. We’ve focused on four themes that guide our action: Opportunity, Sustainability, Community, and Ethics & Integrity. And at Walmart, we’re doing more than simply managing risks in these areas. Managing risk isn’t enough. We have to think differently, and we have to do more. We have adopted a mindset that prioritizes outcomes for business and society — and a regenerative ambition. I’m proud of the ways our team is bringing these principles to life across our business. We’re giving back, and we’re following Sam’s example: we’re leaving things better than we found them.\n### A Message from our Chief Sustainability Officer\nWalmart has grown from humble roots with the enduring purpose of helping people save money and live better.", "chunk_word_count": 152, "section_path": "Walmart \\* > LEADERSHIP LETTERS > Doug McMillon", "document_id": "Walmart ESG Highlights 2023", "page": 4, "page_start": 4, "page_end": 5 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 3, "chunk_text": "# Walmart \\*\n## LEADERSHIP LETTERS\n### Rewiring our business for a low-carbon future:\nWe are committed to achieving our science-based targets; last year we achieved a cumulative $23 \\%$ reduction in GHG emissions from our own operations relative to our 2015 baseline year and have progressed toward our goal of being powered by $100 \\%$ renewable energy. We continue to take meaningful action to decarbonize product value chains; through Project Gigaton, Walmart suppliers report having reduced or avoided over 750 million metric tons of emissions since 2017. As electric vehicle (EV) ownership grows, we are building our own EV fast-charging network at thousands of Walmart and Sam’s Club locations coast to coast to create a convenient, reliable, and affordable charging option for customers. We believe our leadership on energy and emissions in the coming decade can create value for our business and stakeholders.\nAs a people-led, tech-powered omni-channel retailer, we want to help people live better not only through our customer proposition but in the way we deliver it, by:\n• Creating opportunity: Being an employer of choice, where all associates feel they belong, can gain skills, and can advance through career paths ranging from retail management to health care to tech.\nRecent examples illustrate our approach:\n• Enhancing sustainability: Operating efficiently, effectively, and sustainably in service of the customer and communities; building a resilient product supply chain that helps create prosperity for people while sustaining and restoring our planet.\nInvesting in our associates: We have raised minimum starting wages over $90 \\%$ and average hourly wages $54 \\%$ since 2015 through improvements in jobs and career paths, including changes based on direct engagement, dialogue, and feedback from associates. Walmart associates have also helped shape and introduce additional benefits, such as extended parental leave, adoption benefits, and expanded vision care benefits. Our on-the-job training and programs such as Walmart Academy provide opportunities for associates to grow their skills and careers; indeed approximately $8 8 \\%$ of Walmart U.S. store roles above entry level were filled internally in FY2023. Such investments help us to attract, develop, and retain the top talent needed to continue bringing our purpose to life.\nWe invite you to read our FY2023 ESG Highlights and the accompanying ESG Issue Briefs to learn more about how we continue to strengthen our business by creating value for our stakeholders.\n• Strengthening community: Providing access to everyday goods and services as well as good jobs, tax revenue, and philanthropic support for community needs.\n• Upholding the highest standards of ethics and integrity: Being the most trusted retailer so our stakeholders choose us every time.", "chunk_word_count": 435, "section_path": "Walmart \\* > LEADERSHIP LETTERS > Rewiring our business for a low-carbon future:", "document_id": "Walmart ESG Highlights 2023", "page": 5, "page_start": 5, "page_end": 5 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 4, "chunk_text": "# Walmart \\*\n## LEADERSHIP LETTERS\n### Kathleen McLaughlin\nEVP and Chief Sustainability Officer Walmart Inc.\nOur environmental, social, and governance efforts center on the themes of opportunity, sustainability, community, and ethics and integrity. Our efforts create shareholder value by creating value for our stakeholders — our customers, associates, suppliers, business partners, community partners, and even the planet (because as a retailer, our commodity sourcing, facilities, and customer communities depend on healthy ecosystems and climate). We believe that when Walmart creates value for stakeholders, we strengthen our business and deliver value to our shareholders, which allows us to invest in the capabilities to serve our stakeholders even better… propelling a virtuous cycle of shared value. We aim to become a regenerative company — one that not only sustains but strengthens the people and the world around us.\n### Awards & Recognition\nOne of America’s Top Corporations for Women’s Business Enterprises — from the Women’s Business Enterprise National Council\nListed on the 2023 Bloomberg Gender Equality Index\n## 2023 DiversityInc Top 50 Companies for Diversity retailer in the EPA’s Green Power Partnership rankings\nFortune Change the World\n100% on the 2022 Human Rights Campaign’s Corporate Equality Index\n## 2022 Disability \nEquality Index \n. . ： ? \nFor seventh consecutive year\nin National Truck Safety by the American Trucking Association\nGreat Place to Work Certified Walmart Inc. and Sam’s Club (2023)\nFor eighth consecutive year\n### Our Company\nWalmart is a people-led, tech-powered omni-channel retailer dedicated to helping people save money and live better — anytime and anywhere — by providing the opportunity to shop in both retail stores and through eCommerce, and to access our other service offerings. Through innovation, we strive to continuously improve a customer-centric experience that seamlessly integrates our eCommerce and retail stores in an omni-channel offering that saves time for our customers.\n## HOW WALMART CREATES VALUE FOR STAKEHOLDERS\n• Customers: Convenient access to quality, affordable products and services \n• Associates: Purpose-driven work; opportunity for good jobs and upward mobility \n• Shareholders: Strong long-term returns through financial and ESG leadership \n• Suppliers: Access to customers and support for supplier development and growth \n• Business Partners: Access to and understanding of engaged customers for our sellers, advertisers,\n• Communities: Resources to build stronger, more inclusive communities • Planet: Leadership on zero emissions, zero waste and our regenerative approach to nature\nOur strategy is to bring our purpose to life, which means making every day easier for busy families, operating with discipline, sharpening our culture, becoming more digital, and making trust a competitive advantage. We are committed to doing this in a way that is regenerative — helping to renew people and the planet through our business.\n## OUR BUSINESS IN FY2023", "chunk_word_count": 453, "section_path": "Walmart \\* > LEADERSHIP LETTERS > Kathleen McLaughlin", "document_id": "Walmart ESG Highlights 2023", "page": 5, "page_start": 5, "page_end": 8 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 5, "chunk_text": "# Walmart \\*\n## OUR APPROACH TO ESG\n### Creating Shared Value\nShared value — addressing societal issues in ways that create value for our business and stakeholders — lies at the heart of Walmart’s enterprise strategy and our approach to ESG issues.\n### Management of ESG\nLeadership of ESG issues starts with our CEO — with oversight from our Board of Directors — and cascades across our enterprise.\nWe believe we maximize long-term value for shareholders by serving our stakeholders: our customers, associates, suppliers, business partners, communities, and even the planet.\nThe Board’s Nominating & Governance Committee (NGC) exercises oversight over Walmart’s overall ESG strategy and certain priority issues, while other Board committees retain oversight over specific ESG issues.\nAddressing such societal needs builds the value of our business and as business strengthens society, society strengthens business.\nWalmart’s Chief Sustainability Officer (CSO) helps define the ESG agenda and provides dedicated management and oversight of Walmart’s global ESG initiatives and goals. The CSO provides updates to the Walmart executive leadership team and NGC.\nWe aspire to become a regenerative company — helping to renew people and the planet through our business. Each of our ESG priority issue areas offers a discrete shared value proposition: an opportunity to meet a societal need through our business. Doing so aligns our business objectives with societal objectives and increases our ability to create value for the long term.\nWe have additional governance bodies at the management level, including the ESG Steering Committee and the ESG Disclosure Committee that help guide ESG strategy and disclosure.\nRead more: ESG Oversight and Management and Corporate Governance ESG Brief\nRead more: Our ESG Priorities", "chunk_word_count": 276, "section_path": "Walmart \\* > OUR APPROACH TO ESG", "document_id": "Walmart ESG Highlights 2023", "page": 8, "page_start": 8, "page_end": 8 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 6, "chunk_text": "# Walmart \\*\n## OUR APPROACH TO ESG\n### Our ESG Priorities\nWe prioritize the ESG issues that offer the greatest potential for Walmart to create shared value; these are issues that rank high in relevance to our business and stakeholders as well as Walmart’s ability to make a difference.\n### Opportunity\n• Good jobs and advancement for associates • Equity and inclusion at Walmart and beyond • Growth for suppliers, sellers, and local economies\n### Stakeholder Engagement\nOur ability to create shared value depends on direct and frequent engagement with our customers, associates, and community leaders, as well as the people who supply our products, hold our stock, and evaluate our performance. Stakeholder perspectives and feedback help improve the relevance and effectiveness of the products and services we offer and the initiatives we support.\n### For each priority ESG issue, our disclosures aim to:\n• Articulate the relevance of the issue for societyand Walmart’s business • Reflect an understanding of stakeholder expectations • Share our aspirations, goals, and strategies to create shared value • Describe our progress, opportunities, and challenges\n### Sustainability\n• Climate and renewable energy leadership • Zero waste in operations, products, and packaging • Regeneration of natural resources: forests, land, and oceans\nRead more: Our ESG Priorities\nDay to day, we engage with customers, fellow associates, suppliers, members of the communities where we operate, and shareholders.\n### Community\n• Serving communities • Access to safer, healthier food, products, and services • Disaster preparedness and response\nAdditionally, our 2021 ESG priority assessment included extensive outreach to stakeholders, including customers, associates, shareholders, suppliers, and NGOs, to understand their perspectives on which issues Walmart should prioritize.\n### Ethics & Integrity\n• Highest ethical and compliance standards \n• Strong corporate governance \n• Engagement in public policy \n• Digital citizenship \n• Respect for human rights\nRead more: Stakeholder Engagement\n### Opportunity\nRetail can be a powerful engine for inclusive economic opportunity. We aim to advance equity and opportunity throughout Walmart, our product supply chain, and local communities to fulfill our customer mission, strengthen our business, and help people build a better life for themselves and their families.\n## RELATED ESG ISSUE BRIEFS:\nHuman Capital: Good Jobs & Advancement for Associates\nEquity & Inclusion at Walmart & Beyond\nSupplier Opportunity\n### Opportunity Highlights\n68% full-time U.S. hourly associates2\n\\$ 47\n## BILLION\ncumulative total \npurchases supporting \nAmerican jobs \n(2021 through FY2023)\n37% of U.S. officers are women\n\\$ 21.75\n>\\$ 13 BILLION sourced from \\~2,400 diverse suppliers5 to U.S. businesses\nU.S. associate \naverage total hourly \ncompensation1\n## U.S. ASSOCIATES3\n28% of U.S. officers are people of color\nreceived promotions; 88% of roles4 above entry level filled internally\n### Human Capital: Good Jobs & Advancement for Associates\nOur aspiration: making retail a place of inclusive and equitable opportunity where people can gain skills and experience to advance their careers\n### Associate Listening and Feedback", "chunk_word_count": 481, "section_path": "Walmart \\* > OUR APPROACH TO ESG", "document_id": "Walmart ESG Highlights 2023", "page": 9, "page_start": 9, "page_end": 12 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 7, "chunk_text": "# Walmart \\*\n## STRATEGY\nmore than 500,000 associates did so during our 2022 survey. U.S.-based associates can also utilize the MyFeedback Portal, which was designed and launched as a digital, intuitive, self-service site. Hundreds of associates utilize this channel each month. Feedback results are provided to leaders to create action plans and inform enhancements to our overall associate value proposition and ways of working. In FY2023, for example, benefits, training, and education enhancements were made because of associate feedback.\nAs Walmart associates, engaging and listening to each other has been core to our culture since our founding more than 60 years ago. As the world becomes more digital, it creates additional opportunities to solicit feedback from and respond to each other. In FY2023, Walmart U.S. introduced the Engagement Pulse Survey, a monthly survey administered to over one million Walmart U.S. frontline associates via the Me@Walmart app that helps leaders improve engagement, retention, and the overall associate experience. Additionally, our Associate Engagement Survey now provides the opportunity to submit open-text feedback, and\n• Drive a digital transformation that improves the associate experience \n• Strengthen the U.S. frontline workforce development system in retail and related sectors\n• Make Walmart a place for everyone where associates know they are listened to, valued, engaged, and supported • Prioritize the financial, physical, and emotional well-being of associates • Provide opportunities for all associates to learn and grow in their careers\n## FY2023 HIGHLIGHTS\n• Connected U.S. frontline associates to career paths, with $8 8 \\% ^ { 6 }$ of roles above entry level filled internally and $> 1 8 0 { , } 0 0 0$ promotions7\n• Continued investment in wages $( + 5 4 \\%$ in the average hourly wage since 2015) and benefits, increasing average total compensation to $> \\$ 21.75$ /hour, and enhancing parental leave and familybuilding benefits\n• Enhanced engagement capabilities, including through digital Engagement Pulse Surveys and the MyFeedback portal\n### Career Growth Through Live Better U\nAll of my dreams were coming true. I was ready for the next step of my career.\nJarryn Robertson joined Walmart in 2009 as a part-time cash office associate at Store 1196 in New Roads, Louisiana, before transferring to work in asset protection in a supercenter and then a distribution center. Prior to working at Walmart, she’d wanted to get a college degree and had taken classes on and off after high school but never finished. Time, money, and a lack of direction had gotten in the way. In 2018 she heard about a new program Walmart was launching — Live Better U. She took advantage of the new, exciting opportunity and enrolled at Bellevue University, ultimately graduating with a business degree in December 2021.", "chunk_word_count": 455, "section_path": "Walmart \\* > STRATEGY", "document_id": "Walmart ESG Highlights 2023", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 8, "chunk_text": "# Walmart \\*\n## — JARRYN ROBERTSON, PROJECT ANALYST\nBentonville, Arkansas.\n“When I received the job offer, I started to cry,” she recalls. “All of my dreams were coming true. I was ready for the next step of my career.”\nJarryn’s story is just one of the thousands of stories of associates who have completed Live Better U programs, opening up new pathways to career progression and promotion at Walmart. The education and skills gained\nShortly after graduating, Jarryn learned about the Home Office Pathway Experience, a new program designed to connect frontline associates who are recent or soon-to-be college graduates with Home Office roles.\nthrough Live Better U have propelled many associates to grow their careers at Walmart.\nOnce Jarryn was accepted into the Home Office Pathway Experience program in early 2022, she worked hard to show her skills and determination through rotations with several Home Office teams. Her hard work paid off: Jarryn was offered — and accepted — a job as a project analyst on the Non-Traditional Talent Pathways Team at the Home Office in\n### Equity & Inclusion at Walmart & Beyond\nOur aspiration: to advance equity and inclusion in our business, with our suppliers and business partners, and in the communities we serve\n### Belonging at Walmart\n## STRATEGY\nWalmart’s diversity, equity, and inclusion efforts focus on creating a culture of belonging, where people can bring their best selves to work — and we can attract and retain talent to serve our customer well.\n• Create a culture of belonging, where all associates feel accepted and valued for their unique identities and skills • Promote inclusion through our sourcing of products, services, and goods not for resale; marketing; and business relationships\n• Advance equity and inclusion in society through business initiatives and complementary philanthropy\nOur efforts include removing barriers to hiring and advancement; training and education; associate resource groups; and robust oversight and reporting.\nThis year, we began seeking to measure a sense of belonging through our Associate Engagement Survey. We also hired our first Chief Belonging Officer — an evolution of the Chief Diversity Officer role — in early FY2024.\n## FY2023 HIGHLIGHTS\n• Diversified recruiting and talent pools, including our frontline hourly associate base and strategic partnerships with HBCUs; people of color represent $4 1 \\%$ of management (vs. $3 9 \\%$ in FY2022) \n• Worked with more than 200 diverse creators and brands in marketing and sourced more than $\\$ 13$ billion from diverse suppliers \n• Granted \\$58 million towards our $\\$ 100$ million Center for Racial Equity commitment to address disparities in the U.S. criminal justice, education, finance, and health systems, with an additional $\\$ 7$ million contributed towards racial solidarity efforts\n### Supplier Opportunity\nOur aspiration: we aim to create economic opportunities for our suppliers, the people they employ, and their communities\n### Supporting American Manufacturing", "chunk_word_count": 476, "section_path": "Walmart \\* > — JARRYN ROBERTSON, PROJECT ANALYST", "document_id": "Walmart ESG Highlights 2023", "page": 13, "page_start": 13, "page_end": 15 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 9, "chunk_text": "# Walmart \\*\n## STRATEGY\nWalmart has long supported American manufacturing and the creation of jobs in the U.S., completing a commitment to purchase an incremental $\\$ 250$ billion in products made, grown, or assembled in the U.S. in FY2023.\npurchased an incremental $\\$ 47$ billion towards that new goal. Our sourcing can have a profound impact on local communities: we expect our new commitment to catalyze the creation of more than 750,000 new jobs across the U.S.\n• Support the creation of American jobs by increasing our sourcing of products made, grown, or assembled in the U.S. • Source from and build capacity of diverse suppliers\n• Promote the production of goods in India for export \nSupport smallholder farmers and small producers through sourcing and capacity building\nAnticipating the successful completion of this commitment, Walmart renewed its commitment in 2021 and expanded its incremental spend goal to $\\$ 350$ billion over ten years.\nAs just one example, longtime Walmart Supplier Classic Fashion announced a new California cutand-sew apparel facility in October 2022, which is expected to create 125 jobs by 2023 and an additional 225 jobs over five years.\nAs of the end of FY2023, Walmart has already\n## FY2023 HIGHLIGHTS\n• Spent an incremental $\\$ 47$ billion on products supporting American jobs (2021 through end of FY2023) • Sourced more than $\\$ 13$ billion from \\~2,400 diverse suppliers to our U.S. businesses • Invested $> \\$ 39$ million grants in smallholder capacity building in India15 and progressed against a commitment made to triple exports of goods from India to $\\$ 10$ billion by 2027\n### Sustainability\nWalmart seeks to transform our business and product supply chains to be regenerative — optimizing outcomes for climate, waste, nature, and people as we serve our customers and grow our business.\n## RELATED ESG ISSUE BRIEFS:\nProduct Supply Chain Sustainability\nClimate Change\nRegeneration of Natural Resources: Forests, Land, Oceans\nWaste: Circular Economy\nPeople in Supply Chains\n### Sustainability Highlights\n>750 MILLION MT CO e reduced or avoided by suppliers since 201716 >2 MILLION ACRES OF LAND\nof global private-brand packaging is recyclable, reusable, or industrially compostable, a 5% increase over FY2022\nset goals and/or reported \nprogress on responsible \nrecruitment through \nWalmart’s Supplier \nLeadership Program on \nPeople\nconserved through Acres for America since 2005\n23.2%\nreduction in combined \nScope 1 & 2 emissions \nvs. 2015 baseline17 \n(through 2021)\n### Product Supply Chain Sustainability\nOur aspiration: accelerate progress on the sustainability of our own assortment and product supply chains across the retail and consumer goods industry\n### 20x2025 SUSTAINABLE COMMODITIES\nIn 2016, Walmart announced $^ { * } 2 0 { \\times } 2 5 ^ { , }$ : a goal to source at least 20 agricultural commodities more sustainably by 2025. Since then, we have been working on the following:", "chunk_word_count": 468, "section_path": "Walmart \\* > STRATEGY", "document_id": "Walmart ESG Highlights 2023", "page": 15, "page_start": 15, "page_end": 18 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 10, "chunk_text": "# Walmart \\*\n## STRATEGY\n• Set standards and requirements for product \nsourcing \n• Engage and support suppliers to pursue \nsocial and environmental initiatives \n• Lead consortia to accelerate collective \naction beyond Walmart\n• Help customers make informed choices through labeling and cause campaigns • Advocate for public policies that align with sustainable supply chain priorities • Accelerate systems change beyond Walmart through philanthropic investments\n### Floral & Produce\nSpecialty Crops Cocoa, coffee, and tea\nTextile, Pulp, Paper & Timber\n### Ingredients\n### Proteins\nFresh flowers, apples, bananas, berries, grapes, leafy greens, pineapples, stone fruit, and tomatoes\nSeafood (wild caught and farm raised), meat (South American beef, U.S. beef, pork, and poultry), and dairy\nU.S. corn, U.S. wheat, U.S. soy, South American soy, and palm oil\nCotton textiles, pulp, paper, and timber\n## FY2023 HIGHLIGHTS\n### Our approach to more sustainably sourcing these commodities\n• Achieved at least $9 5 \\%$ “more sustainable” certification for several commodities, including fresh and frozen seafood,19 bananas,20 coffee,21 and tea22 \n• Offered products that meet trusted standards for personal well-being, our communities and the environment through the Built for Better online shop \n• Relaunched Member’s Mark brand — “Made with Our Member and Planet in Mind” \n• Made steady progress across food, apparel, consumables, and general merchandise across climate, waste, nature, and people strategies\n• Encouraging our suppliers to adopt more sustainable sourcing practices, including through product specifications and sourcing policies, as well as positions and policy statements \n• Revamping sourcing specifications and requiring certifications where available and aligned with our aspirations \n• Collaborating with suppliers, other retailers, NGOs, and others to improve practices across the sector \n• Asking suppliers to measure and report against progress \n• Supporting place-based sourcing in critical ecosystems \n• Measuring and reporting transparently\n### Climate Change\nOur aspiration: we aim to galvanize collective action across the retail and consumer goods sector through advocacy, supplier engagement, philanthropy, and innovation in product supply chain practices while taking steps to strengthen the resilience of our business against the effects of climate change\n## ANNUAL GHG EMISSIONS\n### EV Fast Charging Network\nWe are investing in clean energy infrastructure in the U.S. to make electric vehicle (EV) ownership more accessible, reliable, convenient, and affordable for our customers. By 2030, we intend to build out our EV fast-charging network to at least 10,000 chargers across ${ 2 , 5 0 0 + }$ Walmart and Sam’s Club locations in the U.S., expanding on the EV fast-charging stations that are already available at over 280 locations across the U.S.\n[IMAGE CAPTION] Walmart’s Progress on Operational Emissions (Scope 1 and $2 ) ^ { 2 7 }$", "chunk_word_count": 441, "section_path": "Walmart \\* > STRATEGY", "document_id": "Walmart ESG Highlights 2023", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 11, "chunk_text": "# Walmart \\*\n## STRATEGY\n• Govern our climate strategy through accountable leadership and assess climate risk • Mitigate emissions to achieve targets, covering our global operations (achieve zero emissions by 2040) and supply chain (reduce, avoid, or sequester 1 billion metric tons of emissions through Project Gigaton)\n• Adapt our business to be more resilient in the face of climate risk • Advocate for $1 . 5 \\mathrm { ^ \\circ C }$ aligned public policy Report transparently on our progress and encourage suppliers to take action\n[IMAGE CAPTION] PROJECT GIGATON: >750 MMT $\\mathsf { C O } _ { 2 } \\mathsf { e }$ REDUCED TO DATE28\n## FY2023 HIGHLIGHTS\n• Decreased our combined Scope 1 and 2 emissions23 by $2 3 . 2 \\%$ (through 2021) • Increased percentage of electricity supplied by renewable sources to 46% (through 2021)24 • Increased supplier participation in Project Gigaton to ${ \\sim } 7 5 \\%$ of U.S. product net sales25 • Achieved >750MMT ${ \\mathsf { C O } } _ { 2 } \\mathsf { e }$ reduced, avoided, or sequestered through Project Gigaton26 • Advocated for climate-related policy in line with our Statement on Climate Policy including supporting the climate provisions of the Inflation Reduction Act\n## CLIMATE CHANGE SPOTLIGHT\n### Project Gigaton: Transforming Supply Chains\nWalmart launched Project Gigaton in 2017 as an ambitious initiative to catalyze decarbonization in product value chains through engagement of suppliers, NGOs, and other stakeholders. Our goal: to democratize climate action and help reduce or avoid one billion metric tons (a “gigaton”) of greenhouse gas emissions by 2030. Through Project Gigaton, we encourage suppliers to take action in six action areas that are key to decarbonization and relevant to our suppliers’ businesses.\n## PROJECT GIGATON PILLARS\n>750 MILLION MT CO2e\nPackaging • Forums and summits • Sustainable packaging playbook\nEnergy • Gigaton PPA • Tools and playbooks\nreduced or avoided by suppliers since 201729\nOver the past six years, we have expanded and deepened our work by adding new tools, resources, and other opportunities for suppliers to accelerate engagement and impact. For example, as part of Project Gigaton, Walmart collaborated with Schneider Electric to provide access to accelerators like Gigaton PPA, which offers suppliers the opportunity to participate in aggregate, utility-scale power purchase agreements. We also worked with CDP and HSBC to launch the Sustainable Supply Chain Finance Program, an early-payment program for suppliers who set science-based targets through Project Gigaton or have achieved certain score thresholds from CDP. As Project Gigaton continues to make progress across areas of the supply chain critical to decarbonization, Walmart is focused on increasing supplier engagement and ambition and catalyzing positive action.\n### Transportation\n### Nature\n• Forums and summits • Place-based initiative connectors\n• Collaborating on public policy • Sharing resources\n### Product Use & Design\n### Waste", "chunk_word_count": 475, "section_path": "Walmart \\* > STRATEGY", "document_id": "Walmart ESG Highlights 2023", "page": 19, "page_start": 19, "page_end": 20 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 12, "chunk_text": "# Walmart \\*\n## >5,200 SUPPLIERS\n• $1 0 \\times 2 0 \\times 3 0$ initiative • Investing in technical assistance\n• Investing in technical assistance • Golden design rules\nsigned up for Project Gigaton\n### Regeneration of Natural Resources: Forests, Land, Oceans\nOur aspiration: to place nature in the center of our business practices, including by protecting, more sustainably managing, or restoring at least 50 million acres of land and 1 million square miles of ocean by 2030\n### Place-Based Sourcing\nWe support the development of place-based and jurisdictional initiatives, which aim to create shared value for producers, suppliers, and communities across a landscape or seascape. For example, we partnered with The Nature Conservancy and the government of the Republic of the Marshall Islands to source tuna certified to Marine Stewardship Council standards for our Great Value brand. The initiative aspires to distribute at least $40 \\%$ of net income to directly support community-based conservation and climate resilience projects\nincluding the development and management of Marine Protected Areas and coral reef restoration. We also collaborate with Indigo Ag to source Great Value rice from a place-based initiative in Arkansas. Rice farmers enrolled in the project implement on-farm practices that are intended to improve water and land stewardship, including crop rotation from legumes, fertilizer management, zero-grade rice production, multiple-inlet irrigation with computerized holes election, and furrow irrigation.\n## STRATEGY\n• Support conservation and restoration of critical ecosystems \n• Encourage the development of place-based initiatives \n• Advocate for and invest in enablers of systemic change \n• Govern our nature strategy through accountable leadership \n• Identify nature-related dependencies, impacts, risks, and opportunities \n• Foster more sustainable production of commodities \n• Transition our operations toward regenerative practices\n## FY2023 HIGHLIGHTS\n• Engaged through business or philanthropy in efforts to protect, more sustainably manage, or restore ${ > } 3 0$ million acres of land and ${ > } 1 . 4$ million square miles of ocean \n• Pursued seven place-based commodity sourcing initiatives (e.g., rice, tuna) \n• Launched a nature portal to connect suppliers to information regarding place-based commodity sourcing and conservation opportunities \n• Reached a milestone of over two million acres conserved through the Acres for America program since 2005\n### Waste: Circular Economy\nOur aspiration: to achieve zero waste in our global operations and accelerate the adoption of innovative packaging and products designed for circularity\n### Circular Connector\n$\\ln 2 0 2 2$ we launched our Circular Connector, designed to help connect innovative packaging companies to our private brand merchants and suppliers.\nfit with private brand packaging goals. To date, the Connector has gathered over 200 more sustainable packaging solutions and made more than 4,000 connections between packaging providers and private brand suppliers.\nPackaging companies submit their packaging solutions through the Connector on the Walmart Sustainability Hub; Walmart teams assess the\n• Achieve zero operational waste \n• Eliminate food waste \n• Optimize packaging and encourage customer recycling\n• Reduce plastic waste • Engage customers in the circular economy • Invest in local infrastructure to address systemic issues around waste management", "chunk_word_count": 509, "section_path": "Walmart \\* > >5,200 SUPPLIERS", "document_id": "Walmart ESG Highlights 2023", "page": 20, "page_start": 20, "page_end": 22 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 13, "chunk_text": "# Walmart \\*\n## FY2023 HIGHLIGHTS\n• Reduced food waste $12 \\%$ (vs. 2016 baseline); diverted ${ \\tt > } 9 0 0 M$ lbs. of food waste to composting, animal feed, anaerobic digestion, and biochemical processing; and donated $> 7 6 0 M$ lbs. of food globally30 • $63 \\%$ of global private brand packaging was recyclable, reusable, or industrially compostable31\n• Eliminated free plastic bags at checkout in Mexico, Canada, and more than 420 Walmart stores in the U.S. \n• Launched Walmart Restored, an online marketplace where customers can buy refurbished products \n• Diverted $78 \\%$ of operational waste globally, including $89 \\%$ in Canada, $80 \\%$ in Mexico, and $78 \\%$ in the U.S.32\n### People in Supply Chains\nOur aspiration: to source responsibly while acting as a catalyst to improve the well-being of people working in product supply chains\n## PEOPLE IN SUPPLY CHAINS — RETAIL SUPPLY CHAINS OF FOCUS\nWalmart has committed to working with others to address risks to the dignity of workers in a minimum of 10 \nretail supply chains by 2025\n## STRATEGY\n• Set strong, responsible sourcing standards, monitor suppliers and facilities for compliance, and manage non-compliances and remediation\nCreate economic opportunity for people in supply chains by sourcing from diverse and small suppliers and investing to support smallholders\nCollaborate with key actors to address systemic risks to worker well-being\n• Assessed \\~13,100 third-party responsible sourcing facility audit reports33 \n• Over $90 \\%$ of assessed audit reports were rated green or yellow and less than $2 \\%$ percent of facilities assessed received a successive orange rating34 \n• $9 9 \\%$ of Walmart U.S. and $9 9 \\%$ of Sam’s Club U.S. net sales of fresh produce and floral were from suppliers endorsing the produce Ethical Charter35 \n• Continued to invest in building capability in responsible recruitment and dignified working conditions, including in grants to IREX, Global Fishing Watch, The Nature Conservancy, Polaris, and the Woodrow Wilson International Center for Scholars\n### Community\nAs an omni-channel retailer with locations in thousands of communities around the world, we seek to help communities thrive and become more resilient.\n## RELATED ESG ISSUE BRIEFS:\nServing Communities\nSafer, Healthier Food & Other Products\nDisaster Preparedness & Response\n### Community Highlights\n## FOOD DONATION PROGRAM\nLaunched the Walmart Healthcare Research Institute to increase community access to healthcare research that may help lead to safer, higher quality, and more equitable healthcare\npounds of food donated in the U.S. to help fight hunger36 cash and in-kind donations globally38\n### Serving Communities\nOur aspiration: as an omni-channel retailer with a physical presence in thousands of communities around the world, Walmart seeks to help those communities thrive and become more resilient\n### Caring and Connected Communities\nFor example, The Trust for Public Land will use a Walmart Foundation grant of $\\$ 1$ million for its initiative $\\mathfrak { s o } _ { \\mathsf { n } }$ Common Ground,” which helps forge new relationships among community members through shared spaces and community programs at city parks across the U.S.\nWe believe in the power of positive, in-person interactions among people of different backgrounds to build trust. Walmart provides support to organizations that bring people together to create more caring and connected communities.", "chunk_word_count": 542, "section_path": "Walmart \\* > FY2023 HIGHLIGHTS", "document_id": "Walmart ESG Highlights 2023", "page": 22, "page_start": 22, "page_end": 26 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 14, "chunk_text": "# Walmart \\*\n## STRATEGY\n• Provide convenient access to affordable, quality goods and services Contribute to economic vitality by providing quality jobs, training and career paths, investing in local suppliers, and contributing to local economies\n• Strengthen community resilience by supporting local organizations and causes, increasing food access, and preparing for and responding to disasters Build more inclusive and engaged communities through advancing equity, supporting caring and connected communities, and deepening engagement between our stores and clubs and their surrounding communities\n## FY2023 HIGHLIGHTS\n• Contributed to local economies including by employing ${ \\sim } 2 . 1$ million people, paying $\\$ 3210$ billion in income-based taxes worldwide, investing $\\$ 4.990$ billion in store and club remodels in the U.S., sourcing more than two-thirds of Walmart U.S.’s total product spend on items made, grown, or assembled in the U.S., and donating more than $\\$ 1.7$ billion in cash and in-kind donations globally • In the U.S., launched Spark Good, a new community engagement platform that provides more opportunities for customers and associates to support the causes that matter most to them; our U.S. locations, associates and customers collectively donated more than $\\$ 146$ million to charitable organizations in FY2023\n### Safer, Healthier Food & Other Products\nOur aspiration: to improve the lives of people around the world by providing access to safer, healthier, and more affordable food and products\n### Innovation in Food Safety\nWe use machine learning technology that integrates compliance data (such as audits and regulatory visits) and operations data (such as facilities maintenance and logistics) to identify early risk indicators of pressure or strain on our stores or clubs. This information helps us prioritize\nthe deployment of resources towards areas with a higher likelihood of food safety failure.\nThe Food Marketing Institute awarded Walmart the 2022 Food Safety Innovation Award for development and deployment of this technology.\n• Provide safe, high-quality foods for our customers, including by promoting a positive food safety culture and a safer food system • Improve access to healthier food options and enable customer choice\n• Provide safe and affordable merchandise while promoting safer use and formulation of products across the industry", "chunk_word_count": 360, "section_path": "Walmart \\* > STRATEGY", "document_id": "Walmart ESG Highlights 2023", "page": 26, "page_start": 26, "page_end": 27 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 15, "chunk_text": "# Walmart \\*\n## FY2023 HIGHLIGHTS\n• Supported a strong food safety culture, including by conducting approximately 71,000 independent food safety audits and training ${ \\sim } 1 . 2$ million associates in at least one food safety course \n• Promoted access to healthier food by ensuring SNAP benefits can be used at all Walmart stores as well as online in 49 states and by updating the Great for You nutrition criteria to match the 2020-2025 USDA Dietary Guidelines for Americans \n• Reduced the footprint of priority chemicals in Walmart U.S. and Sam’s Club U.S. formulated consumables by $20 \\%$ compared to a 2017 baseline39\n### Disaster Preparedness & Response\nOur aspiration: to effectively prepare for and respond to disasters, with a focus on associate well-being, serving customer needs through swift and safe recovery of business operations, and supporting impacted communities\n### Collaborating with Partners for Disaster Preparedness\nA key aspect of disaster planning and preparation is knowing the community and establishing relationships with community stakeholders before a crisis event. Including relevant stakeholders in disaster planning efforts promotes coordinated disaster response efforts, drives information sharing, helps us to direct resources where they are most needed, and can lead to more targeted support for communities in need after a disaster.\n## STRATEGY\n• Disaster planning and preparation through risk assessment, business continuity planning, private-public collaboration, training, and supporting community resilience-building, particularly in vulnerable communities\nDisaster response, including ensuring associate safety and well-being, swift and safe recovery of business operations for the benefit of our customers, and supporting impacted communities\n## SUPPORTING OUR STAKEHOLDERS\n### Associates\nTo strengthen these relationships and coordination, Walmart convened a Preparedness Summit in 2022, bringing together more than 100 representatives from corporations, government agencies, NGOs, and local nonprofits at Walmart’s Home Office campus. Participants shared knowledge and best practices on topics including preparedness and technology, strengthening partnerships, the role of supply chains in disaster relief, and improving and increasing coordination and innovation in the disaster preparedness space.\nEnsuring the well-being of our associates and their families", "chunk_word_count": 339, "section_path": "Walmart \\* > FY2023 HIGHLIGHTS", "document_id": "Walmart ESG Highlights 2023", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 16, "chunk_text": "# Walmart \\*\n## FY2023 HIGHLIGHTS\n### Customers and Members\n• To protect our associates, customers, and communities, our Emergency Operations Center operates 24/7/365 • ${ \\sim } \\$ 16$ million globally in cash and in-kind donations for disaster recovery and preparedness\nMaintaining and restoring our operations to serve customers and members swiftly and safely\nCommunities\nHelping vulnerable communities build resilience before disasters and supporting impacted communities after disasters\n### Hurricane Ian Response\nWalmart private fleet drivers poured into the region from across the country, delivering an additional 3,800 truckloads of water to support stores and clubs and for distribution to communities and local nonprofits.\nIn the days before Hurricane Ian hit Florida in September 2022, Walmart associates began preparations for the storm, including facilities walks and roof checks, airing hurricane preparedness videos and weather forecasts on TVs in stores and clubs, and pre-staging resources and mobile generators at Walmart facilities in the expected path of the storm. Our team began working closely with the state of Florida’s Emergency Operations Center, where they would remain embedded for more than a week to help coordinate with local facilities, emergency responders, and local leaders. The storm brought historic flooding and rainfall and hundreds of Walmart stores, clubs, and distribution centers in its path were affected, with dozens losing power and suffering damage from wind and water. Shortly after the storm passed, stores and clubs began to reopen to safely resume serving customers and members.\nWalmart truck drivers also brought relief to the community through Walmart’s Mobile Relief Kitchen, a fully equipped cooking trailer designed for disaster response. For several weeks, these associates cooked and served over 84,000 hot meals.\nWalmart driver Greg Carter, who is based in Indiana, traveled to Florida to work at the Mobile Relief Kitchen with his fellow associates. To him, stepping up to help is simply part of the job. “Everything about Walmart is to take care of the customer,” Carter said. “This is just one of the facets that we have. Walmart fills the needs of communities — not only when times are good, but especially when times are bad.”\nCustomers, members, and associates saw significant damage to their homes and were left without utilities and water. To meet community needs, Walmart locations hosted services and water and meal distributions in their parking lots. Nonprofits including Cajun Navy Relief and The Salvation Army worked alongside our associates to help get resources like water, food, and emergency supplies to people in need. While power remained down for many across the region, some of our parking lots also hosted shower and laundry services, including P&G’s Tide Loads of Hope.\nOverall, Walmart, Sam’s Club, and the Walmart Foundation donated over $\\$ 6$ million in grants and supplies that helped nonprofits feed and shelter people, clean up debris, and provide relief to underserved communities.\nSee more in our Hurricane Ian timeline.\n### Ethics & Integrity\n### Code of Con\nWalmart strives to make trust a competitive advantage. Modeling the highest standards of ethics and compliance helps us create and maintain a culture of integrity, which builds trust in our business.", "chunk_word_count": 519, "section_path": "Walmart \\* > FY2023 HIGHLIGHTS", "document_id": "Walmart ESG Highlights 2023", "page": 28, "page_start": 28, "page_end": 30 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 17, "chunk_text": "# Walmart \\*\n## RELATED ESG ISSUE BRIEFS:\nEthics & Compliance\nTraining Modu\nCorporate Governance\nEngagement in Public Policy\nDigital Citizenship: Ethical Use of Data & Responsible Use of Technology\nHuman Rights\n### Ethics & Integrity Highlights\n### Ethics & Compliance\nOur aspiration: to model the highest standards of ethics and compliance to create and maintain a culture of integrity and build trust\n### Integrity in Action Award\n[IMAGE CAPTION] ETHICS & COMPLIANCE PROGRAM FOUNDATIONS\n## STRATEGY\nSetting the appropriate tone from the top and creating a culture of ethics is integral to an effective Ethics and Compliance program. Recognizing and rewarding ethical behaviors helps to facilitate the creation of that culture.\n• Set foundations for an effective ethics and compliance program including maintaining a strong corporate culture of compliance and a mindset of continuous improvement\n• Uphold standards of compliance across the business, including related to health and safety, anticorruption, antidiscrimination and harassment, food safety, digital citizenship, and responsible sourcing\nWalmart’s Integrity in Action Award is a global recognition program that celebrates associates who exemplify our values and champion a culture of integrity.\nFor example, in 2022, a Walmart Chile associate was recognized with this award for upholding company values by declining a supplier’s unethical proposal. The associate was presented with the award and celebrated in the company’s publications.\n## FY2023 HIGHLIGHTS\n• Updated our Ethics & Compliance program to focus on nine core program foundations • Offered 29 languages on the 24/7 Walmart ethics helpline • More than 1.4 million associates globally completed Code of Conduct training • Walmart private fleet drivers drove more than 1 billion safe miles\n### Corporate Governance\nOur aspiration: to create an environment of accountability, transparency and trust in our business that fosters business integrity, financial stability, and responsible and long-term growth\n• Maintain a majority independent Board \n• Provide effective oversight of strategy, risks, and opportunities \n• Develop a talented and diverse pipeline of leaders\n• Design compensation programs to support enterprise strategy Engage regularly with and receive feedback from a wide variety of stakeholders\n• Provided updates on our ESG agenda and progress to the Nominating and Governance Committee of the Walmart Board \n• Each governance-related Board committee, as well as the Strategic Planning and Finance Committee, is led by an independent chair \n• Established an ESG Disclosure Committee to supervise, review, and monitor the preparation of ESG reports and information for publication as well as approve information governance standards related to the production of ESG reports and information\n### Engagement in Public Policy\nOur aspiration: to shape public policy that enables our business and the creation of shared value for our business, customers, associates, and other stakeholders\n### Marketplace Trust & Transparency\nCounterfeit and stolen goods are a growing problem on some online marketplaces. That is why we advocated for the INFORM Consumers Act, consumer protection legislation that would curb these activities and reduce the safety threat to our customers. The Act was enacted in 12 states in 2022 and became federal law in December 2022.", "chunk_word_count": 506, "section_path": "Walmart \\* > RELATED ESG ISSUE BRIEFS:", "document_id": "Walmart ESG Highlights 2023", "page": 30, "page_start": 30, "page_end": 34 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 18, "chunk_text": "# Walmart \\*\n## STRATEGY\n• Align public policy activities with our business priorities and values \nAdvocate for policies that promote the interests of our customers and other stakeholders\nEngage in the political process by encouraging our associates to vote as well as through the Walmart Inc. Political Action Committee for Responsible Government\n• Work with trade associations and business coalitions to prioritize and advance issues that affect our stakeholders and our business\n## FY2023 HIGHLIGHTS\n• Advocated for laws, regulations, and policies aligned with our shared-value interests, including the climate provisions in the Inflation Reduction Act and the American Innovation and Manufacturing Act \n• Engaged trade associations in support of our agenda to oppose tariffs that increase costs for consumers and reduce the competitiveness of U.S. manufacturers\n• Promoted greater accessibility to health and wellness services by advocating for expanding the role of health professionals and supporting legislation that helps ensure individuals have the technology to access telehealth services42 • Advanced a more circular economy by promoting extended producer responsibility legislation\n### Digital Citizenship: Ethical Use of Data & Responsible Use of Technology\nOur aspiration: to build and maintain the trust of customers, associates, and communities with respect to our use of technology and data\n## DIGITAL TRUST COMMITMENTS\nWalmart’s Digital Trust Commitments provide a foundation for the company to earn and maintain customer trust in an omni-channel, data- and technology-driven world\n• Promote fairness through our Digital Trust Commitments \n• Protect the privacy of customer and associate information through our policies and controls\n• Manage and support the safety of our records, information, and data Protect our information and digital infrastructure\n### Service\n### Excellence\n### Integrity\n### Respect\nOur use of technology and data will be in service of people\nWe strive for excellence \nin our technology, \nmaking it simple, \nconvenient and secure \nWe will use data \nresponsibly and \ntransparently and \nalways with integrity\nOur data practices and technology will treat people fairly, with dignity and respect", "chunk_word_count": 330, "section_path": "Walmart \\* > STRATEGY", "document_id": "Walmart ESG Highlights 2023", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 19, "chunk_text": "# Walmart \\*\n## FY2023 HIGHLIGHTS\n• Incorporated privacy by design principles into the design, development, procurement, and modification of our tech, business processes, and projects that include processing of personal information • Continued annual assessment of our cybersecurity programs against third-party requirements • >1.4 million associates completed trainings on digital citizenship and information security • Blocked more than 100 billion bots on our websites in 2022\n### How Walmart Protects Against Cyber Threats\nIn today’s complex security landscape, cyberattacks can disrupt companies, institutions, and governments in the blink of an eye. Walmart’s Information Security team helps to build and maintain the trust of our customers, associates, and stakeholders by securing our operating environment.\nOne alert that has become more prevalent — especially around the holidays — are retail bots, which are automated programs that purchase inventory online. As more holiday commerce volume has shifted online, we worked to eliminate these bots via automated, purpose-built capabilities that only allow legitimate customers to purchase products. Last year, we blocked approximately 8.5 billion bots per month.\nOur team analyzes more than seven trillion alerts annually. To help manage the volume of threats, we are prioritizing automation, including by deploying leading third-party tools, supplementing them with our own purpose-built tools, and leveraging internal and external experts to enhance our automated threat management capabilities.\n### Human Rights\nOur aspiration: to use our scale, capabilities, and influence to help people and communities improve their lives, with a focus on our salient human rights issues\n## SALIENT HUMAN RIGHTS ISSUES\nWalmart focuses its efforts on its identified salient human rights issues:\n## STRATEGY\n• Identify salient human rights issues and focus areas most relevant to our business Govern our approach to human rights in accordance with our Human Rights Statement, including oversight by management and the Walmart Board of Directors\n• Manage salient human rights issues in our operations and supply chains, including through policies, engagement, assessing impacts, integration of findings, performance tracking, and appropriate remedy\n### Combating Forced & Underage Labor\nProviding a Fair & Inclusive Work Environment • Anti-discrimination and harassment • Diversity and inclusion • Gender equity\nPromoting a Safe & Healthy Work Environment • Physical safety and security of work premises • Workplace abuse • Healthy work environments\n### Treating Workers with Respect\n• Forced labor, including debt bondage • Underage labor • Vulnerability of migrant workers; responsible recruitment • Human trafficking\n• Pay; working hours \n• Freedom of association and collective bargaining \n• Meaningful opportunities for workers to be heard\n• $\\mathord { > } 4 0 0$ suppliers set goals and/or reported progress on responsible recruitment through Walmart’s Supplier Leadership Program on People \n• Financially supported the creation of a data ecosystem and engagement channels to empower and promote the responsible recruitment of migrant workers in the U.S.-Mexico agriculture corridor \n• Began a refresh of our human rights due diligence approaches, including re-examining our salient issues, focus areas, governance, policies, and practices \n• Participated in the Owned Operations working group of the Consumer Goods Forum, which includes Human Rights Due Diligence activities\nAppendix", "chunk_word_count": 513, "section_path": "Walmart \\* > FY2023 HIGHLIGHTS", "document_id": "Walmart ESG Highlights 2023", "page": 35, "page_start": 35, "page_end": 38 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 20, "chunk_text": "# Walmart \\*\n## FY2023 HIGHLIGHTS\n### About Our Reporting\nWalmart has reported on a wide range of ESG issues since 2005. Our reporting is focused on our priority ESG issues — those that we believe are the most relevant to our business and important to our stakeholders.\nEach priority issue is covered in-depth in our ESG Issue Briefs. The briefs cover our aspirations and strategies with respect to that issue, the relevance of the issue to business and society, our key goals and metrics, and our progress to date. These briefs will be updated from time to time and may not align with fiscal year reporting periods.\nalthough in certain instances third parties assisted in the process of collecting, analyzing, and calculating information.\nOur reporting is guided by widely used voluntary reporting frameworks, including the Global Reporting Initiative (GRI) Standards, Sustainability Accounting Standards Board (SASB), the Task Force on Climate-related Financial Disclosures (TCFD), and the United Nations (U.N.) Sustainable Development Goals (SDGs). We also report through programs such as CDP, a global environmental disclosure system. Please see our GRI, SASB, TCFD, and UN SDGs tables for more information.\nThese ESG Highlights provide an overview of our shared value approach to ESG, our ESG priorities, and key highlights from the year, but it is not intended to be comprehensive. This report covers activities during the fiscal year ending January 31, 2023 (FY2023), except as otherwise noted. Calendar years (CY) are marked as such or written in a four-digit format. As we highlight each issue in this report, we provide links to the relevant issue brief or briefs.\nAll references to “Walmart” in our ESG reporting are to Walmart Inc., a Delaware corporation, and its consolidated subsidiaries that were subsidiaries during the reporting period, excluding all acquired eCommerce businesses, platforms, and/or marketplaces, unless otherwise noted. Financial information referenced in our ESG reporting reflects the scope of the Walmart Inc. consolidated financial statements unless otherwise noted. This report also covers some activities of the Walmart Foundation, a separately incorporated Delaware charitable private foundation. “Walmart.org” is used to refer to the collective philanthropy of Walmart Inc. and the Walmart Foundation.\nNew this year, we are sharing our key ESG metrics as a downloadable spreadsheet to make it easier for our stakeholders to get the information they need. This spreadsheet will be updated from time to time as new information becomes available.\nWe sought and received external assurance from a third party with respect to certain emissions-related information. We did not seek or receive external assurance from third parties with respect to other information,", "chunk_word_count": 430, "section_path": "Walmart \\* > FY2023 HIGHLIGHTS > About Our Reporting", "document_id": "Walmart ESG Highlights 2023", "page": 39, "page_start": 39, "page_end": 39 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 21, "chunk_text": "# Walmart \\*\n## FY2023 HIGHLIGHTS\n### Forward-Looking Statements\nThese ESG Highlights and our various ESG Issue Briefs do not cover all information about our business, and inclusion of information therein is not an indication that the subject or information is material to Walmart’s business or operating results for purposes of U.S. securities laws and regulations. Statements other than statements of historical or current facts, including statements and images about our ESG targets, goals, aspirations, commitments and programs, and other business plans, initiatives, and objectives are forward-looking statements and are based on Walmart management’s current assumptions and expectations. These statements are typically accompanied by the words “aim,” “ambition,” “anticipate,” “aspire,” “believe,” “can,” “commit,” “estimate,” “expect,” “forecast,” “goal,” “hope,” “intend,” “may,” “on track,” “plan,” “predict,” “project,” “strive,” “target,” “will,” “would,” or other similar words. All such statements are intended to enjoy the protection of the safe harbor for forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Our actual future results, including the achievement of our targets, goals, or commitments, could differ materially from our projected results as the result of a variety of factors, including, but not limited to, changes in circumstances, assumptions not being realized, or other risks, uncertainties, and factors, many of which are outside of our control. Such risks, uncertainties and factors include the risk factors discussed in Item 1A of our most recent Highlight Report on Form 10-K and in subsequent filings with the Securities and Exchange Commission (SEC); they also include the challenges, assumptions and dependencies identified in our ESG Issue\nBriefs. We urge you to consider all of the risks, uncertainties, and factors identified above or discussed in these ESG Highlights and each of our ESG Issue Briefs carefully in evaluating the forward-looking statements therein. Walmart cannot assure you that the results reflected or implied by any forward-looking statement will be realized or, even if substantially realized, that those results will have the forecasted or expected consequences and effects. Unless expressly stated otherwise, the forward-looking statements in these ESG Highlights and our ESG Issue Briefs are made as of the effective date identified in the issue brief, and we undertake no obligation to update or revise these forward-looking statements to reflect subsequent events or circumstances. Standards of measurement and performance made in reference to the goals, aspirations, and objectives referred to in these ESG Highlights and our various ESG Issue Briefs are developing and based on protocols, processes, and assumptions that continue to evolve and are subject to change in the future, and no assurances can be given that any plan, initiative, projection, goal, commitment, expectation, or prospect set forth in these ESG Highlights or our ESG Issue Briefs can or will be achieved.", "chunk_word_count": 458, "section_path": "Walmart \\* > FY2023 HIGHLIGHTS > Forward-Looking Statements", "document_id": "Walmart ESG Highlights 2023", "page": 40, "page_start": 40, "page_end": 40 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 22, "chunk_text": "# Walmart \\*\n## FY2023 HIGHLIGHTS\n### Endnotes\n1 Average total compensation includes average hourly pay, other compensation, and benefits per hour for full- and part-time associates. This does not include special cash bonuses or paid leave related to COVID-19.\ncertification or engaged in a fishery improvement project (FIP) or Aquaculture Improvement Project (AIP). Tracked on the FishChoice platform, FisheryProgress.org. Publicly registered FIPs include FIPs and Pre-FIPs, both of which are registered with Fishsource.\n15 As reported by grantee organizations. Farmers may benefit from more than one investment or program. Each engagement will be included in calculating total reach.\n## 2 The calculation excludes the following associate types: Home Office, pharmacists, on-site-clinics, drivers, management trainees, and temporary associates.\n20 Includes Walmart U.S. and Sam’s Club U.S. bananas. Results do not include volume from spot buys. Spot buy bananas may not qualify as certified “more sustainable.” Walmart defines “more sustainable” bananas as bananas that are certified by Rainforest Alliance, Sustainably Grown, or Fair Trade.\n16 Calculated in accordance with Walmart’s Project Gigaton Accounting Methodology, available on the Walmart Sustainability Hub. Suppliers submit information during a Project Gigaton reporting season; figures reported are for the reporting season that took place during the corresponding fiscal year. Because Walmart does not restrict suppliers to reporting only on emissions avoidance and reduction efforts that are attributable to the suppliers’ business with Walmart, actions taken and reported through Project Gigaton cannot be used to measure Walmart’s Scope 3 emissions, either absolutely or in year-over-year reductions.\n## 3 Data for promotions includes both hourly and management promotions and excludes Walmart Home Office promotions.\n21 Includes Walmart U.S. and Sam’s Club U.S. combined coffee. Walmart defines “more sustainable” coffee as coffee sourced as certified by Fair Trade, Rainforest Alliance Certified, or UTZ.", "chunk_word_count": 294, "section_path": "Walmart \\* > FY2023 HIGHLIGHTS > Endnotes", "document_id": "Walmart ESG Highlights 2023", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 23, "chunk_text": "# Walmart \\*\n## 4 Calculation is for associates working in stores, clubs, and supply chain.\n22 Includes Walmart U.S. private brand black and green tea bags and instant iced teas as certified. \nWalmart defines “more sustainable” tea as tea sourced as certified by Rainforest Alliance.\n5 A diverse supplier is defined as a U.S. privately held company that is recognized as at least 51% owned and operated by a woman, minority, veteran, disabled veteran, a person with a disability, or a member of the lesbian, gay, bisexual, transgender, or queer (LGBTQ+) community. All references to “diverse suppliers” in this report follow this definition.\n17 Annual Scopes 1 and 2 GHG emissions are updated from time to time for changes in emission factors or activity data when more accurate information become available. This may result in updated emissions reported in the ESG Climate Change brief that may not correspond to results reported to CDP for our annual Climate Change questionnaire. Flipkart emissions data is excluded from Walmart’s Scope 1 and 2 emissions footprint and progress calculation. We believe excluding Flipkart’s data will have negligible impact on the overall reporting.\n23 Annual Scopes 1 and 2 GHG emissions are updated from time to time for changes in emission factors or activity data when more accurate information become available. This may result in updated emissions reported in the ESG Climate Change brief that may not correspond to results reported to CDP for our annual Climate Change questionnaire. Flipkart emissions data is excluded from Walmart’s Scope 1 and 2 emissions footprint and progress calculation. We believe excluding Flipkart’s data will have negligible impact on the overall reporting.\n## 6 Calculation is for associates working in stores, clubs, and supply chain.", "chunk_word_count": 287, "section_path": "Walmart \\* > 4 Calculation is for associates working in stores, clubs, and supply chain.", "document_id": "Walmart ESG Highlights 2023", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 24, "chunk_text": "# Walmart \\*\n## 7 Data for promotions includes both hourly and management promotinos and excludes Walmart Home Office promotions.\nWe engage Lucideon CICS to independently verify Walmart’s reported Scope 1 and 2 emissions as reported to CDP annually, pursuant to ISO 14064-3 (the international standard for verification of Greenhouse Gas inventories). We follow Walmart’s Greenhouse Gas Inventory Methodology in calculating our GHG emissions, which is consistent with the principles and guidance of the World Resources Institute and the World Business Council for Sustainable Development’s Greenhouse Gas Protocol Initiative (“The GHG Protocol”) for corporate GHG accounting and reporting. Scope 2 (market-based) emissions include the carbon reduction value of renewable electricity procured from onsite and offsite projects.\n8 Wage metrics in the table exclude the following associate types: Home Office associates, pharmacists, on-site-clinics, drivers, management trainees, and temporary associates.\nWe engage Lucideon CICS to independently verify Walmart’s reported Scope 1 and 2 emissions as reported to CDP annually, pursuant to ISO 14064-3 (the international standard for verification of Greenhouse Gas inventories). We follow Walmart’s Greenhouse Gas Inventory Methodology in calculating our GHG emissions, which is consistent with the principles and guidance of the World Resources Institute and the World Business Council for Sustainable Development’s Greenhouse Gas Protocol Initiative (“The GHG Protocol”) for corporate GHG accounting and reporting. Scope 2 (market-based) emissions include the carbon reduction value of renewable electricity procured from onsite and offsite projects. To account for structural changes in our business, we strive to adjust our emission reduction progress on Scope 1 and 2 emissions to add or subtract emissions for entities acquired or divested in the year the acquisition or divestiture took place, including adjusting for previous years (including the baseline year).\n9 The average hourly starting rate is calculated as the average hourly wage of U.S. associates that joined in the preceding six months. Starting wage ranges were \\$12-\\$32/hour (Walmart U.S.), \\$15-\\$32/hour (Sam’s Club U.S.), and \\$16-\\$30 (supply chain). The minimum starting wage rate was increased to \\$14/hour in Walmart U.S. in February 2023.\nTo account for structural changes in our business, we strive to adjust our emission reduction progress on Scope 1 and 2 emissions to add or subtract emissions for entities acquired or divested in the year the acquisition or divestiture took place, including adjusting for previous years (including the baseline year).\n10 Average total compensation includes average hourly pay, other compensation, and benefits per hour for full-and part-time associates. This does not include special cash bonuses or paid leave related to COVID-19.\n18 For the time frame of the private brands packaging survey, we instructed suppliers to use their latest or most recent 12-month period for which they have data available. If they reported last year, use the same reporting period as the initial/prior reporting year to avoid gaps or overlap with the prior year’s submissions. For suppliers that did not complete the survey or provided unusable data, proxy data was substituted to provide a full estimate of global private brand packaging. For the proxy calculation, a market level approach was used.\n11 This segment includes Walmart U.S. stores and supply chain. \n12 This segment includes Sam’s Clubs and supply chain. \n13 Supply chain includes associates who work in distribution and fulfillment centers but excludes drivers.", "chunk_word_count": 542, "section_path": "Walmart \\* > 7 Data for promotions includes both hourly and management promotinos and excludes Walmart Home Office promotions.", "document_id": "Walmart ESG Highlights 2023", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 25, "chunk_text": "# Walmart \\*\n## 7 Data for promotions includes both hourly and management promotinos and excludes Walmart Home Office promotions.\n24 This includes generation from active renewable and low-carbon projects. It considers the combined contribution of power generated from on-site and off-site projects as well as renewable energy generation feeding into the grids where our sites are located. Third-party-verified energy consumption data is one year in arrears for the CY2019 and CY2020 years. For CY2021, the latest energy consumption data was used. This was used in combination with the electricity procured from our renewable energy projects and the most recent grid fuel mix information obtained from the International Energy Agency for the regions where we operate. This estimate does not include energy data for our Flipkart business. We believe excluding Flipkart data will have a negligible impact on our estimate.\n14 U.S. metrics include all 50 states but exclude Puerto Rico. U.S. non-management metrics include all hourly associates, excluding temporary associates. U.S. management metrics include all salaried, exempt associates. U.S. officer metrics include president, executive vice president, senior vice president, and vice president positions. Data for the U.S. is as of January 31.\n19 Includes Walmart U.S. and Sam’s Club U.S. fresh and frozen, wild-caught and farmed seafood. Sourced from fisheries that are third-party certified as more sustainable, actively working toward\n25 The U.S. product net sales figure used for the calculation includes Walmart U.S. and Sam’s Club product net sales for the previous four quarters (Q3 through Q2) prior to the start of the survey reporting window. The percentage represents U.S. product net sales of suppliers that reported to Project Gigaton in the reporting year versus all U.S. product net sales. The calculation excludes Walmart International segment product net sales from the calculation.\nthe Walmart Sustainability Hub. Suppliers submit information during a Project Gigaton reporting season; figures reported are for the reporting season that took place during the corresponding fiscal year. Because Walmart does not restrict suppliers to reporting only on emissions avoidance and reduction efforts that are attributable to the suppliers’ business with Walmart, actions taken and reported through Project Gigaton cannot be used to measure Walmart’s Scope 3 emissions, either absolutely or in year-over-year reductions.", "chunk_word_count": 368, "section_path": "Walmart \\* > 7 Data for promotions includes both hourly and management promotinos and excludes Walmart Home Office promotions.", "document_id": "Walmart ESG Highlights 2023", "page": 41, "page_start": 41, "page_end": 42 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 26, "chunk_text": "# Walmart \\*\n## 34 Facility color ratings denote the seriousness of findings identified in the audits.\n35 Results are limited to net sales of Walmart and Sam’s Club direct suppliers and do not include data from “spot buy” or “direct store delivery” suppliers. Direct suppliers represent $90 \\%$ of Walmart U.S. net sales of the relevant department, and $8 9 \\%$ of the Sam’s Club U.S. net sales of the relevant department. The U.S. product net sales figure used for the calculation includes Walmart U.S. and Sam’s Club product net sales for the previous four quarters (Q3 through Q2) prior to the start of the survey reporting window. The percentage represents U.S. product net sales of suppliers that reported to Ethical Charter in the reporting year versus all U.S. product net sales. The calculation excludes Walmart International segment product net sales from the calculation.\n26 Calculated in accordance with Walmart’s Project Gigaton Accounting Methodology, available on the Walmart Sustainability Hub. Suppliers submit information during a Project Gigaton reporting season; figures reported are for the reporting season that took place during the corresponding fiscal year. Because Walmart does not restrict suppliers to reporting only on emissions avoidance and reduction efforts that are attributable to the suppliers’ business with Walmart, actions taken and reported through Project Gigaton cannot be used to measure Walmart’s Scope 3 emissions, either absolutely or in year-over-year reductions.\n29 Calculated in accordance with Walmart’s Project Gigaton Accounting Methodology, available on the Walmart Sustainability Hub. Suppliers submit information during a Project Gigaton reporting season; figures reported are for the reporting season that took place during the corresponding fiscal year. Because Walmart does not restrict suppliers to reporting only on emissions avoidance and reduction efforts that are attributable to the suppliers’ business with Walmart, actions taken and reported through Project Gigaton cannot be used to measure Walmart’s Scope 3 emissions, either absolutely or in year-over-year reductions.\n## 36 Based on reports from Feeding America\n## 7 Based on reports from Feeding America.\n$^ { 2 7 }$ Annual Scopes 1 and 2 GHG emissions are updated from time to time in the ESG Climate Brief to account for changes in emission factors or the availability of more accurate activity data. Flipkart emissions data is excluded from Walmart’s Scope 1 and 2 emissions footprint and progress calculation. We believe excluding Flipkart’s data will have a negligible impact on the overall reporting. Our emissions footprint in $\\mathsf { C O } _ { 2 } \\mathsf { e }$ is calculated to include emissions for our operations for the period in which we owned the operations in the reporting year. This may result in updated emissions reported not corresponding to results reported to CDP for our annual Climate Change questionnaire.\n30 Based on review of material handling and waste diversion processes, as reported by waste vendors, food banks, and stores. In cases where certified or otherwise documented weights were not available due to industry challenges, they have been estimated based on waste audits, historical data, extrapolation for similar facilities in size and scope, etc.", "chunk_word_count": 513, "section_path": "Walmart \\* > 34 Facility color ratings denote the seriousness of findings identified in the audits.", "document_id": "Walmart ESG Highlights 2023", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 27, "chunk_text": "# Walmart \\*\n## 38 Total cash and in-kind donations includes combined philanthropic efforts of Walmart and the Walmart Foundation.\n39 Walmart measures its chemical footprint in terms of priority chemicals, or PCs based on supplier reports collected through UL WERCSmart for in-scope products sold. Walmart references regulatory and authoritative lists to determine priority chemicals. These lists can be found at https://www. walmartsustainabilityhub.com/sustainable-chemistry/implementation-guide/appendices. Our footprint covers in-scope formulated consumables products within beauty, personal care, baby, pet, and household cleaning products sold by Walmart U.S. stores and Sam’s Clubs in the U.S. In any given year, an increase or decrease in UPC volume weight disclosures may impact reporting. To learn about formulation disclosure, please visit Section 2: Transparency of our Sustainable Chemistry Implementation Guide.\nWalmart’s operational food waste reduction goal is aligned with Target 12.3 of the United Nations Sustainable Development Goal (SDG). Progress towards food loss and waste reduction goal measured in conformance with the Food Loss and Waste Protocol’s Food Loss and Waste Accounting Standard (FLW Standard) for quantifying food and/or associated inedible parts removed from the food supply chain. This figure is based on review of material handling and waste diversion processes, as reported by waste vendors, food banks and stores. In cases where certified or otherwise documented weights were not available due to industry challenges, they have been estimated based on waste audits, historical data, extrapolation for similar facilities in size and scope, etc. The 2016 baseline was adjusted to remove markets (Argentina, Japan, U.K.) that have since been divested; reported reduction is as against this adjusted baseline.\nWe engage Lucideon CICS to independently verify Walmart’s reported Scope 1 and Scope 2 emissions as reported to CDP annually, pursuant to ISO 14064-3 (the international standard for verification of Greenhouse Gas inventories). We follow Walmart’s Greenhouse Gas Inventory Methodology in calculating our GHG emissions, which is consistent with the principles and guidance of the World Resources Institute and the World Business Council for Sustainable Development’s Greenhouse Gas Protocol Initiative (“The GHG Protocol”) for corporate $_ { \\mathsf { G H G } }$ accounting and reporting. The $_ { \\mathsf { G H G } }$ Protocol outlines three emissions sources (referred to as “scopes”) that provide the framework for operational boundaries. The three scopes are:\n40 Metrics presented correspond with information reported in Walmart’s Annual Proxy Statements for the stated years; director metrics are based on nominees for election at the Annual Shareholders’ Meeting for each year.\n31 For the time frame of the private brands packaging survey, we instructed suppliers to use their latest or most recent 12-month period for which they have data available. If they reported last year, use the same reporting period as the initial/prior reporting year to avoid gaps or overlap with the prior year’s submissions. For suppliers that did not complete the survey or provided unusable data, proxy data was substituted to provide a full estimate of global private brand packaging. For the proxy calculation, a market level approach was used.\n41 Metrics presented correspond with information reported in Walmart’s Annual Proxy Statements for the stated years; director metrics are based on nominees for election at the Annual Shareholders’ Meeting for each year.", "chunk_word_count": 532, "section_path": "Walmart \\* > 38 Total cash and in-kind donations includes combined philanthropic efforts of Walmart and the Walmart Foundation.", "document_id": "Walmart ESG Highlights 2023", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Walmart ESG Highlights 2023.pdf", "chunk_idx": 28, "chunk_text": "# Walmart \\*\n## 38 Total cash and in-kind donations includes combined philanthropic efforts of Walmart and the Walmart Foundation.\nScope 1, “Direct Emissions,” represent emissions from the combustible fuels and other sources that occur directly on sites (e.g., refrigerants,) and mobile emissions sources.\nScope 2, “Indirect Emissions,” represent emissions that occur off-site to produce electricity or steam purchased for use at corporate locations.\n42 Walmart is a member of the Alliance for Connected Care and the American Telemedicine Association; we also are a member of the Consumer Technology Association.\n32 Based on review of material handling and waste diversion processes, as reported by waste vendors, food banks, and stores. In cases where certified or otherwise documented weights were not available due to industry challenges, they have been estimated based on waste audits, historical data, extrapolation for similar facilities in size and scope, etc. Original goal covered U.S., Canada, Japan, and the U.K., and now includes Mexico. Walmart divested its retail operations in the U.K. and Japan in February and March of 2021, respectively.\nScope 3, “Other Indirect Emissions,” represents emissions from activities down or upstream from a company’s core business such as product use, waste disposal, commuting, and business travel.\nScope 2 (market-based) emissions include the carbon reduction value of renewable electricity procured from onsite and offsite projects. To account for structural changes in our business, we strive to adjust our emission reduction progress on Scope 1 and 2 emissions to add or subtract emissions for entities acquired or divested in the year the acquisition or divestiture took place, including adjusting for previous years (including the baseline year).\n33 Where a facility is required to be disclosed to Walmart, “Active” status denotes that the supplier can use the facility for Walmart production.\n### Contact Us\nAdditional information about Walmart can be found by visiting us at corporate.walmart.com, on LinkedIn, and on Twitter.\nYour feedback is important to us. Email us at ESG_WMT@walmart.com.", "chunk_word_count": 323, "section_path": "Walmart \\* > 38 Total cash and in-kind donations includes combined philanthropic efforts of Walmart and the Walmart Foundation. > Contact Us", "document_id": "Walmart ESG Highlights 2023", "page": 42, "page_start": 42, "page_end": 43 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 0, "chunk_text": "# Acknowledgement of Indigenous Peoples\nWestpac acknowledges the First Peoples of Australia and recognises their ongoing role as Traditional Owners of the land and waters of this country, and we pay respect to Elders past and present. We extend that respect to Westpac’s Aboriginal and Torres Strait Islander employees, partners and stakeholders, and to the Indigenous Peoples in the other locations where we operate.\nIn Aotearoa (New Zealand) we also acknowledge tangata whenua and the unique relationship that Indigenous Peoples share with all New Zealanders as partners and custodians of their natural ecosystems under Te Tiriti o Waitangi.\n## Westpac’s reporting suite\n[IMAGE CAPTION] Annual Report\n[IMAGE CAPTION] Climate Report\nOur reporting suite brings together the Group’s financial, non-financial, risk and sustainability performance for the year. It includes the documents adjacent. Access the full suite online at westpac.com.au/2023annualreport.\n## About this report\nOur Climate Report outlines Westpac’s approach and strategies for addressing the risks and opportunities presented by climate change.\nThe report aligns with the TCFD recommendations covering governance, strategy risk management and metrics and targets. The appendices in the report include the methodologies for our NZBA targets and financed emissions calculations. Our separate Climate Change Position Statement and Action Plan which summarises our climate change strategy and transition plan is also in the Appendix.\nFY23 Results Presentation and Investor Discussion Pack\n[IMAGE CAPTION] Pillar 3 Report\nOur Sustainability Index and Datasheet, provides additional detail on some of the metrics in this report along with key sustainability metrics and how our reporting aligns with major reporting recommendations.\n## Sustainability Index and Datasheet\n## Corporate Governance Statement", "chunk_word_count": 266, "section_path": "Acknowledgement of Indigenous Peoples > Westpac’s reporting suite", "document_id": "Westpac 2023 climate report", "page": 2, "page_start": 2, "page_end": 2 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 1, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## Our approach to climate reporting\nOutlining our approach to managing climate change risks and opportunities is inherently challenging as measuring, reporting and setting targets on climate change is necessarily based on estimates, inexact data and currently available technology and methodologies. We have aimed to apply consistent principles in how we measure and report our climate metrics and set our targets but recognise that these are estimates and despite our best attempts it is not possible, or feasible, to be completely accurate. Nevertheless, it is vital that we undertake this analysis, including estimating our impact, setting targets and reporting on progress, so we can work towards our ambition to become a net-zero, climate resilient bank.\nAs a result, we ask readers of this report to consider these limitations, recognising our intent and the principles that we have set ourselves, not just the numbers. Over time, our climate-related reported data will change as new methodologies emerge, technologies change and our stakeholders become better at measuring their climate impact, risks and opportunities.\nAccordingly, we need to apply a disclaimer that this Climate Report contains climate-related and other forward-looking statements, including targets, commitments, plans, estimates, assumptions and metrics. While forward-looking statements naturally carry a degree of uncertainty, this is further exacerbated in climate reporting given the measurement difficulties highlighted above. These risks and uncertainties need to be considered when reading this report. For an explanation of forward-looking statements and the risks, uncertainties and assumptions to which they are subject, see ‘Disclosure regarding forward-looking statements’ in the Appendix.\nReferences to ‘Westpac’, ‘Group’, ‘Westpac Group’, ‘we’, ‘us’ and ‘our’ is to Westpac Banking Corporation ABN 33 007 457 141 and its subsidiaries unless stated otherwise.\nOperational greenhouse gas emissions data and targets are absolute market-based greenhouse gas emissions. Greenhouse gas emissions and energy consumption are reported for 12 month periods ended 30 June unless otherwise stated. All other data in this report is for the 12 months to 30 September 2023 or at 30 September 2023 and all dollar amounts are in Australian dollars, unless otherwise indicated.\n## “OUR PURPOSE IS CREATING BETTER FUTURES TOGETHER. ONE WAY WE ARE DOING THIS IS THROUGH OUR AMBITION TO BECOME A NET-ZERO, CLIMATE RESILIENT BANK.\nIn this report, we share our progress, challenges, and achievements, as we work towards a net-zero economy.”\n## WESTPAC CEO, PETER KING\n## CONTENTS\nMESSAGE FROM THE CEO\nAPPENDIX 48\ni Glossary 49 \nii Methodology – Direct scope 1 and 2 operational emissions and scope 3 upstream emissions 54 \niii Methodology– NZBA 2030 sector lending targets 64 \niv Methodology – Group financed emissions estimation 86 \nv Our climate change position statement and action plan 96 \nvi TCFD Index 111 \nvii Climate-related commitments, partnerships and memberships 112\nEXECUTIVE SUMMARY\nFY23 HIGHLIGHTS\nGOVERNANCE\nSTRATEGY\n## 1. Net-zero, climate resilient operations 2. Supporting customers’ transition to net-zero 3. Collaborate for impact\nRISK MANAGEMENT\nASSURANCE STATEMENT", "chunk_word_count": 484, "section_path": "Acknowledgement of Indigenous Peoples > Our approach to climate reporting", "document_id": "Westpac 2023 climate report", "page": 2, "page_start": 2, "page_end": 4 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 2, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## MESSAGE FROM THE CEO\nWe are dedicated to supporting customers in their transition to net-zero.\nWestpac has long been committed to addressing the risks of climate change and supporting the opportunities from transition.\nThe purchase of electricity from these facilities as well as from Ararat Wind Farm, along with our plans to source renewable electricity for our international offices, puts us on track to reach our global goal of sourcing the equivalent of all our direct global electricity demand from renewable sources by 20251 .\nWe were a founding member of the UN’s Environment Programme Finance Initiative (UNEP FI) over 30 years ago, we started measuring our direct greenhouse gas emissions in 2006, signed the Equator Principles in 2003 and were the first Australian bank to release a climate change position statement 15 years ago.\n## 2. Supporting customers’ transition to net-zero and to build their climate resilience\nAs a bank, we believe one of the largest impacts we can have is by working with customers to support their transition to a net-zero economy, as we shift our financed emissions to become net-zero by 2050, consistent with a $1 . 5 ^ { \\circ } \\mathrm { C }$ aligned pathway.\nWe are increasingly seeing the impacts of climate change, including from major floods and wildfires in Australia and around the world. Our teams saw this in Lismore, Australia, and Hawkes Bay, New Zealand, witnessing first-hand the immediate and longer-term impacts climate change is having.\nIn line with our commitment to the Net-Zero Banking Alliance (NZBA), we set further sector-level 2030 targets, and we now have targets set in eight of the nine NZBA carbon intensive sectors. The FY22 absolute financed emissions tied to these targets account for as much as $4 8 \\%$ of the Group’s total scope 1 and 2 financed emissions. Subject to data availability and a valid science-based pathway, we plan to set a target for the remaining NZBA2 carbon intensive sector, Aluminium, in 2025.\nFor Westpac to deliver its purpose of Creating better futures together, it is important we continue to support the transition to a net-zero economy by 2050 for our planet, customers, employees and the community. This is a global challenge, and we are committed to being part of the solution.\nThrough this Climate Report, we set out our plans and progress in a clearer way, as we work towards our ambition of becoming a net-zero climate resilient bank.\nWe are also here to partner with customers on the opportunities that a transition of this magnitude presents. Decarbonising the economy requires significant investment, and we have a big role to play helping customers as they implement their transition plans – such as developing new products and services, and through the provision of targeted funding.\nWithin this report, we outline our climate strategy which is underpinned by the three areas of focus.", "chunk_word_count": 484, "section_path": "Acknowledgement of Indigenous Peoples > MESSAGE FROM THE CEO", "document_id": "Westpac 2023 climate report", "page": 4, "page_start": 4, "page_end": 4 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 3, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## 1. Net-zero, climate resilient operations\nWe have continued to reduce our scope 1 and 2 emissions and our scope 3 upstream emissions, keeping us on track to meet our 2030 operational emissions targets.\nThis year we participated in $5 8 ^ { 3 }$ sustainable finance transactions4, launched a carbon footprint tracker in our Westpac app for retail customers to better understand their estimated carbon footprint, enhanced our electric vehicles (EV) loan in Australia and launched a new Sustainable Farm Loan and Sustainable Business Loan in New Zealand. The opportunities are there and growing.\nWe also reached an important milestone with the equivalent of $100 \\%$ of our Australian operational electricity demand now sourced from renewables from April this year.\nTo achieve this, we worked with suppliers, to support the development of new electricity generation capacity such as the Berri Solar Farm and Battery (SA) and Bomen Solar Farm in Wagga Wagga (NSW), rather than purchase existing renewable energy supply.\n66% SCOPE 1 AND 2 EMISSIONS Relative to 2021 baseline\n### Emerging focus\n## 3. Collaborating for impact\nRecognising the links between climate change and nature, we have also released our first Natural Capital Position Statement. The position statement recognises the importance of protecting nature and defines our ambition to become a nature positive bank. This is our first step in what is an emerging area, and more work is underway to understand our role and identify, measure and manage nature-related risks and opportunities.\nClimate change can only be solved by all stakeholders working together. Our third area of focus is therefore collaborating for positive impact with stakeholders both in Australia and globally. This includes governments, non-governmental organisations, communities and industry peak bodies.\nCollaboration is particularly important because we know the effects of climate change and impacts of the transition will be unevenly distributed across different parts of society. Our aim is to support a just and inclusive transition, that does not leave people behind. This will only be achieved if we are connected, listen and work together.\nThroughout this Climate Report, we also acknowledge the relationship with human rights and nature – key pillars of our refreshed sustainability strategy.\nTransparency and accountability are vital to our sustainability efforts. Having completed significant sector target-setting, our focus is on continuing to operationalise our plans and work with customers on their transition. We are committed to sharing our progress, challenges, and achievements in this report. We value your feedback and partnership as we collectively work towards a more sustainable future.\nAs the climate agenda evolves, we are working to shape the outcomes by participating in a range of initiatives and involvement in key standard setting bodies including as a founding member of the Australian Sustainable Finance Institute (ASFI), as co-Chair of the UNEP FI’s Banking Board which oversees the Principles for Responsible Banking (PRBs), and as a member of the steering and principals groups that govern the NZBA.\nSincerely,\nPeter King CEO\n### FY23 Highlights\n## 12 SECTOR LENDING TARGETS IN 8 NZBA SECTORS", "chunk_word_count": 508, "section_path": "Acknowledgement of Indigenous Peoples > 1. Net-zero, climate resilient operations", "document_id": "Westpac 2023 climate report", "page": 4, "page_start": 4, "page_end": 5 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 4, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## 58 \nSUSTAINABLE FINANCE TRANSACTIONS \nIN FY23\n2 YEARS ACHIEVED SCOPE 1 & 2 EMISSION REDUCTION TARGET TWO YEARS AHEAD OF 2025 PLAN 24 % SCOPE 1, 2 AND SCOPE 3 UPSTREAM EMISSIONS IN 2023\n### Building on our history of action\nTaking action on climate change has long been on Westpac’s agenda. As climate science has evolved, and the urgency for action increased, we have stepped up our actions and commitments.\nIn 2022, we substantially updated our Climate Change Position Statement and Action Plan (CCPS) and defined our ambition to become a net-zero, climate resilient bank. As part of this, we reiterated our commitment to reduce the climate impact of our own operations across our scope 1 and 2 emissions, and our scope 3 upstream emissions.\nOne of our priorities is to assist customers, and as part of this we are piloting a new framework for some of our higher emitting customers that supports engagement and assessment of their emissions reduction plans. We believe that in most instances, collaboration is the most effective approach to achieving transformation.\nWhile reducing our operational emissions is important, the biggest impact we can have is to reduce the emissions intensity of our lending portfolio, also known as scope 3 financed emissions. These represent over $9 9 \\%$ of the Group’s overall emissions. Given this, in July 2022 we joined the NZBA and set emission reduction targets in five emissions intensive sectors in our lending portfolio.\nTo account for progress, stakeholder feedback and evolving science, we further refined the commitments in our CCPS, including updating our positions for the thermal coal mining and oil and gas sectors that better reflect our approach to lending in these sectors. To be clearer on our approach to coal mining we have also published our position on metallurgical coal mining.\nIn 2023, we expanded our emission reduction targets while continuing the significant but complex job of supporting customers as they transition.\n2006\n2002\n## RISK MANAGEMENT\nGOVERNANCE\nIn alignment with our climate ambitions, we launched our first Natural Capital Position Statement (NCPS) defining our ambition to become a nature positive bank. In addition, as part of our new NZBA agriculture 2030 targets (beef, sheep and dairy), we also committed to no deforestation – this requires no more conversion of natural forest to agricultural land use within farm systems from 31 December 2025 for customers that are in the scope of our agricultural targets.\n## 2023 actions on climate change\n## 7 NEW NZBA EMISSION REDUCTION TARGETS\n## REFRESHED\n## CLIMATE CHANGE POSITION STATEMENT AND ACTION PLAN\nRecognising the significant opportunities of climate change we have published our Sustainable Finance Framework to better identify and classify green, transition, sustainability and social financing, and set new lending and bond facilitation targets1 linked to the framework.\n## PILOT FRAMEWORK FOR ASSESSING CUSTOMER TRANSITION PLANS\nIncreasingly, management of the risks and opportunities of climate change is being embedded across our business and climate change is also referenced across our various disclosures.\n1st NATURAL CAPITAL POSITION STATEMENT\n2019", "chunk_word_count": 510, "section_path": "Acknowledgement of Indigenous Peoples > 58 \nSUSTAINABLE FINANCE TRANSACTIONS \nIN FY23", "document_id": "Westpac 2023 climate report", "page": 6, "page_start": 6, "page_end": 7 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 5, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## FY23HIGHLIGHTS\n4% Reduced scope 3 upstream emissions over year1,2\n52% emissions over year 1\n### Our direct operations\nIn FY23 we reduced our direct scope 1 and 2 and scope 3 upstream emissions by improving the efficiency of our operations, consolidating commercial offices, operationalising agreements to source electricity from renewables and more actively working with suppliers. Since 2021 we have achieved a $6 6 \\%$ reduction in our scope 1 and 2 emissions, surpassing our 2025 target of a $64 \\%$ reduction by two years. From April this year we achieved a significant milestone sourcing the equivalent of $100 \\%$ of our Australian electricity demand from renewables.\n[IMAGE CAPTION] FIGURE 2: WESTPAC’S OPERATIONAL EMISSIONS (tonnes of ${ \\mathsf { C O } } _ { 2 }$ equivalent)\n## 100 % Source equivalent of 100% of Australian direct electricity demand from renewables from April 2023³\n## CERTIFICATION4\nUnder Climate Active and Toitū net carbonzero\n### Financed Emissions\nWe have further enhanced our models for calculating the Group’s overall financed emissions as the understanding of our impact evolves.\nUnder our NZBA commitment to transition our lending portfolio to net-zero by 2050, we set seven new 2030 sector targets and expanded our discussions with customers to better understand their transition plans.\nFossil fuel energy value chain 0.6% TCE (as a % of total Group TCE)\n3% Estimated financed emissions for FY23\nA summary of our updated positions for key emitting sectors includes:\n— For thermal coal mining – zero lending to institutional customers with a high portion of their revenue $( \\geq 1 5 \\% )$ ) coming directly from thermal coal mining by 30 September 2025.\n— For upstream oil and gas – subject to national energy security, no project finance or bond facilitation for the development of new (greenfield) or expansionary oil and gas fields, including new associated dedicated infrastructure unless in accordance with the IEA’s NetZero by 2050 (2021) scenario.\n\\$127b n Total committed exposure (TCE) to carbon intensive sectors¹ ( $1 0 . 4 \\%$ of total Group exposure)\n7% to fossil fuel energy value chain over year²\n— For metallurgical coal mining – no project finance for new (greenfield) projects.\nSee page 29 for full details of the sector positions including definitions and footnotes.\n### Opportunities\nWe supported customers with 58 sustainable finance transactions in FY23. We also provided $\\$ 6.5$ billion in new lending to climate change solutions from September 2020 to September 2023 well ahead of our target of $\\$ 3.5$ billion.\nWe launched a comprehensive Sustainable Finance Framework to set out how we assess what is green, transition, social and sustainability financing and have backed that with new sustainable finance targets out to 2030.\n## 2030 TARGETS IN 8 OF 9 NZBA SECTORS\nWe have achieved a lot this year, but acknowledge we have more to do, including engaging with customers on their transition plans and strengthening our climate scenario analysis.\n## GOVERNANCE\nFor some time, Westpac has been working to integrate climate change risks and opportunities into our operations – this starts with our governance.\nHighlights\n## CLIMATE RELATED MEASURES", "chunk_word_count": 523, "section_path": "Acknowledgement of Indigenous Peoples > FY23HIGHLIGHTS", "document_id": "Westpac 2023 climate report", "page": 8, "page_start": 8, "page_end": 10 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 6, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## CLIMATE CHANGE IN OUR GOVERNANCE AND BUSINESS\nINCLUDED IN SHORT TERM VARIABLE REWARD FOR THE CEO AND CERTAIN GROUP EXECUTIVES\n1st CLIMATE REPORT\n### Board oversight of climate-related risks and opportunities\nThe Board approves our key climate change policies such as our updated CCPS and our NCPS as part of their oversight over our sustainability strategy. This is outlined in the Risk Management section of this Report.\nThe Board and its Committees also receive regular reports from the CEO, Group Executives, and second and third-line risk functions on climate-related matters.\nThe following is an outline of key climate change related matters that were considered by the Board and its Committees in FY23.\n### TABLE 2: KEY CLIMATE-RELATED AGENDA ITEMS FOR THE BOARD AND ITS COMMITTEES IN FY23\nIn relation to Board skills, five directors have deep experience and knowledge in the ‘Environment & Social’ skill category, and three have general working experience and knowledge, as set out in the Board skills matrix in the Strategic Review and Corporate Governance Statement.\nWe have ESG performance measures in short term variable reward for Executives. This includes measures relating to the Group’s Customer Outcomes and Risk Excellence program and to climate change.\nThis year, we introduced new climate related measures for the CEO and Group Executives that support the implementation of our climate change plans.\n### Management of climate-related matters\nThe day-to-day management of Westpac’s approach to climate change is the responsibility of the CEO and is delegated to Group Executives and senior management where appropriate. The CEO and senior management work to integrate the assessment of risks and opportunities of climate change into our operations and ensure our people understand their role in supporting the Group and customers in meeting our collective climate ambitions.\nA range of committees help assess climate-related matters and support executive management in their decision making These are summarised below.\n## TABLE 3: COMMITTEES INVOLVED IN ASSESSING/ADVISING ON CLIMATE CHANGE RISKS AND OPPORTUNITIES\nOperational management of climate-related matters is delegated to teams across the Group with key responsibilities utlined below.\nOUR LONG-TERM POWERPURCHASE AGREEMENTSOURCING FROM BERRI \nSOLAR FARM AND BATTERYWAS THE FINAL STEP \nENABLING US TO ACHIEVEOUR 100% NATIONAL \nRENEWABLES OUTCOME.\n## STR AT EGY EGY\nOur climate ambition is to become a net-zero climate resilient bank. This includes transitioning our operational and financed emissions, and aligning our lending portfolio to net-zero by 2050 consistent with a $1 . 5 ^ { \\circ } \\mathbb { C }$ pathway, while aiming to strengthen our climate change resilience.\nThree areas of action in our CCPS:\n2\n1\n## NET-ZERO, CLIMATERESILIENT OPERATIONS\nSUPPORTING CUSTOMERS’ TRANSITION TO NET-ZERO AND TO BUILD THEIR CLIMATE RESILIENCE\n3\nCOLLABORATE FOR IMPACT ON INITIATIVES TOWARD NET-ZERO AND CLIMATE RESILIENCE\n### How we set our strategy and targets", "chunk_word_count": 468, "section_path": "Acknowledgement of Indigenous Peoples > CLIMATE CHANGE IN OUR GOVERNANCE AND BUSINESS", "document_id": "Westpac 2023 climate report", "page": 10, "page_start": 10, "page_end": 14 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 7, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## THE PARIS AGREEMENT\nIn pursuit of net-zero emissions we have set 2030 targets to reduce our scope 1 and 2 emissions and scope 3 upstream emissions.\nThe Paris Agreement was reached in 2015; one of the agreement’s central aims is to limit the increase in global average temperatures this century to well below $2 ^ { \\circ } C$ above pre-industrial levels and pursue efforts to limit the temperature rise to $1 . 5 ^ { \\circ } \\mathrm { C }$ above pre-industrial levels. Subsequently, the Intergovernmental Panel on Climate change has underscored the urgency of attaining the $1 . 5 ^ { \\circ } \\mathrm { C }$ goal.\nOur biggest impact on climate however is related to our financing activities and while we have been working to reduce the emissions intensity of our lending portfolio for some time, significant work is required to reach net-zero.\nWe joined the NZBA last year to accelerate our efforts and have set interim targets in some of the most emissions intensive sectors. We continue work to operationalise these targets. At Westpac, this is about working in step with customers, supporting them in their transition such as by providing products, incentives and insights.\nOur aspirations are connected to the belief that we need to limit global warming to $1 . 5 ^ { \\circ } \\mathrm { C }$ above pre-industrial levels by 2100, which needs to be achieved if the global economy transitions to reach net-zero emissions by 2050. This also aligns with our NZBA commitments.\nWe view climate change not just as a risk but as an opportunity. This perspective is supporting our efforts to mobilise the capital needed to transform our nation’s energy infrastructure and finance customers on their journey to a lower carbon future. This opportunity is reflected in our new sustainable finance targets of $\\$ 55$ billion in lending and $\\$ 40$ billion in bond facilitation by 20301 .\nIn the past year however, interactions with some of our major customers have highlighted some challenges. These challenges are due to a range of factors including limitations in available technologies, especially in industries that are difficult to decarbonise.\nWe will continue to engage with customers to better understand their evolving decarbonisation strategies. Alongside this we will monitor sector developments, emerging science and government policy to work with customers on how to tackle these concerns.\nWe aim to achieve this transition in a just and inclusive way that is mindful of potential adverse impacts on some people and communities, and that seeks to support nature positive outcomes. Our strategy also recognises the need to not only seek to lead by our actions, but to collaborate with stakeholders including customers, communities, industry groups and governments to inform the development of common methods and to encourage change – collective action is vital.\nThis report details our strategy while setting out our actions on key climate change related risks and opportunities for our business, customers, and the communities in which we operate. Our plans will help us deliver our NZBA commitment and have been informed by the Glasgow Financial Alliance for Net Zero (GFANZ) recommendations.", "chunk_word_count": 529, "section_path": "Acknowledgement of Indigenous Peoples > THE PARIS AGREEMENT", "document_id": "Westpac 2023 climate report", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 8, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## THE PARIS AGREEMENT\n[IMAGE CAPTION] FIGURE 3: OUR ESTIMATED CARBON FOOTPRINT(MEASURED AS $\\mathbf { c } \\odot _ { 2 } { \\cdot } \\mathbf { e } )$\n### Understanding our carbon footprint\nTo achieve our net-zero goals, we must understand our carbon footprint so we can take meaningful action by identifying where and how we can make the most difference.\nOur carbon footprint is a best estimate of the greenhouse gas emissions generated directly or indirectly by Westpac. It is subject to inherent uncertainty from both limitations in the availability of relevant source data and methodologies; and the incomplete and evolving scientific knowledge underpinning these estimates. We expect reporting quality to improve over time as mandatory reporting is introduced for businesses although it may be some time before reliable household level data is available.\nThe assessment of our carbon footprint is detailed and complex but can be summarised under several categories. The opposite diagram summarises these.\nThe methodologies for calculating our scope 1 and 2 emissions are supported by long-established domestic and international standards. Our scope 3 upstream emissions include sources detailed in our Sustainability Index and Datasheet. Determining the boundary of our scope 3 upstream emissions has challenges given the number of diverse counterparties, difficulties in tracing emissions and the availability of data. As a result, we are reviewing our scope 3 upstream emissions which is expected to result in further expansion of our emissions profile in subsequent reporting.\nOur scope 3 financed emissions represent the emissions attributable to us due to our lending activities. To estimate financed emissions, we first determine the emissions of customers we lend to and then calculate our portion using TCE or outstanding balance (depending on the sector). Refer to the Appendix for details and definitions. Determining our financed emissions aids in shaping our sector-specific targets, in line with our NZBA commitment, and helps us to better understand and manage our broader climate impacts, risks, and opportunities. Given our substantial lending portfolio, this is our most significant potential to reduce our emissions profile.\nTo estimate our financed emissions, we reference the principles set out in the PCAF’s Global GHG Accounting and Reporting Standard1 and integrate a combination of internal and external data sources. By referring to a recognised standard, we aim to provide disclosure that is consistent, comparable, reliable, and clear. Each year we work to improve the quality of our reporting as measured under PCAF, and for FY23 our score was 4.2, an improvement on the 4.3 score in full year 2022 (FY22) (using the five-point PCAF scale).\n• Electricity T&D losses • Air travel, taxis and couriers • Base building electricity • Paper consumption and disposal • Waste to landfill\nIn accordance with the GHG Protocol Scope 3 Standard, no downstream emissions categories other than category 15 – Investments (which includes financed emissions) have been assessed as relevant scope 3 activities for Westpac’s carbon footprint.\nOur GHG estimation methodologies are detailed in the Appendix.\nOur direct emissions from owned or controlled source\nFinanced emissions\nFacilitated emissions\nOur indirect emissions associated with our downstream activities related to lending. These are our share of the emissions generated by our customers (customer scope 1 and 2 emissions and some customers' scope 3 emissions).\nOur downstream emissions related to our capital markets activities such as bond origination. These are not currently calculated as there is no standard methodology available for determining facilitated emissions.", "chunk_word_count": 575, "section_path": "Acknowledgement of Indigenous Peoples > THE PARIS AGREEMENT > Understanding our carbon footprint", "document_id": "Westpac 2023 climate report", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 9, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## THE PARIS AGREEMENT\n### Understanding our carbon footprint\n• Refrigerants \nStationary energy (natural gas, diesel, LPG) \nTransport energy, fleet fuels\nOur measurement of financed emissions excludes non-mortgage personal lending, lending to governments and some government-owned entities (as defined by government-related ANZSIC codes), and investments related to our significant liquidity portfolio.\n### Climate change and natural capital\n### Climate change and human rights\nThe world’s natural capital is under threat as the stocks of natural resources decline and more critical habitats are placed under pressure. As with climate change, we can play a role in helping to conserve nature and reduce natural capital loss. We are now working to better understand these impacts including how they may impact our customers and our business. It is clear that climate change is impacting nature and vice versa, and so it is important to consider this connection in our plans.\nClimate change brings about physical and transitionrelated risks and opportunities that can affect us all. As we adapt and the economy moves towards net-zero, it will be important to do so in a way that respects human rights and minimises negative human rights impacts. Inequality may arise because the impacts of climate change are likely to be more pronounced for regions at risk of increasing drought, displacement by floods, rising sea levels, or in communities reliant on emissions-intensive industries. Impacts also exist for those involved in energy supply chains (such as workers in the mining of critical minerals). Vulnerable customers and communities may also be disproportionately impacted by the effects of climate change as they are unable to adequately fund climate mitigation, or bear the costs associated with transition.\nWe continue to participate in key UNEP FI pilot initiatives and are a forum member of the Taskforce on Naturerelated Financial Disclosures (TNFD). This year we have also released our first NCPS which defines our ambition to become a nature positive bank. This is our first step as we build our understanding of the complex interplay between climate change and nature along with the risks and opportunities for our business and customers. This work will continue in the year ahead.\nOur Human Rights Position Statement and Action Plan (HRPS) includes our commitment to respect the human rights of our stakeholders as well as those that may be impacted by our activities. The HRPS guides our approach. In practice, we continue to support customers impacted by natural disasters, and are seeking to integrate human rights considerations into our climate change approach. This includes plans to develop the principles that will guide decision making, engage with customers in affected industries/regions, and training our people to identify and respond to potential social and human rights related risks.\n[IMAGE CAPTION] Natural Capital Position Statement\n[IMAGE CAPTION] Human Rights Position Statement and Action Plan\nIt is important that the impacts of climate change, nature and human rights be considered together.", "chunk_word_count": 486, "section_path": "Acknowledgement of Indigenous Peoples > THE PARIS AGREEMENT > Understanding our carbon footprint", "document_id": "Westpac 2023 climate report", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 10, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## HOW CLIMATE CHANGE INTERACTS WITH OTHER ESG THEMES\n### Intersection of themes\n— How vulnerable customers may be more affected by physical risks of climate change Transition risks can impact individuals, sectors and communities differently\nIn developing our Position Statements, we are increasingly considering how various ESG themes interact. This includes:\n— Governance \n— Considering the management of risk \n— Training programs\n### Examples of how we may respond\n— Considering a just and inclusive transition — Continuing to support customers impacted by natural disasters; including disaster relief packages\n### Climate Change\n### Human Rights\nBecome a net-zero climate resilient bank\nRespect and advance human rights\n### Natural Capital\nBecome a nature positive bank\n### Intersection of themes\n— Climate and natural capital are closely linked — Positive climate outcomes support nature and vice versa\n— Indigenous people’s stewardship role, and traditional knowledge in protecting land and nature — How natural capital loss can impact individuals and communities unevenly\n### Examples of how we may respond\n— No deforestation under NZBA agriculture targets for customers in scope — Carbon credits to offset our operational emissions include native forest regeneration\n— Better understanding free prior and informed consent (FPIC) of Indigenous peoples \n— Working to assess human rights risks related to natural capital losses\nWe are committed to reducing the climate change impacts of our operations through the reduction of our scope 1, 2 and scope 3 upstream emissions.\nOur medium and longer term targets:\n 64% 76%\nREDUCE OUR SCOPE 1 AND 2 ABSOL EMISSIONS $64 \\%$ BY 2025 FROM OUR 20211 BASELINE\nREDUCE OUR SCOPE ABSOLUTE EMISSIONS $76 \\%$ BY 2030 FROM OUR 20211 BASELINE\n50% REDUCE OUR SCOPE 3 UPSTREAM ABSOLUTE EMISSIONS BY $50 \\%$ BY 2030 FROM OUR 2021 BASELINE1,2\n### Reducing our direct impact\nThis year we reduced our scope 1 and 2 emissions by $52 \\%$ and our scope 3 upstream emissions1 by $4 \\%$ .\nThe reduction in our scope 1 and 2 emissions was driven by the progress on our renewables program, and property consolidation to more efficient locations. For example, we have reduced the number of commercial offices and centralised our Western Sydney locations into the 6-star energy rated Parramatta Square office tower.\nWe have already achieved our 2025 scope 1 and 2 emission reduction target, two years ahead of schedule. The full period impact of our renewable energy program will lead to a further reduction in our scope 2 emissions as we work towards our 2030 target.\nOur scope 3 upstream emissions reduction was also supported by our renewables program, as well as increased levels of renewables sourcing in our supply chain. Other drivers included improvements in the data linked to our secure waste disposal and from lower working from home emissions as corporate site attendance increased. These reductions were partly offset by increases in travel emissions and in employee commuting as these activities increased post-COVID.\nA summary of plans and our 2023 progress is in the table below. Our full action plans are outlined in our CCPS in the Appendix.", "chunk_word_count": 516, "section_path": "Acknowledgement of Indigenous Peoples > HOW CLIMATE CHANGE INTERACTS WITH OTHER ESG THEMES", "document_id": "Westpac 2023 climate report", "page": 19, "page_start": 19, "page_end": 21 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 11, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## 1. NET-ZERO, CLIMATE RESILIENT OPERATIONS\nWe are working with suppliers to deliver wider community and environmental benefits under our renewables program. This includes the $\\$ 1$ million community fund under our Spark Infrastructure/Bomen Solar Farm agreement (see below).\n### Our approach to renewables\nIn delivering our target to source the equivalent of $100 \\%$ of our direct electricity demand from renewable sources, we’ve aimed to support the development of new renewables capacity, rather than only purchasing from existing generation facilities. This has involved us working with suppliers over many years to contract renewable energy capacity under virtual power purchase agreements including from the Bomen Solar Farm in Wagga Wagga, New South Wales and the Berri Solar Farm and Battery in South Australia.\nA further community fund has been established between Westpac and Flow Power in relation to the Berri Solar Farm and Battery in South Australia (Berri Energy Project). This fund will be used to deliver social and environmental initiatives for the local community of Berri in the next 12 months.\nAs these sites became operational the portion of our global electricity from renewables has risen from $45 \\%$ in 2021 to $70 \\%$ this year and we expect to see it rise further next year.\nFrom April 2023, we are now sourcing the equivalent of $100 \\%$ of our Australian electricity demand from renewable sources.\nWhile over $80 \\%$ of our direct electricity demand is in our Australian operations, our objective is not yet complete, and work is underway so that the equivalent of $100 \\%$ of our electricity is sourced from renewables globally by 30 September 2025. Our plan is to source the renewable electricity in the markets where that energy is consumed. We are on track to reach $9 5 \\%$ local sourcing and we will continue to identify opportunities to lift this to $100 \\%$ , to include our Fiji and PNG businesses.", "chunk_word_count": 323, "section_path": "Acknowledgement of Indigenous Peoples > 1. NET-ZERO, CLIMATE RESILIENT OPERATIONS", "document_id": "Westpac 2023 climate report", "page": 22, "page_start": 22, "page_end": 22 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 12, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## RE-GREENING NEAR THE BOMEN SOLAR FARM\nUnder Westpac’s Bomen Solar Farm agreement with Spark Renewables, a \\$1 million community fund was established with a goal of giving back to the community.\nIncluded in the fund’s initiatives is a 10-year high school program to improve local educational outcomes, a newly built fire shed for the local RFS, installation of solar panels for a local community facility, support of a university research trial into solar and agriculture and a major biodiversity project which involves funding the planting of 50,000 trees, shrubs and grasses to regreen a site in the local Wagga Wagga area. Plantings are already around 60% progressed and due to be completed by the end of 2025.\n### Carbon offsetting\nWhile our priority is to reduce direct emissions, we recognise that carbon credits and sequestration supported by a global carbon credit market can play a role in reducing emissions.\nOur Australian operations are certified under the Australian Government’s Climate Active Carbon Neutral Standard for Organisations. For our New Zealand operations, we are certified under the Toitū net carbonzero programme. We have purchased carbon credits to offset residual emissions as required for our certifications since 2012. Westpac NZ has also offset its operational emissions since 2019, in line with Toitū programme requirements.\nWe review our purchased carbon credits for quality. The credits retired to offset our operational carbon emissions under the Australian standards are listed in our Climate Active Public Disclosures Statement1 . The credits retired align with the eligible offsets units under the Climate Active Carbon Neutral standard for our Australian emissions footprint and were $100 \\%$ Australian Carbon Credit Units (ACCUs) in the 2023 period.\n## 1. NET-ZERO, CLIMATE RESILIENT OPERATIONS\n### OPERATIONAL GREENHOUSE GAS (GHG) EMISSIONS BEFORE CARBON CREDITS $( t \\mathsf { c o } _ { 2 } \\mathsf { - e } ) ^ { 1 }$\nBelow is a summary of our operation and upstream emissions. Refer to our 2023 Sustainability Index and Datasheet for our complete set of GHG data and the Appendix for our methodology and scope 3 category inclusions.\n### Improving our climate resilience\n### Collaborative engagement\nWe have completed an assessment of the physical risks of climate change to our property under a range of scenarios. This includes several IPCC Representative Concentration Pathways (temperature increase scenarios). In FY24 we plan to build on this by developing plans to mitigate and manage these risks and integrate into how we operate. For our branch network and corporate sites this is expected to include improvements in how we select site locations along with more resilient construction and fit-out standards.\nRecognising the need to work collaboratively with stakeholders to address climate change we have actively participated in various forums throughout the year. In these engagements we have shared our insights and experiences on our direct environmental program, our approach to renewables and how we are addressing carbon credit procurement to support suppliers, customers and investors with their climate programs.\nThis includes seeking to support our banking customers and key suppliers with their renewable energy procurement strategies by sharing our direct sourcing experience.\n## 2. SUPPORTING CUSTOMERS’ TRANSITION TO NET-ZERO\n## 12 TOTAL NZBA SECTOR LENDING TARGETS", "chunk_word_count": 538, "section_path": "Acknowledgement of Indigenous Peoples > RE-GREENING NEAR THE BOMEN SOLAR FARM", "document_id": "Westpac 2023 climate report", "page": 22, "page_start": 22, "page_end": 25 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 13, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## 84 % \nOF ELECTRICITY GENERATION LENDING EXPOSURE IS TO \nRENEWABLE ENERGY \n(BASED ON TCE)\nTo meet our NZBA commitments we must partner with customers on their transition.\nSUSTAINABLE FINANCE TARGETS BY 2030 \\$40b n BOND FACILITATION\n\\$55b n LENDING\n### Supporting customers\nAs a bank, one of the most important roles we can play in the transition to net-zero is to support customers in their transition and climate resilience.\nOur goal, to become the transition partner of choice for customers, means partnering with them and providing support on their plans and mobilising capital to drive the transition.\nUnder this priority area, we are working to:\na) Reduce our financed emissions; \nb) Become the transition partner of choice; and \nc) Help customers and communities build resilience to the physical impacts of climate change. A summary of our actions and the progress against each is in the following table.\n## TABLE 10: ACTIONS TO SUPPORT CUSTOMERS’ TRANSITION TO NET-ZERO\n## 2. SUPPORTING CUSTOMERS’ TRANSITION TO NET-ZERO\nThe changes in our data sources, modelling and estimation processes mean that our calculation approach in FY23 differs from that of prior years and so movements in results should be assessed carefully. At the same time, because our approach is largely top down and seeks to cover the majority of our lending, the outcomes are not directly comparable to the estimated financed emissions for our NZBA targets. This is due to the narrower boundaries for our NZBA targets and the use of more granular company information in particular for those targets expressed as emissions intensities.\n### Understanding our financed emissions\nFinanced emissions are the emissions that can be associated with our lending activities. Under our approach, we estimate the absolute financed emissions, and emissions intensity, of loans in our Australian and New Zealand Business and Institutional lending and residential mortgage portfolios. We principally estimate scope 1 and 2 financed emissions and these are presented in Table 11. We also estimate scope 3 financed emissions for a subset of our portfolio that are considered most relevant, and where reliable data is available.\nWe will continue to refine our approach to estimating financed emissions, as data sources and measurement methodologies improve.\nIt is important to emphasise that determining financed emissions poses challenges due to data limitations and availability of applicable methodologies. However, this effort remains vital for gaining insight into our carbon footprint and supporting informed actions. In FY23, we have continued to develop the methodologies and capture of data used to measure and report the Group’s financed emissions, and as a result, our average PCAF data quality score across the total assessed lending portfolio is 4.2 for our estimated portion of customers’ scope 1 and 2 financed emissions. This is an improvement in our PCAF data quality score of 4.3 for FY22.", "chunk_word_count": 471, "section_path": "Acknowledgement of Indigenous Peoples > 2. SUPPORTING CUSTOMERS’ TRANSITION TO NET-ZERO > Understanding our financed emissions", "document_id": "Westpac 2023 climate report", "page": 26, "page_start": 26, "page_end": 28 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 14, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## 2. SUPPORTING CUSTOMERS’ TRANSITION TO NET-ZERO\n### Calculating financed emissions\nIn calculating financed emissions for our targets we have typically used a customer’s TCE (excluding certain markets exposures, see Glossary for full details), which is a broad definition of lending capturing certain other non-lending commitments. For some sector targets, we use drawn balances to estimate financed emissions, notably for residential real estate. We have not calculated facilitated emissions (debt capital markets activity) in our assessment as there is no widely agreed methodology. In looking at customers included in our calculations we have excluded government and finance customers, as well as customers in Westpac Pacific (which by nature is a small part of our portfolio).\nIn FY23, the absolute financed emissions of our total assessed lending is estimated at ${ 3 9 . 4 } \\ M \\mathrm { t C O } _ { 2 }$ -e (the sum of scope 1 and 2 and scope 3 of 26.1 and 13.3) for the FY23 year. Among these sectors, Manufacturing, Mining, Agriculture, Utilities and Residential Mortgages account for the largest share of absolute financed emissions.\nIn aggregate, absolute financed emissions as estimated were down modestly over FY23 (down $3 \\%$ ) while the emissions intensity of the portfolio is estimated to have declined to $0 . 0 4 7 \\ k { \\mathfrak { g } } { \\mathsf { C O } } _ { 2 } .$ e per $\\$ 9$ of lending in FY23 from 0.052 ${ \\mathsf { k g C O } } _ { 2 }$ -e in FY22.\nMovements in our absolute financed emissions estimates, as well as the emissions intensity between FY22 to FY23, have been due to a combination of:\n— changes in total committed exposure; \n— changes in the portfolio mix (some sectors are more emissions intensive than others); and — changes to emissions intensity factors, data and methodologies.\nIt is important to exercise care when comparing financed emissions data over time, as advancements in modelling, changes in methodologies, and the use of different data sources, can affect estimates. This holds especially true when considering specific sectors.\n### NZBA target coverage ratio for FY22\nUp to $48 \\%$ of our estimated scope 1 and 2 financed emissions for FY22 relate to customers and industries that are captured in our NZBA emission reduction targets. When we incorporate scope 3 emissions into this calculation, the percentage stands at $45 \\%$ , but this figure is less reliable as scope 3 emissions estimates across sectors are incomplete (see Table 11).\n### Our NZBA commitment\nIn seeking to reduce our scope 3 financed emissions, we joined the NZBA and have now set 12 (2030) interim emission reduction targets related to our lending across eight of the nine NZBA carbon intensive sectors.\nThe below table summarises our targets – detailed information on each target is in the Appendix.", "chunk_word_count": 488, "section_path": "Acknowledgement of Indigenous Peoples > 2. SUPPORTING CUSTOMERS’ TRANSITION TO NET-ZERO > Calculating financed emissions", "document_id": "Westpac 2023 climate report", "page": 28, "page_start": 28, "page_end": 30 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 15, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## TABLE 12: WESTPAC NZBA 2030 SECTOR LENDING TARGETS\n### Our Sector Positions\nAs we strive to achieve our net-zero ambition, it is vital that we focus on our NZBA targets and respond to the globe’s immediate climate change concerns.\nConsistent with this, we have updated our sector-specific positions which provide explicit and restrictive criteria for evaluating new and renewal of fossil fuel financing. The positions recognise the unique characteristics of each sector and their role in Australia and New Zealand’s decarbonisation journey.\nA summary of our positions are below and further detail can be found in the Appendix: Methodology.\n## 2. SUPPORTING CUSTOMERS’ TRANSITION TO NET-ZERO\n### Operationalising our targets\n### Oil and Gas customer engagement\nSince committing to the NZBA we have been building the foundations to achieve our targets, including by:\nOver FY23, we engaged with upstream oil and gas customers to gain insight into their transition plans. While the sector is making progress in developing emission reduction plans and achieving reductions to scope 1 and 2 emissions, we recognise there are challenges in establishing scope 3 reduction plans.\n— Improving the capture, storage and analysis of data relevant to our sector lending targets; \n— Incorporating net-zero considerations into our frameworks, including our ESG risk assessment tools; \n— Updating our sector positions for certain fossil fuel sectors; \n— Development of detailed sector models allowing us to better report and manage our targets; \n— Building capability to manage the targets and train our bankers; and \n— Engaging with customers to understand their transition plans\nThrough our engagement we deepened our understanding of how challenging it will be for the sector to establish $1 . 5 ^ { \\circ } \\mathrm { C }$ -aligned transition plans covering scope 1, 2 and 3 by 30 September 2025. We will engage further to understand our customers’ evolving decarbonisation strategies. Alongside this, we will also continue to monitor, assess and be guided by the latest science and government policy, while considering energy security and affordability.\n### Assessing our progress\nAfter beginning to set our targets and baselines in FY22, we can begin to report progress. The following table summarises progress, noting that some of our most recent targets have only just been approved and so we are limited in what we can say.\n### Assessing transition plans", "chunk_word_count": 391, "section_path": "Acknowledgement of Indigenous Peoples > 2. SUPPORTING CUSTOMERS’ TRANSITION TO NET-ZERO > Operationalising our targets", "document_id": "Westpac 2023 climate report", "page": 30, "page_start": 30, "page_end": 32 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 16, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## 2. SUPPORTING CUSTOMERS’ TRANSITION TO NET-ZERO\n### Customer engagement\nReviewing and assessing customer transition plans is important for us to manage and achieve our NZBA emission reduction targets. This will help us understand where a customer is on their transition journey and whether we can further support them.\nDiscussing ESG matters is now a routine part of our engagement with Institutional customers. Discussions have focused on a range of matters, including decarbonisation plans, environment, human rights and sustainable finance.\nAs part of this, we have specifically engaged with our top 100 emitting customers1 to discuss their emissions reduction initiatives along with the challenges faced in implementing their plans.\nTo aid our evaluation, we have reviewed global climate frameworks like Climate Action $1 0 0 +$ , GFANZ guidance and the Transition Pathway Initiative to create a pilot transition plan assessment framework for Institutional customers. The framework’s five components seek to serve the dual purpose of evaluating transition plans and enhancing engagement.\nWe have also sought to explain our targets, share our experiences across other sectors and discuss how we may provide support, including through provision of sustainable finance.\nThis year we applied this pilot framework to 20 of our high emitting Institutional customers and we aim to apply the framework across key Institutional customers in emissions intensive sectors in the year ahead. This includes upstream oil and gas customers.\nThis engagement has been particularly important for customers in high-emitting sectors so we can appreciate their plans and they can understand our targets and positions.\nThis year we’ve also engaged with some of our Business Banking customers, particularly those in the Agribusiness and Commercial Property sectors where our net-zero targets apply. Given the breadth and diversity our Business and Consumer portfolios, we’ve complemented our customer engagement by working closely with industry groups and bodies to help drive a collaborative and coordinated approach. We’ll continue to engage with both industry and customers as part of our net-zero implementation work in FY24.\nTable 15 outlines the framework and our initial findings. As we use the framework we will continue to refine it considering evolving standards and to reflect the needs of different sectors. Applying this framework will help guide our approach to the future support we provide.\n### The climate change opportunity\n## 58 SUSTAINABLE FINANCE TRANSACTIONS2 SUPPORTING OUR INSTITUTIONAL CUSTOMERS\nFor a major bank, climate change presents substantial possibilities in supporting customers’ transition and facilitating the funding needed to decarbonise our energy infrastructure, and to improve climate resilience.\nWe aim to be the trusted transition partner for customers, offering the financial support and essential insights to support their decarbonisation. Achieving this requires close collaboration across governments and industry to establish the proper standards, frameworks and polices that will underpin and facilitate this transition.", "chunk_word_count": 467, "section_path": "Acknowledgement of Indigenous Peoples > 2. SUPPORTING CUSTOMERS’ TRANSITION TO NET-ZERO > Customer engagement", "document_id": "Westpac 2023 climate report", "page": 33, "page_start": 33, "page_end": 34 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 17, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## INCLUDED\nWITH OTHER JOINT LEAD MANAGERS WE DISTRIBUTED \\$4.7b n OF DIRECT LENDING \\$14.1bn OF SUSTAINABLE BONDS2\n### Sustainable products\nCustomers are already using our products and services to reduce their emissions and improve resilience, this has included:\nMost of the new lending this year was in green buildings and renewable energy projects. Increases were also recorded across low carbon transport, adaptation and energy efficiency.\n— Consumers using their mortgage or personal loan to install solar panels and batteries or improve the energy efficiency of their home. \n— Many businesses are using existing products to improve their energy efficiency or increase their climate resilience. \n— Last year we launched a new loan for the purchase of electric vehicles in Australia. This year we partnered with Chargefox – Australia’s largest vehicle charging network – to provide 1,250 kilowatt hours (approximately 7,000km of driving) of free charging for those taking out an EV loan. We are already supporting farmers to diversify their operations, by expanding into new locations or agricultural activities. This includes helping to finance infrastructure upgrades, for fencing and water, to allow farmers to manage livestock operations through changing seasonal conditions.\nWhile we have more to do to expand the range of specific climate products in Australia, WNZL continues to make progress in offering practical solutions for customers to be more sustainable and resilient. Development over FY23 in WNZL has included:\n— A Sustainable Farm Loan to accelerate farm sustainability and resilience. — A Sustainable Business Loan to provide discounted lending on green or social initiatives such as energy efficient buildings, native plantings or affordable housing. — Expanded its sustainable lending program. The rebranded Greater Choices Home Loan is an interestfree loan for up to five years to eligible customers for purchasing electric vehicles (EVs), energy-efficient upgrades like heat pumps, insulation, solar panels and rainwater tanks. The limit is NZ\\$50,000 and there are no establishment fees. The business is aiming to lend around $N Z \\$ 200$ million under the program.\nTo help Institutional customers accelerate their transition, we provide tailored sustainable finance solutions. Green and sustainability loans and bonds help direct funding towards green projects and activities while sustainabilitylinked loans and bonds help customers link the interest rate on their finance to their sustainability performance. For Sustainability linked loans, customers are rewarded with a lower interest rate if they achieve their agreed sustainability targets.", "chunk_word_count": 401, "section_path": "Acknowledgement of Indigenous Peoples > INCLUDED", "document_id": "Westpac 2023 climate report", "page": 34, "page_start": 34, "page_end": 34 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 18, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## AGRIBUSINESS\nAgriculture has long been a foundation of the Australian and New Zealand economies, and way of life. Given our nations’ vast natural resources, the sector also provides a distinct global comparative advantage and plays a critical role in our food security. However, it is important to acknowledge this sector carries a significant environmental footprint in both its emissions ( $1 5 \\% ^ { 3 }$ of Australia’s net greenhouse gas emissions) and its impact on the natural world.\nWestpac has also remained the largest financier of greenfield renewable projects in Australia over the last five years, to September 20231 .\nOur climate change solutions exposure has been our key measure of climate impact lending. Between 2020 and 2023 we have lent $\\$ 6.5$ billion in new lending to climate change solutions. See Glossary for definitions.\nThis exceeded our target of $\\$ 3.5$ billion.\nWe look to balance our support to Agriculture’s Ag2030 growth plan4 whilst reducing our climate impact. Like us, the agricultural sector appreciates the climate issues we face and is taking steps to reduce their impact. The sector has already established sustainability frameworks, and is improving its technology and management practices to increase farm productivity.5\nWe are proud of the role we’re playing to support the agricultural sector as it transitions. Australia and New Zealand are well positioned to lead the technological and operational change needed to maintain our world-class agriculture systems.\nRob, who’s also President of the South Australian Dairy Association, says the project is about scaling up and recognising the need to act on climate change now for the next generation.", "chunk_word_count": 273, "section_path": "Acknowledgement of Indigenous Peoples > AGRIBUSINESS", "document_id": "Westpac 2023 climate report", "page": 34, "page_start": 34, "page_end": 35 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 19, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## CUSTOMER: ROSLYN AMDENA JERSEYS\nLong-term BankSA customer Rob Brokenshire, with his son Nick and their families, has operated the Roslyn Amdena Jerseys dairy farm at Mt Compass, South Australia, for over 40 years.\n“We wanted to showcase how productivity and sustainability go hand in hand, and how existing technology can improve farm returns while minimising impact on the environment, our people and animals.\nThis year, the Brokenshires completed a major infrastructure upgrade with the installation of a stateof-the-art rotary milking system. Their new shed and infrastructure will boost productivity, improve environmental outcomes and support the health of their 400 jersey cows.\n“Using the latest technology and best management practices, we can set up a truly resilient operation that can thrive under Nick and his family for generations to come.”\n### Carbon trading\n### Building climate resilience\nCarbon markets play an integral role in creating an economic incentive to reduce emissions and decarbonise the economy, including establishing a market price for carbon.\nOne of the most immediate and significant impacts from climate change is the physical risks from the increased severity of natural disasters. We work hard to support customers with the immediate short-term effects of these events and then help them to get back on their feet over the medium term.\nWhilst reducing gross emissions should be a priority in achieving net-zero, purchasing carbon offsets, to improve the net carbon balance, plays a role where there are limited technological or financially viable alternatives to eliminate emissions from hard to abate sectors.\nThis includes our natural disaster relief packages in Australia and from our Adverse Natural Events Policy in New Zealand.\nThrough our carbon trading desk, we are a key participant in the Renewable Energy Certificates market in Australia and carbon markets both in Australia and New Zealand. In these markets we provide the following services for our clients:\nWe are working with customers and communities to understand and respond to the impacts of climate change. This includes how it may affect their businesses, their assets and their homes.\n— Partnership as they navigate this fast-developing market. — Provision of liquidity to manage exposures to carbon prices and to meet their voluntary and/or compliance requirements in Australia and New Zealand. — Access to the secondary market, enabling generators of carbon units to monetise their production.\nWestpac increased market share in Australian Carbon Credit Units (ACCUs) secondary market trading from $2 . 2 \\%$ in 1H22 to $6 . 3 \\%$ in 1H231 .\nWestpac is a longstanding member of the Carbon Market Institute, helping shape ongoing compliance and regulatory frameworks.\n## CUSTOMER: RANGEBACK BATTERY ENERGY STORAGE SYSTEM", "chunk_word_count": 442, "section_path": "Acknowledgement of Indigenous Peoples > CUSTOMER: ROSLYN AMDENA JERSEYS", "document_id": "Westpac 2023 climate report", "page": 35, "page_start": 35, "page_end": 36 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 20, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## CUSTOMER: KAMBITSIS GROUP\nWestpac and BankSA have been proud to be the transition partner of choice for South Australia based Kambitsis Group, which chose to retrofit and transform two office buildings at 150 Grenfell Street, Adelaide into a premium Property Council Australia A-Grade commercial space.\nWestpac provided financing support for the new Rangebank Battery Energy Storage System to be built in Cranbourne, Victoria. This greenfield project is being developed by Eku Energy and Shell Energy Operations, and once fully operational will have the storage capacity to power 80,000 homes for an hour during peak periods. The project is expected to be completed in late 2024, increasing Victoria’s renewable energy hosting capacity by 200MW/400MWh.\nThe project, due for completion in 2024 is expected to be all electric and carbon neutral certified in both construction and operation. This includes a high-performance façade and energy efficient air conditioning to reduce emissions and operating costs.\nKambitsis Director, George Kambitsis, said the Group has been able to demonstrate how the structure of an existing building can be transformed to meet the highest sustainability standards, while avoiding the higher carbon footprint associated with conventional new construction.\nThe building is targeting a number of energy and sustainability ratings including 6-star Green Star Rating, NABERS 6-star Energy & Indoor Environment ratings, 5.5-star Waste, 5-star Water ratings and WELL Platinum Certification.\n### Sustainable Finance Framework\nWe will begin reporting on these new targets from FY24. Further details are in our Sustainable Finance Framework, published on our website.\nAs demand for sustainable finance increases it is vital we improve the systems to assess, monitor, measure and report on what is green, transition, sustainability or social financing. This is needed to give customers clarity and guide our product development as we work to expand our solutions that contribute to positive climate, nature and social outcomes.\nOur new more comprehensive Sustainable Finance Framework and targets supersede our climate change solution targets and disclosure and so we will no longer report on these from FY24.\nThis year we launched our Sustainable Finance Framework to meet that need. The Framework outlines how we classify sustainable lending and bond facilitation and is underpinned by our Sustainable Finance Taxonomy with the technical screening criteria for assessing activities.", "chunk_word_count": 377, "section_path": "Acknowledgement of Indigenous Peoples > CUSTOMER: KAMBITSIS GROUP", "document_id": "Westpac 2023 climate report", "page": 36, "page_start": 36, "page_end": 37 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 21, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## DECARBONISING THE ENERGY GRID\nTo achieve our NZBA power generation target it is imperative we intensify our efforts in mobilising capital to decarbonise the power grid. This, in turn, will further shift our energy portfolio to renewables. At September 2023, $84 \\%$ of our lending to electricity generation was to renewable energy. We also offer loans for solar and battery installations to support decarbonisation at a household level.\nWe have also introduced new 2030 targets of $\\$ 55$ billion in lending and $\\$ 40$ billion in bond facilitation that are aligned with the Framework.\nThese targets have been designed to best represent lending and bond facilitation activities. Progress against our targets will be measured and reported based on:\n— A point in time approach using total committed exposures (TCE) or balance1 for lending activities. \n— A cumulative approach for qualifying bond facilitation activities2.\n[IMAGE CAPTION] Our Sustainable Finance Framework 1 The balance represents the balance outstanding at a point in time and is applicable for residential mortgages. 2 A cumulative approach to measure bond facilitation towards a 2030 Target best represents the flow nature of the bond facilitation activity, as well as the characteristics of the bond market and customer issuances dynamics, which can fluctuate year on year depending on market conditions.\nClimate change will only be solved when we all work together, including governments, business, communities, industry and peak bodies, and others.\n### This includes:\n## ENGAGING\n## WORKING\n## WITH INDUSTRY BODIES AND THE CUSTOMERS THEY REPRESENT\nON FORUMS TO PRODUCE COMMON STANDARDS ON CLIMATE MATTERS\nSo our third action is to collaborate for impact on initiatives towards net-zero and climate resilience.\n## CONTRIBUTING\n## SHARING\n## TO DEVELOPMENT OF CLIMATE SOLUTIONS\n## OUR EXPERIENCE TO HELPDEVELOP THE RIGHTPOLICIES\n### Approach to collaboration\nAddressing climate change requires collective action and we have an important role to play in supporting and participating in international, national, and industry-based initiatives to progress collective action on climate change.\nThis year we continued our approach to participating in a range of initiatives to outline our view and advocated for change.\nThe assessment of climate change related risks is included in the Group’s risk management framework and reflected in the Board’s risk appetite statement.\n### Climate change risks principally occur from:\n## PHYSICAL RISKS\nfrom changing climate patterns, both acute and chronic, including changes to the frequency and severity of extreme weather events.\nTRANSITION RISKS\nassociated with the transition to a lower carbon economy. This includes changes in policy, gy, regulation and market pressures in relation to carbon intensive activities.\nLIABILITY RISKS\nfrom legal and regulatory action. These may arise from failing to adequately consider or respond imate-related risks, changes in law or re tion, or emerging standards or societal expectations.", "chunk_word_count": 463, "section_path": "Acknowledgement of Indigenous Peoples > DECARBONISING THE ENERGY GRID", "document_id": "Westpac 2023 climate report", "page": 37, "page_start": 37, "page_end": 40 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 22, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## PHYSICAL RISKS\n### Approach to Risk Management\nWestpac’s Risk Management Framework (RMF) describes our structured approach to managing the material risks of climate change.\nKey elements of the RMF include our business strategy; risk appetite; approach to identifying, controlling, monitoring, and managing material risks; and how we respond to possible scenarios that could impact us.\nWestpac’s Sustainability Risk Management Framework (SRMF) sets out our approach to managing sustainability risks relating to climate change, human rights, and the environment, and supports the Board-approved RMF.\nWe use a Board-approved Risk Taxonomy to classify and categorise our material risks and the sub-categories of those risks. Climate change has the potential to affect Westpac in various ways with the main impacts classified under the material risks of Credit Risk (as a financial risk) and Reputation and Sustainability Risk (as a non-financial risk). Broadly, climate change risks manifest as physical risks, transition risks and liability risks (see opposite).\nThe table below shows how climate-related risks may materialise across the Group.\nWe continue to improve our identification and management of climate change risks, as the expectations of stakeholders evolve. Ongoing actions include:\nIdentification, management and monitoring of climate risk by assessing inherent and residual risks along with the effectiveness of controls. We also consider emerging risks, issues, and incidents. Oversight and challenge by Line 2 Risk teams. This includes quarterly monitoring of risk assessments to develop an aggregate Group-wide view of climate change risk. — Regular review of our Group Environmental, Social, & Governance (ESG) Credit Risk Policy. — Regular review and monitoring of climate change related risk appetite.\nFY23 actions included:\nProvided an update to the Board Risk Committee on sustainability risk, as part of the Reputation and Sustainability Risk Class, including how we measure and manage climate risks. \n— Incorporated APRA’s Prudential Practice Guide CPG 229 – Climate Change Financial Risks (CPG 229) into our obligations library and supported its implementation. \n— Formalised NZBA sector target thresholds into our Board Risk Appetite Statement for key sectors.\n### Managing climate-related risks in lending", "chunk_word_count": 344, "section_path": "Acknowledgement of Indigenous Peoples > PHYSICAL RISKS > Approach to Risk Management", "document_id": "Westpac 2023 climate report", "page": 41, "page_start": 41, "page_end": 41 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 23, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## PHYSICAL RISKS\n### Climate-related scenario analysis\nScenario analysis informs how we assess and manage climate-related risks over the short, medium and long term.\nWe have a detailed process for assessing and reviewing our significant customers and transactions for their ESG and climate-related risks.\nWe use climate-related scenario analysis and stress testing to understand our lending portfolio and exposure to high emitting sectors. We also use science-based reference scenarios to help understand the sectoral decarbonisation pathways and targets to transition to net-zero by 2050.\nThe Group ESG Credit Risk Policy forms part of our credit risk assessment process and requires the completion of an ESG-related risk assessment prior to approving finance and at periodic reviews, for certain customers and transactions.\nOur appetite for climate-related risk is defined in our Board Risk Appetite Statement. It includes measures of physical and transition risks and is evaluated and reviewed twice a year.\nOur Institutional bankers, supported by ESG specialists, complete these assessments. Transactions may also be escalated to a Customer and Transaction Risk Escalation Committee (CTREC) comprising executives from business, sustainability, and risk management. CTREC considers transaction for ESG, reputational risk, conflicts and financial crime risks and ensure transactions consider our sector positions and NZBA sector targets. The Institutional Bank Chief Executive has authority to approve or decline a transaction following the CTREC review and may escalate any decision to the ESGR Committee and/or the CEO.\nIn FY24, we plan to review our transition risk methodology to better reflect sector transition risks incorporating the latest climate science scenarios.\nClimate scenario analysis and climate stress testing is an evolving area, and we recognise we need to both expand the coverage of our scenario analysis and improve the inputs into our stress testing models. Further investment is planned in the year ahead including:\nIn our Australian business division, portfolio risk assessments have been conducted to better understand climate risks and align with our policies, position statements and, where relevant, net-zero targets. We are working to digitise our ESG Risk Assessment tool in FY24 which will enable our bankers to conduct them faster.\n— Updating our climate stress testing methodology; — Expanding the data used including geospatial information to better analyse climate impacts on specific regions; and — Extending the range of scenarios used.", "chunk_word_count": 383, "section_path": "Acknowledgement of Indigenous Peoples > PHYSICAL RISKS > Climate-related scenario analysis", "document_id": "Westpac 2023 climate report", "page": 42, "page_start": 42, "page_end": 42 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 24, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## PHYSICAL RISKS\n### Transition risk\nGiven the exposure of the Australian economy to 6.8 emissions-intensive sectors, our assessment of transition risk has to date focused on our Australian business and institutional lending, which Westpac has identified as at higher risk under a rapid decarbonisation $1 . 5 ^ { \\circ } \\mathrm { C }$ transition scenario.\nThe assessment methodology, set in 2019, uses three transition risk scenarios that have been modified 3.7 for Australia:\n[IMAGE CAPTION] FIGURE 4: ESTIMATED GROUP FINANCED EMISSIONS SCOPE 1 AND 2 BY SECTOR (refer to Table 11)\n$( 2 ^ { \\circ } \\mathsf { C } )$ ; and\nUnder this analysis, five sectors, representing around $2 . 1 \\%$ (at September 2023) of our Australian business and institutional lending, were identified as potentially facing higher growth constraints (lower growth than the economy as a whole) under a $1 . 5 ^ { \\circ } \\mathrm { C }$ scenario. These sectors are Petroleum and coke products; Coal mining; Oil and gas mining; Gas distribution, and Air transport.\n### Physical risk in the Australian mortgage portfolio\nEvery six months we update the physical risk scenario analysis of our Australian residential mortgage portfolio. The analysis estimates the portion of our mortgages exposed to higher physical risks under climate scenarios developed by the Intergovernmental Panel on Climate Change (IPCC). The analysis uses a generalised model of how extreme natural disasters and climate change may impact individual properties. Features of the analysis include:\n— We use our current Australian mortgage portfolio, assuming no growth or change in composition. \n— Each individual property location is assessed based on a “representative property” (assuming built under current building codes), with no adaptation or mitigation. \nProperties are matched with contextual information on matters such as elevation, local weather, topography, and spatial data. Two climate scenarios are used, RCP2.6 (temperature increases are held to well below $2 ^ { \\circ } C$ by 2100) and the more extreme RCP8.5 (temperatures expected to rise by around $4 ^ { \\circ } C$ by 2100). \n— Analysis considers potential riverine or surface water flooding, coastal inundation, forest fires, extreme wind, cyclones, extreme heat and soil subsidence under the two scenarios.\nThe analysis found that around $3 . 5 \\%$ of our Australian mortgage portfolio is exposed to higher physical risk under RCP2.6 scenario by 2050. This increases to around $3 . 9 \\%$ under the RCP8.5 scenario The below table outlines this outcome and shows the current characteristics of these at-risk sections of our book.\nThis analysis is informing our risk appetite settings and helping to provide insights to governments, communities, individuals and other stakeholders around physical risks.\n### Physical risk in the New Zealand portfolio", "chunk_word_count": 459, "section_path": "Acknowledgement of Indigenous Peoples > PHYSICAL RISKS > Transition risk", "document_id": "Westpac 2023 climate report", "page": 42, "page_start": 42, "page_end": 43 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 25, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## PHYSICAL RISKS\n### Impact of climate-related risk on our financial statements\nIn 2020, our New Zealand business initiated scenario analysis to build understanding of the potential impacts that sea level rise and coastal hazards could have on our exposures. This analysis was based on current and future risks out to 2050 under RCP2.6 and ${ \\sf R C P 8 . 5 }$ climate change scenarios, using analysis provided by the National Institute of Water & Atmospheric Research – Taihoro Nukurangi (NIWA). We ran this analysis again this year showing the percent of certain portfolios that may be exposed to heightened risk under the ${ \\sf R C P 8 . 5 }$ scenario.1\nWe have considered the potential risk of climate change on our financial statements including both physical risks and transition risks. We have concluded that based on the information and methodologies currently used, climate-related risks do not have a material impact on the judgments, assumptions and estimates for the year ended 30 September 2023.\nKey considerations in reaching this conclusion included assessing our exposure to:\n— high transition risk industries as a proportion of overall credit exposures; and \n— physical risks that may arise from changing weather patterns and extreme weather events, with a particular focus on our housing loans.\nThe effects of climate change represent a source of uncertainty in the medium to long term which may affect our financial statements in the future. Climate-related-risks will continue to be monitored and assessed. Details of any provisions for ECL, including overlays held in relation to physical climate-related risk, are provided in Note 10 of our Annual Report.\n### Physical risk in the Australian agribusiness portfolio\n### Total committed exposure (TCE) by sectors\nSystemic changes in climate also have the potential to impact agribusiness customers. In FY22, we completed a two-year study modelling how farm productivity could be impacted by different climate change scenarios, with and without adaptation measures.\nThe following table disaggregates the total Group TCE by industry, highlighting industries that may be exposed to higher climate change risk, including the NZBA priority sectors, and separates the total Group TCE for Retail Lending and Housing. This is indicative only, as climate change risks may impact industries, geographies and companies in different ways and varying degrees. There will also be some sectors, or companies, exposed to climate change risks that are not in the table.\nWe used this analysis to support our engagement with customers and industry bodies and to build our understanding of how to use geospatial data to improve our management of risk. We expect to build on this analysis in the year ahead to not only assess climate risks but also to gain deeper insights into our nature-related risks and opportunities. In turn, this will aid us in our regulatory disclosures and the shaping of our TNFD disclosures.\nIn FY23, our exposure to industries that may be exposed to higher climate change risk was approximately $\\$ 127.1$ billion, an increase of approximately $6 \\%$ from $\\$ 123.4$ billion in FY22.\nThis analysis also has the potential to be extended across our commercial real estate portfolio.\nIndustries that may be exposed to higher climate change risk", "chunk_word_count": 536, "section_path": "Acknowledgement of Indigenous Peoples > PHYSICAL RISKS > Impact of climate-related risk on our financial statements", "document_id": "Westpac 2023 climate report", "page": 44, "page_start": 44, "page_end": 45 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 26, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## RISK MANAGEMENT\nIn FY23, our exposure to industries specifically in the fossil fuel energy value chain was approximately $\\$ 7.2$ billion, a decrease of approximately $7 \\%$ from $\\$ 7.7$ billion in FY22, as detailed below.\nThe change from prior year was primarily driven by reduced exposures to the Oil and Gas Distribution and Retail industry (approximately $\\$ 365$ million decrease in exposure) and Thermal Coal Mining.\nCare should be taken when comparing data in table 21 and table 22 on the Energy Sector Value Chain figures reported in prior years over time and with other reported sector data.\nThis year, we have expanded the coverage of our sector reporting to include Group-wide data whereas in prior years we used institutional bank data.\nThis year we used ANZSIC codes to extract industry data (bank wide) and then supplemented this with divisional data to obtain more detailed breakdowns for certain sectors. These include thermal and metallurgical coal mining and for coal ports. As a result, this information will not align to extracts of our sector data. Similarly, this data will not align with data used for our NZBA targets as the latter typically use more granular definitions, including to align with the NZBA guidelines.\nRefer to the Glossary in the Appendix and the 2023 Sustainability Index and Datasheet for more detail, including sector scope and relevant ANZSIC codes, definitions of TCE, and additional related metrics.\n### Liability Risks\nLiability risks stem from the potential for litigation or regulatory action that may arise if we fail to adequately consider or respond to climate-related risk, changes in law or regulation, emerging standards, or fail to meet societal expectations. These risks could arise where our actions are not perceived to align with our disclosures or commitments, or where we have potentially made an inaccurate or misleading statement.\nWe believe transparency is important and strive to be accurate, timely and relevant in our climate-related disclosures. We apply a governance process to our public disclosures which includes internal verification, reviews by subject matter experts, legal review, and external assurance on key metrics. Important policies and positions also require Board approval, see the Governance section for more detail.\nThe Group Risk Management Framework also includes processes to identify, assess and manage liability risks. This includes appropriate frameworks, policies, position statements, and monitoring changes in regulation, public policy and stakeholder expectations. Any risks identified, including emerging risks are escalated to relevant management committees.\n### Independent Assurance Report to the Directors of Westpac Banking Corporation\nThe Board of Directors of Westpac Banking Corporation (‘Westpac’) engaged us to perform an independent assurance engagement in respect of the identified Subject Matter Information listed below and identified in the referenced tables and disclosures within the Westpac Climate Report 2023 (the ‘Subject Matter Information’) for the financial year (‘FY’) ended 30 September 2023 or as otherwise stated.\n### Subject Matter Information\nThe Subject Matter Information are as set out below:", "chunk_word_count": 493, "section_path": "Acknowledgement of Indigenous Peoples > RISK MANAGEMENT", "document_id": "Westpac 2023 climate report", "page": 46, "page_start": 46, "page_end": 47 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 27, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## A. Reasonable Assurance Subject Matter Information (for the year ended 30 June 2023)\nWestpac’s assertions regarding the alignment of its 2023 Climate Report with the TCFD recommendations issued by the Task Force on Climate-Related Financial Disclosures (the ‘TCFD Recommendations’) as set out within the TCFD Index included within the Appendix to the 2023 Climate Report.\n### Criteria\nWe assessed the Subject Matter Information against the Criteria. The Subject Matter Information needs to be read and understood together with the Criteria, being:\nthe Glossary and Methodology sections of the Appendix to the 2023 Climate Report (‘Westpac’s Climate Reporting Methodology’); and the TCFD Recommendations (together, the ‘Criteria’).\nOur assurance opinion and conclusion are with respect to the year ended 30 September 2023, unless otherwise noted in the Subject Matter Information set out above, and does not extend to information in respect of other periods or to any other information included in, or linked from, the Climate Report.\nWe specifically note that Westpac has used estimates, assumptions or extrapolated information in the calculation of both the estimated financed emissions of its lending portfolio and the baselines and performance for its 2030 NZBA targets.\n### Our independence and quality control\nWe have complied with the ethical requirements of the Accounting Professional and Ethical Standard Board's APES 110 Code of Ethics for Professional Accountants (including Independence Standards) relevant to assurance engagements, which are founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.\nIt is acknowledged by stakeholders globally, including regulators, that there are significant limitations in the availability and quality of greenhouse gas emissions data from third parties, resulting in the extensive use of proxy data.\nOur firm applies Australian Standard on Quality Management ASQM 1, Quality Management for Firms that Perform Audits or Reviews of Financial Reports and Other Financial Information, or Other Assurance or Related Services Engagements, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.\nThis limitation has resulted in the Partnership for Carbon Accounting Financials (‘PCAF’) establishing a data quality score to assist in understanding the source of data which is incorporated into the Westpac’s Methodology. This document details the quality of the data Westpac has used in the calculation of both its financed emissions information and the baselines and performance for its 2030 NZBA targets, which varies across its lending portfolio reflecting sector or asset-specific data limitations. It is important to read this report in the context of the 2023 Climate Report and Westpac’s Climate Reporting Methodology.", "chunk_word_count": 442, "section_path": "Acknowledgement of Indigenous Peoples > A. Reasonable Assurance Subject Matter Information (for the year ended 30 June 2023) > Criteria", "document_id": "Westpac 2023 climate report", "page": 47, "page_start": 47, "page_end": 48 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 28, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## A. Reasonable Assurance Subject Matter Information (for the year ended 30 June 2023)\n### Responsibilities of Westpac Management\nWestpac Management (‘Management’) is responsible for the preparation of the Subject Matter Information in accordance with the Criteria. This responsibility includes:\nIt is anticipated that the principles and methodologies used to measure and report the Subject Matter Information will develop over time and may be subject to change in line with market practice and regulation, impacting comparability year-on-year.\ndetermining appropriate reporting topics and selecting or establishing suitable criteria for measuring, \nevaluating and preparing the underlying Subject \nMatter Information; \nensuring that those criteria are relevant and \nappropriate to Westpac and the intended users; and designing, implementing and maintaining systems, processes and internal controls over information \nrelevant to the evaluation or measurement of the Subject Matter Information, which is free from \nmaterial misstatement, whether due to fraud or error, against the Criteria.\nThe opinion and conclusion expressed in this report have been formed on the above basis.\n### Our responsibilities\nOur responsibility is to express a reasonable assurance opinion on the Reasonable Assurance Subject Matter Information and a limited assurance conclusion on the Limited Assurance Subject Matter Information based on the procedures we have performed and the evidence we have obtained.\n### Inherent limitations\nOur engagement has been conducted in accordance with the Australian Standard on Assurance Engagements ASAE 3000 Assurance Engagements Other Than Audits or Reviews of Historical Financial Information and ASAE 3410 Assurance Engagements on Greenhouse Gas Statements.\nAssurance engagements\nInherent limitations exist in all assurance engagements due to the selective testing of the information being examined. It is therefore possible that fraud, error or noncompliance may occur and not be detected.\nThese standards require that we plan and perform our engagement to obtain reasonable assurance about whether the Reasonable Assurance Subject Matter Information above has been prepared, in all material respects, in accordance with the Criteria, and limited assurance about whether anything has come to our attention to indicate that the Limited Assurance Subject Matter Information has not been prepared, in all material respects, in accordance with the Criteria.\n### Subject Matter Information\nNon-financial data may be subject to more inherent limitations than financial data, given both its nature and the methods used for determining, calculating and estimating such data. The precision of different measurement techniques may also vary.\nThe absence of a significant body of established practice on which to draw to evaluate and measure non-financial information allows for different, but acceptable, evaluation and measurement techniques that can affect comparability between entities and over time. In addition, greenhouse gas emissions quantification is subject to inherent uncertainty because of incomplete scientific knowledge used to determine emissions factors and the values needed to combine emissions of different gases.", "chunk_word_count": 462, "section_path": "Acknowledgement of Indigenous Peoples > A. Reasonable Assurance Subject Matter Information (for the year ended 30 June 2023) > Responsibilities of Westpac Management", "document_id": "Westpac 2023 climate report", "page": 48, "page_start": 48, "page_end": 48 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 29, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## RISK MANAGEMENT\nAspects of the engagement were designed to provide a reasonable assurance conclusion, as discussed above. A reasonable assurance engagement involves performing procedures to obtain evidence about the Subject Matter Information. The nature, timing and extent of procedures selected depend on professional judgement, including the assessment of risks of material misstatement, whether due to fraud or error, in the Subject Matter Information. In making those risk assessments, we considered internal control relevant to Westpac’s preparation of the Reasonable Assurance Subject Matter Information.\n### Reasonable Assurance Opinion\nIn our opinion, Westpac has prepared the Reasonable Assurance Subject Matter Information, in all material respects, in accordance with the Criteria.\n### Limited Assurance Conclusion\nIn addition, based on the assurance procedures we have performed, as described under ‘Our responsibilities’, and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Limited Assurance Subject Matter Information has not been prepared, in all material respects, in accordance with the Criteria.\nAspects of the engagement were designed to provide a limited assurance conclusion, as discussed above. The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement and consequently the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. Accordingly, we do not express a reasonable assurance opinion on the Limited Assurance Subject Matter Information.\n### Other information\nThe Board of Directors of Westpac also engaged us to perform a limited independent assurance engagement in respect of the baseline emissions intensity for its NZBA sector target for Steel Production. As Westpac have elected not to disclose the baseline for this sector (refer Table 12: Westpac NZBA Sector Lending Targets) we have provided a separate report in relation to this subject matter to the Board of Directors.\nIn carrying out our limited assurance engagement, our procedures included:\nmaking enquiries and assessing the design of \nprocesses and controls for capturing, collating and reporting the performance data within the Subject Matter Information; \nreconciling the Subject Matter Information to \nunderlying data sources on a sample basis; \ntesting the arithmetic accuracy of a sample of \ncalculations of the Subject Matter Information; \nreviewing a sample of relevant management \ninformation and documentation supporting the \nSubject Matter Information; \nassessing the appropriateness of a sample of \nestimates and assumptions applied by management; undertaking analytical procedures over a sample of the Subject Matter Information; and \nreviewing the Subject Matter Information to assess whether it has been prepared as described in the Criteria; and \nreviewing the 2023 Climate Report to assess its alignment with the TCFD Recommendations.", "chunk_word_count": 457, "section_path": "Acknowledgement of Indigenous Peoples > RISK MANAGEMENT > Reasonable Assurance Opinion", "document_id": "Westpac 2023 climate report", "page": 49, "page_start": 49, "page_end": 49 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 30, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## RISK MANAGEMENT\n### Use and distribution of our report\nWe were engaged by the board of directors of Westpac on behalf of Westpac to prepare this independent assurance report having regard to the Criteria specified by Westpac and set out in this report. This report was prepared solely for Westpac, in accordance with the agreement between us, to assist the Directors in reporting Westpac’s climaterelated performance and activities.\nWe accept no duty, responsibility or liability to anyone other than Westpac in connection with this report or to Westpac for the consequences of using or relying on it for a purpose other than that referred to above. We make no representation concerning the appropriateness of this report for anyone other than Westpac and if anyone other than Westpac chooses to use or rely on it, they do so at their own risk.\nThis disclaimer applies to the maximum extent permitted by law and, without limitation, to liability arising in negligence or under statute and even if we consent to anyone other than Westpac receiving or using this report.\nFor the reasonable assurance engagement, in addition to those detailed above, assurance procedures undertaken included:\nuse of larger sample sizes for substantive tests undertaken on a sample basis; and testing the operating effectiveness of controls relied upon for assurance purposes.\nPricewaterhouseCoopers\nWe believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion and conclusion.\nLiza Maimone Managing Partner\nMelbourne 5 November 2023\n## APPENDIX\n### Contents\nGLOSSARY 49 \nII METHODOLOGY – DIRECT SCOPE 1 AND 2 OPERATIONAL EMISSIONS AND SCOPE 3 UPSTREAM EMISSIONS 54 \nIII METHODOLOGY– NZBA 2030 SECTOR LENDING TARGETS 64 \nIV METHODOLOGY – GROUP FINANCED EMISSIONS ESTIMATION 86 \nV OUR CLIMATE CHANGE POSITION STATEMENT AND ACTION PLAN 96 \nVI TCFD INDEX 111 \nVII CLIMATE-RELATED COMMITMENTS AND PARTNERSHIPS 112\n## APPENDIX I. GLOSSARY\n## APPENDIX II. OUR SCOPE 1, 2 AND 3 (UPSTREAM) EMISSIONS METHODOLOGY", "chunk_word_count": 327, "section_path": "Acknowledgement of Indigenous Peoples > RISK MANAGEMENT > Use and distribution of our report", "document_id": "Westpac 2023 climate report", "page": 49, "page_start": 49, "page_end": 55 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 31, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## SCOPE 1 AND 2 DIRECT OPERATIONALEMISSIONS AND SCOPE 3 UPSTREAMEMISSIONS\n### Our approach to measuring scope 1 direct operational emissions\nScope 1 emissions: are the release of greenhouse gases (GHG) into the atmosphere from Westpac Group’s direct operations for the period 1 July – 30 June. This includes operations in Australia, New Zealand and other international sites (Fiji, Papua New Guinea, Singapore, United Kingdom, China, Germany and the United States from 2022, refer to previous footnotes for inclusions in prior years).\nNew Zealand data is prepared in accordance with the New Zealand Ministry for the Environment guidance for GHG reporting, using emission factors from the Ministry for the Environment Summary of Emissions Factors and Toitū net carbonzero programme rules or as detailed against the indicator definition.\nOther international sites scope 1 GHG emissions are calculated using emission factors from the National Greenhouse and Energy Reporting (Measurement) Determination 2008 or as detailed against the indicator definition.\nAustralian data is prepared in accordance with the National Greenhouse and Energy Reporting Act 2007 (NGER Act), using emission factors from the National Greenhouse and Energy Reporting (NGER Measurement Determination) Determination 2008 or as detailed against the indicator definition.\n### Our approach to measuring scope 2 indirect operational emissions\nScope 2 emissions: are indirect greenhouse gas emissions (GHG) from the consumption of purchased electricity by Westpac Group for the period 1 July to 30 June. Includes operations in Australia, New Zealand and other international sites (Fiji, Papua New Guinea, Singapore, United Kingdom, China, Germany and the United States from 2022, refer to previous footnotes for inclusions in prior years).\nScope 2 emissions (location-based): reflects a business’ electricity emissions in its location. It shows the physical emissions from a business’ electricity consumption, reflecting the emissions intensity of the electricity grid $( \\mathsf { S } )$ it relies on. The location-based method does not recognise the surrender of renewable energy attribute certificates (EACs) (e.g. Largescale Generation Certificates (LGCs)) as evidence of renewable electricity use.\n— Australian data is prepared in accordance with the National Greenhouse and Energy Reporting Act 2007 (NGER Act), using emission factors from the National Greenhouse and Energy Reporting (Measurement) Determination 2008 for locationbased accounting or calculated under the Climate Active Carbon Neutral Standard for Organisations for market-based accounting.\nScope 2 emissions (market-based): reflects electricity emissions incorporating renewable energy procurement. This method assigns an emissions factor of zero for electricity covered by renewable EACs (e.g. surrender of corresponding LGCs) and uses a residual mix factor (RMF) to calculate emissions from any remaining electricity consumption.\n— New Zealand data is prepared in accordance with the New Zealand Ministry for the Environment guidance for GHG reporting and Toitū net carbonzero programme rules, using emission factors from the Ministry for the Environment Summary of Emissions Factors for location-based accounting or from Certified Energy, New Zealand Energy Certification System for market-based accounting.\n— Other international emissions are calculated using location-based emission factors from International Energy Association (IEA) emission factors. For market-based accounting, in regions where no residual mix factor is available the location-based emission factors are applied.", "chunk_word_count": 516, "section_path": "Acknowledgement of Indigenous Peoples > SCOPE 1 AND 2 DIRECT OPERATIONALEMISSIONS AND SCOPE 3 UPSTREAMEMISSIONS", "document_id": "Westpac 2023 climate report", "page": 56, "page_start": 56, "page_end": 57 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 32, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX II. OUR SCOPE 1, 2 AND 3 (UPSTREAM) EMISSIONS METHODOLOGY\n### Our approach to measuring scope 3 upstream indirect emissions\nScope 3 upstream emissions: are indirect greenhouse gas emissions (GHG) emitted as a consequence of Westpac Group operations but occur at sources owned or controlled by another organisation (other than electricity). Our scope 3 upstream emissions were measured for the period 1 July to 30 June and include operations in Australia, New Zealand and other international sites (Fiji, Papua New Guinea, Singapore, United Kingdom, China, Germany and the United States from 2022, refer to previous footnotes for inclusions in prior years).\n— Other international sites’ scope 3 emissions are estimated by multiplying the Australian emissions per FTE by the number of FTEs of the Group’s other international sites.\nScope 3 upstream emissions (location-based): reflects electricity emissions in the context of its location. It shows the physical emissions from a business’ electricity consumption, reflecting the emissions intensity of the electricity grid(s) it relies on. The location-based method does not allow claims for renewable electricity from grid-imported electricity.\n— Australian data is prepared in accordance with the National Greenhouse Accounts Factors, using emission factors from the National Greenhouse and Energy Reporting (Measurement) Determination 2008 for location-based accounting or calculated under the Climate Active Carbon Neutral Standard for Organisations for market-based accounting.\nScope 3 upstream emissions (market-based): reflects third parties/upstream electricity emissions in the context of renewable energy procurement. This method assigns an emissions factor of zero for electricity covered by renewable energy attribute certificates (EACs) (e.g. Large-scale Generation Certificates (LGCs)) and uses a residual mix factor (RMF) to calculate emissions from any remaining electricity consumption.\n— New Zealand data is prepared in accordance with the New Zealand Ministry for the Environment guidance for GHG reporting and Toitū net carbonzero programme rules, using emission factors from the Ministry for the Environment Summary of Emissions Factors for location-based accounting or from Certified Energy, New Zealand Energy Certification System for market-based accounting.\n\n\n## APPENDIX III. NZBA SECTOR LENDING TARGETS METHODOLOGY\n## NZBA 2030 SECTOR LENDING TARGETS DETAILS AND METHODOLOGY\nThis appendix details Westpac Group’s financed emissions targets that relate to the priority carbon-intensive sectors identified by the NZBA (NZBA sectors), along with how we arrived at each. This includes the broad trends within each NZBA sector, our target and progress (where reported), the boundary of exposures in each sector and the sciencebased scenario chosen to help determine our target.", "chunk_word_count": 411, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX II. OUR SCOPE 1, 2 AND 3 (UPSTREAM) EMISSIONS METHODOLOGY", "document_id": "Westpac 2023 climate report", "page": 58, "page_start": 58, "page_end": 64 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 33, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## NZBA 2030 SECTOR LENDING TARGETS DETAILS AND METHODOLOGY\n### Calculating financed emissions\nWestpac estimates the Group’s scope 3 financed emissions by assessing the proportion of emissions of individual customers or industry sectors attributable to financing provided by Westpac, using the committed exposure for our lending to customers.\nThe approach applied to calculating financed emissions for the Group is necessarily different to the approach applied to estimating financed emissions for some of our sectorlevel targets.\nIn setting our targets, we have prioritised sectors listed in the NZBA guidelines, and focused on elements of our portfolio where we believe we can make the most difference and have the data and scenarios to set targets. As an example, in the NZBA sector of “Transport” we have determined a sector target for Aviation and defined that to only include scheduled passenger airlines (refer to Transport section on pages 73).\nThe Group Financed emissions are developed based on portfolio level methodology. To develop sector targets that typically comprise institutional or large business customers, we often leverage more granular data to assess a company’s emissions and our portion of those emissions. This approach cannot be applied at a portfolio-level due to a lack of consistent individual company information that can be aggregated to a portfolio level.\nWe now have targets in eight of the nine NZBA priority sectors including oil and gas, coal, cement, agriculture, commercial and residential real estate, iron and steel, power generation, and transport. Subject to available data and a recognised science-based reference scenario, we plan to set a target that relates to our remaining NZBA sector, Aluminium, by July 2025.\nFor the Australian residential real estate and agriculture targets the sector-level and portfolio-level Group financed emissions approaches are broadly aligned.\nWe will consider expanding the scope and coverage of our existing NZBA targets in accordance with our NZBA commitment, where data and methodologies allow.\nThere are some small differences in data sources used for the different methodologies due to these approaches, but the sources are not materially different. Over time, as data improves, including from better company reporting and streamlined research processes, we expect these approaches to gradually converge.\nIn setting our targets we have referenced the UNEP-FI Guidelines for Climate Change Target Setting1 (NZBA guidelines) and credible and well-recognised science-based reference scenarios, tools, methodologies and principles tailored to each sector, as outlined in this appendix.\n### Selecting reference scenarios\nIn determining each of our targets, we need to select an appropriate science-based reference scenario aligned with our commitment to the NZBA. We have established a set of principles to assist with scenario selection. No scenario is perfect and it is difficult to fully align some with the characteristics of the Australian and New Zealand economies or the attributes of the companies within our target boundaries.\nAs a result, scenarios selected may differ from other industry participants, and may not align with all the principles. A summary of the principles follows.", "chunk_word_count": 495, "section_path": "Acknowledgement of Indigenous Peoples > NZBA 2030 SECTOR LENDING TARGETS DETAILS AND METHODOLOGY > Calculating financed emissions", "document_id": "Westpac 2023 climate report", "page": 64, "page_start": 64, "page_end": 64 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 34, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## NZBA 2030 SECTOR LENDING TARGETS DETAILS AND METHODOLOGY\n### Other considerations\nOur targets are set at the sector level, and may not align with the individual targets and transition plans of customers. For this, and other reasons (such as evolving technologies), the pathway to achieving our targets may not be gradual or linear. The emissions reduction trajectory may occur in step-changes, or even increase in some periods.\nSetting targets is complex due to data quality, the availability of suitable science-based reference scenarios and because methodologies require estimation. While we have sought to use best available data and scenarios various assumptions and estimates have been used. As a result, our targets and baselines (along with the pathways to achieve our targets) are likely to change as data quality improves and better methodologies emerge. The baselines for all NZBA targets have been measured using data available as at the end of the relevant baseline period. In accordance with the NZBA guidelines, we expect to review our targets at least every 5 years.\nOur targets have undergone internal review and approval from the Board and have also been independently reviewed. We obtain limited assurance over our NZBA Baselines and progress as per our Assurance Report in page 45.\nFollowing is a commentary of our NZBA priority sectors along with the targets we have set within each sector.\n### Determining customers in the target boundary\nThe boundary for each target has been determined by focusing on the value chain addressed by sciencebased reference scenario used for the target. To identify customers in scope, we use ANZSIC codes for initial screening and, depending on the target, we supplement with more detailed knowledge about the companies so the nature of the companies aligns with the target. The ANZSIC codes used in the initial screening are summarised in the following tables.\n### Our approach to carbon offsets for our NZBA 2030 sector lending targets\nWe believe reducing emissions should be a priority action in achieving targets and the transition to netzero. We recognise carbon offsets are likely to play a role to supplement decarbonisation in line with climate sciencebased scenarios. We do not intend to purchase carbon offsets to meet our NZBA 2030 sector lending targets. We understand that some customers are using or may use offsets to meet their decarbonisation targets and some of the data we use may also include customer offsets. Guidance around the quality and utilisation of carbon credits is a rapidly evolving area and we will review our approach to the use of carbon offsets in line with NZBA Guidance.", "chunk_word_count": 434, "section_path": "Acknowledgement of Indigenous Peoples > NZBA 2030 SECTOR LENDING TARGETS DETAILS AND METHODOLOGY > Other considerations", "document_id": "Westpac 2023 climate report", "page": 65, "page_start": 65, "page_end": 65 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 35, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX III. NZBA SECTOR LENDING TARGETS METHODOLOGY\n### Oil and gas\nThe Oil and Gas industry operates across three segments of upstream, midstream and downstream. Upstream activities include the exploration, development and extraction of crude oil and natural gas. Midstream includes the transportation, storage and processing (refining) of petroleum and gas products. Downstream includes distribution activities.\nThe use of oil and gas represents a significant percentage of current global energy mix, with oil playing an important role in transport and industry while gas is used for residential and commercial heating and cooking, industrial process heating and for electricity generation. However, global forecasts suggest demand for oil and gas will peak or plateau over the coming decades, as the world moves to electrify and the supply of renewable energy increases1 . Natural gas demand is likely to stay higher than oil, given its transition role in power generation, including as a firming fuel supporting the reliability of renewable power generation.\nElectrification of transport, industry and energy networks is needed to reduce oil and gas demand. This will require investment in infrastructure and increased renewable supply. Expansion of clean energy needs to occur in-line with the decline in oil and gas to avoid prolonged high energy prices, reduced energy security and to ensure an orderly transition to net-zero emissions by $2 0 5 0 ^ { 2 }$ .\nIn playing our part, we have set a financed emissions reduction target for our upstream oil and gas sector as outlined below.\n[IMAGE CAPTION] UPSTREAM OIL AND GAS BASELINE, PROGRESS AND TARGET ( $\\ M \\ t { \\mathsf { C O } } _ { 2 }$ -e)", "chunk_word_count": 282, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX III. NZBA SECTOR LENDING TARGETS METHODOLOGY", "document_id": "Westpac 2023 climate report", "page": 66, "page_start": 66, "page_end": 67 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 36, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX III. NZBA SECTOR LENDING TARGETS METHODOLOGY\n### Coal\nCoal currently plays a significant role in the energy sector and in the Australian economy. Thermal Coal has been the major source of energy generation in Australia while metallurgical coal is central to the steel making process – also important for the Australian economy. Australia is also a major exporter of coal making a significant contribution to GDP, to government revenues and to regional development.\nHowever, the burning of coals is a significant source of greenhouse gas emissions and has been identified by scientific consensus as a major contributor to climate change. Accordingly, we believe it is critical that the world transitions away from thermal coal combustion and does so quickly.\nWe seek to eliminate our exposure to thermal coal mining and have set short- and medium-term positions. As a first step, we are focusing on institutional customers with a significant portion $( \\geq 1 5 \\% )$ of their revenue coming directly from thermal coal mining.\nWe have set a thermal coal mining 2030 target as outlined below, and this applies a lower revenue threshold $( > 5 \\% )$ ) which captures diversified companies with minor thermal coal mining interests. Under this more stringent boundary we are working to have no exposure to thermal coal mining by 2030.\nRefer to page 29 for more details on our sector positions for thermal coal mining, metallurgical coal mining, and for power generation.\nWe have not set a target for metallurgical coal given the current lack of alternatives for use in steel production but are looking to support affected customers with their transition plans.\n[IMAGE CAPTION] THERMAL COAL BASELINE, PROGRESS AND TARGET (MtCO2-e)\n### Power generation\nThe 2022 Intergovernmental Panel on Climate Change report on mitigation of climate change1 notes energy systems in a net-zero by 2050 scenario will rely on widespread electrification including end uses for transport, industry and buildings. This also means electricity generation will need to achieve net-zero emissions.\nOur sector position for the power generation sector is on page 29.\n[IMAGE CAPTION] POWER GENERATION BASELINE, PROGRESS AND TARGET $t \\mathsf { c o } _ { 2 }$ -e MWh)\n### Cement\nThe cement production sector is a large energy user and carbon emitter. Most of the emissions result from the production of clinker, a major component of cement. Clinker-related emissions stem from the operation of high-temperature kilns, necessary for the chemical reactions (calcination) needed for clinker formation. Clinker production emissions are hard to abate as they cannot be reduced by changing fuel or increasing energy efficiency. According to the Cement Industry Federation1 , in Australia, $60 \\%$ of total emissions are process-related emissions from the production of clinker.\n[IMAGE CAPTION] CEMENT BASELINE, PROGRESS AND TARGET $t \\mathsf { c o } _ { 2 }$ -e/TONNE OF CEMENT)", "chunk_word_count": 477, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX III. NZBA SECTOR LENDING TARGETS METHODOLOGY", "document_id": "Westpac 2023 climate report", "page": 68, "page_start": 68, "page_end": 73 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 37, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX III. NZBA SECTOR LENDING TARGETS METHODOLOGY\n### Iron and Steel\nThe majority of steel manufactured globally uses the integrated steelmaking process. This process can be optimised through opportunities such as energy efficiency. However, material decarbonisation for the sector will require significant capital, technology development and increased availability of certain raw materials.\nManufacturing steel is a multi-step process. The first step, and the most emissions intensive, involves making pure iron from iron ore. Steel is manufactured by two main process routes, with iron ore being used in both:\n— the integrated steelmaking process featuring the blast furnace/basic oxygen furnace (BF/BOF), where iron ore is the major source of iron units; and\nThe steel sector has an important role in the global transition to net zero emissions. By extension, we will continue to support customers in the metallurgical coal sector as it remains critical for steel production at scale.\n— electric steelmaking based on the electric arc furnace (EAF), where steel scrap or direct reduced iron (DRI) are the major iron feedstock materials.\n### Transport\nTransport is a diverse sector, covering road, rail, shipping and aviation. In considering our NZBA target for this sector we chose passenger aviation due to data availability, maturity of customers (who are mostly institutional) and materiality of the sector’s share of the Group’s financed emissions.\nAviation is a hard-to-abate industry due to the large technical barriers associated with removing or replacing conventional fossil fuel-based jet fuel. The IEA recognises, under its Net Zero Emission (NZE) by 2050 scenario, that carbon removal technologies to offset residual emissions are likely to be required to achieve net-zero by 2050.\n[IMAGE CAPTION] PASSENGER AVIATION BASELINE, PROGRESS AND TARGET $( \\mathfrak { g } \\mathbf { c } \\mathbf { o } _ { 2 }$ -e/PASSENGER KILOMETRE) 1 Indicative pathway derived from 2020 & 2030 datapoints from the 2021 IEA report. Our portfolio emissions intensity reduction is not anticipated to be linear.\n### Commercial Real Estate\nCommercial buildings account for approximately $10 \\%$ of Australia’s emissions1 and so the sector plays a crucial role in achieving net-zero emissions by 2050.\nWe have set a target for offices within the broader Commercial Real Estate sector, as this segment has the greatest availability of emissions data across our portfolio. This supersedes our previous target from FY22 which only applied to Australian large customers with office properties and was referenced to a 2021 baseline.\nMost large offices, rely on electricity as their primary energy source, though natural gas is also often used for heating, hot water and cooking. Increased electrification of buildings will be an important step in achieving net-zero, in combination with increased grid decarbonisation and onsite renewable electricity.", "chunk_word_count": 453, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX III. NZBA SECTOR LENDING TARGETS METHODOLOGY", "document_id": "Westpac 2023 climate report", "page": 74, "page_start": 74, "page_end": 77 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 38, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX III. NZBA SECTOR LENDING TARGETS METHODOLOGY\n### COMMERCIAL REAL ESTATE BASELINE AND TARGET $( \\log \\mathsf { C O } _ { 2 } { \\mathsf { - e / m } } ^ { 2 } )$\n[IMAGE CAPTION] 1 Indicative pathway derived from 2020 & 2030 datapoints from the 2021 IEA report. Our portfolio emissions intensity reduction is not anticipated to be linear.\n### Residential Real Estate\nResidential buildings are responsible for around $2 4 \\%$ of Australia’s electricity use and more than $10 \\%$ of carbon emissions1 . As Residential Real Estate is our largest lending portfolio, it comprises a significant portion of Westpac’s financed emissions. While decarbonising Australia’s electricity grid is the most important factor for reducing residential emissions, customers can also reduce their carbon footprint including by electrification of gas appliances, home retrofits and installation of rooftop solar and batteries.\n[IMAGE CAPTION] RESIDENTIAL REAL ESTATE MORTGAGES BASELINE AND TARGET $( \\log \\mathsf { C O } _ { 2 } { \\mathsf { - e / m } } ^ { 2 } )$\n### Agriculture\nWe have set separate Agriculture targets for Australia and New Zealand. Two drivers for this are the different commodity profiles between Australia and New Zealand different legislative environments.\n### Agriculture – Australia\nAgriculture underpins Australia’s rural communities, as well as our food security. The sector is also a large producer of emissions, contributing around $15 \\%$ of Australian’s total emissions in 2021, excluding land-use, land-use change and forestry (LULUCF)1 . Reducing emissions from agriculture is therefore important for the sector and our emission reduction ambitions. The industry is already leading efforts to decarbonise with both Meat & Livestock Australia and Dairy Australia setting 2030 emissions reduction targets.\nAs part of our Agriculture targets, we are committed to no deforestation, which provides for no further conversion of natural forest to agricultural land use within farm systems from 31 December 2025 for customers in scope of the targets.\n[IMAGE CAPTION] DAIRY AUSTRALIA BASELINE AND TARGET $( t C O _ { 2 } - e A$ OF FPCM)\nScope 1 land management emissions which include biogenic methane from ruminant livestock and also include emissions from nutrient management, manure management, and fertiliser use.\n\n## BEEF AND SHEEP (AUSTRALIA) 2030 TARGET\n### Key transition actions\nEngage with industry groups and representatives to collaboration opportunities such as support and investment in emissions reduction technology and data capture.\nEngage with customers on opportunities for emissions reductions and efficiency, as well as our commitment to no deforestation.\n### BEEF AND SHEEP BASELINE AND TARGET (tCO₂-e/t OF FW)\n### Agriculture – New Zealand\nAgriculture plays a vital role in New Zealand’s economy yet also contributes around half of the country’s total gross emissions1 .\nReducing emissions from agriculture is important for New Zealand but also for the sector to remain globally competitive.\nAs part of our Agriculture targets, we are committed to no deforestation, which provides for no further conversion of natural forest to agricultural land use within farm systems from 31 December 2025 for customers in scope of the targets.", "chunk_word_count": 521, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX III. NZBA SECTOR LENDING TARGETS METHODOLOGY", "document_id": "Westpac 2023 climate report", "page": 78, "page_start": 78, "page_end": 85 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 39, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX III. NZBA SECTOR LENDING TARGETS METHODOLOGY\n[IMAGE CAPTION] DAIRY NZ BASELINE AND TARGET $( \\tt t c o _ { z } { - e / t }$ OF FPCM)\n[IMAGE CAPTION] BEEF AND SHEEP NZ BASELINE AND TARGET $\\scriptstyle { \\mathrm { \\bf { t } } } { \\mathbf { } } { \\mathbf { } } { \\mathbf { } } \\subset { \\mathsf { O } } _ { 2 } { \\mathsf { - e } } / { \\mathbf { t } }$ OF FRESH WEIGHT)\n## SCOPE 3 FINANCED EMISSIONS ESTIMATION\n## 1 Introduction\ndata, and other commercial considerations, as highlighted further within this document. At the date of publication, Westpac is not a signatory to the PCAF Standard.", "chunk_word_count": 133, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX III. NZBA SECTOR LENDING TARGETS METHODOLOGY", "document_id": "Westpac 2023 climate report", "page": 86, "page_start": 86, "page_end": 88 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 40, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## 1 Introduction\n### 1.1 Overview\nInformed by the PCAF Standard, we have used various approaches to estimate our financed emissions for each asset class. These approaches were selected as we seek to align with available data for customers and for their sectors. We have prioritised available data in accordance with the data hierarchies set out within this methodology, which are based upon the data quality scorecards within the PCAF Standard, for each asset class.\nFinanced emissions are the indirect greenhouse gas (GHG) emissions attributable to financial institutions associated with their financing and investment activities.\nFor Westpac, these are the GHG emissions of our lending to customers (currently, primarily their scope 1 and 2 emissions), including the emissions associated with the activities of institutional, commercial and small and medium business customers along with the emissions associated with household energy use of retail mortgage customers.\nFor FY23, we excluded the following from our financed emissions estimation due to considerations of materiality (e.g., small in the context of our total lending), data limitations, and lack of appropriate methodologies:\nThis document outlines the methodologies used to estimate our financed emissions in FY23, including the key assumptions, data sources, and limitations.\n— non-mortgage personal lending (e.g., personal loans and credit cards), \n— businesses in our Specialist Businesses segment as they have either been sold (with the transaction not yet complete) or we are planning their exit, equity investments and the operations of our wealth management business, \n— lending in our Fiji and PNG operations, \n— lending to Governments and Government-owned entities, and \n— investments in our significant liquidity portfolio (mostly Government securities).\nEstimating financed emissions is fundamental to the Group’s ambition to become a net-zero, climate resilient bank. This is because reducing our financed emissions is the most significant impact we can have on addressing climate change. Measuring our financed emissions is key in delivering on our commitment to the Net-Zero Banking Alliance (NZBA), helping to identify our most emissionsintensive sectors and where we should prioritise our efforts.\nAt the same time, the approach to estimating financed emissions for the entire Group lending portfolio is necessarily different to the approach applied to estimating financed emissions for some of our sector-level targets.\nWhile we estimate financed emissions for project finance we do not use the specific methodology for these facilities.\nRefer to the NZBA 2030 sector lending targets – details and methodology section in this Appendix for more information on our emission reduction targets within the NZBA priority sectors, along with how we arrived at each.", "chunk_word_count": 426, "section_path": "Acknowledgement of Indigenous Peoples > 1 Introduction > 1.1 Overview", "document_id": "Westpac 2023 climate report", "page": 88, "page_start": 88, "page_end": 88 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 41, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## 1 Introduction\n### 1.1 Overview\nFor the purposes of estimating financed emissions, we have excluded equity investments and the operations of our wealth management business, as we believe these not to be material. Following business exits completed over recent years, Westpac no longer has material funds management or insurance businesses. Similarly, we no longer operate a large financial advice business. The Group has a small funds management business in New Zealand, but this is not material to the Group. The Group continues to operate a large funds administration business however the entity in question has no beneficial interest in the investments that it administers, nor does it provide financial advice to users of the administration platform in question. Westpac has a small number of direct equity investments including through its venture capital fund but these are also not material in the context of the Group.\n### 1.2 Approach to estimating our financed emissions\nSince FY21, Westpac has estimated and disclosed its financed emissions in key lending portfolios and each subsequent year we have worked to improve the quality of our estimates. In FY23, we have calculated our financed emissions for three broad asset classes:", "chunk_word_count": 200, "section_path": "Acknowledgement of Indigenous Peoples > 1 Introduction > 1.1 Overview", "document_id": "Westpac 2023 climate report", "page": 88, "page_start": 88, "page_end": 88 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 42, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## 1. Business, commercial and institutional lending \n2. Commercial real estate \n3. Residential mortgages\nThe methodologies used for these asset classes were informed by principles in the Partnership for Carbon Accounting Financials (PCAF)’s Global GHG Accounting and Reporting Standard: Part A – Financed Emissions 2nd edition (the PCAF Standard). We have sought to align with the PCAF Standard wherever possible although we have deviated in some instances to account for local applicability of certain approaches, the availability of\nFacilitated emissions: Our financed emissions calculations do not include estimates for facilitated emissions, being emissions attributable to us through activities that we may help originate or support but for which there is no current exposure. This includes certain debt capital markets activity such as the origination of corporate bonds. These have been excluded as agreed methodologies for estimating the associated emissions of these instruments were not readily available by the end of FY23. We will review our approach to facilitated emissions as relevant guidance, industry practice and methodologies mature.\nMeasures of lending: For the purposes of estimating financed emissions, we use two different metrics to measure our lending to customers across our portfolios:\n— for our residential mortgages lending, we use outstanding loan balance1 . — for our business, commercial and institutional lending, including loans secured by commercial real estate2, we use Total Committed Exposure (TCE)1 .\nCollectively, these are termed our “lending” to customers in this Appendix. Refer to Glossary in this Appendix for more information on TCE.\nIn FY23, we updated our approaches for improved data collection and to better align with both the PCAF Standard, where appropriate, and the separate methodology applied to calculate estimated financed emissions for our emissions reduction targets and baselines within the NZBA priority sectors.\nOur approach of using outstanding loan amount for residential mortgages aligns with the approach recommended in the PCAF Standard for the ‘Mortgages’ asset class.\nOur approach of using TCE is a conservative deviation from the approach recommended in the PCAF Standard of using the on-balance sheet outstanding loan amount for the ‘Business loans’ asset class. We consider TCE a more comprehensive approach, reflecting our decisions to extend credit to customers. It also allows better longterm measurement of our financed emissions as it avoids potential volatility due to customers’ use of their facilities. However, all else being equal, using TCE is likely to lead to higher emissions estimates given the inclusion of undrawn amounts in this metric.\nComparing emissions data over time: At this point in time, caution should be taken when comparing our financed emissions results from year to year while our methodology matures. Changes to methodologies and underlying data (refer to the Data Sources section in the methodology for each asset class) may change the estimated financed emissions results and impact comparability over time. Changes could include changing data sources, company and property data, sector allocations, exchange rates, emissions factors, and financial ratios. Methodology changes are also possible as more analysis is completed on sectors and sub-sectors to better understand emissions and refine methodologies.", "chunk_word_count": 510, "section_path": "Acknowledgement of Indigenous Peoples > 1. Business, commercial and institutional lending \n2. Commercial real estate \n3. Residential mortgages", "document_id": "Westpac 2023 climate report", "page": 88, "page_start": 88, "page_end": 89 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 43, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## 1. Business, commercial and institutional lending \n2. Commercial real estate \n3. Residential mortgages\nTiming of data: While we seek to use the most recent data in our estimates, we often need to apply data from different time periods depending on availability. For example, we use lending data at 31 August $2 0 2 3 ^ { 2 }$ whereas emissions factors, emissions intensities, company financials, and other data may be from an earlier period if more upto-date data has not yet been reported at a customer or sector level. In our disclosures, we identify the applicable time periods for relevant input data.\nOur financed emissions estimates are based on the best available data at a point in time taking into consideration the factors above. However, with different methodologies, and more timely data points, different results for a particular sector may occur over a time series, making comparison of the raw results difficult.\nIndependent assurance: We have obtained independent limited assurance over our Group financed emissions estimates for FY23. Refer to the Assurance Report on page 45.\nData quality: We evaluate the data quality of various data inputs in each asset class using Data Quality Scores based on the data quality scorecards within the PCAF Standard. These Data Quality Scores reflect the level of uncertainty in the data inputs using a scale of 1 to 5, with the lowest scores assigned to relatively more accurate and specific company/property-level inputs and the highest scores assigned to less specific inputs that are reliant more on assumptions and proxy data such as industry averages.\nWe highlight any material deviations between our Group financed emissions estimation methodologies and both the approaches applied to estimating financed emissions for some of our sector-level targets and the PCAF Standard below, where relevant.\nOver time we are aiming to lift the quality and availability of our data and improve our PCAF data quality scores across our asset classes.\n2. Commercial real estate \n3. Residential mortgages\n### 1.3 Data\nAs indicated within the data hierarchies set out within this document, we prioritise available data from the most recent time periods relevant to our estimate calculations, supplemented by estimates and assumptions where applicable. As data quality varies across portfolios and sectors, in some instances we need to use proxy data to estimate emissions totals. The following is a discussion of our major data elements and factors that may impact our estimates – while it includes inherent challenges and limitations with these data, it is not an exhaustive list.\nIndustry classification codes: We use ANZSIC codes to identify customers’ primary business activities and sectors that they are involved in. Using ANZSIC codes has limitations, however, as:\n— it relies on the on-going applicability of the ANZSIC codes designated during the onboarding process; \n— it may not be reflective for diversified businesses, or where a business may have transitioned from one sector over time or as a result of corporate transactions such as acquisitions or divestments; \n— where diversified customers are allocated to a specific ANZSIC sector, the estimated emissions may not be reflective of the actual business activities and therefore be under- or overstated; and,", "chunk_word_count": 529, "section_path": "Acknowledgement of Indigenous Peoples > 1. Business, commercial and institutional lending \n2. Commercial real estate \n3. Residential mortgages > 1.3 Data", "document_id": "Westpac 2023 climate report", "page": 89, "page_start": 89, "page_end": 89 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 44, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX IV. FINANCED EMISSIONS METHODOLOGY\n— it necessitates mapping ANZSIC to NZSIOC codes for the purposes of applying sector-level economic intensity emissions factors for New Zealand customers.\n### 1.4 Looking ahead\nWe will continue to develop the estimation of our financed emissions as new and better data emerges, and estimation methodologies evolve. This will include:\nFor many sectors, we can then proceed with a relevant estimation approach and apply sector-level economic intensity emissions factors and sector-level financial ratios at an ANZSIC code level. Where we are unable to do so, we apply relevant approaches, factors and/or ratios on a ‘sector best-fit approach’ to ANZSIC classification.\n— keeping up-to-date on standards, guidance and industry approaches (including changes in the NZBA guidelines); — sourcing more accurate and/or granular customer- and/ or property-level energy consumption, production data, reported emissions, and company financial data; and, — reviewing and refining our assumptions, calculations, and processes.\nProperty-level information: We are unable to readily obtain property-level emissions or energy consumption data for most residential or commercial properties. Similarly, energy efficiency data for buildings is not readily available for most properties against which lending is secured. Accordingly, we apply regional averages and/ or other regional proxy data to estimate the emissions for these properties. Given Westpac’s portfolio is geographically diversified, the use of proxy data is expected to yield representative aggregate results.\nAs part of this process (and consistent with our strategy of collaborating for impact) we will continue to advocate for publicly available emission factors for industry sectors and for the further development and standardisation of standards and methodologies that will assist stakeholders to compare results across companies, sectors and geographies.\nIn turn, this will assist us to better understand industry emissions profiles which will help us in pursuing our ambition to become a net-zero, climate resilient bank.\nExchange rates: Where financial data used in our financed emissions estimations is denominated in a currency other than Australian Dollars, it is converted into Australian Dollars using a spot exchange rate at the end of the period.", "chunk_word_count": 344, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX IV. FINANCED EMISSIONS METHODOLOGY", "document_id": "Westpac 2023 climate report", "page": 90, "page_start": 90, "page_end": 90 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 45, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## 2 Methodology\nMateriality and reasonableness: In estimating financed emissions we use approaches that we believe are both feasible and reasonable – while having regard to the desire to remain as consistent as possible with the PCAF Standard. At times, we may have the option of using more granular information or using more detailed methodologies. However, we are cognisant that using more detailed information may not yield materially improved results and in fact may introduce more risks though complexity of calculations and additional time into our processes that cannot be justified. In making these decisions we consider the PCAF Standard, data quality, and complexity of models and calculations (and associated risk), and materiality (e.g., whether it is appropriate to undertake a more detailed analysis of a sector if the related lending is immaterial to the Group). We also take into consideration that Westpac’s loan portfolio across Australia and New Zealand is relatively representative geographically, demographically and across industries. For example, the use of industry averages may often produce better results than aggregating a company-by-company analysis.\n### 2.1 Residential Mortgages\nWe estimate the financed emissions associated with our retail residential mortgage lending in Australia and New Zealand. This includes on-balance sheet loans to owneroccupiers and investors for the purchase and refinancing of residential property, including apartments, houses as well as multi-family dwellings with a small number of units. We estimate the scope 1 and 2 emissions associated with the properties held as security against these loans and then aggregate these estimates to determine portfolio emissions.\nFor each property we determine our share of estimated emissions using an attribution factor. That factor is the ratio of the loan amount over the property value, and adjusting the ratio if multiple properties are linked to the same loan.\nWe measure the property value as the value at the most recent credit assessment event1 (e.g., when the loan was opened, increased, renewed, refinanced, or extended).\nAt a high-level, total financed emissions for these portfolios are calculated by grouping properties with similar building and geographic characteristics2 and aggregating the product of the estimated emissions for each group of properties across the portfolio and the attribution factor for each group.\n## ABLE 23: DATA QUALITY SCORES AND ASSOCIATED ESTIMATION METHODOLOGIES FOR RESIDENTIAL MORTGAGES\nRefer to table 11 for the weighted average data quality scores, which are weighted based on lending, as reported for our sectors and portfolios for insight into the relative distribution of estimation methodologies applied in our estimation.\n## APPENDIX IV. FINANCED EMISSIONS METHODOLOGY\n### Data sources:\n### Notable exclusions for this asset class:\n— Home equity loans (HELs) and home equity lines of credit (HELOCs) are excluded from the estimation as these products are closer in nature to consumer loans for general purposes, and represent a small portion of the mortgage book.", "chunk_word_count": 473, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX IV. FINANCED EMISSIONS METHODOLOGY > Data sources:", "document_id": "Westpac 2023 climate report", "page": 90, "page_start": 90, "page_end": 92 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 46, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX IV. FINANCED EMISSIONS METHODOLOGY\n### Energy consumption benchmarks:\n— Australian benchmark per-dwelling electricity consumption figures across climate zones and natural gas consumption figures across States were sourced from the Australian Energy Regulator (AER) for June 2021. Benchmark State-level liquefied petroleum gas (LPG) consumption figures were sourced from the Australian Government Department of Industry, Science, Energy and Resources – Australian Energy Statistics (Australian energy consumption, by State and Territory, by industry and fuel type, energy units) for September 2022.\n— Construction loans and renovation loans are excluded from the estimation as the emissions associated with construction and renovation activities would generally be attributable to the companies undertaking the activity, not the homeowner.\n— Loans for the purchase of vacant land.\n— Mortgages in regions outside of Australia and New Zealand.\n— New Zealand benchmark per-dwelling electricity consumption figures across the islands and regions were sourced from the New Zealand Electricity Authority – Residential Consumption Trends for September 2022 to August 2023.\n— Customers’ scope 3 emissions are excluded.\n### 2.2 Business, commercial and institutional lending\nWe estimate the financed emissions associated with our business, commercial and institutional lending in Australia and New Zealand. This includes customers in the Property sector where lending does not meet the definition of secured lending in the Commercial Real Estate asset class, where a separate methodology is used.\n— New Zealand benchmark per-dwelling energy demand figures across the islands were sourced from the Energy Use in New Zealand Households – Final Report on the Household Energy End-use Project (HEEP) BRANZ Study Report SR 221 for 2010 (our research did not identify a more recent data source for this benchmark). Further details on the types and relative breakdown of heating used in New Zealand dwellings across the regions were sourced from Stats NZ for 2018 (i.e., New Zealand 2018 Census).\nWe estimate the scope 1 and 2 emissions associated with this lending and then aggregate these estimates across customers and portfolios. We have also estimated scope 3 emissions in certain sectors identified based on the NZBA guidelines. This includes customers in certain mining sectors (including oil and gas extraction) and downstream sectors within manufacturing1 .\n### Property floor area benchmarks:\n— Benchmark data on the average floor area of residential dwellings broken down by regions in New Zealand sourced from a property market data provider for 2023.\nWe attribute a portion of the estimated emissions for each customer in these portfolios using an attribution factor. The attribution factor is the ratio of our lending over the customer’s company value. Depending on availability of customer financial data, we measure company value as either: the enterprise value including cash (EVIC) for listed companies or private companies’ listed parent company groups; or, the sum of the total equity and debt2 for private companies or their parent company groups.", "chunk_word_count": 475, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX IV. FINANCED EMISSIONS METHODOLOGY > Energy consumption benchmarks:", "document_id": "Westpac 2023 climate report", "page": 92, "page_start": 92, "page_end": 92 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 47, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX IV. FINANCED EMISSIONS METHODOLOGY\n### Household and population statistics:\n— Australian household statistics, including State-level data on dwelling numbers, average occupants, and average bedrooms, were sourced from the Australian Bureau of Statistics (ABS) census reports for 2021.\n— New Zealand population statistics were sourced from Stats NZ population estimates for 2022.\nAt a high-level, financed emissions for each customer are calculated as the product of the customer attribution factor (or the relevant sector-level financial ratio of company revenue to company value (refer to table 24) multiplied by the sum of our lending to the customer), and the total reported or estimated emissions for each customer (or the relevant sector-level emissions factor).\n### Emissions factors:\n— Australian emissions factors for the consumption of purchased or acquired electricity at the State level, and the combustion of natural gas and LPG, were sourced from Australian National Greenhouse Accounts Factors for August 2023.\n— New Zealand emissions factors for the consumption of purchased or acquired electricity at the national level, and the combustion of natural gas, LPG, wood, and coal, were sourced from the New Zealand Government Ministry for the Environment emissions measurement guide for organisations for 2023.\nEmissions are estimated in accordance with the following data hierarchies:\n### TABLE 24: DATA QUALITY SCORES AND ASSOCIATED ESTIMATION METHODOLOGIES FOR BUSINESS, COMMERCIAL AND INSTITUTIONAL LENDING\nRefer to table 11 for the weighted average data quality scores, which are weighted based on lending, for insight into the relative distribution of estimation methodologies applied in our estimation.\n### Data sources:\n— Factors for scope 1 and scope 2 for New Zealand industry sectors were derived based on publicly available information from a combination of:\n### Reported emissions and activity data:\n— Customers’ publicly reported scope 1, 2, and 3 emissions where sourced for the latest available periods from a combination of: Australian Clean Energy Regulator NGER Corporate emissions and energy data for 2021-22; financial market data providers; and customers’ publicly reported disclosures.\n• Stats NZ Greenhouse gas emissions (industry and household) for the year ended 2021\n• Stats NZ Annual enterprise survey for the 2022 financial year\n— Specific emissions factors for scope 1 emissions related to land management per head of livestock in the Australian Agriculture industry were derived for certain livestock types based on the data embedded in the Agriculture – Australia Dairy (Australia) Target methodology (refer to the NZBA 2030 sector lending targets – details and methodology section in this Appendix for further details).\n— Customers’ reported activity data was sourced for the latest available periods from a combination of: internal systems based on periodic customer filings of company production data (e.g., milk production statistics, livestock inventory) for certain Agriculture customers; and, customers’ public disclosures (e.g., ounces of gold mined) and financial market data providers for certain customers in the Mining and Manufacturing sectors.\n— Specific emissions factors for scope 1 emissions related to land management per head of livestock in the New Zealand Agriculture industry were derived for certain livestock types based on publicly available information from a combination of:", "chunk_word_count": 514, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX IV. FINANCED EMISSIONS METHODOLOGY > Household and population statistics:", "document_id": "Westpac 2023 climate report", "page": 92, "page_start": 92, "page_end": 94 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 48, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX IV. FINANCED EMISSIONS METHODOLOGY\n### Customer financial data:\n— Customers’ financial data was sourced for the latest available periods from a combination of: internal systems based on periodic customer filings of company financial information; and, financial market data providers.\n• New Zealand Government Ministry for the Environment emissions measurement guide for organisations released in 2023 for 2021 data.\n### Sector-level emissions factors:\n• Stats NZ Fertilisers – nitrogen and phosphorus statistics for 2021.\n— Factors for scope 1 and scope 2 for Australian industry sectors were derived on a per-dollar revenue basis for each sector (i.e., $\\mathrm { \\ t C O } _ { 2 }$ -e per $\\$ 9$ of company revenue) based on publicly available information from a combination of:\n— Specific emissions factors for downstream scope 3 emissions for non-energy commodities were derived for mining sectors (including oil and gas extraction) and downstream sectors within manufacturing based on reference factors sourced from a combination of:\n• Australian Government Department of Agriculture, Water and the Environment – National Greenhouse Accounts – National inventory by economic sector for 2021;\n• publicly available Life Cycle Assessment databases. \n• publicly available industry publications.\n— In absence of any other available information, scope 3 emissions factors were derived for mining sectors (including oil and gas extraction) and downstream sectors within manufacturing from known revenue figures and reported emissions totals of customers in these sectors.\n• ABS – National inventory by economic sector for 2021; and,\n• for certain customer subsets in the Agriculture sector: Australian Government Department of Agriculture, Water and the Environment – Agricultural Commodity Statistics for 2022 (series dated 2021); Australian Government Department of Agriculture, Water and the Environment – National Greenhouse Accounts – Paris Agreement Inventory for certain Agriculture sectors for 2021; and, Australian Bureau of Agricultural and Resource Economics (ABARES) Farm Data Portal publicly available data for 2022.\n— Sector-level emissions factors were calculated at the most granular ANZSIC (1993) code level, wherever data was available. Where required, emissions factors at a lower granularity were mapped to higher granularity sector codes on a sector best-fit approach ANZSIC classification, and New Zealand NZSIOC sector codes were also mapped to ANZSIC codes.\n### Sector-level financial ratios:\n— Ratios of company revenue to company value for Australian industry sectors were based on information from a combination of:\n• financial market data providers’ data for Australian and New Zealand top companies up to August 2023; and,\n• for certain subsets of customers in the Agriculture sector: Australian Bureau of Agricultural and Resource Economics (ABARES) Farm Data Portal publicly available data for 2022.\n— Ratios of company revenue to company value for New Zealand industry sectors were derived for each sector based on publicly available data from Stats NZ Annual Enterprise Survey for 2022.", "chunk_word_count": 469, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX IV. FINANCED EMISSIONS METHODOLOGY > Customer financial data:", "document_id": "Westpac 2023 climate report", "page": 94, "page_start": 94, "page_end": 95 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 49, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX IV. FINANCED EMISSIONS METHODOLOGY\n### Notable exclusions for this asset class:\nAt a high-level, total financed emissions for lending in the Australian portfolio are calculated by aggregating the estimated financed emissions across all included customers. Customer emissions are calculated as the sum of the product of actual or estimated emissions for each property and the attribution factor relevant to each loan secured by that property.\n— Non-mortgage personal lending (e.g., personal loans and credit cards).\n— Customers and/or accounts where a reliable ANZSIC code could not be identified including those for which Australian Standard Classification of Occupations (ASCO) codes were assigned as industry identifiers.\nTotal financed emissions for lending in the New Zealand portfolio are calculated by grouping properties with similar building and geographic characteristics and aggregating the product of the estimated emissions for each group of properties across the portfolio and the attribution factor for each group.\n— Lending to Governments and Government-owned entities as identified by certain ANZSIC codes1 .\n— Exposures identified as in-scope under the Commercial Real Estate asset class are excluded to avoid doublecounting.\n— Intra-group lending between Westpac entities.\n### 2.3 Commercial Real Estate lending\nWe estimate the financed emissions of our commercial real estate lending in Australia and New Zealand. This includes lending to Australian and New Zealand business, commercial and institutional customers in the Property sector2 that is secured by residential and/or commercial real estate.\nWe estimate the scope 1 and 2 emissions associated with the properties that we hold as security for these loans and then aggregate these for the portfolio. Overall, estimating emissions for commercial real estate is challenging due to limited publicly available property-level emissions and energy data, particularly for smaller properties. Where emissions are not able to be estimated under this methodology due to data limitations, the business lending methodology is applied.\nWe attribute a portion of the estimated (or actual) emissions for each in-scope property based on attribution factors. The attribution factor is the ratio(s) of our customer lending secured by the property over the property value. Where emissions are not able to be estimated under this methodology due to data limitations, the business lending methodology is applied.\nDepending on data availability, we measure the property value as either: the value recorded at a credit assessment event3 (e.g., when the loan was opened, increased, renewed, refinanced, or extended), noting that due to data limitations this may not necessarily be the latest credit assessment event; the value at a recent sale reported by property market data providers; or, the estimated value based on customer LVR data.\nEmissions are estimated in accordance with the following data hierarchies:\nefer to table 11 for the weighted average data quality scores, which are weighted based on lending, for insight into the relative distribution of estimation methodologies applied in our estimation.\n### Data sources:\n— Commercial:\n• Estimated mean price per square metre across a range of regions in Australia and New Zealand were derived from a combination of average yield and average gross face rents data sourced from national property market research snapshots for retail, industrial, and office sectors prepared by property market data providers for Q3 2022.", "chunk_word_count": 533, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX IV. FINANCED EMISSIONS METHODOLOGY > Notable exclusions for this asset class:", "document_id": "Westpac 2023 climate report", "page": 95, "page_start": 95, "page_end": 97 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 50, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX IV. FINANCED EMISSIONS METHODOLOGY\n### Energy consumption benchmarks:\n— Residential:\n• Australian benchmark per-dwelling electricity consumption figures across climate zones and natural gas consumption figures across States were sourced from the Australian Energy Regulator (AER) for June 2021.\n### Household and population statistics:\n• Benchmark State-level liquefied petroleum gas (LPG) energy consumption figures were sourced from the Australian Government Department of Industry, Science, Energy and Resources Australian Energy Statistics for September 2022.\n— Australian household statistics, including State-level data on dwellings numbers, average occupants, and average bedrooms, were sourced from the ABS census reports for 2021.\n— New Zealand population statistics were sourced from Stats NZ population estimates for 2022.\n• New Zealand benchmark per-dwelling electricity consumption figures across the islands and regions were sourced from the New Zealand Electricity Authority for September 2022 to August 2023.\n### Emissions factors:\n— Australian emissions factors for the consumption of purchased or acquired electricity at the State level, and the combustion of natural gas and LPG, were from Australian National Greenhouse Accounts Factors for August 2023.\n• New Zealand benchmark per-dwelling energy demand figures across the islands were sourced from the Energy Use in New Zealand Households – Final Report on the Household Energy End-use Project (HEEP) BRANZ Study Report SR 221 for 2010 (our research did not identify a more recent data source). Further details on the types of heating used in New Zealand dwellings across the regions were sourced from Stats NZ for 2018 (i.e., New Zealand 2018 Census).\n— New Zealand emissions factors for the consumption of purchased or acquired electricity at the national level, and the combustion of natural gas, LPG, wood, and coal, were sourced from the New Zealand Government Ministry for the Environment emissions measurement guide for organisations for 2023.\n— Commercial:\n### Notable exclusions from the estimation of financed emissions for this asset class:\n• Australian buildings’ reported emissions profiles and net lettable area (NLA) figures were sourced from the National Australian Built Environment Rating System (NABERS) ratings register for September 2023.\n— The following commercial property types (where these could be readily identified in the data) were deemed out of scope for the estimation:\n• New Zealand benchmark per-building energy demand figures across the islands were sourced from the Building Energy End-use Study (BEES) Part 1: Final Report BRANZ Study Report SR 297/1 for 2014.\n• freehold hotels and motels; \n• development lands (residential, industrial, office, and retail); \n• certain rural farm properties; \n• land investment subject to ground leases; and, \n• debenture securities and guarantees.", "chunk_word_count": 429, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX IV. FINANCED EMISSIONS METHODOLOGY > Energy consumption benchmarks:", "document_id": "Westpac 2023 climate report", "page": 97, "page_start": 97, "page_end": 97 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 51, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## APPENDIX IV. FINANCED EMISSIONS METHODOLOGY\n### Property floor area and value benchmarks:\n— Residential:\n• Estimated mean price per square metre measure for Australian properties was derived from a combination of data from ABS – Total Value of Dwellings (mean price of residential dwellings) for June 2023 and ABS – Building Activity (average floor area of new properties) for December 2022.\n• Estimated mean price per square metre measure for New Zealand properties derived from a combination of data from Stats NZ median floor area of all homes series for December 2022 and median house price data sourced from property market research snapshots for the Residential sector prepared by a property market data provider for August 2022 to July 2023.\n• Benchmark data on the average floor area of residential dwellings broken down by regions in New Zealand sourced from a property market data provider for 2023.\n## APPENDIX V\n## OUR CLIMATE CHANGE POSITION STATEMENT AND ACTION PLAN\n## KEY TARGETS AND OBJECTIVES1\n## OUR ACTION AREAS\nSource the equivalent of $100 \\%$ global electricity demand from renewable sources by 2025 Transition our Australian and New Zealand fleet vehicles to $100 \\%$ electric or plug-in hybrids by 2030 — Scope 3 upstream absolute emissions reduction target of $50 \\%$ by 2030 from a 2021 baseline\nNet-zero, climate resilient operations — Scope 1 and 2 absolute emissions reduction target of $6 4 \\%$ by 2025 and $76 \\%$ by 2030 from a 2021 baseline\n— Develop our approach to assessing and managing physical climate risk to our operational sites\n— Align our lending portfolio with net-zero by 2050 consistent with a $1 . 5 ^ { \\circ } \\mathsf { C } ^ { 2 }$ pathway in line with our Net-Zero Banking Alliance (NZBA) commitment\nNZBA 2030 sector lending targets in carbon intensive sectors, as detailed in the NZBA Guidelines (NZBA priority sectors). For further information refer to our Action Plan\nSupporting customers’ transition to net-zero and to build their climate resilience\n— Provide $\\$ 55$ bn of lending and $\\$ 40$ bn of bond facilitation activities by 2030 that are aligned with our Sustainable Finance Framework\nSeek to help customers understand and better respond to the impacts of climate change to support adaptation and resilience\n— Contribute to government and industry initiatives and engage on matters of climate policy\nCollaborate for impact on initiatives towards net-zero and climate resilience\nClimate change is a significant issue which is already impacting our business, customers and community. We seek to play our part in addressing these impacts, through our ambition to become a net-zero, climate resilient bank.\nOur climate strategy is structured along three action areas that focus on our own operations, supporting customers and advocating for positive change.\nWe aim to deliver on our strategy through the actions and initiatives set out in our Action Plan. Unless specified, we aim to implement the actions in our Action Plan by 30 September 2025. Other targets refer to Westpac Group’s financial year, e.g. 2030 targets to be achieved by 30 September 2030.", "chunk_word_count": 516, "section_path": "Acknowledgement of Indigenous Peoples > APPENDIX IV. FINANCED EMISSIONS METHODOLOGY > Property floor area and value benchmarks:", "document_id": "Westpac 2023 climate report", "page": 97, "page_start": 97, "page_end": 99 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 52, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## OUR ACTION AREAS\n### Our Climate Change Position Statement (Position Statement) sets out our positions on key climate change risks and opportunities for our business, customers and community.\nOur Position Statement is supplemented by a suite of position statements for sensitive sectors and related sustainability issues. For example:\n— Natural Capital – We recognise the interplay between climate change and natural capital risks, and that their mitigation requires a comprehensive approach that balances both nature and climate issues. Westpac’s Natural Capital Position Statement sets out our principles and ambitions to become a bank that supports nature positive outcomes. It includes the steps required to understand the key nature-related risks and opportunities for our business, customers and the community.\nIt provides the framework within which we seek to conduct business, support customers and engage with stakeholders. It outlines the actions that drive our focus and guide our people as we seek to become a net-zero, climate resilient bank.\n— Human Rights – Climate change results in both risks and opportunities that impact employees, communities and customers. As part of our NZBA commitment we seek to consider and address impacts on people (both adverse and positive) associated with climate change and the transition to a net-zero economy. Our Human Rights Position Statement and Action Plan outlines our positions and action plan to support and advance human rights through a just and inclusive transition.\nOur Position Statement is supported by our Climate Change Action Plan (Action Plan), which outlines the actions we are taking to deliver on our ambition and commitments. It includes our transition plans, in line with our commitment to the Net-Zero Banking Alliance (NZBA).\nWe will review our Position Statement and Action Plan annually so they remain relevant as climate science advances, requirements and opportunities for transition and resilience evolve, and guidance and policy develops.\nOur Position Statement and Action Plan are governed and managed in line with our sustainability governance and oversight structure. For further details, refer to the sustainability governance and risk management section of our Annual Report. We will also report progress against our Action Plan as part of our annual climate-related disclosures.\n## RISK MANAGEMENT\nGOVERNANCE\n## OUR PRINCIPLES\n## A SCIENCE-BASED TRANSITION TO A NET-ZERO EMISSIONS ECONOMY IS REQUIRED BY 2050\nWe support the scientific evidence on human-induced global warming produced by the Intergovernmental Panel on Climate Change. We believe in the need to limit global warming to 1.5°C above pre-industrial levels by 2100, which is achievable only if the economy transitions to net-zero emissions by 2050.\n### ADDRESSING CLIMATE CHANGE SHOULD REDUCE RISKS AND CREATE OPPORTUNITIES FOR OUR BUSINESS AND CUSTOMERS", "chunk_word_count": 443, "section_path": "Acknowledgement of Indigenous Peoples > OUR ACTION AREAS > Our Climate Change Position Statement (Position Statement) sets out our positions on key climate change risks and opportunities for our business, customers and community.", "document_id": "Westpac 2023 climate report", "page": 100, "page_start": 100, "page_end": 101 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 53, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## TRANSITION SHOULD BE TECHNOLOGY-DRIVEN, INCLUSIVE AND SAFEGUARD OUR NATURAL ENVIRONMENT\nThe transition to net-zero emissions should be well planned and \nconsider other factors, such as human rights and safeguarding the natural environment. This requires increased adoption of renewable energy and clean technologies, enhancing \nbio-sequestration, reducing deforestation and addressing human rights impacts as part of the transition.\nWestpac has long considered climate-related risk a financial risk. \nWe believe managing the risks and leveraging the opportunities is good business, for customers and us. While investments are required across the economy to decarbonise, appropriate \ngovernment policies that incentivise and support transition should lead to improved economic growth and resilience.\n## COLLECTIVE ACTION IS VITAL\n## OUR APPROACH SHOULD BE TRANSPARENT WITH THOROUGH DISCLOSURES\nA net-zero economy depends on collective action and requires all stakeholders to play their part. This includes governments following through on their commitments to support transition while also meeting the objectives of the Paris Agreement. \nWe believe in advocating for positive change and will continue to collaborate on initiatives that work towards net-zero and climate resilience.\nAccurate, timely and relevant information on climate-related risks \nand opportunities is key to assessing and managing the impacts \nof climate change. We aim to be transparent on our approach and how we support customers to manage climate-related risks and opportunities.\n## APPENDIX V", "chunk_word_count": 225, "section_path": "Acknowledgement of Indigenous Peoples > TRANSITION SHOULD BE TECHNOLOGY-DRIVEN, INCLUSIVE AND SAFEGUARD OUR NATURAL ENVIRONMENT", "document_id": "Westpac 2023 climate report", "page": 101, "page_start": 101, "page_end": 102 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 54, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## ACTION 1NET-ZERO ANDCLIMATE RESILIENCEIN OUR OPERATIONS\nWe are committed to reducing the climate change impacts of our operations1 aligned with a $1 . 5 ^ { \\circ } \\mathsf { C }$ pathway. We continue to reduce emissions from our own operations towards net-zero by 2050 or sooner.\n### Offsetting our residual emissions\nOur aim is to actively reduce our scope 1, 2 and scope 3 upstream emissions, recognising that for some emissions sources the speed at which we can reduce may be limited by technology availability, policy and economic viability. We seek to maintain certification for our Australian operations under the Australian Government’s Climate Active Carbon Neutral Standard for Organisations6. For our New Zealand operations, we seek to maintain Toitū net carbonzero certification7 . We purchase carbon credits to offset our residual scope 1, 2 and scope 3 upstream emissions as required to maintain our certifications. Further information on our certifications and related carbon credit purchases can be found on our website.\n### Reducing our scope 1 and 2 emissions\nOur target for operational scope 1 and 2 absolute emissions reduction is $64 \\%$ by 2025 and $76 \\%$ by 2030 relative to a $2 0 2 1 ^ { 2 }$ baseline. To achieve these targets, we are working to reduce emissions across our property portfolio and are committed to sourcing the equivalent of $100 \\%$ of our global electricity demand from renewable sources by $2 0 2 5 ^ { 3 }$ . We also aim to transition our Australian and New Zealand fleet vehicles to $100 \\%$ electric or plug-in hybrids by $2 0 3 0 ^ { 4 }$ .\n### Build physical resilience into our business and operations\nThe physical risks of climate change have the potential to significantly affect our ability to operate and support customers. Significant natural disasters and changing climate patterns may disrupt our operations by impacting our people, systems, supply chain, infrastructure, and assets, including branches. We are improving our assessment of these risks and strengthening controls in areas such as business continuity and property leasing. We are working to monitor these risks and build our climate resilience through strategies, which include diversifying critical operations across geographic locations and assessing the operational resilience of our material suppliers.\n### Reducing our scope 3 upstream emissions\nOur target for scope 3 absolute upstream emissions5 reduction is $50 \\%$ by 2030 relative to a 20212 baseline. We aim to work with key suppliers to help and encourage them to reduce their emissions, as well as to consider supplier climate strategies in our sourcing decisions.\n### ACTION 2 – SUPPORTING CUSTOMERS’ TRANSITION TO NET-ZERO AND TO BUILD THEIR CLIMATE RESILIENCE\n## A. Supporting customers’ transition to net-zero", "chunk_word_count": 459, "section_path": "Acknowledgement of Indigenous Peoples > ACTION 1NET-ZERO ANDCLIMATE RESILIENCEIN OUR OPERATIONS", "document_id": "Westpac 2023 climate report", "page": 102, "page_start": 102, "page_end": 102 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 55, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## FACILITATED EMISSIONS\n### Reduce our financed emissions\nOur NZBA 2030 sector lending targets relate to the emissions associated with our lending (i.e. financed emissions). They do not cover emissions associated with transactions we facilitate (i.e. facilitated emissions), as there are currently no standard methodologies for measuring emissions associated with these activities or approaches for net-zero-aligned target setting. Transactions we facilitate include debt capital markets activities. This also includes underwriting, arranging and/or bookrunning for syndicated loans. These transactions are, however, subject to Westpac’s Sustainability Risk Management Framework, including assessment and escalation where required. We will review our position on facilitated emissions as guidance and methodologies mature.\nHaving joined the NZBA, we are committed to aligning our lending portfolio with net-zero financed emissions by 2050, consistent with a $1 . 5 ^ { \\circ } \\mathrm { C }$ pathway. In accordance with our commitment, we have set interim 2030 sector lending targets in some of the NZBA priority sectors. This includes addressing prioritised aspects of the fossil fuel value chain, i.e. oil and gas, thermal coal mining and power generation. We seek to continue developing targets to meet NZBA requirements where data and methodologies allow.\nFurther detail on our target setting, including assumptions and calculation approaches, can be found in the Appendix of our climate-related disclosures.\nOur targets and high-level plan to meet them are outlined in our Action Plan. We continue to integrate and operationalise our targets into our processes and lending decisions.\n## OUR APPROACH TO CARBONOFFSETS FOR OUR NZBA 2030SECTOR LENDING TARGETS\nWe believe reducing emissions should be a priority action in achieving targets and the transition to netzero. We recognise carbon offsets are likely to play a role to supplement decarbonisation in line with climate science-based scenarios. We do not intend to purchase carbon offsets to meet our NZBA 2030 sector lending targets. We understand that some customers are using or may use offsets to meet their decarbonisation targets and some of the data we use may also include customer offsets. Guidance around the quality and utilisation of carbon credits is a rapidly evolving area and we will review our approach to the use of carbon offsets in line with NZBA Guidance.\n### Reduce our financed emissions (continued)\n### Thermal coal mining7:\nGiven the significant emissions generated from thermal coal, we seek to eliminate our exposure to thermal coal mining and have set short- and medium-term commitments. As a first step, we are focusing on institutional customers with a significant portion $( \\geq 1 5 \\% )$ of their revenue coming directly from thermal coal mining. Our NZBA 2030 sector lending target (refer to our Action Plan on page 11) applies a lower revenue threshold $( > 5 \\% )$ which captures diversified companies with minor thermal coal interests.\nOur positions on oil and gas, coal mining and power generation sectors are summarised below. They operate alongside our NZBA 2030 sector lending targets.", "chunk_word_count": 492, "section_path": "Acknowledgement of Indigenous Peoples > OUR APPROACH TO CARBONOFFSETS FOR OUR NZBA 2030SECTOR LENDING TARGETS > Reduce our financed emissions (continued)", "document_id": "Westpac 2023 climate report", "page": 103, "page_start": 103, "page_end": 104 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 56, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## OUR APPROACH TO CARBONOFFSETS FOR OUR NZBA 2030SECTOR LENDING TARGETS\n### Upstream oil and gas1 :\n— Subject to national energy security2:\n• we will not provide project finance or bond facilitation for the development of new (greenfield) or expansionary oil and gas fields, including new associated dedicated infrastructure3, unless in accordance with the International Energy Agency Net-Zero by 2050 scenario4. we will continue to provide corporate lending and bond facilitation where the customer has a credible transition plan5 in place by 30 September 2025. we will work with customers to support their development of their credible transition plans.\n— We will not provide any project financing to new, expansions or extensions of thermal coal mines.\n— For institutional customers with $2 1 5 \\% ^ { 8 }$ of their revenue coming directly from thermal coal mining, we will:\n• effective immediately, not onboard new customers • effective immediately, not provide corporate lending or bond facilitation. This includes for new, expansions or extensions of life of existing thermal coal mines • have zero lending by 30 September 2025.\n— We will not provide project finance for oil and gas exploration in high-risk frontier basins, such as Arctic and Antarctic refuges or for oil sands development.\n### Metallurgical coal mining:\n— We will not provide project finance for exploration of shale, offshore deep water or ultra-deep-water6 oil and gas.\n— We will continue to support the metallurgical coal sector as it remains critical for steel production at scale, which is required to support the transition to net-zero emissions.\nOver FY23, we engaged with upstream oil and gas customers to gain insight into their transition plans. While the sector is making progress in developing emissions reduction plans and achieving reductions to scope 1 and 2 emissions, we recognise there are challenges in establishing scope 3 reduction plans.\n— We will not provide project finance for new (greenfield) metallurgical coal projects.\n— We will continue to explore opportunities to work with customers to support the development of alternative products and processes, where appropriate.\nThrough our engagement we deepened our understanding of how challenging it will be for the sector to establish $1 . 5 ^ { \\circ } \\mathrm { C } \\cdot$ -aligned transition plans covering scope 1, 2 and 3 by 30 September 2025. We will engage further to understand our customers’ evolving decarbonisation strategies. Alongside this, we will also continue to monitor, assess and be guided by the latest science and government policy, while considering energy security and affordability.\n### Power generation:\n— We will not provide project finance to new (greenfield) coal-fired power generation facilities. — We will consider the intersecting requirements of emissions reduction, the feasibility of emerging technologies, as well as energy affordability, security and reliability.\nAs we work towards becoming the transition partner of choice, we seek to increase our sustainable finance offering. By 2030, our targets are to provide $\\$ 550\\mathsf { n }$ of lending and $\\$ 400$ of bond facilitation activities that are aligned with our Sustainable Finance Framework. For further information refer to the Westpac Sustainable Finance Framework available on our website.", "chunk_word_count": 527, "section_path": "Acknowledgement of Indigenous Peoples > OUR APPROACH TO CARBONOFFSETS FOR OUR NZBA 2030SECTOR LENDING TARGETS > Upstream oil and gas1 :", "document_id": "Westpac 2023 climate report", "page": 104, "page_start": 104, "page_end": 105 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 57, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## CARBON TRADING\nThrough our Carbon Trading Desk, we facilitate the purchase and sale of accredited1 offsets. We seek to:\n— support customers with their decarbonisation plans by facilitating access to the Renewable Energy Certificates market in Australia and carbon markets both in Australia (e.g. Australian Carbon Credit Units) and New Zealand (New Zealand Units)\n## B. Help build climate resilience\n### Help our customers and communities build resilience to the physical impacts of climate change\n— help Emissions Trading Scheme (ETS) participants trade in the New Zealand ETS (NZ ETS)\n### Institutional and business customers\n— develop capabilities to support producers of carbon credits by providing them with capital and risk management solutions.\nClimate change physical risks can impact the value of assets and projects we finance for customers. Climate change can also impact customer operations and supply and distribution chains. Customers’ adaptation plans become increasingly important to reduce their vulnerability to physical impacts of climate change. We seek to support customers as they develop adaptation measures to build climate resilience. This also enables surrounding industries and communities to become more resilient. We seek to understand where physical risks will have a material impact across our institutional and business banking portfolio.\nTo support and guide our approach to our Carbon Trading Desk we seek to proactively engage with our customers while participating in industry working groups to help shape the future of carbon markets. We are also a member of the Carbon Market Institute.\n1 Accredited offsets refer to carbon offset credits that have been verified by a recognised independent party under international standards as appropriate at the time of creation of the offset. Westpac does not provide accreditation services, nor does it engage in the accreditation process.\nWe support customers, including small business customers, to get back on their feet after experiencing a natural disaster event by providing access to relief packages, giving customers payment relief and time to start the repair and rebuild. In New Zealand, our Adverse Natural Events Policy provides a comprehensive range of financial assistance measures to customers impacted by natural disasters.", "chunk_word_count": 353, "section_path": "Acknowledgement of Indigenous Peoples > B. Help build climate resilience > Help our customers and communities build resilience to the physical impacts of climate change", "document_id": "Westpac 2023 climate report", "page": 105, "page_start": 105, "page_end": 105 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 58, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## B. Help build climate resilience\n### Become the transition partner of choice\nAs a bank, one of the most significant roles we can play in the transition to a net-zero economy is to support customers in their transition and to mobilise capital.\nFor institutional customers we seek to:\nAgribusiness plays a fundamental role in providing food and other essential goods, driving economic prosperity and supporting livelihoods and communities. Climate change physical risks are increasingly material to agribusinesses. We recognise the ability to adapt to a changing climate is vital, not just for agribusiness customers, but for society as a whole. We seek to help customers respond to physical risks of climate change by:\n— build our capability and evolve our products and services to better meet their emerging needs \n— where applicable, support their transition by providing guidance on climate strategy and in the development of transition plans \n— offer a suite of finance solutions and products to help them meet their sustainability goals, including changing business models, investments in emissions reduction, low/zero carbon technologies, sustainable finance and infrastructure.\n— providing access to products and services that support climate adaptation and resilience \n— engaging with them to support their insights on climate adaptation measures and practices \n— supporting customers affected by drought and natural disasters.\nWe have developed a pilot net-zero transition plan framework for assessing and engaging with institutional customers. This has been informed by a range of local and international sources, such as Climate Action ${ \\mathsf { 1 0 0 + } }$ and the Transition Pathway Initiative. We will continue to evolve our framework as standards evolve and further engage with our customers. We aim to continue to apply a framework across key customers in carbon intensive sectors in FY24. For more detail, refer to our annual climate-related disclosures.\nConsumer banking\nAs a major residential mortgage lender, we have a role to play in helping customers understand and respond to the impacts of climate change. In delivering products and services for customers, we seek to provide customers with information to understand and prepare for the impacts of natural disasters on their homes and communities. We also support customers as they recover after a natural disaster event through access to hardship assistance and disaster relief packages to customers and communities affected.\nWe also see opportunities to further support commercial, small and medium businesses and consumers in their transition to net-zero. This includes engaging with businesses and consumers, and providing access to products and services that support customers to reduce their environmental footprint and transition to a low carbon economy.\nWe monitor our physical risks and seek to understand our risk exposure and vulnerability across our residential mortgages portfolio.\n### ACTION 3 – COLLABORATE FOR IMPACT ON INITIATIVES TOWARDS NET-ZERO AND CLIMATE RESILIENCE", "chunk_word_count": 471, "section_path": "Acknowledgement of Indigenous Peoples > B. Help build climate resilience > Become the transition partner of choice", "document_id": "Westpac 2023 climate report", "page": 105, "page_start": 105, "page_end": 105 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 59, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## B. Help build climate resilience\n### Addressing climate change requires collective action and collaboration.\nWestpac’s position on climate change policies comprises three pillars.\nWe recognise the important role we can play by supporting and participating in international, national and industry-based initiatives to progress collective action on climate change.\n1. Policies need to be aligned with the temperature goals of the Paris Agreement, be capable of achieving the Nationally Determined Contributions that represent each country’s committed global emissions reduction targets in the short and medium term, and give consideration to the long-term target of reducing emissions to net-zero by 2050 without relying on carry-over credits from the Kyoto Protocol.\nFor example, we are a founding member of the United Nations Environment Programme Finance Initiative’s Principles for Responsible Banking and have committed to the NZBA. Further details on our participation in industry groups can be found in our annual climate-related disclosures.\n## 2. Policies should:\n— deliver a clear framework to support the development and deployment of low-emissions technology by providing certainty over a timeline sufficient to match investment horizons which are often long-term\nWe also understand that governmental policy response to climate change will influence the speed of transition and climate change adaptation. We seek to engage with government, industry and business associations. We aim to identify and collaborate with industry groups on initiatives that align with our principles and ambition to become a net-zero, climate resilient bank. We continue to review our membership of industry associations and their advocacy activity with regards to climate change in line with our Industry Association Principles1 .\n— include strategies to increase resilience and promote adaptation for impacted communities, companies and sectors\n— incentivise increased transparency and support development and adoption of reporting frameworks to improve reliability, relevance and measurability of climate-related disclosures.\n3. A broad market-based price on carbon is the most effective, affordable, flexible and equitable means of achieving emissions reductions across the economy.\nUnless specified, we aim to implement the actions in our Action Plan by 30 September 2025. Other targets refer to Westpac Group’s financial year, e.g. 2030 targets to be achieved by 30 September 2030.\n### Net-zero and climate resilience in our operations\n### Supporting customers’ transition to net-zero and to build their climate resilience", "chunk_word_count": 382, "section_path": "Acknowledgement of Indigenous Peoples > B. Help build climate resilience > Addressing climate change requires collective action and collaboration.", "document_id": "Westpac 2023 climate report", "page": 106, "page_start": 106, "page_end": 108 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 60, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## RISK MANAGEMENT\nGOVERNANCE\nSTRATEGY\n### Supporting customers’ transition to net-zero and to build their climate resilience (continued)\nTarget: 76.4 gCO2-e/passenger km for scope 1 by 20302\n### Key transition actions:\n— Provide financing for activities and technologies that support customers to reduce their emissions, for example Sustainable Aviation Fuels procurement or development Manage our portfolio and seek to onboard new customers, prioritising companies with stronger decarbonisation commitments Engage with customers as they develop their emissions reduction plans, focusing our engagement on opportunities for fuel efficiency and key technologies\n### Agriculture (Australia)3\n### Targets:\nDairy: $10 \\%$ reduction in scope 1 land management4 emissions intensity (tCO2-e/tonne of FPCM5) by 2030 from a 2021 baseline\nBeef and sheep: $9 \\%$ reduction in scope 1 land management emissions intensity ( $\\mathrm { \\ t C O } _ { 2 }$ -e/tonne of FW6) by 2030 from a 2021 baseline\nAs part of our Agriculture targets, we are committed to no deforestation, which provides for no further conversion of natural forest7 to agricultural land use within farm systems from 31 December 2025 for customers in scope of the targets\n### Key transition actions:\nEngage with industry groups and representatives to identify collaboration opportunities such as support and investment in emissions reduction technology and data capture \nEngage with customers on opportunities for emissions reductions and efficiency, as well as our commitment to no deforestation\n### Supporting customers’ transition to net-zero and to build\n### Supporting customers’ transition to net-zero and to build their climate resilience (continued)\n### Collaborate for impact on initiatives towards net-zero and climate resilience\n### Strengthening our approach to climate change\n### Build our capabilities\n## APPENDIX VI. TCFD INDEX\n## TCFD INDEX\nThis report is aligned with the TCFD recommendations with the table below indicating where to find information associated with the recommended disclosures. We note that on 10 July 2023, it was announced that the TCFD will be transferred into the International Sustainability Standards Board (ISSB) from 2024. We are working towards alignment with inaugural ISSB standards, IFRS S1 and S2. We also include references across our broader suite of publicly available documents.\nIn this Report, Governance, Strategy and Risk Management are covered in separate sections, whereas the metrics and targets detail are included in the strategy section.\n## CLIMATE-RELATED COMMITMENTS, PARTNERSHIPS AND MEMBERSHIPS\nand uncertainties and assumptions and other factors which are, in many instances, beyond the control of Westpac, its officers, employees, agents and advisors, and have been made based upon management’s current expectations, understandings or beliefs concerning future developments and their potential effect upon us.", "chunk_word_count": 435, "section_path": "Acknowledgement of Indigenous Peoples > RISK MANAGEMENT", "document_id": "Westpac 2023 climate report", "page": 109, "page_start": 109, "page_end": 115 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 61, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## CLIMATE-RELATED COMMITMENTS, PARTNERSHIPS AND MEMBERSHIPS\n### Disclaimer\nThe information in this document is general information about the Group and its activities as at the date of this Climate Report. It is given in summary form and is therefore not necessarily complete. It is not intended that it be relied upon as advice to investors or potential investors, who should be seeking independent professional advice depending on their specific investment objectives, financial situation or particular needs. The material contained in this document may include information, including, without limitation, methodologies, modelling, scenarios, reports, benchmarks, standards, tools, metrics and data, derived from publicly available or government or industry sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information.\nAlthough management currently believes these forwardlooking statements have a reasonable basis, there can be no assurance that future developments or performance will be in accordance with our expectations or that the effect of future developments on us will be those anticipated. There is a risk that the best estimates, judgements, assumptions, views, models, scenarios, projections used may subsequently turn out to be incorrect.\nActual results, performance, conditions, circumstances or the ability to meet commitments and targets could differ materially from those we expect or are expressed or implied in such statements, depending on various factors, including without limitation significant uncertainties in climate change and sustainability related metrics and modelling as well as further development of methodologies, reporting or other standards which could impact metrics, data and targets (noting that climate and sustainability science, standards, methodologies and reporting are subject to rapid change and development).\nThis document contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the US Securities Exchange Act of 1934. Forward-looking statements are statements about matters that are not historical facts. Forward-looking statements and metrics appear in a number of places in this document and include statements regarding our current intent, belief or expectations with respect to our business and operations, macro and micro economic and market conditions, results of operations and financial condition, capital adequacy and risk management, including without limitation, climate change, net-zero, emissions intensity and other sustainability related statements, commitments and targets, projections, scenarios, risk and opportunity assessments, pathways, forecasts and metrics, forecasted economic indicators and performance metric outcomes, financial support to certain borrowers, indicative drivers, estimated emissions and other proxy data. These are subject to known and unknown risks, and there are significant uncertainties, limitations, risks and assumptions in the metrics and modelling on which these statements rely. In particular, the metrics, methodologies and data relating to climate and sustainability are rapidly evolving and maturing, including variations in approaches and common standards in estimating and calculating emissions, and uncertainty around future climate- and sustainabilityrelated policy and legislation. There are inherent limits in the current scientific understanding of climate change and its impacts.", "chunk_word_count": 486, "section_path": "Acknowledgement of Indigenous Peoples > CLIMATE-RELATED COMMITMENTS, PARTNERSHIPS AND MEMBERSHIPS > Disclaimer", "document_id": "Westpac 2023 climate report", "page": 115, "page_start": 115, "page_end": 115 }, { "report": "Westpac 2023 climate report.pdf", "chunk_idx": 62, "chunk_text": "# Acknowledgement of Indigenous Peoples\n## CLIMATE-RELATED COMMITMENTS, PARTNERSHIPS AND MEMBERSHIPS\n### Disclaimer\nThere are usually differences between forecast and actual results because events and actual circumstances frequently do not occur as forecast and their differences may be material. Factors that may impact on the forwardlooking statements made include, but are not limited to, those described in this document and in the section titled ‘Risk factors’ in Westpac’s 2023 Annual Report available at www.westpac.com.au. Investors should not place undue reliance on forward-looking statements and statements of expectation, including targets, particularly in light of the current economic climate and the significant global volatility.\nThese statements are not guarantees or predictions of future performance and Westpac gives no representation, warranty or assurance (including as to the quality, accuracy or completeness of this document), nor guarantee that the occurrence of the events expressed or implied in any forward-looking statement will occur. When relying on forward-looking statements to make decisions with respect to us, investors and others should carefully consider such factors and other uncertainties and events, and the judgments and data presented in this document are not a substitute for investors and other readers’ own independent judgements and analysis. Investors and others should also exercise independent judgement, with the advice of professional advisers as necessary, regarding the risks and consequences of any matter contained in this document. To the maximum extent permitted by law, responsibility for the accuracy or completeness of any forward-looking statements, whether as a result of new information, future events or results or otherwise, is disclaimed. Except as required by law, we assume no obligation to update any forward-looking statements contained in this document, whether as a result of new information, future events or otherwise, after the date of this document.\nForward-looking statements may also be made by members of Westpac’s management, directors, officers or employees (verbally or in writing) in connection with this document. Such statements are subject to the same limitations, uncertainties, assumptions and disclaimers in this document.\nWe use words such as ‘will’, ‘may’, ‘expect’, ‘indicative’, ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘anticipate‘, ‘believe‘, ‘probability‘, ‘risk‘, ‘aim‘, ‘target’, ‘plan’, ‘estimate‘, ‘outlook‘, ‘forecast‘, ‘goal’, ‘guidance’, ‘ambition’ ‘assumption’, ‘projection’, or other similar words that convey the prospective nature of events or outcomes and generally indicate forward-looking statements.\nThese forward-looking statements reflect our current best estimates, judgements, assumptions and views as at the date of this document with respect to future events and are subject to change, certain known and unknown risks\n### Contact", "chunk_word_count": 414, "section_path": "Acknowledgement of Indigenous Peoples > CLIMATE-RELATED COMMITMENTS, PARTNERSHIPS AND MEMBERSHIPS > Disclaimer", "document_id": "Westpac 2023 climate report", "page": 115, "page_start": 115, "page_end": 115 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 0, "chunk_text": "# 2023 Sustainability Report\nASX Market Announcements Offi ce \nAustralian Securities Exchange \n20 Bridge Street \nSydney NSW 2000\nAttached for release is a copy of the Woolworths Group 2023 Sustainability Report.\nThe Sustainability Report, Woolworths Group’s 2023 Modern Slavery Statement and further details about our sustainability plans and achievements will be available on the Woolworths Group website.\nAuthorised by: Kate Eastoe, Group Company Secretary\n## For further information contact\n## Investors and analysts\n## Media\nPaul van Meurs \nHead of Investor Relations \n+61 407 521 651\nWoolworths Press Offi ce media@woolworths.com.au +61 2 8885 1033\n## 2023 Sustainability Report\n[IMAGE CAPTION] Halfway to 2025\n### Contents\n### Everything is connected.\n## SECTION 1\n### Overview\nAbout this report 2 Our reporting suite 3 CEO and CSO message 4 Our changing world 6 Quantifying our \nsocietal impact 8 Focusing on what matters 10 Our purpose-led strategy 12 Integrated approach \nto delivery 14 Our progress aligned \nto our 2025 plan 16\n### Acknowledgement of Country\nWoolworths Group acknowledges the many Traditional Owners of the lands on which we operate, and pay our respects to their Elders past and present. We recognise their strengths and enduring connection to lands, waters and skies as the Custodians of the oldest continuing cultures on the planet.\nWe live in an interconnected world, from natural ecosystems and social networks to business partnerships, customer relationships and more. We recognise this linkage and aim to play a meaningful role in driving systemic change to make a positive long-term impact.\n## SECTION 2\n### People\nWe believe in decisive action and have integrated our sustainability and business strategies. This enables us to play a responsible social, economic and environmental role whilst creating value through our business operations.\nTruly inclusive workplace 20 \nEthical value chain 23 \nHolistic wellbeing of our team 24 \nPositive impact on \ncommunities we serve 26\nWe remain committed to actively contributing to Australia’s reconciliation journey through listening and learning, empowering more diverse voices and working together for a better tomorrow.\nWoolworths Group reaffirms our support for the Uluru Statement from the Heart, and its calls for a First Nations Voice to Parliament enshrined in the Constitution.\nOur Woolworths Group 2023 Sustainability Report documents our sustainability approach and performance.\n## SECTION 3\n### Planet\n### We’re all in this together\nTowards net positive 30 Our pathway to net positive 32 Towards reducing food waste and hunger 38\nWe recognise that to create meaningful change, we must all \nwork together towards collective action. We are collaborating \nwith our supply chain partners, participating in government and industry initiatives and partnering with community organisations and innovators to find joint solutions. \nWe understand that we are on a journey and the path is long. We have made good progress in some areas and have further to go in others. But with our goals and activities \naligned, we believe we will continue to contribute to people’s wellbeing and care for the planet we call home.", "chunk_word_count": 492, "section_path": "2023 Sustainability Report > For further information contact", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 1, "page_start": 1, "page_end": 3 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 1, "chunk_text": "# 2023 Sustainability Report\n## SECTION 4\n### Product\n### See our report online\nMaking healthier easier 44 Supporting the sustainability of our packaging 48 Sourcing our products sustainably 52 Leading the future of protein 54\nUse the links below or scan the QR code to view this report and our 2023 Sustainability Data Pack.\nSECTION 5\nDirectory\nNext steps 56 \nCorporate directory 57\n### Nothing is isolated.\nVisit our online report at woolworthsgroup.com.au/ au/en/investors/our-performance/reports.html\n### Our reporting suite\n### About this report\nWoolworths Group is pleased to share how we’re building a better tomorrow and encourage you to explore our full reporting suite detailing our performance.\nThis Sustainability Report discloses our strategic direction and performance against material sustainability topics affecting Woolworths Group. Our detailed climate and nature disclosures are in our 2023 Annual Report and our annualised performance data in our 2023 Sustainability Data Pack.\n## 2023 Annual Report\n## 2023 Sustainability Data Pack\nUnless stated, it covers our operations in Australia and New Zealand for the 2023 financial period: 1 July 2022 to 30 June 2023 (F23) or 27 June 2022 to 25 June 2023 if based on weekly sales data. Deloitte has provided independent assurance of select information included in this Report. The full assurance statement is available on the Reports and Data page of our Woolworths Group website.\nThe forward looking statements in this report are based on management’s good faith, current expectations and reflect judgements, assumptions and estimates and other information available as at the date of this report. They are, by their nature, subject to significant uncertainties, many of which are outside Woolworths Group’s control. Actual results, circumstances and developments may differ materially from those expressed in this report and readers are cautioned not to place undue reliance on these forward looking statements. Forward looking statements should therefore be read in conjunction with, and are qualified by reference to the expectations, judgements, assumptions, estimates and other information and risk factors, referred to above.\nPerformance of the Group and its retail, B2B and everyday businesses.\nProvides key sustainability metrics.\n### Click here to\nClick here to view the data pack and other sustainability related disclosures on our website\nview the report on our website\nThis report contains forward looking statements, including but not limited to statements regarding: trends in consumer preferences; commodity prices; goals, targets, plans, strategies and objectives of Woolworths Group; assumed near and long-term scenarios and transition pathways; potential global responses to climate change; regulatory and policy developments; the development and uptake of certain technologies; and the potential effect of possible future events on the value of Woolworths Group.\n## 2023 Modern Slavery Statement\n## 2023 Corporate Governance Statement\nProgress made to identify, manage and mitigate the specific risks of modern slavery in our operations and supply chain.\nDescribes our corporate governance framework, including key policies and practices for the F23 financial year.", "chunk_word_count": 480, "section_path": "2023 Sustainability Report > SECTION 4", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 3, "page_start": 3, "page_end": 4 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 2, "chunk_text": "# 2023 Sustainability Report\n## 2023 Corporate Governance Statement\n### Transparent reporting\nClick here to view the report on our website\nWe report our progress in line with applicable legislation, frameworks and certifications and aim to evolve our approach in line with global best practices. Woolworths Group Limited supports the Ten Principles of the UN Global Compact (UNGC) in the areas of Human Rights, Labour, Environment and Anti-Corruption. In this Report, we describe our actions to continually improve the integration of the UN Global Compact and its principles into our Group's strategic priorities, culture and daily operations.\n### Sustainability Plan 2025\nOur program of positive change incorporating our goals and commitments across three pillars: our people, our planet and our products.\nClick here to view the plan on our website\n### UN Sustainable Development Goals (SDGs)\nThe 17 global goals set by the United Nations in 2015 define sustainable development priorities and aspirations for the planet. They seek to mobilise international efforts around common goals and targets. We believe business participation is critical in achieving these goals and have aligned our priorities with the relevant SDGs.\nFor more on our approach to sustainability visit woolworthsgroup.com.au\n### Progress against our 2025 Plan\nAt the midpoint of our 2025 Sustainability Plan (2025 Plan), we took the opportunity to pause, review and refresh our approach to continue to make progress across our goals.\nThis has reinforced to us the key role we have in collaborating with industry and government to make circularity as customer-friendly as possible.\nThis year, we strengthened our disclosure to transparently report our performance, risks and opportunities (e.g. our approach to climate and nature). It is also exciting to see progress we’ve made in improving the accuracy and accessibility of our data via our online reporting hub. This will support our transition to report against the new International Sustainability Standards Board requirements from F24.\n### People\nCaring deeply is part of our culture. In the last year, our efforts towards ${ \\mathsf { L G B T Q } } +$ Inclusion was awarded Platinum Status by AWEI, the first for any retailer. We reached $3 9 . 8 \\%$ representation of women in our leadership team in Australia and $3 9 \\%$ in New Zealand. We also launched our latest Innovate level Reconciliation Action Plan to drive meaningful progress towards reconciliation with Indigenous Australia over the next two years.\n### Towards a better tomorrow\nOur care for people extends to our suppliers and communities. Last year we remediated the first identified case of modern slavery within our supply chain by verifying the return of approximately $\\$ 734,000$ in recruitment fees to 230 migrant workers. We continue to invest in our communities with $\\$ 122.1$ million in contributions to support natural disaster resilience, food security, education and health.\nAs Woolworths Group approaches our 100th year in 2024, we are focussed on delivering meaningful change across our entire supply chain. Our priority remains delivering on our 2025 Plan. In parallel, we are also in the process of quantifying the impact of our various initiatives as this will help us understand and inform how we strategically prioritise opportunities of greatest impact.\n### Halfway to 2025", "chunk_word_count": 533, "section_path": "2023 Sustainability Report > 2023 Corporate Governance Statement > Transparent reporting", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 4, "page_start": 4, "page_end": 5 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 3, "chunk_text": "# 2023 Sustainability Report\n## 2023 Corporate Governance Statement\n### Planet\nThank you for your support and interest as we strive to be better together. On behalf of the Woolworths Group team, we’re pleased to share with you our 2023 Sustainability Report.\nHaving a healthy business requires a healthy planet. We’re excited to be transitioning our home delivery fleet to electric trucks – supporting our aim to reduce emissions in our Group’s transport fleet by $60 \\%$ by 2030. We’ve started with 27 new electric vehicles (EVs) on Sydney roads and will work to replace our 1,200 home delivery trucks. With this, and a range of other initiatives, we’re on track to mitigating $80 \\%$ of our scope 1 and 2 emissions by 2030, which saw a $36 \\%$ decrease this year from baseline.\nBrad Banducci CHIEF EXECUTIVE OFFICER\nAlex Holt CHIEF SUSTAINABILITY OFFICER\nThe scale of our value chain materially contributes to our total emissions and impact on nature. This year, we focused on collaborations and pilots to improve our understanding of scope 3 and nature-related risks and complexities. Our value chain emissions program saw $90 \\%$ participation from suppliers in high-emissions food categories with plans to further expand this to all suppliers.\nF23 marked a return to relative stability across our operating environment following the material disruption caused by COVID. It has however brought new challenges in the form of cost of living pressure and we are focussed on navigating this together with our customers, team and the communities we serve. Our purpose of creating better experiences together for a better tomorrow has never been more important and it provided alignment and focus in F23.\nCommunity contribution\n3.61% of EBT on a two-year rolling average", "chunk_word_count": 287, "section_path": "2023 Sustainability Report > 2023 Corporate Governance Statement > Planet", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 5, "page_start": 5, "page_end": 5 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 4, "chunk_text": "# 2023 Sustainability Report\n## 2023 Corporate Governance Statement\n### Product\nOur products are a tangible way we can make positive change. In a year where communities increasingly turned to our own brands for access to affordable food, we’re pleased to be recognised as Australia's healthiest supermarket own brands for the fourth year in a row. 1\nWe’re extremely grateful for the resilience and agility of our teams. We recognise that collective action is key to our success and thank our customers, suppliers and partners for their trust and support.\nScope 1 and 2 emissions reductions\nAs we consider our Group’s strategic priorities, we see sustainability as a value driver key to the long-term success of our business. In the last year, we delivered over \\$500 million in net societal benefit through investments in health, food security, decarbonisation and circularity. 1\nOur support for customer recycling efforts were disrupted with the collapse of soft plastic recycler, REDcycle. We share the disappointment of our customers, our supply partners and other stakeholders in what has happened. We’re working as part of the Soft Plastics Taskforce, collaborating with government and other retailers, to resume access to soft plastics recycling and restore public confidence.\n36% below 2015 baseline\nUnfortunately, our progress was overshadowed by the fact that tragically, two of our team members lost their lives at work during the year. We are deeply saddened by this loss, and our thoughts remain with the families and many friends, and colleagues affected. This has fortified our daily commitment to providing a safe workplace for every team member. Nothing matters more than the safety and wellbeing of our team, we are working to ensure learnings are gained and appli\nWinner\n## 2023 Banksia Gold and Large Business Sustainable Leadership Award\n### Our changing world\n### Our opportunity to create impact at scale\nWoolworths Group annually reviews our 2025 Sustainability Plan (see page 12) to identify opportunities to deliver impact at scale. Our annual review highlighted our growing impact potential up and down our value chain, particularly in the areas of decarbonisation, food security, circularity (packaging) and health.\nWe will lead by example by first working to improve outcomes in our operations and own brands to demonstrate the behaviours we espouse. We aim to then leverage this progress to influence change at scale across our value chain, encouraging sustainable practices across our products’ lifecycles. We will do this by:\nUnderstanding external drivers\n+ expanding engagement with suppliers upstream to help educate, partner and accelerate cross-industry solutions to common challenges building better advocacy with our customers downstream through sustainable product offerings, supporting our communities and creating opportunities to engage in our sustainability plans.\nThe scale of our business enables us to make a meaningful contribution. This responsibility, as well as the rapid pace of change in sustainability, means that during the year we worked to understand the trends affecting our business, industry and supply chain across Australia and New Zealand. 1 The most significant of these, as detailed below, informs our understanding of highest impact.\n### Our impact opportunity", "chunk_word_count": 511, "section_path": "2023 Sustainability Report > 2023 Corporate Governance Statement > Product", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 5, "page_start": 5, "page_end": 6 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 5, "chunk_text": "# 2023 Sustainability Report\n## 2023 Banksia Gold and Large Business Sustainable Leadership Award\n### Decarbonisation and nature positive outcomes\nOur scope 3 is 15 times our scope 1 and 2 emissions combined. This scale has a material impact due to the resources used to produce food for our customers. Collective action will be key in the transition consistent with net zero emissions and a nature-positive future.\n### Climate resilience\n### Cost of living pressures\n### Transparency and integrity\n### Hunger and food waste\nFood insecurity is caused by inequity, affordability and access. By partnering with our suppliers and customers, we can drive systemic changes to food waste reductions, redistribute edible food to people in need and improve affordability of our products.\nAustralia and New Zealand continue to be impacted by natural disasters and there is a growing need for adaptation and resilience measures to strengthen our supply chain and minimise disruptions. There is increased emphasis on reducing and reporting scope 3 emissions through the introduction of nature-based solutions and low-carbon practices. Regulatory pressures are also continuing to build to demonstrate tangible progress on targets in line with new standards.\nRising cost of living pressures driven by industry-wide supply chain driven inflation continues to impact our customers and team members. To help with this, we have continued to improve our value proposition for our customers and have increased support for our team members, as well as for our communities and those facing food insecurity; however, this will continue to be an ongoing focus in F24.\nThe Australian government’s establishment of a federal independent commission against corruption, alongside the ACCC’s focus on greenwashing, signal a stronger emphasis on transparency and integrity within reporting. In addition, mandates on newly launched disclosure standards reflect a shift in financial reporting in recent years. Recognising the value of consistent reporting in line with emerging regulatory changes, we will begin a transition to reporting against the International Sustainability Standards Board standards from F24.\n### Plastics and packaging\nPlastics have low current rates of recovery and recyclability. This creates an opportunity to drive circularity in our operations and via extensive supplier relationships, investing in innovation to strengthen product stewardship outcomes, and supporting customers’ recycling efforts.\nHealthier choices\nMost Australians and New Zealanders are not consuming foods in line with Dietary Guidelines leading to increasingly poor health outcomes. Through our own brands we are working to enable and inspire healthier, more affordable product choices. By leveraging our supplier partnerships, we can extend this across our vendor brands to materially increase healthier choices in our customers' baskets.\nSources: Decarbonisation: 2022 TCFD and Sustainability reports; Food waste: Australian Department of Agriculture, Water and the Environment; Foodbank Australia; Food Innovation Australia Limited, A Roadmap for reducing Australia's food waste by half by 2030, 2020; Packaging: Australian Packaging Covenant Organisation; Healthier choices: Internal modelling based on units of healthier (>3.5 HSR) products sold.", "chunk_word_count": 481, "section_path": "2023 Sustainability Report > 2023 Banksia Gold and Large Business Sustainable Leadership Award > Decarbonisation and nature positive outcomes", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 6, "page_start": 6, "page_end": 6 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 6, "chunk_text": "# 2023 Sustainability Report\n## 2023 Banksia Gold and Large Business Sustainable Leadership Award\n### Quantifying our societal impact\nWe aim for our efforts to address societal issues and promote positive change. This year, we partnered with Oxford Economics Australia to understand the impact of our actions, in terms of societal outcomes and their value. The purpose of this is to enable us to prioritise strategic initiatives for greatest impact, as we consider how to evolve our goals and commitments beyond 2025. The first phase focused on the decarbonisation of our operations, the reduction of nutrients of concern and plastic packaging from our own brands, and the diversion of food otherwise going to landfill. As we continue to improve this work in F24, we will cover a wider set of initiatives, as well as explore specific topics in more detail, as part of our strategy development. The integrity of this work is supported by the expertise of Oxford Economics and their use of Australian, New Zealand and international peer-reviewed literature and government guidelines.\n### Hunger and food waste\n### Healthier choices\n### Decarbonisation\n## 500 \n73\ngigawatt hours of green electricity\n### Our actions:\nlow-GWP 1 refrigeration systems and 34 leakage detection systems\n34M meals donated\n## \\$55M\nHave resulted in:\nSalt removed from our own brands 56t\nnet societal benefit\nDelivered through:\navoided emissions\n33K tonnes diverted to farmers or composted K\nSugar removed from our own brands\n### Plastic and packaging\n136t\n800t plastic removed from our own brand packaging 1,200t recycled plastic used in our own brand packaging\n### Have resulted in:", "chunk_word_count": 265, "section_path": "2023 Sustainability Report > 2023 Banksia Gold and Large Business Sustainable Leadership Award > Quantifying our societal impact", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 7, "page_start": 7, "page_end": 7 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 7, "chunk_text": "# 2023 Sustainability Report\n## \\$450M\n\\$31M net societal benefit\n\\$12M net societal benefit\nnet societal benefit\n### Have resulted in:\nDelivered through:\navoided:\nemissions from plastic production\nlandfill costs emissions from landfill\nocean pollution new material costs\nDelivered through:\nimproved food security and connection to social services\n+ increase in disability adjusted life years 2 avoided health care system costs other (e.g. avoided animal feed costs)\n### Together these have delivered over \\$500M in net benefit to society in F23.\navoided emissions and landfill costs\n### Focusing on what matters\n### Including our stakeholders\nWoolworths Group's long-term success depends on including key stakeholders in our decisions, a process of continuous engagement for us. This helps us to understand how priorities evolve in a fast-paced and dynamic environment and is critical to our 2025 Plan, initiatives and business practices.\nOur actions are directed to one or more of these groups or entities. We also engage with other stakeholders such as government and regulators, civil society and non-government organisations (NGOs).\nWoolworths Group regularly reviews the most material environmental, social and governance issues affecting our business. In partnership with credible third-party agencies, we conduct these reviews with our customers, team and other stakeholders.\nCustomers\nTeam\n### Suppliers and business partners\nCommunities\nPlanet\nOur 2022 materiality assessment highlighted the evolution and complexity associated with sustainability. While we are working to better understand this, we acknowledge it is built up of interconnected challenges that cannot be tackled in silos. By listening and learning, we focus on topics most important to our business and stakeholders and identify impact hot spots and opportunities. This process is also crucial in evolving our sustainability priorities and informs the annual review of our 2025 Plan.\nFor more information see our 2023 Annual Report\nRead more page 12\n## 2023 Material topics\n### Strategic priorities\n### Emerging external priorities\n### Internal priorities\n### Monitoring developments\nStrategic issues of greatest significance to internal and external stakeholders that continue to be key to our priorities:\nIncreasing in importance and may be considered signals of future market expectations to proactively manage:\nImportant considerations to continually monitor with sector evolution, technology and regulation:\nRemain important to Woolworths Group and are used to drive engagement and activate performance:\n$^ +$ future of work and emerging technologies e.g. artificial intelligence (AI) $^ +$ responsible retailing.\n$^ { + }$ climate change \n$^ +$ healthy, sustainable and affordable products \n$^ +$ waste and circular economy \n$^ +$ human rights \n$^ +$ customer privacy and data security.\n$^ +$ community impact \n$^ +$ inclusion and diversity \n$^ +$ corporate conduct \n$^ +$ reconciliation \n$^ +$ holistic wellbeing \n+ engagement with customers on sustainability.\n$\\cdot$ nature and biodiversity $^ +$ sustainable and regenerative agriculture.\nSDGs:\n[IMAGE CAPTION] SDGs:\n### Our purpose-led strategy:", "chunk_word_count": 463, "section_path": "2023 Sustainability Report > \\$450M", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 7, "page_start": 7, "page_end": 8 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 8, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### Towards a better tomorrow\nWoolworths Group purpose: We create better experiences together for a better tomorrow\nWoolworths Group strategic priorities:\nOur commitment to sustainability is intrinsic to our business and the way we operate\nWoolworths Group is united and driven by our Group purpose: we create better experiences together for a better tomorrow. We strive to have a positive impact on our team, our planet, our customers and the communities we serve – and in doing so, create long-term stakeholder value and sustainable growth for our business.\nDelivering compelling customer propositions\nStrengthening our foundations\nOur sustainability guiding principles:\nSet a long-term direction for our actions, guiding our journey towards our Group purpose\nWe act like a leader and speak up on issues that matter\nWe care for, and We have a We apply circular unlock the potential positive impact thinking in of, our people on the planet everything we do\nWe embrace the power of partnerships to create change\n### Our approach and governance\nWoolworths Group’s strategic priorities have a customer-first, team-first approach and are focused on three key areas: living our purpose, delivering compelling customer propositions, and strengthening our foundations.\n### Our sustainability pillars and goals\nThe Sustainability Plan 2025 (2025 Plan) is the Group’s sustainability strategy and is critical to living our purpose. It is integrated with our Group strategic priorities and details our actions to become a more sustainable business today and tomorrow. Where relevant, targeted strategies named in this report, such as climate and nature, inclusion, etc. support the delivery of our 2025 Plan.\nTogether we work to create positive change for people and the planet through our products. \nOur 14 goals represent our long-term aspirations for positive change.\n### People\n### Product\n### Planet\nOur governance framework is critical for objective oversight of strategy, risk and performance. It relies on our purpose and values as the foundation, and holds us to account in how we deliver our 2025 Plan. The Woolworths Group Board Sustainability Committee (SUSCO) assists the Board in overseeing our sustainability risks, opportunities and performance, and monitors the effectiveness of the 2025 Plan and its sustainability-related strategies.\nOur People pillar focuses on creating a diverse and inclusive place for our teams to work. It means supporting our communities, building partnerships and working with our suppliers to make sure that workers' rights in our supply chain are protected.\nOur Planet pillar focuses on protecting the world we live in for current and future generations. It means going further than just limiting negative impacts; it means actively finding ways to create positive benefits.\nOur Product pillar focuses on evolving the way we do business to embrace circular thinking – which means all waste is a resource. It means making it easy for our customers to choose products that are healthier, sustainably sourced and responsibly packaged.\nGoal 1: Make health easier for Australians and New Zealanders\nGoal 1: Truly inclusive workplace\nGoal 1: Powered by green electricity", "chunk_word_count": 501, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > Towards a better tomorrow", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 9, "page_start": 9, "page_end": 9 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 9, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### Maintaining relevance\nGoal 2: Holistic wellbeing of our team\nGoal 2: Reducing hunger and food waste\nGoal 2: Our packaging is sustainable\nThe case and appetite for sustainable change is accelerating. By focusing on what matters (see page 10), we review our 2025 Plan’s goals and commitments as part of our annual planning cycle to maintain relevance in a changing world.\nGoal 3: Meaningful retail careers for today and tomorrow\nGoal 3: Net positive carbon emissions\nGoal 3: Own brand sourcing is sustainable\nThis year’s review considered the evolution of our operating context. From a wholly owned business‑to‑customer organisation when our 2025 Plan launched (in 2020), to now a Group of complementary adjacencies supported by platforms. The review identified that all our goals remained applicable and in some cases, extend beyond 2025. The goals have been updated to reflect this longer‑term and aspirational nature with the commitments under each of our goals represented with time bound, measurable targets. Most of our commitments remain relevant, with the following updated to better reflect our current operating environment:\nGoal 4: Responsible stewardship of natural resources\nGoal 4: Lead the future of protein\nGoal 4: Ethical and mutually beneficial partnerships through the whole value chain\nGoal 5: Lead the responsible retailing of alcohol and tobacco\nGoal 5: Positive impact on our customers and communities\nSee page 18\nSee page 28\nSee page 42\n### Our sustainability commitments\nOur commitments, namely targets which we are committed to working towards, support us in achieving our goals by 2025. See more detail on our commitments in our Sustainability Plan 2025.\nSupporting sustainability-related strategies\nInclusion strategy\nReconciliation strategy\nClimate and nature strategy\nTransport decarbonisation strategy\n### Integrated approach to delivery\n### Accelerating technology and innovation\nOur business accelerators help drive positive change towards our 2025 Plan through strategic partnerships and innovations that deliver mutually beneficial outcomes.\nIn F22 we established and operationalised our 2025 Sustainability Program – a significant transformational program across Woolworths Group – bringing together teams to collectively drive short and long-term action on our goals across People, Planet and Product. We do this by:\n### W360\nW360 aims to deliver market-leading solutions and innovations focused on energy, waste, water and packaging.\nCase study: saveBOARD a start-up, in New Zealand and Australia, is producing a low carbon building material made from previously unrecyclable waste liquid paperboard packaging (long life milk and juice cartons) and soft plastics. Woolworths Supermarkets has been trialling various iterations of saveBOARD’s products in stores.\n### Activating our 2025 Plan\nWe organise ourselves in line with the agile operating model, uplifting capabilities and expertise to have the right people partnering across the Group to achieve our goals. We do this through:\n$^ +$ a bi-monthly delivery forum that brings commitment owners together to connect, align, provide progress updates and collectively solve problems $^ +$ an executive steering committee that meets three times a year to help orchestrate delivery by providing recommendations and course corrections, and removing roadblocks $^ +$ reporting our progress to the Board SUSCO who review, appraise and approve our strategic direction, targets and material investments to manage actual or potential impacts on the Group.", "chunk_word_count": 534, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > Maintaining relevance", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 9, "page_start": 9, "page_end": 10 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 10, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### W23\nWe support our 40 commitments with pathways providing delivery transparency. With two and a half years to go, we are focused on delivering our 2025 Sustainability Program while working to understand our next horizon beyond 2025.\nW23 is Woolworths Group’s venture capital and innovation fund that uses our assets, scale and expertise to drive strategic partnerships. It invests in innovative startups in retail and climate technology.\nCase study: Samsara has developed groundbreaking enzyme-based technology to break down plastics into its core molecules, which can subsequently be used to infinitely produce new plastic products. Our partnership enables us to invest in a circular solution with the goal of reducing plastic waste and the resulting greenhouse gas emissions.\n### Mobilising delivery and engagement\nAs one of our guiding principles, we believe in the power of partnerships to create change. Our approach takes different forms as outlined below and are discussed throughout this report.\nBenchmarking ourselves with externally validated standards: This allows us to measure our progress, access expertise and align with industry best practices. Our external alignments include, but are not limited to, the Australian Packaging Covenant Organisation, Healthy Food Partnership, Reconciliation Australia, SDGs, UNGC, WGEA Employer of Choice, and in New Zealand the Accessibility Tick and Rainbow Tick.\n### Healthylife\nCollective problem solving and advocacy: We continue to advocate for government policies to encourage systemic approaches to critical issues, for example, national harmonisation of single-use plastic regulation. We also work to influence change via industry collaborations such as the Soft Plastics Taskforce and the Climate Leaders Coalition.\nHealthylife provides health and wellness advice, products, telehealth services and digital tools, backed by an advisory board of independent health professionals to shape how we help everyone live their healthy life.\nSupporting organisations to drive positive change: We partner with NGOs and charity organisations to deliver better outcomes for the planet and community. These include, but are not limited to, Good360, KiwiHarvest, Landcare Australia, OzHarvest, Rainbow Youth, Share the Dignity and The Salvation Army.\nCase study: The Healthylife Food Tracker is a free tool that helps inspire customers to make healthier food choices and achieve a balanced diet. It provides insight into their shopping baskets’ health, salt, sugar and fat content, as well as a series of health programs to support small, achievable changes for a healthier life.\nPartnering with our value chain: Our suppliers are critical to our success, and we actively engage with them as part of our Trade Partner Sustainability Councils. We collectively share knowledge on how we are progressing our packaging and health sustainability goals, and work to identify new sustainability opportunity areas for potential focus.\nWe are also working to build advocacy of team, customers, communities and partners through engagement in our sustainability plans. We do this through internal communities, transparent communications and education.\n### Our progress aligned to our 2025 Plan\n### People\n### Ethical and mutually beneficial partnerships through the whole value chain\n### Goal:\n### Truly inclusive workplace\n### Holistic wellbeing of our team\n### Meaningful retail careers for today and tomorrow\n### Positive impact on our customers and communities\n### Progress:", "chunk_word_count": 527, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > W23", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 10, "page_start": 10, "page_end": 10 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 11, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### Progress:\n$^ +$ $3 9 . 8 \\%$ senior leadership in Australia are women $( + 0 . 8 \\%$ on F22) $^ +$ Australian Workplace Equality Index (AWEI) Platinum Employer Status following delivery of our AWEI Platinum Project + Innovate RAP launched\n+ Total recordable injury frequency rate of 12.24 in F23 (+1.11 on F22) $^ +$ >47,000 team members and families signed up to Sonder, with professional support accessed >18,000 times\n$^ +$ 45% (\\$22.8M) of Future of Work Fund invested to up-skill and capability plan to deliver change to team career opportunities $^ +$ 600 senior leaders completed data analytics capability training\n$^ +$ Remediated first identified case of modern slavery in our supply chain, returning approximately $\\$ 734,000$ in recruitment fees to 230 migrant workers $^ +$ Voice of Supplier overall score of 55 (+3 on F22) $^ +$ #1 company globally in 2023 KnowTheChain Food and Beverage Benchmark\n$^ +$ $\\$ 75.8 M$ value of food donations $^ { + }$ $\\$ 122.1 m$ in total direct community contributions $^ +$ Woolworths NZ donated more than $\\$ 450,000$ (NZD) in food and funds for flood and cyclone relief\n### Planet\nPlanning: ooo Delivery plan built for commitments under this goal with collaboration across teams\n### Powered by green electricity\n### Reducing hunger and food waste\n### Net positive carbon emissions\n### Responsible stewardship of natural resources\n### Goal:\n\n\n\nCommencing: ●oo Early stages of work commenced, likely to involve test-and-learn approaches\nTotal renewable electricity is $2 2 . 6 \\%$ ( $+ 6 \\%$ on F22) $^ +$ Installed 231 solar systems across Australia and New Zealand totalling 48MW, with a further >16MW under construction\n+ $69 \\%$ food waste diverted from landfill across the Group + $\\scriptstyle > 3 4 \\mathsf { m }$ meals donated to our food rescue partners $13 \\%$ on F22 + 887 AU stores with access to organic waste $( + 9 \\%$ on F22)\n+ Scope 1 and 2 emissions reductions $36 \\%$ below 2015 baseline (- ${ \\cdot } 8 \\%$ on F22) 1 + Committed to $100 \\%$ electric vehicle (EV) home delivery vehicles by 2030\n+ Completed TNFD pilot assessing capacity of beef and salmon value chains and continued participation in Climate Leaders Coalition (nature working group) to progress our approach to measurement and mitigation of nature-based risk + Continued the Regenerative Management Systems for New Zealand Vegetable Production project with LeaderBrand to validate regenerative practices in horticulture\nProgressing: \nProgress being made toward commitments \nunder the goal\nAchieving: Commitments under the goal achieved and being sustained year on year\n### Product\n### Make health easier for Australians and New Zealanders\n### Our packaging is sustainable\n### Own brand sourcing is sustainable\n### Lead the future of protein\n### Lead the responsible retailing of alcohol and tobacco", "chunk_word_count": 480, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > Progress:", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 11, "page_start": 11, "page_end": 11 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 12, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### Goal:\nProgress:\n$+ 6 6 \\%$ vendor branded whole shell eggs cage free $( + 8 \\%$ on F22) \n$^ +$ Updated our Sustainable Seafood Policy to improve traceability and human rights \n$\\cdot$ Completed transitioning all Macro Fresh Free Range Chicken to RSPCA Approved Free Range in Australia\n$^ +$ Countdown range includes 88 zero and low alcohol options, with overall category sales up $1 0 . 6 \\%$ on F22 \n$^ +$ 6,569 Countdown team members trained in responsible service of alcohol, up from 4,238 in F22 \n$\\cdot$ over $10 \\%$ year on year decrease in volume of tobacco sold\n$^ +$ #1 Australia's healthiest supermarket own brands, fourth year in a row 2 \n$\\cdot$ $6 1 . 0 7 \\%$ across Woolworths Food Group 3 total sales from ≥3.5 HSR, 26 bps decline from F22 \n+ >30M pieces of free fruit for kids in F23\n+ >14,000 tonnes of virgin plastic packaging removed from circulation since 2018 $\\cdot$ Soft Plastics Taskforce released Roadmap to Restart in response to REDcycle collapse\n$^ +$ 61% non-food palm oil from sustainable sources $4 4 7 \\%$ on F22) \n$\\cdot$ Maintained $100 \\%$ sustainably sourced single product cocoa, coffee, tea \n+ $9 . 6 \\%$ BIG W cotton sustainable in F23\n### Our collective challenge\nWith the backdrop of cost-of-living challenges and technological advancements, we recognise the potential of wider socio-economic inequalities escalating. A fairer, more equitable society benefits from culture that is diverse and rights-respecting of all. This means creating opportunities that are as inclusive and accessible as possible; that is considerate of wellbeing and works collectively to make a difference to people in our teams and communities.\n### Our opportunity to deliver impact\nWoolworths Group is the largest employer in Australia and the second-largest in New Zealand. Our workforce of over 200,000 team members, including more than 4,700 First Nations team members, reflects the diverse communities we serve. As one of Australia and New Zealand’s largest retailers, we have the privilege of serving almost every community through our retail and wholesale network supported by over 17,000 suppliers. We have a meaningful opportunity to positively impact our communities by improving their resilience and investing in diverse experiences.\ni\n### Our approach\nPeople are the primary drivers of change and are at the heart of everything we do. We care for, and unlock the full potential of people by creating a place for them to be their best selves, supporting their wellbeing, and paving their way to a brighter future. Care is also at the heart of supporting our communities and building mutually beneficial partnerships with workers in our supply chain. In line with our 2025 Plan, we are fostering better inclusion and investing in our team’s wellbeing and development. We are also supporting our communities and working with suppliers to build a rights-respecting culture that mitigates modern slavery risks. Our people-related sustainability goals are critical to our long-term success and are woven into our strategic and operational fabric.\n### People\n.00m 10.00pm\n### Sustainable Development Goals", "chunk_word_count": 515, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > Goal:", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 11, "page_start": 11, "page_end": 12 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 13, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### 39.8 % senior leadership in Australia are women\n3.61%\nExternal benchmarks\nLaunched\nInnovate Reconciliation Action Plan\nof EBT on a two-year rolling average as community contribution\n#1 company globally KnowTheChain Food and Beverage Benchmark\n### Truly inclusive workplace\nBelonging is fast becoming one of the most important social and business issues impacting organisations, customers and society. 1 People identify in diverse ways and consider workplace inclusion as a vital factor when looking for employment. 2 Diversity, equity and inclusion are key to fostering a culture that embraces belonging and we recognise that many people turn to their workplace to find a sense of meaning and purpose.\n### Embracing our cultural diversity\nMore than a quarter of Australia’s population was born overseas and more than a fifth speak a language other than English at home.1 Woolworths Group reflects our communities, and we celebrate our diversity, recognising more than 25 cultural days of significance in F23. We provide resources to create a culture of belonging and foster psychological safety. We have established our Cultural Inclusion Team Member Network (starting in Australia) with executive sponsorship to elevate our team’s diverse experiences and voices.\nAt Woolworths Group, we believe in creating safe and inclusive workplaces where diversity is valued, and everyone can be their ‘best self’. Our inclusion strategy focuses on five pillars across: gender; LGBTQ+; First Nations; disability; and cultural inclusion. We aspire to do more to enable a broader culture of inclusion in our society and want our team, stakeholders, suppliers and customers to feel that they are welcomed, respected and heard. This mindset is central to the culture across our organisation.\nOur Refugee Employment Program, in partnership with Community Corporate, has provided 245 refugees with employment in Woolworths Supermarkets, Metros and customer fulfilment centres (CFCs) across NSW, Vic, Qld, WA and SA since 2018.\n### Together starts with you\n### if\n### Our rainbow community\nThis year we took the next step in our belonging journey with ‘Together starts with you’, a call-to-action encouraging our team to be actively conscious of, and individually accountable for, their behaviour and actions. As a result, we have made progress towards being a truly inclusive workplace, with a $^ { + 4 }$ increase in our organisation-wide Voice of Team (VOT) score for ‘Sense of Belonging’ to 63 in F23.While we celebrate our progress, we recognise the need to do more to lean into challenging priorities. In F24 we will make our inaugural submission to the Australian Network on Disability’s Access and Inclusion Index and continue working towards closing the aggregated average gender pay difference.\nWoolworths Group supports LGBTQ+ communities and we have reached two milestones: achieving Platinum Employer AWEI status and maintaining Rainbow Tick Accreditation in New Zealand for five years. This AWEI recognition follows the delivery of our AWEI Platinum Project in Greater Western Sydney. We partnered with the City of Parramatta, ACON, the Bobby Goldsmith Foundation and Out for Australia to achieve 23 milestones. These included initiatives such as the national Welcome Here Project across Woolworths Supermarkets to create inclusive local spaces and support for the Parramatta Pride Picnic.", "chunk_word_count": 527, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > 39.8 % senior leadership in Australia are women", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 12, "page_start": 12, "page_end": 13 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 14, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### Driving disability inclusion\nFollowing discussion with the Disability Royal Commission in 2021, we renewed our focus on removing physical and societal barriers to our team and customers living with disability, to make Woolworths Group a more inclusive place to work and shop.\nThe project had a positive impact on our team in the region. We saw:\nEstablishing our Disability Team Network, incorporating disability voices and lived experience in business decisions, has contributed to the development of our workplace adjustments policy. Since its May 2023 launch, we have enabled over 30 workplace adjustments for team members; provided adjustments to $100 \\%$ of candidates requesting support during recruitment; and delivered disability confidence training to our Talent Acquisition team, hiring managers and leaders of disabled team members.\n+4% in team members openly identifying as LGBTQ+ 2", "chunk_word_count": 143, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > Driving disability inclusion", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 13, "page_start": 13, "page_end": 13 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 15, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### Employer of Choice for Gender Equality\n$+9 \\%$ in team members feeling more comfortable offering their ideas to improve their work, indicating increased feelings of psychological safety 2\nPay parity like-for-like roles <1% in Australia\nWoolworths Group was awarded the Workplace Gender Equality Agency (WGEA) Employer of Choice citation in Australia for the second time, recognising our active commitment to achieving workplace gender equity.\nWe continue to monitor pay parity for like-for-like roles, and in F23 maintained ${ < } 1 \\%$ pay gap in Australia and New Zealand. Women in senior leadership has trended towards our $40 \\%$ gender ambition, achieving $3 9 . 8 \\%$ representation in Australia and $3 8 . 7 \\%$ in New Zealand.\n+4% in team members agreeing their store actively celebrates LGBTQ+ initiatives 2\nOur total Gender Pay Gap (GPG) in Australia calculated according to WGEA standards was $1 1 \\%$ compared to the WGEA Australian GPG of $2 2 . 8 \\%$ . In New Zealand, calculated according to the Stats NZ methodology, our GPG is $1 . 4 1 \\%$ compared to the NZ National GPG of $9 . 2 \\%$ . 3 With an increased gender equity focus in New Zealand, including disclosure of our gender pay gap through MindTheGap and partnership with Work180 in F23, we will continue to drive further improvements. In Australia in F24 we will prioritise reforms from the Respect at Work Bill 2022 and the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023, helping us to build a psychologically safe and inclusive environment.\nWomen in senior \nleadership \n39.8% \nin Australia\nIn F23 we launched our regional Pride approach focused on engaging our team, customers and communities by investing in more than 10 new regional events across Australia and participation in New Zealand events, such as Auckland Pride. Our long-term partnership supporting RainbowYOUTH in New Zealand celebrated five years. We raised a total of $\\$ 108,000$ (NZD) with generous support from our customers and our own $\\$ 20,000$ (NZD) contribution, to bolster the five-year strategic plan supporting queer, gender-diverse, takatāpui and intersex youth.\nIn F23 we delivered our first submission to the Accessibility Tick in New Zealand, alongside our submission to the Australian Human Rights Commission IncludeAbility Health Check. These submissions will enable our inaugural submission to the Australian Network on Disability's Access and Inclusion Index in F24, leading to the development of our first Group-wide disability inclusion action plan.\n3 Statistics New Zealand calculates the gender pay gap as median hourly rate, so this number is not strictly comparable to the Australian gender pay gap averages.\n### Ethical value chain\n### Reconciliation", "chunk_word_count": 450, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > Employer of Choice for Gender Equality", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 13, "page_start": 13, "page_end": 14 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 16, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### Our Māori and Pasifika leadership pipeline\nModern slavery is around us, often hidden in plain sight. It is systemic, global and growing, with around 50 million people held in modern slavery. 1 In Australia, up to 41,000 people are estimated to be living in conditions of modern slavery. 2\nAs Australia continues its reconciliation journey, we remain focused on playing our part in Closing the Gap, continuing to demonstrate our support for the Uluru Statement from the Heart and its call for a First Nations Voice to Parliament enshrined in the Constitution.\nBuilding on the F22 establishment of our Māori and Pasifika Talanoa (Committee), in F23 we delivered our first Māori and Pasifika mentorship program, supporting 20 mentees with individual Māori and Pasifika mentors, to build confidence in navigating career progression.\nWoolworths Group has one of the largest and complex retail supply chains in Australia and New Zealand. We aim to build a rights respecting approach where modern slavery risks are identified, managed and mitigated. We work directly with our global trade and non-trade suppliers to embed respect for human rights into our everyday decisions and throughout our value chain.\nIn June 2023, we launched our Reconciliation Action Plan (RAP), demonstrating our commitment to meaningful progress with First Nations team members, communities and businesses. Our reconciliation strategy aims to drive meaningful action through its three pillars, as detailed below together with examples of progress in F23.\n### Listen and learn from voices and experiences of those impacted\nSince the program’s conclusion, our Talanoa has developed a proposed Māori and Pasifika inclusion action plan. The plan will be endorsed in F24 with the aim of supporting a leadership pipeline with $20 \\%$ Māori and Pasifika representation by 2025. As we conclude F23, our leadership pipeline in New Zealand sits at $8 \\%$ Māori and Pasifika representation. We are committed to analysing the drivers of this result and implementing further action to reach our target, including plans to scale the mentorship program in F24 and implementing the endorsed inclusion action plan.\n$^ +$ A delegation of 10 senior leaders attended the Garma festival to hear Indigenous voices on key topics, including the Voice to Parliament. $^ +$ Through our Australian Grocery Wholesaler partnership, we visited remote communities in the NT and Torres Strait to understand food accessibility and affordability needs.\nOur Human Rights Program underpins our work with suppliers and defines our approach to managing human rights risks across the Group’s supply chain. The United Nations Guiding Principles on Business and Human Rights inform the Program, our Group Risk Management Framework and the Board-approved Group Risk Appetite Statement. This identifies human rights as a ‘level one’ risk, meaning we take all practicable steps to work towards zero harm. We aspire to eliminate these risks.", "chunk_word_count": 472, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > Our Māori and Pasifika leadership pipeline", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 17, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### Four focus areas: employment, health, education, sourcing\nWe were recognised by the 2023 KnowTheChain Food and Beverage Benchmark, with Woolworths Group ranked as the first company globally. We were also the first retailer globally and third company overall in the 2023 Corporate Human Rights Benchmark.\n+ $2 . 6 \\%$ of our Australian workforce were First Nations peoples. Our target is ${ \\tt R P } _ { 3 . 2 \\% }$ by 2025. \n$^ +$ $\\$ 4.47$ million spent on 31 Supply Nation-registered and certified suppliers. \n+ $> \\$ 3,5,000$ raised for the Yothu Yindi Foundation through reusable Art Bags sold at Woolworths, supporting the education of Yolngu students.\n### Case study\n### Governance and ways of working\n### Modern Slavery Statement\n$^ +$ Established our RAP Working Group, with a cross section of senior leaders and team members, both Indigenous and non Indigenous. The Working Group contributed to and coordinated the RAP development and championed within their own area.\nThe Woolworths Group 2023 Modern Slavery Statement (MSS) delivers a detailed report on the progress of our Human Rights Program.\nProgress in F23 includes:\nremediating the first identified case of modern slavery in our supply chain; \\~ \\$734,000 in recruitment fees to 230 migrant workers reviewing audits for 885 supply sites, with seven graded zero tolerance and 238 critical non-compliances. We have worked with moderate and priority risk suppliers to co-develop corrective action plans and conducted 48 site visits across Asia (onsite and virtual)\n### A Brave Heart for a Better Tomorrow\nOur latest Innovate level Reconciliation Action Plan, endorsed by Reconciliation Australia, details 97 deliverables to achieve over the next two years. Our RAP is a call to action for our team, our partners and all Australians to consider moving from ‘safe’ to ‘brave’ when it comes to reconciliation. Our RAP is a part of our reconciliation strategy informing key actions across employment, health, education and sourcing. It also incorporates various key initiatives, including:\ncompleting our second forced labour risk assessment to identify critical risks associated with producing and procuring goods and services + building supplier capability to implement the Priority Industry Principles with all own brand suppliers in Malaysia, extending to Thailand suppliers updating the Woolworths Group Sustainable Seafood Policy, including strengthening requirements for traceability data in Australia.\nView our MSS here.\n$^ +$ $\\$ 10$ million investment in a national First Nations residential college at the University of Technology $^ +$ continuing our remote retailer partnerships to ensure the supply of food and essential goods to remote Indigenous communities.\nFollowing the completion of the Innovate level RAP, we aim to pursue the Stretch level.", "chunk_word_count": 449, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > Four focus areas: employment, health, education, sourcing", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 14, "page_start": 14, "page_end": 14 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 18, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### Holistic wellbeing of our team\nThere has been increased acknowledgement of the role mental health plays in achieving global development goals. 1 Locally, an estimated one in five Australians aged 16 to 85 experienced mental illness in the last 12 months. 2 The impact of COVID has also elevated the need for physical and psychological safety and health of our customers, team and business partners.\nOur team deserves a safe place to work, with team members more likely to stay, and feel a sense of belonging, with a company that values their safety and wellbeing. Woolworths Group invests in caring for our team, safeguarding them and supporting their holistic wellbeing. We recognise how interconnected these are and their potential to have a positive ripple effect within our communities.\n### Promoting mental wellbeing\nOne in five Australians experiencing mental ill health 2 means around 40,000 of our team could be impacted. This year, we continued to invest in awareness, with Mental Health Month and always-on campaigns, while promoting our 24/7 team support tools – Sonder and 13YARN. Over 47,000 team members and their families have signed up to Sonder, and in F23 team members accessed its professional support more than 18,000 times for help with issues related to medical, stress, acute mental health, anxiety, financial and safety concerns. We have extended Sonder to our team in New Zealand, with more than one-quarter of the team signing up in the first six weeks. We recognise the importance of corporations, academia, government and agencies working together to create better mental health outcomes. Woolworths Group is a founding and board member of the Corporate Mental Health Alliance, and in 2023 hosted the Alliance's annual gathering to bring businesses together to support healthy workplace experiences for team members.\n### Improving physical wellbeing\nKeeping our teams (including contractors) safe when they come to work is one of our foundational objectives. Tragically, two of our team members lost their lives at work during the year. We are deeply affected by this loss, and our thoughts remain with the families and many friends, and colleagues affected. Investigations into these events are ongoing and, while the outcomes may not be known for some time, we are working to ensure learnings are gained and applied.\n### Providing meaningful careers\nTechnological advances in automation, predictive analytics and AI are making retail processes faster and more efficient than ever. While these changes push our industry forward, they’re also changing the nature of our team’s day-to-day work.", "chunk_word_count": 424, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > Holistic wellbeing of our team", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 15, "page_start": 15, "page_end": 15 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 19, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### Safety metrics\nF23 Total Recordable Injury Frequency Rate 12.24 1.11 from F22\nOur total recordable injury frequency rate increased from 11.13 in F22 to 12.24. This is a combination of increased total recordable injuries and decreased exposure hours. We are actively working to reduce injuries and illness, and eliminate fatality risks. We continue to focus on identification and management of material safety risks, supported by critical controls and standards. All high potential material safety risk events have been investigated with learnings shared.\nWe’re empowering our team to help them feel comfortable with change; equipping them with new skills; and using technology and multi-skilling to balance operational needs, flexibility and predictability. The Group is investing in new ways to deliver learning at scale, creating employment opportunities and building skills to equip our team for the future of work.\nWe are concerned by increasing levels of Acts of Violence & Aggression (AOVA) against our team members in stores, customer hubs and delivery drivers. In F23, we established an AOVA Steering Committee to further strengthen risk controls, including de-escalation training, physical separations, communication systems and safe havens; and we continue to collaborate with peers and industry leaders.\nThe Woolworths Future of Work Fund, launched in 2021, committed \\$50 million to identify future skills and capabilities and support upskilling and reskilling our team. We have invested \\$22.8 million since launch in Future of Work programs, including new technology to reimagine learning, virtual reality headsets for training and the Data4All program – completed by 600 senior leaders to date – to build data analytics capabilities.\nA\nF23 Severity Rate 1.519 0.22 from F22\nWe also focused on our highest frequency injury, musculoskeletal disorders, with the majority of our teams manually handling products. We have evolved our ergonomic program focused on reducing manual task risks and continue to evolve our store and site design, equipment and processes.\n### Positive impact on communities we serve\n### Fostering community resilience\nAcross Woolworths Group, we’re contributing to building community resilience through a range of partnerships fostering education, skill development and positive health outcomes:\nAcross Australia and New Zealand, we’ve emerged from a global pandemic straight into a cost of living challenge, while all around us the impacts of climate change are becoming more real and severe. Our vulnerable communities are often impacted by forces beyond their control in the areas of natural disasters, food security and healthcare.\n### Delivering positive social impact for children\nTogether with the support of our customers and team, we have a long-standing history helping fund health and wellbeing programs for Variety the Children’s Charity in NSW, ACT, SA and NT; The Royal Children’s Hospital Good Friday Appeal in Vic; St Giles in Tas; Telethon in WA; and the Children’s Hospital Foundation in Qld. In F23 Woolworths Supermarkets raised more than $\\$ 4.3$ million for these partners.\nWe are committed to positively impacting our communities by investing the equivalent of $> 1 \\%$ of our total Group Earnings Before Tax (EBT) in community partnerships and programs. Together with our charity partners we also invest in local programs and community groups to provide natural disaster relief and support better health and education outcomes.", "chunk_word_count": 537, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > Safety metrics", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 15, "page_start": 15, "page_end": 16 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 20, "chunk_text": "# 2023 Sustainability Report\n## 2025 Plan strategic framework\n### Supporting people in need\n### Mini Woolies\nThis collaborative program between Woolworths Supermarkets and Fujitsu provides hands-on learning experiences for students and job candidates living with disabilities. Since its inception in 2018, it has grown to more than 41 locations and offered experiences to more than 3,000 young Australians.\nAccording to the 2022 Foodbank Hunger Report, over two million households in Australia $( 2 1 \\% )$ have experienced severe food insecurity in the last 12 months. 1 To meet the growing demand for food relief, in F23, Woolworths Group contributed a record of more than 34 million meals to our food rescue partners, including OzHarvest, Foodbank and Fareshare in Australia, and KiwiHarvest and The Salvation Army in New Zealand. We helped donate $\\$ 75.8$ million of surplus food and groceries from our stores and Distribution Centres (DCs) to thousands of local charitable organisations across Australia and New Zealand.\nIn kind 1, 2\n### Woolworths Junior Landcare Grants\n## \\$90.2M\nIn 2023, we partnered with Landcare Australia for the fifth Woolworths Junior Landcare Grants Program round to help our future environmental champions. Over 1,100 projects were awarded grants of up to $\\$ 1,000$ each, engaging close to 105,000 children in primary schools and early learning centres countrywide. This year the program included First Nations Perspectives projects, with 323 grants awarded to schools focusing on First Nations education and perspectives.\nOne example is Woolworths Supermarkets’ partnership with Fareshare’s Meals for the Mob, which, in consultation with Elders, provides food relief through free, nutritious and tasty ready-to-eat meals for remote Indigenous communities. The program will deliver 65,000 meals in F24 to remote areas in Queensland. In New Zealand, we donated more than $\\$ 300,000$ (NZD) to the food rescue sector's ongoing development, including funding to Kaibosh for a new supermarket liaison officer role to optimise Wellington food rescue services.\nManagement costs 1 \\$3.7M\n### Breakfast Library Program\nTotal direct community contribution 1", "chunk_word_count": 330, "section_path": "2023 Sustainability Report > 2025 Plan strategic framework > Supporting people in need", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 16, "page_start": 16, "page_end": 16 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 21, "chunk_text": "# 2023 Sustainability Report\n## \\$90.2M\n### Providing natural disaster relief\nBIG W partners with the Australian Literacy and Numeracy Foundation to deliver the innovative Breakfast Library program to kids nationwide. The program is currently supporting approximately 2,800 children in marginalised communities with a healthy breakfast, access to quality children’s books, and reading sessions to improve literacy outcomes. The program is now offered across 30 schools each week.\nSince early 2023, New Zealand has faced devastating weather events, including catastrophic floods and Cyclone Gabrielle – described as the worst storm to hit the country this century. Given Countdown’s national footprint, we play a crucial role in helping with community recovery.\nIn the first half of 2023, we donated more than \\$450,000 (NZD) in food and funds to our partners on the ground and government organisations to support those affected. With our customers’ generous support, Countdown raised over $\\$ 252,000$ (NZD) for the Mayoral Relief Funds, New Zealand Red Cross, and local community partners. We also donated more than 80 tonnes of water, meat, fruit, vegetables and other essentials to evacuation centres in Auckland, Tairāwhiti (Gisborne), and Hawkes Bay. In addition, Countdown announced support to help growers recover from the impact, including $\\$ 700,000$ (NZD) in cash grants, a $\\$ 50,000$ (NZD) donation to Rural Support and other in-kind assistance. In Australia, Woolworths Group’s Support Through Australian Natural Disasters (S.T.A.N.D.) program helps our communities, particularly in times of natural disasters such as the devastating floods that hit WA, Vic and NSW in F23. Funds raised through our S.T.A.N.D. program this past year, including our annual donation of $\\$ 500,000$ , enabled The Salvation Army ability to provide immediate relief to affected communities.\n### Countdown’s Growing for Good\nF23 marks the fifth year of Countdown’s Growing for Good grants. The \\$50,000 (NZD) annual grant pool aims to help foster New Zealand’s next generation of environmentalists.\nLeveraged fundraising\nSupport for suppliers\nWe dedicate funds to supporting farming projects across Australia. In F23 the Woolworths Organic Growth Fund delivered \\$1.5 million in grants to Australian organic growers. At the same time, the Woolworths Dairy Innovation Fund awarded $\\$ 1.5$ million in grants to support Australian on-farm projects to deliver innovation, efficiency and seasonal resilience.\nCash, management and in-kind donations have been verified in line with the B4SI framework www.b4si.net 2 Food rescue valuation is based on Cost of Goods Sold.\n### Our collective challenge\nClimate change is apparent in Australia and New Zealand with extreme weather events impacting community resilience. Science tells us that we need to limit global warming to 1.5°C, yet based on current global policies, we could see warming of 2.7°C by 2100. 1 Strong action is required this decade to support climate mitigation and adaptation efforts, with a third of those reliant on nature-based solutions. 2 Population growth is also projected to reach 10 billion by 2050, requiring a 70% increase in food production. 3 This creates opportunities to encourage regenerative farming practices whilst making sure that food goes to people in need and is not wasted.", "chunk_word_count": 507, "section_path": "2023 Sustainability Report > \\$90.2M > Providing natural disaster relief", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 16, "page_start": 16, "page_end": 17 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 22, "chunk_text": "# 2023 Sustainability Report\n## \\$90.2M\n### Our opportunity to deliver impact\nWoolworths Group feeds a significant proportion of Australia and New Zealand through our network of over 1,400 stores. We are also a significant consumer of electricity, consuming 0.7% of electricity generated across both countries, and have an extensive logistics footprint. The scale of our supply chain has a material impact on climate and nature due to the resources used to produce the food our customers require. With more than 17,000 suppliers, our scope 3 emissions are 15 times our scope 1 and 2 combined. This presents an opportunity to drive decarbonisation whilst protecting nature and the availability and quality of the products we sell.\n### Our approach\nWe recognise that Woolworths Group and our suppliers rely on the health of our climate and nature to meet our customers’ needs. Guided by our principle of positively impacting the planet, we are actively partnering across our value chain to support the transition to a low-carbon future whilst working to protect and regenerate nature. In line with our 2025 Plan, we aim to reduce our emissions; improve our operations and communities’ resilience; work to improve food security and reduce waste; and encourage sustainable and regenerative practices for future generations. We know we can do more and aspire to become a net positive business.\n### Planet\n### Sustainable Development Goals\nLaunched \ntransport \ndecarbonisation \nstrategy\nScope 1 & 2 emissions reductions 36% below 2015 baseline\nExternal benchmarks\nCDP\nLeadership level A-\n### Towards net positive\nAustralia and New Zealand are not immune to climate change, and as we experience extreme weather events and natural disasters, our business is feeling the impacts of this first-hand. We support the Paris Agreement and its efforts to mitigate the impacts of climate change by limiting global temperature rise to $1 . 5 ^ { \\circ } \\mathrm { C }$ if possible.\nWe aspire to reduce our emissions in line with the Science Based Target Initiative (SBTi) and be a net positive business by 2050 – partnering to remove more carbon than we emit. We are actively considering nature-based solutions as part of this aspiration to help support and enhance our supply chain and communities’ long-term viability.\nOur scope 1 and 2 emissions make up $6 \\%$ of the total emissions across our end-to-end value chain. Over the last 12 months, this has reduced by $8 \\%$ – a cumulative reduction of $36 \\%$ over our 2015 baseline. Our scope 3 emissions are approximately 15 times greater than our scope 1 and 2 emissions, making up $94 \\%$ of the emissions in our end-to-end value chain. This is complex, representing emissions from a variety of sources – the largest being agriculture, energy and transport. Our performance against these are detailed on pages 34 and 36.", "chunk_word_count": 468, "section_path": "2023 Sustainability Report > \\$90.2M > Our opportunity to deliver impact", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 17, "page_start": 17, "page_end": 18 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 23, "chunk_text": "# 2023 Sustainability Report\n## \\$90.2M\n### Our climate and nature strategy\nWoolworths Group’s climate and nature strategy focuses on managing climate change impacts across our business and communities. It also details our approach to the responsible stewardship of natural resources and sustainable protein in our supply chain. The strategy is approved by the Woolworths Group Board.\nThe three pillars of our strategy aim to drive tangible action and effectively manage risk. We will continue to integrate our climate and nature approach as our understanding of their interrelationship matures.\nManaging climate impacts across our business By reducing and greening our electricity, embedding low-carbon technologies and increasing resilience in our value chain\n### Our approach to reporting in F23\nOur 2023 Annual Report focuses on areas most material to our business and therefore, details our main climate and nature related disclosures for F23. Our disclosure aligns with the Task Force on Climate-Related Financial Disclosures (TCFD) and broadly with the recently released International Sustainability Standards Board (ISSB) standards and the upcoming Taskforce on Nature-related Financial Disclosures (TNFD).\nSupporting industry and community action By partnering with industry to support the transition to net zero and supporting community resilience to climate change\nWe recognise that the audiences that interact with our Annual and Sustainability Reports are potentially different. With that in mind, we have meaningfully duplicated the narrative where relevant across both reports so they each stand alone. This report is focused on progress against our 2025 Plan and our 2023 Annual Report provides our full TCFD disclosure.\nNurturing nature across our supply chain By leading the future of protein, partnering with suppliers on improved farming practices and working to have a positive impact on nature.\nSee our 2023 Annual Report for more details\n### Our pathway to net positive\nThis is Woolworths Group’s approach to drive decarbonisation across scope 1, 2 and 3 across our value chain. As of today, our pathway has quantified how we will reach net positive scope 1 and 2 emissions. Next year we will integrate our scope 3 pathway which considers nature-based solutions.\n### What we've achieved so far:\n### Medium term\n### Short term\n### Long term\n## 36 % scope and 2 emissions reduction since 2015\nAccelerating action across our operations\nLeading the change across our value chain\nDelivering on our net positive aspiration\n## 100 % renewable electricity by 2025\n## 42 %", "chunk_word_count": 398, "section_path": "2023 Sustainability Report > \\$90.2M > Our climate and nature strategy", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 18, "page_start": 18, "page_end": 19 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 24, "chunk_text": "# 2023 Sustainability Report\n## 63 % scope 1 and 2 emissions reduction by 20301\nWe know we have more to do and will invest in new technologies, sustainable and regenerative practices and make meaningful changes to our products and operations. We will work towards complete value chain decarbonisation.\nscope 1 and 2 emissions reduction by 2025\nZero emissions home delivery fleet\n>60MW of solar operating or under construction\nScope 1 operational transport emissions reduced by $60 \\%$ by 2030\n100% renewable electricity in SA\nValue chain emissions reduction aligned to a $1 . 5 ^ { \\circ } \\mathrm { C }$ pathway\n$19 \\%$ scope 3 emissions reduction by 2030 1, 2\nCommenced a value chain emissions measurement program\nAll new property developments will achieve a minimum 4 star Green Star rating\nSet nature related targets and approaches that support resilient food and fibre production and help mitigate impacts of climate change\nBy 2050, we aim to reach net positive emissions 3,4\nUnderstand the impact of priority fresh supply chains on nature and increase supplier adoption of sustainable and regenerative practices in these categories\n80% food waste in Woolworths supermarkets diverted from landfill\n$1 0 \\%$ of own brand tea and coffee now sustainably sourced\nAll high-impact own brand commodities sourced from net zero-deforestation supply chains\nPiloted the Taskforce on Nature-related Financial Disclosure framework on beef and salmon supply\nSource our animal, and alternative protein sources in a sustainable manner through minimising our impact on the environment\nAim for zero food waste to landfill from our supermarkets\nWoolworths own brand packaging widely recyclable, reusable or compostable\n2015\n2023\n2025\n2030\n### Reducing our scope 1 and 2 emissions\nScope 1 and 2 emissions are those directly within our operational control. Our material scope 1 emissions sources include fugitive synthetic refrigerants, transport fuel for fleet cars and home delivery trucks, and natural gas. Our scope 2 emissions are those associated with electricity use across all stores, DCs and offices; they comprise the largest part of our operational footprint.\n### Decarbonising our transport – a material shift in our scope 1 and 3 emissions\nGlobal transport activity is expected to more than double by 2050 1, yet emissions in this sector need to decrease at least $3 \\%$ annually to align with net zero by 2050 scenarios. Transport is Australia's third largest emissions source, and government projections forecast an emissions increase in this sector by 2030 2.\n### Understanding our large, complex transport fleet", "chunk_word_count": 414, "section_path": "2023 Sustainability Report > 63 % scope 1 and 2 emissions reduction by 20301 > Reducing our scope 1 and 2 emissions", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 19, "page_start": 19, "page_end": 20 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 25, "chunk_text": "# 2023 Sustainability Report\n## 63 % scope 1 and 2 emissions reduction by 20301\n### Our first transport decarbonisation strategy\nOur transport network is one of the largest business supply chains in Australia and New Zealand, with approximately 1.6 billion cartons moved annually through Primary Connect, and $1 9 \\%$ growth in online delivery volumes in the past year.\nOur emissions trajectory has been strengthened with the launch of our transport decarbonisation strategy, with plans now in place to address all material scope 1 and 2 emissions. The strategy, launched in 2023, outlines our approach and priorities for decarbonising our fleet. It has three pillars:\nWoolworths Group is committed to working towards achieving a $63 \\%$ reduction in emissions from our operations (scope 1 and 2) by 2030. The SBTi 1 ratified this commitment in 2020. F23 marks a transition to include market-based scope 2 electricity reporting 2. This methodology enables us to account for the investment we are making in renewable electricity, and helps us track progress against the reduction trajectory shown on pages 32 and 33.\nDelivering fresh food to our customers everyday, we manage international freight movements via air and sea, interstate connections via rail and road, and movements between DCs and stores. Depending on the operational structures and ownership, these emissions vary between direct scope 1 and indirect scope 3 emissions. Our directly managed fleet – scope 1 transport emissions – comprises some 3,500 assets, from light vehicles to semi-trailers. As with the rest of our value chain, scope 3 transport emissions represent the larger part of our footprint, and are outside of our direct control.\n## 1. transitioning to a zero-emissions fleet and delivering cleaner, quieter neighbourhoods\nOver the past 12 months, our scope 1 and 2 emissions have reduced $8 \\%$ due to ongoing grid decarbonisation, energy efficiency work and ongoing transcritical refrigeration upgrades. Our cumulative emissions reductions since 2015 are now up to $36 \\%$ . Details of our emissions footprint are available in our 2023 Sustainability Data Pack.\n2. leading low-carbon practices through efficient operations, such as offering customers the choice of Green Delivery windows that minimise grocery delivery emissions\nIn November 2022, the Clean Energy Regulator (CER) provided new guidance on the treatment of Australian Carbon Credit Units issued for projects registered with the Emissions Reduction Fund (ERF). We have adjusted our F22 and F23 emissions to reflect the new guidance from the CER. These adjustments can be found in the 2023 Sustainability Data Pack.", "chunk_word_count": 415, "section_path": "2023 Sustainability Report > 63 % scope 1 and 2 emissions reduction by 20301 > Our first transport decarbonisation strategy", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 20, "page_start": 20, "page_end": 20 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 26, "chunk_text": "# 2023 Sustainability Report\n## 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network.\nThis strategy is anchored in our commitment that by 2030, we aim to convert our Australian and New Zealand home delivery fleet to zero-emissions vehicles. This goal, alongside changes to zero emissions technology in our heavy vehicle fleet, will reduce our scope 1 transport emissions by approximately $60 \\%$ compared to today.\nActions completed to date contributing to our emissions reductions:\nToday transport makes up less than $5 \\%$ of the Group’s scope 1 and 2 emissions – about 100,000 tonnes of carbon dioxide equivalent. Growth in transport activity, combined with our transition to $100 \\%$ renewable electricity, amplifies our focus on solving transport emissions. Tackling transport decarbonisation will therefore require significant effort due to the size and complexity of our own fleets and those of our logistics partners.\ninstalled 231 solar systems across Australia and New Zealand, totalling 48MW. Also signed renewable energy contracts in SA $\\pmb { \\mathrm { I I } } \\pmb { \\mathrm { ( 0 ) } } \\pmb { \\mathrm { ( 0 ) } } \\pmb { \\mathrm { ( 0 ) } }$ , WA $\\boxed { 6 } \\boxed { 9 } \\boxed { 9 }$ ), and a pathway secured in NSW for 100% spent over \\$30 million on energy initiatives in F23 covering refrigeration and lighting upgrades and improving our ability to monitor and control energy use delivered 15 Green Star ratings with another 22 underway across the Group formalised our transport decarbonisation strategy aimed at achieving a 100% EV last-mile delivery fleet in Australia and New Zealand, helping reduce our transport emissions by 60% in 2030 vs F22.\nWith the limited current availability of zero-emissions vehicles for a fleet of our size and operational complexity, we have gained valuable insights through trialling and testing a small number of low-carbon vehicles. We are already underway transitioning our home delivery fleet. We recently launched 27 additional electric home delivery vehicles in June 2023 with a further 20 on order that will start to replace 1,200 diesel home delivery trucks. We anticipate the last combustion engine vehicle will join our fleet in 2027.\n### Partnering to reduce scope 3 emissions\nWe are at the beginning of our journey on scope 3 emissions. Achieving reductions across the value chain presents a new set of challenges that we cannot solve on our own, requiring a total systems-based approach. In addition to leveraging existing emissions reduction solutions, we continue to seek out different and innovative solutions to define a path forward.\n### Case study", "chunk_word_count": 438, "section_path": "2023 Sustainability Report > 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network. > Partnering to reduce scope 3 emissions", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 20, "page_start": 20, "page_end": 21 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 27, "chunk_text": "# 2023 Sustainability Report\n## 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network.\n### Collaborating on sustainable and regenerative agriculture\nOur scope 3 represents the majority of our emissions – at 29.7 million tonnes, these are approximately 15 times greater than our scope 1 and 2 emissions combined, with purchased goods and services representing $8 0 - 8 5 \\%$ of this. Our current aim under the SBTi, ratified in 2020, is to reduce scope 3 emissions by $19 \\%$ by 2030, which we acknowledge is not aligned with a $1 . 5 ^ { \\circ } \\mathrm { C }$ pathway. As emissions reduction opportunities continue to evolve and our own maturity increases, we recognise that neither our footprint nor our reduction targets are static. In F24, we will seek to update our SBTi target to reflect emissions related to Forestry, Land and Agriculture (FLAG) Guidance. (See our 2023 Annual Report and 2023 Sustainability Data Pack for more information).\nOur active involvement in industry forums and pilots enables us to understand drivers for change and test the value propositions for applying new frameworks and practices.\nWe have joined the Australian Sustainable Agriculture Initiative Platform (SAI Platform) to improve our understanding of Australian and global sustainable agriculture best practices and identify opportunities to increase their adoption in our supply chains. We will work with SAI to build our teams’ and suppliers’ capabilities in the coming year.\nGiven the proportion of our footprint related to land use and agriculture, adoption of sustainable and regenerative agriculture practices – as part of implementing broader nature-based solutions – will be crucial to our scope 3 decarbonisation journey. In F23, we prioritised a test-and-learn approach focused on partnerships and pilots to enable us and our suppliers to identify and implement targeted interventions that both reduce emissions and improve our natural resources stewardship.\nIn New Zealand, we progressed the Regenerative Management Systems for New Zealand Vegetable Production project co-funded by the Ministry of Primary Industries’ Sustainable Food and Fibres Futures Fund. The project is conducted in partnership with produce supplier LeaderBrand Produce and Crown Research Institute, Plant and Food Research. It aims to understand and validate the feasibility of incorporating regenerative practices into intensive vegetable production through on-farm trials. The project’s findings will inform our approach to regenerative agriculture across Australia and New Zealand.\n### Actions completed in F23:\ncommenced measurement of sustainable and regenerative practices in our fresh supply chain to inform targeted initiatives\ncontinued regenerative agriculture pilot with LeaderBrand Produce, Plant and Food Research, and supported by the New Zealand Ministry for Primary Industries Sustainable Food and Fibre Futures Fund\npartnered with the Climate Leaders Coalition to support the development of the scope 3 roadmap, and the Sustainable Agriculture Initiative Platform to build capability and understand climate and nature risks in our value chain\npiloted the TNFD framework on our beef and salmon value chains.\n### Way forward\nIn F24, we will continue to work towards the delivery of our 2025 Plan goals, by:\n### Update on our scope 3 value chain emissions program", "chunk_word_count": 514, "section_path": "2023 Sustainability Report > 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network. > Collaborating on sustainable and regenerative agriculture", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 21, "page_start": 21, "page_end": 21 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 28, "chunk_text": "# 2023 Sustainability Report\n## 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network.\n### Improving the stewardship of our natural resources\ndeveloping a scope 3 strategy to enable the implementation of emissions reduction solutions, including those that have co-benefits in nature\nIn 2022 we commenced a pilot engagement program in partnership with The Sustainability Consortium. We invited 55 suppliers across Australia and New Zealand from six categories significantly contributing to emissions across our value chain to participate. We piloted a science-based decision tool, THESIS on SupplyShift, to capture emissions intensity data and, over time, its trajectory through the value chain. The program aims to meet suppliers on their journey, providing both the opportunity to share progress and understand best practice.\nResponsible stewardship of natural resources supports the resilience of food and fibre production systems, helps to mitigate the impact of natural disasters and contributes to the reduction of our scope 3 emissions.\nincorporating insights from our pilots to understand the impact of our business and our supply chain on nature loss to report on our approach and management of nature-related risks and opportunities\nAgriculture is the backbone of our business and we aim to collaborate on, and encourage supplier adoption of, sustainable and regenerative practices. In F23, we surveyed over 120 suppliers in our fruit and vegetables, poultry, dairy, eggs and seafood categories, identifying those suppliers adopting one or more of our principles of sustainable and regenerative practices, as evidenced by independent certification. We will increase this engagement in F24 to capture the efforts of our suppliers and identify improvement opportunities.\nimplementing shadow carbon pricing across critical business areas to accelerate our decarbonisation journey beyond the goods we sell\nresetting our baseline and targets in line with SBTi’s guidance for Forestry, Land and Agriculture (FLAG), aligning to a 1.5°C reduction pathway.\nThe pilot provided an encouraging start with:\n$+ 7 9 \\%$ of participants working towards their own scope 1 and 2 goals \n+ $87 \\%$ of participants were able to provide information on climate-specific KPIs \n$+ 5 6 \\%$ of participants have scope 3 emissions goals in place.\nOur value chain emissions program will continue expanding, with all suppliers now welcome to participate.\n### Towards reducing hunger and food waste\nBy 2050, there will be an estimated additional 3 million people to feed across Australia and New Zealand. Food waste costs both economies $\\$ 39.7$ billion annually with \\~7.7 million tonnes of food wasted. 1 Yet, one in five Australians and New Zealanders are living in food insecurity. This means ${ \\sim } 5$ million households have run out of food in the last year due to costs, impacting \\~1.3 million children living in households during that time. 2", "chunk_word_count": 454, "section_path": "2023 Sustainability Report > 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network. > Improving the stewardship of our natural resources", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 21, "page_start": 21, "page_end": 22 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 29, "chunk_text": "# 2023 Sustainability Report\n## 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network.\n### Supporting thriving communities\nWe are at the heart of our communities and are determined to positively impact food security across Australia and New Zealand, an issue of increasing importance in the face of cost of living pressures. We aim to redistribute $100 \\%$ of edible unsold food so it can be consumed through food rescue partnerships and charitable organisations. For more information on how we work with our food rescue partners, (see page 26). In F23, Woolworths Supermarkets also continued to offer customers a solution to give back to their communities. We thank our customers for donating those extra cents which added up to over $\\$ 8$ million, making a real difference to our food charity partners such as OzHarvest.\nHunger is caused by inequity, affordability and access, however it is solvable. With more than enough food being produced to feed everyone, Australia is committed to halving all food waste by 2030, and the food and agriculture sector can play an important role. Woolworths Group is a part of that ecosystem of players that is critical in driving systemic change through its core operations, value chain networks, customer-facing platforms, strategic partnerships and level of influence.\nOur remote First Nations communities face food insecurity and affordability challenges. Recognising our role, our wholesale business, Australian Grocery Wholesalers (AGW), entered into a partnership with Community Enterprise Queensland (CEQ), a not-for-profit organisation committed to providing essential goods and services to remote communities in the Torres Strait and Northern Peninsula Area and remote Indigenous communities. For more information on this partnership see our RAP.\n### Strengthening our case for change\nHighlights in F23: >34M meals donated to people in need. A $13 \\%$ increase in our food rescue donations\n### Collective action to reduce food waste\nWe aim to contribute to a more resilient and equitable food system, free of hunger and waste, that advances sustainability, food access and affordability. With a pathway to achieve $\\sim 9 5 \\%$ diversion of food waste from our operations, we are expanding our focus to consider food waste across our value chain, and improving on our efforts towards reducing hunger. We have therefore updated our 2025 goal to 'reducing hunger and food waste' from our earlier 'zero food waste to landfill' This aligns with SDGs 2: zero hunger and 12: responsible consumption and production.\nOur Food Waste Diversion Pyramid applies a hierarchy to our approach based on positive impact, first supporting people in need through food rescue, then our farmer and wildlife partnerships, and finally, food waste recycling.\n### Our end-to-end approach\nWe are embracing the power of partnerships to apply an end-to-end approach to redistribute edible food and prevent food waste. In the last year, we have worked to understand areas where food waste is most concentrated, to identify opportunities of highest impact. This will be key in how we prioritise our initiatives.\n\\$9.25M in funding to food relief partners to enable food security outcomes", "chunk_word_count": 506, "section_path": "2023 Sustainability Report > 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network. > Supporting thriving communities", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 22, "page_start": 22, "page_end": 22 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 30, "chunk_text": "# 2023 Sustainability Report\n## 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network.\n### Making progress across our operations\nWe will build on our existing work to amplify implementation of both innovative and practical solutions towards curbing food waste across our value chain whilst increasing access and affordability; and investing in natural resource conservation.\nWe aim to have all food waste diverted from landfill by 2025, starting with our supermarkets. This year we implemented a Food Waste Diversion Data Enhancement program across our Australian and New Zealand supermarkets, Metros and CFCs. The program has significantly improved our data capture and reporting capability, helping the team select diversion pathways for food waste and reaffirming our pyramid approach. We can now report more accurately on our performance and monitor progress against our goal.\nOperations (10%)\n### Customers/ Downstream $( 4 0 \\% )$ 3\n### Suppliers/\nIn F23, we have 887 Australian supermarkets (including Metro stores) with access to organic waste recycling services $- \\mathtt { a } 9 \\%$ increase on FY22. There is more to do to improve access to recycling for our regional and rural supermarkets. This year we expanded solutions outside metropolitan areas through existing partners and trialling new services, including Wodonga Vic Backhaul transport solution, ACT GoTerra (black soldier fly larvae technology) and the Roxby Downs SA remote store partnership with BHP. This has provided food waste recycling services enabling nine stores to divert food waste that were otherwise unable to.\nUpstream (50%)\nApproximately 50% of the Group's food waste is generated upstream in our farms, manufacturing facilities and during transportation.\nFood waste across Group stores and DCs represents $10 \\%$ of the total food wasted in our value chain.\nOver $40 \\%$ of Group food wastage occur in our customers' homes, with food from fridges and cupboards ending up in landfill.\n### Supporting our suppliers and customers\nWe aim to influence beyond our operations to encompass upstream and downstream initiatives and collaborate to reduce industry and community food waste.\nWe support our farmers upstream to reduce food waste to landfill through initiatives such as the Odd Bunch. The Odd Bunch has saved over 300,000 tonnes of fruit and vegetables from being wasted since 2015, helping farmers sell more crops and our customers enjoy great value fresh produce. We’re also working to help educate and inspire our customers on methods and benefits of food waste reduction. For example, ‘Reduced in Price, Just as Nice’, launched in 2023, helps our Metro customers save money and reduce food waste with allocated space for reduced and short shelf-life items.\nIn F24 we will continue to work with our partners to reduce food waste across our value chain. This includes extracting more inedible food from our waste through a range of collaborations and operational programs, implementing depackaging and backhaul solutions, and further embedding in-store initiatives such as incentivising team behaviour and bin audits.", "chunk_word_count": 486, "section_path": "2023 Sustainability Report > 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network. > Making progress across our operations", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 22, "page_start": 22, "page_end": 23 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 31, "chunk_text": "# 2023 Sustainability Report\n## 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network.\n### Highlights in F23:\n>300,000t of food waste saved by our Odd Bunch program since 2015\n80%\nof food waste diverted from landfill from Woolworths supermarkets and $69 \\%$ across the Group\n\\$442,000 in Woolworths Supermarkets’ WIRES funds raised to support wildlife\n+1,200 farmer partners nationally to support animal feed\n### Refresh:Food\n### Connected food systems\nIn 2023, Woolworths Group and Boston Consulting Group (BCG) co-founded, built and launched Refresh:Food, an independent, stand-alone profit-for-purpose company designed to rescue food. Refresh:Food's digital marketplace eliminates upstream food waste by connecting growers with excess and out of specification produce to buyers and charities in need. The marketplace manages the transactions, quality control and logistics coordination of all produce sold or donated via the platform.\nTo feed a growing population and reduce landfill emissions, we recognise the need to apply an integrated approach to improving the resilience of our food systems. As part of our goal on the responsible stewardship of natural resources, we will encourage supplier adoption of sustainable and regenerative agriculture practices (read more in our 2023 Annual Report page 33). The Woolworths Organic Growth Fund offers interest free options, as well as contracted purchase volumes, providing Australian farmers with the certainty of longer-term demand for their organic fruit and vegetables. In F23, we delivered \\$1.5 million loans and grants.\nWorking towards a waste-free planet, Refresh:Food's end-to-end solution has three core solutions to enable food waste reduction:\nMatching produce to buyers and charities\nMoving produce from seller to buyer\nWe recognise that to continue our progress towards zero food waste requires innovation, investment and ongoing collaboration with partners, industry and government. Countdown was one of the founding signatories of the Kai Commitment, New Zealands' first voluntary agreement bringing leading food businesses together on a shared mission to reduce food waste. In Australia, we are a member of the Fight Food Waste Cooperative Research Centre which is looking at the potential to remove best before labels for some product lines. We’re also a member of Stop Food Waste Australia, and a founding signatory of their Australian Food Pact.\nRefresh:Food recently commenced operations and looks to scale the marketplace over the next year by further expanding its industry-wide network of growers, buyers and charities.\nVisit the Refresh:Food website here\n### The collective challenge\nEating a healthy, sustainable diet is key to looking after the health of people and the planet. Natural resources needed to sustain current consumption and absorb waste are depleting at a rate equivalent to 1.7 planets. 1 Australia also has the third-highest material consumption rate in the world, an expected 3.4 billion tonnes waste generation per year. 2 While the preference is to shop more sustainably, 47% of Australian customers are prioritising financial health versus environmental conscience. 3", "chunk_word_count": 474, "section_path": "2023 Sustainability Report > 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network. > Highlights in F23:", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 23, "page_start": 23, "page_end": 24 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 32, "chunk_text": "# 2023 Sustainability Report\n## 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network.\n### Our opportunity to deliver impact\nWe serve on average 24.5 million customers weekly across Australia and New Zealand with our own brand products providing customers with choice without compromising on quality. As one of the most trusted brands 4, we have a responsibility to help our customers with choices that are affordable, healthier and sustainably produced. With a supply chain of over 17,000 suppliers, we are also uniquely positioned to work in partnership with them to innovate and find new and better ways to reduce waste, source more responsibly and improve animal welfare.\n### Our approach\nWe know our customers want to do the right thing by choosing products that are good for them, the planet and the people who make them. We aim to enable customer choice and access to sustainable products whilst working to limit cost as a barrier. Guided by our principle to apply circular thinking to everything we do, we are also working to treat all waste as a resource. In line with our 2025 Plan, we aim to increase healthier, more sustainable choices in our customers’ baskets; improve the sustainability of our packaging by reducing plastic; and work to meet the highest standards of animal welfare.\n### Product\n### Sustainable Development Goals\n### External benchmarks\n> 30 M pieces of free fruit for kids in F23\n## 100 %\n2,105 t\n#1\nAustralia's healthiest supermarket own brands Four years in a row 5\n## 2023 Australian \nPackaging Covenant \nAnnual Report \n‘Leading’ rating of 77% \nCompassion in \nWorld Farming 6th \nEggTrack \nAchieved ‘Good progress’\nsustainably sourced single product tea, coffee, cocoa, sugar\nof virgin plastic packaging removed from circulation in F23 through targeted initiatives\nWWF and Global Footprin Network Report, 2019. 2 DCCEEW, National Waste Report, 2022.\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Making healthier easier\nHealth is a growing concern across Australia and New Zealand as we continue to see an increase in obesity and non communicable diseases (NCDs). 1,2 Some modifiable behavioural risk factors for NCDs include unhealthy diets, physical inactivity, tobacco use and harmful use of alcohol. 3 This creates a need to promote healthy lifestyles and diets which are well-balanced, aligned to dietary guidelines, and are economically accessible.", "chunk_word_count": 389, "section_path": "2023 Sustainability Report > 3. developing zero emissions transport infrastructure (e.g. EV chargers) across our network. > Our opportunity to deliver impact", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 24, "page_start": 24, "page_end": 25 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 33, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Making healthier more affordable\nHousehold budgets and the rising cost of living is front-of-mind for our customers. 1 To make healthier choices more affordable, we include them in our Woolworths Supermarket's Prices Dropped seasonal campaigns and surface these across customer channels to inspire more healthier choices in shoppers’ baskets. We understand how important value is to our customers and our own brand products provide another affordable option for customers without compromising on quality. We also feature a number of our own brand and exclusive products in our Prices Dropped and Low Price programs.\nOur customers tell us health is a priority 4 and as a Group, we aspire to make healthier easier for all. Our ambition is to grow the proportion of sales from healthier products in our supermarkets by 50 basis points (bps) annually. As we work towards this, we are committed to:\nThe Odd Bunch allows customers to save at least $20 \\%$ when they purchase fruit and vegetables from the range. Not only does it provide access to great value produce, but it also supports growers to sell more of their crop and helps reduce food waste by selling perfectly good Fruit & Vegetables that may look a little odd but still taste great.\n$^ +$ making healthier easier for our customers by supporting, educating and inspiring them to live healthier lives \n$^ +$ leading the way for affordable and healthier products that customers love through our own brands \n$^ +$ inspiring and empowering the next generation through fun and engaging activities, healthier products kids love and ideas for families.\nIn Australia, we have continued to provide Everyday Rewards members with offers on fruit and vegetables despite the challenging inflationary environment, making up approximately $38 \\%$ of redemptions for category offers in F23. 2 To inspire our members, this year we regularly prioritised featuring healthier recipes in weekly category offers for fruit, vegetables, seafood and poultry.\nWe have a Group-wide approach to health, working together to support our customers' health and wellbeing needs. As Woolworths Group, we work actively with government, partners and industry to improve health outcomes for our communities. Our supermarkets work to deliver healthier choices whilst making them more accessible, affordable and inspiring, and Healthylife provides holistic health and advisory services.", "chunk_word_count": 392, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Making healthier more affordable", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 25, "page_start": 25, "page_end": 25 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 34, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Healthier own brands\n[IMAGE CAPTION] Own brand reformulation in 2023\nWe want to provide healthier choices our customers will love, so our work starts with our own brands.\nIn 2022, Woolworths Supermarkets’ own brand range was ranked the healthiest of the four major Australian retailers for the fourth year in a row, by The George Institute for Global Health based on mean Health Star Rating (HSR).5\nOur ongoing reformulation program continues to make our own brand products healthier by reducing nutrients of concern (including salt, saturated fat and sugar) and increasing positive ingredients such as vegetables and whole grains. In F23, Countdown’s focus was on new product development of fresh products and packaging updates, rather than reformulating to remove nutrients of concern, this focus resulted in more positive nutrients added to the food supply.\nWe are working to meet the Australian Government’s Healthy Food Partnership reformulation targets for nutrients of concern and the New Zealand Heart Foundation’s HeartSAFE nutrition targets:\n4 Roy Morgan, 2022.\n### Healthylife\nThis year Healthylife, backed by its Health Advisory Board’s expertise, launched the second Living Healthy Report, focusing on the need for greater investment in preventive health to improve Australian’s health and wellbeing. Healthylife provides access to health advice, including 35 expert-backed programs. Online health services are new to Healthylife this year, including telehealth with a doctor; speak with a naturopath discovery calls; and launching Healthylife pharmacy.\n$^ +$ $7 9 \\%$ of eligible Woolworths Supermarkets' own brand products meet the Healthy Food Partnership targets for salt, saturated fat and sugar, an increase from $76 \\%$ in F22 $^ +$ $6 6 \\%$ of Countdown’s own brand products meet the HeartSAFE targets, an increase from $65 \\%$ in F22.\n4 Roy Morgan, 2022.\n### View the Living Healthy Report here\nWe identified an over-reporting error during the year for nutrients removed and added. We have restated F21 and F22 values to correct this.\n4 Roy Morgan, 2022.\n### Enabling healthier choices\n4 Roy Morgan, 2022.\n### Making healthier more accessible", "chunk_word_count": 350, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Healthier own brands", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 25, "page_start": 25, "page_end": 25 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 35, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Inspiring and empowering the next generation\nAccessibility is vital in helping customers find healthier choices throughout their shopping journey. Our in-store health initiatives focus on product placement, as we recognise how strongly this influences shopping behaviour. Woolworths Supermarkets has now dedicated $80 \\%$ of the space at our checkouts to healthier choices (≥3.5 HSR) for snacking and drinks. We also trialled integrating healthier choices in areas with high traffic and visibility, such as aisle ends.\nWe use the government’s HSR system 1 to measure our progress, and define ‘healthier products’ as those with a HSR of 3.5 stars and above. We also understand movements across the full spectrum of HSRs to evaluate the impact of our initiatives. We have continued to improve our monitoring and reporting which has enabled tracking of dollar sales and tonnage sales of healthier products across Woolworths Food Group. 2 In F23, $6 1 . 0 7 \\%$ of our total sales was from healthier products, a decline compared to last year mainly driven by a lower share of fresh food in customers’ baskets. However, we are seeing progress in the centre of store 3 with $4 8 . 2 2 \\%$ of total sales from healthier products which is a 34 bps increase compared to last year. 2 When we look at sales tonnage 4, $7 0 . 5 7 \\%$ was from healthier products, which is a 13 bps increase from last year. 2\n4 Roy Morgan, 2022.\n### Encouraging kids to eat healthier", "chunk_word_count": 265, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Inspiring and empowering the next generation", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 26, "page_start": 26, "page_end": 26 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 36, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Encouraging Australian kids to stay active\nIn F23, through our Free Fruit for Kids program, we gave away more than 30 million pieces of free fruit across Australia and New Zealand.Since the program’s inception we have provided more than 160 million pieces of free fruit. This year we evaluated the program in Australia, demonstrating that every dollar we invest in the program creates $\\$ 3.93$ of social value. The program provides positive health impacts which persist following the consumption of the piece of fruit.\nWoolworths Supermarkets is a partner of Woolworths Cricket Blast, Woolworths NetSetGo and Woolworths Surf Groms and therefore one of the largest supporters of grassroots sports in Australia. These partnerships connect us to local communities and support kids to be more active.\n$\\mathsf { I n F } 2 3$ we enhanced the Woolworths Supermarkets website, making our dietary and HSR product filters more accessible, and our Making Healthier Easier hub simpler to discover. We also integrated the Healthylife Food Tracker into the Woolworths and Everyday Rewards apps, making it more accessible to customers. Food Tracker provides personalised basket insights to help customers make healthier choices.\nWoolworths Supermarkets continued its Pick Fresh Play Fresh Netball Grants, contributing over $\\$ 100,000$ in F23, bringing the total to over $\\$ 1.3$ million and more than 311 local Australian netball communities over the last six years. Over 60,000 Aussie kids play Woolworths NetSetGO, and our partnership with Netball Australia enables us to support Australia’s number-one women's sport.\nWoolworths' Fresh Food Kids e-Discovery Tours program helps kids understand where their fresh food comes from. In F23, 71,000 primary school and early learning centre students experienced the program. For the second year, Woolworths Supermarkets continued to support Life Education with the Thrive Children’s Fund, which enables remote schools to access nutrition education with Life Ed.", "chunk_word_count": 318, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Encouraging Australian kids to stay active", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 26, "page_start": 26, "page_end": 26 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 37, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Partnering on positive health outcomes\nWe used HSRs more broadly in our communications this year to highlight healthier choices, including in-catalogue and product advertising. We display HSR for close to $30 \\%$ of intended products 5 on the Woolworths Supermarket and Countdown websites, and we are working to increase these numbers.\nWe continue collaborating with governments, NGOs, public health bodies, researchers and industry such as the Australian Government's Healthy Food Partnership, New Zealand Heart Foundation and New Zealand Nutrition Foundation to support the development of practical, balanced health strategies and initiatives. Last year we launched our Woolworths Supermarkets Trade Partner Sustainability Council for Healthier Choices. The council meets quarterly to drive engagement with our supplier network and encourage HSR uptake on-pack, consistent serving sizes, and healthier product development and reformulation.\nIn F23 Woolworths Community Cricket Fund, in partnership with Cricket Australia, provided 14,000 underprivileged Australian kids with the opportunity to play Woolworths Cricket Blast.\nCountdown has collaborated with MyMahi to develop a healthy eating lesson series for rangatahi (young people) in New Zealand. The Hauora Kai/Healthy Eating lesson series is tailored for secondary learners. It helps teachers and mentors cover the fundamentals of nutrition in the classroom and supports learners in applying healthy eating principles in their own lives. Since the release of the healthy eating lessons over 600 teachers and mentors have accessed them, reaching more than 10,000 students.\nWe also have almost 600 healthier recipes on the Woolworths Supermarkets website and app, which received 1.44 million visits in F23. Countdown provides customers with recipes to meet their dietary needs, with over 500 recipes tagged, including healthier, vegan and low sugar.\n4 Roy Morgan, 2022.\n### Goal 5\n4 Roy Morgan, 2022.\n### Responsible retailing\nWoolworths Group aims to lead the industry with the highest standards of responsible alcohol and tobacco retailing.\nCigarette sales across Australia and New Zealand are declining due to healthier customer choices, excise taxes and government regulation. We will continue to work with the Australian and New Zealand governments to implement tobacco and nicotine control and preventative health policies. As part of the New Zealand Government’s Smokefree Aotearoa 2025 Action Plan, our Countdown supermarkets will not apply for licences to sell cigarettes and as a result are readying to cease retailing these products from 1 July 2024.\nIn F23, we sold alcohol in our New Zealand operations through Countdown, and in Australia through our partnership with BWS, Everyday Market and MyDeal. To encourage responsible drinking, we strive to be a market leader in stocking low and zero alcohol beverages. Countdown prominently promotes its 88 zero alcohol options with overall category sales of low and zero alcohol beverages up by $1 0 . 6 \\%$ on F22. We will continue to implement proactive measures to enable the responsible sale of alcohol through controls such as training of Age Restricted Goods team, and mystery shopper testing.\n4 Roy Morgan, 2022.\n### Supporting the sustainability of our packaging", "chunk_word_count": 505, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Partnering on positive health outcomes", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 26, "page_start": 26, "page_end": 26 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 38, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Enabling our customers’ recycling efforts\nIn Australia, we use 3.4 million tonnes of plastic every year. Of this, $84 \\%$ of plastic is sent to landfill and only $13 \\%$ is recycled. 1 While packaging is essential for protecting and preserving the integrity of food products, it takes considerable natural resources to produce and dispose.\nWoolworths Group continues to help our customers recycle as we work towards having the Australasian Recycling Label (ARL) on all own brand products. To support customers' soft plastic recycling efforts, we are replacing the current ARL 'return to store' logo with the new soft plastics recycling ARL 'check locally' by 1st July 2025. In F23 BIG W achieved $55 \\%$ of products with ARL (an increase from $0 \\% )$ , Australia supermarket own brand products $9 2 \\%$ , and Countdown $80 \\%$ .\nPackaging is one of our top customer concerns. We are embracing circular solutions and the power of partnerships, such as with PACT and Licella NZ, to increase access to recyclability and recycled content to address the impact of packaging in Australia and New Zealand. By 2025, we aim to make our own brand product packaging more sustainable by:\nWoolworths Supermarkets and BIG W delivered on our commitment to stop selling 15-cent plastic bags in Australian stores by the end of June 2023, becoming the first national retailer to do so. Online plastic bag sales will cease for Woolworths Supermarkets by the end of 2023. Once the phase out is completed, this will see approximately 350 million plastic bags removed from circulation annually. It follows our move in New Zealand, where Countdown stopped providing plastic bags in 2018. This year, Countdown removed single-use plastic produce bags in line with government regulation, accounting for 50 million bags (85 tonnes) used in stores annually.\n$^ +$ halving the use of virgin plastic packaging \n$^ +$ achieving $60 \\%$ recycled content \n$^ +$ making $100 \\%$ of our own brand packaging widely recyclable, reusable or compostable.\n4 Roy Morgan, 2022.\n### Reviewing our operations\nIn the F23 review of our 2025 Plan (see page 12), we considered the evolving packaging landscape, from emerging legislation (single-use plastics) to soft plastics recycling challenges (the collapse of REDcycle). This review has informed a shift in our delivery timeline from 2023 to 2025, aligned with the National Packaging Targets, to enable us to solve problems and build industry capability collaboratively.\nThis year we formed a Group-wide sustainable packaging delivery community to drive momentum towards delivering our packaging goals. Since our baseline year of 2018, we have achieved:\n26%\nreduction percentage equivalent of baseline year virgin plastic packaging >14,000t in virgin plastic reduction against baseline, through targeted initiatives, equivalent of baseline year virgin plastic packaging", "chunk_word_count": 471, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Enabling our customers’ recycling efforts", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 27, "page_start": 27, "page_end": 27 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 39, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Initiatives to reduce virgin plastic in F23 included:\n49%\n$^ +$ ${ > } 8 0 \\%$ recycled PET plastic in Woolworths Supermarkets bakery trays and clamshells, a 1,222 tonnes reduction in virgin plastic \n$^ +$ Woolworths Supermarkets phasing out the in-store use of PVC film in our fresh-cut fruit and vegetables, reducing virgin plastic usage by 113 tonnes \n$^ +$ $30 \\%$ rHDPE in 3L milk bottles in Countdown, reducing virgin plastic by 114 tonnes \n$^ +$ 69 tonnes of PVC bags removed in BIG W bedding range, reducing virgin plastic usage by 24 tonnes \n$^ +$ World first technology trialling kerbside recyclable paper-based sealable bags for the Macro Wholefoods Market nuts range.\naverage recycled content in own brand primary and secondary packaging\n94%\ntotal recyclability including soft plastics, and $85 \\%$ recyclability based on the current soft plastics recycling temporarily paused\n4 Roy Morgan, 2022.\n### Partnering with suppliers, industry and government\nCollaboration with suppliers, industry and government is critical to delivering on our goals. Last year, we formed our Woolworths Supermarkets Trade Partner Sustainability Council for Packaging and Recycling which, in F23, met quarterly, providing helpful insights and sharing good practices to inspire change.\nOur Woolworths Group Packaging Preferred Materials List and Format Guidelines support all suppliers with their packaging plans and helps drive reductions in problematic packaging. Further to this, we have:\n$^ +$ prohibited microbeads in own brand products since 2016. From November 2022, we extended this prohibition to any vendor brand rinse-off products we range and sell across Australia and New Zealand. BIG W has expanded this expectation with their Glitter, Microbeads and Microplastics Policy, launched in 2022 $^ +$ supported Australian Packaging Covenant's action plan to voluntarily phase out per- and poly-fluoroalkyl substances (PFAS) in food contact, fibre-based own brand product and packaging. We are undertaking testing requirements across our food contact fibre-based packaging to commence phase out.\n4 Roy Morgan, 2022.\n### Soft Plastics in Australia\nSoft plastics are key for maintaining product integrity. In Australia, soft plastics recycling solutions are constrained by limited access to facilities that can handle the mixed polymer plastics collected via post-consumer avenues. Our efforts to make it easier for our customers to recycle soft plastics, were significantly disrupted in Australia in F23 with the collapse of REDcycle. We listened to and recognised the disappointment this caused for our customers, governments and other stakeholders and are working to re-establish a collection scheme.\nWe support the recent announcement by Australia’s environment ministers agreeing to harmonise single use plastics and packaging regulation. This is critical to achieving the stated environmental objectives of plastics and packaging regulation in Australia and would provide the certainty and confidence that industry needs to invest in these solutions. We continue to support phasing out single-use plastic items by taking a national rather than a state-based approach for relevant items.", "chunk_word_count": 490, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Initiatives to reduce virgin plastic in F23 included:", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 27, "page_start": 27, "page_end": 28 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 40, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Understanding the challenge\nIn Australia, REDcycle collected and recycled customer-returned soft plastics for several years. Woolworths Supermarkets suspended the REDcycle program in November 2022 after it was revealed that REDcycle had been stockpiling collected soft plastics potentially due to insufficient downstream processing capacity. Continuing soft plastics in-store collections would have been neither viable nor reasonable under these conditions. In light of this stockpiling, we recognise that previously reported tonnes of post-consumer soft plastics collected by REDcycle in F22, and possibly in earlier years, are unlikely to have been recycled.\ncontrol of the existing soft plastics stockpiles and store them safely while the retailers explore recycling options. Together, we have progressed the safe storage of the stockpiled material, and are continuing to work with the Taskforce to assess the material for recovery. We are providing support to save as much of this material from landfill as possible. Using the limited capacity at present, around 120 tonnes of the existing REDcycle stockpiles has already been processed by domestic processors, including saveBOARD and Polyrok.\n4 Roy Morgan, 2022.\n### Working towards a new solution\nThe Soft Plastics Taskforce (Taskforce), authorised by the ACCC, was formed to allow Australia’s major supermarket retailers to restore public access to post-consumer soft plastics recycling. Chaired by the Federal Department of Climate Change, Energy, the Environment and Water, the Taskforce comprises the three major supermarket chains (ALDI, Coles and Woolworths). The Taskforce has been meeting since December 2022, with the core objectives to:\n$\\cdot$ resume access to soft plastics recycling through Australian supermarkets $^ +$ restore public confidence in soft plastics recycling $\\cdot$ maximise soft plastics recovery.\n4 Roy Morgan, 2022.\n### Increasing our impact\nThe Australian Packaging Covenant Organisation estimates that less than $5 \\%$ of consumer soft plastic was collected through the REDcycle program. Therefore, the Taskforce recognises the need for a national, long-term, broader industry -based soft plastic recycling strategy beyond the Taskforce’s interim program, with the potential to significantly increase the proportion of household soft plastic collected and recycled.\n4 Roy Morgan, 2022.\n### BIG W goes Seamless\nThe Australian clothing industry manufactures and imports over 1.4 billion units of new clothing annually, more than half of which ends up in landfill. 1 The industry recognises that to achieve the Australian Government's vision\nIn March 2023, the Taskforce released a Roadmap to Restart, outlining the current state of play in the Australian recycling industry and the steps needed to launch a new supermarket soft plastics collection scheme. Coles and Woolworths extended an offer to REDcycle to assume\nto transition Australia to a circular economy by 2030 and net zero by 2050, it needs to fundamentally transform the way clothing is designed, produced, consumed and disposed of, both locally and on a global scale. In June 2023, BIG W became a founding member of the National Clothing Product Stewardship Scheme (Seamless), partnering with the Australian Fashion Council. Launched by the Hon. Tanya Plibersek, Minister for the Environment and Water, and supported by the Federal Government, Seamless aims to transform how clothing is made, used, recirculated and recycled in Australia to create clothing circularity by 2030.", "chunk_word_count": 535, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Understanding the challenge", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 28, "page_start": 28, "page_end": 28 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 41, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Sourcing our products sustainably\nForests cover $31 \\%$ of global land area1 , benefiting ecosystems, economies and biodiversity. Deforestation, exacerbated by illegal logging and land clearing, contributes to greenhouse gas emissions, causes habitat loss and species extinction, and disrupts ecosystems’ resilience. Deforestation also harms cultural and Indigenous communities’ connections to their lands.\nWoolworths Group is addressing the risk deforestation poses to both climate change and nature loss. We are committed to sustainably sourcing high-risk commodities, including pulp, paper, timber, palm (kernel) oil, cocoa, coffee, tea, soy, and fresh beef for our own brand products. By the end of 2025, we aim to achieve net zero deforestation and will have assessed the feasibility of transitioning to a deforestation and conversion free commitment for our highest volume and highest risk of deforestation commodities.\n4 Roy Morgan, 2022.\n### Reviewing our progress\nIn F23, we continued to focus on making it easier for our customers to choose sustainable products through the use of third party certification or verification. We have achieved $100 \\%$ sustainable sourcing for tea and coffee in our own brand products and progressed the volume of sustainable cocoa used in collaboration with our bakery team and suppliers. For further detail refer to our commodity-specific policies on the Woolworths Group website.\nWe acknowledge that significant work is required to transition from our current commitment to deforestation and conversion free supply chains (no clearing of forests or other ecosystems such as grasslands is allowed). In many cases, given the need for traceable segregation of certified products, this will involve changing the way in which high risk commodities are sourced or processed for use in our own brand products.\nIn the next year, together with industry and suppliers, we will work to understand the practical implications of this transition through improved product traceability and logistics to segregate deforestation and conversion free certified commodities. By way of example, we will utilise the insights from our first assessment of deforestation in our fresh beef supply chains, and analysis identifying the origins of soy in livestock feed and the associated volume used across our animal protein categories, identifying opportunities to work with our suppliers and industry on pathways to reduce the environmental impact of animal protein.\n4 Roy Morgan, 2022.\n### Case study\n4 Roy Morgan, 2022.\n### Sourcing cotton\nThe cotton sector supports the livelihood of up to one billion people worldwide 1, yet child and forced labour (private and state-enforced) are inherent risks in its production. Cotton is common across our BIG W own brand products, and its sourcing remains our top non-food risk of modern slavery. Aligned with our 2025 Plan, we are working towards sourcing more sustainably and responsibly produced cotton and are encouraging the use of recycled and reclaimed cotton where appropriate.", "chunk_word_count": 476, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Sourcing our products sustainably", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 29, "page_start": 29, "page_end": 29 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 42, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Find more information on our sustainable sourcing here.\nIn F23, BIG W sourced $9 . 6 \\%$ of its cotton from a certified standard or program aligned to the Woolworths Group Sustainable Cotton Policy.\nOther highlights include:\n$\\cdot$ finalising our in-scope suppliers and cotton consumption baselines and segmenting our Sustainable Cotton Policy roll-out plan \n$^ +$ achieving certification for Organic Content Standard (OCS), which required auditing of the BIG W policy and procedures by Control Union to ensure compliance to the Chain of Custody Standards for OCS \n$^ +$ partnering with Cotton Australia to explore end-to-end opportunities to procure high quality, sustainable Australian grown cotton at a competitive price.\n4 Roy Morgan, 2022.\n### Leading the future of protein\nFarmed livestock in Australia generates more than $\\$ 30$ billion of agricultural production annually. 1 While this represents an opportunity for farmers, livestock production represents the largest source of emissions in the agriculture sector $10 \\%$ of Australia's total annual emissions. It is also an area of increased scrutiny, by customers and industry, for its environmental and animal welfare impacts.\n4 Roy Morgan, 2022.\n### Making seafood sustainable\nIn F23 we updated our Seafood Sourcing Policy to improve traceability and human rights, strengthening social and environmental sustainability interconnection. We actively participated in the Tasmanian Government’s regulatory review of the local salmon industry, supporting measures to enhance regulatory oversight of salmon farming through the Environmental Protection Authority Tasmania. We welcome the development of science-based aquaculture standards to better manage biodiversity and environmental and animal welfare impacts.\nOur Achievements\nWoolworths Group is working with our farmers and suppliers to promote high animal welfare practices. With animal protein forming ${ \\sim } 1 3 \\%$ of our sales mix annually, we can play a significant role in improving the environmental sustainability of animal proteins while exploring and expanding the diversity of protein options available on our shelves, including plant-based, food-technology solutions and fermentation.\n4 Roy Morgan, 2022.\n### Seafood\n$100 \\%$ own brand behind the counter, fresh packaged, frozen and canned seafood is from ecologically responsible sources\n4 Roy Morgan, 2022.\n### Customer choice for sustainable protein\n4 Roy Morgan, 2022.\n### Taking a strategic approach\nGlobal demand for alternative proteins is growing. We have seen a $31 \\%$ increase in plant protein volumes since F19. W23 has invested in alternative protein innovators to deliver sustainable, locally produced proteins. In late 2022, Harvest B opened Australia’s first plant-based protein facility, providing clean-label certified products that cost less than comparable animal proteins. All G Foods is developing cultured dairy products that look, feel and taste like dairy food.\nLeading the future of protein is a key focus as part of our approach to nurturing nature. This will also help in our work to reduce our scope 3 emissions and identify opportunities for increased farming efficiencies. For more information see our 2023 Annual Report.\n4 Roy Morgan, 2022.\n### Chicken", "chunk_word_count": 499, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Find more information on our sustainable sourcing here.", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 29, "page_start": 29, "page_end": 30 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 43, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Delivering the highest standards of animal welfare\n$100 \\%$ Woolworths Supermarkets own brand fresh chicken and ingredient chicken from RSPCA Approved farms 1\nWoolworths Group’s animal welfare and ecologically responsible seafood policies are embedded in our business processes and supply chain. We collaborate with suppliers and industry to focus on best practice animal welfare and seafood standards.\n4 Roy Morgan, 2022.\n### Meeting challenges head-on\nWhen the pork industry's stunning practices were scrutinised in 2023, we worked closely with suppliers and industry to undertake a review checking adherence to animal welfare requirements. We are collaborating, via our Woolworths Animal Welfare Horizon fund, with our strategic pork supplier, a research institute and an animal welfare group to assess and verify best practices for ${ \\mathsf { C O } } _ { 2 }$ stunning.\nAnimal welfare is continually assessed across the different proteins we source, including working closely with Greenstock, our stand-alone business focused on the red meat supply chain. As part of our continued investment in capability and processes we deliver bespoke annual animal welfare training to our Greenstock and sourcing teams, training over 20 people per year. All our processing sites are regularly assessed against our Group requirements and the Australian Livestock Processing Industry Animal Welfare Certification System (AAWCS) standards, with over 50 visits last year. Our range of RSPCA Approved products continues to increase. Recently we transitioned all our Macro Free Range chicken to have RSPCA Approved certification for both indoor and outdoor requirements within the RSPCA Standard.\nMacro Fresh Free Range Chicken is RSPCA Approved Free Range\nIn F23 New Zealand experienced an industry-wide egg shortage, with the legislated battery-cage egg ban coinciding with factors making it challenging for farmers to transition to alternative farming systems. In response Countdown implemented a number of measures, including long-term contracts with key suppliers securing our supply and allowing our partners to invest with confidence; and steps to simplify our supply chain trialling distribution from our DCs.\n4 Roy Morgan, 2022.\n### Eggs\n$100 \\%$ own brand whole shell eggs cage free\n$6 6 \\%$ vendor brand whole shell eggs cage free\n4 Roy Morgan, 2022.\n### Looking forward to F24\n21% of egg ingredients in our own brand products are cage free\nAnimal welfare remains an area of importance to us and we continue to build on our animal welfare credentials and further strengthen our policies and procedures. Our work with industry includes research and development projects supported by our Woolworths Ocean Pool and Animal Horizon Funds. With \\$650,000 invested in the past three years, our research in F24 will focus on improved humane processing techniques for pigs and farmed barramundi. We will review our animal welfare policy in line with global best practice and explore options to increase our end-to-end seafood traceability across our supply chain.\nPork\n$100 \\%$ Macro free range fresh pork is certified APIQ Free Range standards in Australia", "chunk_word_count": 499, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Delivering the highest standards of animal welfare", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 30, "page_start": 30, "page_end": 30 }, { "report": "Woolworths Group 2023 Sustainability Report.pdf", "chunk_idx": 44, "chunk_text": "# 2023 Sustainability Report\n## 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022.\n### Next steps and future priorities\nWe remain united by our purpose and as we move into our hundredth year we know we can do more to drive the transformative change needed to positively impact our customers, team, communities and planet.\nThe nature of the sustainability challenges we face requires collective action and we are determined to play a twofold role. First, lead by example by working to make sure our products, operations and other business activities are sustainable and ethical. Second, support and partner with our suppliers and stakeholders to do the same.\nWe will continue collaborating across our value chain and industry to influence positive impact. We will also continue challenging ourselves on our progress, and our action to drive the change we want to see.\n4 Roy Morgan, 2022.\n### Our high-level priorities for F24\n4 Roy Morgan, 2022.\n### Delivery of our 2025 Plan\nContinue to drive momentum across the Group to deliver on People, Planet and Product goals and commitments.\n4 Roy Morgan, 2022.\n### Company directory\n4 Roy Morgan, 2022.\n### Accelerate impact across the value chain\n4 Roy Morgan, 2022.\n### Registered Office\nActively partner upstream and downstream to drive collaborative approaches to solutions in areas of highest impact. Our strategic approach to reducing food waste and hunger will be a key impact area, in addition to decarbonisation, health and plastics. We will also work to quantify the impact of our initiatives to inform decision-making and prioritisation.\n## 1 Woolworths Way, Bella Vista NSW 2153 Tel: (02) 8885 0000 Web: www.woolworthsgroup.com.au\nAuditor \nDeloitte Touche Tohmatsu \n225 George Street, Sydney NSW 2000 \nTel: (02) 9322 7000 \nWeb: www.deloitte.com.au\n### Setting ourselves up for success\nScope our next strategic horizon, considering areas where we can leverage our unique position to deliver impact at scale. We will do this by evaluating our strategic priorities beyond 2025 and organising the capabilities we have across the Group to mobilise against sustainability aspirations to 2025 and beyond.\n### Woolworths Group Sustainability\nAlex Holt\nChief Sustainability Officer\nWe encourage you to contact us if you have feedback or questions at sustainability@woolworths.com.au", "chunk_word_count": 365, "section_path": "2023 Sustainability Report > 3 Finder, Green Report, 2023. \n4 Roy Morgan, 2022. > Next steps and future priorities", "document_id": "Woolworths Group 2023 Sustainability Report", "page": 31, "page_start": 31, "page_end": 31 } ]